TIDMGFRD
RNS Number : 2072S
Galliford Try Holdings PLC
08 March 2023
8 MARCH 2023
GALLIFORD TRY HOLDINGS PLC
HALF YEAR REPORT FOR THE SIX MONTHSED 31 DECEMBER 2022
Confident outlook and strong performance
-- Profit before tax up 65% to GBP11.7m (H1 2022: GBP7.1m) before exceptional costs(1,4) .
-- Revenue up 14% to GBP679m (H1 2022: GBP594m).
-- Divisional operating margin increased to 2.3% (H1 2022:
2.2%)(2) , making good progress against the Sustainable Growth
Strategy.
-- Continued strong balance sheet , with average month-end cash
for the period of GBP154m (H1 2022: GBP180m) and a PPP asset
portfolio of GBP46.1m (June 2022: GBP47.5m).
-- Interim dividend up 36% to 3.0p per share (H1 2022: 2.2p),
with established dividend cover policy of 2.0x annual earnings.
-- Additional capital return of up to GBP15m through the Group's
ongoing share buyback programme.
-- Environment business further enhanced by the acquisition of
the specialist businesses, MCS Control Systems and Ham Baker.
-- Sustainable Growth Strategy on track to meet our carbon
reduction commitments and financial targets to 2026.
-- Full year profit before tax expected to be at the upper end
of current analyst estimates(3) .
-- Confident outlook with GBP3.5bn high quality and focused
order book (H1 2022: GBP3.4bn) with 95% and 79% of projected FY23
and FY24 revenue secured.
H1 2023 H1 2022 Change
Revenue GBP679m GBP594m +GBP85m
Operating profit before amortisation(1) GBP10.8m GBP6.9m +GBP3.9m
(,4)
Divisional operating margin(2) 2.3% 2.2% 0.1ppt
Profit before tax(1) (,4) GBP11.7m GBP7.1m +GBP4.6m
Statutory profit/(loss) before GBP7.2m GBP(2.6)m +GBP9.8m
tax
Earnings per share(1) (,4) 8.8p 5.9p +2.9p
Earnings/(loss) per share
after exceptional items 5.5p (1.2)p +6.7p
Interim dividend per share 3.0p 2.2p +36%
Average month end cash GBP154m GBP180m GBP(26)m
Order book GBP3.5bn GBP3.4bn +GBP0.1bn
1. Stated before exceptional items. H1 2023 GBP4.5m exceptional
items relate to our investment in the implementation of cloud-based
IT systems (H1 2022 GBP9.7m exceptional items relate to the
acquisition of nmcn's water business (GBP6.3m) and the
implementation of cloud-based IT systems (GBP3.4m)).
2. Divisional operating margin is defined as pre-exceptional
operating profit before amortisation as a percentage of revenue. It
is stated for the combined Building and Infrastructure
divisions.
3. The range of analysts' estimates for pre-exceptional profit
before tax for the year ending 30 June 2023 is GBP20.3m to GBP23.3m
based on forecasts at 1 March 2023.
4. Includes profit on disposal of GBP3.6m of our interest in a joint venture arrangement.
Bill Hocking, Chief Executive, commented:
"I am pleased with the Group's performance in the first half of
the financial year, seeing increasing revenue and divisional
operating margin, as we continue to make good progress against our
strategic objectives. Our strong performance is a reflection of our
excellent people and well established relationships with our supply
chain and clients.
In line with our Sustainable Growth Strategy, we acquired the
specialist businesses of MCS Control Systems and Ham Baker in the
first six months of the year, which further enhance our Environment
business' off-site build and asset optimisation offering to
clients. The integration of these businesses is progressing
well.
Our strong and high quality order book, in our chosen sectors,
provides visibility and security of future workloads. Together with
our excellent people and our strong balance sheet, this gives
confidence in our ability to deliver our Sustainable Growth
Strategy and continue to provide long-term sustainable value for
our stakeholders."
Enquiries to:
Bill Hocking, Chief Executive
Galliford Try Andrew Duxbury, Finance Director 01895 855001
James Macey White
Tulchan Communications Ed Cropley 020 7353 4200
This announcement contains inside information. The person
responsible for making this announcement on behalf of Galliford Try
is Kevin Corbett, General Counsel & Company Secretary.
Galliford Try's next Trading Update is scheduled for 12 July
2023.
Presentations
A conference call for analysts and institutional investors will
be held at 09:30am GMT today, Wednesday 8 March 2023. To register
for this event please follow this link:
https://stream.brrmedia.co.uk/broadcast/63c0314bddbb3277238ea732
Should you wish to ask a question, please dial-in on +44 (0)330
551 0200 quoting 'Galliford Try Half Year' when prompted by an
operator, as it will not be possible to submit a question via the
webcast link.
An open presentation and Q&A session for retail investors
will be held on Friday 10 March 2023 at 10:30am GMT. Investors can
register for the event via this link
https://www.investormeetcompany.com/galliford-try-holdings-plc/register-investor
SUSTAINABLE GROWTH STRATEGY
Our strategy is to deliver high-quality buildings and
infrastructure, in a socially responsible way, while also providing
a sustainable return for our shareholders . The Group's strategic
priorities are a progressive culture, socially responsible
delivery, focus on quality and innovation, and sustainable
financial returns.
Our Sustainable Growth Strategy balances financial targets with
wider commitments and aspirations to create long term value for all
our stakeholders. We are making good progress against our financial
targets to 2026, which we announced in September 2021:
Objective KPI Target (2026)
--------------------- -------------------------- -------------------------------
Earning a sustainable Focus on bottom line Divisional operating margin
return on the value margin growth growth to 3.0%
we deliver.
--------------------- -------------------------- -------------------------------
Disciplined contract Revenue growth towards GBP1.6bn
selection and sustainable
revenue growth
--------------------- -------------------------- -------------------------------
Maintain strong balance Operating cash generation
sheet
-------------------------- -------------------------------
Sustainable dividends Dividend cover of 2.0x
--------------------- -------------------------- -------------------------------
Our clear strategy will:
-- retain our strong platform for sustainable growth, with a
particular focus on our progressive culture, robust risk management
and commercial discipline;
-- improve our operational performance and drive margin progression; and
-- deliver strong predictable cash flows, margin growth and sustainable returns.
Our financial targets will be achieved by continued selective
bidding, improving operating margins and disciplined revenue growth
in our existing markets of Highways, Environment and Building. We
will target further growth in complementary and adjacent markets,
utilising our balance sheet strength to deliver increased margins.
These adjacent markets include co-development of Private Rented
Sector (PRS) schemes in Building; developing our green retrofit
offering within our Facilities Management team; and increasing our
capital maintenance and asset optimisation capabilities within the
existing Environment business.
RISK MANAGEMENT AND ORDER BOOK
The Group's strategy is founded on commercial discipline and
robust risk management. Our confidence in the Group's future
performance is based on our strong and high quality order book,
underpinned by management's discipline and focus, and robust future
pipeline of opportunities. Our sector focus means c87% of contracts
are delivered through frameworks providing a reliable stream of
future work with relationship clients on known terms, conditions
and risk profile.
At 31 December 2022 the Group's order book was GBP3.5bn (H1
2022: GBP3.4bn) of which 91% is in the public and regulated sectors
and 9% is in the private sector. 95% of projected revenue for the
current financial year is secured, and 79% is already secured for
the next financial year (H1 2021: 95% and 81% respectively).
OUTLOOK
We have a strong track record and focus on the public and
regulated sectors and are encouraged by the recent project wins and
by the robust pipeline of new opportunities across our chosen
sectors. The UK's planned investment in economic and social
infrastructure supports growth in our core markets. Our recent
specialist acquisitions, of MCS Control Systems and Ham Baker, grow
and further enhance our Environment business' offering in the areas
of off-site build and asset optimisation and demonstrate the
strategic benefits of Galliford Try's strong balance sheet.
Our strong financial position and disciplined focus on risk
management enabled us to successfully manage, without any
significant overall impact on trading, the challenges around
inflation and materials shortages, which are now beginning to ease.
During 2022 the length of time taken to enter new contracts
increased, initially in response to rising inflation and later due
to delays in public sector decision making. We are also beginning
to see these factors normalise, which provides further
encouragement for the Group's future outlook.
We continue to trade well, winning a number of key frameworks
and contracts in the period, as well as having sight of a strong
future pipeline of projects. The Group is well placed for the
financial year to 30 June 2023, with the Board anticipating that
profit will be towards the upper end of the range of analyst
estimates and we continue to make good progress against our
Sustainable Growth Strategy.
DIVID AND CAPITAL ALLOCATION
The directors have reviewed the Group's pre-exceptional results
and outlook for the current financial year and have declared an
interim dividend of 3.0p per share which will be paid on 14 April
2023 to shareholders on the register at the close of business on 17
March 2023.
The Group's key capital allocation objectives are:
- Supporting operational requirements and strategic opportunities
A strong balance sheet is an important element in delivering the
Group's Sustainable Growth Strategy, as it provides a competitive
advantage in the market, supports the Group's disciplined approach,
and provides confidence to our clients and supply chain.
Furthermore, and as demonstrated by the acquisitions of the water
businesses of nmcn, in October 2021, and more recently MCS Control
Systems and Ham Baker, a strong cash balance sheet enables the
Group to react quickly to such strategic opportunities, that
enhance our capabilities and increase future value.
- Mitigating the effect of future market downturns
The future outlook across our markets remains very encouraging
and supports our strategy. The Group will continue to ensure that
it is prepared for any adverse change in market conditions that may
arise. Our strong balance sheet is particularly important for the
Group to continue to operate its disciplined approach to contract
selection and focus on operating margin, irrespective of any short
term economic concerns. The recent inflationary pressures clearly
demonstrate the value and importance of the Group's risk management
framework and focus.
- Paying sustainable dividends to shareholders
The Board understands the importance of dividends to
shareholders, and in setting its dividend considers the Group's
profitability, its strong balance sheet, high quality order book
and longer term prospects. Consistent with this approach, the Group
expects dividend per share to increase in line with earnings, with
a dividend cover of 2.0 times annual earnings.
We continue to assess the cash requirements of the business to
ensure the Group remains well positioned to deliver on its
Sustainable Growth Strategy. Consistent with the framework set out
above, in September 2022 the Group announced an initial share
buyback programme to repurchase up to GBP15m of ordinary shares of
50 pence per share. The Board is satisfied with the progress of
this buyback programme, with a total of 2,349,508 shares purchased
and cancelled during the six months to 31 December 2022, at a total
cost of GBP3.7m.
Environment, Social and Governance (ESG) commitments
Sustainability underpins our long-term success as it helps us to
win work, engages our employees, benefits communities and the
environment, and makes us more efficient. This is why our
sustainability commitments are an integral part of our strategy. We
monitor progress against the six pillars of our sustainability
strategy, which are mapped to the UN Sustainable Development Goals,
as set out below:
Health and Safety
The health, safety and wellbeing of our staff, subcontractors,
suppliers, clients and the public remains the Group's top priority.
During the period, we held our Health, Safety and Environmental
conference, supporting our 2022/23 'Focus Areas' of inductions,
plant, environmental and occupational health.
We continue to focus on leading indicators in our pursuit of 'no
harm' and our behavioural safety programme, Challenging Beliefs,
Affecting Behaviour, based on awareness, training, coaching and
visible leadership, forms the backbone of our approach. This year,
we launched our 'Choose the Safe Path' training programme which
involves employees determining the outcome of site based scenarios
to prevent incidents using immersive 3D technology.
People
We pride ourselves on creating a people-orientated, inclusive
environment and, in January 2023, we received Bronze status from
The Clear Company, a global diversity and inclusion specialist, for
our commitment to embedding inclusive practices across our
organisation. Progress in this area includes the launch of our
first ever Menopause Policy, as well as a series of blogs and
interviews which put a spotlight on different communities aiming to
break down barriers in the workplace.
Early careers roles (apprentices, trainees and graduates) remain
a key area of focus for both recruitment and development as these
roles help us grow our own talent. We were pleased to have received
a Gold Award through The 5% Club's Employer Audit Scheme which
reviews businesses' approaches to inclusion and social mobility,
and we continue to be recognised as a 'Top Graduate &
Apprentice Employer' by TheJobCrowd.
We recognise the rising cost of living that households across
the UK are facing and, in September 2022, we announced a one-off
cost of living payment of up to GBP750 for more than half our
employees and became early adopters of the new rate of Real Living
Wage.
We are making progress with developing our employee value
proposition, Grow Together, which will support our plans to be a
destination employer.
Environment and Climate Change
We recognise the urgency of the climate change agenda and the
role we have to play in decarbonising the economy for a greener,
more sustainable future.
In June 2021, we pledged to achieve net zero carbon across our
own operations (Scope 1 and 2) by 2030 and to achieve net zero
across all activities (Scope 1, 2 and 3) by 2045 at the latest. To
provide a clear route to reduce greenhouse gas emissions, we
committed to achieving a verifiable science-based target validated
by the Science Based Targets initiative (SBTi). During 2022, we
performed a full inventory of our Scope 3 emissions, using external
carbon consultants and submitted our proposed reduction targets to
the SBTi in November for validation.
We also participated in CDP for the first time as a standalone
construction company, achieving a climate change score of 'C',
which provides a baseline against which we can monitor
progress.
As well as driving down our own carbon footprint, we work with
clients to design and construct low carbon buildings and
infrastructure, and share best practice through our membership of
the Construction Leadership Council's ConstZero initiative.
We continue to deliver our Net Zero Partners programme, an
initiative to collaborate closely with our supply chain and design
consultants to help reach our net zero carbon targets.
Communities
Delivering a legacy of positive social value outcomes is the
right thing to do as a responsible business and is an increasingly
important priority for our clients. Since we began reporting in
FY22, we have delivered over GBP300m in social and local economic
value through a combination of providing work for the local supply
chain, providing opportunities for training and apprenticeships and
job creation.
We recently took part in 'Unlocking Construction', which is
developed by New Futures Network - part of HM Prisons and Probation
Service, to promote careers and opportunities within the industry
to prison leavers, aimed at helping sectors like construction fill
skills gaps, while promoting positive change to prisoners, reducing
the likelihood of repeat offending and benefiting wider
society.
We continue to take part in the Considerate Constructors Scheme
(CCS), which assesses sites on criteria including being considerate
of local neighbourhoods and the public and our average CCS audit
score increased in the six months to December 2022 from 41.8 to
43.2, which remains well above the industry average of 39.8.
Clients
We aim to deliver excellence for our clients. We continue to
drive innovation in modern methods of construction, and secured
funding under the National Highways Innovation and Modernisation
Designated Fund to trial an autonomous roadworks compaction process
which could deliver significant outperformance compared to
traditional methods.
In our Building business, we are collaborating with partners
from across Europe to conduct the first UK field trials of an
innovative new paint robot. The AI-supported robot has been
designed to carry out large scale decorating tasks and laboratory
testing suggests that deployment of the robot could lead to
productivity improvements of over 30% and cost savings of at least
20% compared to traditional approaches.
Our increasing capability in supporting clients to design, build
and maintain low carbon infrastructure and buildings is recognised
by our selection to be on two of the working groups developing the
UK Net Zero Carbon Buildings Standard (NZCBS), a cross-industry
initiative which will provide a single agreed definition and
methodology for the industry to determine what constitutes a net
zero carbon building.
Our focus on building trusted relationships with our clients is
reflected in the fact that 92% of our order book is repeat
business. We were also pleased to receive the prize for Innovation
at the Constructing Excellence National Awards; Contractor of the
Year at the Learning Places Scotland Awards and Project of the Year
at the Education Estates Awards.
Supply Chain
We continue to focus on developing collaborative, long-term
relationships with our supply chain partners through our Advantage
through Alignment (AtA) programme, with 60% of our core trades
spend now with aligned subcontractors.
As a signatory of the Prompt Payment Code, we are committed to
paying 95% of supply chain invoices within 60 days. We have made
further improvements in how quickly we pay our suppliers, with 98%
now paid within 60 days (FY22: 98%) and the average days to pay now
26 days. We are also making progress against the additional metric
of paying 95% of invoices from suppliers with fewer than 50
employees within 30 days.
We continue to retain Gold status from the Supply Chain
Sustainability School, an award-winning collaboration designed to
upskill its members through free training and resources covering
sustainability, off-site manufacturing, Building Information
Modelling (BIM), Lean and Management.
Examples of collaboration with our supply chain that drive
improvement are the launch of our Personal Protective Equipment
(PPE) and packaging recycling scheme and the adoption of green
'all-in-one' welfare units on our sites.
FINANCIAL REVIEW
During the first half of the year, the Group delivered a strong
performance resulting in increased revenue and divisional operating
margin. Our operating performance, strong financial position and
high quality order book provide confidence in our future
performance.
Revenue for the half year to 31 December 2022 increased 14% to
GBP679.2m (H1 2022: GBP594.0m), primarily reflecting disciplined
growth in Infrastructure. This includes the benefit of a full six
months' trading from the nmcn water business, acquired in Autumn
2021.
Pre-exceptional operating profit before amortisation increased
by 57% to GBP10.8m (H1 2022: GBP6.9m) including the profit on
disposal of our interest in a joint venture arrangement. The
combined divisional operating margin was 2.3% (H1 2022: 2.2%), with
improvement in both Building and Infrastructure. Building generated
profit of GBP9.3m (H1 2021: GBP8.4m), representing an operating
margin of 2.3% (H1 2022: 2.2%), and Infrastructure generated profit
of GBP6.5m (H1 2022: GBP4.3m), representing an operating margin of
2.3% (H1 2022: 2.1%).
There was a GBP5.0m pre-exceptional operating cost in aggregate
across PPP Investments and Central Costs (H1 2022: GBP(5.8m)). PPP
Investments includes the GBP3.6m profit on disposal of an interest
in a joint venture entity during the period. Central Costs were
slightly higher than H1 2022 reflecting increased share-based
payment costs and some timing differences. Net interest income was
GBP2.4m (H1 2022: GBP1.4m), the increase was largely a result of
improved interest rates.
Pre-exceptional profit before tax was GBP11.7m (H1 2022:
GBP7.1m). Exceptional items of GBP4.5m (H1 2022: GBP3.4m) have been
incurred in the period in relation to our investment in cloud-based
digital finance and commercial systems, part of our investment in
our digital and data capabilities. Full details are set out in note
6 to the financial information. Post-exceptional profit before tax
was GBP7.2m (H1 2022: loss GBP(2.6)m).
The pre-exceptional taxation charge of GBP2.3m reflects a
forecast effective tax rate of 19.6% (H1 2021: 8.9%) for the year
to 30 June 2023, which compares to the 'standard' effective tax
rate of 20.5%.
Based on pre-exceptional earnings per share of 8.8p (H1 2022:
5.9p), and the outlook for the remainder of the financial year, the
Board has declared an interim dividend of 3.0p per share (H1 2022:
2.2p).
As previously disclosed, the Group provided services in respect
of three contracts with entities owned by a major infrastructure
fund of a blue-chip listed company. Our work on these contracts
formally ceased following their termination in August 2018. Costs
were significantly impacted by client-driven scope changes and the
Group has submitted claims and variations to the value of circa
GBP95m in respect of these costs (June 2022: GBP95m). The Group has
taken extensive legal advice on our entitlement, and we have been
successful in two adjudications supporting the validity of the
Group's position. The claim is progressing in line with the
expected timetable, with all associated legal and professional
costs expensed or incurred. Taking into account the requirements of
IFRS 15, the Group had constrained the revenue recognised in prior
periods to the extent that it was highly probable not to result in
a significant reversal in the future. At 31 December 2022, the
Group has reviewed its assessed recoverability in accordance with
IFRS 15. Given the progress, in line with expectations during the
period, this is unchanged. The Group has also reviewed its expected
credit loss provision in accordance with IFRS 9 for which there was
no material change in the required provision since the prior year
end.
The Group is well capitalised, maintaining its focus on
disciplined cash management in line with the Board's key capital
allocation objectives. The Group operates with daily net cash, no
debt facilities, and no defined benefit pension liabilities.
Average month end cash balances for the first half year were strong
at GBP154m. This is in line with the Board's expectations given the
recent acquisitions, our ongoing investment in cloud-based digital
systems as previously disclosed, and circa GBP10m of dividends and
capital returns in the half year. Given these factors, along with
some delayed contract starts in 2022, the Board anticipates that
average cash for the full year to 30 June 2023 will be at a similar
level.
The Group also benefits from a PPP asset portfolio of GBP46.1m,
reflecting a blended 7.1% discount rate and generating interest
income.
The Group is able to adopt appropriate discipline and risk
management when sourcing new work supported by our strong balance
sheet which is also important in providing confidence to our
clients and supply chain. We are committed to pursuing a
collaborative and open approach with our supply chain. Our
performance under the Prompt Payment Code remains very strong, with
98% of invoices paid within 60 days in the period (H1 2022: 98%)
and average payment being made in 26 days (H1 2022: 26 days).
The acquisition of MCS Control Systems in July 2022 and Ham
Baker in November 2022 have resulted in an increase in intangible
assets of GBP0.3m and in goodwill of GBP3.8m. The acquisitions
further enhance the specialist offering in our Environment business
and further increase our operational capabilities.
OPERATIONAL REVIEW
Building
The Group's Building business operates through regional offices,
serving a range of public and commercial clients across the UK,
with a focus on the Education, Defence and Custodial, Health and
Commercial sectors, where we have core and proven strengths.
Building also has a substantial presence in Scotland operating as
Morrison Construction. Our Facilities Management business
complements these operations by providing building maintenance
services and we continue to grow the capabilities of this
operation, with a specific focus on decarbonising existing
buildings through retrofit and other interventions.
H1 2023 H1 2022 Change
Revenue (GBPm) 399.7 386.2 3%
Operating profit before
amortisation (GBPm) 9.3 8.4 11%
Operating margin (%) 2.3 2.2 0.1ppt
Order book (GBPbn) 2.1 2.0 5%
Building generated revenue of GBP399.7m (H1 2022: GBP386.2m).
Revenue is in line with the prior year as a result of some new
contract starts delayed as a result of increased length of public
sector and some private client procurement in 2022. Operating
profit before amortisation was GBP9.3m (H1 2022: GBP8.4m),
resulting in an operating margin of 2.3% (H1 2022: 2.2%). We
continue to target margin progression reflecting the performance of
projects across the business and our strategy of focusing on bottom
line growth.
Building currently has an order book of GBP2.1bn (H1 2022:
GBP2.0bn), including 30% in Education, 25% in Defence and
Custodial, 17% in Facilities Management and 8% in Health.
Infrastructure
Our Infrastructure businesses, primarily Highways and
Environment (incorporating principally our activities in water and
wastewater), carry out civil engineering projects across the UK.
This business has established long-term relationships with
customers where we have a strong track record on delivery, focusing
on public and regulated sector work and bids with early contractor
involvement.
H1 2023 H1 2022 Change
Revenue (GBPm) 276.6 204.4 35%
Operating profit before amortisation (GBPm) 6.5 4.3 51%
Operating margin (%) 2.3 2.1 0.2ppt
Order book (GBPbn) 1.4 1.4 -
Infrastructure revenue was up 35% to GBP276.6m (H1 2022:
GBP204.4m). This includes the benefit of the nmcn water business
acquired in Autumn 2021, along with high level of activity across
our Environment operations. Operating profit before amortisation
and exceptional items was GBP6.5m (H1 2022: GBP4.3m), with a 2.3%
operating margin (H1 2022: 2.1%) showing good progress.
Our enlarged Environment business, including the recent
acquisitions of MCS Control Systems and Ham Baker, provides
enhanced and specialist service delivery across UK operations
including water, engineering, off-site build and asset
optimisation, and asset security. The acquisitions, in the first
half of the financial year, have provided complementary and
specialist capabilities in the water sector. This enhanced
capability puts the Environment business in a strong position to
support our clients, as shown by our recent collaboration with
Siemens to accelerate the integration of digital technologies
across the lifecycle of water and wastewater projects.
During the first six months of the year, Infrastructure won a
number of contracts and positions on frameworks including the
GBP600m Southern Water AMP8 Framework and two frameworks for Welsh
Water, representing the first capital maintenance framework wins
for the Environment business since the acquisition of nmcn water
(in October 2021).
Infrastructure currently has an order book of GBP1.4bn (H1 2022:
GBP1.4bn) comprising GBP550m in Highways and GBP840m in
Environment.
PPP Investments
PPP Investments delivers major building and infrastructure
projects through public private partnerships, generating work for
the wider Group in the process.
PPP Investments has continued to move its focus towards
co-development of Private Rented Sector (PRS) projects. The
business is working towards reaching financial close on its first
consented scheme, which will allow construction to commence. At the
period-end it was preferred bidder on two further PRS schemes with
a gross development value of cGBP200m and anticipates further
opportunities in the future.
H1 2023 H1 2022 Change
Revenue (GBPm) 2.9 3.4 (15)%
Operating profit/(loss)
(GBPm) 1.5 (0.5) GBP2.0m
Asset valuation (GBPm) 46.1 48.3 GBP(2.2)m
Net interest income (GBPm) 2.0 2.0 -
For the first half of the financial year, revenue was GBP2.9m
(H1 2022: GBP3.4m), on which the operating profit was GBP1.5m (H1
2022: GBP(0.5)m loss). This includes GBP3.6m relating to the profit
on disposal of our interest in a joint venture arrangement.
At 31 December 2022 the Group directors' valuation of our PPP
portfolio was GBP46.1m (H1 2022: GBP48.3m), reflecting a blended
7.1% discount rate (H1 2022: 7.0%). These assets contribute to our
balance sheet strength and generated interest income in the period
of GBP2.0m (H1 2022: GBP2.0m).
PRINCIPAL RISKS AND UNCERTAINTIES
The directors consider that the principal risks and
uncertainties which may have a material impact on the Group's
performance in the second half of the financial year remain
primarily the same as those outlined on pages 44 to 47 of the
Group's annual report and financial statements for the year ended
30 June 2022. Those risks the Group considers to be of particular
importance and highlighted as the principal risks in focus within
the 30 June 2022 annual report are; work winning, project delivery,
resources and regulatory compliance.
BOARD
On 18 January 2023 the Group announced that Gavin Slark,
Non-executive Director, had decided to step down from the board on
31 March 2023, after over seven years on the board. The Board is
grateful for Gavin's contribution to the Group over the years and
wishes him every success in the future.
Condensed consolidated income statement
for the half year ended 31 December 2022 (unaudited)
Half year to Half year to Year to
31 December 2022 31 December 2021 30 June 2022 (audited)
Pre-exceptional Exceptional Total Pre-exceptional Exceptional Total Pre-exceptional Exceptional Total
items items items items items items
(note (note (note
6) 6) 6)
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ---------------- ------------ -------- ---------------- ------------ -------- ---------------- ------------ ----------
Revenue 4 679.2 - 679.2 594.0 - 594.0 1,237.2 - 1,237.2
Cost of
sales (634.0) - (634.0) (554.5) (5.2) (559.7) (1,151.5) (5.8) (1,157.3)
---------------- --- ---------------- ------------ -------- ---------------- ------------ -------- ---------------- ------------ ----------
Gross
profit/(loss) 45.2 - 45.2 39.5 (5.2) 34.3 85.7 (5.8) 79.9
Other income 5 3.6 - 3.6 - - - - - -
Administrative
expenses (39.5) (4.5) (44.0) (33.8) (4.5) (38.3) (69.9) (7.9) (77.8)
Operating
profit/(loss) 9.3 (4.5) 4.8 5.7 (9.7) (4.0) 15.8 (13.7) 2.1
Share of
post-tax
profit
from joint
ventures - - - - - - 0.4 - 0.4
Finance
income 7 3.2 - 3.2 2.1 - 2.1 4.3 - 4.3
Finance
costs 7 (0.8) - (0.8) (0.7) - (0.7) (1.4) - (1.4)
---------------- --- ---------------- ------------ -------- ---------------- ------------ -------- ---------------- ------------ ----------
Profit/(loss)
before
income
tax 11.7 (4.5) 7.2 7.1 (9.7) (2.6) 19.1 (13.7) 5.4
Income
tax (expense)/
credit 8 (2.3) 1.0 (1.3) (0.6) 1.9 1.3 (1.7) 2.6 0.9
---------------- --- ---------------- ------------ -------- ---------------- ------------ -------- ---------------- ------------ ----------
Profit/(loss)
for the
period
from
continuing
operations 9.4 (3.5) 5.9 6.5 (7.8) (1.3) 17.4 (11.1) 6.3
---------------- --- ---------------- ------------ -------- ---------------- ------------ -------- ---------------- ------------ ----------
Earnings
/(loss)
per share
Basic
- Profit/(loss) from continuing
operations attributable to ordinary
shareholders
10 8.8p 5.5p 5.9p (1.2)p 16.0 5.8p
Diluted
- Profit/(loss) from continuing
operations attributable to ordinary
shareholders
10 8.2p 5.1p 5.6p (1.2)p 15.0 5.5p
The notes are an integral part of the condensed consolidated
half year financial statements.
Condensed consolidated statement of comprehensive income
for the half year ended 31 December 2022 (unaudited)
Half year Half year
to to Year to
30 June
31 December 31 December 2022
2022 2021 (audited)
Notes GBPm GBPm GBPm
--------------------------------------------- ------ -------------- ------------- -----------
Profit/(loss) for the period 5.9 (1.3) 6.3
Other comprehensive (expense)/income:
Items that may be reclassified subsequently
to profit or loss
Movement in fair value of PPP and other
investments - continuing operations 12 (1.0) (0.4) (0.9)
Other comprehensive expense for the
period net of tax (1.0) (0.4) (0.9)
--------------------------------------------- ------ -------------- ------------- -----------
Total comprehensive income/(expense)
for the period 4.9 (1.7) 5.4
--------------------------------------------- ------ -------------- ------------- -----------
The notes are an integral part of the condensed consolidated
half year financial statements.
Condensed consolidated balance sheet
at 31 December 2022 (unaudited)
31 December 31 December 30 June 2022
2022 2021 (restated
- note 21)
(audited)
Notes GBPm GBPm GBPm
---------------------------------- ------ ------------- ---------------- -------------
Assets
Non-current assets
Intangible assets 19 7.6 10.3 8.8
Goodwill 11 92.9 88.2 88.2
Property, plant and equipment 7.0 3.6 7.1
Right of use assets 27.6 21.9 24.5
Investments in joint ventures 0.1 0.2 0.3
PPP and other investments 12 46.1 48.3 47.5
Deferred income tax assets 13.4 14.1 14.0
---------------------------------- ------ ------------- ---------------- -------------
Total non-current assets 194.7 186.6 190.4
---------------------------------- ------ ------------- ---------------- -------------
Current assets
Trade and other receivables 13 264.3 227.5 243.0
Current income tax assets 3.1 5.7 3.1
Cash and cash equivalents 195.8 211.1 218.9
---------------------------------- ------ ------------- ---------------- -------------
Total current assets 463.2 444.3 465.0
---------------------------------- ------ ------------- ---------------- -------------
Total assets 657.9 630.9 655.4
---------------------------------- ------ ------------- ---------------- -------------
Liabilities
Current liabilities
Trade and other payables 14 (476.1) (444.6) (471.1)
Lease liabilities (11.2) (8.5) (9.9)
Provisions for other liabilities
and charges 15 (26.6) (37.2) (27.4)
Total current liabilities (513.9) (490.3) (508.4)
---------------------------------- ------ ------------- ---------------- -------------
Non-current liabilities
Lease liabilities (16.7) (13.4) (14.9)
Total non-current liabilities (16.7) (13.4) (14.9)
---------------------------------- ------ ------------- ---------------- -------------
Total liabilities (530.6) (503.7) (523.3)
---------------------------------- ------ ------------- ---------------- -------------
Net assets 127.3 127.2 132.1
---------------------------------- ------ ------------- ---------------- -------------
Equity
Ordinary share capital 54.3 55.5 55.5
Other reserves 133.4 118.4 132.2
Retained earnings (60.4) (46.7) (55.6)
---------------------------------- ------ ------------- ---------------- -------------
Total shareholders' equity 127.3 127.2 132.1
---------------------------------- ------ ------------- ---------------- -------------
The notes are an integral part of the condensed consolidated
interim financial statements.
Condensed consolidated statement of changes in equity
for the half year ended 31 December 2022 (unaudited)
Ordinary
share Other Retained Total shareholders'
capital reserves earnings equity
Notes GBPm GBPm GBPm GBPm
--------------------------------- ------ --------- ---------- ---------- --------------------
As at 31 December 2022
At 30 June 2022 55.5 132.2 (55.6) 132.1
Profit for the period - - 5.9 5.9
Other comprehensive expense - - (1.0) (1.0)
--------- ---------- ---------- --------------------
Total comprehensive expense for
the period - - 4.9 4.9
Transactions with owners:
Dividends 9 - - (6.4) (6.4)
Share-based payments - - 1.8 1.8
Purchase of own shares - - (5.1) (5.1)
Cancellation of shares 10 (1.2) 1.2 - -
--------------------------------- ------ --------- ---------- ---------- --------------------
At 31 December 2022 54.3 133.4 (60.4) 127.3
--------------------------------- ------ --------- ---------- ---------- --------------------
As at 31 December 2021
At 30 June 2021 55.5 118.4 (39.8) 134.1
Profit for the period - - (1.3) (1.3)
Other comprehensive income - - (0.4) (0.4)
--------- ---------- ---------- --------------------
Total comprehensive income for
the period - - (1.7) (1.7)
Transactions with owners:
Dividends 9 - - (3.9) (3.9)
Share-based payments - - 0.7 0.7
Purchase of own shares - - (2.0) (2.0)
--------------------------------- ------ --------- ---------- ---------- --------------------
At 31 December 2021 55.5 118.4 (46.7) 127.2
--------------------------------- ------ --------- ---------- ---------- --------------------
As at 30 June 2022 (audited)
At 30 June 2021 55.5 118.4 (39.8) 134.1
Profit for the year - - 6.3 6.3
Other comprehensive income - - (0.9) (0.9)
----- ------ ------- ------
Total comprehensive income for
the year - - 5.4 5.4
Transactions with owners:
Dividends 9 - - (6.3) (6.3)
Purchase of shares - - (3.4) (3.4)
Share-based payments - - 2.3 2.3
Recycling of retained earnings
to merger reserve on reversal
of impairment of investment in
Galliford Try Limited - 13.8 (13.8) -
--------------------------------- ----- ------ ------- ------
At 30 June 2022 55.5 132.2 (55.6) 132.1
--------------------------------- ----- ------ ------- ------
The notes are an integral part of the condensed consolidated
half year financial statements.
Condensed consolidated statement of cash flows
for the half year ended 31 December 2022 (unaudited)
Half year
Half year to
to 31 December Year to
31 December 2021 (restated 30 June
2022 - note 21) 2022 (audited)
GBPm GBPm GBPm
----------------------------------------------------- ------------ --------------- ---------------
Cash flows from operating activities
Profit/(loss) for the period 5.9 (1.3) 6.3
Adjustments for:
Income tax expense/(credit) 1.3 (1.3) (0.9)
Net finance income (2.4) (1.4) (2.9)
Depreciation and amortisation 8.1 7.7 14.5
Profit on disposal of joint venture (3.6) - -
Share-based payments 1.8 0.8 2.3
Share of post-tax profits from joint ventures - - (0.4)
Net cash generated from operations before
changes in working capital 11.1 4.5 18.9
(Increase)/decrease in trade and other receivables (16.0) 17.9 1.2
(Decrease)/increase in trade and other payables (1.7) (19.6) 6.7
Decrease in provisions (0.8) (1.5) (11.3)
------------------------------------------------------ ------------ --------------- ---------------
Net cash (used in)/generated from operations (7.4) 1.3 15.5
Interest received 3.2 2.1 4.3
Interest paid (0.8) (0.7) (1.4)
Corporation tax (paid)/received (0.5) (0.2) 4.4
------------------------------------------------------ ------------ --------------- ---------------
Net cash (used in)/generated from operating
activities (5.5) 2.5 22.8
Cash flows from investing activities
Dividends received from joint ventures and
associates - - 0.3
Increase in amounts due from joint ventures (1.8) - -
Decrease in amounts due from joint ventures - 3.9 5.0
PPP loan repayments 0.4 0.4 0.7
Proceeds from disposal of PPP and other investments 3.6 - -
Acquisition of business combination, net of
cash/borrowings (1.0) (0.3) (0.3)
Proceeds from disposal of property, plant
and equipment - - 0.1
Acquisition of property, plant and equipment (1.1) (0.6) (5.0)
Net cash generated from investing activities 0.1 3.4 0.8
Cash flows from financing activities
Repayment of lease liabilities (6.2) (5.1) (11.2)
Purchase of own shares (5.1) (2.0) (3.4)
Dividends paid to Company shareholders (6.4) (3.9) (6.3)
------------------------------------------------------ ------------ --------------- ---------------
Net cash used in financing activities (17.7) (11.0) (20.9)
Net (decrease)/increase in cash and cash equivalents (23.1) (5.1) 2.7
------------------------------------------------------ ------------ --------------- ---------------
Cash and cash equivalents at beginning of
period 218.9 216.2 216.2
------------------------------------------------------ ------------ --------------- ---------------
Cash and cash equivalents at end of period 195.8 211.1 218.9
------------------------------------------------------ ------------ --------------- ---------------
Notes to the condensed consolidated half year financial
statements
for the half year ended 31 December 2022 (unaudited)
1 Basis of preparation
Galliford Try Holdings plc is a public limited company
incorporated in England and Wales and domiciled in the UK. The
address of its registered office is Blake House, 3 Frayswater
Place, Cowley, Uxbridge, Middlesex, UB8 2AD. The Company has its
listing on the London Stock Exchange. This condensed consolidated
half year financial information was approved for issue on 8 March
2023.
This condensed consolidated half year financial information does
not comprise statutory financial statements within the meaning of
Section 434 of the Companies Act 2006. Statutory financial
statements for the year ended 30 June 2022 were approved by the
board of directors on 21 September 2022 and delivered to the
Registrar of Companies. The report of the auditors on those
financial statements was unqualified, did not contain an emphasis
of matter paragraph and did not contain any statement under Section
498 of the Companies Act 2006.This condensed consolidated half year
financial information has been reviewed, not audited. The auditors'
review opinion is included in this report.
This condensed consolidated half year financial information for
the half year ended 31 December 2022 has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority and with UK adopted International
Accounting Standard 34, "Interim financial reporting". The
condensed consolidated half year financial information should be
read in conjunction with the annual financial statements for the
year ended 30 June 2022, which have been prepared in accordance
with UK adopted International Accounting Standards.
The Group's activities, together with the factors likely to
affect the future development, performance and position of the
business are set out in this half year report. The annual financial
statements for the year ended 30 June 2022 included the Group's
objectives, policies and processes for managing capital, its
financial risk management objectives, details of its financial
instruments and hedging activities and its exposure to credit risk
and liquidity risk.
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for at least twelve months from the date of
signing the condensed consolidated half year information, and
accordingly continue to adopt the going concern basis of
preparation.
2 Accounting policies
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 30 June 2022. There
are no new standards effective for the first time in the period
beginning 1 July 2022 which have a material impact on the Group's
reported results.
Critical accounting estimates and judgements
The Group's principal judgements and key sources of estimation
uncertainty remain unchanged since the year-ended 30 June 2022. The
principal judgements and key sources of estimation uncertainty are
set out in note 1 on pages 115 - 117 of the annual financial
statements for the year ended 30 June 2022.
The Group's five largest unagreed variations and claims
positions as at 31 December 2022 are summarised in aggregate below,
the most significant of which relates to three contracts with
entities owned by a major infrastructure fund of a blue-chip listed
company (note 13).
GBPm
------------------------------------------------------------------- ------
Overall contract value (including total estimated end of contract
variations and claims after IFRS 15 constraints) 347.0
------------------------------------------------------------------- ------
Revenue in the period 23.8
------------------------------------------------------------------- ------
Total estimated end of contract variations and claims before
IFRS 15 constraints 150.6
------------------------------------------------------------------- ------
Total estimated end of contract variations and claims after
IFRS 15 constraints 79.3
------------------------------------------------------------------- ------
These five positions represent the most significant estimates of
revenue. The revenue recognised in the period in relation to the
subsequent five largest unagreed variations and claims total
GBP11.7m.
3 Segmental reporting
Segmental reporting is presented in the condensed consolidated
half year financial statements in respect of the Group's business
segments, which are the primary basis of segmental reporting. The
business segmental reporting reflects the Group's management and
internal reporting structure. Segmental results include items
directly attributable to the segment as well as those that can be
allocated on a reasonable basis. As the Group has no material
activities outside the UK, segmental reporting is not required by
geographical region.
The chief operating decision-makers ("CODM") have been
identified as the Group's Chief Executive and Finance Director. The
CODM review the Group's internal reporting in order to assess
performance and allocate resources. Management has determined the
operating segments of the resulting Group to be Building,
Infrastructure, PPP Investments and Central (primarily representing
central overheads).
The CODM assess the performance of the operating segments based
on a measure of adjusted earnings before finance costs,
amortisation, exceptional items and taxation. This measurement
basis excludes the effects of non-recurring expenditure from the
operating segments, such as restructuring costs and impairments
when the impairment is the result of an isolated, non-recurring
event. Interest income and expenditure are included in the result
for each operating segment that is reviewed by the CODM. Other
information provided to them is measured in a manner consistent
with that in the financial statements.
PPP
Building Infrastructure Investments Central Total
Half year to 31 December 2022 GBPm GBPm GBPm GBPm GBPm
Revenue 399.7 276.6 2.9 - 679.2
Pre-exceptional operating profit/(loss)
before amortisation of intangibles(1) 9.3 6.5 1.5 (6.5) 10.8
Finance income - 0.3 2.0 0.9 3.2
Finance costs (0.3) (0.3) - (0.2) (0.8)
------------------------------------------ --------- --------------- ------------- -------- ------
Pre-exceptional profit/(loss) before
amortisation and taxation 9.0 6.5 3.5 (5.8) 13.2
Exceptional items - - - (4.5) (4.5)
Amortisation of intangible assets (0.5) (0.5) - (0.5) (1.5)
------------------------------------------ --------- --------------- ------------- -------- ------
Profit/(loss) before taxation 8.5 6.0 3.5 (10.8) 7.2
Income tax credit (1.3)
------------------------------------------ --------- --------------- ------------- -------- ------
Profit for the period 5.9
------------------------------------------ --------- --------------- ------------- -------- ------
(1) PPP Investments includes other income as detailed in note
5.
PPP
Building Infrastructure Investments Central Total
Half year to 31 December 2021 GBPm GBPm GBPm GBPm GBPm
---------
Revenue 386.2 204.4 3.4 - 594.0
Pre-exceptional operating profit/(loss)
before amortisation of intangibles 8.4 4.3 (0.5) (5.3) 6.9
Finance income - 0.1 2.0 - 2.1
Finance costs (0.2) (0.3) - (0.2) (0.7)
------------------------------------------ --------- --------------- ------------- -------- ------
Pre-exceptional profit/(loss) before
amortisation and taxation 8.2 4.1 1.5 (5.5) 8.3
Exceptional items - (6.3) - (3.4) (9.7)
Amortisation of intangible assets (0.5) (0.2) - (0.5) (1.2)
------------------------------------------ --------- --------------- ------------- -------- ------
Profit/(loss) before taxation 7.7 (2.4) 1.5 (9.4) (2.6)
Income tax credit 1.3
------------------------------------------ --------- --------------- ------------- -------- ------
Loss for the period (1.3)
------------------------------------------ --------- --------------- ------------- -------- ------
PPP
Building Infrastructure Investments Central Total
Year ended 30 June 2022 (audited) GBPm GBPm GBPm GBPm GBPm
Revenue 789.1 441.9 6.2 - 1,237.2
Pre-exceptional operating profit/(loss)
before amortisation of intangibles 18.9 10.8 (0.9) (10.3) 18.5
Share of post tax profits from joint
ventures - - 0.4 - 0.4
Finance income - - 3.9 0.4 4.3
Finance costs (0.3) (0.7) - (0.4) (1.4)
------------------------------------------ --------- --------------- ------------- -------- --------
Profit/(loss) before amortisation
and taxation 18.6 10.1 3.4 (10.3) 21.8
Exceptional items - (7.7) - (6.0) (13.7)
Amortisation of intangible assets (1.0) (0.7) - (1.0) (2.7)
------------------------------------------ --------- --------------- ------------- -------- --------
Profit/(loss) before taxation 17.6 1.7 3.4 (17.3) 5.4
Income tax credit 0.9
------------------------------------------ --------- --------------- ------------- -------- --------
Profit for the year 6.3
------------------------------------------ --------- --------------- ------------- -------- --------
Inter-segment revenue, which is priced on an arm's length basis,
is eliminated from revenue above. In the half year to 31 December
2022 this amounted to GBP26.7m (31 December 2021: GBP18.2m; 30 June
2022: GBP38.8m) for continuing operations, of which GBP0.1m (31
December 2020: GBP0.1m; 30 June 2022: GBPnil) was in Building,
GBP16.2m (31 December 2021: GBP10.8m; 30 June 2022: GBP21.7m) was
in Infrastructure and GBP10.4m (31 December 2021: GBP7.3m; 30 June
2022: GBP17.1m) was in Central costs.
PPP
Building Infrastructure Investments Central Total
Half year to 31 December 2022 GBPm GBPm GBPm GBPm GBPm
-------------------------------- ---------- --------------- ------------- -------- --------
Balance Sheet
Goodwill and intangible assets 41.5 57.8 - 1.2 100.5
Working capital employed (57.2) (160.4) 43.0 5.6 (169.0)
Net cash 127.1 20.0 (8.8) 57.5 195.8
Net assets/(liabilities) 111.4 (82.6) 34.2 64.3 127.3
Total Group liabilities (530.6)
--------------------------------- --------- --------------- ------------- -------- --------
Total Group assets 657.9
--------------------------------- --------- --------------- ------------- -------- --------
Infrastructure
(restated
- note PPP
Building 21) Investments Central Total
Half year to 31 December 2021 GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------------ --------------- ------------- -------- --------
Balance Sheet
Goodwill and intangible assets 42.4 53.9 - 2.2 98.5
Working capital employed (65.5) (164.1) 42.2 5.0 (182.4)
Net cash 77.6 55.9 (11.2) 88.8 211.1
Net assets/(liabilities) 54.5 (54.3) 31.0 96.0 127.2
Total Group liabilities (restated) (503.7)
------------------------------------- ----------- --------------- ------------- -------- --------
Total Group assets (restated) 630.9
------------------------------------- ----------- --------------- ------------- -------- --------
PPP
Building Infrastructure Investments Central Total
Year ended 30 June 2022 (audited) GBPm GBPm GBPm GBPm GBPm
------------------------------------ ----------- --------------- ------------- -------- --------
Balance Sheet
Goodwill and intangible assets 42.0 53.3 - 1.7 97.0
Working capital employed (92.8) (139.5) 41.9 6.6 (183.8)
Net cash 154.9 (1.4) (9.6) 75.0 218.9
------------------------------------- ----------- --------------- ------------- -------- --------
Net assets/(liabilities) 104.1 (87.6) 32.3 83.3 132.1
Total Group liabilities (523.3)
------------------------------------- ----------- --------------- ------------- -------- --------
Total Group assets 655.4
------------------------------------- ----------- --------------- ------------- -------- --------
4 Revenue
Nature of revenue streams
(i) Building & Infrastructure segments
Our Construction business operates nationwide, working with
clients predominantly in the public and regulated sectors. Projects
include the construction of assets (with services including design
and build, construction only and refurbishment) in addition to the
maintenance, renewal, upgrading and managing of services across
utility and infrastructure assets.
Revenue stream Nature, timing of satisfaction of performance obligations
and significant payment terms
Fixed price A number of projects within these segments are undertaken
using fixed-price contracts.
Contracts are typically accounted for as a single performance
obligation; even when a contract (or multiple combined contracts)
includes both design and build elements, they are considered
to form a single performance obligation as the two elements
are not distinct in the context of the contract given that
each is highly interdependent on the other.
The Group typically receives payments from the customer
based on a contractual schedule of value that reflects the
timing and performance of service delivery. Revenue is therefore
recognised over time (the period of construction) based
on an input model (reference to costs incurred to date).
Un-invoiced amounts are presented as contract assets.
No significant financing component typically exists in these
contracts.
-------------------------------------------------------------------
Cost-reimbursable A number of projects within these segments are undertaken
using open-book/cost-plus/target-price (possibly with a
pain/gain share mechanism) contracts.
Contracts are typically accounted for as a single performance
obligation with the majority of these contracts including
a build phase only.
The Group typically receives payments from the customer
based on actual costs incurred. Revenue is therefore recognised
over time (the period of construction) based on an input
model (reference to costs incurred to date). Un-invoiced
amounts are presented as contract assets.
No significant financing component typically exists in these
contracts.
-------------------------------------------------------------------
Facilities Contracts undertaken within the Building segment that provide
management full life-cycle solutions to clients, are accounted for
as a single performance obligation, with revenue recognised
over time and typically on a straight-line basis.
-------------------------------------------------------------------
(ii) Investments segment
Through public private partnerships, the business leads bid
consortia and arranges finance, makes debt and equity investments
(which are recycled) and manages construction through to
operations.
Revenue stream Nature, timing of satisfaction of performance obligations
and significant payment terms
PPP Investments The Group has investments in a number of PPP Special Purpose
Vehicles (SPVs), delivering major building and infrastructure
projects.
The business additionally provides management services to
the SPVs under Management Service Agreements (MSA). Revenue
for these services is typically recognised over time as
and when the service is delivered to the customer.
Revenue for reaching project financial close (such as success
fees) is recognised at a point in time, at financial close
(when control is deemed to pass to the customer).
---------------------------------------------------------------
Disaggregation of revenue
The Group considers the split of revenue by operating segment to
be the most appropriate disaggregation. All revenue has been
derived from performance obligations settled over time.
5 Other income
The Group disposed of its 60% interest in Community Ventures
Partnerships Limited on 11 November 2022, recognising a gain on
disposal of GBP3.6m.
6 Exceptional items
Half year Half year Year to 30
to to June 2022
31 December 31 December
2022 2021 (audited)
GBPm GBPm GBPm
------------------------------------- -------------- ------------- -----------
Acquisition and integration related
costs(1) - cost of sales - 5.2 5.8
Acquisition and integration related
costs(1) - administrative expenses - 1.1 1.9
Implementation costs of cloud based
arrangements(2) 4.5 3.4 6.0
Exceptional items 4.5 9.7 13.7
------------------------------------- -------------- ------------- -----------
An associated tax credit of GBP1.0m (31 December 2021: GBP1.9m,
30 June 2022 GBP2.6m) has been recognised.
(1) The Group acquired the Water business of nmcn plc (in
administration) on 7 October 2021 and incurred acquisition and
integration related costs during the half year to 31 December 2021
and the year to 30 June 2022. This was predominantly made up of
legal, professional, integration and restructuring costs recognised
in administrative expenses, and specific staff costs incurred
during the period of site closures following nmcn plc entering
administration that were recognised in cost of sales. No further
costs of this nature are anticipated relating to the nmcn
acquisition. In the half year to 31 December 2022, the Group did
not recognise any exceptional costs in relation to the acquisition
of MCS Control Systems Limited or Ham Baker.
(2) The Group incurred customisation and configuration costs
associated with the move to a cloud-based computing arrangement
during the period. Taking into account the IFRIC Agenda Decision
issued by the IFRS IC in March 2021, the Group has analysed the
costs and concluded that these costs should be expensed in the
period. In accordance with the Group's existing accounting policy,
management considers that the costs should be separately disclosed
as exceptional because they are significant and irregular. The
implementation of the new system is ongoing and further costs are
expected to be incurred up to its implementation date.
7 Net finance income
Half year Half year Year to 30
to to June 2022
31 December 31 December
2022 2021 (audited)
Group GBPm GBPm GBPm
------------------------------------------ -------------- ------------- -----------
Interest receivable on bank deposits 0.9 0.1 0.4
Interest receivable from PPP investments
and joint ventures 2.0 2.0 3.9
Other 0.3 - -
------------------------------------------ -------------- ------------- -----------
Finance income 3.2 2.1 4.3
Other (including interest on lease
liabilities) (0.8) (0.7) (1.4)
------------------------------------------ -------------- ------------- -----------
Finance costs (0.8) (0.7) (1.4)
Net finance income 2.4 1.4 2.9
------------------------------------------ -------------- ------------- -----------
8 Income tax expenses
The taxation expense on profit for pre-exceptional operations
for the period of 19.6% (31 December 2021: 8.9%, 30 June 2022:
8.9%) reflects the expected pre-exceptional effective tax rate for
the year to 30 June 2023. The substantially lower than standard
rates applicable to 31 December 2021 and 30 June 2022 reflect the
recognition of previously unrecognised tax losses.
9 Dividends
The following dividends were paid and recognised by the Company
in each accounting period presented:
Half year to 31 Half year to 31 Year to 30 June
December 2022 December 2021 2022 (audited)
------------------ ------------------ ------------------
pence pence per pence per
GBPm per share GBPm share GBPm share
--------------------- ----- ----------- ------ ---------- ------ ----------
Previous year net
final 6.4 5.8 3.9 3.5 3.9 3.5
Current period
interim - - - - 2.4 2.2
Dividend recognised
in the year 6.4 5.8 3.9 3.5 6.3 5.7
--------------------- ----- ----------- ------ ---------- ------ ----------
The following dividends were declared by the Company in respect
of each accounting period presented:
Half year to 31 Half year to 31 Year to 30 June
December 2022 December 2021 2022 (audited)
------------------ ------------------ ------------------
pence pence per pence per
GBPm per share GBPm share GBPm share
------------------- ----- ----------- ------ ---------- ------ ----------
Interim 3.2 3.0 2.4 2.2 2.4 2.2
Final - - - - 6.4 5.8
Dividend relating
to the year 3.2 3.0 2.4 2.2 8.8 8.0
------------------- ----- ----------- ------ ---------- ------ ----------
The interim dividend for 2023 of 3.0p per share was approved by
the board on 8 March 2023 and has not been included as a liability
as at 31 December 2022. This interim dividend will be paid on 14
April 2023 to shareholders who are on the register at the close of
business on 17 March 2023.
10 Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year, excluding
those held by the Employee Share Trust, which are treated as
cancelled.
The average number of shares is diluted by reference to the
average number of potential ordinary shares held under option in
the period. The dilutive effects amounts to the number of ordinary
shares which would be purchased using the aggregate difference in
value between the market value of shares and the share option
price. Only shares that have met their cumulative performance
criteria are included in the dilution calculation. The Group has
two classes of potentially dilutive ordinary shares: those share
options granted to employees where the exercise price is less than
the average market price of the Company's ordinary shares during
the year and the contingently issuable shares under the Group's
long term incentive plans. A loss per share cannot be reduced
through dilution, hence this dilution is only applied where the
Group has reported a profit.
The earnings and weighted average number of shares used in the
calculations are set put below.
Half year to 31 December Half year to 31 December Year to 30 June 2022
2022 2021 (audited)
--------------------------------- ---------------------------------- ---------------------------------
Weighted Per Weighted Per Weighted Per
average share average share average share
Earnings number amount Earnings number amount Earnings number amount
GBPm of shares pence GBPm of shares pence GBPm of shares pence
Total operations
Basic EPS
-
pre-exceptional
Pre-exceptional
earnings
attributable
to ordinary
shareholders 9.4 107,218,581 8.8 6.5 109,654,473 5.9 17.4 109,016,667 16.0
Basic EPS
Earnings
attributable
to ordinary
shareholders
post
exceptional
items 5.9 107,218,581 5.5 (1.3) 109,654,473 (1.2) 6.3 109,016,667 5.8
Effect of
dilutive
securities:
Options n/a 8,070,133 n/a n/a 6,033,488 n/a n/a 6,627,132 n/a
Diluted EPS
-
pre-exceptional 9.4 115,288,713 8.2 6.5 115,687,961 5.6 17.4 115,643,799 15.0
Diluted EPS 5.9 115,288,713 5.1 (1.3) 115,687,961 (1.2) 6.3 115,643,799 5.5
----------------- --------- ------------ -------- --------- ------------ --------- --------- ------------ --------
During the period to 31 December 2022, the Group purchased and
cancelled 2,349,508 shares at a total cost of GBP3.7m, as part of
the share buyback programme announced in September 2022. This has
resulted in a capital redemption reserve recorded within "other
reserves" totalling GBP1.2m, representing the nominal value of the
shares cancelled.
11 Goodwill
Goodwill is allocated to the Group's cash-generating units
(CGUs) identified according to business segment. The goodwill is
attributable to the following business segments:
30 June 2022
31 December
31 December 2021 (restated
2022 - note 21) (audited)
GBPm GBPm GBPm
------------- ---------------- -------------
Building 40.0 40.0 40.0
Infrastructure 52.9 48.2 48.2
92.9 88.2 88.2
---------------- ------------- ---------------- -------------
As stated in the annual financial statements for the year ended
30 June 2022, detailed impairment reviews were carried out for all
business segments. Consideration has been given as to whether any
events have occurred since the year ended 30 June 2022 which could
give rise to an impairment. No impairments have been identified
from these reviews.
The increase in goodwill relates to acquisitions in the period
(note 19) and the finalisation of the acquisition accounting of
nmcn in accordance with IFRS 3.
12 PPP and other investments
30 June 2022
31 December 2022 31 December 2021 (audited)
GBPm GBPm GBPm
--------------------------- ---------------- ---------------- ------------
At 1 July 47.5 49.1 49.1
Disposals and subordinated
loan repayments (0.4) (0.4) (0.7)
Movement in fair value (1.0) (0.4) (0.9)
--------------------------- ---------------- ---------------- ------------
At 31 December and 30 June 46.1 48.3 47.5
--------------------------- ---------------- ---------------- ------------
The portfolio reflects a blended discount rate of 7.1% (31
December 2021: 7.0%; 30 June 2022: 7.0%), with the discount rates
applied ranging from 6.0% to 7.8% (31 December 2021: 6.0% to 7.5%;
30 June 2022: 6.0% to 7.5%). An increase/reduction of 0.5% (which
is considered an appropriate range given the relatively low risk
associated with the portfolio) would result in a corresponding
decrease/increase in the fair value of approximately GBP1.7m (31
December 2021: GBP1.9m; 30 June 2022: GBP1.9m).
13 Trade and other receivables
30 June 2022
31 December
31 December 2021 (restated
2022 - note 21) (audited)
GBPm GBPm GBPm
-------------------------------------- ------------- ---------------- -------------
Amounts falling due within
one year:
Trade receivables 42.3 53.9 46.0
Less: Provision for impairment
of receivables (0.1) (0.1) (0.1)
-------------------------------------- ------------- ---------------- -------------
Trade receivables - net 42.2 53.8 45.9
Contract assets 193.8 145.9 173.4
Amounts due from joint venture
undertakings 2.9 2.2 1.1
Research and development expenditure
credits 4.3 2.3 4.5
Prepayments and other receivables 21.1 23.3 18.1
-------------------------------------- ------------- ---------------- -------------
264.3 227.5 243.0
-------------------------------------- ------------- ---------------- -------------
As previously disclosed, the Group provided services in respect
of three contracts with entities owned by a major infrastructure
fund of a blue-chip listed company. Costs were significantly
impacted by client-driven scope changes and the Group has submitted
claims to the value of GBP95m in respect of these costs. Our work
on these contracts formally ceased on their termination in August
2018. The Group has taken extensive advice on our entitlement and
we have been successful in two adjudications supporting the
validity of the Group's position. The claim is progressing in line
with the original expected timetable. The Group has incurred
significant legal and professional costs and may continue to do so,
with all associated legal and professional costs expensed as
incurred.
Taking into account the requirements of IFRS 15, the Group had
constrained the revenue recognised in prior periods to the extent
that it was highly probable not to result in a significant reversal
in the future. While the Group has submitted a total claim value of
GBP95m in respect of these costs within the Statement of Case,
revenue has been constrained. We have constrained the revenue to a
percentage recoverable that is lower than that successfully
recovered from the adjudications and variations previously agreed
on this contract. The underlying principle supporting the validity
and recovery of the claims and variations is not considered to be
impacted by the passage of time, which is driven by the nature of
dispute resolution in this sector. Given the progress, in line with
expectations during the period, this is unchanged. It is possible
that the process of the arbitration may not be concluded within the
coming financial year.
Whilst the entities are owned by a major infrastructure fund of
a blue-chip listed company, and we expect that the amounts will be
repaid, we have assessed any expected credit loss provision in
accordance with IFRS 9 to take into account their investment
structure. Our assessment of the credit worthiness of the
underlying contracting entities includes reviewing their latest
audited financial statements to 31 December 2021 (as well as their
immediate parent and investor whose latest filed financial
statements are to 31 December 2021), for which the audit opinion
includes a disclaimer of opinion in relation to material
uncertainties in respect of claims and the potential impact on
going concern. The Group does not consider there to be a change in
credit risk over the course of the period to 31 December 2022 and
consequently, there has been no material change to the expected
credit loss provision since 30 June 2022, which is discussed
further in note 1 accounting policies of the Group's annual report
and financial statements for the year ended 30 June 2022.
There has been no change to our assessment of the constrained
revenue under IFRS 15 or the expected credit loss under IFRS 9 in
the period to 31 December 2022. The Group continues to vigorously
defend the counterclaims made by the counterparty, that we consider
are without merit, and as such no amounts have been provided on the
basis the Group considers the possibility of an outflow of
resources to be remote.
14 Trade and other payables
30 June 2022
31 December
2021 (restated
31 December 2022 - note 21) (audited)
GBPm GBPm GBPm
----------------------------- ------------------ ---------------- -------------
Trade payables 106.8 73.4 102.3
Contract liabilities 116.7 127.3 104.4
Other taxation and social
security payable 43.3 34.7 29.9
Accruals and other payables 209.3 209.2 234.5
476.1 444.6 471.1
----------------------------- ------------------ ---------------- -------------
15 Provisions for other liabilities and charges
Onerous Rectification Total
Group contracts GBPm
-------------------- ---------- ------------- ------
At 1 July 2022 (4.6) (22.8) (27.4)
Utilised 2.2 1.7 3.9
Additions (2.2) (0.9) (3.1)
At 31 December 2022 (4.6) (22.0) (26.6)
-------------------- ---------- ------------- ------
Onerous Rectification Total
Group contracts GBPm
---------------------------------- ---------- ------------- ------
At 1 July 2021 (0.8) (24.2) (25.0)
---------------------------------- ---------- ------------- ------
Utilised 1.7 3.9 5.6
Additions(1) (13.8) (4.0) (17.8)
At 31 December 2021 (restated)(2) (12.9) (24.3) (37.2)
---------------------------------- ---------- ------------- ------
Onerous Rectification Total
Group contracts GBPm
---------------- ---------- ------------- ------
At 1 July 2021 (0.8) (24.2) (25.0)
---------------- ---------- ------------- ------
Utilised 10.2 3.7 13.9
Additions(1) (14.0) (2.3) (16.3)
At 30 June 2022 (4.6) (22.8) (27.4)
---------------- ---------- ------------- ------
(1) Additions include GBP13.7m acquired as part of the nmcn
business combination.
(2) Onerous contract and rectification provisions were
previously reported within accruals but should have been presented
as provisions (see note 21).
Onerous contract provisions are made on loss-making contracts
the Group is obliged to complete.
Rectification provisions are made for potential claims and
defects for remedial works against work completed by the Group.
Due to the nature of the provisions, the timing of any potential
future outflows is uncertain, however they are expected to be
utilised within the Group's normal operating cycle, and accordingly
are classified as current liabilities. Of the total provisions,
GBP18.2m (31 December 2021: GBP18.8m; 30 June 2022: GBP18.8m) is
likely to be utilised in 1-3 years with the remainder utilised
within 12 months.
16 Financial instruments
The Group's activities expose it to a variety of financial
risks. The condensed consolidated half year financial statements do
not include all financial risk management information and
disclosures required in the annual financial statements; they
should be read in conjunction with the Group's financial statements
for the year ended 30 June 2022.
There have been no significant changes in the risk management
policies since the year end.
Fair value estimation
Specific valuation techniques used to value financial
instruments are defined as:
i. Level 1 - Quoted market prices or dealer quotes in active markets for similar instruments.
ii. Level 2 - The fair value of equity securities and interest
rate swaps is calculated as the present value of the estimated
future cash flows based on observable yield curves.
iii. Level 3 - Other techniques, such as discounted cash flow
analysis, are used to determine fair value for the remaining
financial instruments.
The following table presents the Group's assets that are
measured at fair value:
30 June 2022
31 December 2022 31 December 2021 (audited)
Level Level Total Level
3 Total 3 GBPm 3 Total
GBPm GBPm GBPm GBPm GBPm
Assets
Other investments
* PPP and other investments 46.1 46.1 48.3 48.3 47.5 47.5
Total 46.1 46.1 48.3 48.3 47.5 47.5
--------------------------------------- --------- -------- --------- -------- ------------- ------
There were no transfers between levels during the period. The
valuation techniques used to derive Level 2 and 3 fair values are
consistent with those set out in the 30 June 2022 financial
statements. Level 3 fair values are determined using valuation
techniques that include inputs not based on observable market data.
For all other financial instruments, the fair value is materially
in line with the carrying value. The key assumptions used in Level
3 valuations include the expected timing of receipts, credit risk
and discount rates. The typical repayment period is 10-15 years and
the timing of receipts is based on historical data.
During the period, government gilts have increased, but the
underlying assets have remained low risk and insulated from short
term changes to the macro economic environment. The fair value of
the portfolio reflects a blended discount rate of 7.1% (31 December
2021: 7.0%; 30 June 2022: 7.0%) and is based on current market
conditions. The sensitivity to discount rates is set out in note
12. If receipts were to occur earlier than expected, the fair value
could increase.
17 Guarantees and contingent liabilities
Galliford Try Holdings plc has entered into financial guarantees
and counter indemnities in respect of bank and performance bonds
issued in the normal course of business on behalf of Group
undertakings, including joint arrangements, amounting to GBP148.5m
(31 December 2021: GBP131.9m; 30 June 2022 GBP127.1m). Disputes
arise in the normal course of business, some of which lead to
litigation or arbitration procedures. The directors make proper
provision in the financial statements when they believe a liability
exists. While the outcome of disputes and arbitration is never
certain, the directors believe that the resolution of all existing
actions will not have a material adverse effect on the Group's
financial position.
18 Related party transactions
Since the last Group annual financial statements for the year
ended 30 June 2022, there have been no significant changes to the
nature of related party transactions.
19 Business combinations
During the six months to 31 December 2022, the Group acquired
(i) 100% of the share capital MCS Control Systems Limited and (ii)
certain contracts and assets of Ham Baker Limited (in
administration). The Group has also finalised the acquisition
accounting of nmcn having previously reported the balances as
provisional in accordance IFRS 3.
(i) MCS Control Systems Limited
On 8 July 2022, the Group acquired 100% of the share capital of
MCS Control Systems Limited ("MCS"), a leading systems integrator
to the industrial and utilities sectors for consideration of GBP1
settled in cash. The addition of MCS's capabilities is
complementary to the operations of Galliford Try's expanding
Environment business. In particular, MCS provides additional
competencies that complement those acquired in October 2021 with
nmcn's Water business and Lintott Control Systems Limited and will
accelerate the growth of Galliford Try Environment's asset
optimisation and capital maintenance strategy.
The goodwill of GBP3.2m arising from the acquisition is
significantly attributable to the acquired workforce and their
technical expertise and the opportunity to leverage this expertise
across the Group to enhance the asset optimisation and capital
maintenance strategy.
The following table summarises the consideration paid and the
provisional fair value of the assets acquired and liabilities
assumed.
GBPm
-------------------------------------------------------- ------
Recognised amounts of identifiable assets acquired and
liabilities assumed
Property plant and equipment 0.1
Intangible assets 0.2
Right-of-use assets 0.6
Trade and other receivables 3.2
Trade and other payables (5.9)
Bank and other borrowings (0.8)
Lease liabilities (0.6)
Total identifiable net liabilities (3.2)
Goodwill 3.2
-------------------------------------------------------- ------
Total -
-------------------------------------------------------- ------
Consideration
Cash -
Total -
-------------------------------------------------------- ------
The acquisition contributed GBP2.3m of turnover and GBP0.2m loss
before tax and amortisation in the period to 31 December 2022,
which is similar to the contribution it would have made if acquired
at the start of the financial year.
(ii) Ham Baker
On 18 November 2022, the Group acquired certain contracts and
assets from Ham Baker Limited (in administration) for GBP225,000
settled in cash. The Group has acquired the asset inspection,
maintenance and screens and distributor operations. The acquired
business produces a variety of engineered products for the water
industry, which the Group will use as a basis to develop a low
carbon engineering offering, enabling products and raw materials to
be as reused if possible, and reducing waste. The acquisition
brings complementary capabilities to the Group's growing
Environment business and will give it a further advantage in
preparing for the water industry's AMP8 cycle, in particular
addressing storm overflow challenges. It also plays into Galliford
Try's role in decarbonising the industry for a greener, more
sustainable future.
Similar to the MCS Control Systems Limited acquisition, the
goodwill of GBP0.6m arising from the acquisition is significantly
attributable to the acquired workforce and their technical
expertise and the opportunity to leverage this expertise across the
Group to enhance the asset optimisation and capital maintenance
strategy.
The following table summarises the consideration paid and the
provisional fair value of the assets acquired and liabilities
assumed.
GBPm
-------------------------------------------------------- ------
Recognised amounts of identifiable assets acquired and
liabilities assumed
Intangible assets 0.1
Trade and other receivables 0.3
Trade and other payables (0.8)
Total identifiable net liabilities (0.4)
Goodwill 0.6
-------------------------------------------------------- ------
Total 0.2
-------------------------------------------------------- ------
Consideration
Cash 0.2
Total 0.2
-------------------------------------------------------- ------
The acquisition contributed a loss before tax and amortisation
of GBP0.4m in the period to 31 December 2022.
The performance of the business preceding the acquisition was
impacted by Ham Baker Limited entering administration, and
accordingly it is impracticable to assess the contribution it would
have made to the Group if acquired at the start of reporting
period.
(iii) nmcn
On 7 October 2021, the Group acquired the water business of nmcn
plc (which had been placed into administration) for GBP1.0m settled
in cash.
This expanded the Group's geographical presence on key
frameworks across the UK, and its capabilities in the water sector,
in line with the Group's strategy. Full details are included in the
Group's 30 June 2022 Annual Report.
The provisional balances at 31 December 2021 have been restated
to reflect those reported at 30 June 2022, resulting in an increase
to goodwill from GBP6.5m previously recorded at 31 December 2021 to
GBP11.0m as reported at 30 June 2022. See note 21 for further
details.
In accordance with IFRS 3, the Group has assessed the
acquisition accounting during the measurement period and has
identified the need to reflect a final adjustment to the reported
acquisition note in the 30 June 2022 annual report. The change
reflects an increase to the onerous contract provisions and net
unfavourable contracts acquired by GBP0.8m with an offsetting
increase in goodwill by GBP0.8m. As this is not material, the
adjustment has been recorded in the six-month period to 31 December
2022.
20 Alternative performance measures
Throughout the Interim statement, the Group has presented
financial performance measures which are used to manage the Group's
performance. These financial performance measures are chosen to
provide a balanced view of the Group's operations and are
considered useful to investors as they provide relevant information
on the Group's performance. They are also aligned to measures used
internally to assess business performance in the Group's budgeting
process and when determining compensation. An explanation of the
Group's financial performance measures and appropriate
reconciliations to its statutory measures are provided below.
Measuring the Group's performance
The following measures are referred to in this report:
Statutory measures
Statutory measures are derived from the Group's reported
financial statements, which are prepared in accordance with UK
adopted International Accounting Standards and in line with the
Group's accounting policies. The Group's statutory measures take
into account all of the factors, including exceptional items which
do not reflect the ongoing underlying performance of the Group.
Alternative performance measures
In assessing its performance, the Group has adopted certain
non-statutory measures that more appropriately reflect the
underlying performance of the Group. These typically cannot be
directly extracted from its financial statements but are reconciled
to statutory measures below:
a) Pre-exceptional performance
The Group adjusts for certain material items which the Board
believes assist in understanding the performance achieved by the
Group as this better reflects the underlying and ongoing
performance of the business.
b) Pre-exceptional operating profit/(loss) before amortisation
and operating margin
The Group uses an operating profit measure excluding
amortisation and exceptional items.
Operating margin reflects the ratio of pre-exceptional operating
profit before amortisation and pre-exceptional revenue. This
differs from the statutory measure of profit before finance costs
which includes the share of joint ventures' interest and tax and
amortisation of intangible assets. Divisional operating margin
represents the combined Building and Infrastructure operating
margins.
A reconciliation of the statutory measure to the Group's
performance measure is shown below, based on continuing
operations:
Building Infrastructure PPP Investments Central Total
GBPm GBPm GBPm GBPm GBPm
-------- --------------
Half year ended 31 December 2022
Statutory operating profit/(loss) 8.8 6.0 1.5 (11.5) 4.8
Exclude: amortisation of intangible
assets 0.5 0.5 - 0.5 1.5
Exclude: exceptional items (note
6) - - - 4.5 4.5
Pre-exceptional operating profit/(loss)
before amortisation 9.3 6.5 1.5 (6.5) 10.8
---------------------------------------- -------- -------------- --------------- ------- -------
Revenue 399.7 276.6 2.9 - 679.2
---------------------------------------- -------- -------------- --------------- ------- -------
Operating margin 2.3% 2.3% n/a n/a 1.6%
---------------------------------------- -------- -------------- --------------- ------- -------
Half year ended 31 December 2021
Statutory operating profit/(loss) 7.9 (2.2) (0.5) (9.2) (4.0)
Exclude: amortisation of intangible
assets 0.5 0.2 - 0.5 1.2
Exclude: exceptional items (note
6) - 6.3 - 3.4 9.7
Pre-exceptional operating profit/(loss)
before amortisation 8.4 4.3 (0.5) (5.3) 6.9
---------------------------------------- -------- -------------- --------------- ------- -------
Revenue 386.2 204.4 3.4 - 594.0
---------------------------------------- -------- -------------- --------------- ------- -------
Operating margin 2.2% 2.1% n/a n/a 1.2%
---------------------------------------- -------- -------------- --------------- ------- -------
Year ended 30 June 2022 (audited)
Statutory operating profit/(loss) 17.9 2.4 (0.9) (17.3) 2.1
Exclude: amortisation of intangible
assets 1.0 0.7 - 1.0 2.7
Exclude: exceptional items (note
6) - 7.7 - 6.0 13.7
Pre-exceptional operating profit/(loss)
before amortisation 18.9 10.8 (0.9) (10.3) 18.5
---------------------------------------- -------- -------------- --------------- ------- -------
Revenue 789.1 441.9 6.2 - 1,237.2
---------------------------------------- -------- -------------- --------------- ------- -------
Operating margin 2.4% 2.4% n/a n/a 1.5%
---------------------------------------- -------- -------------- --------------- ------- -------
c) Pre-exceptional profit before tax
The Group uses a profit before tax measure which excludes
exceptional items as noted above, whereas the statutory measure
includes exceptional items.
A reconciliation of the statutory measure to the Group's
performance measure is shown below, based on continuing
operations:
Half year to Half year to
31 December 31 December Year to 30 June
2022 2021 2022 (audited)
GBPm GBPm GBPm
--------------------------------- ------------ ------------ -----------------
Statutory (loss)/profit before
tax 7.2 (2.6) 5.4
Exclude: exceptional items (note
6) 4.5 9.7 13.7
--------------------------------- ------------ ------------ -----------------
Pre-exceptional profit before
tax 11.7 7.1 19.1
--------------------------------- ------------ ------------ -----------------
d) Pre-exceptional earnings per share
In line with the Group's measurement of pre-exceptional
performance, the Group also presents its earnings per share on a
pre-exceptional basis. This differs from the statutory measure of
earnings per share which includes exceptional items.
A reconciliation of the statutory measure to the Group's
performance measure is shown below, based on continuing
operations:
Half year to 31 December
2022
------------------------- ---- -----------------------------
Earnings Ave number EPS
GBPm of shares pence
------------------------- -------- ----------- ------
Statutory results 5.9 107,218,581 5.5
Exclude: e xceptional
loss (note 6) 3.5 n/a n/a
------------------------- -------- ----------- ------
Pre-exceptional earnings
per share 9.4 107,218,581 8.8
------------------------------- -------- ----------- ------
Half year to 31 December
2021
------------------------- ---- -----------------------------
Earnings Ave number EPS
GBPm of shares pence
------------------------- -------- ----------- ------
Statutory results (1.3) 109,654,473 (1.2)
Exclude: e xceptional
earnings (note 6) 7.8 n/a n/a
------------------------- -------- ----------- ------
Pre-exceptional earnings
per share 6.5 109,654,473 5.9
------------------------------- -------- ----------- ------
Year ended 30 June 2022
(audited)
------------------------- ---- -----------------------------
Earnings Ave number EPS
GBPm of shares pence
------------------------- -------- ----------- ------
Statutory results 6.3 109,016,667 5.8
Exclude: e xceptional
earnings (note 6) 11.1 n/a n/a
------------------------- -------- ----------- ------
Pre-exceptional earnings
per share 17.4 109,016,667 16.0
------------------------------- -------- ----------- ------
21 Prior period adjustments
Consistent with the adjustments made in the 30 June 2022 Annual
Report, the Group has restated certain balance sheet items at 31
December 2021.
i) The balance sheet at 31 December 2021 has been restated due
to the incorrect presentation of trade receivables, contract assets
and contract liabilities in relation to one combined contract. At
31 December 2021, no trade receivable should have been recognised
as there was not an unconditional right to payment, the amount
should have instead been recognised as a contract asset.
Additionally, the contract position across different performance
obligations within the combined contract should have been presented
as one net balance whereas it was previously presented on a gross
basis.
ii) The provisions and accruals balance has been restated,
reflecting a reclassification between the two line items. Onerous
contract and rectification provisions were previously reported
within accruals but should have been presented as provisions.
iii) Other receivables and current income tax assets have been
restated reflecting a reclassification of research and development
expenditure credits from current income tax assets to other
receivables.
To correct the presentation of these balances in the prior
period, the Group has restated the balance sheet and associated
note disclosures as at 31 December 2021 and statement of cash flows
for the year then ended as outlined below. There is no overall
effect of the restatements on net assets at 31 December 2021 nor
profit for the period then ending.
In addition, and as required by IFRS 3, the acquisition
accounting in respect of the group's acquisition of nmcn was
finalised during the measurement period. As a result, the fair
values of assets and liabilities acquired, and goodwill, at 31
December 2021 were restated to reflect the final fair values - see
note 19(iii) for more details. These adjustments are shown in
column (iv) in the tables that follow:
Balance Sheet
31 December 2021
-------------------------------------------- ----------------------------------------------------------------------
Adjustment Adjustment Adjustment Adjustment
Originally i) ii) iii) iv) Restated
reported
GBPm GBPm
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Assets
Non-current assets
Intangible assets 10.3 - - - - 10.3
Goodwill 83.7 - - - 4.5 88.2
Property, plant and equipment 3.6 - - - - 3.6
Right-of-use assets 21.9 - - - - 21.9
Investments in joint ventures 0.2 - - - - 0.2
PPP and other investments 48.3 - - - - 48.3
Deferred income tax assets 14.1 - - - - 14.1
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total non-current assets 182.1 - - - 4.5 186.6
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Current assets
Trade and other receivables 235.1 (7.4) - 2.3 (2.5) 227.5
Current income tax assets 8.0 - - (2.3) - 5.7
Cash and cash equivalents 211.1 - - - - 211.1
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total current assets 454.2 (7.4) - - (2.5) 444.3
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets 636.3 (7.4) - - 2.0 630.9
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Liabilities
Current liabilities
Trade and other payables (487.2) 7.4 36.5 - (1.3) (444.6)
Lease liabilities (8.5) - - - - (8.5)
Provisions for other liabilities and charges - - (36.5) - (0.7) (37.2)
Total current liabilities (495.7) 7.4 - - (2.0) (490.3)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Non-current liabilities
Lease liabilities (13.4) - - - - (13.4)
Total non-current liabilities (13.4) - - - - (13.4)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total liabilities (509.1) 7.4 - - (2.0) (503.7)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets 127.2 - - - - 127.2
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Equity
Ordinary shares 55.5 - - - - 55.5
Other reserves 118.4 - - - - 118.4
Retained earnings (46.7) - - - - (46.7)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total equity attributable to owners of the
Company 127.2 - - - - 127.2
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Statements of cash flows
As a result of the restatements to the balance sheet, the
following working capital movements have also been restated. The
impact of the change in presentation of research and development
expenditure tax credits has resulted in a change to the income tax
cash flow, being a payment of GBP0.2m (previously a receipt of
GBP2.0m).
31 December 2021
--------------------------------------- ----------------------------------------------------------------------
2021 Adjustment Adjustment Adjustment Adjustment
originally i) ii) iii) iv) 2021
reported restated
GBPm GBPm
--------------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
Net cash generated from operations
before changes in working capital 4.5 - - - - 4.5
(Increase)/decrease in trade and other
receivables 14.7 1.0 - 2.2 - 17.9
Increase/(decrease) in trade and other
payables (20.1) (1.0) 1.5 - - (19.6)
(Decrease)/increase in provisions - - (1.5) - - (1.5)
--------------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
Net cash generated from operations (0.9) - - 2.2 - 1.3
--------------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
Trade and other receivables
31 December 2021
---------------------------------------------- ----------------------------------------------------------------------
2021 Adjustment Adjustment Adjustment Adjustment
originally i) ii) iii) iv) 2021
reported restated
GBPm GBPm
---------------------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
Trade receivables 56.2 (2.3) - - - 53.9
Less: provision for impairment of receivables (0.1) - - - - (0.1)
---------------------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
Trade receivables - net 56.1 (2.3) - - - 53.8
Contract assets 153.5 (5.1) - - (2.5) 145.9
Amounts due from joint ventures 2.2 - - - - 2.2
Research and development expenditure
credits - 2.3 2.3
Prepayments and other receivables 23.3 - - - - 23.3
235.1 (7.4) - 2.3 (2.5) 227.5
---------------------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
Trade and other payables
31 December 2021
----------------------------------- ----------------------------------------------------------------------
2021 Adjustment Adjustment Adjustment Adjustment
originally i) ii) iii) iv) 2021
reported restated
GBPm GBPm
----------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
Trade payables 73.4 - - - - 73.4
Contract liabilities 133.4 (7.4) - - 1.3 127.3
Other taxation and social security
payable 34.7 - - - - 34.7
Accruals and other payables 245.7 - (36.5) - - 209.2
----------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
487.2 (7.4) (36.5) - 1.3 444.6
----------------------------------- ----------- ---------- ---------- ---------- ---------- ---------
The impact on provisions for other liabilities and charges is
stated in note 15.
Forward looking statements
Certain statements in this half year report are forward looking.
Such statements should be treated with caution as they are based on
current information and expectations and are subject to a number of
risks and uncertainties that could cause actual events of outcomes
to differ materially from expectations.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
The condensed set of financial statements has been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting' as adopted by the UK.
The directors confirm that these condensed consolidated half
year financial statements have been prepared in accordance with IAS
34 as adopted by the UK; and that the interim management report
herein gives a true and fair view of the assets, liabilities,
financial position and profit of the Group as required by DTR 4.2.4
and includes a fair review of the information required by DTR 4.2.7
and DTR 4.2.8 namely:
-- an indication of important events that have occurred during
the six months and their impact on the condensed set of financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related party transactions in the first six months
and any material changes in the related party transactions
described in the last annual report.
The directors of Galliford Try Holdings plc are:
Alison Wood Non-executive Chair
Bill Hocking Chief Executive
Andrew Duxbury Finance Director
Terry Miller Senior Independent Director
Gavin Slark Non-executive Director
Marisa Cassoni Non-executive Director
Sally Boyle Non-executive Director
Peter Ventress resigned as a Non-executive Director on 21
September 2022.
Signed on behalf of the Board.
Bill Hocking
Chief Executive
Andrew Duxbury
Finance Director
8 March 2023
Independent review report to Galliford Try Holdings plc
Report on the condensed consolidated interim financial
statements
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2022 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2022 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated statement of changes in equity and the
condensed consolidated statement of cash flows.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London, UK
8 March 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
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END
IR DDLFBXXLZBBF
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