TIDMGFRD
RNS Number : 0057T
Galliford Try Holdings PLC
15 July 2020
GALLIFORD TRY HOLDINGS PLC TRADING UPDATE
WEDNESDAY 15 JULY 2020
Galliford Try Holdings plc ("Galliford Try"), the UK
construction group, today provides the following update on trading
for the year ended 30 June 2020. The Group expects to announce its
results for the full year in September 2020.
Highlights
-- All our construction sites across the UK are now operational
with underlying operations performing well.
-- Well-capitalised, with cash at 30 June 2020 of GBP195m (2019:
net debt GBP57m) and average month-end cash during the six months
to 30 June 2020 of GBP140m.
-- Strong order book up 10% at GBP3.2bn (2019: GBP2.9bn) with
90% of revenue for the new financial year secured (2019: 88%) and
encouraging pipeline in chosen sectors.
Operational and trading update
The Group responded quickly and decisively to the Covid-19
pandemic . The Group's prior investment in smart and agile working
facilitated a seamless transition to remote and efficient working
practices.
Health and safety remains our top priority. All our sites have
implemented new operating procedures, in accordance with Government
and industry guidance, to ensure the safety of all employees,
subcontractors and others attending our sites. Early in the
pandemic we established a Covid-19 Working Group, to establish
clear new working practices and share good practice across the
Group.
The majority of the Group's construction sites in England
continued operations under strict safety guidance throughout the
Covid-19 lockdown. All sites in Scotland were closed in accordance
with Scottish Government requirements. Work was allowed to resume
in Scotland from late June and production across the UK is now
normalising.
The Group made use of the Government's Job Retention Scheme
during the period and the majority of affected employees have now
returned to work. In addition to the measures implemented following
the disposal of our housebuilding operations, the Group has
initiated a number of other actions to reduce costs and conserve
cash in the business to account for both the impact of Covid-19 and
our future business requirements. This included, in response to
Covid-19, temporary salary reductions of between 15% and 25% for
our most senior employees.
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.
Throughout the lockdown we have been encouraged by the pipeline
of new opportunities across our chosen sectors in the public,
regulated and private markets together with a number of significant
contract wins.
Recent major contract wins include:
a place on the GBP20bn Crown Commercial Service's Construction
Works and Associated Services Framework,
a place on the GBP1.5bn YORbuild Major Works Contractors Framework
in the north of England,
GBP100m of education facilities including the GBP42m National
Manufacturing Institute Scotland for the University of Strathclyde,
an GBP85m mixed-use development at Tottenham Hale, London,
and
the new GBP54m women's national prison facility at Cornton
Vale, Stirling.
Balance Sheet
Galliford Try remains a well-capitalised business, with net cash
balances at 30 June 2020 of GBP195m.
Since January 2020, the Group has operated with net cash, and
with no debt or associated covenants. Cash management remains a key
priority for the Group, and our strong financial position has been
carefully managed through the Covid-19 disruption. The average
month-end cash for the six months to 30 June 2020 was GBP140m.
Throughout the pandemic the Group's businesses have worked
closely with our suppliers, ensuring Covid-19 secure practices and
prompt payments.
Outlook
On 31 March 2020 the Group suspended financial guidance, in
response to the Covid-19 uncertainty.
Although it is too early to restore guidance, the Group has
entered the new financial year with a high-quality, carefully risk
managed order book of GBP3.2bn, 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.
Bill Hocking, Chief Executive, commented:
"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."
A conference call for Analysts and Investors will be held at
09:00am BST today, Wednesday 15 July 2020, to register for the dial
in details follow this link
https://www.incommglobalevents.com/registration/client/4705/galliford-try-trading-update/
For further enquiries please contact:
Bill Hocking, Chief Executive
Andrew Duxbury, Finance
Galliford Try Director 01895 855001
James Macey White
Giles Kernick
Tulchan Communications Amber Ahluwalia 020 7353 4200
Note to Editors
Galliford Try Holdings plc is a leading UK construction group
listed on the London Stock Exchange. Operating as Galliford Try and
Morrison Construction, the group carries out building and
infrastructure projects with clients in the public, private and
regulated sectors across the UK.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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