Galliford Try ‘well positioned’ to make progress on strategic priorities
Galliford Try has issued a positive trading statement as all of it construction sites across the UK return to operation and underlying operations “performing well”.
The group is well-capitalised, with cash at 30 June 2020 of £195 million (2019: net debt £57m) and average month-end cash during the six months to 30 June 2020 of £140m.
Its order book is up 10% at £3.2bn (2019: £2.9bn) with 90% of revenue for the new financial year secured (2019: 88%) and encouraging pipeline in chosen sectors.
The company said: “As expected, the combination of site closures and reduced productivity significantly reduced revenue in the final quarter of the financial year.
“Along with the cost of implementing our new operating procedures and lengthened site programmes, this has led to a material reduction in gross margin in the financial year to June 2020, with divisional operating margins expected to show a loss of c5%.
“Productivity levels on our sites have gradually increased since the beginning of the lockdown, and we start the new financial year with productivity close to normal and operating margins expecting to improve in line with our target.
“The group has entered the new financial year with a high-quality, carefully risk managed order book of £3.2bn, and with 90% of the new financial year’s planned revenue secured.
“This gives management confidence in the future as we look to increase operating margins, capitalise on the actions taken to reduce costs and maintain our disciplined approach to contract selection.
“The strong order book, with 81% in the public and regulated sectors, and recent government announcements on capital expenditure mean that the group is well placed to contribute to the UK’s economic recovery from COVID-19 and to benefit from opportunities in our chosen sectors.”
Recent major contract wins include a place on the £20 billion Crown Commercial Service’s Construction Works and Associated Services Framework as well as the £42m National Manufacturing Institute Scotland for the University of Strathclyde and the new £54m women’s national prison facility at Cornton Vale in Stirling.
Chief executive Bill Hocking said: “Following the disposal of the housebuilding businesses earlier in the year the group is firmly focused on its core strengths of regional building, highways and environment.
“Throughout the COVID -19 pandemic I have been impressed by the energy, commitment and resilience of our employees and subcontractors, as they adapted to the new COVID -19 secure working practices. Their strength of character is exemplary, and I thank them for their efforts.
“The financial year just ended was a year of transition for the group and I am confident about the future for the business.
“The impact of the global pandemic in the UK continues to be uncertain but innovative ways of working, better use of technology and improving efficiencies have been successfully embedded in our business in response to the crisis.
“Going forward we are well placed to benefit from the planned spending in our chosen sectors and to support the rebuilding of the economy and I will provide an update on our strategic priorities at results in September.
“Whilst these are challenging times, I look forward to the new financial year with confidence. The group is well capitalised with a strong order book and is well positioned to make progress on its strategic priorities and margin improvement targets.”