TIDMGFRD
RNS Number : 8042S
Galliford Try PLC
05 October 2017
GALLIFORD TRY PLC
PUBLICATION OF ANNUAL REPORT AND FINANCIAL STATEMENTS 2017 AND
NOTICE OF 2017 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 2017
-- Notice of 2017 Annual General Meeting
-- Form of Proxy for the 2017 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/reports-and-presentations/reports/2017.
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 13
September 2017. That information together with the information set
out below which is extracted from the Annual Report and Financial
Statements 2017 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 2017. Page and note references in the text below refer
to page numbers in the Annual Report and Financial Statements 2017.
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 risks. The way in which
we manage our principal risks and uncertainties is integral to the
way we do business and to achieving our strategy of sustainable
growth. The Group's approach to risk management has been enhanced
during the year.
Approach to risk management
Risk is inherent in our operations and the decisions that we
make in pursuit of our strategy. The Board has overall
responsibility for determining both the nature and extent of the
principal risks that the Group is willing to take and the Group's
systems of risk management and internal control. In addition to the
ongoing monitoring processes that the Board has in place, it has
undertaken a formal and robust review of the Group's risk
management and internal control systems during the year. The Board
has also 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 on pages 20 and 21. There may be other risks
and uncertainties besides those listed which may also adversely
affect the Group and its performance. More detail can be found in
the Audit Committee Report on pages 53 and 54.
The Audit Committee is responsible for keeping under review the
adequacy and effectiveness of the Group's internal controls systems
and for reviewing and approving statements included in the Annual
Report concerning internal controls, risk management and the
viability statement. The Board's assessment of the viability of the
Group is set out on page 19 opposite.
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.
Operational responsibilities
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
Executive Risk Committee, which has been chaired by the General
Counsel and Company Secretary since May 2017, and is managed on a
day-to-day basis by the Director of Risk and Internal Audit. During
the year the Executive Risk Committee was restructured and
refreshed with additional processes introduced to monitor and
manage the Group's risks.
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 appetite
Our risk management processes evaluate risk and initiate
actions, where necessary, to bring identified risks down to an
acceptable level. Our risk appetite is described as the total
residual risk defined on the Group risk register.
Risk management, risk reporting, internal controls and internal
audit
The material components of the Group's established framework of
risk management and 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 Board and 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 we optimise both of
the 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 high-level governance reporting structure shown on
page 49 clarifies the effective Board structures upon which the
delegated authorities matrices and corporate and finance manuals
are overlaid.
The Executive Risk Committee, Executive Board and plc Board
regularly review the risk registers and associated mitigating
actions. During the last year the ongoing review included the
impact of the EU referendum, the general election result and major
contract pricing. In addition to this process 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 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 overleaf, and the cyclical nature of the markets in which
the Group operates, and incorporates an appropriate level of
flexibility to mitigate 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
The heat map shows the movement of the principal risks
mitigating actions, illustrating the effects of the Group's risk
management process.
Risk management governance structure
The Group's risk management governance structure, as set out
above, highlights the way in which risks are identified, reported
and managed within the framework set by the Board. The Risk and
Internal Audit function plays an integral role in identifying,
reporting and managing risk throughout the governance
structure.
To view the risk heat map and risk management governance
structure, please see page 19 of the Annual Report and Financial
Statement 2017, which can be found at:
http://www.gallifordtry.co.uk/investors/reports-and-presentations/reports/2017
Principal risks
Category Description of inherent Mitigation
risks
--------------- -------------------------------- ------------------------------------------
Economic The biggest risk is We manage the impact of macro-economic
the macro-economic environment risks, for example by building
and the possibility a strong order book and maintaining
of an economic downturn. an appropriately-sized landbank.
The ongoing uncertainty We have been doing that successfully
following last year's and had order books in Construction
EU referendum and this and Partnerships & Regeneration
year's general election of GBP3.6 billion and GBP1.0 million
has the potential to respectively at the year end. The
distort some of our sales carried forward position
markets. The Construction in Linden Homes at the year end
and Partnerships & Regeneration was GBP373 million. We monitor
businesses are well closely political and economic
placed to deal with developments: we have modelled
any uncertainty due a range of macro-economic scenarios
to the nature of their and planned measures which can
businesses. Linden Homes, be implemented should the macro-economic
while more exposed to environment improve or deteriorate
a potential slowdown as against our internal models.
and changes in consumer
confidence, has a great
brand and is
solidly positioned,
with an appropriate
landbank, good locations
and well-designed homes.
--------------- -------------------------------- ------------------------------------------
Government A reduction in government The Group regularly engages with
spending on infrastructure government and the Homes and Communities
projects or affordable Agency (HCA), both directly and
housing development, via our membership of industry
including schemes such bodies. Prudent pricing models,
as Help to Buy, would increased hurdle rates and other
directly affect our contingencies are built into our
business. Other initiatives land appraisal process, including
relating to project removal of any government support.
bank accounts or payment Support for Help to Buy appears
terms may impact the to be in place until 2021.
cost of doing business.
--------------- -------------------------------- ------------------------------------------
Health and A failure of routine We have operational controls in
Safety (H&S) H&S processes leading place, including an H&S site risk
to a catastrophic incident assessment for every site. We have
with fatalities and/or processes in place which allow
significant injuries us to respond promptly and appropriately
can, in addition to to incidents. Both the 'Golden
its impact on victims Rules' and H&S database implemented
and corporate reputation, in 2015/16 and the award-winning
lead to fines or prosecutions 'Challenging Beliefs, Affecting
for individual members Behaviour' safety programme help
of staff or directors. to reduce risk in this area.
A high cumulative level
of H&S prosecutions
would reduce our ability
to win work.
--------------- -------------------------------- ------------------------------------------
Commercial A failure to agree appropriate We are carefully managing our existing
commercial terms or fixed-price contracts and closely
to manage fixed-price review bids for contracts of this
contracts correctly kind. We enhanced our risk management
can result in reduced procedures, bringing greater rigour
profits or, in some around contract selection.
cases, losses on projects.
--------------- -------------------------------- ------------------------------------------
Legal and Legal and regulatory The Group has comprehensive policies
regulatory failure, for example and guidance in place at every
compliance involvement in bribery level, including the Group's Code
or other fraudulent of Conduct, mandatory e-learning
activity, or non-compliance for all employees, regular legal
with law (including updates and briefings, six-monthly
for example the Bribery compliance declarations and conflicts
Act, Fraud Act, Competition of interest registers and authorisations.
Act, Money Laundering In addition, an anonymous and independent
Regulations and Proceeds whistleblowing helpline is available
of Crime Act) could to all staff.
lead to disbarment from
bidding for certain
public or regulated
sector work, fines,
jail and reputational
damage.
--------------- -------------------------------- ------------------------------------------
Customer Poor customer satisfaction There are rigorous quality control
satisfaction may have a negative procedures in place in all three
and quality impact on reputation of our businesses, including The
control affecting revenue and Linden Way, which defines our approach
profit through sales at each stage of the housebuilding
rates and increased process.
costs.
--------------- -------------------------------- ------------------------------------------
People The ability to attract, The Group has an established HR
develop, retain and strategy based
build relationships on best practice, Investors in
with diverse and high-quality People principles and relevant
employees and members legislation which, among other
of the supply chain things, includes the regular review
impacts every level of remuneration and benefits packages
of the Group, from developing to ensure we remain competitive.
and building our products Our succession planning and talent
to succession planning management processes enable continuity
for the Board and is and identify future leaders.
particularly important
during a period of growth.
--------------- -------------------------------- ------------------------------------------
Supply chain A shortage of trades The Group aims to develop long-term
people can create resourcing relationships with subcontractors
issues and increase to ensure we are a preferred customer
the cost of the supply in the supply of resources and
chain. skills, as well as materials. The
'Advantage through Alignment' initiative
in our Construction business is
working well.
--------------- -------------------------------- ------------------------------------------
Business Loss of our Shared Service Disaster recovery plans have remained
continuity Centre or IT infrastructure, in place throughout the year, and
especially our financial are tested on a regular basis,
system, including a including penetration tests in
natural disaster or respect of cybercrime.
malicious attack, may
affect our ability to
carry on day-to-day
business.
--------------- -------------------------------- ------------------------------------------
Ambitious Ambitious growth of Strong management teams are in
growth targets a business in terms place within each business to ensure
of revenue and footprint that growth plans are well managed.
may increase the risk In addition, the Executive Board
of its existing business and plc Board regularly monitor
suffering from quality the financial performance of each
issues, failure to achieve business.
budgeted growth and
failure of new offices,
all impacting Group
results.
--------------- -------------------------------- ------------------------------------------
Forecasting Given the nature of Each business unit reviews its
the three businesses, cash forecast monthly and the Group
cash forecasting is prepares a detailed daily cash
the result of subjective book for the following eight-week
estimates which carry period, to highlight any risk of
an intrinsic risk of intra-month fluctuations. These
error. Poor cash forecasting forecasts are reviewed at business
can impact business unit, division and Group.
planning, investments
and reporting of financial
information.
--------------- -------------------------------- ------------------------------------------
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report
and the 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 (EU). 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 and Company for that period.
In preparing the financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements 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 Group and Company
will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and the Company 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 Group and the Company 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.
The directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group and
Company's performance, business model and strategy.
Each of the directors, whose names and functions are listed on
pages 46 and 47, confirms that to the best of their knowledge:
-- the Company financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of
the Company;
-- the Group financial statements, which have been prepared in
accordance with IFRSs 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 45 includes a
fair review of the development and performance of the business and
the position of the Group and Company, 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, regeneration
and construction group. It is listed on the London Stock Exchange
and a member of the FTSE 250. Housebuilding - through our Linden
Homes business - develops private and affordable homes in prime
locations. Galliford Try Partnerships - our regeneration business -
delivers mixed-tenure solutions working with housing association,
local authority and private sector partners. Operating as Galliford
Try and Morrison Construction, our Construction business carries
out building and infrastructure with clients in the public, private
and regulated sectors. At the end of the last financial year to 30
June 2017, the Group generated revenue of GBP2.7 billion.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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