TIDMGFRD
RNS Number : 4987N
Galliford Try PLC
26 October 2016
GALLIFORD TRY PLC
PUBLICATION OF ANNUAL REPORT AND FINANCIAL STATEMENTS 2016 &
NOTICE OF 2016 ANNUAL GENERAL MEETING
Galliford Try plc has today, in accordance with LR 9.6.1 R of
the Listing Rules, submitted to the Financial Conduct Authority's
National Storage Mechanism copies of the following:
-- The Annual Report and Financial Statements 2016
-- Notice of 2016 Annual General Meeting
-- Form of Proxy for the 2016 Annual General Meeting
The documents will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM.
The Annual Report and Financial Statements and Notice of Annual
General Meeting are also available on the Galliford Try plc website
at www.gallifordtry.co.uk/investors.
A condensed set of the Group's financial statements and
information on important events that have occurred during the
financial year and their impact on the financial statements were
included in Galliford Try plc's Final Results Announcement on 14
September 2016. That information together with the information set
out below which is extracted from the Annual Report and Financial
Statements 2016 constitute the material required by DTR 6.3.5 of
the Disclosure Guidance and Transparency Rules which is required to
be communicated to the media in full unedited text through a
Regulatory Information Service. This announcement is not a
substitute for reading the full Annual Report and Financial
Statements 2016. Page and note references in the text below refer
to page numbers in the Annual Report and Financial Statements 2016.
To view the results announcement, slides of the results
presentation and the results webcast please visit
www.gallifordtry.co.uk/investors.
Principal risks
Identifying, evaluating and managing our principal risks and
uncertainties is integral to the way we do business and to
achieving our strategy.
Roles and responsibilities
The Board has overall responsibility for the Group's systems of
risk management and internal control, which are subject to ongoing
monitoring processes alongside a formal and robust annual review.
It is also responsible for determining the overall level of risk
which it is willing to accept in pursuing the Group's strategy. The
Board has delegated implementation of risk management and internal
control, together with their day-to-day operation, to the Group's
executive management. The process is overseen by the Risk
Committee, which is chaired by the Group Finance Director and
managed on a day-to-day basis by the Director of Risk and Internal
Audit. The Risk Committee is also attended by the Chairman.
Although they are not absolute assurance against the risk of
material misstatement or loss, the Group's systems of risk
management and internal control are designed to identify, manage,
mitigate, monitor and report on risks to which the Group is
exposed.
Risk identification, assessment and mitigation
We develop and maintain risk registers at business unit,
divisional and Group level, which identify key operational,
financial and strategic risks applicable to that level within the
organisation, and which are assessed and consolidated into a
Group-wide register using a standardised methodology. The
methodology requires each identified risk to be assessed and
measured using a risk matrix which quantifies the likelihood and
impact of each risk (the inherent risk), the effect of the
mitigating actions (to determine the residual risk) and the
desirable risk profile (the target risk), as aligned to the Group's
risk appetite. The methodology evaluates the impact of each risk on
the Group's profitability and reputation.
Risk management, risk reporting, internal controls and internal
audit
The material components of the Group's established framework of
internal controls comprise the following:
> organisational structure: each business has its own
management board and each business unit is led by a managing
director and management team;
> contractual review and commitments: the Group has clearly
defined policies and procedures for entering into contractual
commitments which apply across its business units and operations
and are enforced through the Group's legal authorities matrix;
> investment in land and development: land expenditure
approval is subject to clearly defined policies and procedures,
with significant investments approved at Executive and main Board
levels under Group policies and procedures;
> operational activity: there are established frameworks to
manage and control all site operations including health, safety and
environmental procedures, regular performance monitoring, quality
and external accountability to stakeholders;
> financial planning framework: the Group reviews and refines
its business plan on an annual basis, following specific Board
meetings held to consider strategy. A detailed annual budget is
prepared for each financial year which is approved by the
Board;
> operational and financial reporting: we continue to improve
the Group's reporting and financial systems as a result of
implementing both Oracle and Hyperion systems. An exacting profit
and cash reporting and forecasting regime is in place across the
Group. As well as the emphasis placed on cash flow, income and
balance sheet reporting, health, safety and environmental matters
are prioritised within monthly operational reports;
> Code of Conduct: the Group requires its employees to
operate ethically and with demonstrable integrity. Group standards
are set out in a Code of Conduct issued to all employees, and
supported by specific training modules in key areas;
> pension plan administration: the administration of the
Group's fully closed final salary and ongoing defined contribution
pension plans is outsourced to professional service providers. Each
of the final salary schemes has an independent scheme secretary and
a proportion of independent trustees to provide additional layers
of external scrutiny; and
> assurance provided by non-audit functions: a number of
other Group functions provide assurance in areas including, but not
limited to, health, safety and environment; legal contract review
and compliance; and construction industry regulation.
The Group's governance reporting structure shown on page 57
clarifies the effective Group, business and operational board
structures upon which the delegated authorities matrices and
corporate and finance manuals are overlaid.
The Risk Committee and the Board review the risk registers and
associated mitigating actions on a regular basis. For example,
during the last year the ongoing review included consideration of
the impact of possible outcomes of June's EU referendum and the
Group's exposure to the London market. In addition to this process,
which has been in place throughout the past year, we undertake an
annual review of our risk management processes in the context of
market developments, projects secured and Group strategy to ensure
that they remain up-to-date and relevant. This also encompasses a
review of the internal controls framework, together with the
findings of the internal audit function over the past year, which
may indicate weaknesses that have had, could have had, or may have
in the future, a material impact on results, and any remedial
actions taken. Based on these assessments, the Board is satisfied
with the effectiveness of the Group's systems of risk management
and internal control.
Viability statement
In accordance with provision C.2.2 of the UK Corporate
Governance Code, the Board has assessed the prospects of the Group
over a period longer than the 12 months as required under provision
C.1.3 of the Code in relation to the adoption of the going concern
basis. The Board conducted this review for a period of three years
in line with its typical business planning and risk management
review period.
The Group's business plan includes information in relation to
the Group's revenues, profits, cash flows, dividends, net debt, and
other key financial and non-financial metrics. The plan considers
the potential impact of the principal risks to the business as
described below and overleaf, and the cyclical nature of the
markets in which the Group operates, and incorporates an
appropriate level of flexibility to provide against these risks.
This is achieved through the preparation of sensitivity analyses on
a range of scenarios including variations in revenue, house prices,
sales rates, build costs, cash generation and access to
financing.
Based on the results of this analysis, the Board has a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
three-year period of its assessment.
Risk heat map - effects of mitigation on inherent risks and
residual risks
The heat map shows the principal risks the Group faces by impact
and likelihood, before and after mitigating actions are taken into
account, illustrating the effects of the Group's risk management
process in mitigating the identified risks.
To view the Risk Heat Map please see page 19 of the Annual
Report and Financial Statement 2016, which can be found at:
http://www.gallifordtry.co.uk//media/Files/G/GallifordTry/reports/2016/ara-2016.pdf
Principal risks continued
Principal risks
The directors have carried out a robust assessment of the
principal risks facing the Group, including those that would
threaten its business model, future performance, solvency or
liquidity. Our consideration of the key risks and uncertainties
relating to the Group's operations, along with their potential
impact and the mitigations in place, is set out below and on the
previous page. There may be other risks and uncertainties besides
those listed below which may also adversely affect the Group and
its performance. More detail can be found in the Audit Committee
Report on pages 58 and 59.
Category Description of inherent risk Inherent Mitigation
risk trend
in the year
---------------- ------------------------------------------ ------------ --------------------------------------
a. Economic The biggest risk is the macro-economic ^ We manage the impact of macro-economic
environment and the possibility risks, including by building
of an economic downturn. The result a strong order book and maintaining
of the recent EU referendum has an appropriately sized landbank.
the potential to distort some of We have been doing that successfully
our markets. While this is certainly and had a Construction order
not an inevitable outcome, we must book of GBP3.5 billion and
be mindful of the potential risks sales carried forward position
and plan for the Group's future in Linden of GBP380 million
accordingly. The Construction and at the year end. We monitor
Partnerships businesses are very closely political and economic
well placed to deal with any uncertainty developments: we have modelled
due to the nature of their businesses a range of macro-economic scenarios
and their late cycle and hybrid and planned measures which
nature respectively. Linden Homes, can be implemented should the
while more exposed to a potential macro-economic environment
slowdown and changes in consumer improve or deteriorate as against
confidence, has a great brand, our internal models.
and is solidly positioned, with We also regularly monitor actual
an appropriate landbank, good locations supply chain costs against
and well-designed homes. costs assumed at tender, with
Improvement in the construction regular reforecasting of the
market increases the workload in likely effect on margin, and
our supply chain, enabling it to with realistic increased supply
seek increased prices which could chain costs fed back into tenders
impact our margins. House price going forward. We also regularly
inflation can mitigate this effect review fixed price assumptions
but the effect can be amplified in bids. Land purchases at
by a house price fall. The input appropriate margins are reviewed
costs to our business can also in the context of three-year
be affected by fluctuations in market forecasts, and we monitor
foreign exchange rates. sales rates on an ongoing basis.
---------------- ------------------------------------------ ------------ --------------------------------------
b. Government A reduction in Government spending < > The Group regularly engages
on infrastructure projects or affordable with Government and the Homes
housing development, including & Communities Agency (HCA),
schemes such as Help to Buy, would both directly and via our membership
directly affect our business. Other of industry bodies. Prudent
initiatives relating to project pricing models, increased hurdle
bank accounts or payment terms rates and other contingencies
may impact the cost of doing business. are built into our land appraisal
Government may also impose future process, including removal
taxes or levies that are not incorporated of any Government support.
into our plans. Support for Help to Buy appears
to be in place until 2020.
The Group monitors on an ongoing
basis economic and political
conditions and developments;
and it plans for different
economic scenarios.
---------------- ------------------------------------------ ------------ --------------------------------------
c. Health A catastrophic incident with fatalities ^ We have operational controls
and Safety and/or significant injuries can, in place, including a H&S site
(H&S) in addition to its impact on victims risk assessment for every site.
and corporate reputation, lead We have processes in place
to fines or prosecutions for individual which allow us to respond promptly
members of staff or directors. and appropriately to incidents.
A high cumulative level of H&S During the year, we implemented
prosecutions would reduce our ability the 'Golden Rules', a new H&S
to win work. database, and reinvigorated
our award-winning 'Challenging
Beliefs, Affecting Behaviour'
safety programme.
---------------- ------------------------------------------ ------------ --------------------------------------
d. Over-reliance Direct or indirect over-reliance We carefully monitor and maintain
on a single customer or vendor, relationships at every level
such as the HCA in Housebuilding, of the organisation up to Executive
may leave us exposed, especially Board level. Where customers
if there is a large degree of regulation or suppliers have regulated
surrounding this customer or vendor. contractual commitments, we
undertake annual (and, as necessary,
independent) audits, to ensure
we are meeting our requirements.
---------------- ------------------------------------------ ------------ --------------------------------------
Category Description of inherent risk Inherent Mitigation
risk trend
in the year
------------------- ------------------------------------------- ------------ ------------------------------------
e. Legal Legal and regulatory failure, for < > The Group has comprehensive
and regulatory example involvement in blacklisting, policies and guidance in place
compliance cover pricing, bribery or other at every level, including the
fraudulent activity, or non-compliance recently reinvigorated Code
with law (including for example of Conduct, mandatory e-learning
the Bribery Act, Fraud Act, Competition for all employees, regular
Act, Money Laundering Regulations, Board legal updates and briefings,
and Proceeds of Crime Act) could six-monthly compliance declarations
lead to disbarment from bidding and conflicts of interest registers
for certain public or regulated and authorisations. In addition,
sector work, fines, jail, and reputational an anonymous and independent
damage. whistleblowing helpline is
available to all staff, with
strict policies to ensure anonymity
and regular reporting of helpline
use provided to the Board.
------------------- ------------------------------------------- ------------ ------------------------------------
f. Land acquisition If the assumptions used in the < > There are comprehensive land
land acquisition process are wrong, acquisition policies and procedures
subsequent financial results may in place. The Group monitors
be affected on an ongoing basis economic
and political conditions and
developments; and it plans
for different economic scenarios.
------------------- ------------------------------------------- ------------ ------------------------------------
g. People The ability to attract, develop, The Group has an established
and supply retain and build relationships HR strategy based on best practice,
chain with diverse and high-quality employees Investors in People principles
and supply chain impacts every and relevant legislation which,
level of the Group, from developing among other things, includes
and building our products to succession the regular review of remuneration
planning to the Board. and benefits packages to ensure
we remain competitive. Our
succession planning and talent
management processes enable
continuity and identify future
leaders.
The Group aims to develop long-term
relationships with subcontractors
to ensure we are a preferred
customer in the supply of people
and skills, as well as materials.
Key initiatives this year include
rolling out the 'Advantage
through Alignment' initiative
throughout our Construction
business supply chain. The
Group monitors on an ongoing
basis economic and political
conditions and developments;
and it plans for different
economic scenarios.
------------------- ------------------------------------------- ------------ ------------------------------------
h. Business The stability, performance and < > Our IT governance structure
management successful operation of current prioritises resources on the
systems and legacy third party business most critical and added value
management systems, such as our improvements. Specific improvement
Oracle finance system and electronic forums, for example the Procurement
document management systems, are Improvement Group, further
critical to the successful operation refine and optimise core processes.
of the business, both in Group Relationships with third parties
locations and on-site project offices are given the highest level
and sales outlets. of management attention, with
contingency solutions reviewed
as appropriate.
------------------- ------------------------------------------- ------------ ------------------------------------
i. Business Loss of our Shared Service Centre < > Disaster recovery plans have
continuity or IT infrastructure, especially remained in place throughout
our financial system, including the year, and are tested on
a natural disaster or malicious a regular basis, including
attack, may affect our ability penetration tests in respect
to carry on day-to-day business. of cybercrime.
------------------- ------------------------------------------- ------------ ------------------------------------
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report,
the Directors' Remuneration Report and financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under company law the directors
have prepared the Group and Parent Company financial statements in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union. Under company law, the directors
must not approve the financial statements, unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of
the Group for that period.
In preparing those financial statements, the directors are
required to:
> select suitable accounting policies and then apply them
consistently;
> make judgments and accounting estimates that are reasonable
and prudent;
> state whether applicable IFRSs as adopted by the EU have
been followed, subject to any material departures disclosed and
explained in the financial statements; and
> prepare the financial statements on the going concern
basis, unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable them to
ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Each of the directors whose names and functions are listed on
pages 50 and 51, confirms that to the best of their knowledge:
> the Group financial statements, which have been prepared in
accordance with IFRS as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of
the Group; and
> the Strategic Report contained in pages 1 to 49 includes a
fair review of the development and performance of the business and
the position of the Group, together with a description of the
principal risks and uncertainties that it faces.
For further enquiries:
Galliford Try Kevin Corbett, Company
plc Secretary 01895 855001
Clara Melia, Investor
Relations 07748 171 236
Tulchan Communications James Macey White 0207 353 4200
Martin Pengelley
Matt Low
Notes to Editors
Galliford Try plc is a leading UK housebuilding and construction
group. It is listed on the London Stock Exchange and a member of
the FTSE 250. Housebuilding - through our Linden Homes and
Galliford Try Partnerships businesses - sells distinctive homes to
the public and affordable homes to housing associations and local
authority providers. The construction business carries out building
and infrastructure work across the UK with clients ranging from
major Government departments through to regulated utilities and
private sector companies. At the end of the last financial year to
30 June 2016, the Group generated revenue of GBP2.5 billion.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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