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A progressive
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Galliford Try
Annual Report and
Financial Statements
2020
Strategic report
1 What makes us different?
2
4
8
Our business at a glance
Our business model
Our investment case
10 Chairman’s statement
11 Q&A with the Executive directors
14 Market review
16 Our strategy
18 Operating review
24 People and culture
27 Health and safety
29 Risk management
35 Operating sustainably
40 Financial review
43
Managing our stakeholder relationships
(s172 statement)
Governance
46 Chairman’s review
48 Directors and Executive Board
50 Governance review
57 Nomination Committee report
58 Audit Committee report
61 Remuneration Committee report
63 Directors’ Remuneration Policy report
70 Annual report on remuneration
77 Directors’ report
80 Statement of directors’ responsibilities
Financial information
81
Independent auditors’ report
88 Consolidated income statement
89
Consolidated statement of comprehensive income
90 Balance sheets
91
Consolidated and Company statements of
changes in equity
92 Statements of cash flows
93
Notes to the consolidated financial statements
143 Five-year record
144 Shareholder information
Cover photo: Dami Alli, Graduate Quantity Surveyor,
Building London & South East Commercial.
Financial performance
Revenue
£1,089.6m
-22% £1,121.6m
Pre-exceptional1
Statutory
-20%
Continuing
(loss)
before tax
Net cash2
Continuing
loss per
share
£(59.7)m
-247%
£(34.6)m
+46%
£197.2m +£253.8m
£197.2m +£253.8m
(47.7)p
-346%
(29.4)p
+34%
Operational performance3
Order book
(2019: £2.9bn)
Accident Frequency Rate
(2019: 0.10)
£3.2bn
0.07
Alternative performance measures
The financial statements in this report include the financial performance of the Linden
Homes and Partnerships & Regeneration divisions, which are presented as discontinued
operations per IFRS 5 as a result of their disposal on 3 January 2020. The ‘continuing basis’
shown above excludes these businesses unless stated otherwise.
1
Pre-exceptional measures exclude exceptional items as described in the Financial
review on page 40 and in note 4. All future references to pre-exceptional data and
ratios are consistent with this definition.
Net cash is cash and cash equivalents less current and non-current borrowings
(note 22).
2
3 Excludes discontinued housebuilding operations.
Two alternative performance measures have been removed since last year as they are
no longer relevant to the Group following the disposal of the housebuilding divisions
during the year. These were ‘Group revenue’, which included the share of joint ventures’
revenue and which was primarily relevant only to the housebuilding divisions and
‘Group return on net assets’, which provided a measure of the profit returns generated
by the Group’s invested capital, and was again primarily relevant to the Partnerships &
Regeneration business.
More information on the Group’s alternative performance measures can be found in
note 38 to the financial statements on page 135.
Key developments in the year Successful transition to a well-capitalised, UK-focused construction group following the strategic disposal of the housebuilding divisions. Rapid and effective response to Covid-19 to protect the health and wellbeing of our people and supply chain, and enable our business to continue to operate safely and sustainably. At a glance
2
Financial review
40
Our strategy
16
Risk management
29
People and culture
24
Operating
sustainably
35
People are key to success in the UK construction
industry – and our network of regional businesses
allows us to build successful local relationships with
clients and suppliers nationally.
To make the most of that network, you need to
be well financed, with a balance sheet that makes
you a reliable, attractive partner.
You must have a clear strategy with strong
positions in your chosen sectors, robust
commercial controls and rigorous risk
management. You have to be agile and react
quickly and decisively when needed, as
demonstrated in our response to Covid-19.
To truly stand out as a construction business,
there is a crucial underpinning factor –
a progressive culture, focused on
long-term performance and value creation
for all stakeholders.
Bill Hocking
Chief Executive
1
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Our business at a glance
One of the UK’s leading construction groups
Our divisions
Our core capabilities are delivered through
our Building and Infrastructure divisions:
Building
works with private and public
sector clients, in particular in
health, education and defence.
Infrastructure
carries out civil engineering projects,
specialising in the highways and
environment sectors.
Operating review p20
Operating review p22
PPP Investments
delivers major building and infrastructure
projects through public-private
partnerships and co-development
opportunities, generating work for
the wider Group in the process.
Operating review p23
Facilities Management (FM)
predominantly provides services for buildings
which Galliford Try has constructed and
invested in.
2
Galliford Try How we do it
Our purpose
To improve people’s lives through building
the facilities and infrastructure that
communities need. In doing so, we provide
opportunities for our people to learn,
grow and progress, work with our supply
chain to promote the very best practices
and care for the environment.
Our values
We achieve our purpose by holding true to:
Excellence
Striving to deliver the best.
Passion
Committed and enthusiastic in all
that we do.
Integrity
Demonstrating strong ethical standards
with openness and honesty.
Collaboration
Dedicated to working together to
achieve results.
We do this by delivering excellence
for our clients and the community, being
passionate about our role in providing vital
services, putting integrity at the heart of
our business and collaborating with our
clients, supply chain and stakeholders.
Our vision
To be a people-orientated, progressive
business, driven by our values to deliver
lasting change for our stakeholders
and communities.
Where we do it
We operate nationally through nine regions in
Building, and UK-wide coverage in Infrastructure.
Areas of Building operations
1
2
3
4
5
6
7
8
9
Morrison Construction Highland
Morrison Construction North East
Morrison Construction Central
Building North East & Yorkshire
Building North West
Building West Midlands & South West
Building East Midlands
Building London & South East Commercial
Building Southern (public sector)
1
2
3
4
5
6
7
8
9
3
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Our business model
Our business model is designed to deliver our purpose and
to create both financial and non-financial value that benefits
all our stakeholders
What we do
Key activities
Promote a strong culture
We promote the culture,
values and behaviours we
want to see in Galliford Try
to our people, and underpin
this through high standards
of corporate governance.
Collaborate with our
supply chain
A large portion of our business
is delivered through our supply
chain, so building successful
long-term relationships is vital.
Our ‘Advantage through
Alignment’ scheme increases
engagement with leading supply
chain members, giving them
insight into our pipeline of work
and allowing them to benefit
from our training programmes
and practices.
Deliver excellence
We look to complete projects
to the highest standards and
are recognised for the quality
of our delivery. We increasingly
use technology and Modern
Methods of Construction, such
as off-site construction and
Building Information Modelling
to deliver superior buildings.
We also continue to invest in
improving our digital technologies
and systems.
Build strong client and
community relationships
We seek clients who value a
collaborative approach and
aim to become their long-term
partners, in particular by securing
a place on major frameworks.
We also endeavour to develop
strong community relationships,
recognising that a successful
business needs to be welcomed
by the communities surrounding
its projects.
Who we work with
Government investment in our markets1
£14bn
£4.6bn
£7bn
£28.8bn
£15bn
Education
Primary and
secondary education
Defence
To optimise military sites
Health
Capital budget
Highways
National Roads Fund
Environment
New and improved water
and waste water services,
flooding and droughts
We primarily work with public sector and regulated organisations,
as well as major private sector companies.
Our approach to collaborating with our clients has been accredited
to ISO 44001 and our Delivering Excellence framework helps us to
achieve high levels of client satisfaction.
1 For sources, see page 14.
4
Galliford Try How we make money
High-quality revenue
We enter into different types of contracts with clients. These include fixed-price,
cost plus (where we recover all our costs plus an agreed profit margin), target
cost (where we and the client share gains or losses against the target cost),
frameworks (where clients allocate individual projects to us, as one of their
pre-qualified contractors) and long-term private finance contracts.
Our preference is to operate on frameworks and in two-stage tender processes
that are not purely price dependent. We carefully select the work we take on,
emphasising quality rather than volume and ensuring each project contains
sufficient allowances for risk, margin and inflation. We do not undertake major
infrastructure projects on a fixed-price, all-risk basis.
Robust commercial control and rigorous risk management
We make a profit by managing risk at every stage of the project, as described
on pages 29 to 34. We have robust review and approval controls for bids and
contracts and use a risk-based heat map tool to support contract selection and
bid approval.
In addition to construction projects, we earn revenue and profit from our
PPP Investments and Facilities Management businesses. These offer lower-risk
annuity type income and margin accretion.
Good capital management
Our business is typically cash generative, as we receive regular payments
from clients as projects progress.
The Group does not require significant investment in fixed assets or working
capital and we therefore only use a modest amount of cash for ongoing
investment in the business and for investing in PPP projects. This leaves
funds to pay an appropriate level of dividend, while maintaining our balance
sheet strength.
5
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Our business model
continued
What sets us apart
We stand out in a competitive market for our innovative and
values-driven approach.
Through our progressive nature and commitment to
delivering excellence, we constantly pursue new and
better ways of working – embracing new technologies,
construction methods and management tools that help
us lead the sector.
We pride ourselves on the relationships we build across
our operations and are firmly committed to doing the
right thing, creating greater social value through what
we do.
We don’t take our position for granted. We continue
with our strategy to retain and enhance what’s good
about our business and improve where we can to deliver
for our stakeholders.
6
Galliford Try Our key resources and relationships
People
Our success comes from our people.
We therefore need to retain and attract
the right talent for our business and
create an inclusive environment in
which they are enabled to thrive.
People and culture p24 and Health and safety p27
Clients
We carefully choose the sectors
we want to work in and the clients
we partner with.
Operating review p18
Supply chain
Our supply chain predominantly consists
of subcontractors, who operate on
our sites, and suppliers, who provide
materials. We select and manage our
subcontractors and some materials
suppliers at a local level and procure
key commodities centrally.
Supply chain p38
Communities
Our positive impact on communities
is significant, both through the way
we work and the legacy we leave in
the form of buildings, infrastructure
and other assets.
Social and community matters p39
Natural resources
Our building processes use natural
resources, including land, materials
and energy.
Environment and climate change p36
Financial resources
We maintain a robust balance sheet
to give clients, our supply chain and
shareholders reassurance that we
are a financially sustainable business.
Financial review p40
Managing our stakeholder relationships p43
Our impact
We place the highest priority on protecting
our people’s health, safety and wellbeing.
We commit to supporting our people
personally and professionally, and at every
level, so they achieve their potential. We
offer a fast-paced, exciting environment
that guides, challenges and develops them.
2,944
people employed
across the Group
at the year end
4,647
training days
delivered to
staff in the year
As a trusted partner to our clients,
we deliver high-quality buildings and
infrastructure that form the fabric of our
society, while also helping our clients to
achieve their sustainability objectives.
72%
70%
net promoter score
repeat business
Through our supply chain we support jobs
and local economies and enable our
suppliers and subcontractors to grow
their businesses alongside ours.
Gold
status from the
Supply Chain
Sustainability School
Member
of Prompt
Payment Code
Our Advantage through Alignment
programme provides a programme
of support, training and education
to key supply chain members to
engender collaborative, mutually-
beneficial relationships.
In addition to the jobs and economic
activity we generate in our communities,
we deliver buildings and infrastructure
that benefit the people living in and
around them, whether by providing
schools, offices, roads, environmental
improvements or recreational facilities.
We believe in maximising the positive
impact of our operations through active
engagement with the local community and
assessing and addressing our impacts in
relation to them.
41.1
Considerate
Constructors
Scheme score
£195,000+
charitable donations
We aim to optimise our use of natural
resources and reduce our associated
environmental impact, recognising that
environmental protection and climate
change are among the greatest challenges
we face.
95%
waste diverted
from landfill
30%
reduction in carbon
emissions from
calendar years
2018 to 2019
Carefully managing our financial resources
helps to ensure that shareholders typically
benefit from rising earnings and dividends,
while ensuring we remain soundly financed.
£141m
average month
end cash since
the disposal of
housebuilding
divisions
7
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Our investment case
Our investment proposition is driven by a progressive culture
National presence
Finance
Our national presence and local
relationships are a key strength
Robust, flexible balance sheet
and economic model
We have established regional offices and
consistently apply our strategy across
the UK. We are on numerous major
public sector and regulated frameworks,
and have strong relationships with
local clients and suppliers.
Galliford Try has a significant net cash
position, no pension scheme liabilities and
no competition for capital inside a diversified
group. The way we operate gives us high
visibility of future revenues.
90%
of 2021 revenues
already secured
Key frameworks
– Department for Education’s school
building framework (six lots).
– ProCure22 Department of Health and
Social Care Framework.
– Crown Commercial Service Capital
Works Framework.
– Defence Infrastructure Organisation
Capital Works Framework.
– hub North Scotland, hub South East
Scotland, hub South West Scotland
and hub West Scotland.
– Highways England Delivery
Integration Partnership.
– AMP7 – Yorkshire Water, Southern
Water and Thames Water.
Commercial ‘health checks’ provide an
independent assessment of reported
project performance and forecast outturn
Operating review p18
Financial review p40
8
Galliford Try Culture
Values-driven, people-orientated
and progressive
We are committed to doing the right thing
for all our stakeholders. In particular, our
people are valued and motivated, and we
appreciate the benefits brought by diversity
of background and thought. We embrace
change, invest in new technology and employ
sustainable practices to deliver lasting, positive
change for communities across the UK.
Focus
Strong position in a
growing market
We have a highly disciplined approach and
only operate in sectors where we have core
and proven strengths. This allows us to work
with long-term clients and benefit from major,
long-term public sector, infrastructure and
regulatory spending.
70%
of new work won in FY20
is with repeat clients
The Government’s investment in the
UK’s social and economic infrastructure
is a fundamental driver of demand for
our services
Market review p14
People and culture p24
9
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Chairman’s statement
A transformational year
Galliford Try has been through a transformational
period, which gives us a focused and financially sound
construction group, with a strong order book of
lower-risk contracts at appropriate margins.
This was a significant year in the history
of Galliford Try, as we completed the
strategic disposal of the Group’s
housebuilding divisions at the start of
2020. Linden Homes and Partnerships
& Regeneration were successful and
profitable businesses but, over time,
it was evident they lacked a clear
strategic fit with Construction.
We therefore took the decision to separate
them from Construction and satisfactorily
worked with the acquiror, Vistry Group plc
(formerly Bovis Homes), over several months
to achieve that objective.
In doing so, we unlocked considerable value
trapped within the businesses.
The new Group started well as an independent
business, as it benefited from the operational
review we completed in early 2019 and our
work to finalise challenging legacy contracts,
in particular the Aberdeen Western
Peripheral Route. Crucially, we ensured that
the transaction resulted in a substantial capital
injection and left us with no debt or pension
liabilities. At the year end, we therefore had
net cash of £197.2m and average month end
cash of £141m since the disposal of the
housebuilding divisions. This is an important
advantage for us, in a sector where there
have been high-profile corporate failures in
recent years.
Despite this promising start, the Covid-19
outbreak led to us operating below normal
productivity for a number of weeks. We were
required to close our sites in Scotland for a
period and while most of our sites in England
remained open, we took an early decision to
risk assess our sites and modify or curtail our
10
activities where necessary. The Group worked
closely with Government and industry bodies,
clients and other authorities to ensure we could
work safely and productively and I want to
thank our people for their resourcefulness and
dedication during these exceptional times.
While the nature of our business means that
work has been delayed rather than lost,
Covid-19 has had a significant impact on our
financial performance in the year to 30 June
2020, including reduced revenue and increased
project costs. For more information on our
rapid response to the pandemic, see the Q&A
on page 11.
Dividends
After the sale of the housebuilding divisions,
we adopted a target of paying a dividend that
was three times covered by underlying
earnings, provided it was also at least covered
by free cash flow in the period, given the
importance of maintaining our strong capital
base. However, in response to Covid-19,
we thought it prudent to cancel the payment
of the interim and final dividends to preserve
cash. We plan to resume dividends as we return
to profitability.
Management and the Board
We have an experienced Executive Board
under Bill Hocking, who previously led our
Construction business and became Chief
Executive of the Group on 3 January 2020.
Bill replaced Graham Prothero, who departed
with the sale of our housebuilding divisions.
I want to thank Graham for his contribution
during his seven years on the Board. The
seamless transition from Graham to Bill again
demonstrated the quality of our succession
planning at plc and Executive Board level,
following the internal appointments of Graham
and our Finance Director, Andrew Duxbury,
in the previous year. We now need to refresh
our succession plans and make sure they are
appropriate for the new Group.
On 6 July 2020 we announced that Jeremy
Townsend will be stepping down from the
Board this year. I would like to thank him for
his valued contribution.
The Board was otherwise unchanged during
the year. With one business rather than three,
our governance approach is more focused
and the Board has adapted well to remote
meetings during the pandemic. We may
continue to hold some meetings remotely in
future, enabling us to spend more time seeing
the business in action when we do meet in
person. Our strengthened internal audit and
risk departments have focused on how remote
working challenges our governance and
assurance, and we are confident we are in a
strong position.
People and culture
A hallmark of Bill’s leadership is his passion for
people and culture. We see Galliford Try as a
people-orientated, progressive business,
driven by strong values (page 3), which help to
determine our strategic direction and ensure
we are all working to common goals.
Prior to the onset of Covid-19, the Board had
put a lot of work into testing the Group’s culture,
whether by visiting sites, inviting people to join
us at Board meetings or in less formal settings.
Culture remains high on our list of priorities and
we will continue to work with the Executive
Board to find new ways of monitoring and
understanding it, recognising that creating the
conditions where a good culture can exist is an
ongoing process.
Two-way communication is central to a robust
culture and the Board is benefiting from Terry
Miller’s role as our designated Non-executive
Director with responsibility for engaging with
the workforce as chair of the Employee Forum.
She is also helping to shape our approach to
stakeholder engagement through chairing
our Stakeholder Steering Committee. However,
I remain very keen that all of the Board continue
to have direct exposure to our people.
Looking ahead
Galliford Try has been through a
transformational period, which gives
us a focused and financially sound
construction group, with a strong order
book of lower-risk contracts at appropriate
margins. The management team is committed
and enthused by the opportunities ahead.
Notwithstanding the uncertainties raised by
Covid-19, we are confident this positions us
for success in the coming years.
Peter Ventress
Chairman
Galliford Try Q&A with the Executive Directors
A progressive culture in action
Q&A
Chief Executive Bill Hocking and Finance
Director Andrew Duxbury answer key
questions about our performance, response
to Covid-19 and the direction of travel for
our business.
Q
Q
What is your view of the Group’s
financial performance this year?
Bill: This was a very unusual year for us. In the
first half of the year, our results were affected
by legal costs and final account settlements
on legacy work. After we disposed of the
housebuilding divisions at the start of 2020,
we were really encouraged by the Group’s
performance. The benefits of last year’s
restructuring were coming through and we
won a number of significant projects. Then
Covid-19 took hold in March and that had a
major effect on our operations and our financial
performance in the last quarter of the year.
Andrew: Covid-19 reduced our on-site activity
and we’ve incurred extra costs to introduce safe
working practices. Inevitably, this reduced our
revenue and operating profit in the year. It also
had some impact on our cash generation, which
we mitigated by revisiting variable costs and
discretionary spend, so we only had a modestly
lower cash balance at the year end.
Are you on track to achieve profitability?
Bill: Yes. At the half year results we were excited
about the strategy and nothing has changed.
We nurture long-term relationships with clients
and take on contracts where we have the
experience and expertise to deliver them
effectively. We’re still putting a lot of effort into
improving our operations and processes.
We have an order book of £3.2bn that fully
reflects the type of company we want to be,
in terms of size, the clients we contract with,
the terms and conditions of those contracts
and their cash and risk profiles. So, our
ambitions remain the same. Covid-19 means
we may just take a little longer to get there.
Andrew: The legacy contracts that held us back
are substantially finished on site. We still have
to finalise the commercial outcomes on some
of those, but the issues are now behind us.
Coupled with the quality of our order book,
that means the expected underlying trend in
our margins is up.
We can also take a different approach to our
PPP Investments business. Previously we sold
our investments to fund housebuilding. Now we
can hold investments when we want to, which
will earn us a low-risk annuity type income.
Similarly, our FM business is small but it’s
growing. Both of these businesses give us higher
margins at a lower risk than contracting and are
areas in which we will seek to use our strong
balance sheet to leverage controlled growth.
Q
Covid-19 disrupted the construction
industry. How have you responded?
Bill: We took prompt and decisive action to
ensure the health, safety and wellbeing of our
people and all those on our sites in the earliest
days of the pandemic. We risk assessed every
one of our sites and modified or curtailed
activities to ensure that no work was
undertaken if we were unable to fully comply
with the hygiene and social distancing
guidelines or if our people could not work safely,
and we strictly followed the Construction
Leadership Council’s guidelines. In line with
Government advice, non-essential Scottish
sites closed from mid-March until June.
Doing less work on-site meant we had to place
around one third of our staff on furlough leave.
To protect jobs, our most senior people and
highest paid staff took pay reductions and we
made a commitment to top-up all employees on
furlough leave to 100% of their basic pay during
March and April. Thereafter, we paid 90% of
basic annual salary for lower earners and
80% for higher earners on furlough leave.
We were also quick to implement remote
working. Some time ahead of the lockdown,
we took pre-emptive steps and placed our
back-office finance function at home to test our
systems and make sure we could still pay our
supply chain and our people. We did the same
with our IT support team. Then a week before
lockdown, we asked everyone who could work
remotely to do so.
Our investment in smart and agile working paid
huge dividends, working exactly as it should and
accelerating its acceptance across the business
as a productive and efficient way to work.
11
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Q&A with the Executive Directors
continued
Q
How has the pandemic affected
your clients?
Bill: We’ve liaised closely with our clients and
they’ve been supportive. So far, the pandemic
hasn’t significantly slowed their procurement
and we’ve been able to sign new work. Those
contracts factor in the additional costs of social
distancing and Covid-19 secure working
measures, such as staggered or double shifts
and a lot more welfare space. We’re now
more or less back to pre-Covid-19 productivity.
To drive this further, we’ve set up a Project
Efficiency Task Force made up of our regional
operational leaders. They’re identifying the
very best practices on our sites and across the
industry and embedding them in our business.
Work in the regulated sector needs to continue
regardless, as those companies have to
implement their regulatory business plans.
In the commercial sector, the demand for
private rented housing will remain but sectors
such as offices and aviation, where we have
less exposure, may be affected.
Andrew: Construction is about 6% of GDP but
few sectors have the ability to provide such
large numbers of highly skilled, well-paid jobs
across a vast supply chain. That’s recognised in
the UK’s Industrial Strategy and was also
shown by the Government’s decision to class
construction employees as key workers during
the lockdown. Investment in construction
also means investment in the country’s assets.
That’ll have long-term benefits for productivity,
which has stagnated in the UK since the
financial crisis.
Q
Q
What were the strategic highlights of
the year?
Bill: The successful disposal of the
housebuilding divisions was key. That’s really
set us up for a bright future as a well-capitalised
UK construction business.
We will continue to update our strategy to
benefit our business in line with events –
such as holding investments and increasing our
co-development activities – but fundamentally
it’s unchanged. We’re focused on key markets
and clients where we can sensibly execute
work and make a profit. Some of our wins this
year, such as our place on 11 lots for the new
Crown Commercial Services Framework, are
testament to our strengths and our track record
in our chosen sectors.
We’ve also continued to work hard in the areas
that underpin our strategy and we’re making
good progress. We won BIM Constructor
of the Year, which recognised the way we’ve
integrated this technology into our business
to improve project delivery. Our focus on our
culture and people has also been key and that’s
reflected in awards such as our Leaders in
Diversity accreditation and our recognition
as a Top Graduate Employer and Top
Apprentice Employer.
Andrew: We’re continuing our journey of
sharpening the way we operate, having focused
a lot of attention on bidding, risk management
and the quality of our order book. That means
making sure we have shorter reporting lines
and real clarity of reporting throughout the
business, as well as simplifying processes and
controls that were relevant for three businesses
but cumbersome for one. With many people
remote working, we’re also keeping a close eye
on our control framework to ensure it’s still
operating effectively.
Many businesses in the supply chain
are under financial pressure because
of the pandemic. How are you
supporting them?
Andrew: We’d already improved our payment
procedures this year and were readmitted to
the Prompt Payment Code in December 2019,
which is very important to us. Our payment
performance improved again in the six months
to 30 June 2020.
The concern for the industry is that smaller
companies in the supply chain may fail.
We’re working very closely with our supply
chain, making sure we pay them promptly and
talking to smaller companies about how we can
support them, for example using our Advantage
through Alignment programme, and by sharing
knowledge with them. That will minimise the
risk of failure but only if the whole industry
provides similar support.
The Government also has an important role in
continuing to support our sector, for example
through the Cabinet Office Procurement Policy
Note which provides guidance on payment by
public bodies during the outbreak.
Q
How do you think Covid-19 will affect
your markets?
Bill: Government policy supported our strategy
before the pandemic, such as the levelling
up agenda for the North and Midlands,
decarbonisation through Modern Methods of
Construction, the National Roads Fund and
environmental improvements such as flood
defences (page 14). All of that work still
needs doing. Post Covid-19, we believe the
Government will use construction as a stimulus
as it is one of the fastest ways of boosting
the economy.
12
Q
You talk a lot about people and culture.
Why is that so important to you?
Bill: Construction is all about people, which is
why the skills, expertise and culture you nurture
as an organisation are so important. I believe
that if you create a culture and working
environment where everyone feels valued
as an individual, and is motivated to give their
best, you will succeed in your ambitions.
That’s why we put such a focus on being a
people-orientated, progressive and values-
driven business. A major part of that is to
genuinely prioritise inclusivity, knowing that it
facilitates the diversity of thought, innovative
approaches and experiences that create
stronger, better balanced teams. Ultimately
that enriches our culture and enhances our
offering for our stakeholders.
Our senior leadership team has set that
example, and live those values, so that our
teams, policies and the way we recruit and
induct people embody the company we aspire
to be. Our people, at all levels, have responded
to that approach. The challenge for most big
companies is to get everyone on the same
wavelength and when I meet our teams around
the country, I’m always struck by how many
are absolutely aligned to our message and
understand what we are trying to achieve
through it. This was clearly demonstrated in the
way our people responded to the challenges
posed by the pandemic, which I am very proud
of and thankful for.
Q
Innovation can differentiate the
Group from other companies.
How are you improving the Group’s
ability to innovate?
Bill: We’re an innovative business already.
Our people love solving problems and Covid-19
has really shown how we can come up with new
ideas. What we’ve been less good at in the past
is identifying a new idea as innovation, so we
capture and reuse it. Our Project Efficiency
Task Force now leads our digital, innovation
and technical work and marries them all
together. This will give more momentum to our
innovation and how we capture and leverage it.
Q
How are you responding to the key
sustainability issues facing Galliford Try?
Bill: We’re already doing a lot of work across
Environmental, Social and Governance (ESG)
areas whether it’s through our inclusive
environment, engaging with communities,
Galliford Try supporting the supply chain, including
environmental considerations in our design
standards and construction practices or
employing off-site construction techniques to
reduce carbon emissions.
This was recognised in our inclusion in the
FTSE4Good Index for the sixth consecutive
year (page 35) but I still want us to do better as
climate change and environmental protection
are one of the biggest challenges for the
whole industry.
Q
What is the outlook for the business?
Andrew: The work we’ve done over the last
year or so has positioned us exactly where
we want to be in a post-Covid world. We’re in
the right sectors with the right clients, with a
high-quality order book, a strong balance sheet
and plenty of liquidity. We’ll continue to focus
on growing the bottom line rather than the top
line, to drive sustainable returns.
Bill: Our priority is to ensure we bounce back
from Covid-19 and the prospects for that are
good. Our order book is strong and, although
there’s still a fair amount of uncertainty due to
Covid-19, we have visibility of future revenues
and we’re working hard to increase productivity
to complete current projects on time and
to budget. We’ve got an excellent team,
a strong foundation and we’ll continue to work
efficiently within the new on-site constraints,
so I’m bullish about the future.
Applying temporary salary reductions of
between 15% to 25% for our most senior
employees.
Cancelling payment of the dividend.
Identifying and deferring/cancelling
discretionary expenditure.
Reviewing client contracts to identify
and address potential contractual risk
exposures and/or protections.
Communications
Throughout the period, we have kept our staff
and other stakeholders informed of the actions
we are taking through timely and detailed
communications, including:
Regular email and mobile text
communication to our staff to keep them
updated on the latest guidance and the steps
we are taking to maintain operations
throughout the crisis.
A mobile app to facilitate rapid
communication of information to staff.
Regular engagement with our clients and
supply chain to assess the risks and feasibility
of maintaining site operations.
Updates to the market on operational
impacts of Covid-19 to the business.
Covid-19 response – risk management in action
The Covid-19 pandemic has had an
impact on most of our principal risk
themes. These risk combinations and
the fast-moving nature of the crisis have
presented an unprecedented challenge
which has required risk assessments
and mitigation responses to be
developed on a daily and, at times,
hourly basis.
Our response has been agile, evolving
as the situation has changed and
fully in compliance with Government
guidelines. The key elements of our
response are summarised below.
Governance and co-ordination
The response to Covid-19 has required strong
leadership and decision-making in a rapidly
evolving set of circumstances. This has been
achieved from the very earliest days of the
crisis including:
Our response being led by the Chief
Executive and the Executive Board.
Daily Executive Board meetings and
twice-weekly meetings with the Senior
Leadership Team.
Effective engagement and co-ordination
with Government, industry groups and
with our peer group.
Clear and transparent communications to
our clients, staff and stakeholders.
A best practice website providing guidance
and examples of how to implement the
revised Site Operating Procedures.
Protecting our people and public health
Our number one priority has been to
protect the health and safety of our staff,
subcontractors and the communities in which
we operate. Key actions to achieve this include:
Monitoring and adhering to Government
guidance throughout the crisis and
reinforcing Government advice on hygiene,
self-isolation and social distancing.
Performing thorough site risk assessments
and only operating where it is possible to
observe the operating procedures and
guidance issued by the Construction
Leadership Council.
Procuring additional PPE and hygiene/
cleaning products to enable sites to
operate safely.
Maintaining business operations
It has been important to maintain the office-
based activities and services that support the
operations of our site-based teams. We have
achieved this by deploying a range of business
continuity responses, including:
Leveraging our investment in IT
and cloud-based applications to
facilitate a seamless transition to
remote working, including extensive
use of video-conferencing.
Anticipating social distancing restrictions
in advance of their introduction.
Assessing the potential risks associated with
home-working and modified business
processes and implementing additional
monitoring controls.
Where appropriate, safely, securely and
temporarily closing site and office facilities.
Ensuring financial viability
One of the key areas of focus has been to
ensure that the temporary disruption to our
operations does not have a long-term impact on
the financial health of the business. Key actions
that we have taken to protect the financial
viability of the business include:
Maximising the value of work that is certified
and paid by our clients and ensuring that
we continue to keep cash flowing to our
subcontractors and suppliers.
Modelling the potential cashflow impact
of site closures under different scenarios.
Utilising the financial support
available through the Coronavirus
Job Retention Scheme.
13
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Market review
Driven by long-term demand in our markets
The majority of the Group’s revenue
derives from public sector and regulated
clients. The Government’s investment
in the UK’s social and economic
infrastructure is therefore a
fundamental driver of demand for our
services. Activity in the private sector
is more closely linked to the UK’s
economic cycle. Constraints on the
labour supply are another important
factor in our market and the availability
of labour may be affected by the UK’s
immigration policy once the transition
period for the departure from the
EU ends.
Investment in social and
economic infrastructure
The UK needs to invest substantial
sums in the infrastructure that
underpins the economy and key
public services. This investment is
being driven by powerful long-term
trends. These include:
A growing and ageing population.
The UK’s population has increased
steadily in recent years, reaching 66.4
million in 2018 (source: ONS). This trend
requires increased investment in both
education and healthcare. In September
2019, the Government announced a
£14bn increase in the schools budget
to 2022/23, providing more scope
for investment in school buildings.
Meanwhile, the NHS has a capital budget
of around £7bn (source: gov.uk).
Ageing or inadequate infrastructure.
Much of the UK’s infrastructure is ageing
and no longer fit for purpose in a modern
economy. Examples of the investment
expected include the National Roads
Fund, which ringfences receipts from
vehicle excise duty and will see £28.8bn
spent on the road network in England
between 2020 and 2025. The Ministry
of Defence also intends to spend £4.6bn
over the next few years to optimise
military sites. The Government’s levelling
up agenda, through which it intends
to invest in the Midlands and North
of England to improve economic
performance, also plays to our strengths.
14
Climate change. Mitigating the impacts of
climate change will require investment in
areas such as water services, addressing
drought challenges and flood protection.
Planned environmental spending is
estimated at £15bn in the coming five
years (source: Ofwat).
In June 2020, the Prime Minister announced
a “New Deal” which puts jobs and
infrastructure at the centre of the
Government’s economic growth strategy
(source gov.uk).
Our response
The strategic review we carried out in April
2019 focused our business on key sectors
that are set to benefit from these trends,
such as education, defence and health within
Building, and Highways and Environment
within Infrastructure. These sectors are
each headed up by sector leads, enabling us
to hone our approach in each area.
UK building budget1
Education:
£14bn
For primary and
secondary education
Defence:
£4.6bn
To optimise military sites
Health:
£7bn
As part of the capital budget
UK infrastructure budget
Highways:
£28.8bn
Spend through the National
Roads Fund
Environment2:
£15bn
For new and improved services,
flooding, droughts
1 Source: gov.uk
2 Source: Ofwat.
Galliford Try Economic conditions
affect demand
In the commercial sector, levels
of construction are affected
by the economic cycle and by
business confidence.
While it is currently uncertain how long
and deep the Covid-19 related economic
downturn will be, it is clear that the
pandemic is having a significant impact on
certain subsectors and we expect reduced
activity in the near-term in areas such as
offices, hotels, leisure and student
residential. Conversely, we expect projects
for private rented accommodation to
continue, given the UK’s pressing need
for new housing.
Our response
We remain open to carefully selected
projects with blue-chip commercial
clients, which meet our criteria in relation
to risk and margins. In addition, we continue
to look at co-development opportunities in
markets such as the private rented sector,
using the capabilities of our PPP
Investments business.
Constraints on the
labour supply
Skilled and experienced people
are in demand across the industry.
London and the South East are
particularly reliant on EU nationals
to meet this demand.
The UK’s proposed post-Brexit immigration
regime has the potential to limit the
labour supply.
Our response
We develop long-term relationships with key
subcontractors to ensure that we remain a
priority customer. We seek relationships
that deliver mutual benefits by offering
access to training such as our award-winning
behavioural safety programme. We aim to
provide key subcontractors with greater
visibility of our pipeline of projects.
Initiatives such as agile working and our
focus on wellbeing make Galliford Try a
more attractive employer and will help us
to attract more diverse applicants for roles,
broadening the pool of potential recruits we
can choose from. Our investment in training
and development ensures we have the skills
we need across the Group.
Beyond that, we ensure we actively promote
our industry to school and college leavers,
graduates and experienced people.
15
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Our strategy
Delivering long-term value
Our strategy
Our three-part strategy – Retain, Improve, Deliver – is set out below. Underpinning
this strategy is our commitment to operating sustainably, by balancing financial
performance with our obligations to all stakeholders, so we create long-term value.
Retain
our solid platform for
sustainable growth
Improve
our operations to drive
margin progression
We intend to build on our
strengths, including our skilled
people, health and safety record,
national coverage with local
delivery, excellent position on
frameworks, and focus on the
public and regulated sectors.
To support our margin
progression, we will continue
to: develop capabilities
in FM, Investments and
co-development alongside our
core activities; improve our risk
management; attract, retain and
develop a diverse workforce;
further enhance our investment
in digital technologies, systems
and communication tools; and
further align the supply chain
with our operations.
Deliver
strong, predictable
cash flows and margin
improvement
Ensuring we only bid for
high-quality work with
appropriate margins, while
continuing to improve the way
we work, will enhance our
margins. This, in turn, will help
us to deliver consistent and
growing cash flows.
Progress in the year
Progress in the year
Progress in the year
Disposed of the housebuilding divisions
to create a focused construction group
with a strong balance sheet.
Won positions on significant frameworks
in the public and regulated sectors.
Continued to focus on improving our
strong health and safety record.
Rapidly responded to Covid-19 by
introducing mitigation measures to
protect everyone on our sites.
Continued to focus rigorously on risk
management to ensure we only take on
appropriate work.
Continued to invest in our people,
enhance inclusion and diversity, recruit
new talent and ensure we have strong
succession planning.
Continued to invest in our digital technology.
Worked closely with the supply chain, in
particular to support smaller companies
during Covid-19.
Completed legacy contracts on site,
positioning the business for margin growth.
Strong order book of newer work, which
supports our margin ambitions and has
appropriate cash and risk profiles.
16
Galliford Try Key performance indicators1
Revenue2 £m
£1,089.6m
Actual 2020
£1,402.9m
Actual 2019
Target
The Group’s revenue target is
£1.2bn–£1.5bn per annum in
normalised operational conditions.
Definition
Revenue earned by the Group, less any
exceptional revenue in the year.
Performance
The Group’s revenue prior to the onset of
Covid-19 reduced in line with expectations,
following the 2019 strategic review. Covid-19
reduced revenue due to site closures and
lower output.
Operating margin2 %
(5.7)%
Actual 2020
(1.2)%
Actual 2019
Target
We are targeting a minimum divisional margin
of 2% across Building and Infrastructure by
2022 and a Group-wide margin of 2%, in the
medium term, after allowing for PPP and
central costs.
Definition
Profit or loss from operations (stated
before exceptional items, net finance
income, amortisation, tax and share of
joint ventures’ interest and tax) as a
percentage of pre-exceptional revenue.3
Performance
The Group’s operating margin, after deducting
the net loss in central costs and PPP
Investments, was (5.7)%.
(Loss)/profit before tax2 £m
£(59.7)m
Actual 2020
£(17.2)m
Actual 2019
Cash £m
£197.2m
Actual 2020
£(56.6)m
Actual 2019 net debt
Target
We are targeting monthly average cash and
being cash generative in the medium-term.
Accident Frequency Rate
0.07
Actual 2020
0.10
Actual 2019
Definition
Profit before tax excluding exceptional items.
Performance
The Group made a pre-exceptional loss
before tax of £(59.7)m for the year, reflecting
the impact of Covid-19 and legal and final
settlement costs in relation to legacy contracts.
Definition
Average month end cash.
Performance
Since disposal of the housebuilding divisions
on 3 January 2020, the Group’s average month
end cash was £141m.
Definition
Reportable RIDDOR accidents per 100,000
hours worked.
Performance
We reduced our Accident Frequency Rate
(AFR) from 0.10 last financial year to 0.07.
See Health and Safety p27
1
‘Gearing’ and ‘return on net assets’ have been removed as key performance indicators this year, following the
disposal of the housebuilding divisions during the year. All the Group’s debt facilities were repaid and cancelled
when the disposal was completed and therefore the Group no longer has any debt (and therefore gearing).
‘Return on net assets’ provided a measure of the profit returns generated by the Group’s invested capital and
was primarily relevant only for the Partnerships & Regeneration business.
2 Pre-exceptional.
3 All future references to profit or loss from operations data and ratios are consistent with this definition.
Reducing costs and
build times through
Optimum Schools
Our Optimum Schools concept
continues to evolve as we combine
innovations in technology, process
and construction methods to
deliver solutions for the schools
of the future.
With ever-increasing demographic
pressure pushing the need for
new schools and the Government
re-committed to the replacement of
the dilapidated parts of the school
estate, proactive, cost-effective
approaches to education building
are required.
Since its initial introduction in 2012,
Optimum Schools has been a
significant part of Galliford Try’s
education offering, utilising a
‘kit-of-parts’ approach that assists
standardisation, reducing cost
and programme time, while
maintaining a design process that
allows for bespoke solutions for
each site and situation.
Recent examples include the
Kingsteignton Primary School in
Devon, where the project team
achieved a 14-week programme
saving thanks to a repeatable design
that enabled the use of Modern
Methods of Construction.
14 weeks
saved in programme terms for
the Kingsteignton Primary School
project in Devon.
17
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Operating review
A well-capitalised standalone construction business
As described in the Q&A with the
Executive Directors on pages 11 to 13,
this has been a period of significant
change, with the successful strategic
disposal of the Group’s housebuilding
divisions transforming Galliford Try into
a well-capitalised, UK construction-
focused business.
Our new structure allowed the Group to
respond quickly and decisively to the Covid-19
pandemic, with health and safety remaining our
top priority. Prior investment in smart and agile
working facilitated a seamless transition to
remote and efficient working practices for
those able to work from home. The majority of
our construction sites in England continued
operations under strict safety guidance
throughout the Covid-19 lockdown. However,
all non-essential sites in Scotland were closed
in accordance with Scottish Government
requirements from mid-March to late June.
Production across the UK normalised
around July.
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 contributed to a reduction in
gross margin in the year.
In line with strategy, we continued to maintain a
strong pipeline of work in our chosen sectors,
with excellent positions on several key
frameworks in the public and regulated sectors.
Throughout the Covid-19 pandemic, we have
been encouraged by the demand in our sectors
and look to further enhance this position
through the continued disciplined approach to
project selection and rigorous risk management.
Order book
The total work won during the year of £1.4bn
contributed to an order book at 30 June 2020
of £3.2bn (2019: £2.9bn). Of this, 68% was in
the public sector (2019: 79%), 13% was in
regulated industries (2019: 5%) and 19% was
in the private sector (2019: 16%). The business
has secured 90% of planned revenue for the
2021 financial year. Frameworks generate a
high level of repeat business for us and they
provided 90% of our year end order book
(2019: 79%). The average contract size in
Building’s order book was less than £20m.
Of Building’s order book of £2.2bn at
30 June 2020, around 80% was provided
by the four largest sectors, with 25% in
Education, 23% in Defence and Custodial,
18% in Facilities Management and 12% in
Health. In Infrastructure, around 60% of
the order book is provided by Highways,
with the remainder mainly in Environment.
Strong visibility of workload
E
D
F
C
Building
£2.2bn
A
B
A Education
B Defence & Custodial
C Facilities Management
D Health
E Other public sector
F Commercial
£m
531
504
395
263
195
264
C
B
Infrastructure
£1.0bn
A
A Highways
B Environment
C Other civil engineering
£m
598
384
28
Our relationships with our clients are
built on transparency, honesty and,
above all, our values of Excellence,
Passion, Integrity and Collaboration.
We look to achieve exceptional
standards of service and satisfaction
through continual monitoring,
assessment and refinement of
our delivery processes.
18
Galliford Try Retain
our solid
platform for
sustainable
growth
Ensuring client satisfaction
Our relationships with our clients are built
on transparency, honesty and, above all,
our values of Excellence, Passion, Integrity
and Collaboration. We look to achieve
exceptional standards of service and
satisfaction through continual monitoring,
assessment and refinement of our delivery
processes. We also work collaboratively to
become our clients’ long-term partners and
have been accredited with ISO 44001 for
our approach to collaboration.
The quality of our work is ensured through
regular internal audits conducted by our
dedicated quality managers, as well as external
audits of our ISO 9001 certified management
system. Our Delivering Excellence framework
additionally helps us to achieve high levels of
client satisfaction.
Client satisfaction is independently assessed
by a third party on a project by project basis
and we use a dedicated software platform to
internally analyse the data and develop
improvement plans. In 2020, we scored eight
out of ten in our client feedback surveys
(2019: eight) and achieved a high net promoter
score of 72 (2019: 78).
Client satisfaction is linked to quality and we
have created a new Assurance Director role,
covering both safety and quality. We are also
increasing the use of technology to record
and track site inspections, ensuring each
element of a project is completed to the
required high standards.
A framework is a multi-year
agreement between clients and
contractors that enables contractors
to pre-qualify for upcoming contracts
by establishing governing terms for
projects that may be awarded during
the life of the agreement.
90%
of our work is in frameworks
Our key framework positions
We form long-term partnerships with our clients, aligning their needs on a project-to-project
basis with their long-term ambitions and requirements, and are consequently a valued
partner on many key frameworks. A framework can generate tens or hundreds of millions
of pounds of work for us, over its duration.
Highways England Delivery
Integration Partnership.
Manchester Airports Group Capital
Delivery Framework.
Gatwick Airport’s Capital
Delivery Framework.
AMP7 – Yorkshire Water, Southern
Water and Thames Water.
Scottish Water.
North East Procurement Organisation.
Smart Motorways Programme.
Midlands Highways Alliance.
Network Rail Control Period 5.
Department for Education’s school
building framework (six lots).
LHC Schools and Community
Buildings Framework.
Crown Commercial Service (CCS)
Capital Works Framework.
Ministry of Justice Strategic Alliance
Framework (multiple lots).
Defence Infrastructure Organisation
Capital Works Framework.
ProCure22 Department of Health and
Social Care Framework.
hub North Scotland, hub South East
Scotland, hub South West Scotland and
hub West Scotland.
London Construction Programme.
Manchester City Council Highways and
Infrastructure Framework.
NEUPC Universities Framework.
Scottish Procurement Alliance.
Southern Construction Framework.
North West Construction Hub.
YORbuild/YORcivil.
University of Strathclyde.
Procure Partnerships.
19
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial informationImproveDeliver Operating review
Building
Performance
Revenue (£m)
(Loss) from
operations (£m)
Operating profit
margin (%)
Order book (£m)
Pre-exceptional
Post-exceptional
2020
719.9
(51.9)
(7.2)
2019
858.3
(9.5)
(1.1)
2020
719.9
(53.9)
(7.5)
2019
858.3
(10.4)
(1.2)
2,152
2,045
2,152
2,045
Building operates through nine regional
business units, serving a range of public
and private sector clients across the UK,
with a focus on the education, defence
and health sectors, where we have core
and proven strengths. Building retains a
substantial presence in Scotland,
operating as Morrison Construction.
Building generated revenue of £719.9m
(2019: £858.3m), which equates to 66% of
the Group’s pre-exceptional revenue. The
pre-exceptional loss from operations1 was
£51.9m (2019: £9.5m), resulting in a (7.2)%
margin (2019: (1.1)%). The profit reduction
reflects the impact of the Covid-19 outbreak
and the settlement of final accounts on legacy
contracts, with current projects delivering an
encouraging performance.
During the year, Building won contracts and
positions on frameworks worth over £1,021m.
This included securing a place on 13 lots across
the UK for the Crown Commercial Services
Construction Works and Associated Services
major framework. The framework is available
to all public sector organisations to procure
construction services and has a total value of
approximately £20bn.
Other notable contracts secured during the
year included framework contracts with the
University of Glasgow and the University of
Birmingham; contracts for Castlebrae High
School in Scotland, a new education campus in
Hexham for Northumberland County Council,
The Exchange for the University of Birmingham;
and a contract to build a new women’s prison in
Scotland. The division also won a contract for
the 1-4 Marble Arch mixed-use development
and two mixed-use residential schemes for an
urban development specialist, both in London.
Our FM business continued to complement our
work in Building.
£1,021m
Contracts won and positions
on frameworks
£20bn
Construction Works and Associated
Services major framework value
1 Defined as profit or loss from operations stated
before exceptional items, net finance income,
amortisation, tax and share of joint ventures’
interest and tax.
20
Galliford Try Improve
our operations to
drive margin
progression
Embracing innovation
We take a ‘best in class’ approach to innovation, maximising
the expertise of our Technical teams across our divisions
under the leadership of our Technical Services Director.
This enables a ‘best in class’ approach to our digital agenda;
by embracing technological advances we are safely and
efficiently delivering quality assured projects for our clients.
Our whole team approach to BIM (Building Information
Modelling) is an example of our success, including how we
have assimilated it into our processes to focus fully on
project delivery outcomes.
Our approach was recognised at the BIM Awards, which
celebrate the innovators of digital construction and those
who are redefining the construction industry, with the coveted
title of BIM Constructor of the Year in 2019.
Building a sustainable future means we
need to adapt continuously to new and
emerging challenges, improving and
embedding our learning and innovation
using the same drive we’ve shown in our
response to Covid-19.
Sean Blackmore
Technical Services Director
21
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial informationRetainDeliver Operating review
Infrastructure
Performance
Revenue (£m)
(Loss)/profit from
operations (£m)
Operating profit
margin (%)
Order book (£m)
Pre-exceptional
Post-exceptional
2020
357.1
2019
527.0
(1.8)
(0.5)
1,010
(5.5)
(1.0)
825
2020
389.1
25.5
6.6
1,010
2019
524.2
(51.0)
(9.7)
825
£135m
Overall value to upgrade the
A303 in Somerset
£100m
Expected work from Yorkshire
Water’s framework over the five years
The Infrastructure business carries out
civil engineering projects across the UK,
focused on Highways and Environment
(incorporating our activities in water,
wastewater and flood alleviation).
Infrastructure’s pre-exceptional revenue was
£357.1m (2019: £527.0m), which equates to
33% of the Group’s pre-exceptional revenue.
The pre-exceptional loss from operations
was £1.8m (2019: £5.5m), resulting in a (0.5)%
margin (2019: (1.0)%). There is an improvement
in pre-exceptional profit despite the effect of
final account settlements, and the impact of
Covid-19. Statutory profit included exceptional
income of £28.0m on settlement of AWPR.
Infrastructure won contracts and positions on
frameworks worth over £377m during the
year. These included the Highways business
being appointed to two schemes by Highways
England, under the new Regional Delivery
Partnerships Framework. The larger of these
schemes is a series of five projects to upgrade
the A47. The other major scheme is to upgrade
the A303 in Somerset. Highways was also
appointed to the YORcivil major works
framework, which enables northern local
authorities to procure maintenance and
construction and has a total value of £2bn.
The Environment business was appointed
to AMP7 frameworks for Southern Water,
Yorkshire Water and Thames Water. The
appointment by Southern Water is for two of
its design and build frameworks, with Galliford
Try’s share of the business expected to be
worth approximately £240m. Environment also
expects to secure around £100m of work over
the five years of Yorkshire Water’s framework.
22
A pioneering
partnership
for the
driverless
revolution
Our ability to innovate has been
recognised by Highways England,
who have awarded our Highways
business and Loughborough University
funding to conduct pioneering research
that will advance our knowledge of
how driverless vehicles can be safely
introduced to the UK’s Strategic Road
Network (SRN).
The decision came as a result of a national
competition in which the partnership won
the ‘Innovation’ category.
This research is necessary because it is
not yet known how the existing road
infrastructure will accommodate
Connected and Autonomous Vehicles
(CAVs), which have developed at a fast
pace. The CAVIAR (Connected and
Autonomous Vehicles Infrastructure
Appraisal Readiness) project will directly
address this challenge.
Using advanced technology, CAVIAR will
investigate how CAVs operate in a range
of challenging scenarios and examine
how the SRN will need to evolve to
enable their safe and efficient operation
within a complex highway environment.
Galliford Try PPP Investments
Performance
Revenue (£m)
(Loss)/profit from
operations (£m)
Net interest income
2020
8.2
(0.5)
2.9
2019
17.0
4.5
1.8
Directors’ valuation
(£m)
40.7
41.6
PPP Investments delivers major
building and infrastructure projects
through public private partnerships.
The business leads bid consortia and
arranges finance, making equity
investments and managing construction
through to operations.
During the year, we invested £6.6m in equity
in three schemes in Scotland, and sold three
non-core investments that generated a profit
on disposal of £0.6m (2019: £6.9m). At the
year end, the directors’ valuation of our PPP
portfolio was £40.7m (2019: £41.6m), which is
the fair value included in the balance sheet
(using a 9% discount rate). The valuation
compared with a value invested of £34.9m
(2019: £34.9m).
With the reduction in traditional PPP/PFI
bidding opportunities, PPP Investments
has continued to move its focus towards
co-development projects and at the year
end it was preferred bidder on two PRS
(Private Rented Sector) schemes with a
gross development value of £117m.
£6.6m
Invested in three equity schemes
in Scotland
The objective of the project is to evaluate
roadway readiness for CAVs with
the aim of accelerating their successful
deployment. The research has the
potential to influence the industry,
not only nationally but globally too,
as we prepare for the CAV revolution.
Jon de Souza
Research & Development Manager,
Galliford Try
23
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information People and culture
Success comes from our people
Key Performance Indicators1
2,944
employees across our business
at the year end
(2019: 3,399)
4,647
training days delivered
(2019: 8,536)
1.5
average training days per employee
(2019: 2.5)
240
graduates, apprentices or trainees
(2019: 299)
12.8%
churn rate
(2019: 11.5%)
1 Excludes discontinued housebuilding operations.
24
We look to employ people who
are passionate about their work
and support them to do their
best every day.
Policies and management
Our policies encourage behaving with integrity,
honesty and fairness.
Our Resourcing Policy sets out how we recruit
people with the right values, behaviours, skills
and experience. It is underpinned by both our
Leadership Framework, which outlines what
leadership looks like to us and the capabilities
that it comprises, and our Code of Conduct,
which defines the behaviours we expect and
our ethical standards.
We encourage difference and promote
inclusivity, believing that diversity of thought,
approaches and experiences enrich our
culture, as set out in our Equality, Diversity
and Inclusion Policy.
We make all of our people aware of our policies
on joining, within contracts of employment,
inductions and new starter packs, and make
the policies available through our Business
Management System (BMS) and intranet.
Any new or materially updated policies are
communicated through news management
cascades as well as all-staff communications,
including training, where necessary. We also
mandate training on key themes such as
diversity, discrimination, GDPR, anti-bribery
and cyber security.
As well as internal reporting, we also have an
independent whistleblowing facility, which
allows individuals to report concerns
anonymously.
Performance1
The employee churn rate is a key performance
indicator for the Group and shows the
proportion of our employees who voluntarily
leave during the year. It was 12.8% for 2020,
compared with 11.5% in 2019.
We delivered a total of 4,647 training days
during the year (2019: 8,536), equivalent to 1.5
days per employee (2019: 2.5). This decrease
can be attributed to a focus on core courses,
less demand for longer courses from employees,
a decline in booking of training due to the
Covid-19 outbreak, and increased availability
of ‘unrecorded’ or informal online training and
webinars through the professional institutions
that employees can access, both through
Galliford Try membership and otherwise.
Initiatives
Inclusion and diversity
Creating an environment in which everyone
feels valued as an individual and is motivated
to give their best results in stronger, better-
balanced teams. We believe that having an
inclusive culture is key, since inclusivity leads
to diversity. Diversity for us means valuing
difference and reaping the benefits of
alternative viewpoints, ways of thinking,
experiences and backgrounds. Our investment
in agile working has supported our ability to be
Galliford Try flexible for those who have a requirement or
preference to work from home, whether for
family/care reasons or because of a disability,
so we can recruit from a more diverse pool
of candidates.
Gender balance
Our gender diversity is shown in the table to
the right. We aim for gender balance at all levels
across the Group, recognising that it will take
ongoing work to achieve this. However it is
encouraging that the gender mix in our business
generally has been more balanced in our
incoming talent pool in the graduate population
in recent years.
Senior Grades3
Total Group
Gender1
Ethnicity2
Female
8%
24.2%
Male
92%
75.8%
BME
1.4%
5.6%
White
Unknown
75.5%
64.0%
23.1%
30.4%
1 Gender and ethnicity figures are based on employee numbers at year end.
2 Black and Minority Ethnic (BME).
3 Senior grades are defined as job grades A–D which encompasses senior managers and directors,
excluding Board directors.
Attracting more women to our business and industry
We use a number of methods to ensure we attract diverse talent and our gender-focused activities can be seen below:
Objective
Progress made
Future
Recruitment
Review and update our policies.
Review our approach to early
careers recruitment.
Reviewed all policies through
a diversity lens.
Our family-friendly policies are
published on our website to enable
greater transparency as a potential
employer and through recruitment.
Changed our approach to ensure a
more inclusive focus (less emphasis
on traditional technical skills and
remodelled assessment centre).
Continue to review and update
as required.
Focused recruitment from outside of
the traditional ‘engineering degrees’.
Shortlist female candidates for
all senior management positions.
Targeting female candidates is a
requirement for all senior positions.
Continue to increase the conversion
of candidates to offers.
Corporate induction.
Inclusion session for all new employees
added to our inductions.
Refinement of session and reinforce
importance of our Diversity &
Discrimination training modules.
Develop a women
returners programme.
Proposal developed.
Retention
Establish a women’s forum/network.
Established and held first event.
Targeting implementation and
promotion in 2020/21.
Further network events planned
in 2020/21.
Promote flexible working and increased
promotion of career breaks.
Promotion of our Agile Working
programme.
Refresh and further update our
Agile Working programme.
Family-friendly policies.
Part of wider encouragement of
flexible/agile working.
Review of our maternity and adoption
leave policies.
Progression Monitor pipeline of talent.
Development plans for all females
in talent pools.
Implement inclusive
development programmes.
Senior females attending specific
external personal development
programmes eg School for CEOs
Runway programme.
Introduction of mentoring/reverse
mentoring programme for females in
talent pools.
Inclusive recruitment project to be
launched, building on our values-based
recruitment workshops.
25
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information People and culture
continued
8%
of our workforce is made up of
graduates, trainees and apprentices
We continue to bring new talent into the
Group as apprentices, graduates and
trainees. Each of these routes is
important to us and we want to be an
organisation where everyone has an
equal chance of success, no matter
how they joined us.
1. Our annual Graduate Welcome
event is designed to give new
starters an opportunity to hear
about our business directly from the
Chief Executive to understand what
values and behaviours we seek and
to empower them to shape their
career with us.
2. Our approach to technology and
agile working has long played a key
role in attracting talent.
26
Attracting more women to Galliford Try
requires us to be more proactive in explaining
our strengths as an employer. We are therefore
sponsoring a Women in Construction event,
with our Chief Executive as keynote speaker.
Succession planning
Each business unit is responsible for its own
succession planning. We then aggregate those
plans, giving us good visibility of our key talent
across the Group. The Nomination Committee
and Executive Board review our succession
plans on a regular cycle.
Recruitment
We continue to bring new talent into the
Group including apprentices, graduates and
trainees. Each of these routes is important to
us and we want to be an organisation where
everyone has an equal chance of success.
We are currently trialling a virtual assessment
centre, which will assist recruitment during
the Covid-19 pandemic.
Learning and development
Having finalised the career pathways within
our learning and development framework
last year, we launched phase two this year by
adding the key skills required to be successful
in a particular role. Our people can now
see how they need to develop themselves in
order to support their progression. This is
complemented by a wide range of training
modules, accessible through the GT Academy,
our online portal of content to aid personal
and professional development. As a result
of the pandemic, we are also delivering more
training remotely.
1.
2.
Performance management
The shift to agile working is placing ever-greater
emphasis on our managers having strong
performance management skills, recognising
that we must empower our people to deliver
and hold them to account for their output,
rather than focus on presenteeism. We have
therefore developed a toolkit to help line
managers have conversations about
performance, as well as providing tools,
hints and tips through the GT Academy.
Embedding culture
Embedding and reinforcing our culture
is a continuous process. We have regular
communications about our Code of Conduct
and our values. The Code and our values are
also a key part of our corporate induction
process, which is led by a member of the
Executive Board and explains what our
values mean and how to live by them.
For more on the importance of our culture,
see the Q&A with the Executive directors p11
Our values
Excellence
Striving to deliver the best.
Passion
Committed and enthusiastic
in all that we do.
Integrity
Demonstrating strong
ethical standards with
openness and honesty.
Collaboration
Dedicated to working
together to achieve results.
Embedding and reinforcing our
culture is a continuous process.
We have regular communications
and refresher programmes
around our Code of Conduct
and our values.
Galliford Try Health and safety
We are committed to effectively managing
all aspects of health, safety and welfare
Accident Frequency Rate1
(RIDDORs per 100,000 hours worked)
Accident Incident Rate1
(RIDDORs per 1,000 people)
0.10
0.08
0.08
0.07
0.07
2.48
2.00
2.00
1.48
1.48
Target
2019
Actual
2019
Target
2020
Actual
2020
Target
2019
Actual
2019
Target
2020
Actual
2020
Our objective is to create and maintain
an environment where care for our
people and those who work with us
is our top priority. Our approach is
delivered through our award-winning
and industry-leading behavioural safety
programme, Challenging Beliefs,
Affecting Behaviour. Our focus on
wellbeing remains high and has never
been more important than during
the current period.
Policies and management
The Group’s Health and Safety Policy
establishes our commitment to effectively
managing all aspects of health and safety,
and to taking all reasonably practicable
measures to continually improve. The policy
determines the roles and responsibilities of
the Executive Board, divisional Boards and
business unit management in delivering health
and safety. It also expresses the Group’s
commitment to ensuring that our people’s
behaviour is consistent with an improving
safety culture.
In addition to the legally required policies,
we have an Employee Wellbeing Policy, which
recognises that our duty of care extends to our
people’s physical and mental health. We ensure
our policies are widely communicated, through
inductions for new employees, internal training
sessions, site noticeboards and via our intranet.
The Group’s Health, Safety & Environment
Director manages a team of Health, Safety and
Sustainability (HS&S) advisors and Regional
HS&S advisors, with each business unit assigned
a Lead HS&S advisor to provide appropriate
guidance. These advisors visit sites regularly
to ensure compliance with policies and
procedures, and produce a Site Safety and
Environmental Report, which is communicated
to appropriate levels in the business. A Health,
Safety and Sustainability Action Plan sets out
high level objectives for each business.
Statistics and any trends in non-compliance
are reported to business unit and divisional
Board meetings each month. Further assurance
is provided by audits against the requirements
for OHSAS 18001 and 14001, the standards
for Occupational Health, Safety and
Environmental Management.
27
Key Performance Indicators
16
reportable RIDDOR accidents1
(2019: 29)
61,143
safe behaviour discussions
(2019: 74,234)
663
director safety tours
(2019: 1,112)
0
prohibition or
improvement
notices received1
(2019: 1)
1 Excludes discontinued
housebuilding operations.
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Health and safety
continued
Initiatives
In the earliest days of the Covid-19 pandemic,
we took prompt, decisive action to ensure the
health, safety and wellbeing of our people and
all those on our sites. We risk assessed every
one of our construction sites and modified
or curtailed activities to ensure that no work
was undertaken if we were unable to fully
comply with the hygiene and social distancing
guidelines or if our people could not safely
work. We simultaneously upheld the principles
of our Challenging Beliefs, Affecting Behaviour
programme and ensured that activities were
only undertaken with suitably qualified
personnel, the right planning, equipment
and supervision.
As well as following Government advice and
adhering to the industry’s Site Operating
Procedures, we consulted a specialist
occupational health advisor to work with our
leadership and site teams to provide
educational sessions about the virus and
develop and promote a Hazard Mitigation
Process designed to prevent the introduction
of the virus into our sites and offices and
minimise its potential impact to everyone’s
health. A dedicated internal website was
created to provide advice to our teams, as well
as a series of resources including presentations,
videos, posters and leaflets.
Performance1
We were pleased to successfully reduce our
Accident Frequency Rate (AFR) from 0.10 last
financial year to 0.07, which also exceeded our
target of 0.08. Several of our business units
successfully achieved an AFR of zero, which is
particularly commendable, and we secured
eight awards from RoSPA (The Royal Society for
the Prevention of Accidents), which includes an
Order of Distinction for our Building London
business’s 18th consecutive Gold Award.
There was a reduction in the number of Safe
Behaviour Discussions and director tours
during the onset of the Covid-19 pandemic
when the strictest securing measures were
in place on site.
Areas of focus for 2020/2021
A new health and safety strategy driven by
lead indicators.
Safety in design and buildability.
Improving our performance across
buried services.
Making our systems leaner and further
integrating health, safety and environment
into other business processes.
Improving our internal database to allow for
increased ability to manage performance.
Transitioning from OHSAS 18001 to
OHSAS 45001.
Active hearing
protection
Noise-induced hearing loss is a commonly reported
occupational health problem among road workers. To help
protect our people, our Highways business introduced active
hearing protection on all its sites.
A highways site can present constant danger to operatives from
moving vehicles. It is therefore vital for Highways operatives
to be constantly aware of ambient noise, while also protecting
themselves. Highways has adopted active ear defenders, which
use a best-in-class ‘hear-through’ technology. Unlike standard
passive ear defenders, this solution allows the wearer to
continue to hear environmental sound such as from vehicles,
vastly improving the safety of workers.
These smart headsets also monitor and map noise exposure,
displaying it via a cloud-based software platform, allowing the
business to analyse in real-time each worker’s noise exposure
across a site.
We have a duty to provide our workers with
the best possible protection against hazards.
What we’re trying to do is create a movement
for change in the sector.
The team on site really appreciate putting
their hearing protection on and still being able
to hear their environment. When you ally this
with the ability to constantly monitor their
exposure, the benefits of this approach are
really apparent.
Mark Bridges
Health and Safety Manager for
Galliford Try Highways
28
Galliford Try Enhancements to our risk
management process
The corporate transaction has provided the
opportunity to review and refresh all aspects
of our risk management process and tailor our
approach to reflect the revised organisation
structures and refocused activities of the
Group. Accordingly, the key changes to our
risk management process include:
Refreshing the membership of the Executive
Risk Committee to reflect the organisation
structure of the Group, with the Building,
Infrastructure and Investments businesses
now each having representation.
Reviewing and updating the articulation
of our risk universe, reflecting our changing
risk profile and to facilitate a more
transparent view of risks from the
bottom-up and top-down.
Introducing an enhanced risk and
opportunity register to record and track
project level risks and opportunities
throughout the lifecycle of the project.
Risk management
Managing risk in a dynamic environment
The ability to identify, assess and
manage risks and uncertainties is an
integral element of our management
processes, with clear links to the
conception and execution of the
strategy. During the past year, this
ability has been critical to enabling the
Group to navigate through a period of
significant change in the context
of a highly dynamic external
risk environment.
The disposal of the housebuilding divisions
created operational risks in the short term,
particularly in relation to the separation of
shared processes and systems. Of greater
significance, the Group’s business model is
now entirely focused on construction
contracting and therefore our risk profile
has changed as a result.
Externally, the first half of the year saw activity
in both the construction and housebuilding
sectors constrained by the high degree of
political uncertainty in relation to the timing and
nature of the UK’s withdrawal from the EU and
the General Election. Since March, most of the
business as usual risks have been overshadowed
by the impacts of the Covid-19 pandemic.
In this highly dynamic risk environment, the
Board has carried out regular reviews of the
principal risks and uncertainties, together with
the key mitigations in place. The most significant
risks are presented on pages 32 to 33.
The Group’s business model is now
entirely focused on construction
and therefore our risk profile
has changed.
A changing risk profile
The disposal of the housebuilding divisions and
the focus on construction means that the risk
profile of the Group has changed. While most
of the risk themes remain, the way in which
those themes manifest in our risk exposure
has changed. In the following areas, our risk
exposure is considered to be reduced:
Exposure to the risks associated with the
cyclical nature of the housing market
including changes in mortgage availability,
interest rates and consumer spending.
Exposure to sudden and significant changes
in Government policy in relation to the
housing sector such as the National Planning
Policy Framework or Help to Buy.
The regulatory and cyber security risks
associated with handling the personal data
of retail customers are significantly reduced
in an increasingly regulated area.
Exposure to the potential reputational
risks associated with feedback arising from
retail customers.
Managing the rapid expansion of the
Partnerships business is no longer relevant.
The Group’s balance sheet no longer has any
debt or associated financial covenants.
However, our focus on construction
also means that a number of risks have
increased, principally:
Market risk is more concentrated, and we
are more reliant on continued Government
investment in public infrastructure in our
chosen markets.
Construction margins are significantly lower
than housebuilding margins and therefore
overall Group performance could be
materially impacted by a small number of
loss-making projects.
Cash is more exposed to unexpected
variances from forecast, and we are no
longer able to mitigate this risk through
deferring land acquisitions or the sale of
land assets.
29
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Risk management
continued
Our risk management process
The Group’s risk management and governance structure is
designed to facilitate both a bottom-up and top-down view
of principal and emerging risks and is summarised in the
diagram below.
Audit Committee
plc Board
Responsible for keeping
under review the adequacy
and effectiveness of the
Group’s risk management
processes and systems of
internal control.
Responsible for reviewing
and approving statements
included in the Annual Report
concerning internal controls,
risk management and the
Viability Statement.
Risk and Internal Audit
Facilitates the identification,
reporting and management
of risk throughout the
governance structure.
Provides a risk update,
including the updated
Group principal risks to
the Executive Board and
the plc Board at least three
times a year.
30
Has overall responsibility for setting the risk appetite of the business and
maintaining oversight of the Group’s processes for identifying, assessing,
managing and reporting on principal risks.
Reviews the Group principal and emerging risks three times a year.
Executive Board
Responsible for implementing the strategy and risk appetite set by the
Board and ensuring that appropriate risk management and internal control
procedures are embedded in our day-to-day operations.
Reviews the Group principal and emerging risks at least three times a year.
Executive Risk Committee
Chaired by the General Counsel & Company Secretary and comprises the
Finance Director, Director of Risk and Assurance and a representative from
each of the Buildings, Infrastructure and Specialist business divisions.
Meets three times a year to review and update the Group principal and
emerging risks, based on the risks reported up from the business units, and
to consider any emerging risks that may have an impact on the Group in the
longer term.
Business unit Boards
Maintain a business unit risk register that records the key risks applicable
to that business, key mitigations and further actions required to manage
the risk.
Risk registers are reviewed twice a year, with one of the reviews facilitated
by the Group Risk and Internal Audit team.
Project teams
Create a project Risk and Opportunity Register at the bid stage and maintain
throughout the lifecycle of the project.
Review the risk and opportunities at key checkpoints and as part of the
monthly contract review meetings.
Galliford Try Our principal risks
We have reviewed our principal risks to reflect the disposal of the housebuilding divisions and to align them with the
construction focus of the Group. A detailed analysis of the principal risks that have the greatest potential to have a
material impact on the development, performance, position or future prospects of the Group is presented on pages
32 to 33. This includes an assessment of the impact of Covid-19 on each principal risk. A summary of the other
principal risks including our key mitigations and the metrics we use to monitor the risk is presented on page 34.
Market
Opportunity pipeline
R
Insufficient pipeline of opportunities
in our target markets.
Project selection
We take on the wrong projects, at the
wrong price, or on the wrong terms.
Work winning
Failure to win work within our
target markets and clients.
Resources
Cash management
We are unable to maintain
sufficient net cash reserves to
finance business operations.
Supply chain and joint
arrangement partners
R
R
We are unable to secure
subcontractors and joint venture
partners with the quality, capacity
and financial resilience that we need.
People
We do not have sufficient staff
with the skills and experience that
we require.
Project delivery
Safety
Failure to maintain high standards of
health and safety performance.
Margin erosion
R
We fail to deliver project margins in
line with tender and/or forecasts.
Quality
Failure to deliver high-quality,
defect-free buildings and
infrastructure to our clients.
Operations
Cyber security
Loss of data from or loss of access
to business critical IT infrastructure
and applications.
Sustainability
We fail to keep pace with the
sustainability expectations of our
key stakeholder groups.
Regulatory compliance
We have a high profile breach of
applicable laws or regulations.
Key: R Risk in focus – see p32-33.
31
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Risk management
continued
Principal risks
Opportunity pipeline
Margin erosion
Risk description
Insufficient pipeline of opportunities in our target markets.
Risk description
We fail to deliver project margins in line with tender and/or forecasts.
Risk appetite
We only pursue opportunities within our chosen markets where
we have the experience, knowledge and supply chains to deliver
effectively. We aim to secure a forward order book that provides a
high degree of certainty of current year plus following year revenue.
Risk appetite
We carefully assess the risk and profit of each project and aim to
secure and deliver profitable projects with margins in line with our
strategic targets. We require our project forecasts to be reliable and
provide a realistic and transparent view of project performance.
Potential causes
Potential causes
A significant and sustained reduction in Government investment in
building and infrastructure projects.
Delays to and/or reduced levels of private sector investment due
to macro-economic conditions.
Emerging risks
Public and/or private sector clients pursue alternative
procurement strategies and move away from the traditional
tier one contractor model.
Mitigations
We manage the potential impact of an economic downturn by
building a strong order book.
We concentrate on sectors and clients with long-term growth and
profitability potential.
We focus on securing positions on key procurement frameworks
and repeat business with key clients.
We have appointed sector leads to manage activity in each of our
core areas.
Key risk indicators
Percentage of planned revenue secured.
Percentage of pipeline in frameworks.
Order book by client type.
Percentage of repeat business with existing clients.
Movement in the year
Prior to the outbreak of Covid-19, the general market and opportunity
outlook appeared to be improving. The UK Government’s
commitment to a large-scale programme of infrastructure investment
was signalled in the General Election campaign and reiterated in the
March budget. Following the General Election in December 2019,
we had also started to see confidence return in the commercial sector,
including demand in London and the Private Rented Sector.
The longer-term impact of the Covid-19 pandemic on our opportunity
pipeline is still uncertain. Given the scale of the fiscal intervention
from the Government, we believe that infrastructure investment will
be used to stimulate economic recovery. It is possible that investment
in commercial sectors that have been particularly affected by
Covid-19 will either be delayed or cancelled.
Programme delays and cost escalation.
Poor control of client and subcontractor variations and
claims processes.
Contractual notices not given as per contract requirements.
Poor record-keeping and document management.
Poor design quality and/or co-ordination.
An imbalance between supply and demand for materials and
subcontractors results in higher than expected prices.
Unrealistic estimates, including cost to complete, inflation
estimates, outcomes of disputes, final value included in
project forecasts.
Emerging risks
Increasing regularity and severity of extreme weather may delay
programmes and increase costs.
Failure to innovate quickly enough or make the right strategic
decisions in relation to the investment in and adoption of
Modern Methods of Construction.
Procurement, methodology, resourcing and programming
changes as a consequence of unforeseen events and circumstances
(such as Covid-19).
Mitigations
Robust review and approval of contractual terms, pre-contract
to ensure we do not sign up to contracts with onerous terms.
Margin thresholds employed.
Monthly cross-disciplinary contract review meetings on
all projects.
Project level controls and management oversight of project
forecasts has been strengthened and visibility of risks and
exposures has improved.
Standardised formats (value cost analysis and cost and value
reconciliation) for monitoring and reporting project performance
and forecasts.
Comprehensive commercial training.
A programme of commercial ‘health checks’ to provide an
independent assessment of the project team’s reported
project performance and forecast outturn.
Key risk indicators
Forecast project margins.
Movement in the year
Construction margins are significantly lower than housebuilding
margins and therefore overall Group performance is now more
exposed to margin erosion on a single project.
Failure to adhere strictly to contract administration requirements
and issues in relation to the quality and co-ordination of design
continue to be typical causes of margin erosion.
The disruption to normal operations resulting from Covid-19 has
necessitated a reassessment of forecast margins on all projects.
This discipline will be maintained as the longer-term impacts of the
new ways of working become clearer.
32
Galliford Try Risks trend key:
increasing
decreasing
no movement
Supply chain and joint arrangement partners
Cash management
Risk description
We are unable to secure subcontractors and joint venture partners
with the quality, capacity and financial resilience that we need.
Risk description
We are unable to maintain sufficient net cash to finance
business operations.
Risk appetite
We build strong relationships with our supply chain and joint venture
partners. We have national coverage with local delivery which
provides us with good quality relationships all over the UK.
We predominantly work with subcontractors and joint venture partners
who are financially resilient and who share our values in relation to safety
and quality, and who are aligned to our ways of working.
Potential causes
Lack of capacity in the supply chain due to high levels of activity in
the construction sector.
Lack of geographical coverage.
Subcontractor insolvency.
Failure to comply with fair payment practices.
Emerging risks
Potential shortage of skilled workers in key trades as a result of
the end of freedom of movement with the EU.
Insufficient numbers of UK nationals entering the construction
industry to address the potential skills shortages.
Failures due to recessionary factors and/or consequence of
disruption arising from Covid-19.
Mitigations
We develop long-term relationships with key suppliers and
subcontractors to ensure that we remain a priority customer
when resources and materials are in short supply.
The Group’s Advantage through Alignment programme facilitates
greater engagement with our key supply chain members and
provides them with greater visibility of our pipeline of projects.
We are committed to meeting the requirements of the Prompt
Payment Code.
We use a credit tracker on the Dun and Bradstreet portal to
monitor subcontractor financial strength.
Key risk indicators
Prompt Payment Code performance statistics.
Material and trade shortages.
Movement in the year
Prior to the outbreak of Covid-19, construction activity was
rebounding strongly from the Brexit uncertainty that had been
holding back activity in 2019. The Government’s commitment to
infrastructure investment and a general increase in construction
activity could have led to a lack of capacity in the supply chain and
potentially material shortages. Both of these supply chain risks
could also be exacerbated by the still unknown impact of Brexit on
the availability of skilled workers and the future trading relationship
with the EU.
As a result of Covid-19 and the sudden and significant reduction in
construction activity, there is an increased risk of subcontractor
insolvency, especially as activity levels increase again. To reduce
this risk, we have sought to keep cash flowing through the supply
chain by continuing to pay our subcontractors and suppliers on time.
The current situation also increases the risk of insolvency of a joint
venture partner. Their financial stability is monitored closely to
identify any early warning signs.
Maintaining the supply of materials, especially those sourced
indirectly by subcontractors from builders’ merchants, was one of
the most acute challenges during the pandemic. We continually
review the measures we can take to improve the resilience of our
materials supply chain.
Risk appetite
We have the expertise and structure to maintain a strong net cash
position and to have a high degree of visibility of cash flow.
Potential causes
Loss-making projects.
Inability to produce accurate cash forecasts.
Significant amounts of cash locked up in WIP and claims
against clients.
Insolvency of a key client.
Emerging risks
Potential reform of the law and practices in relation to retentions.
Increased use of project bank accounts and/or increased scrutiny
on our payment practices.
Mitigations
Each business unit reviews its cash forecast weekly and
monthly, and the Group prepares a detailed daily cash book
forecast for the following eight-week period to highlight any
risk of intra-month fluctuations.
These forecasts are reviewed at business unit, division and
Group level.
Key risk indicators
Average month end cash.
Movement in the year
The disposal of the housebuilding divisions means that the balance
sheet no longer has debt or associated covenants.
However, it has also removed a key lever (the timing and value of land
acquisitions and disposals) available to manage cash. Therefore, our
cash position is more exposed to unexpected variances from forecast
in the construction business.
Cash management has been a critical area of management focus
throughout the Covid-19 pandemic. Interventions have included
maximising the value our clients will certify and pay, chasing down
retentions and postponing or cancelling discretionary expenditure.
We also introduced more detailed and regular monitoring controls,
including divisional and Finance Director review and approval of all
supplier payments proposed by business units, as a temporary
measure during the onset of the Covid-19 pandemic.
33
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Risk management
continued
Risk description
Key mitigations
We take on the wrong projects,
at the wrong price, or on the
wrong terms.
We have robust review and approval controls for bids and contracts
including a risk-based heat map tool to ensure that project selection is
aligned to our risk appetite.
Failure to win work within our
target markets and clients.
We have a centralised, dedicated pre-construction team, focused on
securing our place on the most strategically important construction
procurement frameworks.
Failure to maintain high
standards of health and
safety performance.
We have operational controls in place, including an H&S site risk
assessment for every site, which are monitored through a regular
audit process.
Both the ‘Golden Rules’ and the award-winning Challenging Beliefs,
Affecting Behaviour safety programme help drive a strong safety culture.
Failure to deliver high quality,
defect-free buildings and
infrastructure to our clients.
Quality control is embedded within the Business Management System
policies and procedures, with compliance monitored through a
programme of internal audits.
Risk
Project
selection
Work
winning
Safety
Quality
People
We do not have a sufficient
amount of staff with the skills
and experience that we require.
Regulatory
compliance
We have a high-profile breach
of applicable laws or regulations.
Sustainability We fail to keep pace with the
sustainability expectations of
our key stakeholder groups.
Cyber security Loss of data from or loss
of access to business critical IT
infrastructure and applications.
We select competent designers and subcontractors to work with
and use specialist consultants at key review stages.
We undertake regular reviews of remuneration and benefits packages
to ensure we remain competitive.
We operate graduate and trainee programmes to develop our own
pipeline of talent.
The Group has comprehensive policies and guidance at every level
including the Group’s Code of Conduct, mandatory e-learning for all
employees, regular legal updates and briefings, six-monthly compliance
declarations, and conflicts of interest registers and authorisations.
We have a Stakeholder Steering Committee to engage with and help us
understand the priorities of our key stakeholder groups.
Carbon dioxide
emissions.
We carry out regular engagement with analysts and investors to
understand the evolving ESG expectations of the investor community.
Waste per £100,000
of revenue.
Tools to protect and monitor our networks and data such as scanning
of email attachments to detect and intercept malware.
Number of user
accounts breached.
Key risk indicators
Project margins.
Total value of order book.
% of current year’s
revenue target
already secured.
Accident
Frequency Rate.
RIDDORs in past
12 months.
Director safety tours.
Average ageing
of retentions.
Average net
promoter score.
Number of vacancies.
Voluntary churn rate %.
Number of external
enforcement cases.
Number of successful
malware infections.
deterioration in working capital performance.
We have also specifically modelled the impact
of further local and national lockdowns as a
result of Covid-19.
As part of the viability assessment, the Board
also considered the mitigations and
interventions available to manage the impact
of one or more of the downside scenarios
occurring but has not assumed any potential
future assistance from the UK Government
such as a new Coronavirus Job Retention
Scheme or deferrals to tax payment dates.
The base case already includes significant cash
contingencies and the Board has considered
further mitigating actions that are available to it.
Based on the results of this analysis, the Board
has concluded it 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.
Viability Statement
As required by provision 31 of the 2018 UK
Corporate Governance Code, the Board has
assessed the prospects and financial viability
of the Group, taking account of the Group’s
current position and the potential impact of the
principal risks to the Group’s ability to deliver
its business plan. The assessment has been
made using a period of three years, which aligns
with our normal business planning period and
provides reasonable visibility of future revenue
from the existing order book. Following the
sale of the housebuilding divisions and the
recapitalisation of the business, the Group no
longer has any debt facilities and associated
covenants, therefore viability has been assessed
in terms of the headroom against available
cash reserves.
The base case for the cash flow projections
modelled in our assessment of viability is the
budget for the three years from 1 July 2020
which incorporates appropriate contingencies
against plausible day-to-day downside risks,
primarily the Group’s principal risks as disclosed
previously. The base case shows average month
end net cash growing in line with earnings and
assumes that the Group continues to operate
without debt facilities. Against this base case,
we have stress-tested the forecasts and
modelled the impact on cash flow and liquidity
of a number of downside scenarios related to
our principal risks, including the impact of
Covid-19 as well as a combined downside
scenario that includes a number of these
sensitivities occurring together.
The most significant risks considered in relation
to the viability assessment are reductions in
the opportunity pipeline, lack of new work
winning (albeit the Group is protected by its
place on a number of public and regulated
sector frameworks), margin erosion, poor
project delivery and performance and cash
management. The scenarios modelled included
reductions in volumes leading to a fall in
monthly revenue of up to 25%, delays of up to
six months in the recovery of outstanding
amounts such as retentions and a general
34
Galliford Try Operating sustainably
Sustainability is central to our strategy
We recognise that being sustainable makes us more
efficient, helps us to win work, engages our employees
and benefits communities and the environment.
We therefore look to operate sustainably, balancing our
financial performance with our obligations to all our
stakeholders to create long-term value.
Retain
Existing platform for
sustainable growth
Improve
Operations to drive margin
progression
Deliver
Strong, predictable
cash flows and margin
improvement
Our performance
Our overall performance as a responsible
business is reflected in our membership of the
FTSE4Good Index, an exclusive investor index
consisting only of companies that effectively
manage their environmental, social and
governance risks. We were independently
assessed to have achieved a score of 3.3 out of 5
(2019: 3.2), firmly securing a place in the top
third of the index, and scoring well above the
heavy construction sector average of 1.5.
We achieved the top rating possible for
corporate governance and anti-corruption,
as well as scoring highly on environmental
supply chain and community matters.
We continue to have Gold status from the
Supply Chain Sustainability School.
Environment and
climate change
Supply chain and
human rights
Social and community
matters
People and culture p24
Health and safety p27
Our approach to sustainability
The Group takes a strategic approach to
sustainability, guided by our Sustainability &
Social Value Policy. Overall responsibility for
sustainability and the policy rests with the
Executive Board, which discharges this
responsibility through divisional leadership.
We set clearly defined objectives and targets
that address the sustainability risks and
opportunities facing our business and
stakeholders, and then take appropriate steps
to mitigate negative impacts and enhance
positive impacts. We manage our impacts in
relation to six fundamental areas: our people
and health and safety, which are described on
pages 24 to 28, and environment and climate
change, communities, clients and supply chain.
Our policies and processes are contained within
our BMS, a mandatory platform which defines
our approach to all key operations and sets out
the standards we must adhere to. Use of the
BMS ensures consistency, governance and
control and effective risk management by
mitigating issues at source.
p36
p38
p39
35
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Operating sustainably
continued
Waste per £100,000 revenue
(tonnes of construction and demolition waste)
Carbon dioxide equivalent emissions
(tonnes)2,3
22.3
16.4
14.5
13.0
Actual
2017
Actual
2018
Actual
2019
Actual
2020
13.0
33,489
Scope 1: company car business travel
(petrol, diesel and liquefied petroleum
gas); fuel oil; gas; liquefied petroleum
gas and fugitive emissions
(air conditioning refrigerants)
Scope 2: electricity
Scope 3: private car business
travel (petrol, diesel and liquefied
petroleum gas)
47,978
35,527
33,489
22,510
5,053
7,398
Actual
2018
3,709
7,270
Actual
2019
Environment and climate change
Environmental protection and climate
change are among the greatest
challenges we face, both as a society and
as a business. We have a key part to play
through minimising the environmental
impact and carbon footprint of our
operations to ensure the long-term
sustainability of the buildings,
infrastructure and services we provide.
Policies and management
Our Environmental Policy sets out our
commitment to integrating the assessment,
management and control of environmental
issues into the management of our business.
This is complemented by our Energy Policy,
which recognises the impact of energy use on
climate change and commits us to effectively
and efficiently managing our energy use. Our
Biodiversity Policy obligates us to protect and,
where appropriate, enhance biodiversity during
our construction activities. Our Responsible
Sourcing Policy requires us to consider our
preferred suppliers’ environmental impacts,
among other issues.
Our policies require us to play our part in
minimising the amount of construction,
demolition and excavation waste going to
landfill by designing out and reducing waste,
reusing materials wherever possible, recycling
more, and increasing the use of recycled and
recovered materials.
We identify, manage and mitigate our
environmental impacts from project to business
level through our ISO 14001 certified
management system, supported by our HS&S
department. We make our people aware of our
environmental standards and policies that are
integrated into our BMS through extensive
training, our intranet and by promoting our
Code of Conduct, ‘Doing the right thing’,
to all our employees.
Key Performance Indicators1
684
employees completed
environmental training
(2019: 622)
0
environmental prosecutions
or fixed penalties
(2019: 0)
95%
of waste diverted from landfill
(2019: 95%)
1 Excludes discontinued housebuilding operations.
Scope 3 to reflect industry best practice and compliance with ISO 14064-1.
2 Carbon dioxide equivalent emissions are reported by calendar year and since 2014 have been externally
verified to ISO 14064-1. Emissions cover all those arising from our fleet, gas and electricity in all offices and sites
and all other fuel used directly (for example diesel on site) (including our share of emissions from joint ventures).
3 Emissions associated with the use of ‘private cars’ have been removed from Scope 1 and are now included as
36
Galliford Try Waste performance
In the financial year to 30 June 2020, the
continuing Galliford Try business reduced
waste per £100,000 of revenue to 13.0 tonnes,
compared to 14.5 tonnes in the previous
financial year. For the same periods, we
maintained a good level of waste diverted
from landfill at 95%.
Areas of focus for 2020/21
We continue to seek innovative and
proactive ways to improve our environmental
performance across all our activities. Building
upon the provision of renewable energy sources
for office electricity that we reported last
year, we are now seeking to extend this to
our construction sites to further reduce our
carbon footprint and our climate change impact.
Additionally, based upon the results of an
energy audit successfully completed during
2019 to comply with the Energy Saving
Opportunity Scheme, we are looking at further
opportunities to reduce our use of energy for
example through the use of energy efficient
construction site accommodation and further
promoting the use of hybrid generators for
temporary power.
We will also continue to support community
initiatives that are geared towards
environmental performance improvement,
for example, the National Community Wood
Recycling Project, Community RePaint Scheme
and the ‘BIG Challenge’ that enhances
local biodiversity.
We have also committed to improving our
internal environmental training processes
through the development and delivery of a
bespoke one-day environmental training course
which will supplement an internal project to
integrate our HS&E management processes
into our BMS.
Compliance with our environmental standards
and policies is assessed through the same
process as for health and safety, which is
described on page 27. We also monitor
environmental performance improvement
using key indicators (for example carbon and
waste), which are regularly reviewed and
reported. All environmental incidents are
fully investigated and reported by our HS&S
department to ensure any appropriate lessons
are learned to prevent further recurrences.
Carbon and energy performance,
initiatives and SECR reporting
Galliford Try has voluntarily reported
greenhouse gas emissions and environmental
performance since 2009. The data included
below and to the left covers the new reporting
requirements detailed in the Streamlined
Energy & Carbon Reporting ‘SECR’ Regulations.
As we have historically reported our carbon
and energy data in calendar years, the following
section represents our carbon and energy
performance for Galliford Try for the calendar
year 2019. It therefore includes the disposed
housebuilding divisions (waste data is reported
for the financial year and excludes performance
of the disposed divisions):
Tonnes of CO2e
Emissions from
combustion of gas
(Scope 1)
Emissions from
combustion of fuel for
transport purposes
(Scope 1)
Emissions from purchased
electricity (Scope 2;
location-based)
Emissions from business
travel in employee-owned
vehicles (Scope 3)
2019
2018
3,388
4,265
2,476
3,026
3,709
5,053
7,270
7,398
We are pleased to report a reduction in our
Scope 1, 2 and 3 carbon emissions from an
intensity of 1.54 tonnes of carbon dioxide
equivalent emissions per £100,000 of revenue
in 2018 to 1.22 tonnes of carbon dioxide
equivalent emissions per £100,000 of revenue
in 2019, which reflects the work we have
undertaken to become more energy efficient
and our commitment to reduce our climate
change impact. Overall, we have reduced our
carbon dioxide equivalent emissions by 20%
since 2015 ie from 42,223 carbon dioxide
equivalent emissions tonnes in 2015 to 33,490
in 2019.
Our reported emissions are solely related to our
UK activities.
We are also encouraged that data for our
standalone construction and Group operations
excluding the disposed of housebuilding
divisions shows a similar trend, with our
intensity ratio falling from 2.05 in 2018 to
1.40 in 2019.
Methodology
Carbon dioxide equivalent emissions (tCO2e)
are calculated using the methodology in ISO
14064-1 and the UK Government GHG
Conversion Factors and Methodology for
Company Reporting 2019, which are also
subject to external verification. Emissions
cover all those arising from our fleet, gas and
electricity in all offices and sites and all other
fuel used directly (for example diesel on site)
(including our share of emissions from joint
ventures). Where data is obtained in litres
used and distance travelled, these conversion
factors have been used to convert to kW.
Annual energy usage
Our total energy use, calculated from DEFRA
2019 conversion factors, for all our UK activities
related to our scope 1, 2 and 3 activities was
141,163,384 KWh, which is a 24% reduction in
our total energy use in 2018 (186,835,090
KWh). Excluding the disposed housebuilding
divisions, our total energy use mirrored the
same trend at 78,714,616 KWh in 2019, which
is a 38% reduction in total energy use for the
same operations in 2018 (126,098,453 KWh).
Energy efficiency
measures undertaken
The two main areas that contribute to our use of
energy are from business travel and fuel use
on our construction sites (associated with
cabin and plant usage) that accounts for 79%
of our total carbon footprint ie 29% from
business travel and 50% from on-site fuel usage.
Consequently, our energy efficiency initiatives
have focused on these areas and have included:
Improving the efficiency of our vehicle
fleet ie our average carbon dioxide emissions
have been reduced from 133g/km in 2011 to
97g/km in 2019.
Introducing plug-in hybrid and electric
vehicles to our fleet that has resulted in over
20% of the fleet in 2019 being either hybrid
or all electric.
Introducing Agile and Smart Working
Policies that allow alternative options
for travel to offices and sites using online
communication technologies such as
Microsoft Teams as well as all our offices
having video conference facilities.
Promoting the use of hybrid generators for
temporary power on our construction sites,
which improves energy efficiency compared
to conventional diesel only powered units.
Providing all our offices with electricity from
renewable sources.
37
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Operating sustainably
continued
Supply chain
Delivering projects to achieve our
customers’ requirements and achieving
targets for improving the performance
of our business on many social,
environmental and economic
performance indicators is only possible
if we work with organisations that
share our commitment and have
good relationships.
Collaboration and delivering mutual benefits
form the basis of our approach, which
establishes and maintains long-term trading
relationships with key subcontractors,
suppliers and manufacturers.
Management and compliance
Our supply chain predominantly consists of
subcontractors, who operate on our sites, and
suppliers, who provide materials. We select
and manage our subcontractors at a local level
to maximise local economic impact, but in
accordance with robust procedures to
minimise risk to our projects. This approach is
coupled with the central procurement of key
commodities to benefit from strategic supplier
partnerships and economies of scale.
We engage with our supply chain using a range
of methods such as Meet the Buyer events,
meetings and workshops and actively engage
with members to promote our principles
and practices.
Performance
We continue to retain Gold status from the
Supply Chain Sustainability School. We have
worked with the school to deliver to our supply
chain more than 3,400 hours of CPD training
and over 1,000 e-learning modules, with more
than 100 individuals attending workshops.
Human rights
As a construction business operating
in the UK, the key human rights risk
associated with our business is modern
slavery and human trafficking. The main
areas that could be affected are our
directly-hired employees, agency
workers working on our behalf,
subcontractor operatives, and our
supply chain.
Policies and management
Our Code of Conduct sets out our commitment
to upholding human rights and to taking steps
to prevent slavery and human trafficking.
Our annually reviewed Modern Slavery
Statement sets out the procedures we employ
to mitigate these risks. Our Responsible
Sourcing Policy also requires our preferred
suppliers to have policies and procedures that
protect employee rights, diversity and equality
along with payment of the living wage.
We verify our employees have the right to work
in the UK and make them aware of their rights
and entitlements.
We aim to engage only with agency workers
on a preferred supplier list, who ensure their
workers have the right to work in the UK,
who do not charge workers a work-finding fee
and have procedures to minimise the risk of
recruiting forced or compulsory labour.
Our on-boarding procedures for subcontractors
are compliant with PAS 91 and we also ask
additional questions that cover our Responsible
Sourcing, Modern Slavery and Environmental
policies with an aim to ensure we work with
subcontractors who share our values.
Our supplier and manufacturing supply
chain partners are subject to similar rigorous
vetting processes which also encompass
Responsible Sourcing, Modern Slavery and
Environmental policies.
Our whistleblowing procedure encourages any
employee or third party to confidentially raise a
concern and these are always investigated.
Performance
We are not aware of any human rights issues in
our own business or the supply chain.
Delivering Advantage
through Alignment for
our subcontractors
Advantage through Alignment is an initiative designed
to increase both engagement and involvement with our
supply chain.
The five pillars of the scheme are based on increasing
communication between all parties, giving the supply chain
better visibility of our pipeline of work, providing greater
insight into Galliford Try’s operations and implementing
360 degree reviews and an improved feedback process.
The ongoing dialogue also allows us to gain a better
understanding of the requirements of our key supply
chain members and their drivers.
38
Galliford Try We also take part in the Considerate
Constructors Scheme (CCS), which assesses
sites on criteria including being considerate
of local neighbourhoods and the public.
Performance1
The Group achieved an average CCS
score of 41.1 (2019: 40.5), which continues
to exceed the industry average of 37.1
(2019: 36.5). We donated over £195,000 in
time, materials and money to charitable causes
(2019: £142,198) and we were pleased to mark
21 years of supporting CRASH, which assists
homelessness and hospice charities with
construction-related projects.
We also contribute to communities by spending
a significant portion of our revenue with
subcontractors, most of which are local small
and medium-sized enterprises.
Initiatives
There are a number of initiatives under
way across the Group to engage with our
communities. Examples include improving
employment prospects for young people
through our training schemes and community
volunteering, with each employee entitled to
take two days of paid leave each year. In total,
our people took 1,043 days to volunteer
during the year.
Non-financial information
statement and non-financial
key performance indicators
The information required to be included
in our non-financial information
statement, under sections 414CA and
414CB of the Companies Act 2006,
can be found in the following places
in the Strategic report:
Business model
Employees
Principal risks
Environmental
matters
Human rights
Social matters
Anti-bribery and
corruption
p4
p24
p32
p36
p38
p39
p39
£195,000+1
donated to charitable causes
41.11
score in the Considerate
Constructors scheme
1,0431
volunteering days taken
by employees
Anti-bribery and corruption
Policy and management
Our Corruption and Fraud Prevention Policy
and Guidelines make clear our zero tolerance
approach to bribery, corruption and fraud
of all kinds. They describe the obligations
for all our people to meet the expected
standards of conduct and to report any
suspected policy breaches.
Our approach to anti-bribery, corruption and
to gifts and entertainment is also explained in
our Code of Conduct, which is distributed to all
of our people and the supply chain. Every six
months, management across the Group is
required to sign a declaration to the Chief
Executive that the people they are responsible
for are aware of the policy and the Code of
Conduct, comply with their contents, and
that any issues have been reported.
Every three years, all employees must complete
an online course regarding the Bribery Act,
which is also a topic covered in employee
inductions. Any employees not completing
mandatory courses are escalated to the
Executive Board.
We require any suspicious activity to be
reported either through the advertised
whistleblowing line or to our Legal department.
We subject our internal control systems
and procedures to regular audits to provide
assurance that they are effective in countering
bribery and corruption.
Performance
No material issues were reported or identified
through our audits. We achieved the top
rating possible in the FTSE4Good Index
for anti-corruption.
Social and community matters
We recognise that our business
can have both positive and negative
impacts on society as a whole and the
communities around our sites. We look
to manage our impacts to maximise the
overall value we create.
Policies and management
Our Sustainability & Social Value Policy sets
out our commitment to assessing sustainability
risks and opportunities, and taking appropriate
steps to mitigate negative impacts and enhance
positive impacts. Our Code of Conduct also
explains our approach to being a good
neighbour and the requirement to treat all
our stakeholders with respect, courtesy and
consideration.
The business has a range of mechanisms for
identifying and managing community impacts.
These include sustainability steering groups,
sustainability route maps, planning (for example
covering community benefits and social value),
and dedicated roles covering areas such as
corporate responsibility and community liaison.
1 Excludes discontinued housebuilding operations.
39
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Financial review
Confident for the future
Our core business was performing well ahead of the Covid-19
outbreak and we can see the benefits of our strict risk
management and people-focused values coming through.
Andrew Duxbury
Finance Director
The disposal of the housebuilding
divisions completed on 3 January 2020.
This review focuses primarily on the
performance and financial position of
the continuing business. Information on
the transaction and the performance
of the discontinued businesses can be
found on page 107.
As with the significant majority of
companies globally, we have been
impacted by the Covid-19 pandemic,
with the site closures in Scotland and
the adapted site operations in England
affecting our financial performance this
year. That said, our core business was
performing well ahead of the Covid-19
outbreak and we can see the benefits
of our strict risk management and
people-focused values coming through.
Group financial performance
– continuing operations
£1,089.6m
Pre-exceptional revenue
(2019: £1,402.9m)
£59.7m
Pre-exceptional loss before tax
(2019: £17.2m)
£34.6m
Loss before tax
(2019: £64.5m)
£197.2m
Net cash
(2019: net debt of £56.6m)
£40.7m
PPP portfolio
(2019: £41.6m)
40
Revenue
The continuing Group’s pre-exceptional
revenue for the year was £1,089.6m
(2019: £1,402.9m), with the reduction reflecting
the refocusing of the business, following the
April 2019 strategic review, and the impact of
Covid-19, which closed our Scottish business
and reduced output in England during the last
four months of the year. Of the total, Building
contributed pre-exceptional revenue of
£719.9m (2019: £858.3m), down 16%,
while Infrastructure recorded revenue of
£357.1m, down 32% from £527.0m in 2019.
PPP Investments’ revenue was £8.2m
(2019: £17.0m).
Loss from operations
The Group’s loss from operations (stated before
exceptional items, finance costs, amortisation,
tax and share of joint ventures’ interest and tax),
was £62.4m (2019: £16.9m). Building and
Infrastructure incurred pre-exceptional losses
from operations of £51.9m and £1.8m
respectively (2019: £9.5m and £5.5m
respectively). These performances were
adversely impacted by Covid-19 and associated
project delays, contract settlements and legal
costs. In particular, Covid-19 reduced gross
profit due to the impact of lower revenue, lower
site productivity and the cost of implementing
the new operating procedures. There was an
£8.7m net loss in Central Costs and PPP
Investments (2019: £1.9m).
After exceptional items of £25.1m (see below),
the Group’s net loss from operations was
£37.3m (2019: £64.2m), with Building incurring
a loss of £53.9m (2019: £10.4m) and
Infrastructure recording a profit of £25.5m
(2019: loss of £51.0m).
Net interest income
Net interest income of £4.8m was greater
than the comparable income of £2.0m in
2019, due to greater interest receivable from
PPP sub-debt investments.
Profit/(loss) before tax
The pre-exceptional loss before tax for the year
was £59.7m (2019: £17.2m). Pre-exceptional
loss or profit before income tax is an alternative
performance measure and a key metric we
use to monitor our performance. The table
below reconciles it to statutory profit before
income tax.
Pre-exceptional loss
before income tax
Exceptional
income/(charge)
Loss before income tax
2020
£m
2019
£m
(59.7)
(17.2)
25.1
(34.6)
(47.3)
(64.5)
Galliford Try We use other alternative financial performance
indicators to monitor our performance. These
are included throughout this report, alongside
standard measures, and are designed to be
useful to investors by providing a balanced
view of our operations. An explanation of
these measures and reconciliations to the
corresponding statutory measures are included
in note 38.
Exceptional items
Exceptional items in the year totalled a net gain
of £25.1m (2019: net charge of £47.3m). The
exceptional gain in 2020 was made up of the:
impact of legacy contracts: £28.0m; and
restructuring costs: £(2.9)m.
Following the settlement of the AWPR final
account, the Group received a cash payment
of £32m in 2020. The settlement brings to a
conclusion a complex and challenging project
and avoids a lengthy, distracting, uncertain
and expensive litigation process.
After discussion with the Corporate Reporting
Review Team of the Financial Reporting
Council, we have treated the write-down of the
previously recorded AWPR recoverable asset
as an opening balance sheet adjustment at
30 June 2018, on the basis that it could not be
demonstrated that it was highly probable that
there would not be a significant reversal of
revenue in the future in respect of the value
to be recovered and therefore the asset should
not have been recognised. This results in the
settlement payment being recognised as
exceptional income in the year to 30 June 2020,
net of final cost estimates of £4.0m. Another
adverse adjudication award of £9.4m has also
been treated as an opening balance sheet
adjustment at 30 June 2018, as the Group
considers that the loss should have been
previously accrued under IAS 11. The prior
year adjustments are explained in more detail
in notes 1 and 40.
Following the disposal of the housebuilding
operations in January 2020 and the impact
of the Covid-19 pandemic during 2020, the
Group completed a restructuring exercise
during the summer to reflect the revised size
and structure of the business and the central
support resources required, resulting in
£2.9m of redundancy costs.
Exceptional items in 2019 of £47.3m included
£41.8m in respect of two legacy contracts
(AWPR and Queensferry Crossing), £4.6m of
restructuring costs and £0.9m of pension costs.
Further details of exceptional items are set out
in note 4 to the financial statements.
Taxation
The pre-exceptional taxation credit of £6.8m
reflects an estimated effective tax rate of
11.4% (2019: 31.4%) for the year, lower than
the standard UK rate of corporation tax due
to a number of prior year adjustments. We
anticipate that the effective tax rate will revert
towards the standard UK rate of corporate tax
for the foreseeable future.
Our tax strategy is available from our website
at www.gallifordtry.co.uk. In summary, we look
to comply with both the letter and spirit of
relevant regulations and to pay our fair share
of tax.
Earnings/loss per share
The Group recorded a pre-exceptional loss
per share for the year of 47.7p (2019: 10.7p).
After exceptional items, the loss per share
was 29.4p (2019: 44.7p).
Dividends
On 12 March 2020, the Board declared an
interim dividend of 1.0p per share, which
was scheduled to be paid to shareholders on
17 April 2020. However, following the outbreak
of Covid-19, the Board considered it prudent
to cancel the interim dividend payment in
order to preserve liquidity during a period
of significant uncertainty.
We plan to resume dividends as we return
to profitability.
At 30 June 2020, the Company had
distributable reserves of £100.0m.
Cash and investments
As discussed below, following the disposal of
the housebuilding divisions the Group has
no debt and had a pro forma cash balance of
£225m as at 31 December 2019. At 30 June
2020, we had a cash balance of £197.2m, partly
reflecting reduced activity in the final quarter
of the year due to Covid-19. The average
month-end cash balance in the period since the
transaction completed was £141m, which is in
line with the expectations we set at the start of
the year.
At 30 June 2020, the Group had a PPP portfolio
of £40.7m (2019: £41.6m), valued using a 9%
discount rate.
Working capital and equity
The Group has modest working capital
requirements. At 30 June 2020, total working
capital employed was £(211.3)m (30 June
2019 restated: £452.8m). The comparative
balances for 2019 include the disposed
housebuilding divisions, distorting the year
on year comparisons.
The main elements of working capital include
trade receivables and payables, contract assets
and liabilities and accruals. Trade balances
have reduced with a continued focus on cash
collections from customers and in supporting
our supply chain. Contract balances have
reduced following the settlement of a number
of final accounts including AWPR. Accruals
include traditional subcontractor, purchase
ledger and overhead cost accruals and have
reduced, reflecting the smaller business.
Total equity at the year end was £120.5m
(30 June 2019: £679.3m) following the disposal
of the housebuilding divisions.
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 on 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 £95m in respect of these costs
(2019: £54m). 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. 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 30 June 2020 the Group has updated
its assessed recoverability in accordance with
IFRS 15 and expected credit loss provision in
accordance with IFRS 9, both of which
assessments are unchanged in the year.
Prompt Payment Code
In July 2019, the Group was suspended from
the Prompt Payment Code for not paying at
least 90% of invoices within 60 days. We are
committed to pursuing a collaborative and
open approach with all our supply chain and
therefore instigated changes to our procedures
and processes, to ensure we could again be
recognised as a signatory to the Code as soon
as possible. We were therefore pleased that
our membership of the Code was restored
in December 2019. Our prompt payment
performance improved again in the six month
period to 30 June 2020.
41
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Performance of the discontinued operations
The performance of the discontinued
operations during the period of the Group’s
ownership is summarised below.
Further information
Further information on the transaction can
be found in notes 1 and 9 to the financial
statements, on pages 93 and 107.
Contingent liabilities
The directors ensure that contingent liabilities
are appropriately assessed, documented and
monitored. More information can be found in
note 35.
Going concern and viability statement
The Group’s going concern statement, together
with further related information, can be found
in the Directors’ report on page 77.
The Group’s viability statement
can be found on p34
Critical accounting policies and
assumptions
The Group’s principal accounting policies are
set out in note 1 to the financial statements,
together with a description of the key estimates
and judgments affecting the application of
those policies and amounts reported in the
financial statements.
On 1 July 2019, the Group transitioned from
IAS 17 Leases to IFRS 16 Leases. This required
all assets previously classified as operating
leases to be capitalised, alongside an associated
liability equal to the present value of the lease
commitment. The operating lease rental
expense charged to operating profit was
replaced by an amortisation charge for the
‘right of use’ assets recognised in operating
profit and an interest charge on the lease
liabilities was recognised in the licence costs.
We adopted the modified retrospective
approach, which does not require us to restate
comparative years. On adoption of IFRS 16,
the Group recognised a £1.0m reduction in
reserves, represented primarily by £42.1m of
additional right of use assets offset by £43.5m
of corresponding lease liabilities. Of this,
£25.5m of right of use assets and £25.6m of
lease liabilities related to the continuing
businesses, with the remainder relating to the
discontinued operations. More information
can be found in notes 1 and 39.
Linden Homes
Adjusted revenue*
Profit from operations
2020
£m
333.8
50.1
2019
£m
820.4
160.5
Profit from operations in the period of £50.1m resulted
in an operating profit margin of 15.0%. Adjusted
revenue* of £333.8m was generated from 1,293
completions. The average number of outlets during
the period was 82.
Partnerships & Regeneration
Adjusted revenue*
2020
£m
2019
£m
370.0
623.2
Profit from operations
18.7
34.8
Partnerships & Regeneration’s adjusted revenue*
during the period was £370.0m, with an operating
margin of 5.0%.
The trading performance of the discontinued operations
is detailed in note 9.
* Adjusted revenue includes share of JV revenue and
excludes part-exchange revenue.
Debt
At 30 June 2019, the Group had net debt of
£56.6m and total debt facilities of £550m,
including a £100m 10-year private placement.
As noted above, the Group received cash
proceeds of £300m plus a further working
capital adjustment, enabling it to repay and
cancel its £450m bank facilities on 3 January
2020, while the private placement notes
transferred to Vistry Group plc as part of the
transaction. As a result, at 30 June 2020 the
Group had no debt or borrowing facilities
and a cash balance of £197.2m.
Pension schemes
At completion of the transaction, Vistry Group
plc assumed our rights and obligations under
two pension schemes, the Galliford Try Final
Salary Pension Scheme and the Galliford Try
(Holdings) Limited Pension & Assurance
Scheme. The schemes had combined
membership of approximately 2,059 individuals
and combined assets of approximately
£254.0m. We retained the Galliford Try
Special Scheme, which currently has only
five members and is in the process of being
wound up. The Group therefore has no defined
benefit pension liabilities with the liabilities
having been bought out last year.
Financial review
continued
Disposal of the housebuilding divisions
At the General Meeting of Galliford Try plc,
held on 29 November 2019, the shareholders
approved the implementation of the scheme
of arrangement, the proposed company
restructuring and the disposal of the
housebuilding divisions, Linden Homes and
Partnership & Regeneration. On 2 January
2020, we announced that the scheme of
arrangement had become effective.
On 3 January 2020, the Group completed
the disposal of the housebuilding divisions.
We received consideration in the form of
cash proceeds of £300m, the transfer of the
£100m 10-year sterling private placement
notes to the acquiror, Vistry Group plc,
and a further working capital adjustment as
stipulated by the Sale and Purchase Agreement
(note 9). In addition, the Group’s shareholders
received 0.57406 shares in Vistry Group plc
for every 1.0 share held in Galliford Try plc.
With effect from 8:00 a.m. on 3 January 2020,
111,053,489 Galliford Try Holdings plc shares
with a nominal value of 50p each, representing
the Group’s entire issued share capital, were
admitted to the premium listing segment of the
Official List of the Financial Conduct Authority
and to trading on the main market of the
London Stock Exchange, with a corresponding
cancellation of all shares of Galliford Try plc.
The shares were issued to existing Galliford
Try plc shareholders on a 1 to 1 basis.
The basis of preparation of the Group’s
consolidated financial statements following
this disposal is detailed in note 1 and the
financial impact of the disposals on the income
statement and balance sheet is detailed in
note 9 (Discontinued operations).
At completion of the transaction,
Vistry Group plc assumed our rights
and obligations under two pension
schemes, the Galliford Try Final
Salary Pension Scheme and the
Galliford Try (Holdings) Limited
Pension & Assurance Scheme.
The schemes had combined
membership of approximately
2,059 individuals and combined
assets of approximately £254.0m.
This leaves the continuing Group
with no defined benefit pension
schemes to fund.
42
Galliford Try Managing our stakeholder relationships
s172 statement
Section 172(1) of the Companies Act
2006 imposes a general duty on every
company director to act, in good faith,
in the way they consider would be
most likely to promote the success
of the company for the benefit of its
shareholders, while taking into account
how the Group’s activities and Board
decisions will affect its stakeholders.
This statement explains how the Board
complies with its obligations under s172.
We recognise the importance of our
stakeholders’ views and actively engage with
them, proactively considering their interests in
the decisions we make. The ability to carry out
our operations and therefore our long-term
success is contingent on our ability to be:
A great employer for our people and
supply chain.
A collaborative partner for our clients.
A considerate neighbour for the
communities we work in.
A performing business for our investors.
We recognise the importance of
our stakeholders’ views and
actively engage with them,
proactively considering their
interests in the decisions we make.
Employees
Clients
We employ 2,944 people, who we rely
on to deliver our activities.
Satisfied clients are essential for a
sustainable and profitable business.
Key employee priorities
Key client priorities
Commitment to their health, safety
and wellbeing.
A compelling company vision.
A culture of fair treatment, respect
and integrity.
Opportunities to develop professionally
and personally.
Attractive and fair rewards and benefits.
Job security driven by Group performance.
How we engage
We use the following mechanisms to outline
our approach to employee priorities and
gather feedback on our interactions:
Face-to-face engagement through our
Employee Forum, which is chaired by
our Senior Independent Director; staff
inductions with members of our Executive
Board present; CEO roadshow; our annual
Graduate Welcome event, director site
and office visits; Performance Development
Reviews/one-to-ones, toolbox talks and
town halls.
Emails from our CEO, video content from
the Group and CEO, video calls, general
email bulletins, our employee magazine,
intranet, text messages and social
platforms such as Yammer.
Indirect engagement such as through papers
to our Board detailing key data relating to
our people including health and safety
KPIs, employee churn levels, engagement
indicators such as sickness leave,
and training.
Independent support such as access to
our Employee Assistance Programme
and whistleblowing hotline.
Encouraging and analysing independent
employee feedback via employee surveys or
via sites such as Glassdoor and JobCrowd.
Ability to deliver, and financial stability.
Health, safety and wellbeing.
Cost, value, quality and service.
Collaborative approach.
Achieving environmental and
sustainability targets.
How we engage
We use the following mechanisms to outline
our approach to client priorities and gather
feedback on our interactions:
Direct engagement through face-to-face,
video or telephone client meetings; high-
quality bid submissions, contract negotiation
and management; client satisfaction surveys;
site tours; business development activities
such as attendance at exhibitions and Meet
the Buyer events.
Indirect engagement such as project reports,
marketing materials, an up-to-date website,
press coverage and engaging in social media.
Project performance feedback.
Supply chain
We rely on suppliers to deliver our
construction projects.
Key supply chain priorities
Health, safety and wellbeing.
Pipeline of work.
Fair treatment and prompt payment.
Access to resources.
Collaborative relationships.
How we engage
We use the following mechanisms to outline our
approach to supply chain priorities and gather
feedback on our interactions:
Direct engagement through Meet the
Buyer events; workshops; face-to-face,
video or telephone meetings; contract
negotiation and management and
toolbox talks.
Creating mutually-beneficial relationships
through our Advantage through
Alignment programme.
Indirect engagement such as via trade
associations, project reports, an up-to-date
website, press coverage, engaging in social
media and involvement in the Considerate
Constructors Scheme.
43
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information s172 statement
continued
Shareholders
We must act in the interests of our
shareholders to maintain the capital
needed to fund our activities.
Treating shareholders fairly
The Group’s shares are owned by a wide range
of institutional and individual shareholders, with
no shareholder having a majority holding or
significant influence over the Group. As a result,
no situations arise in which any shareholders
can be treated differently, ensuring fair
treatment for all. The Group responds to all
shareholder requests.
Key shareholder priorities
Strategy and progress.
Financial performance and trading.
Dividend policy.
Market trends and impact of
Government policy.
Corporate governance.
Reputation and culture.
Remuneration and share schemes.
Risks to the business.
Succession planning.
ESG matters.
How we engage
We use the following mechanisms to outline our
approach to shareholder priorities and gather
feedback on our interactions:
Direct engagement through investor
roadshows; face-to-face, video or telephone
communications; Capital Markets Days,
results presentations and webcasts; analyst
briefings; AGMs; our Annual Report;
consultations and Regulatory News Service
announcements.
Indirect engagement such as an up-to-date
website, press coverage, engaging in social
media, trading updates; corporate and
financial videos and contributions to
investor decision-making resources.
How the Board engages with
our stakeholders
The Directors gather stakeholder views
through both direct and indirect engagement.
The Board, and in particular the Chief Executive
and Finance Director, lead our shareholder
engagement activities, as described in the
shareholder relations section on page 56.
The Board also engages directly with employees
through the Employee Forum, which is
chaired by our Senior Independent Director,
Terry Miller. The Forum’s role and the
Forum’s meetings in the year are discussed
on page 46.
The Board also established a Stakeholder
Steering Committee in 2019. This is a Board-
level Committee, chaired by Terry Miller, whose
purpose is to review and oversee the Group’s
relationships with its key stakeholders, identify
ways to create two-way communication
between stakeholders and the Board and
ensure their views are considered in Board
discussions and decisions. The Committee met
twice during the year, as discussed on page 46.
Standards of business conduct
The Board is acutely aware of the need to
maintain high standards of business conduct.
The Group has a strong ethical culture,
underpinned by our values, policies and our
Code of Conduct, all of which are endorsed by
the Board. The Code of Conduct sets out the
ethical standards everyone in Galliford Try must
adhere to and provides a framework to ensure
we always behave in a way that reflects our
values. The Group also has specific policies and
procedures to prevent bribery and corruption,
as described on page 39.
Environmental impact
Information on the Group’s environmental
impact can be found on pages 36 and 37.
Communities
We construct buildings and
infrastructure in communities and
must meet the needs of local groups
so we are welcomed and can carry out
our work.
Key community priorities
Disruption to local services/environment.
Contribution to local economy (local labour)
and supporting local causes.
High-quality buildings and infrastructure.
Environmental concerns.
How we engage
Direct engagement such as through our
membership of the Considerate
Constructors Scheme, local newsletters,
town hall meetings and exhibitions, school
and college visits, site tours, Open Doors
and local community engagement plans.
Indirect engagement such as an up-to-date
website, press coverage and engaging in
social media.
As a dedicated Partner of the
Considerate Constructors
Scheme, we strive to continuously
improve the image of the industry,
focusing on the key areas of safety,
community, environment,
workforce and appearance.
44
Galliford Try Stakeholder interests and key Board decisions
Two critical decisions were made by the Board during the year. These related to the
disposal of the housebuilding divisions and business continuity planning in response
to Covid-19. The section below seeks to explain these strategic decisions and how
the interests of our stakeholders were taken into account.
Strategic priorities p16
Disposal of our
housebuilding divisions
Overview
As we reported in our 2019 Annual Report,
the Board decided to engage with Bovis Homes
Group plc (now Vistry Group plc) regarding a
potential combination of Vistry Group plc and
our Linden and Partnerships housebuilding
divisions. The Board felt that there was a
compelling strategic rationale for the
transaction which could lead to significant
creation of shareholder value and generate
operational synergies and procurement
savings for the remaining Group.
The Board carefully took into account the
following factors in making the decision to
proceed with the transaction:
The valuation of the housebuilding divisions
and the working capital requirements
for the remaining Group to continue as a
stand-alone construction business.
The completion of due diligence.
The funding mechanism and structure
for the transaction.
Strategic options available to the Group
should the transaction proceed.
Cost and procurement synergies.
The timetable for completion.
Shareholder approval.
The likely long-term consequences
of the decision
The Board considered the likely long-term
consequences of the transaction for the
remaining construction business in relation
to the following:
The impact of the transaction
on shareholders.
The financial effects of the transaction on
the remaining Group and how the proceeds
of the transaction would be used to finance
ongoing working capital requirements.
The future profitability of the Group.
Having considered the above factors, the Board
concluded that the transaction would allow the
remaining construction operations to be a
well-capitalised business. Together with a
strong and flexible balance sheet, a positive
average Group net cash position and strong
pipeline of work and high-quality order book,
the remaining Group would be able to
deliver long-term sustainable value for all
of our stakeholders.
Stakeholder engagement
During the course of the transaction, the
Board carried out extensive stakeholder
engagement including:
Staff briefings, regular communications
and the opportunity to have their
questions answered.
Publication of documents relating
to the sale including a prospectus, circular,
explanatory statements and announcement.
Regular communication to key clients
and suppliers keeping them briefed
on developments.
Business continuity
planning in response to
the Covid-19 pandemic
Overview
The Covid-19 pandemic created major
challenges for the construction industry,
resulting in new Government guidelines being
imposed at short notice to deal with the national
health crisis. Due to the uncertain environment,
and the likely impacts that Covid-19 would have
on our business and our stakeholders, the
Board responded and took immediate actions
to mitigate the effects on our business and
stakeholders and allow business as usual
activities to continue for as long as it was
safe and practical to do so.
The likely long-term consequences of
the decision
The following factors were taken into account:
The health and safety of our employees,
clients, subcontractors, suppliers, and the
general public.
Changing Government guidelines.
Sites that would need to be closed while
Government maintained restrictions.
The impact on profitability and cash-flow
given the reduced activity.
The Board’s response
To address the issues, business continuity
planning was immediately put into place.
The Executive Board held daily and ad hoc
remote meetings during the early phase of
the pandemic. Our Chief Executive attended
regular briefings with the Construction
Leadership Council and sector peers to agree
the approach to be taken to guarantee the
safety of employees, clients, subcontractors,
and the general public. The actions taken were:
Rigorous risk assessments were undertaken
on all construction sites and our risk
assessment process was published on
our website.
The temporary closure of some of our
construction sites, while others that could
remain open would comply fully with the
Site Operating Procedures issued by the
Construction Leadership Council.
Use of various measures announced by
the Government in response to the
pandemic (page 13).
Stakeholder engagement
An unscheduled trading update in
March 2020.
Revised health and safety and guidance
issued to sites and offices remaining open.
Enhancement of IT to support homeworking
during the pandemic.
Regular staff briefings and communications
from the Chief Executive were issued via
email and other channels for site operatives.
Supporting our suppliers and NHS to
increase capacity to meet challenges.
45
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Chairman’s review
An engaged and proactive Board
In this report we explain our governance related
processes and procedures, to ensure we comply
with applicable laws and regulations. We are
committed to upholding the highest standards
of corporate governance and have always
endeavoured to meet the requirements of new
legislation ahead of their formal application.
Additionally, we recognise the need to balance
our financial performance with our obligations
to all our stakeholders, so we can create value
over the long term. The Board’s duties under
section 172 of the Companies Act 2006 relating
to how the workforce and other stakeholders
have been engaged and influence the Board’s
decision-making are outlined on pages 43 to 45.
Culture, values and purpose
The Board is responsible for the company’s
culture and for defining and setting the
company’s values and standards. The culture
of the business is driven by a vision to be a
people-orientated, progressive business, and
deliver lasting change for our stakeholders
and the communities we work in. Underpinning
our culture of being a people-first business are
strong values, clear policies and our Code
of Conduct, entitled Doing the right thing.
We embed our culture through:
Comprehensive inductions for staff.
Our extensive training programmes.
Our bespoke Code of Conduct,
Doing the right thing.
Our operational supporting
Business Management System.
See People and culture on p24 to p26
Governance developments
Throughout the year, the Board received
regular governance briefings and updates from
the General Counsel & Company Secretary
covering key legal and regulatory changes
introduced during the year. As noted in our
2019 Annual Report, we had considered
how best to implement the new requirements
of the Code and identified key actions that
were required to enhance our governance.
Actions that we have taken in the year to
address the Code and best practice can be
summarised as follows:
Employee voice and stakeholder engagement
We established an Employee Forum to
strengthen the voice of our employees at Board
level and throughout the Group. Through the
Employee Forum, the Board assesses and
monitors the company’s culture and ensures
that the views of employees are taken into
account. In addition, our Stakeholder Steering
Committee reviews and oversees relationships
with the business’s key stakeholders, collating
stakeholder views and reporting these views
to the Board. The Board is fully committed
to ensuring that we continue to meet our
obligations under section 172 of the Companies
Act 2006 to promote the success of the
company for the benefit of shareholders as a
whole but also with regard to the interests of all
of our stakeholders. The early introduction of
both the Employee Forum and the Stakeholder
Steering Committee in 2019 demonstrates our
commitment to listening to and involving our
employees and to take into account the
interests of our stakeholders when making
Board decisions.
The Employee Forum met in October 2019,
at a time when the company was transacting
the disposal of the Group’s housebuilding
divisions, and also at the beginning of the
Covid-19 pandemic in March 2020. The Forum
meetings are chaired by the Senior Independent
Non-executive Director and discussions
included updates on business strategy and
developments, business continuity in response
to the Covid-19 pandemic, health and safety
matters, staff communications, training
and pensions. There have been some
excellent initiatives proposed by the Forum
representatives, which has been encouraging,
and we will progress these in the coming year.
See more on the Forum and employee engagement
on p43
The Stakeholder Steering Committee also
met twice during the year, in September 2019
and May 2020. The completion of the sale
of the Group’s housebuilding divisions in
January 2020 necessitated the need to
reconstitute the membership of the committee
and recalibrate our stakeholder engagement
matrix. The Committee membership includes
representatives from Building, Infrastructure
and support services, the Director of Health,
Safety and Environment and the Sustainability
Manager. The Committee’s work to date has
focussed on reviewing our approach to
engaging with our key stakeholders and
identifying suitable key performance
indicators to monitor the effectiveness of
our engagement.
See Managing our stakeholders relationships
p43 to p45
Gender pay report
In March 2020, the Group published its third
Gender pay report. We are pleased to report
that our gender mean and median pay gaps have
both reduced from 31.7% to 29.3% and from
34.5% to 31.4%, respectively, and that our
efforts in the past 12 months to address the
gender pay gap have produced promising
results. However, we acknowledge that real
change will take time and we remain committed
to addressing under-representation of
women in the construction industry by
raising awareness of our industry and the
opportunities that are available. As in 2018,
there was a slight increase in the number of
women represented in the higher two pay
quartiles within the Group. We continue to
participate in the Women in Construction
Summit and our continued efforts to attract
graduates and apprentices has enabled us
to once again be named a ‘Top Graduate
Employer’ and ‘Top Apprentice Employer’ in
TheJobCrowd’s league table.
Environment, social and
governance responsibility
Our overall performance as a responsible
business is reflected by our continued
membership of the FTSE4Good Index, an
exclusive investor index consisting only of
companies that effectively manage their
Believing in our purpose,
upholding our values and
delivering our strategy with
strong governance will ensure
the long-term sustainability
of our business.
Peter Ventress
Chairman
Corporate governance
Board leadership and
company purpose
Division of responsibilities
Composition, succession
and evaluation
Audit, risk and
internal control
Remuneration
p52
p52
p53
p54
p54
High standards of corporate
governance are integral to the
delivery of our strategy.
On behalf of the Board, I am pleased to present
the Group’s Corporate Governance report.
The 2018 UK Corporate Governance Code
(the Code) was the standard against which
we were required to measure ourselves.
As we reported in our 2019 Annual Report,
we commenced extensive preparatory work
last year to ensure full compliance with the
new Code requirements and I am delighted to
report that the Group has fulfilled its obligations
with respect to the Code (see pages 52 to 54
for details).
46
Galliford Try Group governance structure
As at 30 June 2020
plc Board
Directors: 7
Meetings annually: 8
Executive
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Members: 6
Meetings annually: 10
Directors: 4
Meetings annually: 3
Directors: 5
Meetings annually: 2
Directors: 5
Meetings annually: 3
Executive Risk
Committee
Employee
Forum
Stakeholder
Steering
Committee
Members: 6
Meetings annually: 3
Members: 8
Meetings annually: 2
Members: 9
Meetings annually: 2
environmental, social and governance risks.
In 2020 we were independently assessed
to have achieved a score of 3.3 out of 5,
placing the Group in the top third of the index,
and well above the heavy construction sector
average of 1.5. We are pleased to have
achieved the top rating possible for corporate
governance and anti-corruption, as well as
scoring highly on environmental supply
chain and community matters.
Inclusion and diversity
Diversity and inclusivity have continued to
be key items on the overall UK governance
agenda and feature prominently in the Code.
The Nomination Committee and Board remain
committed to increase the levels of diversity,
including gender and ethnicity, at both Board
and senior management levels. During the year,
we increased our female representation on the
Executive Board further, demonstrating our
commitment to develop our talent and increase
our gender diversity at senior leadership
level. We recognise that diversity of thought,
approaches and experiences enrich our
culture, so we continually strive to create
an environment which is inclusive.
Succession planning
During the year, the Nomination Committee
oversaw the appointment of Bill Hocking as
Chief Executive, following the departure of
Graham Prothero on completion of the sale of
the housebuilding divisions to Vistry Group plc.
Executive succession remains a key priority
for the Board this year and our succession and
development plans are being refreshed to make
sure they are appropriate for the new Group.
See Nomination Committee report p57
Remuneration Policy
The Remuneration Committee applied the
current Remuneration Policy in determining
the remuneration package offered to the new
Chief Executive in January 2020. In addition,
the Remuneration Committee has actively
engaged with shareholders to discuss our
proposed new Remuneration Policy. We hope
the feedback they provided can be shown
in our reporting and they continue to fully
support our proposals outlined in our 2020
Remuneration Policy.
See Directors’ Remuneration Policy Report
p63 to p69
Board and leadership changes
This was a year of significant change for the
Group. On 3 January 2020, Bill Hocking,
formerly Chief Executive of Galliford Try’s
Construction & Investments business,
was appointed Chief Executive, replacing
Graham Prothero who stepped down from
the position following the successful disposal
of the Group’s housebuilding divisions. In July,
Jeremy Townsend advised the Board that he
would be stepping down from the Board later
this year. Accordingly, he will not be standing
for re-election at the AGM.
The Executive Board was also strengthened
with the appointments of Ian Jubb as Managing
Director of Building; Vikki Skene as HR
Director; and Mark Baxter as Managing
Director of Investments and Specialist Services.
Ian, Vikki and Mark were all previously
members of the Construction Board, providing
continuity and in-depth business knowledge
as well as considerable industry experience.
I am particularly pleased that with these
appointments, we have increased the diversity
of our Executive Board and added a range of
skills and experience from leaders who actively
promote our values and strongly advocate our
people-orientated approach.
On behalf of the Board, I thank Graham for
his contribution to the Group and successful
disposal of the housing divisions, and Jeremy
for his valuable contributions as a director and
excellent chairmanship of the Audit Committee
in overseeing a time of significant change for the
company, and wish them well for the future.
See Nomination Committee report p57
Board performance evaluation
The Code requires that a formal and rigorous
annual evaluation is carried out to ensure that
the Board, its Committees and each Director
performs effectively. As we reported in our
2019 Annual Report, an externally facilitated
evaluation was undertaken by Independent
Audit Limited in April 2019 and therefore,
the annual evaluation for 2020 was internally-
facilitated. The outcome of the evaluation
was positive and full details of the evaluation
methodology and its outcome are set out on
page 55. In addition, an update on the external
performance evaluation carried out in April
2019 can also be found on page 55.
Annual General Meeting
Following the enactment of the Corporate
Insolvency and Governance Act 2020 on
26 June 2020 in response to the Covid-19
pandemic, companies are allowed to hold
meetings flexibly and, for a limited period,
suspend the right of the generality of members
to attend shareholder meetings.
The company intends to hold its AGM on
Friday 13 November 2020 at its registered
office at Cowley Business Park, Cowley,
Uxbridge, Middlesex, UB8 2AL. To safeguard
the health and wellbeing of the Group’s
shareholders, as well as its directors, officers
and employees, it is expected that attendance
in person at the AGM will be limited to satisfy
the requirements of a quorum. The AGM will
end immediately following the formal business
required and shareholders can be assured that
no business will be considered other than the
resolutions proposed to the AGM.
Further information on arrangements for the
AGM and voting instructions will be set out
fully in the Notice of AGM and Form of Proxy.
On behalf of the Board
Peter Ventress
Chairman
47
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Directors and Executive Board
Our Board and Leadership
Our Board
N
R
E
E
Executive Board
Peter Ventress
Chairman
Bill Hocking
Chief Executive
Kevin Corbett CEng MICE MIStructE
General Counsel & Company Secretary
E
NA
R
E
Andrew Duxbury
Finance Director
Terry Miller
Senior Independent Non-executive Director
Vikki Skene
HR Director
NA
R
RNA
E
Gavin Slark
Non-executive Director
A N
R
Marisa Cassoni
Non-executive Director
Jeremy Townsend
Non-executive Director
A Audit Committee
N Nomination Committee
R Remuneration Committee
E Executive Board
Denotes Chair of respective Committee
Ian Jubb
Managing Director, Building
E
Mark Baxter
Managing Director, Investments and
Specialist Services
Board composition
Balance of Non-executive and
Executive directors
Non-executive
Executive
Diversity
Male
Female
5
2
5
2
Length of appointment
0-2 years
2-5 years
5-10 years
3
1
3
48
As at 30 June 2020
Galliford Try Our Board
Peter Ventress
Chairman
Appointment date: Peter Ventress joined the
Board of Galliford Try on 30 April 2015 and was
appointed Chairman on 11 November 2016.
Skills and experience: Peter has significant
experience of chairing boards and of being a
Non-executive Director of both public and private
companies. He brings a wealth of commercial,
financial and high-level management experience,
including being former Chief Executive Officer
of European textile service business Berendsen
plc from 2010 to 2016. He has also held several
senior Executive roles, including International
President of Staples Inc and Chief Executive
Officer of Corporate Express N.V. In 2008,
he was appointed head of all Staples’ activities
outside the United States and Canada. Peter was
formerly a Non-executive Director of Softcat plc,
Premier Farnell plc and Staples Solutions BV.
External appointments: Peter is Chairman of
Bunzl plc, the FTSE100 specialist international
distribution and services group. He assumed the
role of Chairman at the conclusion of Bunzl plc’s
Annual General Meeting in April 2020. He is also a
Non-executive Director of Signature Aviation plc.
Andrew Duxbury
Finance Director
Appointment date: Andrew Duxbury joined
the Board of Galliford Try on 26 March 2019
as Finance Director.
Skills and experience: Andrew is a chartered
accountant and a Fellow of the Institute of
Chartered Accountants in England and Wales
with extensive knowledge of the operating
environment in construction. He has operational
responsibility for managing the Group’s finances
and oversees the Risk and Assurance, Finance,
Tax and Treasury, IT and Shared Service Centre
functions. He joined Galliford Try in March 2012
as Group Financial Controller and from 2016, held
a number of operational finance roles, including
Finance Director of Linden Homes. Prior to joining
Galliford Try, Andrew worked for PwC.
Gavin Slark
Non-executive Director
Appointment date: Gavin Slark was appointed to
the Board of Galliford Try on 13 May 2015.
Skills and experience: Gavin has strong leadership
skills and commercial experience gained in his
various Executive level roles. He is Chief Executive
Officer of Grafton Group plc and was Group Chief
Executive of BSS Group plc, a leading UK
distributor to specialist trades including the
plumbing, heating and construction sectors.
External appointments: Since July 2011, Gavin has
been Chief Executive Officer of Grafton Group plc,
a publicly quoted distributor of building materials
operating in the merchanting, DIY retailing and
mortar manufacturing markets in the UK, Ireland
and Belgium.
Marisa Cassoni
Non-executive Director
Appointment date: Marisa Cassoni was appointed
to the Board of Galliford Try on 1 September 2018.
Skills and experience: Marisa is a chartered
accountant with more than 40 years’ experience as
a finance professional. She has strong leadership
and commercial experience gained through her
various Executive and non-executive roles.
Her early career was initially in audit but she
progressed into advisory services including
corporate finance, investigations and restructuring
across a variety of industries and jurisdictions.
Marisa’s previous Executive roles include Group
Finance Director of the John Lewis Partnership,
Royal Mail Group, Britannic Assurance Group and
Prudential UK Group. Marisa has over 20 years’
experience as an Executive Board member and
was recently a Non-executive Director of
Skipton Building Society and Ei Group plc.
External appointments: Marisa is currently a
Non-executive Director of AO World plc,
a leading European online electrical retailer.
Bill Hocking
Chief Executive
Appointment date: Bill Hocking was appointed as
Chief Executive of Galliford Try on 3 January 2020
following the sale of the Group’s housing divisions.
Skills and experience: Bill is a civil engineer
with more than 30 years of experience in the
construction industry. He has full day-to-day
responsibility for delivering the Group’s strategy
having regard to the Group’s responsibilities to
its shareholders, customers, employees and
other stakeholders. He was Chief Executive of
Construction & Investments from 1 August 2016,
having joined Galliford Try as Managing Director
of Construction in September 2015. He joined
the Group from Skanska UK plc, where he held
the position of Executive Vice President on the
Executive Management Team of Skanska UK from
2008, having initially joined that company in 1990.
Terry Miller
Senior Independent Non-executive Director
Appointment date: Terry Miller was appointed to
the Board on 1 February 2014.
Skills and experience: Terry brings strong
commercial experience to the Board, gained at a
senior level in both the public and private sector.
Terry was a Trustee of the Invictus Games
Foundation and previously General Counsel
for the London Organising Committee of the
Olympic and Paralympic Games (LOCOG).
Her LOCOG role included experience of major
construction projects in overseeing negotiation
of all overlay construction contracts for the
London 2012 Olympic and Paralympic Games.
Prior to her LOCOG appointment, Terry was
International General Counsel for Goldman Sachs,
having spent 17 years with Goldman Sachs based
in London.
External appointments: Terry is a Non-executive
Director of Goldman Sachs International and
Goldman Sachs International Bank, part of the
global Goldman Sachs Group of investment
banking and financial services businesses. She is
also a Non-executive Director of insurance
company Rothesay Life Plc.
Jeremy Townsend
Non-executive Director
Appointment date: Jeremy Townsend was
appointed to the Board of Galliford Try on
1 September 2017.
Skills and experience: Jeremy has extensive
experience in audit and corporate finance gained
in various senior and Executive roles at Ernst &
Young LLP, J Sainsbury plc and Mitchells & Butlers
plc. He is a Fellow of the Institute of Chartered
Accountants in England and Wales.
External appointments: Jeremy was the Chief
Financial Officer of Rentokil Initial plc for 10 years
until his retirement on 14 August 2020. He is a
Non-executive Director of PZ Cussons plc,
a leading consumer products group, and
Wm Morrison Supermarkets plc.
Executive Board
Kevin Corbett CEng MICE MIStructE
General Counsel & Company Secretary
Appointment date: Kevin Corbett joined the
Executive Board on 1 February 2012 and was
appointed General Counsel & Company
Secretary of Galliford Try on 1 March 2012.
Skills and experience: Kevin is a solicitor and
chartered civil and structural engineer. He was
previously Chief Counsel Global for AECOM.
Kevin has significant corporate law, insurance,
finance, governance, strategy and extensive
UK and overseas experience. He chairs the
Executive Risk Committee and has responsibility
for the management of Legal, Secretariat,
Communications and Property functions.
Vikki Skene
HR Director
Appointment date: Vikki joined the Executive
Board on 3 January 2020.
Skills and experience: Vikki is an experienced
senior HR Leader, with more than 20 years’
experience in both Construction and HR and
was previously UK Employee Relations Director
at Balfour Beatty, where she held a number of
senior HR roles. She joined the Group in June
2016 as HR Director of the Construction &
Investments division.
Ian Jubb
Managing Director, Building
Appointment date: Ian was appointed to the
Executive Board on 3 January 2020.
Skills and experience: Ian has more than 37
years’ experience in the industry, with the last
20 years including senior positions with Miller
Construction and Taylor Woodrow. He joined the
Group as Managing Director for the North and
Scotland Building division on the acquisition of
Miller Construction in July 2014, subsequently
taking responsibility for all Building Operations
in May 2019.
Mark Baxter
Managing Director, Investments and
Specialist Services
Appointment date: Mark was appointed to
the Executive Board on 3 January 2020.
Skills and experience: Mark has a wealth of
industry and PPP experience, gained through a
number of senior roles spanning more than
20 years. He joined the Group in February
2014 from Miller Construction, taking on the
responsibility for the Group’s Investments division.
In March 2018, Mark additionally took on
responsibility for the FM division and, in 2019,
the specialist businesses Rock & Alluvium and
Oak Dry Lining. In his career to date, he has held a
number of senior roles including Director for
all PPP activities at Miller Construction.
49
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Governance review
The role of the Board and its Committees
As at 30 June 2020, the Board
comprised the Chairman, four
independent Non-executive Directors,
the Chief Executive and the Finance
Director. Biographical summaries for
each of the directors as at 30 June
2020, their respective responsibilities
and their external directorships are
set out on pages 48 and 49.
The Board’s role is to promote the long-term
sustainable success of the company and it is
the key decision-making forum for all strategic
matters of the Group. The Chairman is
responsible for leading the Board, setting the
purpose, direction and values of the Group and
ensuring the highest standards of corporate
governance are adhered to. In addition, the
Chairman facilitates constructive Board
relations and the effective contribution of all
Non-executive Directors and ensures that
directors receive accurate, timely and clear
information. The role of the Non-executive
Directors is to offer advice and guidance to
the Executive directors, and when required,
constructively challenge the Executive
directors and Group senior management on
performance or strategy related matters.
The Chief Executive has responsibility for the
day-to-day leadership and management of the
business, within the authority limits delegated
by the Board.
The roles and responsibilities of the
Non-executive Directors are specified in
their letters of appointment. The letters of
appointment are available for inspection on
request at the Group’s registered office and will
be available immediately prior to and during
the 2020 AGM. Additionally, the roles of
the Chairman, Chief Executive and Senior
Independent Director can be found on our
website at https://www.gallifordtry.co.uk/
about/governance-and-policies/.
In line with the Code, and with the exception
of Jeremy Townsend, all other directors
will stand for re-election at the 2020 AGM.
The performance of the directors continues
to be effective, and commitment to their
respective roles is clearly demonstrated.
To ensure compliance with regulatory
requirements, the Board delegates certain
matters to its Committees, which are required
to consider these in accordance with their terms
of reference. The terms of reference for each
Board Committee are available on our website.
Delegated authorities
The Board continues to operate an established framework of delegated financial, commercial
and operational matters to management, which is reviewed annually. A summary of the matters
reserved for the Board and the matters delegated to management is set out in the table below.
Matters reserved for the Board
Group values and standards
Group strategy, business plans
and annual budgets
Acquisitions, disposals and contracts
over a prescribed value
Material joint arrangements
Approval of Group policies
Matters delegated to management
Operational management of Group
Implementation of Group policies
Allocation of Group resources
Contracts up to a prescribed value
Management succession planning
Material changes to Group share capital
Risk management
Group borrowing facilities
Approval of circulars and financial reports
Board attendance
The Board had eight scheduled meetings during the year. All Board meetings were led by the
Chairman with the General Counsel & Company Secretary in attendance. Additional Board
meetings are convened as and when necessary for approving transactions and other matters that
may require approval in between scheduled Board meetings. The Board Committee meetings are
scheduled around the regular Board meetings. Additionally, and in line with the Code, the Chairman
and the Senior Independent Non-executive Director held an annual meeting without the Executive
directors present. The number of scheduled meetings attended by each director is summarised in
the table below.
2019/20 Board and Committee meetings attendance table
Number of meetings
(attended/scheduled)
Peter Ventress
Chairman
Bill Hocking1
Chief Executive
Andrew Duxbury
Finance Director
Terry Miller
Senior Independent
Non-executive Director
Gavin Slark
Non-executive Director
Jeremy Townsend
Non-executive Director
Marisa Cassoni
Non-executive Director
Kevin Corbett
General Counsel &
Company Secretary
Graham Prothero2
Former Chief Executive
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
8/8
by invitation
2/2
7/7
3/8
by invitation
by invitation
by invitation
8/8
by invitation
8/8
7/8
8/8
8/8
8/8
3/3
2/3
3/3
3/3
3/3
n/a
2/2
2/2
2/2
2/2
2/2
n/a
7/7
7/7
6/7
7/7
7/7
5/8
by invitation
by invitation
by invitation
1 Bill Hocking became Chief Executive on 3 January 2020 and attended all Board meetings after his appointment.
2 Graham Prothero stepped down from his role as Chief Executive and from the Board on 3 January 2020.
50
Galliford Try Board activities during the year
The Board receives regular and timely
information on the financial performance of
the businesses, together with reports on health,
safety, environment and sustainability, strategy,
and operational reviews. In addition, at each
Board meeting, a report from the company’s
corporate broker, Peel Hunt, regarding the
market sector, the relative performance of the
company’s share price, movements by the top
20 shareholders and relevant comments by
market analysts, along with any shareholder
feedback, is provided to ensure that the Board
has a full understanding of the views of major
shareholders.
The Board receives regular presentations from
the businesses on operational matters, assisting
Board members to stay up-to-date with specific
operational matters and sector-relevant
issues, and receives updates from advisors on
pertinent matters as and when required. Board
members are encouraged to undertake their
own continuing professional development.
In addition, the annual Board meeting
programme typically provides for regular visits
to operational sites, which are considered useful
and informative and allow the Board to meet
with site management. From March to June
2020, Board meetings have been held in a
virtual format.
Key areas of activity that were considered by the Board during the year are summarised below:
2020
March
April
May
Presentation – IT.
Half-year results.
Interim dividend.
Project updates.
Gender pay report.
Board evaluation
2019/20 timetable.
Code of Conduct.
Covid-19 updates.
Employee Forum.
Risk Committee Report.
Governance update.
Covid-19 updates.
SAYE 2020.
Board evaluation
2019/20 results.
2020 Annual Report.
2019
July
September
October
November
December
Site visit to the Project
Apple site in Birmingham.
Presentation – Construction
& Investments.
Presentation – 2019/20
Group budget.
Vistry Group plc
transaction update.
Board evaluation review.
Insurance renewal.
2019 Annual Report.
Full year results.
2019 Annual Report.
Annual corporate
governance review.
Review of internal controls
and risk management.
2019 Notice of AGM.
Housebuilding
transaction update.
Investor relations.
Construction & Investments
business structure planning.
Stakeholder Steering
Committee report.
Governance update.
Presentation – Health,
safety, environment &
sustainability review.
Housebuilding
transaction update.
AGM.
Project updates.
Presentation – Risk
Committee report and
Group risk register.
Project updates.
Investor relations reports.
Governance update.
Corporate logo, stationery
and share certificates.
Interim financial statements.
51
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Governance review
continued
How we comply with the 2018 UK Corporate Governance Code
Throughout the year, the Board has applied the Principles and complied with all the Provisions of the 2018 UK Corporate Governance Code
as set out below:
Principle
How we apply the Principle
Further information
1. Board leadership and company purpose
A. The Board’s role
A successful company is led by an effective and
entrepreneurial Board, whose role is to promote
the long-term sustainable success of the company,
generating value for shareholders and contributing
to wider society.
B. Setting purpose, values and strategy
The Board should establish the company’s purpose,
values and strategy, and satisfy itself that these
and its culture are aligned. All directors must act
with integrity, lead by example and promote the
desired culture.
C. Risk management
The Board should ensure that the necessary
resources are in place for the company to meet its
objectives and measure performance against them.
The Board should also establish a framework of
prudent and effective controls, which enable
risk to be assessed and managed.
D. Stakeholder engagement
In order for the company to meet its responsibilities
to shareholders and stakeholders, the Board should
ensure effective engagement with, and encourage
participation from, these parties.
E. Workforce policies
The Board should ensure that workforce policies
and practices are consistent with the company’s
values and support its long-term sustainable success.
The workforce should be able to raise any matters
of concern.
The Board is collectively responsible for the long-term
success of the company, including its relationships and
engagement with all shareholders, and operates via a
formal schedule of matters reserved for its decision.
See page 50 for further
information and list of
matters reserved for
the Board.
See our People and culture
section on pages 24 to 26
for further information.
See pages 29 to 31
for further information
on the governance
structure and identification
of our principal and
emerging risks.
See pages 43 to 45
for further information
on our stakeholders and
Stakeholder Steering
Committee.
See our People and culture
section on pages 24 to 26
for further information.
The schedule of matters reserved for the Board
provide that the Board is responsible for establishing
the values and strategy of the company. In addition,
the establishment of the Employee Forum chaired
by Terry Miller, Senior Independent Non-executive
Director, is a key element in the Board’s oversight
of culture. Our Code of Conduct also defines the
behaviours we expect of our people and the ethical
standards we adhere to. The Code of Conduct was
updated during the year and is reviewed and endorsed
by the Board.
The annual budget was agreed by the Board at the
July 2019 meeting. In addition, the Group has mature
risk management and governance processes in place
to identify, report and manage risk. The Executive
Risk Committee provides regular reports to the Board.
As we reported in our 2019 Annual Report, the
Stakeholder Steering Committee is chaired by
Terry Miller, Senior Independent Non-executive
Director. The Committee was established to review
and oversee relationships with the business’s key
stakeholders, including collating stakeholder views
and reporting these to the Board.
The Code of Conduct ‘Doing the right thing’ sets out
our organisational policies, procedures and defines
behaviours. The Code was updated during the year.
In addition, there are Group policies that define our
approach to managing health, safety, environmental
and social matters affecting our employees. These are
published on our website and described in our Annual
Report. In addition, there is also an independent
and anonymous Whistleblowing procedure allowing
any employee or third party to confidentially raise
any concerns.
2. Division of Responsibilities
F. Chair leadership
The Chair leads the Board and is responsible for
its overall effectiveness in directing the company.
They should demonstrate objective judgement
throughout their tenure and promote a culture of
openness and debate. In addition, the Chair facilitates
constructive board relations and the effective
contribution of all Non-executive Directors, and
ensures that directors receive accurate, timely
and clear information.
The Chairman, in conjunction with the General
Counsel & Company Secretary, ensures that quality
information is provided to the Board in advance of
each Board meeting. The performance of the Chairman
is monitored through the annual Board evaluation
process and through a separate annual meeting of
the Non-executive Directors led by the Senior
Independent Non-executive Director without
the Chairman present.
See our Governance
section on page 50 for
further information.
52
Galliford Try G. Balance of the Board
The Board should include an appropriate combination
of Executive and non-executive (and in particular,
independent Non-executive) Directors, such that no
one individual or small group of individuals dominates
the Board’s decision-making. There should be a clear
division of responsibilities between the leadership
of the Board and the Executive leadership of the
company’s business.
H. NED’s role and time commitment
Non-executive Directors should have sufficient
time to meet their board responsibilities.
They should provide constructive challenge,
strategic guidance, offer specialist advice and
hold management to account.
I. The Company Secretary
The Board, supported by the Company Secretary,
should ensure that it has the policies, processes,
information, time and resources it needs in order
to function effectively and efficiently.
3. Composition, succession and evaluation
J. Board appointments
Appointments to the Board should be subject to a
formal, rigorous and transparent procedure, and an
effective succession plan should be maintained for
Board and senior management. Both appointments
and succession plans should be based on merit and
objective criteria and, within this context, should
promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
As explained on page 50 the Board comprises the
Chairman (who was independent on appointment),
Chief Executive, Finance Director and four other
independent NEDs. The roles of the Chairman and
Chief Executive are separate with distinct
accountabilities set out in their role profiles.
The Chief Executive is responsible for the day-to-day
leadership and management of the business through
defined delegated authority limits. The NEDs
provide an independent view on the running of
our business, governance and boardroom best
practice. They oversee and constructively challenge
management in its implementation of strategy and
performance of the Group.
The annual Board evaluation process assesses the
performance and effectiveness of directors and their
commitment to meet their board responsibilities.
In addition, prior to taking up an NED position, the
Board considers whether the NED has sufficient
time to devote to their role with the Group and in light
of any changes to a NED’s external commitments
during the year.
All directors have access to the advice and services
of the General Counsel & Company Secretary.
The General Counsel & Company Secretary ensures
that the Board receive papers of a high quality in a
timely manner. He advises the Board on all governance
matters, including compliance with the Code. He works
with the Chairman and Committee chairs to ensure
that the right matters are escalated to the Board and
Committees at the appropriate time and that sufficient
time is devoted to strategic matters. He arranges
Directors’ induction and Board evaluation exercises
and supports succession planning and recruitment of
new NEDs.
There are regular succession reviews at Nomination
Committee, Executive and business level. A key
priority for the Board in 2020 is to review succession
plans in the context of the structure of the business
following the disposal of the housebuilding divisions.
K. Skills, experience and knowledge
The Board and its committees should have a
combination of skills, experience and knowledge.
Consideration should be given to the length of
service of the Board as a whole and membership
regularly refreshed.
The Nomination Committee and annual NED meeting
regularly review the balance, composition and
structure of the Board, as well as the length of
service of each Board member and recommends the
re-appointment of the NEDs and any extensions to
their term.
L. Board evaluations
Annual evaluation of the Board should consider its
composition, diversity and how effectively members
work together to achieve objectives. Individual
evaluation should demonstrate whether each
director continues to contribute effectively.
In line with the requirement of the Code, the Board
has continued to conduct an annual evaluation of the
performance of the Board and Committees and each
individual Director. An externally-facilitated Board
evaluation is undertaken every three years. The most
recent external evaluation was undertaken in April
2019, and an update on the outcomes can be found on
page 55.
This year, the Board undertook an internally-facilitated
Board evaluation and further information can also be
found on page 55.
See the role of Board
and its Committees section
on page 50 for further
information.
See the section on Board
Evaluation on page 55
for further information.
53
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Governance review
continued
4. Audit, risk and internal control
M. Financial reporting integrity
The Board should establish formal and transparent
policies and procedures to ensure the independence
and effectiveness of internal and external audit
functions and satisfy itself on the integrity of financial
and narrative statements.
N. Fair, balanced and understandable assessment
The Board should present a fair, balanced and
understandable assessment of the company’s
position and prospects.
O. Risk management and internal control framework
The Board should establish procedures to manage
risk, oversee the internal control framework, and
determine the nature and extent of the principal
risks the company is willing to take in order to
achieve its long-term strategic objectives.
5. Remuneration
P. Supporting strategy and long-term
sustainable success
Remuneration policies and practices should be
designed to support strategy and promote long-term
sustainable success. Executive remuneration should
be aligned to company purpose and values, and be
clearly linked to the successful delivery of the
company’s long-term strategy.
Q. Remuneration Policy
A formal and transparent procedure for developing
policy on Executive remuneration and determining
director and senior management remuneration
should be established. No director should be involved
in deciding their own remuneration outcome.
R. Independence of remuneration outcome decisions
Directors should exercise independent judgement
and discretion when authorising remuneration
outcomes, taking account of company and individual
performance, and wider circumstances.
The Board delegates detailed oversight of the Group’s
system of internal controls to the Audit Committee,
to ensure the integrity of the Group’s full year and half
year results and the Annual Report and Accounts.
On the recommendation of the Audit Committee,
the Board reviewed and approved the 2020 half year
and full year results and the 2020 Annual Report.
In addition, the Board evaluation process confirmed
that the Group’s system of internal controls had
operated effectively during the year.
The Audit Committee reviewed the 2020 Annual
Report and Accounts in September 2020 and
was satisfied that it presents a fair, balanced and
understandable assessment of the Group’s position
and prospects. The Audit Committee reported its
findings to the Board.
Both the Executive Risk Committee and Audit
Committee monitor the Group’s risk management
and internal control systems on behalf of the Board
on a continuous basis. The Executive Risk Committee
(chaired by the General Counsel & Company
Secretary) reviews the Group’s principal risks and
recommends any changes to risk appetite to the
Board. The Group Risk Register is reviewed regularly
by the Board.
The Remuneration Committee proposes the Group’s
remuneration policy to the Board for approval and the
Directors’ remuneration report is put to an advisory
vote at the AGM, in line with statutory requirements.
In accordance with section 439A of the Companies
Act 2006, a new Remuneration Policy will be put to a
binding vote at the 2020 AGM.
In accordance with its terms of reference, the
Remuneration Committee has undertaken a review
of the Remuneration Policy and recommended a
revised Remuneration Policy to the Board for
approval at the 2020 AGM.
Under the Remuneration Committee’s terms of
reference, the remuneration of Non-executive
Directors shall be a matter for the Chairman and
the Executive members of the Board. No Director,
committee attendee, Executive, senior manager
or other person can be involved in any discussion
or decision as to their own remuneration.
The Remuneration Committee comprises solely of
independent NEDs. The Committee takes advice from
external remuneration consultants and ensures that
remuneration for Board and senior management is
suitably structured so as to attract, retain and motivate
Executives, and to link reward to corporate and
individual performance and all relevant internal and
external factors.
54
Please see the Financial
Review section on pages
40 to 42 for further
information.
Please see the section
on Principal risks on
pages 31 to 34.
Please see the
Remuneration Committee
Report on pages 61 to 76.
The Remuneration Policy
can be found on pages
65 to 69 within the
Remuneration Report.
The terms of reference
for the Remuneration
Committee can be
found on our website at
https://www.gallifordtry.
co.uk/about/governance-
and-policies/.
Galliford Try Board evaluation: 2019 update and
2020 performance evaluation
As we reported in our 2019 Annual Report,
the 2019 Board externally-facilitated evaluation
found that the Board and its Committees
were operating effectively. The findings were
presented to the May 2019 Board meeting
and actions were agreed by the Board to
address the recommendations of the
evaluation. The table summarises the
substantive recommendations made and
actions undertaken during the financial year
to address them.
2019 Board
evaluation
recommendations Actions taken during the year
Executive
succession
planning
Workforce
engagement
Board papers
Specialist
advisors
The Board appointed Bill
Hocking as Chief Executive
following the successful
completion of the sale
of the housebuilding
divisions in January 2020.
Succession plans are
continuing to be reviewed
in the context of the new
structure of the business.
The Board received
regular reports including
from the Employee Forum
chair on key issues and
recommendations raised
at these meetings.
The structure of Board
papers has been kept
under review and improved
during the year.
The Board received
regular presentations and
advice from advisors,
including in relation
to the disposal of the
housebuilding divisions
in January 2020.
Board effectiveness review
In line with the Code, the Board reviews its
own effectiveness and that of its Committees
on an annual basis, with an externally facilitated
review at least every third year. The 2020 Board
evaluation was internally-facilitated by the
Chairman in conjunction with the General
Counsel & Company Secretary. The Board
evaluation exercise was conducted between
March and May 2020.
A detailed and comprehensive questionnaire
was securely sent online to each individual
Director to complete and return. Questions
were reviewed to ensure their continued
relevance with additional relevant questions
added. Each Director was asked to complete
online questionnaires specific to their Board
and Committee responsibilities; the completed
questionnaires were then collated and the
responses were reviewed by the Chairman
and the General Counsel & Company Secretary.
In line with best practice, performance
evaluation of individual Directors is conducted
by the Chairman on an annual basis. The
Chairman holds one-to-one meetings with
each Board member and the General Counsel
& Company Secretary to discuss their
performance, contribution, commitment and
training and development needs. The Senior
Independent Non-executive Director holds a
session annually with all Board members and
the General Counsel & Company Secretary,
except the Chairman, to discuss the
performance of the Chairman. The Senior
Independent Non-executive Director then
meets with the Chairman to provide feedback.
The findings of the evaluation exercise were
presented to the Board in May 2020. Overall,
the evaluation confirmed that the Board and
its Committees are operating effectively.
The Board is pleased that the Board and
Committee evaluation results were strong,
given the challenges faced by the Group in
the year. Additionally, the Board has identified
the following areas in which it would like to
make improvements:
Succession plans to be regularly reviewed
and included as part of business
management meetings.
Regular updates on inclusion and diversity
and people initiatives from HR to the
Nomination Committee/Board.
Summary reports of new commercial audits
to be provided to the Audit Committee.
A sustainability session to be added to the
Group’s annual strategy away day.
Inclusion and diversity
As at 30 June 2020, women held 29% of Board
positions, which was unchanged from the
previous year.
Strategies to improve diversity at all levels in the
workforce have continued to build on the work
undertaken in 2019, to ensure each business
has the right culture, procedures and policies in
place. The Company has continued to sponsor
the Women in Construction summit and
raise awareness of the construction industry,
to promote the opportunities that are available
through various events such as colleges,
universities and in industry. In addition,
a variety of inclusive initiatives, such as
gender-neutral recruitment, supporting
diversity programmes and the promotion of
agile working are used to make the Group
more attractive to a wider group of employees.
Further diversity disclosures can be found
in the People and culture section on p25
Executive Board report
Membership of the Executive Board is detailed
on page 49.
The Chief Executive is responsible for the
effective leadership of the senior Executive
management and chairs the Executive Board
which, in addition to the Chief Executive,
consists of the Finance Director, the General
Counsel & Company Secretary, the Managing
Directors of Building and Investments and
Specialist Services and the HR Director.
The Executive Board is responsible for the
operational management of the Group
under terms of reference delegated by
the Board, which include responsibility for
making recommendations to the Board
on all items included in the formal schedule
of matters reserved for Board authorisation.
The Executive Board receives and considers
regular performance and operational reports
and presentations from business management.
The Assistant Company Secretary acts as
Secretary to the Executive Board and the
minutes of Executive Board meetings are
included in the Board packs.
The Executive Board meets at least ten times a
year and additional meetings are convened
when necessary to consider and authorise
specific operational or project matters. The
Executive Board focuses on long-term strategic
issues and matters of Group-wide policy, with
health, safety and sustainability and business
ethics as the first agenda items at every
meeting, highlighting the importance of such
matters to the Group.
55
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Shareholder relations
The Chief Executive and Finance Director,
continued to meet with existing and prospective
institutional shareholders throughout the year.
The Board as a whole continues to engage
actively with institutional shareholders, in line
with the Financial Reporting Council’s UK
Stewardship Code, on key matters of relevance
to the Group and its operations, such as
governance, strategy or remuneration,
or more general market themes. Specific
reports regarding shareholder views are
provided to the Board for analysis and
discussion. Separately, the Chairman, Senior
Independent Non-executive Director and
other Non-executive Directors are available
to attend meetings with shareholders and
address any significant concerns that
shareholders may have.
The Company’s AGM, held in November each
year, continues to be a popular means for
private shareholders to receive updates
on Group performance, and provides an
opportunity to put questions to the Board
and for the Board to listen to shareholder
suggestions and concerns. All directors
of the company attended the 2019 AGM.
Arrangements for the meeting, including
notice period and voting arrangements,
followed the requirements of the Code and
related best practice.
As a consequence of the Covid-19 pandemic,
and as explained in the Chairman’s review
on page 47, it is expected that attendance
at this year’s AGM will be limited to satisfy
the requirements of a quorum. Arrangements
for the meeting and voting instructions will be
set out fully in the Notice of AGM and Form
of Proxy.
Governance review
continued
Governance policies
The Group continues to operate a suite of
governance and risk management policies,
procedures and training programmes, all of
which address obligations arising under
relevant legislation. The Group Corporate
Manual, which summarises the policies,
procedures and authority matrices by which
the central functions and businesses operate,
was updated and refreshed during the
financial year.
Reporting, risk, internal audit
and controls
The Governance review, commencing on
page 50, details the specific actions undertaken
by the Group during the financial year,
including those with a risk management focus.
The Board’s approach to risk and internal
audit, including its systems in relation to the
preparation of consolidated accounts, and the
material controls of the Group’s established
internal control framework, are disclosed in
the Risk management section on pages 29 to 34.
A separate programme of 12 internal audits was
also completed across the Group’s operations,
and progress checks were completed against
previous recommendations.
Compliance statement
The Group remains compliant with the Financial
Conduct Authority’s Listing Rule 9.8.6 and
Disclosure Guidance and Transparency Rule
7.2.1. Related information can be found in the
Directors’ report on pages 77 to 79.
Additionally, the Group has complied with
sections 414CA and 414CB as well as 414C
of the Companies Act 2006. Relevant
information can be found throughout the
Strategic report and Governance section of
this Annual Report. The summary table on
page 39 in the Strategic report highlights where
non-financial information can be found within
this Annual Report.
Using technology to engage virtually and effectively
with investors
We look to build long-term, strong
relationships with our investor base and
have maintained good quality meetings
with both new and existing investors,
despite the challenges that Covid-19 has
raised to delivering our investor relations
programme in 2020.
conference hosted by Goldman Sachs,
a leading global investment banking,
securities and investment management
firm, in May 2020.
Following its success, our investor relations
programme for the remainder of the year
will be in a virtual format and will include
the 2020 full year results roadshow,
conferences and other investor engagement
events. Looking forward, we will consider
how the use of technology can continue to
support our investor relations programme
in line with best practice, expanding
our reach to investors who we had not
previously thought it was possible to engage
with in an effective manner, due to distance
and the cost of travel, both monetary
and environmentally.
The 2020 half year results announcement
and presentation to analysts and investors
on 12 March 2020 was one of the last
face-to-face meetings that was held prior
to the UK entering lockdown. Consequently,
we quickly adapted our half year results
roadshow to a virtual format, using
videoconferencing technology such as
Microsoft Teams and Zoom. Andrew
Duxbury, Finance Director, and our investor
relations team also attended a virtual
56
Galliford Try Nomination Committee report
The Committee has overseen
the succession to the role
of Chief Executive and
consequential Executive
Board changes, following the
successful completion of the
disposal of the housebuilding
divisions in January 2020.
Peter Ventress
Nomination Committee Chair
I am pleased to report on the
Committee’s activities during the
financial year.
During 2019 and the first part of 2020, the
Committee oversaw a number of significant
changes to the Board. Graham Prothero stood
down as Chief Executive and from the Board.
On behalf of the Board I thank Graham for his
contribution to the Group and the corporate
transaction and wish him well in his new
role. Bill Hocking, who was previously Chief
Executive of Construction & Investments was
appointed as Chief Executive on 3 January
2020. Bill brings management continuity and
a wealth of construction industry experience
to the role and we are confident that Bill and
the highly experienced senior management
team supporting him will deliver on the
Group’s strategy.
Board appointments
Appointments to the Board are subject to
formal, rigorous and transparent procedures.
The Committee oversees and advises the Board
on the identification, assessment and selection
of candidates for appointment to the Board.
An external consultant, Russell Reynolds
Associates, which has no other connection
to the Company, was engaged to undertake
benchmarking to inform the views of the
Committee and the Board on appointments
in the year.
Review of the composition of the Board
The Board Evaluation process this year also
assessed whether the composition of the Board
and mix of skills, experience, knowledge and
diversity of opinion remains suitable in the
context of the new structure of the Group.
Further details on how the Board Evaluation
process was conducted and its outcomes can
be found on page 55.
Inclusion and diversity
The Committee is committed to embedding
inclusion and diversity at Board and Executive
level and generally throughout the Group.
The gender balance of those in senior grades
is reported in the People and culture section
on page 25.
Activities include a range of initiatives with
direct participation from management to help
address its gender pay gap, action plans to
increase inclusivity and diversity, and access
to agile working arrangements to ensure that
the Group provides and offers a flexible culture,
environment and working practices to suit
everybody’s needs. The appointment of the
HR Director to the Executive Board is a
strong example of our commitment to further
developing our talent and increasing our
gender diversity at senior leadership level.
The Committee is committed to continuing to
retain and attract the best candidates and
ensuring the full development of all its
employees across the Group.
For further information on our approach to
gender diversity, please see our People and
culture section on pages 24 and 25. While we
continue to make progress, we recognise that
we have more to do to fulfil our overall diversity
ambitions and we will work towards achieving
further progress in this area.
Peter Ventress
Nomination Committee Chair
Composition and remit
Membership of the Committee is detailed on
page 48. The General Counsel & Company
Secretary acts as Secretary to the Committee.
Following the publication of the 2018 UK
Corporate Governance Code (2018 Code),
the Committee has reviewed the terms of
reference and updated them to ensure that they
are in line with the new Code. The terms of
reference of the Committee can be found on
the Group’s website (www.gallifordtry.co.uk)
and have not been significantly changed from
the previous year.
The principal authorities delegated to the
Committee by the Board are:
Reviewing the size, structure and
composition of the Board.
Evaluating the balance of skills, knowledge,
diversity and experience of the Board,
including the impact of new appointments.
Overseeing and recommending the
recruitment of any new directors.
Ensuring appointments are appropriately
made against objective criteria.
Keeping the leadership and succession
requirements of the Group under
active review.
The principal tasks of the Committee during
the financial year have been to oversee the
succession to the role of Chief Executive,
changes to the Executive management team as
a consequence of the corporate transaction and
to continue the development, monitoring and
oversight of succession planning processes
and the further implementation of a range of
inclusive and diversity-supporting initiatives.
Following the successful completion of the sale
of the housebuilding divisions, the Committee
will focus on refreshing the succession planning
process for the continuing business with the
particular aim of identifying those in line for
future promotion and to ensure retention
and development of talent.
At the financial year end, the Committee
comprised a majority of independent Non-
executive Directors, complying with provision
17 of the 2018 Code. During the financial year,
the Committee prioritised the calendar of key
activities and areas of focus as set out below.
Calendar of 2019/20 Committee activities
and areas of focus
October
2019
May
2020
Chief Executive position.
Executive Board
remuneration.
Succession planning.
Non-executive Directors
appointment review
and Committee
membership.
Terms of reference review
and approval.
57
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Audit Committee report
The Committee continued
to monitor and review the
implementation of new
accounting standards, the
integrity of the financial
statements, the principal
risks for the Group following
the sale of the housebuilding
divisions and the
effectiveness of risk
management and
internal controls.
Jeremy Townsend
Audit Committee Chair
On behalf of the Board, I am pleased
to present the report of the Audit
Committee, summarising the work
that has been carried out in 2020.
The Committee comprises independent
Non-executive Directors. Additional details on
the Committee’s members can be found on
pages 48 and 49. The Chairman of the Board,
Chief Executive and Finance Director attend
Committee meetings by invitation, together
with the Director of Risk and Assurance and
the Director of Group Finance. The General
Counsel & Company Secretary, or his delegate,
acts as Secretary to the Committee.
58
A key requirement of Provision 24 of the 2018
UK Corporate Governance Code and the FRC’s
guidance on Audit Committees is that each
committee member should have sufficient
knowledge, training and expertise to contribute
effectively to the work of the Committee.
As Committee Chair, I have extensive
experience in my previous roles as Chief
Financial Officer of Rentokil Initial plc, Finance
Director at Mitchells & Butlers plc and in
various finance roles at J Sainsbury plc, of
financial reporting preparation and compliance
for public companies and of dealing with
internal and external auditors. I am also a
Non-executive Director of PZ Cussons plc and
became Chair of its Audit & Risk Committee
on 31 May 2020, and I was also appointed
as a Non-executive Director of Wm Morrison
Supermarkets plc on 6 July 2020. Marisa
Cassoni has wide experience in numerous roles,
which include Group Finance Director of the
John Lewis Partnership, Royal Mail Group,
Britannic Assurance Group and Prudential
UK Group. She also has experience of being a
Non-executive Director with Skipton Building
Society, AO World plc and Ei Group plc.
Terry Miller has wide-ranging commercial
experience, including construction experience
from overseeing the negotiation of the
construction contracts as General Counsel
for the London 2012 Olympic and Paralympic
Games. She also has extensive experience as a
Non-executive Director and currently serves as
a Non-executive Director with two Goldman
Sachs group companies and a regulated
insurance company. Gavin Slark is currently
Chief Executive Officer of Grafton Group plc,
an independent company operating in the
merchanting, DIY retailing and mortar
manufacturing markets in Britain, Ireland and
Belgium. He was previously Group Chief
Executive of BSS Group plc, a leading UK
distributor to specialist trades including the
plumbing, heating and construction sectors.
The Board is satisfied that, as a whole, the
Committee has competence relevant to the
sector in which the Group operates.
The Committee has continued to monitor and
review developments in corporate governance,
the integrity of the financial statements and
the adequacy and effectiveness of the risk
management and internal control framework
of the Group. In addition, the Committee
oversaw the successful transition of external
auditor from PwC to BDO LLP, following their
appointment as auditor at the 2019 Annual
General Meeting.
Aside from the reduction in revenue and
profitability following the sale of the
housebuilding divisions, the continuing
Group’s financial performance during the year
was severely impacted by the effects of the
Covid-19 pandemic on the industry and
economy. Further information can be found
in the Financial Review on pages 40 to 42.
The Committee considers that the 2020
Annual Report and financial statements are fair,
balanced and understandable in terms of the
form and content of the strategic, governance
and financial information presented therein.
Remit and activities
The Committee meets at least three times a
year, this number being deemed appropriate
to the Committee’s role and responsibilities.
The Committee’s delegated authorities
and calendar of prioritised work have not
changed substantially from those disclosed in
previous years. The terms of reference of
the Committee are available on the Group’s
website (www.gallifordtry.co.uk). The key
responsibilities of the Committee are: delegated
responsibility from the Board for financial
reporting; monitoring external audit, internal
audit, risk and controls; and reviewing instances
of whistleblowing and the Group’s procedures
for detecting fraud.
The authorities and calendar of work remain
in line with the requirements of the Code.
The table below summarises the key activities
during the financial year. The Committee also
continues to meet with internal and external
audit teams, without Executive management,
in order to discuss any matters which the
auditor may wish to raise in confidence.
Calendar of 2019/20 Committee activities
and areas of focus
September
2019
March
2020
May
2020
Committee review of 2018/19
full year results, including
external auditor presentation,
going concern review and
approval of ‘fair, balanced and
understandable’ process.
Summary of impact of
IFRS 16 Leases.
Risk, internal audit and
whistleblowing reports.
Review of UK Corporate
Governance Code.
Committee review of 2019/20
half year results, including
external auditor presentation,
conclusion of discussions with
the FRC on the 2018 annual
report, going concern review
and approval of ‘fair, balanced
and understandable’ process.
Risk, internal audit and
whistleblowing reports.
Review and approval of
Internal Audit Plan 2020/21.
Internal Audit Code of
Practice 2020.
Approval of external
audit plan.
Anti-money
laundering update.
Risk, internal audit and
whistleblowing reports.
Review of terms of reference
and Non-Audit fee policy.
Galliford Try Risk and internal audit
The Committee reviews and approves the
scope of work of the Risk and Internal Audit
team on an annual basis, including assessing
the adequacy of the team’s resources.
During the financial year, the Risk and Internal
Audit team focused on delivering its agreed
calendar of audit reviews under its rolling
three-year internal audit plan and on providing
commercial and risk management support
across the Group at the request of the
Committee, the Executive Board and
senior management.
The risks of the Group are reviewed by the
Executive Risk Committee, which reports
to the Executive Board and the plc Board.
Following the disposal of the housebuilding
divisions, the Group has reconsidered its
principal risks and uncertainties. The principal
risks and uncertainties and risk profile which
may have a material impact on the Group’s
performance in the second half of the financial
year were refreshed to align them more closely
with the construction contracting nature of the
Group. The principal risks remain primarily the
same as those outlined in the Group’s annual
report and financial statements for the year
ended 30 June 2019, other than risks related
to growth in the Partnerships & Regeneration
business and exposure to the residential
housing market which are no longer relevant.
In addition, the Committee has continued to
review procedures in place to identify emerging
risks. More information about the Group’s
principal risks, its process of identifying and
managing emerging risks, its long-term viability
and its risk management systems can be found
in the Risk management section on pages 29
to 34.
Non-audit services
Policies and review mechanisms governing
the provision of material non-audit services,
and safeguarding the objectivity and
independence of the external auditor,
remained in force throughout the financial year.
The policy specifies: the types of non-audit
services for which the use of the external
auditor is pre-approved (ie approval has
been given in advance as a matter of policy);
the services for which specific approval from
the Committee is required before the auditor
is contracted; and the services from which
the external auditor is excluded. In respect of
pre-approved services, a financial threshold is
in place, applicable to individual and aggregated
services in any year. Furthermore, should the
total value of non-audit service engagements
exceed a defined percentage of the total Group
audit fee for the previous financial year, the
Committee shall consider and give specific
prior approval for any subsequent non-audit
service engagements.
In September 2019, the Committee approved
fees totalling £1.5m to appoint PwC to the role
of Reporting Accountant, to provide services to
audit/validate the extracts of Group financial
information that are required for the various
public documents as well as review and opine
on the working capital forecasts and Financial
Position and Prospects statements required by
the transaction sponsors acting on the disposal
of the housebuilding divisions in January 2020.
As reported in the 2019 Annual Report,
the Audit Committee recommended the
appointment of BDO LLP as the Group’s
auditors following a successful tender audit.
At the AGM held on 12 November 2019,
shareholders appointed BDO LLP (“BDO”)
as the Group’s auditors. As indicated in note 7
to the financial statements, following their
appointment in November 2019 the incumbent
external auditor, BDO, did not provide any
non-audit related advice or services covering
general corporate matters during the year.
Each year, the Committee assesses the
independence and effectiveness of the external
audit process, which includes discussing
feedback from the members of the Committee
and key senior management within the
Group and from regulatory sources.
Internal control framework
The day-to-day management of our principal
risks is supported by an internal control
framework which is embedded in our
management and operational processes.
The most significant elements of the Group’s
internal control framework include the following:
Organisational structure: each business
unit is led by a managing director and
management team providing a clear
hierarchy and accountabilities.
Code of Conduct: the Group promotes a culture
of acting ethically and with demonstrable
integrity. Group standards are set out in our
‘Doing the Right Thing’ Code of Conduct which
has been updated and reissued during 2020.
It is supported by specific training modules in
key areas and its key themes and importance
are communicated to new starters as part of
their induction.
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. The legal
authorities matrix was subject to review
during the year following the disposal of the
housebuilding divisions in January 2020.
Operational activity: site operations are
performed in line with established business
management systems and processes that
incorporate all operational activities, including
health, safety and environmental procedures,
regular performance monitoring, quality
management and external accountability
to stakeholders.
Financial planning framework: a detailed
annual budget is prepared for each financial
year, which is approved by the Board.
Operational and financial reporting:
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.
Internal Audit: the Risk and Internal Audit team
develops and delivers an annual programme of
internal audits, which includes business unit key
control reviews, contract and developments
commercial audits, audits of Group processes
and reviews of significant change programmes.
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
reviews and compliance, and construction
industry regulation.
Significant issues and other
accounting judgements
The Committee reviewed the integrity of
the Group’s financial statements and all
formal announcements relating to the Group’s
financial performance. This included an
assessment of each critical accounting policy,
as set out in note 1 to the financial statements,
as well as review and debate on the following
areas of significance:
Contract revenue and provisions:
in conjunction with the annual audit, the
Committee reviewed key judgments in respect
of revenue recognition and contract provisions,
in relation to certain significant long-term
construction contracts. This specifically
included consideration, in the context of IFRS 9
and IFRS 15, of the accounting and disclosure
in relation to the Aberdeen Western Peripheral
Route and three terminated contracts
(see Financial review on page 41 and note 40
to the financial statements).
59
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information The Company recognises that the FRC’s review
was based on a review of its annual report and
accounts for the year ended 30 June 2018 and
did not benefit from detailed knowledge of the
Company’s business or an understanding
of the underlying transactions entered into.
The FRC’s review provides no assurance that
the Company’s annual report and accounts
are correct in all material respects; the FRC’s
role is not to verify the information provided
but to consider compliance with reporting
requirements. The FRC’s letters are written on
the basis that it (and its officers, employees and
agents) accepts no liability for reliance on them
by the Company or any third party, including
but not limited to investors and shareholders.
Significant transactions: the Committee has
given particular consideration to the accounting
for and presentation of individually significant
transactions, and areas where alternative
performance measures are required to ensure
that the financial statements give a fair,
balanced and understandable view of
the Group’s performance, and that statutory
measures are equally clear and prominent.
Reconciliations of alternative performance
measures to their statutory equivalent
measures are detailed in note 38 to the
financial statements. In the year ended
30 June 2020, the Committee considered
the disposal of the housebuilding divisions to
Vistry Group plc.
Committee membership
After having served as a Non-executive
Director since September 2017, I have decided
to step down from the Board later this year
and will not be standing for re-election as a
director at the AGM. I have thoroughly enjoyed
my time on the Board at Galliford Try, and
I wish colleagues and the Group well in its
future prospects.
Jeremy Townsend
Audit Committee Chair
Audit Committee report
continued
Future IFRS developments: during the year,
the Committee continued to review the
implementation of new accounting standards
with respect to their impact on the Group’s
results and financial statements. This included
IFRS 16 Leases, for which an impact assessment
and implementation project was completed and
presented. The Committee also considered,
reviewed and approved the Group’s proposed
internal accounting policy to reflect the
requirements of the new standard, which
was adopted by the Group on 1 July 2019.
Further details on the impact of the adoption
of IFRS 16 can be found in notes 1 and 39.
Going concern and viability: the Committee
assessed the available bank facilities (in
September 2019) and the associated covenants
and sensitivities and since the disposal of the
housebuilding divisions, forecast Group cash
liquidity. The Committee also considered other
commercial and economic risks to the Group’s
going concern status and longer-term viability,
and reported to the Board on its findings.
Goodwill impairment review: during the year,
the Committee considered the judgments
made in relation to the valuation methodology
adopted by management and the model inputs
used, as well as the sensitivities used by
management and the related disclosures.
Financial Reporting Council review of 2018
financial statements: the Group’s 30 June 2018
financial statements were subject to a review by
the FRC’s Corporate Reporting Review team.
As reported in our half year statement for the
six months ended 31 December 2019 and on
page 41 of this Annual Report, this resulted in a
number of prior year adjustments being made
to the 30 June 2018 net assets, as a result of
revisiting the application of the new IFRS 15
accounting standard and its predecessor,
IAS 11. The Group has treated the write-down
of the previously recorded AWPR recoverable
asset as an opening balance sheet adjustment
at 30 June 2018, on the basis it could not be
demonstrated that it was highly probable that
there would not be a significant reversal of
revenue in the future in respect of the value to
be recovered and therefore the asset should
not have been recognised; this results in the
settlement payment being recognised as
exceptional income in the year to 30 June 2020.
Another adverse adjudication award of £9m
has also been treated as an opening balance
sheet adjustment at 30 June 2018, as the
Group considers that the loss should have been
previously accrued under IAS 11. Full details are
included in note 40 to the financial statements.
The Committee has also reviewed additional
improvements to the Group’s disclosures that
arose in our discussions with the FRC.
60
Galliford Try Remuneration Committee report
Board changes
Following the disposal of the Group’s
housebuilding divisions, Graham Prothero,
Chief Executive, left the business on 3 January
2020. Graham was succeeded by Bill Hocking,
who was formerly the Chief Executive of the
Group’s Construction & Investments business.
Reflecting these changes and the corporate
transaction, the Committee considered both
the leaver arrangements for Graham Prothero
and the new remuneration arrangements for
Bill Hocking in the context of, and in compliance
with, our current Directors’ Remuneration
Policy. Our decisions in each of these areas
are detailed in the relevant sections on
pages 71 and 73.
Remuneration Policy review
The principal work of the Committee this year
has been considering remuneration matters
arising from the disposal of the Group’s
housebuilding operations and the review of
the Group’s existing Remuneration Policy and
formulation of the 2020 Policy, in consultation
with major shareholders. The Committee
considers the existing policy, updated in
accordance with best practice, and structure
comprising base salary, pension, benefits,
annual bonus and Long Term Incentive Plan
(LTIP) remains appropriate.
A summary of the key changes proposed under
the 2020 Policy are detailed in the Directors’
Remuneration Policy report on pages 63 to 69.
Shareholders will be invited to vote on the 2020
Policy, a copy of which is set out on pages 65 to
69, at the Group’s AGM on 13 November 2020.
Most of the changes are limited in scope and/or
have been introduced to align to developments
in best practice. In the LTIP, although earnings
per share (EPS) growth remains a clear strategic
objective, the Committee concluded as part
of its review that it would be appropriate to
supplement this metric with an additional
financial measure linked to cash – a key element
of the future success of the Group – please see
page 63.
Application of Remuneration Policy
in 2019/20
For 2019/20, there were no changes to the
current Remuneration Policy (Policy).
The key elements of how the Policy was applied
in the current financial year are set out below:
Base salaries: as a consequence of the
Covid-19 pandemic, the 2020/21 salary review,
which is usually undertaken in July each year
has been deferred to April 2021. Also as a
consequence of the pandemic, from 1 May
2020, the Group implemented a temporary
25% salary and fee reduction for all Board
Directors and Executive Board members.
Normal salaries and fees were reinstated
from 1 July 2020.
The Committee continues to monitor and
review pay and conditions across the Group
and in line with the external market.
Annual Bonus Plan (ABP): the structure of the
2019/20 annual bonus was originally aligned
with the 2018/19 scheme with regards to
performance measures and weightings, and
with stretching targets set around the Group’s
budget for the year. Following the disposal of
the housebuilding divisions in January 2020,
the Committee used its discretion to adjust the
performance metrics and targets for the second
half of the 2019/20 financial year to reflect the
new structure of the business, as follows:
The landbank element (12.5% weighting)
was removed entirely from the annual bonus,
with the weighting reallocated to the Group
cash management element for the period
from January to June.
The pre-exceptional half year Group
profit before tax and Group cash
management targets to 31 December
2019 remained as originally set and
represented 10% and 12.5% of the total
bonus for the year respectively.
The pre-exceptional full year Group profit
before tax targets were reduced to reflect
the original budget for the disposed
businesses for the second half of the year.
Group cash management targets for the
second half year to 30 June 2020 (25% of
total bonus) were reset based on the new
forecast but retained the same principles
as had originally applied (ie 50% of monthly
bonus achieved at budget and up to 100% at
a 10% stretch, with achievement computed
on a straight line basis between target and
maximum), earned up to 3% each month
from January to May and up to 10% for June.
The changes were designed such that the
targets should have been no more or less
difficult than those set prior to the disposal.
Additionally, the Committee resolved that in
order to incentivise the successful completion
of the disposal of the Group’s housebuilding
divisions, and to reflect the focus of a significant
part of his duties for the year, Andrew
Duxbury’s annual bonus for 2019/20 would
be based 50% on the successful completion
of the disposal, with the remaining 50%
adjudicated in proportion to the revised annual
bonus structure as detailed above. This
approach is within the scope of the approved
Remuneration Policy. In making the award in
respect of the disposal, the Committee had
regard to Andrew’s wider contribution and
the underlying performance of the Group.
A detailed analysis of performance targets and
the wider factors taken into account by the
Committee in determining ABP payments
for the circa 1,800 participants is included on
page 72. Taking all factors into consideration,
the Committee determined that outcomes of
36.7% and 68.3% of maximum to Bill Hocking
and Andrew Duxbury were appropriate
taking into account Group performance,
their contributions to this, the corporate
transaction and consistency with the rewards
delivered to the wider workforce.
61
The Remuneration
Committee has reviewed
the Group’s current
Remuneration Policy and
developed a new Policy to
be proposed to shareholders
at the 2020 AGM.
Marisa Cassoni
Remuneration Committee Chair
Committee Chair’s annual statement
On behalf of the Board, I am pleased to
present the Directors’ Remuneration
Report for the financial year ended
30 June 2020. The Report is divided
into three parts: this Annual Statement;
a detailed Directors’ Remuneration
Policy Report that sets out the
proposed 2020 Policy and associated
changes (2020 Policy); and an Annual
Report on Remuneration, which sets
out how the 2020 Policy will be applied
over the year ending 30 June 2021
and how the current Policy was applied
during the current year.
Following the publication of the 2018
Corporate Governance Code in July 2018
(the 2018 Code), the Committee has applied
the recommendations in the 2018 Code insofar
as they relate to remuneration. During the year,
we focused on embedding the Code Principles
into our existing processes, to ensure that the
Committee considers all relevant matters
when discharging its responsibilities.
The Group’s financial performance during the
year was severely impacted by the effects
of the Covid-19 pandemic on the industry and
economy. The Committee’s decisions relating
to these matters are set out in the relevant
sections of this report.
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Remuneration Committee report
continued
LTIP: as part of the corporate transaction,
updated rules for the continuing Group with
respect to the LTIP were put in place and were
approved by shareholders at a general meeting
held on 29 November 2019. Following the
announcement of the half year results to
31 December 2019, the Committee granted
awards under the LTIP for 2019 – 2022 of 150%
of salary to each of Bill Hocking and Andrew
Duxbury, as well as other senior leaders.
These awards were made within the current
approved Remuneration Policy and, reflecting
the new structure of the business, were based
entirely on underlying EPS in respect of a
performance period comprising three
consecutive financial years of the Group
commencing in the year ended 30 June 2019.
Further details of the awards and performance
targets applying are included on page 73.
In addition, the Committee approved the
vesting of 16.5% of the LTIP awards originally
granted to Executives in September 2016
following the pre-exceptional reported profit
before tax (PBT) of £155.5m and cumulative
notional EPS over the performance period
of 419.9p.
The approval took place on 30 September 2019
and again on 16 November 2019, in relation to
former Chief Executive Graham Prothero.
Committee activities during 2020
The Committee met seven times during the year and there were a number of ad hoc meetings
to consider the remuneration matters in connection with the disposal of the housebuilding divisions.
The key activities during the year are summarised below:
July
2019
Salary review outcome.
LTIP 2016 performance measures to 30 June 2019.
Proposal of performance metrics for LTIP 2019 Grant of Awards
(subsequently deferred, as a consequence of the corporate transaction).
Update on 2018/19 annual bonus forecast, performance and proposal of
2018/19 annual bonus scheme.
Long Term Bonus Plan 2019 proposal (subsequently deferred, as a consequence
of the corporate transaction).
Consideration of 2019 Directors’ Remuneration Report disclosures.
September
2019
Vesting of 2016 LTIP award.
Payment and award review of Long Term Bonus Plan.
Review of 2018/19 annual bonus performance to 30 June 2019.
Approval of the 2019 Directors’ Remuneration Report.
October
2019
Remuneration considerations.
Management incentives.
Long Term Bonus Plan grant 2019-22.
November
2019
Corporate transaction matters.
Incentive arrangements for the continuing Group.
December
2019
Corporate transaction matters.
New Chief Executive remuneration.
Award incentive schemes for the remainder of the financial year from
January to June 2020.
January
2020
Incentive plan targets January to June 2020.
Updated LTIP rules for the continuing Group.
May
2020
Remuneration and corporate governance developments.
Update on 2020 AGM season.
Remuneration Policy Review.
Group and senior management remuneration report.
Annual Bonus Scheme performance for the financial year 2019/20.
Long Term Bonus Plan scheme proposals 2020-2023.
Review of Terms of Reference.
Review of Employee Share Trust shareholdings.
Marisa Cassoni
Remuneration Committee Chair
62
Galliford Try Directors’ Remuneration Policy report
This report sets out the new
Remuneration Policy that will be
proposed to shareholders at the
2020 AGM, describing the framework
within which the Group remunerates
its directors. The main objectives of the
Group’s Remuneration Policy are to:
Ensure that remuneration packages are
appropriately positioned and structured
to promote the long-term success of the
Group, taking into account pay and
conditions across the Group.
Engender a performance culture, which
will position Galliford Try as an employer
of choice and deliver shareholder value.
Deliver a significant proportion of total
Executive pay through performance-related
remuneration and in shares.
Proposed changes to the current Policy
Position performance-related elements of
remuneration so that these are capable
of appropriately rewarding the delivery
of outstanding results and peer sector
outperformance.
Ensure that failure is not rewarded. Both the
current and proposed New Policy are shaped
by environmental, social and governance
factors, which help to determine the
design of incentive structures to encourage
responsible behaviour. Furthermore,
recognising that even well-designed
incentives cannot cater for all eventualities,
should any unforeseen issues arise that
would make any payments unjustifiable,
the Committee can use its discretion to
address such outcomes by scaling back
payments. Any use of such discretion
would be fully disclosed in the Annual
report on remuneration.
The Committee operates clawback provisions
within both the ABP and LTIP, which facilitate
the retrieval of payments made to Directors and
Executive management in circumstances of
error, material misstatement, misconduct,
and for awards from 2020/21, in respect of
reputational damage or corporate failure
as a result of poor risk management.
As part of the Policy review, the Committee
consulted with our largest shareholders and
proxy voting agencies. Strategy, culture and
pay philosophy across the Group, best practice
and governance developments were all taken
into account when formulating the proposed
changes to the current Policy. A summary of
the key changes to the Policy are included in
the table below.
Element
Summary of current Policy
Proposed change
Annual
Bonus Plan
Current bonus opportunity is 150% of base salary for the
Chief Executive and 100% for other directors. Pro-rating
applies as appropriate for intra-year joiners.
The Committee, may at its discretion, adjust bonus outcomes
if it considers the payout is inconsistent with the Group’s
underlying performance during the year.
The Committee operates recovery and withholding
provisions which facilitate the retrieval of payments made
to Directors and Executive management in circumstances
of error, financial misstatement or misconduct.
Long Term
Incentive Plan
(LTIP)
Performance measures chosen to provide alignment with
medium term objectives and selected annually; any material
change would be subject to shareholder consultation.
The Committee may, at its discretion, adjust LTIP vesting
outcomes if it considers the payout is inconsistent
with the Group’s underlying performance during the
performance period.
The LTIP provides clawback and malus powers to the
Committee, which can facilitate the retrieval of payments
made to Directors and Executive management in
circumstances of error, financial misstatement or misconduct.
A maximum bonus opportunity of 120% of salary for the
Chief Executive, and 100% for other Executive directors.
No more than half of the maximum opportunity is earned
for target performance.
Bonus outcomes are subject to overall Committee discretion
taking into account factors including safety, environmental,
social and governance (ESG) and the underlying performance
of the Group. The change from a formulaic safety adjustor to
Committee discretion allows greater flexibility to take into
account actual circumstances.
In line with best practice, recovery provisions may apply in the
event of error, material misstatement, misconduct, reputational
damage or corporate failure as a result of poor risk management.
Any bonus payment may be ‘clawed back’ within a period of
three years after the payment date should:
i. The Company discover that there was a material
misstatement of the financial results or an error in the
calculation of any performance condition, which resulted
in excess annual bonus being received by the employee.
ii. The Company become aware of any material wrongdoing
on the part of an employee that would have entitled the
Company to terminate the employment summarily.
In these scenarios, the Committee shall be entitled to recover
the balance of the overpayment from future bonus payments,
unvested share awards (if any), or if all of these possibilities
have been exhausted, by cash payment from the employee via
deduction(s) from their salary or via bank transfer/cheque from
ex-employees. Both scenarios shall repay the sum on demand.
The application and extent of the claw back provision shall
operate at the sole discretion of the Committee.
The LTIP performance metrics for FY21 comprise 75%
based on earnings per share and 25% based on a cash
performance metric, based on average month end cash
as a percentage of revenue.
Vesting of awards is subject to overall Committee discretion,
taking into account factors including safety, ESG and the
underlying performance of the Group.
In line with best practice, recovery provisions may apply in the
event of error, material misstatement, misconduct, reputational
damage or corporate failure as a result of poor risk management.
63
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Directors’ Remuneration Policy report
continued
Element
Pension
Summary of current Policy
Proposed change
The Chief Executive and Finance Director receive age-related
pension contributions of 8% and 6% of salary, in line with the
rates offered across the employee population.
In line with 2018 Code recommendations, any new Executive
Director hire would receive a pension contribution in line with
the wider workforce.
Shareholding
guidelines
The current share retention policy requires Executive
directors to build and maintain a shareholding equivalent
in value to at least 200% of basic salary.
The required minimum level of share ownership will be
maintained at 200% of salary. However on leaving the Group,
Executive directors are required to retain the lesser of their
in-post shareholding guideline and their actual shareholding on
departure for two years. This requirement applies only to share
awards granted to Executive directors following the 2020 AGM.
How the 2020 Policy aligns with the 2018 UK Corporate Governance Code
The 2018 Code sets out principles against which the Committee should determine the Policy for Executives, as follows:
Principle
Committee approach
Clarity
Remuneration arrangements should be transparent and promote
effective engagement with shareholders and the workforce.
The Committee has operated a consistent approach which is well
understood internally and by investors. Consultation with shareholders
on the revisions to the Policy has been undertaken.
Simplicity
Remuneration structures should avoid complexity and their rationale
and operation should be easy to understand.
The Committee has taken measures to ensure pay arrangements
are balanced, simple in their design with a small number of relevant
performance measures, and clearly linked to strategy.
Risk
Remuneration arrangements should ensure reputational and other
risks from excessive rewards, and behavioural risks that can arise
from target-based incentive plans, are identified and mitigated.
Predictability
The range of possible values of rewards to individual directors and any
other limits or discretions should be identified and explained at the time
of approving the policy.
Proportionality
The link between individual awards, the delivery of strategy and the
long-term performance of the company should be clear. Outcomes
should not reward poor performance.
Alignment to culture
Incentive schemes should drive behaviours consistent with company
purpose, values and strategy.
Incentive targets have been set which the Committee believes are
stretching and achievable within the risk appetite set by the Board.
Under the proposed Policy revisions, the Committee has discretion to
override formulaic incentive outcomes if they do not accurately or fairly
reflect the underlying performance of the Group.
The proposed extension to the incentive scheme recovery provisions to
include reputational damage or corporate failure arising from poor risk
management ensures that malus and clawback provisions are considered
to be sufficiently wide-ranging.
The Committee maintains clear annual caps on incentive opportunities
and has used its discretion where necessary.
The Committee ensures performance metrics continue to be clearly
aligned with the Group’s strategy each year, maintaining an appropriate
balance between base pay, short- and long-term incentive opportunities.
Bonus and incentive schemes are reviewed by the Committee to ensure
consistency with the Group’s purpose, values and strategy.
64
Galliford Try Proposed New Policy
The current Policy was subject to a binding shareholder vote at the 2017 AGM of Galliford Try plc and was approved by 99.84% of shareholders
who voted. The three-year life of that Policy will expire at the 2020 AGM and we are required to seek binding shareholder approval for a new Policy.
The proposed new Policy is detailed in the table below:
Component and
link to strategy
Salary
To provide a competitive
and appropriate level
of basic fixed pay,
sufficient to attract,
motivate and retain
Executive directors of
high calibre, able to
develop and execute
the Group’s strategy.
Benefits
To provide cost-effective
and market-competitive
benefits.
Operation
Normally reviewed annually, with any changes typically
taking effect from 1 July. The Committee has decided
that the annual salary review normally undertaken in
July each year will be deferred to April 2021, and held
every April thereafter.
The Committee sets salaries at competitive rates,
taking into consideration pay and employment
conditions across the Group, the economic environment,
the responsibilities and accountabilities of each role, the
experience of each individual, his or her marketability
and the Group’s key dependencies on the individual.
Reference is also made to salary levels among relevant
construction peers and other companies of broadly
similar size and complexity.
The Committee reserves the right to reduce salary
levels (and has done so in the past) if the circumstances
warrant it.
Benefits provided to Executive directors may include
entitlements to a Group car or cash equivalent allowance,
private medical and permanent health insurance,
and life assurance.
The benefits provided may be subject to minor
amendment from time to time by the Committee.
Where a Director is asked to relocate, relocation
(or related) allowances may be provided.
Executives may also be reimbursed for any reasonable
expenses (and any income tax payable thereon)
incurred in performance of their duties.
Directors may become eligible for any new
benefits introduced for the wider workforce on
comparable terms.
Framework to assess performance and maximum opportunity
When reviewing salaries, both Group and individual
performance are considered.
While there is no prescribed maximum, the Committee’s
policy on salary increases for Executive directors is for
increases to be broadly in line with the average across the
workforce, unless there is a promotion or material change
in role or business circumstances in which case increases
may be higher.
Salaries for the year ahead are set out in the Annual Report
on Remuneration.
The cost of benefit provision varies from year to year,
depending on the cost to the Group, and there is no
prescribed maximum limit. Benefit costs are monitored
and controlled to ensure that they remain appropriate and
represent a small element of total remuneration costs.
Pension
To provide a contribution
towards retirement.
The Executive directors may each receive contributions
to a money purchase pension scheme or salary
supplement in lieu of Group pension contributions
(or a combination of both).
The rate offered of 8% for the Chief Executive and 6%
(increasing to 8% at age 50) for the Finance Director is in
line with that offered across the employee population.
Any new Executive Director would also receive a pension
contribution in line with the wider workforce.
65
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Directors’ Remuneration Policy report
continued
Operation
Executive directors and selected senior management,
subject to invitation and approval by the Committee,
may participate in the Annual Bonus Plan.
For Executive directors, two thirds of any bonus earned
in excess of 50% of salary is required to be deferred
into restricted shares. Although beneficially held by the
participants, the restricted shares are legally retained
by the trustee of the Galliford Try Employee Share Trust
(EST) for three years, and are subject to forfeiture
provisions, unless otherwise agreed by the Committee.
Subject to continued employment, the restricted shares
are legally transferred to participants on the third
anniversary of allocation.
The Committee operates recovery and withholding
provisions within the Annual Bonus Plan, which
facilitate the retrieval of payments made to Directors
and Executive management in circumstances of error,
material misstatement, misconduct, reputational damage
or corporate failure as a result of poor risk management.
Any bonus payment may be ‘clawed back’ within a period
of three years after the payment date should;
i. The Company discover that there was a material
misstatement of the financial results or an error
in the calculation of any performance condition,
which resulted in excess annual bonus being received
by the employee.
ii. The Company become aware of any material
wrongdoing on the part of an employee that would
have entitled the Company to terminate the
employment summarily.
In these scenarios, the Committee shall be entitled to
recover the balance of the overpayment from future
bonus payments, unvested share awards (if any), or if
all of these possibilities have been exhausted, by cash
payment from the employee via deduction(s) from their
salary or via bank transfer/cheque from ex-employees.
Both scenarios shall repay the sum on demand. The
application and extent of the claw back provision shall
operate at the sole discretion of the Committee.
Executive directors may be granted awards under
the rules of the LTIP approved by shareholders on
29 November 2019 and adopted by the Group in January
2020. The LTIP provides for awards of free shares in
the form of nil or nominal cost options or conditional
awards, which vest dependent on the achievement of
performance conditions and continued service.
Any share awards that vest (after allowing for the sale
to cover any tax liabilities) are subject to a two-year
holding period during which time they cannot be sold
(unless exceptional circumstances apply).
The LTIP provides clawback and malus powers to the
Committee, which can facilitate the retrieval of payments
made to Directors and Executive management in
circumstances of error, material misstatement,
misconduct, reputational damage or corporate
failure as a result of poor risk management.
Dividends may accrue on LTIP awards over the vesting
and holding periods and, subject to the discretion
of the Committee, be paid out either as cash or shares
on vesting, in respect of the number of shares that
have vested.
Component and
link to strategy
Annual Bonus Scheme
Rewards the
achievement of
stretching annual
goals that support the
Group’s annual and
strategic objectives.
Compulsory deferral
of part of the bonus
into shares provides
alignment with
shareholders.
Long Term Incentive
Plan (LTIP)
Rewards the
achievement of sustained
long-term financial and
operational performance
and is therefore aligned
with the delivery of
value to shareholders.
Facilitates share
ownership to provide
further alignment
with shareholders.
Making of annual
awards aids retention.
66
Framework to assess performance and maximum opportunity
The maximum opportunity is 120% of salary for
the Chief Executive and 100% of salary for other
Executive directors.
No more than half of the maximum opportunity is
earned for target performance. For financial elements,
bonuses start to be earned from 0% of salary for
achieving threshold performance.
Dependent on achieving specified financial (no less than
50% of the bonus) and strategic or non-financial targets.
The Committee may, at its discretion, acting fairly and
reasonably, adjust bonus outcomes if it considers the
payout is inconsistent with the Group’s underlying
performance during the year, taking into account factors
including safety and ESG. For the avoidance of doubt, this
can be to zero and bonuses may not exceed the maximum
levels detailed above. Any use of such discretion, if to the
benefit of the Executive management, will be detailed in
the Annual report on remuneration.
Performance metrics for FY21 comprise 75% based
on earnings per share and 25% on a cash performance
metric based on average month end cash as a percentage
of revenue.
The Committee may vary the measures and targets that
are included in the plan and the weightings between them
from year to year. Any material changes to the choice
of measures would be subject to consultation with the
Group’s major shareholders.
The Committee may, at its discretion, acting fairly and
reasonably, adjust LTIP vesting outcomes if it considers
the payout is inconsistent with the Group’s underlying
performance over the performance period, taking into
account factors including safety and ESG. For the
avoidance of doubt, this can be to zero and vesting may
not exceed the maximum levels detailed below. Any use
of such discretion, if to the benefit of the Executive
management, will be detailed in the Annual report
on remuneration.
Under the LTIP rules, the maximum value that may be
granted in any financial year to any individual is 150%
of salary.
Up to 25% of the relevant part of the award may vest for
achieving threshold performance.
Galliford Try Framework to assess performance and maximum opportunity
The schemes are subject to the limits set by HM Revenue
& Customs (HMRC) and may be further limited at the
Committee’s discretion.
Not applicable.
The Committee and the Executive directors are guided
by the general pay increase for the broader employee
population, but on occasions may need to recognise, for
example, changes in responsibility or time commitments.
Current fee levels are disclosed on page 76.
Component and
link to strategy
All-employee schemes
To encourage employee
share participation.
Shareholding guidelines
To ensure the interests
of the Executive
directors are aligned to
those of shareholders.
Non-executive fees
To provide a competitive
and appropriate level of
fees sufficient to attract,
motivate and retain a
Chairman and Non-
executive Directors
of high calibre.
Operation
The Group may from time to time operate tax-approved
share plans (such as an approved Save As You Earn
scheme for the benefit of all staff) for which Executive
directors could be eligible on the same terms as
other staff.
The Group’s share retention policy requires Executive
directors to build and maintain a shareholding equivalent
in value to at least 200% of basic salary.
Executive directors are required to retain a minimum
of half the after tax number of vested share awards
(deferred bonus and LTIP) until the guideline is met.
On leaving the Group, Executive directors are required
to retain the lesser of their in-post shareholding guideline
and their actual shareholding on departure for two years.
This requirement applies to share awards granted to
Executive directors following the 2020 AGM.
The Committee will assess the guideline annually
and take into account vesting levels and personal
circumstances when assessing progress against
the guideline.
The Chairman is paid a single fixed fee. The remaining
Non-executive Directors are paid a basic fee.
Non-executives chairing a Board Committee and
the Senior Independent Director are paid an additional
fee to reflect their extra responsibilities.
The level of these fees is reviewed periodically by
the Committee and Chief Executive for the Chairman,
and by the Chairman and Executive directors for the
Non-executive Directors.
Fees are set taking into consideration market levels in
comparably sized FTSE companies and relevant sector
peers, the time commitment and responsibilities of
the role and the experience and expertise required.
Non-executive Directors, including the Chairman,
are entitled to reimbursement of business expenses
reasonably incurred in performing their duties
(and any personal tax that may become payable).
Non-executive Directors cannot participate in any
of the Group’s annual bonus or share plans and are not
eligible for any pension entitlements from the Group.
The Chairman is eligible to participate in the Group’s
medical assurance plan.
Notes to the policy table
Performance measure selection and
approach to target setting
Measures used under the ABP and LTIP are
reviewed annually to reflect the Group’s main
short- and long-term objectives and reflect
both financial and non-financial priorities,
as appropriate.
Targets applying to the ABP and LTIP are
also reviewed annually, based on a number
of internal and external reference points.
Performance targets are set to be stretching
but achievable, with regard to the particular
strategic priorities and economic environment
in a given year.
Discretions retained by the Committee in
operating incentive plans
The Committee may make minor amendments
to the Policy for regulatory, exchange control,
tax or administrative purposes or to take
account of a change in legislation, without
obtaining shareholder approval.
The Committee will operate the ABP and
LTIP according to their respective rules, the
Policy set out above and in accordance with
the Listing Rules and HMRC rules where
relevant. The Committee, consistent with
market practice, retains discretion over a
number of areas relating to the operation and
administration of these plans, subject to any
limitations set out in the rules of the applicable
plan or, in the case of Executive directors, in the
Policy set out above. These include (but are not
limited to) the following:
Who participates in the plans.
The timing of grant of an award and/or
a payment.
The size of an award and/or a payment.
The choice of (and adjustment of)
performance measures, weightings and
targets for each incentive plan, in accordance
with the Policy set out above and the rules of
each plan.
Discretion relating to the measurement of
performance in the event of a change of
control or reconstruction.
Determination of a good leaver (in addition
to any specified categories) for incentive
plan purposes, based on the rules of each
plan and the appropriate treatment under
the plan rules.
Adjustments required in certain
circumstances (eg rights issues, corporate
restructuring, on a change of control and
special dividends).
Any use of the above discretions would,
where relevant, be explained in the
Annual report on remuneration and may,
as appropriate, be the subject of consultation
with the Group’s major shareholders.
67
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Directors’ Remuneration Policy report
continued
Illustration of application of Remuneration Policy
Remuneration (£000s)
£2,056
49%
£1,718
39%
£1,111
31%
24%
45%
£503
100%
32%
26%
29%
25%
£1,594
52%
£1,320
41%
28%
31%
23%
25%
£863
32%
21%
47%
£406
100%
Minimum
Target
Maximum
Max +
50% share price
Bill Hocking
Minimum
Target
Maximum
Max +
50% share price
Andrew Duxbury
Fixed pay
Annual bonus
Long-term incentives
Executive Director remuneration scenarios
The individualised potential Executive reward
charts set out above have been prepared using
the following assumptions:
For minimum remuneration: only fixed
salary, benefits and pensions payments
have been included.
For on-target remuneration: fixed salary,
benefits and pension plus 50% payout of
the ABP and 50% of the LTIP (face value)
awards have been included.
For maximum remuneration: fixed salary,
benefits and pension plus full payout
under the ABP and full vesting of the LTIP
(face value) awards have been included.
For maximum plus share price growth:
same values as the maximum scenario
plus a 50% increase in the value of the LTIP
(face value) awards have been included.
Salary levels are based on those applying on
1 July 2020, excluding the temporary
reductions applied as a consequence of
Covid-19. The value of taxable benefits is
estimated based on the cost of supplying those
benefits (as disclosed) for the year ended
30 June 2020. Executive directors can
participate in all employee share schemes
on the same basis as other employees but,
for simplicity, the value that may be received
from participating in these schemes has
been excluded.
Policy on recruitment
In cases where the Group recruits a new
Executive Director, the Committee will align
the new Executive’s remuneration with the
approved Remuneration Policy. In arriving
at a value for individual remuneration, the
Committee will take into account the skills
and experience of the candidate, the market
rate for a candidate of that experience and the
importance of securing the preferred candidate.
The Committee also has the discretion to meet
certain other incidental expenses (for example,
relocation costs and travel and subsistence
payments) to secure recruitment of preferred
candidates. Further details of the Recruitment
Policy are set out in the table below.
Element
Salary
General policy
Specifics
At a level required to
attract the most
appropriate candidate.
Discretion to pay lower base salary with incremental increases (potentially above the average
increase across the Group), as the new appointee becomes established in the role.
Pension
and benefits
In line with the policy for
existing Executive directors.
In line with the proposed new Policy, pension contribution rates are aligned with those offered
across our employee population.
Relocation expenses or allowance, legal fees and other costs relating to recruitment may be paid
as appropriate.
ABP
In line with existing schemes.
Where a director is appointed part way through a financial year, different performance measures
could be introduced to reflect the change in role and responsibilities. The annual bonus limit will
be 120% of base salary for a Chief Executive and 100% for other directors.
Pro-rating applies as appropriate for intra-year joiners.
Where an individual is appointed to the Board, different performance measures to those for
continuing directors may be set for the period of time remaining in that performance year.
LTIP
In line with Group policies and
LTIP rules.
An award of up to 150% of salary may be made in accordance with the Remuneration Policy
table. An award may be made in the year of joining or can be delayed until the following year.
Targets would normally be the same as for awards to other directors.
Other share
awards
The Committee may make an
incentive award to replace
deferred pay forfeited by
an Executive leaving a
previous employer.
The Committee reserves the right to award
additional remuneration in excess of the
Remuneration Policy at appointment,
exclusively to replace lost rewards or benefits.
In determining the appropriate form and
amount of any such award, the Committee will
consider various factors, including the type and
quantum of award, the length of performance
period, and the performance and vesting
conditions attached to each forfeited incentive
68
Awards would, where possible, be consistent with the awards forfeited in terms of structure,
value, vesting periods and performance conditions.
award. The maximum payment (which may be in
addition to the normal variable remuneration)
should be no more than the Committee
considers is required to provide reasonable
compensation to the incoming director. The
Committee may make use of the flexibility
provided in both the Listing Rules and the
approved Remuneration Policy, to make awards
outside the existing parameters of the LTIP.
For internal promotions to Executive Director
positions, the Committee’s policy is for legacy
awards or incentives to be capable of vesting
on their original terms (which may involve
participation in schemes that operate
exclusively for below Board employees)
or, at the discretion of the Committee,
they may be amended to bring them into
line with the policy for Executive directors.
Galliford Try Wider workforce remuneration
and how the views of employees
have been taken into account
The Committee takes due account of
remuneration structures elsewhere in the
Group when setting pay for the Executive
directors. Consideration is given to the overall
salary increase budget and the incentive
structures that operate across the Group,
taking into account available market sector
data obtained through benchmarking pay
and benefits data, Government policies and
advice from the Executive management team.
The wider total package on offer remains
competitive at all levels. However, the
Committee is mindful of the feedback from
key stakeholders across the Group that
improvements could be made to the visibility
and flexibility of some of the wider benefits
offered to staff.
In relation to the new Policy, the Committee
took wider workforce remuneration policies
and practices into consideration. Subject to
shareholder approval at the 2020 AGM,
management will apply the New Policy and
review the Group’s overall remuneration
policies and incentive arrangements for
the wider management team, to ensure
that they are aligned to the Company’s
long-term strategy.
In addition, the Board engages with employees
through the Employee Forum. The purpose of
the Employee Forum is to:
Provide a voice for employees and enable
better engagement with the workforce.
Strengthen the internal communication
process, providing information exchange
and representation of employee groups
and their views.
Act as a representative body for
communication with and feedback from
employees about enhancements and
changes that may affect their employment.
Seek suggestions and ideas from employees
and provide feedback on developments
and proposals.
Champion change and support
good governance.
The Employee Forum is chaired by Terry Miller,
Senior Independent Non-executive Director.
Further information on the work of the
Employee Forum can be found on page 46
of the Chairman’s review.
For a new Non-executive Chairman or
Non-executive Director, the fee arrangement
would be set in accordance with the approved
Remuneration Policy.
The Group may suspend Executive directors or
put them on a period of gardening leave during
which they will be entitled to salary, benefits
and pension.
For ‘good leavers’, bonuses may be payable pro
rata for the proportion of the financial year
worked at the discretion of the Committee.
Depending upon the circumstances, the
Committee may consider additional payments
in respect of an unfair dismissal award,
outplacement support and assistance
with legal fees.
Any share-based entitlements granted to an
Executive Director under the Group’s share
plans will be determined based on the relevant
plan rules. The default treatment is that any
outstanding awards lapse on cessation of
employment. However, ‘good leaver’ status
can be applied at the discretion of the
Committee (taking into account the
individual’s performance and the reasons
for their departure).
For ‘good leavers’, LTIP awards may vest at the
normal time (other than by exception) to the
extent that the performance conditions have
been satisfied. The level of vested awards will
be reduced pro rata, based on the period of time
after the grant date and ending on the date
of cessation of employment relative to the
three-year performance period, unless the
Committee, acting fairly and reasonably,
decides that such a scaling back is inappropriate
in any particular case. Deferred bonus shares of
‘good leavers’ vest on cessation of employment.
The overriding principle will be to honour
contractual remuneration entitlements and
determine on an equitable basis the appropriate
treatment of deferred and performance-related
elements of remuneration, taking into account
the circumstances. Failure will not be rewarded.
External directorships
The Board ensures that any additional external
appointments are only undertaken if time and
commitments allow and with the prior written
approval of the Board. Only upon approval
are Executive directors permitted to accept
external appointments as Non-executive
Directors and retain any associated fees.
Shareholder consultation
The Committee actively consults with relevant
institutional shareholders regarding, and in
advance of, substantial changes to the
Remuneration Policy, where appropriate,
or individual Executive director salary packages.
The most recent consultation took place in
June 2020 in connection with the proposed
New Policy.
Directors’ service contracts and
policy for payments to departing
Executive directors
The service contracts and letters of
appointment for the Board directors serving
as at 30 June 2020 are detailed below:
Contract date1
Non-executive Directors
Peter Ventress
3 January 2020
Terry Miller
3 January 2020
Gavin Slark
3 January 2020
Jeremy
Townsend
3 January 2020
Marisa Cassoni
3 January 2020
Executive directors
Bill Hocking
3 January 2020
Andrew Duxbury 3 January 2020
Notice
period2,3
(months)
6
6
6
6
6
12
12
1 New letters of appointment were prepared and
conditional on the listing of the Company’s
securities on the London Stock Exchange on
3 January 2020. Dates shown are the Directors’
contract as an Executive or Non-executive
Director of the Group. Executive directors have
a rolling notice period as stated. Non-executive
appointments are reviewed after a period of three
years and their appointments are subject to a rolling
notice period as stated. With the exception of
Jeremy Townsend, all other Directors will stand
for re-election at the 2020 AGM.
2 There are no contractual provisions requiring
payments to directors on loss of office or
termination, other than payment of notice
periods. The Committee may seek to mitigate
such payments where appropriate.
3 Subject to the recommendation of the Nomination
Committee, the Group’s practice is to agree
notice periods of no more than six months for
Non-executive Directors and no more than
12 months for Executive directors.
Executive directors’ service contracts are
available at the Group’s registered office
and will be available for inspection at the
2020 AGM.
For Executive directors, at the Group’s
discretion, a sum equivalent to 12 months’
salary and benefits may be paid in lieu of
notice. The contracts include mitigation
provisions to pay any such lump sum in
monthly instalments, subject to offset
against earnings elsewhere. This will also
be the case for any future appointments.
An Executive director’s service contract may
be terminated summarily without notice and
without any further payment or compensation,
except for sums accrued up to the date of
termination, if they are deemed to be guilty
of gross misconduct or for any other material
breach of the obligations under their
employment contract.
69
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Annual report on remuneration
Performance graph
The graph shows the total shareholder return
for Galliford Try shares over the last 10 financial
years. It shows the value to 30 June 2020 of
£100 invested in Galliford Try on 30 June 2010,
compared with the value of £100 invested in the
FTSE All-Share Index, this being a broad-market
index of which the Company has been a
constituent over the full period shown.
The FTSE 250 Index line shown in previous
reports has been dropped this year, as Galliford
Try is no longer a constituent of this index.
Total Shareholder Return
Value (£) (rebased)
The closing mid-market quotation for the
company’s shares on 30 June 2020 was
£1.18. The high and low during the year
were £1.90 and £0.56 respectively.
800
600
400
200
0
Jun
10
Jun
11
Jun
12
Jun
13
Jun
14
Jun
15
Jun
16
Jun
17
Jun
18
Jun
19
Jun
20
Galliford Try
FTSE All Share
The total gross remuneration of the Chief Executive and the percentage achieved of the maximum ABP and LTIP awards are shown in the table below
for the last 10 financial years.
2011
2012
2013
2014
20151
2016
2017
2018
20192
20203
Year ended 30 June
Chairman
Chief
Executive
Total remuneration (£000)
2,559
2,468
4,114
3,212
2,811
1,262
1,461
1,043
1,448
824
660
Annual bonus (% of maximum)
LTIP (% of maximum)
94%
75%
88%
93%
94%
87%
97%
63%
79%
63%
74%
47%
74% 46.3% 86.5%
57.0% 36.7%
–
16.5%
36.6%
16.5%
–
1 Peter Truscott was appointed Chief Executive on 1 October 2015. His predecessor, Greg Fitzgerald, was Chief Executive until 21 October 2014, and Executive Chairman
until 31 December 2015. Peter Truscott stepped down as Chief Executive and from the Board on 26 March 2019.
2 Graham Prothero was appointed Chief Executive on 26 March 2019, succeeding Peter Truscott who stepped down from the Board with effect from the same date.
He stepped down from the Board following the successful completion of the sale of the housebuilding divisions to Vistry Group plc on 3 January 2020.
3 Bill Hocking was appointed Chief Executive on 3 January 2020.
Directors’ remuneration and single-figure annual remuneration (audited)
The remuneration of the directors serving during the financial year under the current Remuneration Policy, together with 2019 comparative figures,
was as follows:
Salary and fees
£000
Annual bonus
£000
Taxable
benefits2
£000
Pensions3
£000
LTIP
£000
Sharesave
£000
Total fixed
remuneration
£000
Total variable
remuneration
£000
Total
remuneration
£000
20205
2019
2020
2019
2020
2019
2020
2019
2020 20194
2020
2019
2020
2019
2020
2019
2020
2019
Executive directors
Bill Hocking1
205
–
98
–
5
Andrew
Duxbury6
350
94
250
53
19
Non-executive Directors
Terry Miller
Gavin Slark
Jeremy
Townsend
Peter
Ventress
Marisa
Cassoni
54
42
50
54
42
50
193
195
53
35
Former directors
–
–
–
–
–
–
–
–
–
–
Graham
Prothero7
285
445
–
294
–
–
–
1
–
9
–
5
–
–
–
1
–
18
21
–
–
–
–
–
–
6
–
–
–
–
–
19
41
82
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
39
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
228
–
98
–
326
–
390
105
250
53
640
158
54
42
50
54
42
50
194
196
53
35
–
–
–
–
–
–
–
–
–
–
54
42
50
54
42
50
194
196
53
35
–
335
546
–
333
335
879
1 Salary and fees received by Bill Hocking relate to the period from appointment as Chief Executive on 3 January 2020.
2 Includes the value of benefits such as car allowance and medical insurance. Taxable benefits received by Bill Hocking in the financial year relate to the period from
appointment as Chief Executive on 3 January 2020.
3 This is a salary supplement paid to the directors in lieu of direct pension contributions. In the case of Bill Hocking, this relates to the period from appointment as
Chief Executive on 3 January 2020.
4 LTIP figures reported in 2019 and the corresponding single figure for that year were based on an estimated share price. These have now been updated with the actual
share price as at the date of vesting of £7.03.
5 In the context of Covid-19, from 1 May 2020, the Group implemented a temporary 25% salary and fee reduction for all Board directors. Normal salaries and fees were
reinstated from 1 July 2020.
6 Andrew Duxbury’s annual bonus for 2019/20 is based 50% on the successful completion of the sale of the housebuilding divisions, with the remaining 50% adjudicated
in proportion to the revised annual bonus structure as detailed on page 71.
7 Graham Prothero stepped down from the Board on 3 January 2020. Salary, taxable benefits and pension disclosed above reflects his time in the role of Chief Executive.
Details of his leaving arrangements are set out on page 73.
70
Galliford Try Remuneration arrangements for
Directors promoted during 2020
Following his promotion to the role of Chief
Executive on 3 January 2020, the Committee
determined that Bill Hocking would receive a
remuneration package which is appropriately
positioned against the market. Accordingly,
Bill’s base salary was set to £450,000 per
annum and will be subject to periodic review.
He continues to participate in the ABP.
However, his maximum annual bonus
opportunity was increased from 100% to 120%
of salary, which is lower than the figure for his
predecessor. In addition, Bill’s 2019/20 annual
bonus was pro-rated based on time served in
the two roles during the year. The Committee
had agreed that the Group contribution pension
rate would be 8% of salary, in line with those
offered across the employee population.
The Committee believes that the existing
Chief Executive’s remuneration package is
appropriately positioned against the market.
2020 Annual bonus outcome (audited)
As detailed in the Chair’s Statement on page 61,
the structure of the 2019/20 annual bonus was
originally aligned with the 2018/19 scheme
with regards to performance measures and
weightings, and with stretching targets set
around the Group’s budget for the year.
Following the disposal of the housebuilding
divisions in January 2020, the Committee used
its discretion to adjust the performance metrics
and targets for the second half of the 2019/20
financial year to reflect the new structure of
the business, as follows:
The landbank element (12.5% weighting)
was removed entirely from the annual
bonus, with the weighting reallocated to the
Group cash management element for the
period January-June;
The pre-exceptional half year Group profit
before tax and Group cash management
targets to 31 December 2019 remained
as originally set and represented 10%
and 12.5% of the total bonus for the
year respectively;
The pre-exceptional full year Group profit
before tax targets were adjusted to reflect
the original budget for the disposed
businesses for the second half of the
year; and
Group cash management targets for the
second half year to 30 June 2020 (25% of
total bonus) were reset based on the new
post-transaction forecast but retained the
same principles as had originally applied
(i.e. 50% of monthly bonus achieved at
budget and up to 100% at a 10% stretch,
with achievement computed on a straight
line basis between target and maximum),
earned up to 3% each month January to
May and up to 10% for June.
The changes were designed such that the
targets should have been no more or less
difficult than those set prior to the disposal.
Finally, the Committee resolved that in order
to incentivise the successful completion of
the disposal of the Group’s housebuilding
divisions, and to reflect the focus of a significant
part of his duties for the year, Andrew
Duxbury’s annual bonus for 2019/20 would be
based 50% on the successful completion of the
disposal, with the remaining 50% adjudicated
in proportion to the revised annual bonus
structure as detailed above and below. This
approach is within the scope of the approved
Remuneration Policy. In making the award in
respect of the disposal, the Committee had
regard to Andrew’s wider contribution and the
underlying performance of the Group.
The revised weightings and performance targets are shown in the table below:
Performance target
Measure
Group targets (pre-disposals)
Pre-exceptional full year
Group profit before tax
Pre-exceptional half year
Group profit before tax
Group cash management1
Landbank2
Construction order book
Adjusted targets following disposals
Pre-exceptional full year
Group profit before tax3
Pre-exceptional half year Group
profit before tax
Group cash management (July-Dec)4
Group cash management (Jan-Jun)4
Construction order book
Total payout (% of maximum bonus)
Weighting
Threshold (% of
maximum bonus)
On-target (% of
maximum bonus)
Maximum (% of
maximum bonus)
Actual
performance
Payout % of
bonus maximum
40.0%
£161.5m (0%)
£170m (20%)
£178.5m (40%)
10.0%
25.0%
12.5%
12.5%
£60.2m (0%)
£63.4m (5%)
£66.5m (10%)
(12.5%)
(12.5%)
(25%)
10,750 units
(12.5%)
10,750 units
(12.5%)
10,750 units
(12.5%)
83.0% secured
(0%)
85.0% secured
(6.2%)
87.0% secured
(12.5%)
n/a
n/a
n/a
n/a
n/a
40.0%
£40.6m (0%)
£42.8m (20%)
£44.9m (40%)
£(59.7)m
10.0%
12.5%
25.0%
12.5%
100.0%
£60.2m (0%)
£63.4m (5%)
£66.5m (10%)
(6.2%)
(12.5%)
(6.2%)
(12.5%)
(12.5%)
(25.0%)
£(5.6)m
8.1%
16.1%
83.0% secured
(0%)
85.0% secured
(6.2%)
87.0% secured
(12.5%)
90.0% secured
18.7%
50.0%
100.0%
n/a
n/a
n/a
n/a
n/a
0.0%
0.0%
8.1%
16.1%
12.5%
36.7%
1 Cash management related to month-end net cash/debt figures in accordance with a predetermined net cash/debt budget schedule. The weighting represented 12.5% for
the performance from 1 June 2019 to 31 December 2019 and 12.5% for the performance from 1 January 2020 to 30 June 2020.
2 As explained on page 61, and following the disposal of the housebuilding divisions in January 2020, the landbank element performance measure was removed entirely
from the annual bonus with the weighting reallocated to the Group cash management element for January to June 2020.
3 The pre-exceptional full year Group continuing operations profit before tax targets were reduced, reflecting the removal of the original budget for the disposed
housebuilding divisions for the second half of the year.
4 Adjusted cash management targets consisted of the original targets for the first half of the year (as described in note 1) and adjusted targets for the second half of the year
which were rebased on the new forecast following the disposal of the housebuilding divisions, but using the same principles (i.e. 50% of monthly bonus achieved at budget
and up to 100% at a 10% stretch with achievement computed on a straight-line basis between target and maximum), earned up to 3% each month (January-May) and up to
10% for June.
5 As previously approved by the Committee, Andrew Duxbury’s annual bonus for 2019/20 was based 50% on the successful completion of the disposal of the housebuilding
divisions, with the remaining 50% adjudicated in proportion to the adjusted annual bonus structure as detailed in the table above. This approach is within the scope of the
approved Remuneration Policy.
71
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Annual report on remuneration
continued
The Committee gave significant consideration as to how the ABP should be treated. In particular it took into account the following factors:
Management and the wider workforce has done an exceptional job of keeping sites open and safe to the highest extent possible and thereby
positioning the Group for long-term success.
Notwithstanding the severe disruption caused by Covid-19, the business performed well on its cash management – this being a particularly
important consideration in a time of economic disruption.
The Group has continued to win profitable new work/order book in an uncertain and challenging environment and this will underpin the
Group’s continued success over the next 12-18 months.
The disposal of the housebuilding divisions in January was well-executed and value-enhancing for shareholders.
Taking all the above into account, the Committee determined that a bonus should be paid to circa 1,800 ABP participants in respect of the cash
management and order book elements and Executive directors have been treated no better than other plan participants.
Specifically, the Committee determined that the bonus level produced by the scorecard (36.7%) in respect of the cash management and order book
element is an appropriate reward given overall performance. This treatment is consistent with that applied for the other circa 1,800 participants.
A formulaic health and safety bonus deductor was also considered, based on a health and safety matrix in force across the entire Group that could
reduce bonus by specified percentages relating to the number of accidents, incidents and other reportable events. Non-financial targets for Executive
directors are also appropriately linked to the overall Group’s RIDDOR accident frequency rate (AFR) performance during the financial year. As set
out in last year’s Annual Report, the Committee reserved the right to adjust the 2020 bonus outcomes. In reviewing the Group’s health and safety
performance against the matrix, the Committee took these factors into consideration and decided that the Group targets were met. The Group’s AFR
for 2019/20 is 0.07 against a target of 0.08. In addition, several business units achieved an AFR of zero during the year.
The Committee determined that, in respect of the year to 30 June 2020, the resulting annual bonus awards were as follows:
Bill Hocking1
Andrew Duxbury
On-target bonus
(% of salary)
Maximum bonus
(% of salary)
36.7%
68.3%
120/100
100
Actual bonus
payable for
2019/20
(£000)
98
250
Cash
(£000)
98
205
Shares
(£000)
–
45
1. Bonuses awarded to Bill Hocking were pro-rated based on time served in two roles during the year. Bill’s annual bonus was pro-rated at 36.7% when in post as
Chief Executive (at 120% maximum) and at 0% when in post as Chief Executive of the Construction & Investments division (at 100% maximum).
Two-thirds of the bonus earned in excess of the 50% of salary threshold is required to be deferred into restricted shares. Although beneficially held
by the participants, the allocated restricted shares are legally retained by the Employee Share Trust for a period of three years, and are subject to
forfeiture provisions, unless otherwise agreed by the Committee. Subject to continued employment, the restricted shares are legally transferred to
participants on the third anniversary of allocation.
Incentive awards made prior to Board appointment
In his previous role, i.e. prior to his appointment as an Executive Director, Bill Hocking was granted an incentive award for the successful completion of
the disposal of the Group’s housebuilding divisions on 3 January 2020 along with certain other senior Executives below Main Board level. Subject to
conditions, a payment of £181,587 will therefore be made in December 2020 and this will be included in the single-figure annual remuneration table in
the 2021 Annual Report.
LTIP awards vesting
The Committee approved the vesting of 16.5% of the LTIP awards originally granted to Executives in September 2016, following the pre-exceptional
reported profit before tax (PBT) at 30 June 2019 of £155.5m and cumulative notional EPS over the performance period of 419.9p. The approval took
place on 30 September 2019 and again on 16 November 2019, in relation to former Chief Executive Graham Prothero.
As a result of the corporate transaction, awards granted in September 2017 and September 2018 had vested early under the 2016 LTIP rules.
Financial performance fell below the level required to achieve the threshold targets and accordingly, awards vested at 0% and therefore lapsed.
Directors’ share plan interests (audited)
Outstanding awards held by Directors are detailed in the table below.
Plan
Date
Share price
at grant
2016 LTIP1,2
16.11.16
2016 LTIP1,2,3 22.09.17
2016 LTIP1,2,3 20.09.18
13.03.20
New LTIP4
20.09.18
ABP5
2016 LTIP1,2,3 20.09.18
13.03.20
New LTIP4
01.11.16
Sharesave6
02.11.17
Sharesave6
23.10.18
Sharesave6
£12.88
£13.56
£10.73
£1.1554
£10.99
£10.73
£1.1554
£9.357
£9.276
£8.23
Number of
awards
outstanding at
1 July 2019
Granted
Vested
27,997
36,966
49,291
–
5,898
27,260
–
445
740
188
–
–
–
584,213
–
474,705
–
–
–
4,619
–
–
–
5,898
–
–
–
–
–
Number of
awards
outstanding
at 30 June
2020
–
–
–
584,213
–
–
474,705
–
–
–
Value of
awards
vested
during
financial year
£000
31
–
–
–
49
–
–
–
–
–
Actual or
anticipated
vesting date
30.09.19
17.12.19
17.12.19
13.03.23
18.12.19
17.12.19
13.03.23
01.01.20
01.01.21
01.01.22
Lapsed
23,378
36,966
49,291
–
–
27,260
–
445
740
188
Director
Bill Hocking
Andrew Duxbury
72
Galliford Try 1 Each LTIP award is a provisional allocation of a number of shares which is equal in value to 100% of the individual’s basic salary as at the date of grant, with up to
150% of the number of the base award able to vest at the stretch performance level. The number of shares shown in the table above represents the base award.
2 Awards are based on a maximum percentage of salary. The number of shares shown in the table represent the maximum number of shares ie 150% of salary.
3 The awards granted to Bill Hocking and Andrew Duxbury relate to their former roles as Chief Executive of Construction & Investments and Finance Director of
Linden Homes. The awards vested at 0% and therefore lapsed under the LTIP rules.
4 Awards were made under the new LTIP rules approved by shareholders at the General Meeting of Galliford Try plc on 29 November 2019 and prior to the scheme
of arrangement being effective on 2 January 2020. Awards are subject to performance conditions over a three-year period as described below.
5 As a consequence of the corporate transaction, all in-flight restricted shares vested early in accordance with the rules of the Annual Bonus Plan.
6 The options over ordinary shares granted to Andrew Duxbury under the Sharesave Plan lapsed in accordance with the rules of the Sharesave Plan following the
closure of the savings contracts relating to those options.
Awards granted during the year (audited)
On 13 March 2020, the following conditional LTIP awards were made to Bill Hocking and Andrew Duxbury.
Director
Bill Hocking1
Andrew Duxbury1
Date of grant
Number of shares awarded
Basis of award
Share price used to
determine level of award1
£
13 March 2020
13 March 2020
584,213
150% of base salary
474,705
150% of base salary
£1.1554
£1.1554
Face value
£
674,999
548,474
1 The share price used for awards made on 13 March 2020 was the closing mid-market price of the share price of the Company on the day prior to the award.
The performance conditions attached to these awards and awards made in March 2020 are as follows:
Date of grant
March 2020
Performance conditions
Vesting based on underlying EPS performance over the three years to 30 June 2022.
Vesting of up to two-thirds of the award is based on underlying EPS. 25% will vest for 13.0p, increasing to
100% vesting on a straight-line basis if 16.5p is achieved.
Any shares which vest will be subject to a two-year post vesting holding period in accordance with the existing
Remuneration Policy.
Directors’ share interests (audited)
As at 30 June 2020, the Directors held the following beneficial, legal and unvested ABP interests in the Group’s ordinary share capital.
Measure
Executive directors
Bill Hocking
Andrew Duxbury
Non-executive Directors
Terry Miller
Gavin Slark
Jeremy Townsend
Marisa Cassoni
Peter Ventress
Former directors
Graham Prothero3
Legally owned1
30.6.20
30.6.19
LTIP (unvested)
Deferred bonus
awards (unvested)
119,778
2,939
2,066
1,600
3,333
–
–
2,939
2,066
1,600
3,333
–
14,098
14,098
84,418
70,288
584,213
474,705
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
30.6.20
703,991
477,644
2,066
1,600
3,333
–
14,098
84,418
% of salary held
under share
ownership
guidelines2
31%
1%
n/a
n/a
n/a
n/a
n/a
n/a
1 Either held by the individual or connected persons.
2 Under the current Remuneration Policy, the share ownership guideline for Executive directors is 200% of base salary. The shareholding policy is set out on page 59 of
the 2017 Annual Report and Financial Statements. Bill Hocking and Andrew Duxbury were appointed as Chief Executive and Finance Director on 3 January 2020 and
26 March 2019, respectively, and are still building up to the guideline level.
3 The shareholdings of Graham Prothero are based on the number of shares held at the time of leaving the Group.
There were no changes in the directors’ interests from 30 June 2020 to the date of this Annual Report.
Payments for loss of office (audited)
As explained on page 47, Graham Prothero left the Group with effect from 3 January 2020 following the successful completion of the sale of the
housebuilding divisions to Vistry Group plc. Under the terms of his exit arrangements, he continued to receive his salary and contractual benefits
up to the date of his departure and release of 15,821 deferred restricted shares as part of his annual bonus awards in 2017, 2018 and 2019.
Payment of his pro-rata 2019/20 bonus (if any) for the period up to 31 December 2019 is subject to the finalising of the corporate transaction
closing adjustment.
As a result of the corporate transaction, his LTIP awards granted in September 2017 and September 2018 vested early. Financial performance fell
below the level required to achieve the threshold targets and accordingly, awards vested at 0% and therefore lapsed. There were no payments for
loss of office.
73
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Annual report on remuneration
continued
Percentage change in remuneration of Chief Executive and across workforce for 2019/20
% change
Salary
Bonus
Benefits
Average across
workforce2
Chief Executive1
5.22%
(42.82)%3
13.62%4
(10.03)%
(20.78)%
(38.69)%
1 The figures have been calculated by: (a) combining (i) the salary, fees and benefits paid to Graham Prothero for the period between 1 July 2019 and 3 January 2020;
and (ii) salary and fees, pro-rated bonus and benefits paid to Bill Hocking for the period between 3 January 2020 and 30 June 2020; and then (b) comparing these
aggregate figures against figures for the prior year to 30 June 2019.
2 The comparator group chosen were employees of the continuing Group on fixed monthly salaries and excludes the housebuilding divisions which were sold in
January 2020.
3 Based on comparison of average aggregate bonus awards divided by average numbers of staff.
4 Based on comparison of cost to the Group of benefits for the tax years ended in April 2019 and April 2020.
Percentage change in remuneration of Executive directors and Non-executive Directors
In accordance with The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report Regulations) 2019 (applying to financial years
commencing on or after 10 June 2019), a comparison of the annual percentage change of each directors’ remuneration to the average remuneration
of the Company’s employees must also be made and calculated on a full time equivalent basis (FTE). As required, we have displayed this analysis in the
table below and will build this information to display a five-year history.
Executive directors
Bill Hocking3
Andrew Duxbury4
Non-executive Directors
Peter Ventress
Terry Miller
Gavin Slark
Jeremy Townsend
Marisa Cassoni5
Former directors
Graham Prothero6
P50 median employee
Salary change1
Benefits change2
Bonus change
n/a
273%
(1.3)%
(1.3)%
(1.3)%
(1.2)%
49.3%
(35.9)%
(1.2)%
n/a
226%
n/a
n/a
n/a
n/a
n/a
n/a
369%
n/a
n/a
n/a
n/a
n/a
(53.6)%
0.6%
(100)%
–
1 As a consequence of Covid-19 pandemic, the Board agreed a temporary salary/fee reduction of 25% of base salary/fee from 1 May 2020. Salaries and fees were reinstated
to normal levels with effect from 1 July 2020.
2 Benefits received include pension contributions (or cash equivalent), company car (or equivalent cash allowance), and private medical insurance. Executive directors and
senior management, subject to invitation and approval by the Committee, may participate in the Annual Bonus Plan and Long Term Incentive Plan (LTIP).
3 Bill Hocking was appointed as Chief Executive on 3 January 2020, and therefore, no comparison has been made for the prior financial year.
4 Andrew Duxbury was appointed as Finance Director on 26 March 2019. As such, the percentage increase numbers shown above compare his salary, benefits, and bonus
for the full financial year ended 30 June 2020 against a three-month period in the prior financial year (i.e. 26 March 2019 to 30 June 2019). The percentage increase
numbers are therefore misleadingly high. If a comparison is made against a full prior financial year and Andrew Duxbury had been employed as a director for the full year,
the percentage changes for Andrew Duxbury’s salary, benefits and bonus (including elements of bonus awards earned in his former role as Finance Director of Linden
Homes) would be (1.3)% for salary, 3% for benefits and 59% for bonus.
5 Marisa Cassoni received a fee supplement following her appointment as Chair of the Remuneration Committee in February 2019. Salary and fees received in the prior
financial year relate to the period from appointment on 1 September 2018.
6 Graham Prothero stepped down from the Board on 3 January 2020.
In calculating the average change per employee, the Committee has elected to compare the total remuneration of the P50 median employee (median)
from this year (2019-20) to that used last year. The Committee looks to ensure that the wider total package on offer to employees remains competitive
at all levels.
74
Galliford Try Relative importance of spend on pay
Total overall spend on pay (£m)
Dividends (£m)2
Share buyback (£m)
Pre-exceptional Group corporation tax credit (£m)
Pre-exceptional effective tax rate (%)
2018/19
217.9
64.4
–
5.4
31.4
2019/201
188.8
–
–
6.8
11.4
% change
(13.35)%
(100)%
–
25.9%
(20.0) ppts
1 Pre-exceptional Group profit before tax has not been used as a comparator in the table above for this financial year. The financial results for the continuing Group can be
found in the Financial Review on pages 40 to 42.
2 The dividend amounts used for the comparison in the table above are the amounts declared in respect of each accounting period presented.
The equivalent total overall spend on pay in 2020 is disclosed in note 5 to the financial statements. The total overall spend on pay equates to average
remuneration per staff member of £61,100 per annum as at 30 June 2020 (2019: £61,500).
CEO pay ratios
The Companies (Miscellaneous Reporting) Regulations 2018 require UK listed companies with an average of 250 or more UK employees in a given
year to disclose the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay of their UK employees from 2019. The Regulations
apply to financial years beginning or after 1 January 2019.
Our CEO pay ratios have been calculated using Option B (gender pay data) as the methodology to perform this exercise. We believe this to be a
clear methodology involving fewer adjustments to calculate full-time equivalent earnings. In calculating the CEO data, and consistent with the
approach taken for the calculation made in the 2019 Annual Report, an annualised figure was used and pro-rated to account for the change of CEO in
January 2020.
Year
2019/20
Method CEO single figure1,2 All UK employees
Lower quartile
Median
Upper quartile
Option B
£660,587
Ratio
Total pay
Salary
24:1
£27,407
£25,500
15:1
£43,165
£35,429
9:1
£74,351
£61,057
1 Bill Hocking was appointed as Chief Executive on 3 January 2020, replacing Graham Prothero who stepped down from his role and from the Board on the same date.
The single figure illustrated above is the aggregated sum of remuneration paid to Graham Prothero and Bill Hocking in respect of their times in the role of Chief Executive.
2 As disclosed on page 72, Bill Hocking’s annual bonus was pro-rated at 36.7% of 120% maximum (when in post as Chief Executive) and at 0% of 100% maximum
(when in post as Chief Executive of the Construction & Investments division). Taxable benefits and pension contributions have also been pro-rated from January 2020
to the end of the financial year.
The components of employee remuneration
used to calculate each of the pay ratios in the
table above were salaries, bonus, taxable
benefits and pension contributions. As required,
we will build this analysis over a ten-year
reporting period.
As a comparison, we have considered the ratio
if Bill Hocking had been employed for the full
year and had received an annual bonus of 36.7%
of salary (120% bonus opportunity), benefits
totalling £13,147 and pension contribution of
8% of salary. This would lead to a total single
figure of £678,397 and the following pay ratios:
Year
2019/20
Lower
quartile
25:1
Median
16:1
Upper
quartile
9:1
A high proportion of the Chief Executive’s total
reward is performance related and therefore,
variable pay outcomes may fluctuate from year
to year. The Committee is comfortable that the
resulting calculations are representative of pay
levels at the respective quartiles and that the
applicable relativities are appropriate given
the profile of the workforce.
Composition of Remuneration
Committee and attendance
Membership of the Committee is detailed on
page 48. Aside from the Chair, Marisa Cassoni,
the other members were Terry Miller, Gavin
Slark, Jeremy Townsend and Peter Ventress.
The General Counsel & Company Secretary
acts as Secretary to the Committee. The Chief
Executive has a standing invitation to attend all
Committee meetings, although each meeting
commences with the Non-executive Directors
meeting without Executive management
present. No director, or the General Counsel &
Company Secretary, is present when his or
her own remuneration is being considered.
The Committee is governed by formal terms of
reference agreed by the Board and is composed
solely of Non-executive Directors, each of
whom the Board considers to be independent.
The latest terms of reference are available on
the Group’s website (www.gallifordtry.co.uk).
Remuneration advice and advisors
The Committee is informed of key
developments and best practice in the field
of remuneration and regularly obtains advice
from independent external consultants, when
required, on individual remuneration packages
and on Executive remuneration practices
in general. Mercer Limited (Mercer) is the
Committee’s remuneration consultant,
following its appointment in March 2019.
Fees paid to Mercer during the financial year
were £79,907 (2019: £23,000).
Mercer Limited does not provide any other
services to the Group, although Mercer is part
of Marsh & McLennan Companies, a subsidiary
of which Marsh JLT Specialty Limited, provides
insurance broking services to the Group.
The Committee is satisfied that these services
do not impinge on the independence of Mercer.
Furthermore, Mercer is a signatory to the
Remuneration Consultants’ Code of Conduct,
which requires that its advice be objective
and impartial.
The General Counsel & Company Secretary
also advises the Committee as necessary and,
where appropriate, makes arrangements for
the Committee to receive independent legal
advice at the request of the Chair.
75
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Annual report on remuneration
continued
Votes cast
(%)
0.74
0.32
2.15
13.97
14.27
99.26
99.68
97.85
86.03
85.73
2015
2016
2017
AGM Year
2018
2019
Votes For
Votes Against
Forward-looking implementation
of Policy
Base salaries
As a consequence of the Covid-19 pandemic,
the 2020/21 salary review, which is normally
undertaken in July, has been deferred until
April 2021. Also as a consequence of the
pandemic, from 1 May 2020, the Board agreed
a temporary salary/fee reduction of 25%
of base salary/fee. Salaries and fees were
reinstated to normal levels with effect from
1 July 2020.
ABP
The Committee has decided that, for the
financial year to 30 June 2021, the existing
bonus structure remains appropriately aligned
to corporate strategy. It will therefore remain in
its current form, with an opportunity of 120%
of salary for the Chief Executive, and 100% for
other Executive directors.
Bonus outcomes will be subject to overall
Committee discretion taking into account
factors including safety, ESG and the
underlying performance of the Group.
LTIP
Any award will be within the current
approved Remuneration Policy and based on
performance metrics comprising of 75% based
on earnings per share and 25% on a cash
performance metric, based on average month
end cash as a percentage of revenue. Relevant
details will be included in next year’s Directors’
Remuneration Report and, in respect of the
LTIP grant, in the market announcement at
the time of any grant during the 2020/21
financial year.
Chairman and Non-executive fees
The fee level for Peter Ventress as Chairman
for 2019/20 was £201,100 per annum. As a
consequence of the Covid-19 pandemic, his fee
was temporarily reduced by 25% to £150,825
with effect from 1 May to 30 June 2020. Peter
Ventress received no benefits in connection
with his position, other than membership of
the Group’s medical insurance plan.
The standard Non-executive fee was £43,600
per annum throughout the financial year.
From 1 May 2020 to 30 June 2020, the fee
was temporarily reduced by 25% to £32,700.
The fee supplement for the Chairs of the Board
Committees and for the Senior Independent
Non-executive Director also decreased by
25% from £8,200 to £6,150 and from
£4,350 to £3,262 respectively, also from
1 May 2020 to 30 June 2020.
Salaries and fees were reinstated to normal
levels with effect from 1 July 2020.
Companies and Groups (Accounts
and Reports) Regulations (Amended)
2013 and the Financial Conduct
Authority’s Listing Rules
The Directors’ Remuneration Report has been
prepared in accordance with The Companies
(Director’s Remuneration Policy and Directors’
Remuneration Report) Regulations 2019
(applying to financial years starting on or after
10 June 2019), the Large and Medium-sized
Companies and Groups (Accounts and Reports)
Regulations (Amended) 2013 and the Financial
Conduct Authority’s Listing Rules. The auditor
is required to report on the remuneration
data disclosed in the Directors’ Remuneration
Report section and state whether, in its opinion,
that part of the report has been properly
prepared in accordance with relevant provisions
of the Companies Act 2006 (as amended).
Certain sections of the Annual report on
remuneration on pages 70 to 73 have been
subject to audit.
For and on behalf of the Board
Marisa Cassoni
Remuneration Committee Chair
16 September 2020
Employee Share Trust and dilution
The Employee Share Trust (EST) is the primary
mechanism by which shares required to satisfy
the Executive incentive plans are provided.
During the financial year, the EST purchased
53,617 shares from participants of the LTIP and
the ABP at an average price of £7.18, which
resulted in a balance held at 30 June 2020 of
221,603 shares.
The Group provided net additional funds to
the EST during the financial year of £366,169,
by extending the existing EST loan facility.
The number of new shares purchased in the
market during the year was nil.
Following the completion of the sale of the
housebuilding divisions to Vistry Group plc in
January 2020, the EST received one new share
in Galliford Try Holdings plc for every share held
in Galliford Try plc and 0.57406 shares in Vistry
Group plc for every share held in Galliford Try
plc. During the year, the Trust sold 84,792
Vistry Group plc shares for £1.1m cash, which is
available to purchase new Galliford Try shares
in the market to satisfy future awards that may
vest under the Executive share schemes.
During the financial year, 20,872 new shares
were issued arising from share scheme-related
activities under the SAYE share option scheme.
As at 30 June 2020, the total number of
shares outstanding under the SAYE share
option scheme was nil. The Group has
complied with the dilution guidelines of the
Investment Association.
Applying the guidelines, the Group has 10%
headroom against ‘the 10% in 10 years’ rule
and on the basis that the Group’s practice is that
all awards granted pursuant to discretionary
plans are satisfied using shares purchased in
the market, 5% headroom against the ‘5% in
10 years’ rule for discretionary plans.
Shareholder voting on the
Directors’ Remuneration Report
The Committee takes account of annualised
shareholder voting trends in connection
with the Directors’ Remuneration Report
votes. Votes cast in support of the annual
advisory resolution to approve the Directors’
Remuneration Report during the last five AGMs
are included in the chart below. In 2019, 14%
of the votes cast were against the Directors’
Remuneration Report. The proportion of votes
withheld were 1,168,305 shares.
The current Policy was approved by 99.8% of
shareholders at the 2017 AGM. A resolution in
respect of the 2020 Remuneration Policy will
be proposed at the 2020 AGM.
76
Galliford Try Directors’ report
The directors present their Annual
Report and audited financial statements
for the Group for the financial year
ended 30 June 2020.
Principal activities
Galliford Try is a trading name of Galliford Try
Holdings plc, a leading UK construction group
which listed on the London Stock Exchange
on 3 January 2020 following the sale of the
housebuilding divisions to Vistry Group plc.
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.
Galliford Try Holdings plc, registered in England
and Wales with company number 12216008,
is the Parent Company of the Group. More
detailed information regarding the Group’s
activities during the year under review, and
its prospects, is provided on pages 1 to 45.
The principal subsidiaries and joint ventures
operating within the Group’s businesses are
shown in note 41 to the financial statements.
Strategic report
The Group is required by section 414A of the
Companies Act 2006 to present a Strategic
report in the Annual Report. This can be found
on pages 1 to 45.
The Strategic report contains an indication
of the directors’ view on likely future
developments in the business of the Group.
In addition, and in accordance with the EU
Non-Financial Reporting Directive, the
Strategic report also provides direction on
where information on the impact of activities
on employees, social and environmental
matters, human rights and anti-corruption
and anti-bribery matters can be found within
the Annual Report and financial statements,
as well as a description of the Group’s policies
and where these are located.
In accordance with section 414CZA of the
Companies Act 2006, the Strategic report
also contains a section 172 (1) statement
describing how directors have had regard to
the matters set out in section 172 (1) (a) to (f)
of the Companies Act 2006 when performing
their duty under section 172. Please refer to
pages 43 to 45.
The Corporate governance report on pages
46 to 56 is the corporate governance statement
for the purposes of Disclosure Guidance and
Transparency Rule 7.2.1.
The Annual Report and financial statements use
financial and non-financial key performance
indicators wherever possible and appropriate.
Results, dividends and capital
The pre-exceptional continuing loss for the
year before income tax was £59.7m, as shown
in the consolidated income statement on page
88. On 12 March 2020, the Board declared an
interim dividend of 1.0p per share which was
scheduled to be paid to shareholders on 17 April
2020. However, following the outbreak of
Covid-19, the Board considered it prudent to
cancel the interim dividend payment in order
to preserve liquidity during a period of
significant uncertainty. The Board continues to
recognise the importance of dividends to all its
shareholders, however given the importance
of maintaining a strong balance sheet, is not
proposing a final dividend for the year ended
30 June 2020. The Group has a strong outlook
and the Board anticipates reinstating dividend
payments, following a return to profitability.
Please refer to page 5 for an overview of the
Group’s capital structure and funding.
Share capital, authorities
and restrictions
The company has one class of ordinary
share capital, having a nominal value of 50p.
The ordinary shares rank pari passu in respect
of voting and participation and are listed for
trading on the Main Market of the London
Stock Exchange. At 30 June 2020, the company
had 111,053,489 ordinary shares in issue.
Votes may be exercised at general meetings
of the company by members in person, by proxy
or by corporate representatives (in relation
to corporate members). The Articles of
Association of the company (the Articles)
provide a deadline for the submission of proxy
forms (electronically or by paper) of not less
than 48 hours, taking no account of any part
of a day that is not a working day, before the
time appointed for the holding of the general
meeting or the adjourned meeting (as the case
may be).
The directors are authorised on an annual basis
to issue shares, to allot a limited number of
shares in the company for cash other than to
existing shareholders, and to make market
purchases of shares within prescribed limits.
The current authorities will expire at the AGM.
Resolutions to be proposed at the 2020 AGM
will renew all three of the directors’ standing
authorities relating to share capital, which are
further explained in the Notice of 2020 AGM
sent separately to shareholders. During the
year, no shares have been issued or purchased
by the company under the relevant authorities
either during the financial year or to the date of
this Annual Report.
There are no restrictions on the transfer of the
company’s shares, with the exceptions that
certain shares held by the Employee Share Trust
(EST) are restricted for the duration of the
applicable performance periods under relevant
Group share plans, and directors and persons
discharging managerial responsibilities are
periodically restricted in dealing in the
company’s shares under the Group’s share
dealing policy which reflects the requirements
of the Market Abuse Regulation. In certain
specific circumstances, the directors are
permitted to decline to register a transfer in
accordance with the Articles. There are no
other limitations on holdings of securities,
and no requirements to obtain the approval
of the company, or other holders of shares
in the company, prior to the share transfer.
The company is not aware of any agreements
between holders of shares that may result
in restrictions on the transfer of shares or
voting rights.
There are no shares carrying specific rights
with regard to control of the company, with
the exception that the EST holds shares in the
company in connection with Group share plans
which have rights with regard to control of the
company that are not exercisable directly by the
employee. The EST abstains from voting in
respect of any shares so held. The EST currently
holds 0.20% of the issued share capital of
the company for the purposes of satisfying
employee share options or share awards.
Articles of Association
The Articles, adopted on 5 November
2019, set out the internal regulations of the
company, and define various aspects of the
company’s constitution including the rights of
shareholders, procedures for the appointment
and removal of directors, and the conduct of
both directors and general meetings.
In accordance with the Articles, directors
can be appointed or removed either by the
Board or shareholders in general meeting.
Amendments to the Articles require the
approval of shareholders in general meeting
expressly by way of special resolution. Copies
of the Articles are available by contacting the
General Counsel & Company Secretary at the
registered office.
77
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Directors’ report
continued
Significant direct and indirect holdings
As at 16 September 2020, being the date of
this Annual Report, the Group had been made
aware, pursuant to the FCA’s Disclosure
Guidance and Transparency Rules, of the
following beneficial interests in 3% or more
of the Company’s ordinary share capital:
Shareholder
Interest
Standard Life Aberdeen plc 6,436,890
Premier Miton Group plc
5,746,818
J O Hambro Capital
Management Limited
5,738,929
Ameriprise Financial Inc.
5,734,661
%
capital
5.80
5.17
5.17
5.16
Dimensional Fund
Advisors LP
Brewin Dolphin Ltd
5,552,697
5,169,266
4.97
4.66
Norges Bank Investment
Management
3,249,094
2.93
There were no material changes in any of the
significant holdings from 30 June 2020 to the
date of this Annual Report.
Change of control provisions
All the Group’s share plans contain provisions
relating to a change of control. The respective
plan rules permit outstanding awards to vest
on a proportional basis and then become
exercisable in the event of a change of control,
subject to the satisfaction of any applicable
performance conditions and the prior approval
of the Remuneration Committee. Other than in
relation to share schemes as described above,
the Group has not entered into any agreements
with its directors or employees which
provide for compensation for loss of office
or employment in the event of a takeover
or change of control of the Group.
The agreements governing the Group’s joint
arrangements all have appropriate change of
control provisions, none of which is significant
in the context of the wider Group.
Directors’ interests and indemnities
Summary biographies of the directors of the
company as at 30 June 2020 are on pages 48
and 49. During the year, Graham Prothero stood
down as Chief Executive and from the Board
on 3 January 2020, following the sale of the
housebuilding divisions to Vistry Group plc.
Bill Hocking, formerly Chief Executive of the
Construction & Investments business was
appointed as Chief Executive to succeed
Graham. As stated on page 47, Jeremy
Townsend has decided to step down from
the Board later this year, and accordingly,
he will not be standing for re-election as a
director at the AGM.
78
The interests of the directors in the share
capital of the company are set out in the
Directors’ Remuneration Report on page 73
and details of Executive directors’ service
contracts and Non-executive Directors’ letters
of appointment can be found on page 69.
The Group operates a formal ongoing
procedure for the disclosure, review and
authorisation of directors’ actual and potential
conflicts of interest, in accordance with the
Companies Act 2006. In addition, conflicts
of interest are reviewed and, as necessary,
authorised by the Board on an annual basis.
The Group maintained appropriate Directors’
and Officers Liability insurance on behalf of the
directors and General Counsel & Company
Secretary throughout the financial year. In
addition, individual qualifying third party
indemnities are provided to the directors and
General Counsel & Company Secretary, which
comply with the provisions of section 234
of the Companies Act 2006, and were in force
throughout the year and up to the date of
signing the Annual Report.
Employees
The Group is committed to employment policies
which follow best practice based on equal
opportunities for all employees. We value
everyone as an individual, recognising that
everyone is different and has different needs at
work. We respect people’s differences and treat
everyone with dignity and respect. We aim to
create a culture in which everyone feels valued
as an individual and is motivated to give their
best in their jobs.
The Group gives full and fair consideration to
applications for employment from disabled
persons, having regard to their particular
aptitudes and abilities. We carry out regular
workplace assessments and provide
occupational health checks and advice to
support both employees and line managers.
Appropriate arrangements are made for the
continued training and employment, career
development and promotion of disabled
persons. If existing members of staff become
disabled, the Group endeavours to continue
employment, either in the same or an
alternative position with appropriate
retraining and occupational assistance
being given if necessary.
Employee engagement and consultation is
encouraged through the Employee Forum, use
of regular informal discussions and feedback,
formal annual appraisals, business unit staff
forums and periodic employee surveys.
Details of where to find information regarding
the Group’s employees, remuneration policies,
employment practices and employee
involvement are provided in the Strategic
report on pages 24 to 26 and the Remuneration
Policy and Report on pages 61 to 76. Details of
where to find information on other matters
of importance to stakeholders such as
environmental, social and community matters,
human rights and anti-corruption, related
policies and their impact can also be found in
the Strategic report.
Significant agreements
There are no persons with which the Group
has contractual or other arrangements which
are essential to its business.
Charitable and political donations
For information regarding charitable donations
made through employees volunteering or
donation of materials, please refer to the
Strategic report on page 39.
It is Group policy to avoid making political
donations of any nature and accordingly none
were made during the financial year. The Group
notes the wide application of Part 14 of the
Companies Act 2006, but does not consider
the construction industry bodies of which it
is a member to be political organisations for
the purposes of the Act.
Emissions
Details of the Group’s carbon dioxide emissions
for the financial year have been included on
page 37 and are included by reference in
this report.
Creditor payment policy
Group policy regarding creditor payment is
to agree payment terms contractually with
suppliers and sub-contractors, ensure the
relevant terms of payment are included in
contracts, and to abide by those terms when
satisfied that goods, services or assets have
been provided in accordance with the agreed
contractual terms. In November 2013, the
Group became a signatory to the Prompt
Payment Code which contains, among other
things, commitments to pay suppliers within
agreed contract terms. In July 2019, the Group
was suspended from the Prompt Payment
Code as a consequence of a new requirement.
Remedial actions were taken resulting in
substantial improvements in payment
performance and the Group being
readmitted to the Prompt Payment
Code in December 2019.
Financial instruments
Further information regarding the Group’s
financial instruments including interest rate
hedges, related policies and a consideration of
its liquidity and other financing risks can be
found in the Financial review from page 40
and in note 29 to the financial statements.
Galliford Try Fair, balanced and understandable
In accordance with the principles of the 2018
Code and as further described on pages 40 and
42, the Group has arrangements in place to
ensure that the information presented in
this Annual Report is fair, balanced and
understandable. The directors consider,
on the advice of the Audit Committee, that
the Annual Report, taken as a whole, is fair,
balanced and understandable and provides
the information necessary for shareholders to
assess the Group’s performance, position,
business model and strategy.
Approval of report
This Directors’ report, the Strategic report,
on pages 1 to 45 and the Corporate Governance
report and Directors’ Remuneration report,
on pages 46 to 76 were approved by the Board
of Directors on 16 September 2020.
For and on behalf of the Board
Kevin Corbett
General Counsel & Company Secretary
16 September 2020
Important developments during
the year
On 10 September 2019, the Group announced
the proposed sale of the Group’s housebuilding
divisions, Linden Homes and Partnerships &
Regeneration, to Vistry Group plc (formerly
Bovis Homes Group plc). Following the
implementation of the Group restructuring,
pursuant to which the company became a new
listed holding company of the continuing Group,
on 3 January 2020, the Group successfully
completed the sale of the Group’s housebuilding
divisions, transforming Galliford Try into a
well-capitalised, UK construction-focused
business. Galliford Try has continued to
maintain a strong pipeline of work in its chosen
sectors, with excellent positions on several key
frameworks in the public and regulated sectors.
Going concern
In accordance with the Financial Reporting
Council’s Going Concern and Liquidity Risk:
Guidance for Directors of UK Companies
published in 2009, the requirements of the
2018 UK Corporate Governance Code
(2018 Code) and Listing Rule 9.8.6(3), the
directors have conducted a rigorous and
proportionate assessment of the Group’s ability
to continue in existence for the foreseeable
future. This has been reviewed during the
financial year and the directors have concluded
that there are no material uncertainties that
may cast significant doubt on the Group’s ability
to continue as a going concern. Furthermore,
the Group has adequate resources and visibility
as to its future workload, as explained in this
Annual Report. It is therefore justified in using
the going concern basis in preparing these
financial statements.
Independent auditor
Each of the directors at the date of approval
of this Annual Report confirms that:
so far as the director is aware, there is no
relevant audit information of which the
auditor is unaware; and
the director has taken all steps that he/she
ought to have taken as a director in order to
make himself/herself aware of any relevant
audit information and to establish that the
Group’s auditor is aware of that information.
This confirmation is given and should be
interpreted in accordance with section 418
of the Companies Act 2006.
A resolution is to be proposed at the
forthcoming AGM for the reappointment of
BDO LLP as auditor of the Group, at a rate of
remuneration to be determined by the
Audit Committee.
AGM
The 2020 AGM will be held at Cowley Business
Park, Cowley, Uxbridge, Middlesex, UB8 2AL
on 13 November 2020 at 11am. The notice
convening the AGM, sent to shareholders
separately, explains the items of business
which are not of a routine nature.
To safeguard the health and wellbeing of
shareholders, and in line with the Corporate
Insolvency and Governance Act 2020 and
public health guidelines in force, it is expected
that attendance in person at the AGM will be
limited to satisfy the requirements of a quorum.
Further information on arrangements for the
AGM and voting instructions will be set out fully
in the Notice of AGM and Form of Proxy.
79
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Forward-looking statements
Forward-looking statements have been
made by the directors in good faith using
information up until the date on which
they approved this Annual Report.
Forward-looking statements should be
regarded with caution due to uncertainties
in economic trends and business risks.
The Group’s businesses are generally
not affected by seasonality.
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
(IFRSs) as adopted by the 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 Parent Company and of the
profit or loss of the Group and Parent Company
for that period.
In preparing the 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 Group and
Parent Company will continue in business.
The directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Group and Parent
Company’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Group and Parent 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 Parent 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 Group
and Parent 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 Parent Company’s
performance, position, business model
and strategy.
Each of the directors, whose names and
functions are listed on pages 48 and 49
confirms that to the best of their knowledge:
the Parent 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 Parent 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 on pages 1 to
45 includes a fair review of the development
and performance of the business and the
position of the Group and Parent Company,
together with a description of the principal
risks and uncertainties that it faces.
In the case of each director in office at the date
the Directors’ Report is approved:
so far as the director is aware, there is
no relevant audit information of which
the Group and Group’s auditors are
unaware; and
they have taken all the steps that they
ought to have taken as a director in order
to make themselves aware of any relevant
audit information and to establish that the
Group and Group’s auditors are aware
of that information.
For and on behalf of the Board
Bill Hocking
Chief Executive
16 September 2020
80
Galliford Try Independent auditors’ report
to the members of Galliford Try Holdings plc
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Galliford Try Holdings plc
(the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 30 June 2020 which comprise the consolidated income statement,
consolidated statement of comprehensive income, consolidated and
company balance sheets, consolidated and company statements of
changes in equity, statements of cash flows and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards
the Parent Company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
In our opinion:
the financial statements give a true and fair view of the state of the
Group’s and of the Parent Company’s affairs as at 30 June 2020 and
of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
the Parent Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006; and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities
for the audit of the financial statements section of our report. We are
independent of the Group and the Parent Company in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to principal risks, going concern and
viability statement
We have nothing to report in respect of the following information in the
Annual Report and Financial Statements (the Annual Report), in relation
to which the ISAs (UK) require us to report to you whether we have
anything material to add or draw attention to:
the Directors’ confirmation on page 29 in the Annual Report that they
have carried out a robust assessment of the Group’s emerging and
principal risks and the disclosures in the Annual Report that describe
the principal risks and the procedures in place to identify emerging
risks and explain how they are being managed or mitigated;
the Directors’ statement on page 79 in the financial statements
about whether the Directors considered it appropriate to adopt the
going concern basis of accounting in preparing the financial statements
and the Directors’ identification of any material uncertainties to the
Group and the Parent Company’s ability to continue to do so over
a period of at least 12 months from the date of approval of the
financial statements;
whether the Directors’ statement relating to going concern required
under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is
materially inconsistent with our knowledge obtained in the audit; or
the Directors’ explanation on page 34 in the Annual Report as to
how they have assessed the prospects of the Group, over what
period they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a reasonable
expectation that the Group will be able to continue in operation and
meet its liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Key audit matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified including
those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
81
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Independent auditors’ report
continued
Key audit matter
Revenue and profit recognition for construction contracts
For the majority of long-term contracts, the Group recognises
revenue over time and measures progress based on the input
method by considering the costs incurred to date, relative to
the total estimated forecast revenue.
This is considered a significant risk as the stage of completion
and the forecasted margin on contracts is an area of
significant judgment. These judgments have a consequential
impact on a number of contract balances within the
financial statements.
Having considered the above we determined that contract
revenue and other related contract balances have an inherent
high degree of estimation uncertainty with a potential range
of estimation uncertainty higher than our Group materiality.
Note 1 on page 95 to the financial statements gives further
detail regarding the estimates and judgments made by the
Group in this regard.
How we addressed the matter in our audit
We obtained an understanding of and evaluated management’s processes and controls
for ensuring contracts meet the requirements of IFRS 15. We focused our work on
those contracts with the greatest estimation uncertainty and challenged the judgments
made with the senior operational, legal, commercial and financial management.
On each contract selected, we specifically challenged and critically assessed the
explanations provided by management and carried out the following detailed testing.
Obtaining an understanding of the contract and its particulars.
Agreeing forecast revenue to contractual agreements, supplemental agreements
and agreed variations.
Reconciling revenue recognised with amounts applied for and amounts certified by
clients, agreeing the amounts received to bank.
Re-performing the key calculations behind the margin applied, the profit taken
and the stage of completion, as well as balance sheet exposure.
Testing a sample of accrued costs.
Agreeing forecast costs for significant subcontractor packages to
documentary evidence.
Assessing the recoverability of balance sheet items by comparing to external
certification of the value of work performed.
Holding discussions with management to understand and challenge other areas
of judgment taken including movements in margin from tender to 30 June 2020.
Where appropriate reviewing legal correspondence and expert advice obtained in
respect of the judgments and where necessary speaking directly with management’s
experts who had provided this advice.
We carried out targeted testing on the remaining population including high turnover
and final account testing which includes comparing the revenue recognised to amounts
certified or final accounts where applicable.
We visited a sample of sites across the business. We inspected the physical progress of
the sites and discussed progress with personnel working on the specific sites.
We assessed the reliability of management’s estimates by reviewing the fluctuations in
budgeted end of life margin from 30 June 2019 to 30 June 2020 for projects that are
substantially completed at the year end.
We considered the adequacy of the disclosures in the financial statements in relation
to specific contracts and also the disclosures in respect of significant judgments
and estimates.
Key observations:
We consider that the estimates and judgments made by management in respect of
revenue recognition and the associated disclosures are reasonable.
82
Galliford Try Key audit matter
How we addressed the matter in our audit
Recognition and recoverability of claims and variations
In a number of the Group’s projects there are assumptions of
amounts contractually due from customers, and contract
assets can include variations and claims which are not yet
certified or formally agreed but have been assessed as highly
probable of not reversing under IFRS 15. (refer to accounting
policy note 1 on page 95)
The Group has submitted claims of £95m and recognised
significant recoveries in respect of three contracts
with entities owned by a major infrastructure fund of a
blue-chip listed company. The Group has been successful in
adjudications on these projects and has assumed recoveries
from these claims. The parties have agreed that the claim
will be resolved through an arbitration process that is
currently underway.
The assessment of revenue that is highly probable that
there will not be a significant reversal requires judgment.
Similarly, the assessment of the expected credit loss as
regards contract assets is judgmental.
In addition, there are some downstream claims from third
parties other than customers which are only recognised
once they are considered to be ‘virtually certain’ of
recoverability, in accordance with IAS 37. These assumptions
impact revenue recognised on these contracts, as well as
contracts assets balances. (refer to accounting policy
note 1 on page 97).
We challenged management’s forecasts, in particular the key assumptions, which
included the expected recovery of variations, claims and compensation events from
clients, to determine the basis on which the associated revenue was considered to be
‘highly probable of not reversing’.
We considered the adequacy of provisions held based on our understanding of the
contracts, meetings with in-house counsel and review of key project correspondence.
In respect of the three contracts with entities owned by a major infrastructure fund,
we assessed the adjudication results obtained and evidence of the recovery on
instructed variations previously agreed on those contracts.
We assessed the reconciliation between the management’s assessment of the claim
and the contract asset recorded in the financial statements as highly probable of not
reversing and obtained explanations for the difference between these positions.
We challenged management’s assessment of the revenue constraint on the basis of
this analysis and the recoveries from previous adjudications and agreed variations on
these contracts.
We assessed the evidence supporting the claims submitted including meeting with
management’s internal and external legal and other experts regarding the claims.
This followed a review of the correspondence to date, including the most recent
correspondence as regards the ongoing arbitration.
We obtained management’s previous legal advice regarding the basis of the contract
terminations and the financial and ownership status of the parties with whom the
Group was contracted. We met with the management’s external legal counsel
numerous times throughout the year, including following the receipt of the entities
response to the Statement of Case submitted by the Group. We challenged whether
management’s assessment of the revenue constraint remained appropriate, also
considering the passage of time.
We obtained and challenged management’s assessment of IFRS 9 expected credit loss
in respect of these contract assets. We challenged this assessment based on the most
recently filed annual report of the immediate parent and investor in these entities.
We assessed the disclosures included in the financial statements in respect of these
infrastructure contracts, including whether they convey the estimates involved and
judgments taken by management.
We also challenged those assumptions in respect of estimated recoveries from
subcontractors, designers, and insurers included in the forecast, to determine whether
these could be considered ‘virtually certain’ of recoverability.
We assessed the evidence provided by management regarding recovery of these
amounts to evidence of agreement with customers or insurance reserves provided
by the insurers.
Key observations:
We consider that the estimates and judgments and associated disclosures made by
management in respect of revenue recognition and downstream claims are reasonable.
83
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Independent auditors’ report
continued
Key audit matter
How we addressed the matter in our audit
Revenue and profit recognition for housing developments
Profit is recognised on each unit sold based on an overall
forecast margin for each site which is derived from the
total forecast revenue and total forecast costs for the site.
The valuation of developments is therefore dependent
upon the correct estimate and allocation of costs on each
site, as well as the estimation of site margins. Future sales
prices and forecast costs to complete are dependent on
market conditions and can be difficult to predict. See note
1 on page 95.
Accounting for the disposal of Linden and Partnerships
Following the disposal of Linden and Partnerships, we
identified a significant risk that the accounting adjustments
in respect of the de-recognition of these businesses from
the Group are not accurate.
Impairment of goodwill
The directors have performed an impairment assessment
of the goodwill, refer to note 1 on page 95 and note 14 of the
financial statements.
At 30 June 2020 the Group has a balance of £77.2m of
goodwill (2019: £160.3m). £40.0m relates to the Building
segment and £37.2m to Infrastructure.
The audit of goodwill was a focus area given the value of
these assets when compared to the market capitalisation
which has fallen due to the change in the business and the
uncertainty in relation to Covid-19.
The carrying values of goodwill are based on a value in
use calculation. The value in use calculation has a high
degree of estimation uncertainty with a potential range
of reasonable outcomes.
84
We selected a sample of developments that recorded revenue during the period under
ownership based on metrics designed to address higher risk sites, including those sites
with low margins which may have resulted from specific issues or underperformance.
For a sample of sites, we recalculated, the cost of sales recognised in the period.
A sample of costs incurred on sites (included within cost of sales) has been agreed
to supporting documentation.
For a sample of sites, we have compared the achieved margin to the initial margin
determined when the original site budget was approved. Where differences fell outside
of an acceptable threshold, we performed corroborative inquiries with management
and obtained evidence supporting the variance such as increased cost forecasted or
changes in product pricing.
Key observations:
We consider that the estimates and judgments made by management were found to
be supported by evidence sighted.
We obtained and reviewed the technical paper prepared by management’s expert
having assessed their independence and competence, in order to assess whether
the accounting entries relevant to the Group were compliant with the applicable
accounting standards, and reviewed management’s execution of the restructuring,
transaction and the resulting journals.
We agreed the steps impacting companies within the Group in the technical paper to
supporting documentation such as legal agreements of distributions.
We reviewed the Sales and Purchase Agreement, agreeing the proceeds of the sale
of Partnerships to bank and the repayment of the external debt facility.
We have agreed the distribution in specie of Linden to supporting documentation.
We have also agreed the provision in relation to the final completion accounts process
to supporting documentation.
We assessed the inclusion of other assets and liabilities in the disposal in accordance
with the transaction documents, along with their associated disclosures.
We tested a sample of transaction disposal costs to supporting evidence.
Key observations:
We found no material misstatements from our testing.
We obtained the Board-approved three-year cash flow forecasts which formed the
basis of the model used in the directors’ impairment calculation.
We compared the forecast margins to current and historical margins achieved and
obtained corroborating evidence to support management’s assessment.
We challenged management on the assumptions included in the forecasts including
anticipated increases to gross and operating profit margin and perpetuity cash inflows.
We used our internal valuation experts to help set expectations regarding certain
assumptions in the value in use calculation, particularly the WACC.
We considered management’s assessment of the impact of Covid-19 on the forecasts.
We agreed a sample of secured work to third party evidence to support the
forecast turnover.
We re-performed management’s impairment calculation and sensitivities and
confirmed the accuracy of the related disclosures.
We performed additional sensitivities around the key drivers of the cash flow forecasts
in particular around margin assumptions.
We considered the adequacy of the disclosures in the financial statements in relation
to the key judgments, sources of estimation uncertainty and sensitivities performed.
Key observations:
Based on the procedures performed, we found the Group’s assessment of goodwill
impairment to be appropriate and the disclosures made appropriate.
Galliford Try Key audit matter
How we addressed the matter in our audit
Going concern
The going concern disclosures in note 1 on page 93 explain
how the Board has formed a judgment that is appropriate to
adopt the going concern basis of preparation for the Group
and Parent Company.
That judgment as regards going concern is based on an
evaluation of the inherent risks to the Group’s and Company’s
financial resources and ability to continue operations over
a period of at least a year from the data of approval of the
financial statements.
The risk most likely to adversely affect the Group and
Company’s available financial resources over this period
are considered to be the uncertainty of the future impact
of Covid-19 and recovery of the economy owing to the
unprecedented nature of the event. Given the historical
losses for the continuing business, we have determined going
concern to be a key audit matter.
We assessed the appropriateness of the Group’s cash flow forecasts in the context of
the Group’s secured ongoing contracts, the secured new work and forecast potential
work which were agreed to the Board approved forecasts tested as part of the
impairment of goodwill referred to above.
We evaluated the directors’ downside sensitivities including the cash impact of a
potential further lockdown, delays to construction and delays in receiving final
accounts. We challenged the directors on the quantum and timing of any payments
in relation to any working capital adjustment due to Vistry Group plc.
We assessed the post year cash and contract positions to evaluate the directors’
accuracy and achievability of the forecasts prepared.
We evaluated the monthly cash position since January 2020 noting the Group
maintains an average monthly cash balance of £141m and that even in the worst
case scenarios considered by the directors, the Group has sufficient cash for the
going concern period.
We evaluated the adequacy of the disclosures within the Directors’ report in
relation to the specific risks posed, the scenarios the directors have considered
and conclusions made.
Key observations:
Our observations in respect of this matter are set out in the conclusions relating to
principal risks, going concern and viability statement above.
Our application of materiality
We apply the concept of materiality both in planning and performing
our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements. We also consider
whether lower levels of materiality should be set for particular classes of
transaction, account balances or disclosures for which misstatements of
lesser amounts than materiality for the financial statements as a whole
could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial statements. Importantly,
misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Level of materiality applied and rationale
On an ongoing basis and in previous years an adjusted measure of profit
before tax has been the basis which users of the accounts would be
interested in and which has been used as the basis of materiality.
This year there have been a number of one-off items which have led
to a distortion of the underlying profit. Adding back the exceptional items
the continuing business has made a loss of £59.7m and the disposed
businesses made a profit before tax of £32.6m up to the date of disposal.
This is as a result of the trading effects of the pandemic which doesn’t
reflect management’s view of ongoing profit. This year, we have
considered what would be a stable basis of operations and have
benchmarked to other peers’ materiality as a proportion of revenue.
Based on this we have set Group materiality at 0.15% of Group
revenue (£2.6m).
For the continuing business we have set a specific materiality at 0.15% of
revenue from continuing operations (£1.6m).
Materiality for the Parent Company financial statements as a whole
was set at £1.5m, calculated at 95% of Group level materiality for the
continuing operations.
For each component in the scope of Group audit, we allocate materiality
that is less than our overall Group materiality. The range of materiality
allocated across components was between £0.3m and £2m.
We agreed with the Audit Committee that misstatements in excess of
£52k, which were identified during the audit, would be reported to them,
as well as smaller misstatements that in our view should be reported on
qualitative grounds.
An overview of the scope of our audit
We tailored the scope of our audit to ensure that we performed enough
work to be able to give an opinion on the Group financial statements
as a whole, taking into account the geographic structure of the Group,
the accounting processes and controls, and the industry in which the
Group operates.
In establishing the overall approach to the Group audit, we assessed the
audit significance of each reporting unit in the Group by reference to both
its financial significance and other indicators of audit risk, such as the
complexity of operations and the degree of estimation and judgment in
the financial results.
All of the Group’s seven significant components were subjected to full
scope audits for Group purposes. All components are located in the UK
and were audited by the Group audit team.
The significant components within the scope of our work accounted for
96% of group revenues and 96% of total assets.
85
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Independent auditors’ report
continued
Capability of the audit to detect irregularities, including fraud
We gained an understanding of the legal and regulatory framework
applicable to the Group and the industry in which it operates, and
considered the risk of acts by the Group that were contrary to applicable
laws and regulations, including fraud.
Opinions on other matters prescribed by the Companies
Act 2006
In our opinion, the part of the Directors’ remuneration report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
We designed audit procedures at Group and significant component levels
to respond to the risk, recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
We focused on laws and regulations that could give rise to a material
misstatement in the financial statements, including, but not limited to,
the Companies Act 2006, the UK Listing Rules and tax legislation.
Our tests included agreeing the financial statement disclosures to
underlying supporting documentation, review of board and committee
meeting minutes, enquiries with management, enquiries of in-house
legal counsel and we considered the adequacy of controls around
procurement fraud.
There are inherent limitations in the audit procedures described above
and, the further removed noncompliance with laws and regulations is
from the events and transactions reflected in the financial statements,
the less likely we would become aware of it. We also addressed the risk
of management override of internal controls, including testing journals
and evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
Other information
The Directors are responsible for the other information. The other
information comprises the information included in the Annual Report
and Financial Statements, other than the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does
not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance
conclusion thereon. In connection with our audit of the financial
statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there is a
material misstatement of the other information, we are required to
report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our
responsibility to specifically address the following items in the other
information and to report as uncorrected material misstatements of
the other information where we conclude that those items meet the
following conditions:
Fair, balanced and understandable set out on page 79 – the statement
given by the directors that they consider the Annual Report taken
as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s position,
performance, business model and strategy, is materially inconsistent
with our knowledge obtained in the audit; or
Audit Committee reporting set out on pages 58 to 60 – the section
describing the work of the Audit Committee does not appropriately
address matters communicated by us to the Audit Committee; or
Directors’ statement of compliance with the UK Corporate
Governance Code set out on page 52 – the parts of the Directors’
statement required under the Listing Rules relating to the Company’s
compliance with the UK Corporate Governance Code containing
provisions specified for review by the auditor in accordance with
Listing Rule 9.8.10R(2) do not properly disclose a departure from a
relevant provision of the UK Corporate Governance Code.
86
In our opinion, based on the work undertaken in the course of the audit:
The information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements and those reports have been
prepared in accordance with applicable legal requirements.
The information about internal control and risk management systems
in relation to financial reporting processes and about share capital
structures, given in compliance with rules 7.2.5 and 7.2.6 in the
Disclosure Guidance and Transparency Rules sourcebook made by
the Financial Conduct Authority (the FCA Rules), is consistent with
the financial statements and has been prepared in accordance with
applicable legal requirements.
Information about the Company’s corporate governance code and
practices and about its administrative, management and supervisory
bodies and their committees complies with rules 7.2.2, 7.2.3 and
7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the
Parent Company and its environment obtained in the course of the audit,
we have not identified material misstatements in:
the Strategic report or the Directors’ report; or
the information about internal control and risk management systems
in relation to financial reporting processes and about share capital
structures, given in compliance with rules 7.2.5 and 7.2.6 of the
FCA Rules.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
the Parent Company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the
accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are
not made; or
we have not received all the information and explanations we require
for our audit; or
a corporate governance statement has not been prepared by the
Parent Company.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set
out on page 80, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group’s and the Parent 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 Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Galliford Try Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Other matters which we are required to address
Following the conclusion of a formal tender process led by the Group’s
Audit Committee, the Board proposed appointment of BDO LLP as
the Company’s auditor for the financial year ending 30 June 2020 and
subsequent financial periods. The appointment was approved by the
Company’s shareholders at the Annual General Meeting on 12 November
2019. The period of total uninterrupted engagement is one year.
The non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the Group or the Parent Company and we remain
independent of the Group and the Parent Company in conducting
our audit.
Our audit opinion is consistent with the additional report to the
Audit Committee.
Use of our report
This report is made solely to the Parent Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Parent
Company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than
the Parent Company and the Parent Company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
Thomas Edward Goodworth (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
16 September 2020
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
87
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Consolidated income statement
for the year ended 30 June 2020
Revenue
Cost of sales1
Gross profit
Administrative expenses1
Share of post tax (losses)/profits from joint ventures
18
(Loss)/profit before finance costs
Finance income1
Finance costs
(Loss)/profit before income tax
Income tax credit/(expense)1
(Loss)/profit from continuing operations for the year
Profit from discontinued operations, net of income
tax for the year
Profit for the year
(Loss)/earnings per share
Basic
– Profit from continuing operations attributable to
ordinary shareholders
– Profit attributable to ordinary shareholders
Diluted
– Profit from continuing operations attributable to
ordinary shareholders
– Profit attributable to ordinary shareholders
6
6
7
8
9
12
12
12
12
Pre-
exceptional
items
£m
Exceptional
items
(note 4)
£m
Notes
2020
Total
£m
Pre-
exceptional
items
£m
Exceptional
items
(note 4)
£m
2019
Total
£m
3
1,089.6
32.0
1,121.6
1,402.9
(2.8)
1,400.1
(1,085.9)
3.7
(68.0)
(0.2)
(64.5)
5.8
(1.0)
(59.7)
6.8
(52.9)
353.0
300.1
(47.7)p
270.9p
(47.7)p
270.9p
(6.3)
25.7
(0.6)
–
25.1
–
–
25.1
(4.8)
20.3
–
20.3
(1,092.2)
(1,348.4)
29.4
54.5
(42.0)
(44.8)
(1,390.4)
9.7
(68.6)
(0.2)
(39.4)
5.8
(1.0)
(34.6)
2.0
(32.6)
(74.1)
0.4
(19.2)
3.6
(1.6)
(17.2)
5.4
(11.8)
(2.5)
–
(47.3)
–
–
(47.3)
9.6
(37.7)
(76.6)
0.4
(66.5)
3.6
(1.6)
(64.5)
15.0
(49.5)
353.0
320.4
139.9
128.1
(3.5)
(41.2)
136.4
86.9
(29.4)p
289.2p
(10.7)p
115.7p
(29.4)p
289.2p
(10.6)p
115.6p
(44.7)p
78.5p
(44.7)p
78.4p
1
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity. This results in a reduction in operating lease costs within cost of sales and administrative expenses and an increase in
depreciation charge and interest expense (notes 1, 16 & 39).
The notes are an integral part of the consolidated financial statements.
88
Galliford Try Consolidated statement of comprehensive income
for the year ended 30 June 2020
Profit for the year
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss
Remeasurement of retirement benefit obligations – discontinued operations
Current tax through equity – continuing operations
Current tax through equity – discontinued operations
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Movement in fair value of cash flow hedges:
– Movement arising during the financial year – discontinued operations
– Reclassification adjustments for amounts included in profit or loss – discontinued operations
Net movement in fair value of PPP and other investments – continuing operations
Deferred tax on items recognised in equity that may be reclassified – discontinued operations
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income/(expense) for the year net of tax
Total comprehensive income for the year
The notes are an integral part of the consolidated financial statements.
Notes
2020
£m
320.4
2019
£m
86.9
8
19
2.0
–
–
2.0
0.8
(0.4)
(1.8)
(0.1)
(1.5)
(2.4)
0.3
0.4
(1.7)
0.9
(0.4)
0.8
(0.1)
1.2
0.5
(0.5)
320.9
86.4
89
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Balance sheets
Assets
Non-current assets
Intangible assets
Goodwill
Property, plant and equipment
Right of use assets1
Investments in subsidiaries
Investments in joint ventures
PPP and other investments
Trade and other receivables
Retirement benefit asset
Deferred income tax assets
Total non-current assets
Current assets
Developments
Trade and other receivables
Current income tax assets
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Borrowings
Trade and other payables1
Lease liabilities1
Provisions for other liabilities and charges
Total current liabilities
Non-current liabilities
Financial liabilities
– Borrowings
– Derivative financial liabilities
Deferred income tax liabilities
Other non-current liabilities
Lease liabilities1
Provisions for other liabilities and charges
Total non-current liabilities
Total liabilities
Net assets
Equity
Ordinary shares
Share premium
Other reserves
Retained earnings
Total equity attributable to owners of the Company
30 June 2019
(restated
– notes
1 & 40)
£m
30 June
2020
£m
Group
1 July 2018
(restated
– notes
1 & 40)
£m
Company
30 June
20202
£m
30 June
2019
£m
13
14
15
16
17
18
19
21
33
28
20
21
22
25
23
16
24
25
29
28
26
16
24
30
30
32
32
7.8
77.2
3.8
22.8
–
0.2
40.7
–
1.0
4.3
157.8
–
247.5
23.1
197.2
467.8
625.6
–
(458.8)
(9.5)
(13.9)
(482.2)
–
–
–
–
(12.8)
(10.1)
(22.9)
(505.1)
120.5
55.5
–
85.7
(20.7)
120.5
11.8
159.6
16.2
–
–
67.0
41.6
238.4
7.0
1.3
542.9
876.7
674.3
8.7
591.2
2,150.9
2,693.8
(547.8)
(1,262.5)
–
(0.4)
(1,810.7)
(100.0)
(0.4)
–
(103.0)
–
(0.4)
(203.8)
(2,014.5)
679.3
55.5
197.7
4.8
421.3
679.3
15.3
159.6
16.7
–
–
49.9
26.8
148.9
7.0
–
424.2
724.9
731.6
12.3
912.4
2,381.2
2,805.4
(617.1)
(1,184.0)
–
(0.3)
(1,801.4)
(197.1)
(0.9)
(0.7)
(122.3)
–
(0.8)
(321.8)
(2,123.2)
682.2
55.5
197.6
4.8
424.3
682.2
–
–
–
–
141.2
–
–
–
–
–
141.2
–
–
–
100.0
100.0
241.2
–
–
–
–
–
–
–
–
–
–
–
–
–
241.2
55.5
–
85.7
100.0
241.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The loss for the Parent Company for the period was £46.5m (20192: £nil).
1
2
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity (notes 1, 16 & 39). This is in addition to the prior year adjustments detailed in notes 1 and 40.
Galliford Try Holdings plc was incorporated on 19 September 2019. On 3 January 2020 its entire share capital was admitted to the premium listing segment of the
Official List of the FCA and its trading on the main market for listed securities of the London Stock Exchange (note 1).
The notes are an integral part of the consolidated financial statements.
The financial statements on pages 88 to 142 were approved and authorised for issue by the Board on 16 September 2020 and signed on its behalf by:
Bill Hocking
Chief Executive
Andrew Duxbury
Finance Director
Galliford Try Holdings plc
Registered number: 12216008
90
Galliford Try
Consolidated and Company statements of changes in equity
for the year ended 30 June 2020
Consolidated statement
At 30 June 2018 (as originally reported)
Restatement as a result of correction of previous error
At 30 June 2018 (restated)
Adjustment as a result of transition to IFRS 9 and IFRS 15 on
1 July 2018
Adjusted equity at 1 July 2018
Profit for the year
Other comprehensive (expense)
Total comprehensive income for the year
Transactions with owners:
Dividends
Share-based payments
Issue of shares
At 30 June 2019 (restated)
Notes
40
11
31
Adjustment as a result of transition to IFRS 16 on 1 July 20191
1, 16 & 39
Adjusted equity at 1 July 2019
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners:
Dividends
Distribution of Galliford Try Homes Ltd
Capital re-organisation2,3
Share-based payments – discontinued operations
At 30 June 2020
Company statement
On incorporation at 19 September 20192
Loss for the period
Other comprehensive income
Total comprehensive expense
Transactions with owners:
Capital reorganisation2,3
Recycling of merger reserve to retained earnings on impairment of
investment in Galliford Try Limited
At 30 June 2020
11
9
1 & 9
9 & 32
32
Ordinary
shares
£m
Share
premium
£m
Other
reserves
£m
Retained
earnings
£m
Total
shareholders’
equity
£m
55.5
–
55.5
–
55.5
–
–
–
–
–
–
55.5
–
55.5
–
–
–
–
–
–
55.5
–
–
–
–
55.5
–
55.5
197.6
–
197.6
–
197.6
–
–
–
–
–
0.1
197.7
–
197.7
–
–
–
–
–
(197.7)
–
–
–
–
–
–
–
–
–
4.8
–
4.8
–
4.8
–
–
–
–
–
–
4.8
–
4.8
–
–
–
–
–
80.9
–
85.7
–
–
–
–
518.6
(94.3)
424.3
(10.4)
413.9
86.9
(0.5)
86.4
776.5
(94.3)
682.2
(10.4)
671.8
86.9
(0.5)
86.4
(79.9)
(79.9)
0.9
–
421.3
(1.0)
420.3
320.4
0.5
320.9
(38.9)
(840.0)
116.8
0.2
(20.7)
0.9
0.1
679.3
(1.0)
678.3
320.4
0.5
320.9
(38.9)
(840.0)
–
0.2
120.5
–
–
(46.5)
(46.5)
–
–
(46.5)
(46.5)
232.2
–
287.7
(146.5)
85.7
146.5
100.0
–
241.2
1
2
3
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity (notes 1, 16 & 39). This in addition to the prior year adjustments detailed in notes 1 and 40.
Galliford Try Holdings plc was incorporated on 19 September 2019. On 3 January 2020 its entire share capital was admitted to the premium listing segment of the
Official List of the FCA and its trading on the main market for listed securities of the London Stock Exchange (notes 1, 9 & 32).
On 3 January 2020, as part of the overall process to dispose of the Group’s housebuilding operations to Vistry Group plc, a scheme of arrangement was completed under
section 26 of the Companies Act 2006 which resulted in the admission of Galliford Try Holdings plc to the premium listing segment of the Official List of the FCA and its
trading on the main market for listed securities of the London Stock Exchange (see above). Consequently, the previously consolidated share premium and merger reserve
balances of Galliford Try Limited (previously known as Galliford Try plc) were replaced by the equivalent balances of Galliford Try Holdings plc (notes 1, 9 & 32).
91
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Statements of cash flows
for the year ended 30 June 2020
Notes
2020
£m
Cash flows from operating activities
Pre-exceptional profit/(loss) for the year
Exceptional profit/(loss) for the year
Profit/(loss) for the year
Adjustments for:
Profit for the year from discontinued operations
Income tax credit – continuing operations
Net finance income – continuing operations
(Loss) before finance costs for continuing operations
Adjustments for continuing operations:
Depreciation and amortisation
Impairment of investment in subsidiary undertaking
Loss on sale of property, plant and equipment
Profit on sale of PPP and other investments
Dividends received from subsidiary undertakings
Share-based payments
Share of post-tax losses/(profits) from joint ventures
Movement on provisions
Other non-cash movements
Net cash used in operations before changes in working capital
Decrease in trade and other receivables
Decrease in trade and other payables
Net cash used in operations
Interest received
Interest paid
Income tax received
Net cash used in operating activities from continuing operations
Net cash (used in)/generated from operating activities from
discontinued operations
Net cash used in operating activities
Cash flows from investing activities
Dividends received from joint ventures
Movement in net working capital balances due from joint ventures
Acquisition of PPP and other investments
Proceeds from disposal of PPP and other investments
Dividends received from subsidiary undertakings
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash (used in)/generated from investing activities from continuing operations
Net cash generated from/(used in) investing activities from
discontinued operations
Net cash generated from/(used in) investing activities
Cash flows from financing activities
Net proceeds from issue of ordinary share capital
Repayment of lease liabilities2
Decrease in borrowings
Net dividends paid to Company shareholders
Net cash used in financing activities from continuing operations
Net cash generated from financing activities from discontinued operations
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
4
9
8
6
13, 15 & 16
17
19
18
24
18
19
19
15
30
16
11
22
22
Group
2019
£m
128.1
(41.2)
86.9
(136.4)
(15.0)
(2.0)
(66.5)
5.0
–
0.2
(6.9)
–
0.5
(0.4)
(0.3)
0.1
(68.3)
31.7
(92.6)
(129.2)
5.0
(2.1)
16.6
(109.7)
50.1
(59.6)
0.4
0.1
(22.7)
21.1
–
(2.7)
0.5
(3.3)
(11.0)
(14.3)
0.1
–
(0.1)
(79.9)
(79.9)
–
(79.9)
20201
£m
(46.5)
–
(46.5)
–
–
–
(46.5)
–
146.5
–
–
(100.0)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.0
–
–
100.0
100.0
–
–
–
–
–
–
300.1
20.3
320.4
(353.0)
(2.0)
(4.8)
(39.4)
13.8
–
–
(0.6)
–
–
0.2
23.2
–
(2.8)
128.5
(257.1)
(131.4)
4.9
(1.0)
7.5
(120.0)
(32.1)
(152.1)
–
(2.4)
(6.6)
5.8
–
(1.4)
–
(4.6)
362.6
358.0
–
(10.0)
–
(38.9)
(48.9)
(101.4)
(150.3)
55.6
(153.8)
100.0
141.6
295.4
–
197.2
141.6
100.0
Company
2019
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Galliford Try Holdings plc was incorporated on 19 September 2019. On 3 January 2020 its entire share capital was admitted to the premium listing segment of the
Official List of the FCA and its trading on the main market for listed securities of the London Stock Exchange (note 1).
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity (notes 1, 16 & 39).
1
2
92
Galliford Try Notes to the consolidated financial statements
1 Accounting policies
General information
Galliford Try Holdings plc (the Company) is a public limited company
incorporated, listed and domiciled in England and Wales. The address
of the registered office is Cowley Business Park, Cowley, Uxbridge,
UB8 2AL. The Company has its listing on the London Stock Exchange.
Following the disposal of the Linden Homes and Partnerships &
Regeneration divisions of Galliford Try Limited (formerly Galliford
Try plc), effective from 3 January 2020, the entire issued share capital
of Galliford Try Holdings plc, was admitted to the premium listing segment
of the Official List of the FCA and to trading on the main market for
listed securities of the London Stock Exchange with a corresponding
cancellation of trading in all shares of Galliford Try Limited (formerly
Galliford Try plc).
The disposal of the housebuilding divisions of the Group was a complex
transaction incorporating a court-approved scheme of arrangement
under Part 26 of the Companies Act 2006, by which the ultimate result
was that Galliford Try Limited (formerly Galliford Try plc):
Distributed the Linden Homes assets and its 100% investment in
the various Linden legal entities to its shareholders (who received
0.57406 shares in Vistry Group plc in addition to 1.0 shares in Galliford
Try Holdings plc for each share they held in Galliford Try Limited).
In these consolidated accounts, this resulted in a debit to equity equal
to the fair value of assets distributed of £840.0m, de-recognition of
the net assets of Linden Homes of £862.2m and a loss recognised in
the income statement of £22.2m (being the difference).
Sold its 100% investment in the various Partnerships & Regeneration
legal entities for £300.0m in cash and the transfer of the £100.0m
Pricoa Private Placement debt (ie £400.0m of net value). In these
consolidated accounts, this resulted in the de-recognition of the net
assets relating to these entities of £107.0m and recognition of a gain
on disposal of £293.0m.
Received a working capital adjustment of £76.3m which has been
included within profit on disposal in the discontinued operations line
of the income statement.
In addition, a new entity, Galliford Try Holdings plc, was established
and acquired 100% of the share capital of Galliford Try Limited and
as noted above, became the parent of the overall continuing Galliford
Try Group, with its entire issued share capital admitted to the London
Stock Exchange.
In effect, the substance of the transaction is that the Linden Homes
operations were distributed to the shareholders of Galliford Try Limited,
then the newly incorporated Galliford Try Holdings plc issued shares to
its shareholders in exchange for their shares in Galliford Try Limited and
subsequently sold the Partnerships & Regeneration operations for cash
and the transfer of debt.
Further details on this transaction are included in notes 9 and 32.
The financial statements are presented in pounds sterling because that
is the currency of the primary economic environment in which the Group
operates. The amounts stated are denominated in millions (£m).
Discontinued operations
The Linden Homes and Partnerships & Regeneration segments
(which comprise the housebuilding operations) and certain other assets
and liabilities were transferred to Vistry Group plc on 3 January 2020
(including the £100m Private Placement notes and two of the Group’s
defined benefit pension schemes) and therefore have been treated as
discontinued operations in accordance with IFRS 5: Non–Current Assets
Held for Sale and Discontinued Operations. Accordingly, prior periods
in the income statement and the statement of cash flows have been
restated to show separately those transactions in respect of discontinued
operations; these are also disclosed in detail in note 9.
Following the transaction noted above, the Group is in a net cash
position and its bank debt facilities have been cancelled (notes 22 & 25).
The Group meets its day-to-day working capital requirements through
its cash resources. The Group’s forecasts, taking into account the Board’s
future expectations of the Group’s performance, indicate that there is
substantial headroom within these resources.
Basis of accounting
These consolidated financial statements have been prepared in
accordance with EU adopted International Accounting Standards
(IASs), International Financial Reporting Standards (IFRSs), IFRS
Interpretations Committee (IFRS IC) interpretations and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The consolidated financial statements have been prepared
on a going concern basis under the historical cost convention, as modified
by the revaluation of PPP and other investments, retirement benefit
obligations and financial assets and liabilities (including derivative
financial instruments) at fair value through other comprehensive income.
The Group’s business activities, together with the factors likely to affect
its future development, performance and position are set out in the
Viability Statement (on page 34) and the Strategic Report (from page 1).
As at 30 June 2020, the Group had substantial cash balances, no debt, and
a strong forward secured order book. The Directors regularly review the
working capital requirements of the Group while considering downside
sensitivities, including the economic uncertainties resulting from Covid-19
which resulted in the closure of our sites across the country. All sites have
since re-opened and appropriate operating procedures adopted, including
social distancing measures (see page 11).
The Group’s forecasts have been prepared in the context of the current
economic conditions (as at 30 June 2020) and additionally, the Directors
have considered a range of downside sensitivities (as discussed in detail in
the Viability Statement on page 34). Even in the worst-case scenario,
the Group is forecast to continue to meet its obligations and remain
cash positive.
After making enquiries and considering the factors and sensitivities
outlined above for a range of scenarios, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus, they continue
to adopt the going concern basis of accounting in preparing the annual
financial statements.
The Group has consistently applied all accounting standards and
interpretations issued by the International Accounting Standards Board
and IFRS IC, and endorsed by the EU, relevant to its operations and
effective on 1 July 2019. The Company has elected to take the exemption
under section 408 of the Companies Act 2006 to not present the Parent
Company income statement and statement of comprehensive income.
New amendments to standards that became mandatory for the first time
for the financial year beginning 1 July 2019 are listed below.
Amendment to IFRS 9, ‘Financial Instruments’, on prepayment features
with negative compensation and modification of financial liabilities
(effective 1 January 2019).
Amendments resulting from annual improvements to IFRSs
2015-2017 cycle (effective 1 January 2019).
Amendments to IAS 19 ‘Employee Benefits’ on plan amendment,
curtailment or settlement (effective 1 January 2019).
IFRS 16 ‘Leases’ (effective 1 January 2019).
Amendments to IAS 28 ‘Long-term Interests in Associates and
Joint Ventures’ (effective 1 January 2019).
IFRIC 23 ‘Uncertainty over Income Tax Treatments’
(effective 1 January 2019).
The new amendments had no significant impact on the Group’s results,
other than as described below and certain revised disclosures.
(i) IFRS 16 Leases
The Group has adopted IFRS 16 Leases from 1 July 2019. IFRS 16
eliminates the classification of leases as either operating leases or
finance leases and instead introduces a single lessee accounting model.
The Group, as lessee, has recognised a long–term depreciating right
of use asset and corresponding lease liability. The leases were previously
categorised as either operating leases or finance leases.
93
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
1 Accounting policies (continued)
Basis of accounting (continued)
(i) IFRS 16 Leases (continued)
The Group has adopted the modified retrospective approach for IFRS 16,
recognising the right of use asset as if IFRS 16 had always been applied
(but using the incremental borrowing rate as at the date of initial
application of 1 July 2019), with a resulting transition adjustment
recognised to opening equity. The weighted average incremental
borrowing rate applied was 3.77%.
The Group has used the following practical expedients permitted by the
standard on transition to IFRS 16:
The treatment of leases with a remaining term of less than 12 months
at 1 July 2019 as short–term leases.
The use of hindsight in determining the lease term where the contract
contains options to extend or terminate the lease.
The use of a single discount rate to a portfolio of leases with reasonably
similar characteristics.
The reliance on assessments made under IAS 37 prior to transition
as to whether leases are onerous as an alternative to performing an
impairment review.
Payments associated with short–term leases (with a lease term of
12 months or less) and leases of low–value assets are recognised
as an expense on a straight–line basis over the lease term.
In line with the requirements of the standard with regards to the
transition option adopted, the Group has not restated its comparative
information which continues to be reported under previous leasing
standards, IAS 17. As required by IFRS 16, the Group has provided a
reconciliation of the lease commitment disclosed as at 30 June 2019 to
the opening lease liability under IFRS 16 as at 1 July 2019 (in note 39).
The financial impact on transition (for the total Group) is as follows,
with the split between continuing and discontinued operations shown
in note 16:
Right of use assets
Prepayment assets derecognised
Lease liabilities
Accrual liabilities derecognised
Deferred tax asset recognised on transition
Retained earnings on transition at 1 July 2019
£m
42.1
(0.7)
(43.5)
0.9
0.2
(1.0)
As a result of this new standard, the Group has reviewed its accounting
policies in respect of lease accounting (where applicable) and this is
detailed below.
Accounting policy applied from 1 July 2019
Prior to 1 July 2019, leases in which a significant portion of the risks
and rewards of ownership are retained by the lessor were classified as
operating leases. Rentals under operating leases were charged to
the income statement on a straight–line basis over the lease term.
From 1 July 2019, leases are recognised as a right–of–use asset and a
corresponding liability at the date at which the leased asset is available for
use by the Group. Each lease payment is allocated between the liability
and finance cost. The finance cost is charged to profit or loss over the
lease term at a constant periodic rate of interest on the remaining balance
of the liability. The right–of–use asset is depreciated over the lease term
on a straight–line basis, unless the useful life of the asset is shorter than
the lease term.
A contract is or contains a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange
for consideration.
The Group leases a variety of property, plant and equipment, such as
offices, site plant and accommodation and cars. Rental contracts are
usually made for fixed periods of 1 to 5 years but may be for longer or
shorter periods or include extension options or break clauses. Leases
94
of site plant and accommodation are not made for fixed periods but
can be terminated when no longer required. Leases are negotiated
on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants, but
leased assets may not be used as security for borrowing purposes.
Payments associated with short–term leases and leases of low–value
assets (defined as those with a weekly lease payment of less than £25)
are recognised on a straight–line basis as an expense.
Assets and liabilities arising from a lease are initially measured on a net
present value basis. Lease liabilities comprise the net present value of
the following lease payments:
Fixed payments (including in–substance fixed payments), less any
lease incentives receivable.
Variable lease payments that depend on an index or a rate.
The lease payments are discounted using the appropriate incremental
borrowing rate specific to each lease within each asset class.
The incremental borrowing rate is the rate of interest that a lessee would
have to pay to borrow over a similar term, with similar security, the funds
necessary to obtain an asset of similar value to the right–of–use assets
in a similar economic environment.
Right–of–use assets are initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any direct costs incurred or
expected to dismantle and remove the underlying asset, less any lease
incentives received.
New standards, amendments and interpretations issued but not effective
or yet to be endorsed by the EU are as follows:
Amendments to IFRS 3 – Definition of a Business
(effective 1 January 2020).
Amendments to IAS 1 and IAS 8 on the Definition of Material
(effective 1 January 2020).
Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest rate benchmark
reform (effective 1 January 2020).
Amendment to IFRS 16 – Covid-19-Related Rent Concessions
(effective 1 June 2020)
IFRS 17 ‘Insurance Contracts’ (effective 1 January 2023).
Amendments to IAS 1, Presentation of financial statements’
on classification of liabilities as current or non-current
(effective 1 January 2022).
The Group has yet to assess the full impact of these new standards
and amendments. Initial indications are that they will not significantly
impact the financial statements of the Group.
Basis of consolidation
The Group financial statements incorporate the results of Galliford Try
Holdings plc, its subsidiary undertakings and the Group’s share of the
results of joint arrangements. Subsidiaries are all entities over which the
Group has control. The exposure or right to variable returns from its
involvement with an investee, and the ability to influence those returns,
are considered when assessing whether the Group controls another
entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group, until the date that control ceases.
Due to the disposal of the Group’s housebuilding operations to
Vistry Group plc on 3 January 2020 (noted above and in note 9),
the Linden Homes and Partnerships & Regeneration segments
(which comprise the housebuilding operations) and certain other assets
and liabilities which were transferred to Vistry Group plc as part of this
transaction (including the £100m Private Placement notes and two
of the Group’s defined benefit pension schemes) have been treated as
discontinued operations in accordance with IFRS 5: Non–Current Assets
Held for Sale and Discontinued Operations. Accordingly, prior periods in
the income statement and the statement of cash flows have been restated
to show separately those balances in respect of discontinued operations;
these are also disclosed in detail in note 9.
Galliford Try 1 Accounting policies (continued)
Basis of consolidation (continued)
As the transaction does not represent either a common-control
transaction nor a business combination as defined by IFRS 3 Business
Combinations, it has been accounted for as a reorganisation using
merger accounting principles. Consequently, these consolidated
financial statements have been prepared with the consolidated Group
balances of the retained businesses unchanged from the transaction.
The consolidated total equity reflects the legal position of the Group,
reflecting the share capital and merger reserve of the parent, Galliford Try
Holdings plc, and retained earnings representing the balance. Therefore,
these financial statements are a continuation of the prior year’s and the
previous Group’s (ie Galliford Try Limited) consolidation reflecting
historical balances previously disclosed.
Following the completion of the transaction, the ultimate holding
company for the Group is Galliford Try Holdings plc (of which Galliford
Try Limited (formerly Galliford Try plc) is now a wholly owned subsidiary)
and therefore, it is for this entity that the Company financial statements
are shown within these accounts. This entity was incorporated on 19
September 2019 and hence there are no prior year comparative balances.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an acquisition is
measured at the fair value of the assets transferred, equity instruments
issued and liabilities incurred or assumed at the date of exchange.
Costs directly attributable to the acquisition are expensed to the income
statement. The identifiable assets acquired and liabilities and contingent
liabilities assumed in the business combination are measured initially at
their fair values at the acquisition date, irrespective of any non-controlling
interest. The excess of cost of acquisition over the fair value of the Group’s
share of the identifiable net assets acquired is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated but considered an impairment indicator of
the asset transferred. Accounting policies of acquired subsidiaries are
changed where necessary, to ensure consistency with policies adopted
by the Group.
In addition to total performance measures, the Group discloses additional
information including profit from operations (excluding amortisation of
intangible assets) and, if applicable, performance before exceptional items
and earnings per share before exceptional items. The Group believes that
this additional information provides useful information on underlying
trends. This additional information is not defined under IFRS and may
therefore not be comparable with similarly titled profit measures
reported by other companies. It is not intended to be a substitute for,
or superior to, IFRS measures of profit.
Prior year adjustments
The Group has a number of prior year adjustments, primarily as a result of
revisiting the initial application of the accounting standards IFRS 9 and 15
and as a result of discussions with the FRC’s Corporate Reporting Review
Team (CRRT) following the conclusion of its review of the Group’s 2018
financial statements. Details of these adjustments are included in note 40.
Covid-19
The Covid-19 outbreak has developed rapidly in 2020. Measures taken to
contain the virus have affected the wider economy and directly impacted
on the Group’s trading results (as detailed further in the Strategic report).
The Group continued to operate sites where possible, in a safe and
appropriate manner and strictly in accordance with both Government and
the Construction Leadership Council health and safety guidelines and
regulations. In light of the pandemic, the Group has performed a further
review of its accounting policies and consider they remain appropriate.
Some of the key points and clarifications resulting from this review are
highlighted below:
The main impact to the trading results has been to the revenue
and margin shortfall resulting from lockdown and to the ongoing
costs incurred on projects which ultimately have not fulfilled
performance obligations under IFRS 15 as efficiently as expected
(or not at all). The Group continues to recognise these costs as incurred
(in accordance with IFRS 15 paragraph 98), and the associated revenue
to the extent it is highly probable not to result in a significant reversal,
adjusting for the measure of progress in accordance with IFRS 15: B19
(a). When measuring progress towards completion of a performance
obligation recognised over time, future costs include costs associated
with the new working guidelines in respect of Covid-19 secure
environment, providing such costs are expected to contribute to the
satisfaction of the performance obligation. Inefficient costs and any
costs that are not expected to contribute to the satisfaction of the
performance obligation are excluded when measuring progress and
are expensed through the trading results (not exceptional items).
The Group has utilised the Government’s Job Retention Scheme.
The grant income received has been accounted for in accordance with
IAS 20, and has been offset against the costs incurred in line with our
existing accounting policy in the Income Statement.
The Group has reviewed any potential impairment indicators of
both financial and non-financial assets (in accordance with IAS 36
and IFRS 9 in particular), especially where operations have been
curtailed or customers are in financial distress. This has been further
incorporated into the impairment reviews and sensitivity analysis
over goodwill which is detailed in note 14. As detailed in the Strategic
report, the Group benefits from a customer base predominantly within
the public sector, which the Group considers provides greater financial
security over the balances held within trade and other receivables.
The Group has successfully negotiated a limited number of rent
concessions on leased properties. The practical expedient available
from the recently endorsed amendment to IFRS 16 – ‘Covid-19-Related
Rent Concessions’ has not been utilised on the basis it does not have a
material impact to the Group and its application is optional.
Critical accounting estimates and judgments
The preparation of the consolidated financial statements requires
management to make judgments, estimates and assumptions that affect
the application of policies and reported amounts of assets, liabilities,
income and expenses. The estimates, judgments and associated
assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results
of which form the basis of making estimates and judgments about the
carrying value of assets and liabilities which are not readily apparent from
other sources. Actual results may differ from these estimates and
judgments. The estimates, judgments and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates and
judgments are recognised in the period in which the estimate or judgment
is revised if the revision affects only that period, or in the period of
revision and future periods if the revision affects both current and
future periods.
Material estimates, judgments and assumptions are made in particular
with regards to establishing the following policies:
(i) Impairment of goodwill and intangible assets
The determination of the value of any impairment of goodwill and
intangible assets requires an estimation of the value in use of the Cash
Generating Units (CGUs) to which goodwill has been allocated. The value
in use calculation requires an estimate of the future cash flows expected
from these CGUs, including the anticipated growth rate of revenue and
costs as well resulting operating margin and requires the determination of
a suitable discount rate to calculate the present value of the cash flows.
Details of the goodwill impairment review calculations and associated
sensitivity analysis performed are included in note 14.
(ii) Estimation of costs to complete and contract provisions
In order to determine the profit and loss that the Group is able to
recognise on its construction contracts in a specific period, the Group
has to allocate total costs of the construction contracts between the
proportion completing in the period and the proportion to complete in a
future period. The assessment of the total costs to be incurred and final
contract value requires a degree of estimation.
95
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
1 Accounting policies (continued)
Critical accounting estimates and judgments (continued)
(ii) Estimation of costs to complete and contract provisions (continued)
The estimation of final contract value includes assessments of the
recovery of variations which have yet to be agreed with the client,
compensation events and claims where these meet the criteria set out
in the Group’s accounting policies and are in accordance with IFRS 15
Revenue from Contracts with Customers and are therefore highly
probable to be agreed. The amount of these variations and claims
can be substantial and at any time, these are often not fully agreed
with the customer due to timing and requirements of the normal
contractual process.
The Group recognises recoveries of claims from clients in certain
situations where clear entitlement has been established such as through
dispute-resolution processes. Therefore, assessments are based on an
estimate of the potential cost impact of the compensation events and
revenue is constrained to the extent that amounts that the Group believes
are highly probable of not being subject to a significant reversal.
Group management has established internal controls to review and ensure
the appropriateness of estimates made on an individual contract basis,
including any necessary contract provisions. As with most large, complex
construction projects, there is an element of estimation uncertainty over
final account settlements. This is, however, reduced by the experience of the
management team and the controls that we have in place. The settlement
of these final accounts may give rise to an over or under-recognition of profit
or loss and associated cash flows, which could be material.
The Group’s five largest unagreed variations and claims positions at the
year end 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 (as detailed further
below). Of these five projects, four are materially complete with only
one remaining on-site:
Overall contract value (including revenue recognised for
variations and claims)
Revenue in the year
Total estimated end of contract variations and claims
before IFRS 15 constraints
Constrained revenue recognised in respect of variations
and claims
£m
441.0
98.6
169.0
66.7
These five positions represent the most significant estimates of revenue.
The aggregate unagreed variations and claims valued at year end of the
subsequent five largest contracts is £10.2m.
In respect of contract assets of £172.0m and in assessing receivable
provisions calculated on an expected loss basis, the Group has recorded
a provision of £14.0m. The directors’ estimate represents a reasonably
possible outcome within an estimated reasonable range of outcomes of
zero to £21.0m.
It is unclear whether the outstanding uncertainties will be resolved
within the next 12 months.
There is one significant estimated claim recovery in our Infrastructure
business in respect of three contracts with entities owned by a major
infrastructure fund of a blue-chip listed company. Included in contract
assets of £172.0m is an assessment of the recovery to be made in respect
of the outstanding claims on these contracts which are still being assessed
with customers and recoveries have been assumed as highly probable.
Our claims, supported by third party expert advice, exceeds the amounts
recognised. However, there is a range of possible outcomes when these
claims are finally settled. Further details are included in the Financial
Review on page 41 and note 21.
(iii) Taxation
Deferred tax liabilities are generally provided for in full and deferred tax
assets are recognised to the extent that it is probable that future taxable
profit will arise against which the temporary differences will be utilised.
Management judgment is required to determine the amount of deferred
tax assets that can be recognised based on the likely timing and level of
future taxable profits (note 28).
96
(iv) Exceptional items
Exceptional items are items of financial performance which the Group
believes should be presented separately on the face of the income
statement to assist in understanding the underlying financial performance
achieved by the Group. Determining whether an item is part of underlying
items or non-underlying items requires judgment. Details of exceptional
items included in the financial statements are included in note 4.
(v) PPP and other investments measured at fair value through other
comprehensive income
At 30 June 2020, £40.7m (2019: £41.6m) of PPP and other investments
were classified as financial assets measured at fair value through
other comprehensive income. In the operational phase the fair value of
these financial assets is measured at each reporting date by discounting
the future value of the cash flows allocated to the financial asset.
A discount rate of 9.0% (2019: 9.0%) has been used, which reflects a
conservative assessment of the risk profile of the various concessions and
this resulted in a loss through other comprehensive income of £1.8m
in the year (2019: gain of £0.8m). A 1.0% reduction in the discount rate
would result in an increase in the value of the investments recorded in
the balance sheet of approximately £3.4m (note 19).
(vi) Impairment of investment in Galliford Try Limited
During the year, the value of the investment of Galliford Try Holdings plc
in Galliford Try Limited was impaired following an assessment of the
impact of Covid-19 on the company. This impairment requires an
estimation of the value in use of this entity and its assets using the same
key assumptions used in reviewing the goodwill and intangible assets
balances. Further details of this impairment are included in note 17.
Exceptional items
Exceptional items are material or significant irregular items of income
and expense which the Group believes should be disclosed in the income
statement to assist in understanding the underlying financial performance
achieved by the Group by virtue of their nature or size. Examples of items
which may give rise to disclosure as exceptional items include gains and
losses on the disposal of businesses and property, plant and equipment,
significant unanticipated losses on contracts, cost of restructuring and
reorganisation of businesses, acquisition costs and asset impairments.
Segmental reporting
Segmental reporting is presented in the consolidated 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.
Revenue and profit
Revenue is recognised when the Group transfers control of goods
or services to customers. Revenue comprises the fair value of the
consideration received or receivable net of rebates, discounts and value
added tax. Where consideration is subject to variability, the Group
estimates the amount receivable. Revenue recognised is constrained
to the amount which is highly probable not to result in a significant
reversal in future periods.
Sales within the Group are eliminated. Revenue also includes the Group’s
proportion of work carried out under joint operations.
Where a modification to an existing contract occurs, the Group assesses
the nature of the modification and whether it represents a separate
performance obligation required to be satisfied or whether it is a
modification to the existing performance obligation.
Revenue is recognised as follows:
Continuing operations:
Construction services
Revenue comprises the value of construction services transferred
to a customer during the period. The results for the period include
adjustments for the outcome of contracts, including jointly controlled
operations, executed in both the current and preceding years.
Fixed price contracts – the amount of revenue recognised is calculated
based on total costs incurred as a proportion of total estimated costs to
complete and is recognised over time. The estimated final value includes
Galliford Try 1 Accounting policies (continued)
Revenue and profit (continued)
Construction services (continued)
variations, compensation events and certain claims where it is highly
probable that there will not be a significant reversal. Provision will be
made against any potential loss as soon as it is identified.
Cost-reimbursable contracts – revenue is recognised based upon
costs incurred to date plus any agreed fee and is recognised over time.
Where contracts include a target price, consideration is given to the
impact on revenue of the mechanism for distributing any savings or
additional costs compared to the target price. Any revenue over and
above the target price is recognised once it is highly probable that there
will not be a significant reversal. Revenue includes any variations and
compensation events where it is highly probable that there will not
be a significant reversal.
Framework agreements – each work order under a framework
agreement is considered a performance obligation. Revenue is
recognised over time as the services are delivered.
Facilities management – management services and facilities management
contracts typically represent a single series performance obligation.
Revenue is recognised over time as control passes to the customer and
is typically measured on a straight-line basis.
Recoveries from claims against third-parties
The recognition of expected reimbursements resulting from certain
third-party claims is accounted in accordance with IAS 37 Provisions,
Contingent Liabilities and Contingent Assets. This requires recovery
to be ‘virtually certain’ before an asset can be recognised.
Discontinued operations
Linden Homes1
Linden Homes sells private housing units and associated land, inclusive
of customer options, incentives and warranties. In most instances,
the contract with the customer is assessed to only contain one
performance obligation. Revenue from the sale of individual private
housing units, net of incentives, is recognised at the point of legal
completion. Contract consideration for private house sales may include
part-exchange properties at fair value. The onwards sale of part-exchange
properties is separately recognised as revenue, on legal completion.
Sales of land where title transfers prior to construction beginning
(or at ‘golden brick’) are considered to be a distinct performance
obligation. Revenue from land sales is recognised at a point in time,
being the unconditional exchange of contracts or at ‘golden brick,’
provided that the Group does not retain legal title to the land or have a
right of repurchase.
Revenue from affordable housing development is recognised over time.
Partnerships & Regeneration1
Development of multiple units on the same site (inclusive of design and
construction activities contracted for at the same time, and mobilisation
activities) is considered to be a single performance obligation. Where a
contract comprises units across multiple sites, typically each site will
represent a distinct performance obligation. Revenue is accounted for
on an over time basis. The amount of revenue recognised is calculated
based on total costs incurred as a proportion of total estimated costs
to complete.
Private and affordable housing unit sales are accounted for in the same
way as within Linden Homes, as stated above.
Housing grants1 and Government funding
Grants are recognised when there is reasonable assurance that the Group
will comply with the conditions attaching to them and the grants will be
received. The grants are recognised in the income statement over the
periods necessary to match them with the related costs which they are
intended to compensate, on a systematic basis.
Interest bearing loans received from the Government, for example under
the Homes & Communities Agency (now Homes England) programmes,
1
These policies relate primarily to discontinued operations.
are recorded at proceeds plus accrued interest and reported within
Financial Liabilities – Borrowings.
Grants and Government funding received by the Group include
direct capital grant funding awards under Homes England’s Affordable
Homes Programme; Infrastructure loan finance under the Large Sites
Infrastructure Fund; and equity loans provided to home buyers under
the Help to Buy home ownership initiative.
Contract costs
Incremental costs to obtain a contract are capitalised to the extent the
contract is expected to be sufficiently profitable for them to be recovered.
All other costs to obtain a contract are expensed as incurred. Incremental
costs to fulfil a contract are expensed unless they relate directly to an
existing contract or specific anticipated contract, generate or enhance
resources that will be used to satisfy the obligations under the contract
and are expected to be recovered. These costs are amortised over the
shorter of the duration of the contract or the period for which revenue
and profit can be forecast with reasonable certainty. Where a contract
becomes loss making, capitalised costs in relation to that contract are
expensed immediately.
Rent receivable
Rental income represents income obtained from the rental of properties
and is credited to revenue within the income statement on a straight-line
basis over the period of the operating lease.
Interest income and expense
Interest income and expense is recognised on a time proportion basis
using the effective interest method.
Income tax
Current income tax is based on the taxable profit for the year. Taxable
profit differs from profit before taxation recorded in the income
statement because it excludes items of income or expense that are
taxable or deductible in other years or that are never taxable or
deductible. The liability for current tax is calculated using rates that have
been enacted, or substantively enacted, by the balance sheet date.
Deferred income tax is provided using the balance sheet liability method,
providing for all temporary differences between the carrying amount of
assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes with the exception of the initial recognition
of goodwill arising on an acquisition. Deferred tax is measured at the
average tax rates that are expected to apply in the periods in which the
timing differences are expected to reverse, based on rates and laws that
have been enacted or substantively enacted by the balance sheet date.
A deferred tax asset is only recognised when it is more likely than not
that the asset will be recoverable in the foreseeable future out of suitable
taxable profits from which the underlying temporary differences can
be deducted.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries and associates, except where the timing
of the reversal of the temporary difference is controlled by the Group
and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred income tax assets and liabilities are offset
when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when there is an intention to settle
the balances on a net basis.
Deferred income tax is charged or credited through the income
statement, except when it relates to items charged or credited through
the statement of comprehensive income or to equity, when it is charged
or credited there.
Goodwill
Goodwill arising on consolidation represents the excess of the fair value
of the consideration given over the fair value of the net assets acquired.
It is recognised as an asset and reviewed for impairment at least annually
or when there is a triggering event, by considering the net present
value of future cash flows. For purposes of testing for impairment,
the carrying value of goodwill is compared to its recoverable amount,
which is the higher of the value in use and the fair value less costs to sell.
Any impairment is charged immediately to the income statement.
97
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
1 Accounting policies (continued)
Goodwill (continued)
Goodwill arising on acquisitions before the date of transition to IFRS has
been retained at the previous UK GAAP amounts following impairment
tests. Goodwill written off to reserves under UK GAAP prior to 1998 has
not been restated.
A joint operation is a joint arrangement that the Group undertakes
with third parties whereby those parties have rights to the assets and
obligations of the arrangement. The Group accounts for joint operations
by recognising its share of profits and losses in the consolidated income
statement. The Group recognises its share of associated assets and
liabilities in the consolidated balance sheet.
Goodwill is allocated to Cash Generating Units (CGUs) for the purpose
of impairment testing. The allocation is made to those CGUs or groups
of CGUs that are expected to benefit from the business combination in
which the goodwill arose.
Intangible assets
Intangible assets include brands, customer contracts and customer
relationships acquired on acquisition of subsidiary companies, and
computer software developed by the Group. The intangible assets are
reviewed for impairment at least annually or when there is a triggering
event. Intangible assets are stated at cost less accumulated amortisation
and impairment. Cost is determined at the time of acquisition as being
directly attributable costs or, where relevant, by using an appropriate
valuation methodology.
Intangible assets are being amortised over the following periods:
(a) Brand – on a straight-line basis over four to ten years.
(b) Computer software – once the software is fully operational,
amortisation is on a straight-line basis over up to ten years.
Property, plant and equipment
All property, plant and equipment is stated at cost less accumulated
depreciation and impairment. Cost includes expenditure that is directly
attributable to the acquisition of the items. Land and buildings comprise
mainly offices.
Depreciation is calculated to write off the cost of each asset to estimated
residual value over its expected useful life. Freehold land is not
depreciated. The annual rates of depreciation, applied on a straight
line basis, are as follows:
Freehold buildings
2% on cost
On cost:
Plant and machinery
Fixtures and fittings
15% to 33%
10% to 33%
In addition to systematic depreciation the book value of property, plant
and equipment would be written down to estimated recoverable amount
should any impairment in the respective carrying values be identified.
The asset residual values, carrying values and useful lives are reviewed
on an annual basis and adjusted if appropriate at each balance sheet date.
Repairs and maintenance expenditure is expensed as incurred on an
accruals basis.
Joint ventures and joint operations
The Group applies IFRS 11 to all joint arrangements. Investments in joint
arrangements are classified as either joint ventures or joint operations,
depending on the contractual rights and obligations of each investor.
A joint venture is an entity over which the Group has joint control and
rights to the net assets of the entity. The Group’s interest in joint ventures
is accounted for using the equity method. Under this method the Group’s
share of profits less losses after taxation of joint ventures is included in
the consolidated income statement and its interest in their net assets is
included in investments in the consolidated balance sheet. Where the
share of losses exceeds the Group’s interest in the entity and there is no
obligation to fund these losses, the carrying amount is reduced to nil and
recognition of further losses is discontinued. Future profits are not
recognised until unrecognised losses are extinguished. Unrealised gains
on transactions with the Group’s joint ventures are eliminated to the
extent of the Group’s interest in the joint venture. Accounting policies of
joint ventures have been changed on consolidation where necessary
to ensure consistency with policies adopted by the Group. Where joint
ventures do not adopt accounting periods that are coterminous with
the Group’s, results and net assets are based upon unaudited accounts
drawn up to the Group’s accounting reference date.
These policies relate primarily to discontinued operations.
1
98
PPP and other investments
PPP and other investments are non-derivatives that are either designated
in this category or not classified in any of the other categories. They are
included in non-current assets unless management intends to dispose
of the assets within 12 months of the balance sheet date. On initial
recognition the asset is recognised at costs.
The Group’s housebuilding divisions operated schemes under which part
of the agreed sales price for a residential property can be deferred for
up to 25 years. The fair value of these assets is calculated by taking into
account forecast inflation in property prices and discounting back to
present value using the effective interest rate. Provision is also made for
estimated default to arrive at the initial fair value. The unwinding of the
discount included on initial recognition at fair value is recognised as
finance income in the year.
The Group applies equity accounting for its investments in PPP/PFI
entities. These investments are treated as associates as the Group has
significant influence over them. On initial recognition the investments
in these entities are recognised at cost, and the carrying amounts are
increased or decreased to recognise the Group’s share of the profit or
loss of the PPP/PFI entities after the date of acquisition. The Group’s share
of the investments’ profits or losses are recognised in the profit or loss net
of any impairment losses. Distributions received reduce the carrying
amount of the investments.
The debt element of the Group’s PPP/PFI entities is accounted for under
IFRS 9 ‘Financial Instruments’ with fair value movements recorded in
other comprehensive income, with recycling of gains and losses through
the income statement. This reflects the fact that the Group has a
demonstrable track record of investing in PFI assets as part of an overall
construction procurement strategy, with a view to churning these
investments on a regular basis. In light of the disposal of the Group’s
housebuilding divisions in the year, management have reviewed the
classification of PPP investments and consider that the business model
continues to be hold to collect and sell, though the ‘collect’ period may be
longer than it has historically been. The investments therefore continue
to be held at fair value through other comprehensive income.
Leases
Leases for all comparative periods have been accounted for under IAS 17.
Under this standard, leases in which a significant portion of the risks
and rewards of ownership are retained by the lessor were classified as
operating leases. Rentals under operating leases were charged to the
income statement on a straight-line basis over the lease term. IFRS 16 is
applicable to all accounting periods beginning on or after 1 July 2019.
In accordance with IFRS 16, leases are recognised as a right–of–use
asset and a corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated between
the liability and finance cost. The finance cost is charged to profit or loss
over the lease term at a constant periodic rate of interest on the remaining
balance of the liability. The right–of–use asset is depreciated over the
lease term on a straight–line basis, unless the useful life of the asset is
shorter than the lease term.
Developments1
Developments are valued at the lower of cost and net realisable value.
Work in progress is valued at the lower of cost, including direct costs
and directly attributable overheads, and net realisable value. On initial
recognition, land is included within developments at its fair value, which is
its cost to the Group.
Land inventory is recognised at the time a liability is recognised which
is on unconditional exchange of contract or once the acquisition
has completed.
Where a development is in progress, net realisable value is assessed by
considering the expected future revenues and the total costs to complete
the development, including direct costs and directly attributable
overheads. To the extent that the Group anticipates selling a development
in its current state, then net realisable value is taken as its open market
value at the balance sheet date less any anticipated selling costs.
Galliford Try 1 Accounting policies (continued)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost, using the effective interest method, less
provision for impairment. A provision for impairment of trade receivables
is established based on an expected credit loss model (general or
simplified approach as detailed under impairment of financial assets).
The amount of the loss is recognised in the income statement.
When a trade receivable is uncollectible, it is written off against the
impairment provision for trade receivables. Subsequent recoveries of
amounts previously written off are credited against costs in the income
statement. Short-term trade receivables do not carry any interest and
are stated at their amortised cost, as reduced by appropriate allowances
for estimated irrecoverable amounts.
Impairment of financial assets
IFRS 9 establishes a new model for recognition and measurement of
impairment in financial assets. Loans and receivables and contract assets
apply the “Expected Credit Losses” (ECL) model. All other assets are
classified and measured at fair value with movements going through the
income statement or other comprehensive income. Expected credit
losses are recognised and measured according to one of three approaches
– a general approach (12 months ECL), a simplified approach (lifetime ECL)
or the “credit adjusted approach”. The Group has taken the practical
expedient to apply a simplified “provision matrix” for calculating expected
losses. The provision matrix is based on an entity’s historical default
rates over the expected life of the trade receivables and is adjusted for
forward-looking estimates. For large one-off balances where there is
no historic experience, analysis is completed in respect of a number of
reasonably possible scenarios.
Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at nominal
value. For the purposes of the cash flow statement, cash and cash
equivalents comprise cash at bank and in hand, including bank deposits
with original maturities of three months or less. Bank overdrafts
are included for purposes of cash flow movements and the cash
flow statement.
Bank deposits with an original term of more than three months are
classified as short-term deposits where the cash can be withdrawn on
demand and the penalty for early withdrawal is not significant. Cash held
in escrow accounts is classified as a short-term deposit where the escrow
agreement allows the balance to be converted to cash, if replaced by a
bond repayable on demand.
Bank and other borrowings
Interest bearing bank loans and overdrafts and other loans are
originally recognised at fair value net of transaction costs incurred.
Such borrowings are subsequently stated at amortised cost, with the
difference between initial fair value and redemption value recognised
in the income statement over the period to redemption.
Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accruals
basis in the income statement, using the effective interest rate method.
Refinancing costs associated with new borrowing arrangements are
included within the borrowing amount and amortised over the period
of the loan.
Trade payables
Trade payables on normal terms are not interest bearing and are stated
at their nominal value. Trade payables on extended terms, particularly in
respect of land, are recorded at their fair value at the date of acquisition
of the asset to which they relate and subsequently held at amortised
cost. The discount to nominal value is amortised over the period of the
credit term and charged to finance costs using the effective interest rate.
Changes in estimates of the final payment due are taken to developments
(land) and, in due course, to cost of sales in the income statement.
Provisions for liabilities and charges
Provisions for liabilities and charges are recognised when, as a result
of past events, the Group has a present legal or constructive obligation,
it is probable that an outflow of resources will be required to settle the
obligation and the amount has been reliably estimated. Provisions are
not recognised for future operating losses.
1
These policies relate primarily to discontinued operations.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using the pre-tax rate that
reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to the
passage of time is recognised as an interest expense.
Foreign currency
Transactions in foreign currencies are recorded at the rate ruling at the
date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are translated at the rate of exchange ruling at the
balance sheet date. All differences are taken to the income statement.
Retirement benefit obligations1
For defined contribution schemes operated by the Group, amounts
payable are charged to the income statement as they accrue.
For defined benefit schemes, the cost of providing benefits is calculated
annually by independent actuaries using the projected unit method.
The retirement benefit asset/(obligation) recognised in the balance sheet
represents the excess/(deficit) of the fair value of the schemes’ assets over
the present value of scheme liabilities, with a net asset recognised to
the extent that the employer can gain economic benefit as set out in
the requirements of IFRIC 14. The present value of the defined benefit
obligation is determined by discounting the estimated future cash flows,
using interest rates of high quality corporate bonds that have terms to
maturity approximating to the terms of the related pension liability.
Actuarial gains and losses are recognised in full in the period in which
they occur, in the statement of comprehensive income. Gains and losses
arising on curtailment and settlements are taken to the income statement
as incurred.
Accounting for Employee Share Ownership Plan
Own shares held by the Galliford Try Employee Share Trust (the ‘Trust’)
are shown, at cost less any permanent diminution in value, as a deduction
from retained earnings. The charge made to the income statement for
employee share awards and options is based on the fair value of the award
at the date of grant, spread over the performance period. Where such
shares subsequently vest to the employees under the terms of the
Group’s share option schemes or are sold, any consideration received is
included in equity.
Share-based payments
The Group operates a number of equity-settled, share-based
compensation plans. The fair value of the employee services received in
exchange for the grant of the options is recognised as an expense over
the vesting period. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions such as growth
in earnings per share. Non-market vesting conditions are included in
assumptions about the number of options that are expected to vest.
At each balance sheet date, the Group revises its estimates of the number
of options that are expected to vest. It recognises the impact of the
revision to original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs
are credited to share capital (nominal value) and share premium when
the options are exercised. The grant by the Company of options over its
equity instruments to the employees of subsidiary undertakings in the
Group is treated as a capital contribution.
Dividend policy
Final dividend distribution to the Company’s shareholders is recognised
as a liability in the Group’s financial statements in the period in
which the dividends are approved by the Company’s shareholders.
Interim dividends are recognised when paid.
Equity instruments
Equity instruments, such as ordinary share capital, issued by the Company
are recorded at the proceeds received net of directly attributable
incremental issue costs. Consideration paid for shares in the Company
held by the Trust are deducted from total equity.
Investments in subsidiaries
The Company’s investments in subsidiaries are recorded in the
Company’s balance sheet at cost less any impairment. The directors
review the investments for impairment annually.
99
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
2 Segmental reporting
Segmental reporting is presented in the consolidated 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, segment 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. Following the disposal of the Group’s housebuilding operations
to Vistry Group plc on 3 January 2020 (notes 1 & 9), management has determined the operating segments of the resulting Group to be Building,
Infrastructure, PPP Investments and Central (primarily representing central overheads). Previously, they were assessed as Linden Homes, Galliford Try
Partnerships and Regeneration, Construction, including Building and Infrastructure, PPP Investments and Central.
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.
Year ended 30 June 2020 – continuing operations
Pre–exceptional revenue
Exceptional items (note 4)
Revenue
Pre–exceptional loss from operations1,2
Exceptional items (note 4)
Share of joint ventures’ interest and tax
(Loss)/profit before finance costs, amortisation and taxation
Finance income
Finance costs1
(Loss)/profit before amortisation and taxation
Amortisation of intangibles
(Loss)/profit before taxation
Income tax credit
(Loss) for the year
Year ended 30 June 2019 – continuing operations
Pre–exceptional revenue
Exceptional items (note 4)
Revenue
Pre–exceptional (loss)/profit from operations2
Exceptional items (note 4)
Share of joint ventures’ interest and tax
(Loss)/profit before finance costs, amortisation and taxation
Finance income
Finance costs
(Loss)/profit before amortisation and taxation
Amortisation of intangibles
(Loss)/profit before taxation
Income tax credit
(Loss) for the year
Building
£m
Infrastructure
£m
PPP
Investments
£m
Central
£m
719.9
–
719.9
(51.9)
(2.0)
–
(53.9)
–
(2.7)
(56.6)
(1.0)
(57.6)
357.1
32.0
389.1
(1.8)
27.3
–
25.5
–
(5.8)
19.7
–
19.7
8.2
–
8.2
(0.5)
–
–
(0.5)
4.3
(1.4)
2.4
–
2.4
4.4
–
4.4
(8.2)
(0.2)
–
(8.4)
1.5
8.9
2.0
(1.1)
0.9
Building
£m
Infrastructure
£m
PPP
Investments
£m
Central
£m
858.3
–
858.3
(9.5)
(0.9)
(0.1)
(10.5)
–
(1.4)
(11.9)
(1.0)
(12.9)
527.0
(2.8)
524.2
(5.5)
(45.5)
–
(51.0)
–
(7.0)
(58.0)
–
(58.0)
17.0
–
17.0
4.5
–
(0.1)
4.4
3.4
(1.6)
6.2
–
6.2
0.6
–
0.6
(6.4)
(0.9)
–
(7.3)
0.2
8.4
1.3
(1.1)
0.2
Total
£m
1,089.6
32.0
1,121.6
(62.4)
25.1
–
(37.3)
5.8
(1.0)
(32.5)
(2.1)
(34.6)
2.0
(32.6)
Total
£m
1,402.9
(2.8)
1,400.1
(16.9)
(47.3)
(0.2)
(64.4)
3.6
(1.6)
(62.4)
(2.1)
(64.5)
15.0
(49.5)
1
2
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity (notes 1, 16 & 39).
Pre–exceptional profit from operations is stated before finance costs, amortisation, exceptional items, share of joint ventures’ interest and tax.
Inter-segment revenue, which is priced on an arm’s length basis, is eliminated from revenue above. In the year to 30 June 2020 this amounted to
£51.8m (2019: £57.3m) for continuing operations, of which £16.9m (2019: £23.2m) was in Building, £21.9m (2019: £22.1m) was in Infrastructure and
£13.0m (2019: £12.0m) was in central costs.
100
Galliford Try 2 Segmental reporting (continued)
Balance sheet
30 June 2020
Goodwill and intangible assets
Working capital employed1
Net cash/(debt)
Net assets
Total Group liabilities
Total Group assets
Building
£m
Infrastructure
£m
PPP
Investments
£m
43.9
(160.7)
111.1
(5.7)
37.2
(26.1)
(66.3)
(55.2)
–
37.7
(10.0)
27.7
Central
£m
3.9
(12.6)
162.4
153.7
Total
£m
85.0
(161.7)
197.2
120.5
(505.1)
625.6
1
Includes lease liabilities as per IFRS 16. The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and
adjustments arising from the initial application recognised as an adjustment to opening equity (notes 1, 16 & 39).
Building
£m
Infrastructure
£m
PPP
Investments
£m
44.6
(73.5)
77.4
48.5
37.2
(17.8)
(93.2)
(73.8)
–
47.6
(22.2)
25.4
Central
£m
4.8
(208.0)
557.8
354.6
Linden
Homes
£m
52.5
759.2
(567.1)
244.6
Partnerships
&
Regeneration
£m
32.3
57.0
(9.3)
80.0
30 June 2019 (restated – note 40)
Goodwill and intangible assets
Working capital employed
Net cash/(debt)
Net assets
Total Group liabilities
Total Group assets
Other segmental information
Year ended 30 June 2020
Investment in joint ventures
Contracting revenue
Building
£m
Infrastructure
£m
–
712.4
–
353.5
PPP
Investments
£m
Central
£m
0.2
7.4
–
–
0.1
–
–
–
–
–
1.1
2.1
1.0
1.1
(0.2)
1.1
Linden
Homes
£m
60.8
Partnerships
&
Regeneration
£m
5.7
Capital expenditure – property, plant and equipment
Depreciation – property, plant & equipment
Depreciation – right of use assets
Increase in provision for receivables
Share-based payments
Amortisation of intangible assets
0.2
0.1
4.4
0.1
0.1
1.0
Year ended 30 June 2019 (restated – note 40)
Investment in joint ventures
Contracting revenue
Capital expenditure – property, plant and equipment
Depreciation
(Decrease)/increase in provision for receivables
Share-based payments
Amortisation of intangible assets
Building
£m
Infrastructure
£m
–
–
852.4
524.2
PPP
Investments
£m
0.5
20.1
–
0.1
(0.1)
0.3
1.0
1.0
0.2
–
0.2
–
–
–
–
–
–
0.1
0.2
3.8
–
0.1
–
Central
£m
–
–
1.7
2.6
0.1
–
1.1
Total
£m
171.4
564.5
(56.6)
679.3
(2,014.5)
2,693.8
Total
£m
0.2
1,073.3
1.4
2.4
9.3
1.2
–
2.1
Total
£m
67.0
–
1.0
0.4
0.1
0.2
–
480.3
1,877.0
–
0.2
0.2
0.2
1.4
3.7
3.5
0.3
0.9
3.5
101
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
3 Revenue
Nature of revenue streams – continuing operations
(i) Building and Infrastructure segments
Our Construction business operates nationwide, working with clients predominantly in the public and regulated sectors, such as health, education and
defence markets within the Building segment and road, rail, airports, water and flood alleviation markets within the Infrastructure segment (as well as
private commercial clients). 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.
Management does not expect a financing component to exist.
Cost–reimbursable
A number of projects within these segments are undertaken using open–book/cost–plus (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). Uninvoiced amounts
are presented as contract assets.
Management does not expect a financing component to exist.
Framework
Projects within the Building and Infrastructure segments can be undertaken under an overall framework agreement
(possibly granted on a regulatory cycle, such as for water contracts), with work performed under individual work orders
submitted by the customer and governed by the terms of the framework agreement (often including a schedule of rates
and a pain/gain element).
Individual work orders will typically consist of a single deliverable or job and are anticipated to comprise only a single
deliverable (and consequently performance obligation).
Revenue is therefore recognised over time based on an input model (reference to costs incurred to date).
(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 derives its revenue from contracts with customers for the transfer of goods and services, both at a point in time and over time. The split is
disclosed in the table below, which is consistent with the revenue information that is disclosed for each reportable segment of the Group (of the
continuing operations) as per IFRS 8 ‘Operating Segments’.
Year ended 30 June 2020
Over time
Point in time
Revenue
Year ended 30 June 2019
Over time
Point in time
Revenue
102
Building
£m
Infrastructure
£m
PPP
Investments
£m
719.9
–
719.9
389.1
–
389.1
7.4
0.8
8.2
Building
£m
Infrastructure
£m
PPP
Investments
£m
858.3
–
858.3
524.2
–
524.2
12.1
4.9
17.0
Central
£m
4.4
–
4.4
Central
£m
0.6
–
0.6
Total
1,120.8
0.8
1,121.6
Total
1,395.2
4.9
1,400.1
Galliford Try 3 Revenue (continued)
Disaggregation of revenue (continued)
Revenue on existing contracts, where performance obligations are unsatisfied or partially unsatisfied at the balance sheet date, is expected to be
recognised as follows:
Revenue – year ended 30 June 2020
Building
Infrastructure
Total Construction
PPP Investments
Central
2021
£m
519.3
203.1
722.4
1.9
–
2022
£m
172.9
49.6
222.5
1.6
–
Total transaction price allocated to performance obligations yet to be satisfied
724.3
224.1
Revenue – year ended 30 June 2019
Building
Infrastructure
Total Construction
PPP Investments
Central
2020
£m
575.9
316.1
892.0
2.1
–
2021
£m
128.5
75.4
203.9
1.8
–
Total transaction price allocated to performance obligations yet to be satisfied
894.1
205.7
Any element of variable consideration is estimated at a value that is highly probable not to result in future reversal.
4 Exceptional items
Revenue – Impact of legacy contracts1
Revenue – expected credit loss per IFRS 9 in respect of legacy contract2
Cost of sales – charge on legacy contracts1,2
Cost of sales – restructure costs3
Administrative expenses – restructure costs3
Administrative expenses – pension costs4 (note 33)
Profit/(loss) from operations
2023
onwards
£m
10.3
27.3
37.6
25.1
–
62.7
2022
onwards
£m
4.8
1.0
5.8
25.4
–
31.2
2020
£m
32.0
–
(4.0)
(2.3)
(0.6)
–
25.1
Total
£m
702.5
280.0
982.5
28.6
–
1,011.1
Total
£m
709.2
392.5
1,101.7
29.3
–
1,131.0
2019
£m
–
(2.8)
(39.0)
(3.0)
(1.6)
(0.9)
(47.3)
1
2
3
4
On 23 December 2019, the Group announced that following a lengthy period of negotiation, the AWPR joint venture had substantially agreed settlement terms with
the client in respect of the final account of this major infrastructure project. Together with an adverse adjudication award on an unrelated historical project, the Group
announced that it expected to receive a cash payment of £32.0m. After discussion with the Corporate Reporting Review Team of the FRC (as stated in notes 1 & 40),
the Group has treated the write down of the AWPR asset as a prior period adjustment, with the settlement income of £32.0m recognised (in revenue) net of final cost
estimates of £4.0m (in cost of sales) as exceptional items in the current year.
In the prior year, exceptional items of £32.3m were in relation to additional costs to complete the AWPR contract, of which £26.0m was for additional costs to complete
the project as accrued in the first half of the year and £6.3m resulted from the impact of our updated accounting policy on claims from other parties. Both of these items
were recorded within cost of sales. The exceptional charge in the prior year also included £6.7m in respect of other legacy contracts (recorded within cost of sales).
In accordance with IFRS 9 Financial Instruments (which was adopted on 1 July 2018), the Group performed an assessment of the expected credit loss on both adoption
of the standard (at 1 July 2018) and at the closing balance sheet date (30 June 2019), based on estimated provision matrices. This resulted in an exceptional impairment
charge of £2.8m incurred in the year to 30 June 2019.
During the year and following the disposal of the housebuilding operations to Vistry Group plc on 3 January 2020 and the impact of the Covid-19 pandemic during
2020, the Group completed a restructure exercise to reflect the revised size and structure of the business, resulting in £2.9m of redundancy costs (of which £2.3m was
recorded in cost of sales and £0.6m was recorded in administrative expenses). In the prior year, redundancy costs of £4.6m were recorded in respect of the restructure
announced in May 2019 completed within the Construction business, (of which £3.0m was recorded in cost of sales and £1.6m was recorded in administrative expenses).
In July 2018, the Galliford Group Special Scheme completed a £7m insurance bulk annuity buyout transaction, securing the pensioner liabilities of the scheme.
The premium paid was £0.9m higher than the IAS 19 liabilities discharged and therefore, a settlement charge of £0.9m was recorded within administrative expenses in
the income statement. Of the total reported exceptional costs of £4.5m relating to defined benefit pension schemes in the year to 30 June 2019, the remaining £3.5m has
been classified as part of discontinued operations.
103
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
4 Exceptional items (continued)
Loss before income tax
Expected credit loss in respect of legacy contract
Net (income)/charge on legacy contracts
Pension costs
Restructure costs
Pre-exceptional loss before income tax
5 Employees and directors – continuing operations
Employee benefit expense during the year
Wages and salaries
Social security costs
Other pension costs
Share-based payments
Restructure costs
Total
Average monthly number of people (including Executive directors) employed
By business:
– Building
– Infrastructure
Construction
PPP Investments
Group
Total
2020
£m
(34.6)
–
(28.0)
–
2.9
2019
£m
(64.5)
2.8
39.0
0.9
4.6
(59.7)
(17.2)
Company
2019
£m
2020
£m
–
–
–
–
–
–
–
–
–
–
–
–
Notes
33
31
2020
£m
153.1
17.3
15.5
–
2.9
Group
2019
£m
177.4
20.2
15.2
0.5
4.6
188.8
217.9
2020
Number
Group
2019
Number
2020
Number
Company
2019
Number
1,603
1,188
2,791
78
218
1,780
1,437
3,217
74
249
3,087
3,540
–
–
–
–
7
7
–
–
–
–
–
–
Remuneration of key management personnel
The key management personnel comprise the Executive Board and non-executive directors. The remuneration of the key management personnel
of the Group is set out below in aggregate for each of the categories specified in IAS 24, Related Party Disclosures. Further information about
the remuneration of individual directors, including any interests in the Company’s shares, is provided in the audited part of the Directors’
remuneration report.
2020
£m
4.5
0.3
4.8
2019
£m
4.3
0.4
4.7
Salaries and short-term employee benefits
Retirement benefit costs
Total
104
Galliford Try 6 Net finance income
Group
Interest receivable on bank deposits
Interest receivable from PPP investments and joint ventures
Net finance income on retirement benefit obligations
Finance income
Other (including interest on lease liabilities1)
Finance costs
Net finance income
2020
£m
0.3
5.4
0.1
5.8
(1.0)
(1.0)
2019
£m
0.2
3.4
–
3.6
(1.6)
(1.6)
4.8
2.0
1
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity (notes 1, 16 & 39). This resulted in the recognition of a lease liability for leases that were previously recognised as operating
leases and therefore captured off-balance sheet. Interest expense is charged on the lease liability and included within Other finance costs above.
7 Profit before income tax
The following items have been included in arriving at profit before income tax:
Employee benefit expense
Depreciation of property, plant and equipment
Depreciation of right of use assets1
Amortisation of intangible assets
Repairs and maintenance expenditure on property, plant and equipment
Increase in provision for receivables
Exceptional profit/(loss)
Notes
5
15
16
13
21
4
2020
£m
188.8
2.4
9.3
2.1
0.8
1.2
2019
£m
217.9
2.9
–
2.1
1.7
0.4
25.1
(47.3)
In addition to the above, the Group incurs other costs classified as cost of sales relating to labour, materials and subcontractors’ costs.
1
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity (notes 1, 16 & 39).
Services provided by the Group’s auditor and network firms
During the year the Group obtained the following services from the Group’s auditor at costs as detailed below (2019: PricewaterhouseCoopers LLP was
the Group’s auditor):
Fees payable to the Company’s auditor for the audit of Parent Company and consolidated financial statements
Fees payable to the Company’s auditor for other services:
The audit of financial statements of the Company’s subsidiaries
Audit-related assurance services
Total other services
Total
2020
£m
0.2
2019
£m
0.2
0.8
0.1
0.9
1.1
0.5
0.1
0.6
0.8
A description of the work of the Audit Committee in respect of the auditor’s independence is set out in the Governance report.
Our previous auditor (PricewaterhouseCoopers LLP) was paid £1.5m in the year in respect of work performed as Reporting Accountant in respect of
the disposal of the housebuilding divisions.
105
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
8 Income tax credit
Group
Analysis of expense in year
Current year’s income tax
Current tax
Deferred tax
Adjustments in respect of prior years
Current tax
Deferred tax
Income tax credit
Tax on items recognised in other comprehensive income
Current tax (credit) for share-based payments
Tax recognised in other comprehensive income
Total taxation
Note
2020
£m
2019
£m
28
28
(7.1)
0.3
8.2
(3.4)
(2.0)
(20.4)
4.5
0.9
–
(15.0)
–
–
(0.3)
(0.3)
(2.0)
(15.3)
The total income tax credit for the year of £2.0m (2019: £15.0m) is lower (2019: higher) than the blended standard rate of corporation tax in the UK of
19.0% (2019: 19.0%). The differences are explained below:
Loss before income tax
2020
£m
(34.6)
2019
£m
(64.5)
Loss before income tax multiplied by the blended standard corporation tax rate in the UK of 19.0% (2019: 19.0%)
(6.6)
(12.3)
Effects of:
Expenses not deductible for tax purposes
Non-taxable income
Adjustments in respect of prior years
Other
Income tax credit
We have recognised deferred tax at 19.0% as it is likely that most assets and liabilities will have reversed within one year.
0.5
(1.0)
4.8
0.3
0.1
(1.9)
0.8
(1.7)
(2.0)
(15.0)
106
Galliford Try 9 Discontinued operations
On 3 January 2020, the Group completed the disposal of the Linden Homes and Partnerships & Regeneration divisions of Galliford Try plc (in addition
to certain other assets and liabilities transferred to Vistry Group plc as part of this transaction). This followed the initial steps in this transaction which
included the implementation of a Group restructuring and scheme of arrangement under Part 26 of the Companies Act 2006 becoming effective on
2 January 2020. Additionally, with effect from 8:00 a.m. on 3 January 2020, 111,053,489 Galliford Try Holdings plc shares with a nominal value of 50p
each, being the entire issued share capital of Galliford Try Holdings plc, were admitted to the premium listing segment of the Official List of the FCA
and to trading on the main market for listed securities of the London Stock Exchange with a corresponding cancellation of all shares of Galliford Try plc
(note 30).
Further information on the transaction is included in note 1.
As a result of this disposal, the Linden Homes and Partnerships & Regeneration segments have been classified as discontinued operations in accordance
with IFRS 5: Non–Current Assets Held for Sale and Discontinued Operations. Accordingly, prior periods in the income statement and the statement of
cash flows have been restated to show separately those balances in respect of discontinued operations.
Nature of revenue streams
Linden Homes and Partnerships & Regeneration segments
The following information sets out the nature of revenue streams that are included within discontinued operations in respect of revenues generated in
the period to 3 January 2020, when the disposal was completed. The Group developed high-quality homes over a national footprint, for sale under the
Linden Homes brand. The Partnerships & Regeneration segment is a specialist regeneration business which carried out contracting, land–led solutions
and development for local authorities and Registered Providers as well as selling private housing units.
Revenue stream
Nature, timing of satisfaction of performance obligations and significant payment terms
Private development
Individual customers obtain control of a unit once the sale is legally complete (unconditional sale). This is typically the same
time that the customer has paid.
Revenue is therefore recognised on the sale of individual units (net of incentives), at a point in time.
Contracts for onward sale of part–exchange properties are entered into with a different customer and therefore represent
separate revenue contracts.
Unit sales to Registered
Providers/investors in
the Private Rented
Sector (PRS)
This represents sales of (affordable) housing units to Housing Associations (HAs) and other Registered Providers/PRS,
treated as a single performance obligation. The Group receives payments from the customer during the building of the units
(based on a schedule of value that reflects the timing and performance of service delivery), indicating that the customer
controls all the work in progress as the house is being built. The units are built on the customer’s land. Therefore, revenue
on performance obligations to construct these units is recognised over time (the period of construction) based on an output
model (certification of work done to date). Uninvoiced amounts are presented as contract assets.
Management does not expect a financing component to exist in respect of HA contracts.
Land sales
The sale of land, whether or not in conjunction with the sale of a number of housing units, is assessed to be a distinct
performance obligation to the sale of any related units and control is deemed to pass to the customer on the unconditional
exchange of contracts.
Revenue is therefore recognised at a point in time (unconditional exchange of contracts).
Contracting to
Registered
Providers/PRS
This represents the building of a number of (affordable) units on the customer’s land with any design phase treated alongside
the construction phase as a single performance obligation. This is because the two stages are not distinct in the context of the
contract, given that each is highly interdependent on the other (and are typically contracted together within a single contract).
Payment terms are based on a 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.
The profit for the year (and associated comparative periods) of these discontinued operations are as follows:
Year ended 30 June 2020 – discontinued operations1
Revenue
Profit/(loss) from operations
Share of joint ventures’ interest and tax
Profit/(loss) before finance costs, amortisation and tax
Net finance (costs)/income
Amortisation costs
Profit/(loss) before taxation
Income tax expense
Profit after tax of discontinued operations
Linden
Homes
£m
303.1
50.1
(6.6)
43.5
(17.5)
–
26.0
Partnerships
&
Regeneration
£m
348.8
18.7
–
18.7
(0.7)
(1.0)
17.0
Central
£m
–
(27.9)
–
(27.9)
17.5
–
(10.4)
Total
£m
651.9
40.9
(6.6)
34.3
(0.7)
(1.0)
32.6
(7.8)
24.8
1
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity. This resulted in the recognition of a lease liability for leases that were previously recognised as operating leases and
therefore captured off-balance sheet. Interest expense is charged on the lease liability and included within net finance (costs)/income above.
107
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Central
£m
Total
£m
–
1,310.6
(0.6)
–
(0.6)
30.2
(3.5)
–
26.1
194.7
(12.7)
182.0
(7.8)
(3.5)
(1.4)
169.3
(32.9)
136.4
2020
£m
476.3
(18.9)
457.4
(969.2)
(511.8)
840.0
328.2
–
328.2
353.0
Notes to the consolidated financial statements
continued
9 Discontinued operations (continued)
Year ended 30 June 2019 – discontinued operations
Revenue
Profit/(loss) from operations
Share of joint ventures’ interest and tax
Profit/(loss) before finance costs, amortisation and tax
Net finance (costs)/income
Exceptional items
Amortisation costs
Profit before taxation
Income tax expense
Profit for the period
Linden
Homes
£m
758.7
160.5
(9.3)
151.2
(36.2)
–
–
115.0
Partnerships
&
Regeneration
£m
551.9
34.8
(3.4)
31.4
(1.8)
–
(1.4)
28.2
The Linden Homes and Partnerships & Regeneration segments (which comprise the housebuilding operations) and certain other assets and
liabilities were transferred to Vistry Group plc on 3 January 2020 (including the £100m Private Placement notes and two of the Group’s defined
benefit pension schemes).
Gain on sale and distribution of the discontinued operations
Net proceeds
Transaction costs
Total net disposal consideration
Carrying amount of net assets disposed and distributed
Fair value of distribution of Galliford Try Homes Limited
Net gain on sale before income tax
Income tax expense on gain
Net gain on sale after income tax
Net profit from discontinued operations for the year per Income Statement
The transaction has been described in detail in note 1 with the businesses sold on a cash-free debt-free basis with Linden Homes being distributed to
shareholders (plus a further cash working capital adjustment being paid by the buyer to the Group) and the Partnerships & Regeneration business being
sold for cash.
The total proceeds received of £476.3m consist of £300.0m in cash, the transfer of the £100.0m Private Placement 10-year sterling notes to the buyer
and a further provisional working capital adjustment of £76.3m. The Group incurred total third-party advisor fees, professional fees and stamp duty in
respect of the transaction of £18.9m resulting in net disposal proceeds of £457.4m. The carrying amount of net assets immediately prior to the disposal
in respect of the discontinued operations was £969.2m, as noted in the table on page 109.
As indicated above, Linden Homes was disposed via a distribution to shareholders. The owner of each Galliford Try share (in Galliford Try Limited,
formerly Galliford Try plc) received 0.57406 shares in Vistry Group plc (formerly Bovis Homes plc) as well as one replacement share in Galliford Try
Holdings plc. Under IFRIC 17 Distributions of Non-cash Assets to Owners, this distribution is reflected at fair value, with the difference between the fair
value of the assets distributed and their carrying value (within the total housebuilding net assets carrying value of £969.2m) reflected in profit or loss.
Based on the market value of the shares in Vistry Group plc at the time of completion (of £13.12), the fair value of the assets distributed was £840.0m.
Finally, as a result of the transaction, incorporating the disposal of the housebuilding divisions, the completion of the court-approved scheme of
arrangement, reorganisation of the Group structure with the insertion of Galliford Try Holdings plc as the ultimate parent of the Group (under
Part 26 of the Companies Act 2006) and the subsequent capital reduction of Galliford Try Limited, the Group’s consolidated share premium and other
reserves were reduced by £197.7m to nil and increased by £80.9m to £85.7m respectively, with the net balance recycled through retained earnings
(note 32).
This resulted in a net gain on sale from the transaction of £328.2m which in addition to the trading profit for the year of £24.8m resulted in a net profit
for the year from discontinued operations of £353.0m, as reflected in the Income Statement.
108
Galliford Try 9 Discontinued operations (continued)
The carrying amounts of assets and liabilities as at the date of disposal and the distribution of Galliford Try Homes Ltd (3 January 2020) were:
Goodwill and intangible assets
Property, plant & equipment
Right of use assets1
Investments in joint ventures
Developments
Trade and other receivables
Cash and cash equivalents
Retirement benefit assets
Total assets
Trade and other payables
Lease liabilities1
Borrowings
Deferred income tax liabilities1
Total liabilities
Net assets
3 January 2020
£m
92.8
3.6
16.3
71.8
821.6
595.3
869.9
12.0
2,483.3
(626.2)
(16.7)
(869.9)
(1.3)
(1,514.1)
969.2
1
The Group adopted IFRS 16 Leases on 1 July 2019 using the modified retrospective approach with any reclassification and adjustments arising from the initial application
recognised as an adjustment to opening equity.
The assets noted above include items previously segmented to Central that were transferred to Vistry Group plc as part of the sale of the housebuilding
division completed on 3 January 2020, such as the £100m Private Placement notes and £12.0m in respect of two of the Group’s defined benefit
pension schemes.
109
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
10 Business combinations
On 1 July 2019, the Group’s Partnerships & Regeneration division acquired Strategic Team Group (STG) for £10.7m (of which £1.8m was deferred),
delivering a mature operating platform in Yorkshire and expanding the Group’s presence in Cheshire. STG is a well–established regional business with
120 employees and a revenue in its last full year of approximately £60m.
The acquisition was of the entire share capital and control of the holding company Strategic Team Group Limited and its trading subsidiary Strategic
Team Maintenance Company Limited. STG operates a new homes contracting business and a maintenance and minor works business. The profile and
geographical split of its order book provides an excellent strategic fit with a client base known to the Group’s Partnerships & Regeneration business
and STG is on the Homes England Delivery Partner Panel. These assets and liabilities were transferred to Vistry Group plc on 3 January 2020 as part
of the disposal of the housebuilding segments to Vistry Group plc (notes 1 & 9) and is therefore reported within discontinued operations.
The goodwill of £6.9m arising from the acquisition is attributable to the acquired workforce of STG. None of the goodwill recognised is expected to be
deductible for income tax purposes.
The following table summarises the consideration paid for STG, and the fair value of the assets acquired and liabilities assumed:
Recognised amounts of identifiable assets acquired and liabilities assumed
Net cash and cash equivalents
Property plant and equipment
Intangible assets1
Trade and other receivables
Trade and other payables
Net deferred tax liabilities2
Total identifiable net assets
Goodwill
Total
Consideration
Cash
Deferred consideration3
Total
£m
3.6
0.6
2.2
14.2
(15.8)
(1.0)
3.8
6.9
10.7
8.9
1.8
10.7
Intangible assets of £2.2m comprise customer relationships and contracts.
1
2 Deferred tax assets recognised on the acquisition relate to the fair value adjustments on acquisition.
3 Deferred cash consideration deferred until January 2020.
The Group assumed responsibility for £1.7m of guarantees and contingent liabilities in relation to performance bonds issued in the normal course of
business although these were disposed of with the housebuilding divisions (note 9).
The acquisition contributed £37.2m of revenue and £0.6m of profit before tax in the period to 31 December 2019, prior to the disposal to Vistry
Group plc. The acquisition occurred at the beginning of the financial period. Acquisition costs were expensed to the Income Statement in the year.
11 Dividends
Group
Previous year final
Current year interim
Dividend recognised in the year
£m
38.9
–
38.9
The following dividends were declared by the Company in respect of each accounting period presented:
Interim
Final
Dividend relating to the year
£m
–
–
–
2020
pence
per share
35.0
–
35.0
2020
pence
per share
–
–
–
2019
pence
per share
49.0
23.0
72.0
2019
pence
per share
23.0
35.0
58.0
£m
54.4
25.5
79.9
£m
25.5
38.9
64.4
The directors are not proposing a final dividend in respect of the financial year ended 30 June 2020 (2019: 35.0p), bringing the total dividend in respect
of 2020 to nil pence per share (2019: 58.0p).
The Company became the ultimate holding company of the Group on 3 January 2020 and paid no dividends in the year (2019: n/a).
110
Galliford Try
12 Earnings Per Share
Basic and diluted earnings/(losses) per share (EPS)
Basic EPS 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 Trust, which are treated as cancelled.
Under normal circumstances, the average number of shares is diluted by reference to the average number of potential ordinary shares held under
option in the year. The dilutive effect 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 out below.
Continuing operations
Basic EPS – pre-exceptional
Earnings attributable to ordinary shareholders
pre-exceptional items
Basic EPS
Earnings attributable to ordinary shareholders
post-exceptional items
Effect of dilutive securities:
Options
Diluted EPS – pre-exceptional
Diluted EPS
Total operations
Basic EPS – pre-exceptional
Earnings attributable to ordinary shareholders
pre-exceptional items
Basic EPS
Earnings attributable to ordinary shareholders
post-exceptional items
Effect of dilutive securities:
Options
Diluted EPS – pre-exceptional
Diluted EPS
Discontinued operations
Basic EPS – pre-exceptional
Earnings attributable to ordinary shareholders
pre-exceptional items
Basic EPS
Earnings attributable to ordinary shareholders
post-exceptional items
Effect of dilutive securities:
Options
Diluted EPS – pre-exceptional
Diluted EPS
Weighted
average
number of
shares
Earnings
£m
2020
Per share
amount
pence
Weighted
average
number of
shares
Earnings
£m
2019
Per share
amount
pence
(52.9) 110,798,602
(47.7)
(11.8) 110,704,829
(10.7)
(32.6) 110,798,602
(29.4)
(49.5) 110,704,829
(44.7)
n/a
–
(52.9) 110,798,602
(32.6) 110,798,602
n/a
(47.7)
(29.4)
n/a
94,166
(11.8) 110,798,995
(49.5) 110,798,995
n/a
(10.6)
(44.7)
300.1 110,798,602
270.9
128.1 110,704,829
115.7
320.4 110,798,602
289.2
86.9 110,704,829
78.5
n/a
–
300.1 110,798,602
320.4 110,798,602
n/a
270.9
289.2
n/a
94,166
128.1 110,798,995
86.9 110,798,995
n/a
115.6
78.4
353.0 110,798,602
318.6
139.9 110,704,829
126.4
353.0 110,798,602
318.6
136.4 110,704,829
123.2
n/a
–
353.0 110,798,602
353.0 110,798,602
n/a
318.6
318.6
n/a
94,166
139.9 110,798,995
136.4 110,798,995
n/a
126.3
123.1
111
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
13 Intangible assets
Group
Cost
At 1 July 2018 and 1 July 2019
Additions
Disposals
At 30 June 2020
Accumulated amortisation
At 1 July 2018
Amortisation in year
At 1 July 2019
Amortisation in year – continuing operations
Amortisation in year – discontinued operations
Disposals
At 30 June 2019
Net book amount
At 30 June 2020
At 30 June 2019
At 30 June 2018
Customer
contracts and
relationships
£m
Computer
software
£m
17.4
2.2
(7.4)
12.2
(7.9)
(2.4)
(10.3)
(1.2)
(0.9)
4.2
(8.2)
4.0
7.1
9.5
10.9
–
–
10.9
(5.1)
(1.1)
(6.2)
(0.9)
–
–
(7.1)
3.8
4.7
5.8
Brand
£m
10.8
–
(10.8)
–
(10.8)
–
(10.8)
–
–
10.8
–
–
–
–
Total
£m
39.1
2.2
(18.2)
23.1
(23.8)
(3.5)
(27.3)
(2.1)
(0.9)
15.0
(15.3)
7.8
11.8
15.3
All amortisation charges in the year have been included in administrative expenses. Computer software relates to the introduction of the Group’s
reporting systems. The remaining period of amortisation on computer software is three years and six months. The remaining period of amortisation
on customer contracts and relationships is four years.
Additions in the year relate to the acquisition of Strategic Teams Group (note 10) which was subsequently sold with the Housebuilding operations to
Vistry Group plc on 3 January 2020.
Disposals relate to intangible assets transferred to Vistry Group plc as part of the sale of the Group’s housebuilding divisions on 3 January 2020
(notes 1 & 9).
14 Goodwill
Group
Cost
At 30 June 2018, 1 July 2018 and 30 June 2019
Addition
Disposal
At 30 June 2020
Aggregate impairment at 30 June 2018, 1 July 2018 and 30 June 2019
Disposal
At 30 June 2020
Net book amount
At 30 June 2020
At 30 June 2019
At 30 June 2018
£m
160.3
6.9
(90.0)
77.2
(0.7)
0.7
–
77.2
159.6
159.6
The addition in the year related to the acquisition of STG (note 10) and the disposal was in respect of the sale of the Group’s housebuilding divisions to
Vistry Group plc on 3 January 2020 (notes 1 & 9).
112
Galliford Try 14 Goodwill (continued)
Goodwill is allocated to the Group’s CGUs identified according to business segment. The goodwill is attributable to the following business segments:
Linden Homes
Partnerships & Regeneration
Building
Infrastructure
2020
£m
–
–
40.0
37.2
77.2
2019
£m
52.5
29.9
40.0
37.2
159.6
Impairment review of goodwill and key assumptions
Goodwill is tested for impairment at least annually. The recoverable amount of a CGU is determined based on value in use calculations. These
calculations use pre-tax cash flow projections based on future financial budgets approved by the Board, based on past performance and its expectation
of market developments. The key assumptions within these budgets relate to revenue and the future profit margin achievable, in line with our strategy
and targets as set out in the Strategic report. Future budgeted revenue is based on management’s knowledge of actual results from prior years and
latest forecasts for the current year, along with the existing secured works and management’s expectation of the future level of work available within
the market sector. In establishing future profit margins, the margins currently being achieved are considered in conjunction with expected inflation rates
in each cost category. In Building and Infrastructure, the margins currently being achieved are expected to increase in line with the strategy set out in
the Strategic Report.
Cash is monitored very closely on a daily, weekly and monthly basis for the purposes of managing both treasury and the business as a whole. Details
of the Group’s treasury management are included within the financial review in the Strategic report of the Annual Report. The assumptions used are
reviewed regularly and differences between forecast and actual results are closely monitored with variances being investigated fully. The knowledge
gained from this past experience is used to ensure that the future assumptions used are consistent with past actual outcomes and are management’s
best estimate of the future cash flows of each business unit.
Cash flows beyond the budgeted three-year period are extrapolated using an estimated growth rate within each segment. The growth rate used is the
Group’s estimate of the average long-term growth rate for the market sectors in which the CGU operates. Furthermore, sensitivity analysis has been
undertaken on each goodwill impairment review, by changing the discount rates, profit margins, growth rates and other variables applicable to each
CGU, and the results are noted below.
The pre-tax discount rates for each CGU are noted below and the significant increase in these rates compared to the prior year reflects the change in
the Group’s capital and debt structure following the disposal of the housebuilding operations as well as reflecting the current uncertainty and risk
premium inherent in the capital markets with the ongoing Covid-19 pandemic.
The impact of Covid-19 has been reflected in the Group’s approved budgets for the next three years with budgeted operating margins updated on a
contract by contract basis to reflect new standard operating procedures and potential increased costs to reflect revised government and industry
health and safety guidelines as well as any delays to existing projects due to site curtailments or closures in early 2020.
Building CGU
A pre-tax discount rate of 14.5% (2019: 8.7%) in Building has been applied to the future cash flows, based on an estimate of the weighted average cost of
capital of that division.
A long-term growth rate of 2.0% per annum has been applied to the budgeted cash flows (reflecting the board approved budget operating margins and
working capital cashflows) into perpetuity and these assumptions result in the recoverable value of this CGU being significantly in excess of the carrying
value of the CGU assets.
The Building CGU is not sensitive to changes in key assumptions and management does not consider that any reasonable possible change in any single
assumption would give rise to an impairment of the carrying value of goodwill and intangibles.
113
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
14 Goodwill (continued)
Infrastructure CGU
A pre-tax discount rate of 14.7% (2019: 9.4%) in Infrastructure has been applied to the future cash flows, based on an estimate of the weighted average
cost of capital of that division.
A long-term growth rate of 2.0% per annum has been applied to the budgeted cash flows (reflecting the board approved budget operating margins and
working capital cashflows) into perpetuity and these assumptions result in the recoverable value of this CGU being in excess of the carrying value of the
CGU assets (by £19m).
However, the headroom resulting from the value in use calculations indicates that this CGU is sensitive to changes in the key assumptions and
management considers that a reasonably possible change in any single assumption could give rise to an impairment of the carrying value of goodwill
and intangibles.
The detailed sensitivity analysis indicates that the following changes in each of these key assumptions would result in an impairment:
Budgeted revenue annual growth rates across the three years of the budget period, range from nil to 14% at an average of 5.8%. A reduction of
this rate to 2.6% per annum would result in the headroom being eliminated.
A long term growth rate of 2.0% has been applied. Even if this was reduced to nil, the headroom would remain greater than £9m.
Gross operating margins (before divisional and central overheads and contingencies) are forecast to range from 2.3% to over 3.0% across the
three years of the budget period, at an annual average of over 3.0%. These margins would need to reduce to an average of approximately 2.5% per
annum to eliminate the headroom.
The pre-tax discount rate is 14.7% and an increase of more than 26% to 18.6% would eliminate the headroom. This increase in discount rate would
reflect an additional risk premium in respect of the current growth assumptions.
A reduction of 27% in the overall forecast operating cash flows of the CGU would eliminate the headroom.
It should be noted that a deterioration in a combination of these key assumptions (especially the WACC) could result in a larger reduction in
assessed headroom.
15 Property, plant and equipment
Group
Cost
At 1 July 2018
Additions
Disposals
At 1 July 2019
Additions
Acquisition of a subsidiary (note 10)
Disposals
At 30 June 2020
Accumulated depreciation
At 1 July 2018
Charge for the year
Disposals
At 1 July 2019
Charge for the year – continuing operations
Charge for the year – discontinued operations
Disposals
At 30 June 2020
Net book amount
At 30 June 2020
At 30 June 2019
At 30 June 2018
Land and
buildings
£m
Plant and
machinery
£m
Fixtures and
fittings
£m
3.2
–
(1.0)
2.2
0.2
–
(1.9)
0.5
(1.1)
(0.1)
0.3
(0.9)
–
(0.1)
0.7
(0.3)
0.2
1.3
2.1
7.6
2.5
(0.4)
9.7
0.5
0.1
(8.2)
2.1
(0.9)
(0.2)
0.4
(0.7)
(0.2)
(0.1)
–
(1.0)
1.1
9.0
6.7
25.3
1.2
(0.2)
26.3
0.7
0.5
(14.1)
13.4
(17.4)
(3.2)
0.2
(20.4)
(2.2)
(0.2)
11.9
(10.9)
2.5
5.9
7.9
Total
£m
36.1
3.7
(1.6)
38.2
1.4
0.6
(24.2)
16.0
(19.4)
(3.5)
0.9
(22.0)
(2.4)
(0.4)
12.6
(12.2)
3.8
16.2
16.7
There has been no impairment of property, plant and equipment during the year (2019: £nil).
Disposals relate predominantly to assets transferred to Vistry Group plc as part of the sale of the Group’s housebuilding divisions on 3 January 2020
(notes 1 & 9).
The Company has no property, plant or equipment.
114
Galliford Try 16 Leases
This note provides information for leases where the Group is a lessee.
The Company holds no leases.
Right-of-use assets
Cost
At 1 July 2019 (on transition to IFRS 16)
Additions
Disposals
At 30 June 2020
Accumulated depreciation
At 1 July 2019 (on transition to IFRS 16)
Charge for the year – continuing operations
Charge for the year – discontinued operations
Disposals
At 30 June 2020
Net book amount
At 30 June 2020
At 1 July 2019 (on transition to IFRS 16)
Land and
buildings
£m
Plant and
machinery
£m
Motor
vehicles
£m
10.7
1.8
(4.7)
7.8
–
(2.9)
(1.0)
1.8
(2.1)
11.5
5.0
(4.0)
12.5
–
(3.8)
(0.9)
0.9
(3.8)
Total
£m
42.1
7.6
(18.4)
31.3
–
(9.3)
(2.9)
3.7
(8.5)
5.7
10.7
8.7
11.5
22.8
42.1
19.9
0.8
(9.7)
11.0
–
(2.6)
(1.0)
1.0
(2.6)
8.4
19.9
Disposals relate predominantly to assets transferred to Vistry Group plc as part of the sale of the Group’s housebuilding divisions on 3 January 2020
(notes 1 & 9).
Lease liabilities
Current
Non-current
Total lease liabilities
The statement of profit or loss shows the following amounts relating to leases for continuing operations:
Depreciation of right-of-use assets
Interest expense (included in finance cost)
Expense relating to short-term leases (included in cost of goods sold and administrative expenses)
Expense relating to leases of low-value assets that are not shown above as short-term leases
(included in administrative expenses)
Total expenses
1 July 2019
(on transition)
£m
2020
£m
9.5
12.8
22.3
2020
£m
9.3
1.0
12.1
0.4
22.8
14.5
29.0
43.5
2019
£m
–
–
–
–
–
The total cash outflow for leases in the year to 30 June 2020 for continuing operations was £11.0m (of which £1.0m was included in net interest
expense – note 6).
The total of future minimum lease payments under short term and low value non-cancellable lease rentals (that are recognised as an expense over a
straight-line) are payable as follows:
Less than 1 year
Between 1 and 5 years
Total
Land and
buildings
£m
Plant and
machinery
£m
0.1
–
0.1
0.6
0.9
1.5
Total
£m
0.7
0.9
1.6
The Group has not early adopted the Amendment to IFRS 16 Covid-19 Related Rent Concessions (effective 1 June 2020). The amendment is optional
and not expected to have a material impact.
115
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
17 Investments in subsidiaries
Company
Cost
On incorporation at 19 September 20191
Additions
At 30 June
Aggregate impairment
On incorporation at 19 September 20191
Impairments
At 30 June
Net book value
At 30 June
2020
£m
–
287.7
287.7
–
(146.5)
(146.5)
141.2
1
Galliford Try Holdings plc was incorporated on 19 September 2019. On 3 January 2020 its entire share capital was admitted to the premium listing segment of the
Official List of the FCA and its trading on the main market for listed securities of the London Stock Exchange.
The addition of £287.7m above reflects the initial investment in Galliford Try Limited on 3 January 2020 as part of the scheme of arrangement and
disposal of the housebuilding divisions to Vistry Group plc (notes 1 & 9). This valuation reflected the net assets of Galliford Try Limited at that date.
However, during the remainder of the year, Galliford Try Limited paid a cash-backed distribution to the Company of £100.0m which resulted in an
equivalent reduction in the fair value of the investment. Additionally, the outbreak of the Covid-19 pandemic has also resulted in an assessed further
impairment in this investment of £46.5m, reducing the overall value of the investment to £141.2m as at 30 June 2020. This impairment has been
determined from value in use calculations based on the same assumptions as described in note 14 (goodwill).
The carrying value of investments has been reviewed and the directors are satisfied that there is no further impairment required.
The subsidiary undertakings that principally affected profits and net assets of the Group were:
Galliford Try Construction Limited
Galliford Try Infrastructure Limited1
Galliford Try Investments Limited
Galliford Try Services Limited
Galliford Try Limited2
1
2
Incorporated in Scotland.
Shares of these subsidiary companies are owned directly by the Company.
Unless otherwise stated, each subsidiary has a 30 June year end, operates as a construction company, is incorporated in England & Wales and 100% of
ordinary shares and voting rights are held by the Group. Galliford Try Services Limited operates as central administration company to the Group.
A full list of the Group’s undertakings is set out in note 41.
18 Investments in joint ventures
Group
At 1 July
Dividend received from joint ventures – continuing operations
Dividend received from joint ventures – discontinued operations
Disposals
Share of post tax (loss)/profit – continuing operations
Share of post tax profit – discontinued operations
At 30 June
2020
£m
67.0
–
(1.6)
(71.8)
(0.2)
6.8
0.2
2019
£m
49.9
(0.4)
(3.0)
–
0.4
20.1
67.0
Disposals relate predominately to those investments transferred to Vistry Group plc as part of the sale of the Group’s housebuilding divisions on
3 January 2020 (notes 1 & 9).
116
Galliford Try 18 Investments in joint ventures (continued)
Joint ventures
At 30 June 2020 the Group held interests in joint ventures, all of which are incorporated in England and Wales or in Scotland, as set out in note 41.
In relation to the Group’s interest in joint ventures, the assets, liabilities, income and expenses are shown below:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Amounts due from joint ventures
Amounts due to joint ventures
Revenue
Expenses
Finance cost
Income tax
Share of post-tax (losses)/profits from joint ventures
2020
£m
4.6
–
(4.4)
–
0.2
0.9
–
2019
£m
532.2
–
(296.6)
(168.6)
67.0
331.6
(24.8)
Continuing operations
Discontinued operations
2020
£m
23.9
(24.1)
(0.2)
–
–
(0.2)
2019
£m
23.5
(22.9)
0.6
(0.1)
(0.1)
0.4
2020
£m
100.6
(87.4)
13.2
(6.4)
(0.2)
6.6
2019
£m
233.6
(200.8)
32.8
(12.3)
(0.4)
20.1
The disclosures above exclude those material joint ventures that are separately disclosed in note 19 (PPP and other investments).
The Group’s share of unrecognised losses of joint ventures is £0.1m (2019: £37.8m, of which a net £37.7m was disposed of during the year).
As at 30 June 2020, amounts due from joint ventures of £0.9m (2019: £331.6m) were considered for impairment. The impairment reviews were
performed in accordance with IFRS 9 as described in note 1. No impairment loss has been recognised for these balances in the year ended 30 June 2020
(2019: £nil).
The Group has no commitments (2019: £nil) to provide further subordinated debt to its joint ventures.
Our share of joint ventures’ external bank funding was £nil at 30 June 2020 (2019: £19.7m). The joint ventures have no significant contingent liabilities
to which the Group is exposed (2019: £nil). The joint ventures had no capital commitments as at 30 June 2020 (2019: £nil).
19 PPP and other investments
Group
At 1 July
Effect of change in accounting policy1
Restated at 1 July
Additions
Disposals of housebuilding divisions (notes 1 & 9)
Disposals and subordinated loan repayments
Movement in fair value
At 30 June
2020
£m
41.6
–
41.6
6.6
(0.5)
(5.2)
(1.8)
40.7
2019
£m
26.8
5.5
32.3
22.7
–
(14.2)
0.8
41.6
1
The Group adopted IFRS 9 Financial Instruments on 1 July 2018 using the modified retrospective approach with the cumulative effect of initial application recognised as
an adjustment to opening equity.
These comprise PPP/PFI investments, shared equity receivables (disposed of during the year) and investments in other listed securities (acquired during
the year as a result of the shares held in the Employee Benefit Trust in Galliford Try Limited, formerly Galliford Try plc which resulted in the receipt of
shares in Vistry Group plc, held at fair value, following the sale of the housebuilding divisions to Vistry Group plc on 3 January 2020 – notes 9 & 32).
The Group’s share of post-tax profits from PPP investments was £4.6m (2019: £4.1m) but was impaired to a net balance of £nil (2019: £nil).
None of the financial assets are past their due dates (2019: £nil) and the directors expect an average maturity profile of 10 years. Further disclosures
relating to financial assets are set out in note 29.
During the year additional subordinated loans and other investments of £6.6m (2019: £22.7m) were added to the Group’s PPP/PFI investments,
subordinated loans of £2.4m (2019: £1.4m) were repaid and the Group disposed of interests held at £2.8m (2019: £12.8m), generating a profit on
disposal of £0.6m (2019: £6.9m). £0.4m relating to shared equity receivables was sold during the year as part of the disposal of the housebuilding
divisions to Vistry Group plc.
The Group has commitments of £1.9m (2019: £9.0m) to provide further subordinated debt to its investments.
117
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
19 PPP and other investments (continued)
This portfolio has been valued using a discount rate of 9.0%. This is consistent with the prior year but is towards the higher end of the range typically
experienced in the marketplace. A reduction of 1.0% would result in an increase in the fair value of approximately £3.4m.
Our share of PPP and other investments’ external bank funding was £280.0m at 30 June 2020 (2019: £296.9m). Our share of these entities’ other
external funding consists of £64.1m (2019: £68.1m) of listed bonds. These balances are non-recourse to the Group.
The information disclosed reflects the amounts presented in the financial statements or management accounts of the relevant joint ventures and
associates and not the Group’s share of those amounts. The Group holds investments in both debt and equity within a number of entities over which it
has significant influence. Predominantly all of the value that the Group recognises relates to the debt instruments which have been fair valued within
the PPP and other investments portfolio. Consequently, the material joint ventures (in which the Group also holds debt investments either directly or
indirectly) are disclosed within this note (rather than in note 18, Investments in joint ventures).
S4B (Issuer) Plc1,2
Space Scotland Limited1
Aberdeen Roads
(Finance) Plc1
Aberdeen Roads Limited
Income statement –
continuing operations
Revenue
Depreciation and amortisation
Finance income
Finance expense
Income tax expense
Profit (100%)
Other comprehensive (expense)
Total comprehensive
(expense) (100%)
Group’s share of (loss) and
total comprehensive (loss)
Dividends received by the
Group during the year
Balance sheet
Cash and cash equivalents
Other current assets
Current assets
Non-current assets
Current external borrowings –
bank/listed bonds
Other current liabilities
Current liabilities
Non-current external borrowings –
bank/listed bonds
Other non-current liabilities
Non-current liabilities
Net assets (100%)
2020
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2019
£m
–
–
2.8
(2.8)
–
–
–
–
–
–
–
–
–
53.6
(1.5)
–
(1.5)
(51.4)
(0.7)
(52.1)
–
2020
£m
1.3
2019
£m
1.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2020
£m
–
–
26.9
(26.9)
–
–
(1.5)
(1.5)
(0.5)
–
0.2
–
0.2
2019
£m
–
–
26.3
(26.3)
–
–
(1.1)
(1.1)
(0.4)
–
0.2
–
0.2
2020
£m
3.4
–
30.8
(26.9)
–
–
–
–
–
–
2019
£m
3.7
–
29.2
(26.3)
–
–
–
–
–
–
27.8
4.9
32.7
36.9
4.7
41.6
577.1
600.8
566.8
577.0
(18.2)
(4.2)
(22.4)
(502.6)
(58.2)
(560.8)
(5.9)
(17.9)
(12.5)
(30.4)
(515.6)
(59.4)
(575.0)
(4.4)
–
(22.4)
(22.4)
–
(577.1)
(577.1)
–
–
(47.8)
(47.8)
–
(570.8)
(570.8)
–
1 Material due to their holdings and/or issuing listed debt.
2
The Group disposed of its interest in S4B (Issuer) Plc during the year.
Details of related party transactions with joint ventures are given in note 36. The Group’s shareholding of each joint venture can be seen in note 41.
118
Galliford Try 20 Developments
Group
Land
Work in progress
Movement on development provisions
Balance at 1 July
Reversed in the year
Disposal
Balance at 30 June
20201
£m
–
–
–
2020
£m
1.5
–
(1.5)
–
2019
£m
552.9
323.8
876.7
2019
£m
1.9
(0.4)
–
1.5
1
All the development land and work in progress were transferred to Vistry Group plc as part of the sale of the Group’s housebuilding divisions on 3 January 2020
(notes 1 & 9).
21 Trade and other receivables
Amounts falling due within one year:
Trade receivables
Less: provision for impairment of receivables
Trade receivables – net
Contract assets1
Amounts due from joint ventures
Other receivables
Prepayments
Notes
2020
£m
49.4
(1.6)
47.8
27
172.0
0.9
9.8
17.0
247.5
Group
2019
(restated)
£m
Company
2020
£m
2019
£m
169.6
(0.4)
169.2
332.8
93.5
4.9
73.9
674.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
Contract assets of £172.0m at 30 June 2020 includes a life-time expected credit loss allowance of £14.0m (2019: £14.0m). The contract asset as at 30 June 2019 has
been restated (notes 1 & 40).
Retentions will be collected in the normal operating cycle of the Group and are therefore shown in current receivables.
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 and variations after our work on
these contracts formally ceased on their termination in August 2018. 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 Group is currently proceeding through arbitration in respect of the
claims and variations in line with the expected timeframe. The arbitration commenced in the second half of 2019 and the panel has now been appointed,
terms of reference agreed, and the Statement of Case was submitted in the year.
Taking into account the requirements of IFRS 15, in prior periods the Group had constrained the revenue recognised (and therefore the associated
contract receivable carried) 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 £95m (2019: £54m) 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. 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. At 30 June 2019 and 30 June
2020, our assessment of the credit worthiness of the underlying contracting entities includes a review of their latest audited financial statements to
31 December 2018 as well as their immediate parent and investor (for whom the latest audited financial statements are for the year to 31 December
2019), 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 year to 30 June 2020 and consequently, there
has been no change to our expectations about the probability weighted outcomes in the IFRS 9 assessment from the prior year. The expected credit
loss provision for this contract (amongst our overall portfolio of contracts) is discussed further in note 1 Critical accounting estimates and judgments.
The counterparty has made counterclaims during the financial year that we consider are without merit. We intend to defend these vigorously,
and no amounts have been provided on the basis the Group considers the possibility of an outflow of resources to be remote.
It should be noted that while the final value recovered could be materially higher or lower than that assumed by the Group, the Group has constrained
the revenue to an amount that is highly probable will not reverse.
119
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
21 Trade and other receivables (continued)
Amounts falling due in more than one year:
Amounts due from joint ventures
Other receivables
These balances were part of the housebuilding divisions sold to Vistry Group plc in the year (notes 1 & 9).
Movements on the Group provision for impairment of trade receivable were as follows:
At 1 July
(Increase) in provision for receivables impairment
At 30 June
2020
£m
2019
£m
2020
£m
2019
£m
–
–
–
238.1
0.3
238.4
–
–
–
2020
£m
(0.4)
(1.2)
(1.6)
–
–
–
2019
£m
(0.1)
(0.3)
(0.4)
Provisions for impaired receivables have been included in cost of sales in the income statement. Amounts charged to the impairment provision are
generally written off, when there is no expectation of recovering additional cash.
Provisions for amounts due from joint venture undertakings are set out in note 18. The other classes within trade and other receivables do not contain
impaired assets.
The maximum exposure to credit risk at the reporting date is the book value of each class of receivable mentioned above, along with the Group’s
investment in shared equity receivables (note 19) and its cash and cash equivalents. The Group does not hold any collateral as security.
Management believes that the concentration of credit risk with respect to trade receivables is limited due to the Group’s customer base being large,
unrelated and predominantly within the public sector. Major water industry customers accounted for in total 9% (2019: 4%) of Group revenue in the
year. However, the customers involved comprise a variety of entities including those both in the public and commercial sectors. In addition, within the
commercial sector each customer has an unrelated ultimate parent company.
The maturity of non-current receivables is as follows:
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
2020
£m
–
–
–
–
2019
£m
67.9
91.9
78.6
238.4
As of 30 June 2020, trade receivables of £20.9m (2019: £80.6m) were past due but not impaired.
These relate to a number of independent customers for whom there is no recent history of default and there are no indications that they will not meet
their payment obligations in respect of the trade receivables recognised in the balance sheet that are past due and unprovided. The ageing analysis of
these trade receivables is as follows:
Number of days past due date
Less than 30 days
Between 30 and 60 days
Between 60 and 90 days
Between 90 and 120 days
Greater than 120 days
2020
£m
2019
£m
4.2
1.2
3.1
0.8
11.6
20.9
51.4
8.3
2.6
6.6
11.7
80.6
As of 30 June 2020, trade receivables were considered for impairment based on management’s judgment and review of the trade receivables listings.
The amount provided for these balances was £1.6m (2019: £0.4m). The allocation of the provision is as follows:
Number of days past due date:
Greater than 120 days
120
2020
£m
2019
£m
1.6
1.6
0.4
0.4
Galliford Try 22 Cash and cash equivalents
Cash at bank and in hand
2020
£m
197.2
Group
2019
£m
591.2
2020
£m
100.0
Company
2019
£m
–
Cash at bank above includes £nil (2019: £nil) of restricted cash. The effective interest rate received on cash balances is 0.6% (2019: 0.4%).
Group
Net cash/(debt)
Cash and cash equivalents excluding bank overdrafts
Current borrowings – bank overdrafts (note 25)
Cash and cash equivalents per the statements of cashflows
Current borrowings – bank loans1 (note 25)
Non-current borrowings – debt private placement1 (note 25)
Net cash/(debt)
2020
£m
2019
£m
197.2
–
197.2
–
–
591.2
(449.6)
141.6
(98.2)
(100.0)
197.2
(56.6)
1
On completion of the disposal of Group’s housebuilding divisions on 3 January 2020, the Company received £300m of cash, transferred the £100m debt private
placement 10-year sterling notes to Vistry Group plc and received a further working capital cash adjustment. This has resulted in the Group holding a net cash position at
all times since the transaction.
Net cash excludes IFRS 16 lease liabilities (note 16).
It should be noted that cash and cash equivalents and bank overdrafts are presented on a net (offset) basis in the current year whereas they were
presented on a gross basis in the prior year. In 2016, the IFRS Interpretations Committee released an update in respect of IAS 32 ‘Financial instruments:
presentation’ specifically in relation to offsetting and cash pooling. This clarified that in order to offset bank account balances, an entity must have
both a legally enforceable right and an intention to do so. The Group’s bank arrangements and facilities with both HSBC Bank plc and Barclays Bank plc
provide the legally enforceable right to offset and in the current year, the Group demonstrated its intention to offset by formally sweeping the balances.
Consequently, the balances have been offset in the financial statements in 2020.
23 Trade and other payables
Trade payables
Development land payables
Contract liabilities
Amounts due to joint ventures
Other taxation and social security payable
Other payables
Accruals
Notes
27
Group
2019
(restated)
£m
284.9
150.5
237.9
24.8
11.1
25.0
528.3
1,262.5
2020
£m
108.1
–
112.3
–
18.6
1.2
218.6
458.8
Company
2020
£m
2019
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Developments of £nil (2018: £67.1m) have been pledged as security for current and non-current development land payables. Other payables are unsecured.
Retentions will be paid in the normal operating cycle of the Group and are therefore shown in current payables.
24 Provisions for other liabilities and charges
Group
At 1 July 2019
Created in the year
Utilised in the year
At 30 June 2020
Analysis of total provisions
Current
Non-current
At 30 June 2020
The provision created in the year results from the working capital adjustment provisionally agreed in respect of the disposal of the housebuilding
divisions (note 9).
Total
£m
0.8
23.7
(0.5)
24.0
13.9
10.1
24.0
121
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
25 Financial liabilities – borrowings
Current
Bank overdrafts
Bank loans
Non-current
Debt private placement
20201
£m
–
–
–
–
–
Group
2019
£m
449.6
98.2
547.8
100.0
100.0
Company
2019
£m
20201
£m
–
–
–
–
–
–
–
–
–
–
1
On completion of the disposal of Group’s housebuilding divisions on 3 January 2020, the Company received £300m of cash, transferred the £100m debt private
placement 10-year sterling notes to Vistry Group plc and received a further working capital cash adjustment. This has resulted in the Group holding a net cash position at
all times since the transaction. Prior to this, the bank loans and overdrafts were unsecured, and incurred interest at a rate of 2.0%-2.3% (2019: 2.0%-2.3%) over LIBOR.
The bank loans were classified as non-current as the Group expected to, and had the discretion to roll over the obligations under the facility agreement.
During the year (prior to the disposal of the housebuilding divisions), further loans of £120m were drawn down from the Group’s revolving credit facility
and the drawn balance of £220m was repaid on completion of the disposal on 3 January 2020.
The debt private placement of £100m 10-year Sterling notes, at a fixed rate of 4.03% was completed in February 2018 and were issued in a bilateral
deal with Pricoa in London. These notes were transferred to Vistry Group plc on 3 January 2020 as part of the disposal of the housebuilding division to
Vistry Group plc (notes 1 & 9).
26 Other non-current liabilities
Development land payables
Contract liabilities
Accruals
2020
£m
–
–
–
–
Group
2019
£m
66.4
26.1
10.5
103.0
Company
2019
£m
2020
£m
–
–
–
–
–
–
–
–
Developments of £nil (2019: £67.1m) have been pledged as security for current and non-current development land payables. Other payables
are unsecured.
The maturity profile of the anticipated undiscounted future cash flows of non-derivative financial liabilities based on the earliest date on which the
Group can be required to pay financial liabilities on an undiscounted basis, is as follows:
Within one year
30 June 2020
Financial liabilities at amortised cost
Development
land
payables
£m
Amounts due
to joint
venture
undertakings
£m
Other
financial
liabilities at
amortised
cost
£m
–
–
–
–
327.9
327.9
Total
£m
327.9
327.9
Financial liabilities at amortised cost
Development
land
payables
£m
Amounts due
to joint
venture
undertakings
£m
Other
financial
liabilities at
amortised
cost
£m
838.2
10.5
–
Total
£m
1,013.5
49.2
27.7
24.8
–
–
24.8
848.7
1,090.4
Within one year
More than one year and less than two years
More than two years
30 June 2019
150.5
38.7
27.7
216.9
122
Galliford Try 27 Contract balances
Contract assets and liabilities are included within “trade and other receivables” and “trade and other payables” respectively on the face of the
balance sheet. Where there is a corresponding contract asset and liability in relation to the same contract, the balance shown is the net position.
The timing of work performed (and thus revenue recognised), billing profiles and cash collection results in trade receivables (amounts billed to date
and unpaid), contract assets (unbilled amounts where revenue has been recognised) and customer advances and deposits (contract liabilities),
where no corresponding work has yet to be performed, being recognised on the Group’s balance sheet.
The reconciliation of the opening to closing contract balances is shown below:
At 30 June 2019 as reported
Restatement (note 40)
At 30 June 2019 as restated
Balances removed due to business disposals1
Revenue recognised in the year (continuing operations)2
Net cash received in advance of performance obligations being fully satisfied
Transfers in the period from contract assets to trade receivables
Contract
asset
£m
412.8
(80.0)
332.8
(68.3)
1,051.3
–
(1,143.8)
Group
Contract
liability
£m
(254.6)
(9.4)
(264.0)
127.6
70.3
(46.2)
–
30 June 2020
172.0
(112.3)
Contract
asset
£m
Company
Contract
liability
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Disposal of housebuilding divisions (note 9). The balances reflect those as at 30 June 2019.
2
Of the revenue recognised, £32.0m is in respect of the final agreement for AWPR. The revenue was previously constrained due to uncertainty of the ongoing negotiation
as at 30 June 2019.
Revenue allocated to performance obligations that are unsatisfied at 30 June, are expected to be recognised as disclosed in note 3.
28 Deferred income tax
Deferred income tax is calculated in full on temporary differences under the liability method, using a tax rate of 19.0% (2019: 19.0%).
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income
tax liabilities. The net deferred tax position at 30 June was:
Deferred income tax assets – non-current
Deferred income tax assets
Deferred income tax liabilities – non-current
Deferred income tax liabilities
2020
£m
5.3
5.3
(1.0)
(1.0)
Group
2019
£m
5.7
5.7
(4.4)
(4.4)
Net deferred income tax
4.3
1.3
Company
2019
£m
2020
£m
–
–
–
–
–
–
–
–
–
–
123
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
28 Deferred income tax (continued)
The movement for the year in the net deferred income tax account is as shown below:
At 30 June
Effect of transition to IFRS 9 and IFRS 15
Restated at 1 July
Current year’s deferred income tax – continuing operations
Current year’s deferred income tax – discontinued operations
Adjustment in respect of prior years – continuing operations
Adjustment in respect of prior years – discontinued operations
(Expense) recognised in equity – continuing operations
(Expense) recognised in equity – discontinued operations
Acquisition of subsidiaries1
Disposal of subsidiaries2
At 30 June
1 Acquisition of STG – note 10.
2 Disposal of housebuilding divisions on 3 January 2020.
2020
£m
1.3
–
1.3
(0.3)
0.3
3.4
(0.1)
–
(0.1)
(1.0)
0.8
4.3
Group
2019
£m
(0.7)
8.8
8.1
(6.6)
–
(0.1)
–
(0.1)
–
–
–
1.3
Company
2019
£m
2020
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Deferred income tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred income tax assets,
as it is probable that these assets will be recovered.
Movements in deferred income tax assets and liabilities during the year are shown below:
Deferred income tax assets
Accelerated
tax
depreciation
and other
£m
Share-based
payments
£m
Interest
provisions &
intangible
assets
acquired
£m
0.1
8.8
8.9
(6.7)
(0.1)
–
2.1
(0.1)
(0.5)
0.8
(0.1)
(0.1)
(0.1)
–
3.3
5.3
0.5
–
0.5
(0.1)
–
–
0.4
(0.4)
–
–
–
–
–
–
–
–
3.0
–
3.0
0.3
–
(0.1)
3.2
0.2
–
–
–
–
–
0.8
(4.2)
–
Total
£m
3.6
8.8
12.4
(6.5)
(0.1)
(0.1)
5.7
(0.3)
(0.5)
0.8
(0.1)
(0.1)
(0.1)
0.8
(0.9)
5.3
Group
At 30 June 2018
Effect of transition to IFRS 9 and IFRS 15
Restated as at 1 July 2018
Income/(expense) taken to income statement
Transfer from deferred income tax liabilities
(Expense) recognised in equity
At 30 June 2019
(Expense)/income taken to income statement – continuing operations
(Expense) taken to income statement – discontinued operations
Adjustment in respect of prior years – continuing operations
Adjustment in respect of prior years – discontinued operations
(Expense) recognised in equity – discontinued operations
Transfer from deferred income tax liabilities
Transfer to deferred income tax liabilities
Disposal of subsidiaries
At 30 June 2020
Disposals related to the housebuilding divisions (note 9).
124
Galliford Try 28 Deferred income tax (continued)
Deferred income tax liabilities
Group
At 1 July 2018
Income taken to income statement
Transfer from deferred income tax assets
At 30 June 2019
Income taken to income statement – discontinued operations
Income taken to the income statement – continuing operations
Transfer from deferred income tax assets
Transfer to deferred income tax assets
Disposal of subsidiaries
At 30 June 2020
Disposals related to the housebuilding divisions (note 9).
Accelerated
tax
depreciation
£m
Fair value
adjustments
£m
Retirement
benefit
obligations
£m
Intangible
assets
acquired
£m
–
(0.2)
0.1
(0.1)
–
–
–
0.1
–
–
(3.0)
(1.3)
–
–
(3.0)
–
2.6
–
–
0.4
–
–
–
(1.3)
0.8
–
–
–
0.3
(0.2)
–
–
–
–
–
–
(0.8)
–
–
(0.8)
Total
£m
(4.3)
(0.2)
0.1
(4.4)
0.8
2.6
(0.8)
0.1
0.7
(1.0)
29 Financial instruments
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit
risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group’s financial performance. Financial assets and liabilities are offset and the net amount reported when there
is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the
liability simultaneously.
The Group and Company operate within financial risk policies and procedures approved by the Board. It is, and has been throughout the year,
the Group’s policy that no trading in financial instruments shall be undertaken. The Board provides written principles for overall risk management,
as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments
and non-derivative financial instruments, and investment of excess liquidity. The Group’s and Company’s financial instruments principally comprise
bank borrowings, cash and cash equivalents, receivables and payables, PPP and other investments and interest rate swaps that arise directly from its
operations and its acquisitions.
Capital risk management
The Group is funded by ordinary shares, retained profits and its strong net cash position following the disposal of the Linden Homes and Partnerships &
Regeneration divisions. Previously the Group also operated a single bank facility and had completed a debt private placement of £100m 10-year Sterling
notes to supplement its bank facilities. The Group’s and Company’s objectives when managing capital are to safeguard the Group’s ability to continue as
a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce
the cost of capital. Following the disposal of the Linden Homes and Partnerships & Regeneration divisions the capital requirements of the Group are
focussed on the requirements of Construction.
Consistent with others in the industry, prior to the disposal of its housebuilding operations the Group monitored capital on the basis of the gearing ratio.
This ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including current and non-current borrowings
as shown in the consolidated balance sheet) less cash and cash equivalents. The Group held net cash at 30 June 2020 following the disposal of the
Linden Homes and Partnerships & Regeneration divisions but held net debt at 30 June 2019 and therefore had gearing of nil% in 2020 and 8% in 2019.
Previously, the Group had capital requirements in the covenants in its bank facilities. These facilities have now been transferred out of the Group and
the gearing ratio is no longer applicable.
125
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
29 Financial instruments (continued)
Financial risk factors
(a) Market risk
(i) Foreign exchange risk
All material activities of the Group take place within the UK and consequently there is little direct exchange risk other than payments to overseas
suppliers who require settlement in their currency. If there is any material foreign exchange exposure, the Group’s policy is to enter into forward
foreign currency contracts. The Group and Company have no material currency exposure at 30 June 2020 (2019: nil).
(ii) Price risk
The Group has no quoted investments that are exposed to equity securities price risk. The Group and Company are not exposed to commodity
price risk.
(iii) Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market interest rates.
The Group’s interest rate risk arises from movement in cash and cash equivalents. Following the disposal of the Linden Homes and Partnerships &
Regeneration divisions on 3 January 2020 the Group’s exposure to interest rate risk is reduced given that it is well capitalised with no debt or net
overdraft facilities.
(b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments, deposits and borrowings
with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables (including shared equity receivables)
and committed transactions. The Group no longer holds any debt facilities. Further details of credit risk relating to trade and other receivables
are disclosed in note 21. No credit limits were exceeded during the reporting period, and management does not expect any material losses from
non-performance of any counterparties, including in respect of receivables not yet due.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. Following the disposal of the Linden Homes and
Partnerships & Regeneration divisions on 3 January 2020, the Group finances its operations through its cash reserves and ongoing retained profits.
Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flow. This is generally carried out at local level
in the operating companies of the Group, in accordance with practices and limits set by the Group. These limits vary by location to take into account
the liquidity of the market in which the entity operates. On a daily basis throughout the year, the bank balances or gross overdrafts in all the Group’s
operating companies are aggregated into a total cash figure, in order that the Group can obtain the most advantageous interest rate.
In accordance with IFRS 9 ‘Financial Instruments’, the Group has reviewed all contracts for embedded derivatives that are required to be separately
accounted for if they do not meet certain requirements set out in the standard. No such embedded derivatives have been identified.
Financial liabilities – derivative financial liabilities
The fair value of interest rate swaps is detailed below:
Group
At 30 June
Non-current liabilities
Company
At 30 June
Non-current liabilities
2020
£m
–
2020
£m
2019
£m
(0.4)
2019
£m
–
–
During the year ended 30 June 2015 the Group entered into a five-year interest rate swap contract that expired in February 2020. The notional
principal amount of the outstanding interest rate swap contract at 30 June 2020 was £nil with the swap contract cancelled at the time of the disposal
of the Group’s housebuilding divisions to Vistry Group plc on 3 January 2020 (2019: £100m) and the fixed interest rate is in the prior year was 1.4%.
This swap was designated as a cash flow hedge and changes in fair value are recognised directly in reserves. A profit of £0.5m was recognised in other
comprehensive income in the prior year. Gains and losses recognised in reserves were released to the income statement within finance costs over the
period to maturity of the contract, and a loss of £0.4m was recognised in the prior year. At 30 June 2020 the Group had no derivative financial liabilities.
Fair values of non-derivative financial assets and financial liabilities
Where market values are not available, fair values of financial assets and financial liabilities have been calculated by discounting expected future cash
flows at the prevailing interest rate.
Fair value of current and non-current borrowings
Current borrowings
Non-current borrowings
2020
2019
Book value
£m
Fair value
£m
Book value
£m
Fair value
£m
–
–
–
–
98.2
100.0
102.9
100.0
Notes
25
25
126
Galliford Try 29 Financial instruments (continued)
Fair value of other financial assets and financial liabilities
Primary financial instruments held or issued to finance the Group’s operations:
Financial liabilities:
Current borrowings
Current financial liabilities measured at amortised cost
Non-current financial liabilities measured at amortised cost
Financial assets:
PPP and other investments
Current assets measured at amortised cost
Non-current assets measured at amortised cost
Cash and cash equivalents
2020
2019 (restated)
Notes
Book value
£m
Fair value
£m
Book value
£m
Fair value
£m
25
23
26
19
21
21
22
–
327.9
–
40.7
230.5
–
197.2
–
327.9
–
40.7
230.5
–
197.2
–
–
1,013.5
1,013.5
103.0
103.0
41.6
600.4
238.4
141.6
41.6
600.4
238.4
141.6
Prepayments and accrued income are excluded from the loans and receivables balance; and statutory liabilities, deferred income and payments
received on account on construction contracts are excluded from financial liabilities measured at amortised cost. A maturity analysis of the Group’s
non-derivative financial liabilities is given in note 26.
There is no difference between the book value and the fair value of the Company’s other financial assets and financial liabilities.
Borrowing facilities
The Group had no committed borrowing facilities available at 30 June 2020. The undrawn committed borrowing facilities available at 30 June in the
prior year were as follows:
Expiring:
In more than two years
2020
Floating rate
£m
2019
Floating rate
£m
–
–
347.2
347.2
In February 2014 the Group agreed a five-year £400m unsecured revolving credit facility with HSBC Bank plc, Santander UK plc, Barclays Bank plc and
The Royal Bank of Scotland plc. In February 2015, the Group agreed a one-year extension on the facility, to 2020, and in March 2016 agreed an increase
in the facility to £450m. In December 2016, the Group agreed a further two-year extension to February 2022. This facility was repaid and cancelled on
3 January 2020 as a result of the disposal of the housebuilding division to Vistry Group plc (notes 1 & 9).
In February 2017 the Group completed a debt private placement of £100m 10-year Sterling notes, maturing in February 2027. These notes were
transferred to Vistry Group plc on 3 January 2020 as part of the disposal of the housebuilding division to Vistry Group plc (notes 1 & 9).
127
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
29 Financial instruments (continued)
Fair value estimation
Specific valuation techniques used to value financial instruments are defined as:
Level 1 – Quoted market prices or dealer quotes in active markets for similar instruments.
Level 2 – The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows, based on observable yield curves.
Level 3 – Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments. The fair
value of other investments is set out in note 19.
The following table presents the Group’s assets and liabilities that are measured at fair value at 30 June:
Assets
Available for sale financial assets
– PPP and other investments
Total
Liabilities
Liabilities at fair value through income statement
– Derivatives used for hedging
There we no transfers between levels during the period.
–
–
–
Level 2
£m
Level 3
£m
40.7
40.7
2020
Total
£m
40.7
40.7
Level 2
£m
Level 3
£m
–
–
41.6
41.6
2019
Total
£m
41.6
41.6
–
–
(0.4)
–
(0.4)
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using
valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on
entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or
more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
Fair value measurements using significant unobservable inputs (Level 3)
Opening balance
Effect of change in accounting policy1
Restated at 1 July
Additions
Movement in fair value
Disposal of housebuilding divisions (notes 1 & 9)
Disposals and subordinated loan repayments
Closing balance
2020
41.6
–
41.6
6.6
(1.8)
(0.5)
(5.2)
40.7
2019
0.7
31.6
32.3
22.7
0.8
–
(14.2)
41.6
1
The Group adopted IFRS 9 Financial Instruments on 1 July 2018 using the modified retrospective approach with the cumulative effect of initial application recognised as
an adjustment to opening equity (note 1).
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. The discount rate of 9.0% used to compute the fair value is based on current market
conditions. The sensitivity to discount rates is set out in note 19. If receipts were to occur earlier than expected, the fair value would increase.
128
Galliford Try 30 Ordinary shares and share premium
Group
At 1 July 2018
Allotted under share option schemes
At 1 July 2019
Allotted under share option schemes
Capital reorganisation1
At 30 June 2020
Company
On incorporation on 19 September 2019
Issue of shares on incorporation
Capital reorganisation
At 30 June 2020
Number of
shares
111,028,162
4,455
111,032,617
20,872
–
Ordinary
shares
£m
Share
premium
£m
55.5
–
55.5
–
–
197.6
0.1
197.7
–
(197.7)
–
111,053,489
55.5
Number of
shares
Ordinary
shares
£m
Share
premium
£m
–
2
111,053,487
111,053,489
–
–
55.5
55.5
–
–
–
–
Total
£m
253.1
0.1
253.2
–
(197.7)
55.5
Total
£m
–
–
55.5
55.5
Number of shares refers to 50p ordinary shares, which are authorised, issued and fully paid. There are no shares authorised and issued but not
fully paid.
1
Following the disposal of the Linden Homes and Partnerships & Regeneration divisions of Galliford Try Limited (formerly Galliford Try plc), effective from 3 January
2020, the entire issued share capital of Galliford Try Holdings plc, was admitted to the premium listing segment of the Official List of the FCA and to trading on the
main market for listed securities of the London Stock Exchange with a corresponding cancellation of all shares of Galliford Try Limited (formerly Galliford Try plc).
At 30 June 2020 the total number of shares outstanding under the SAYE share option scheme was nil (2019: 1,606,224) and under the LTIPs was
2,248,829 (2019: 1,087,808) as detailed in the note below.
31 Share-based payments
The Company operates performance-related share incentive plans for Executives, details of which are set out in the Directors’ remuneration report.
The Company also operates sharesave schemes although there are no live grants as at 30 June 2020. The total charge for the year relating to employee
share-based payment plans was £nil (2019: £0.9m), all of which related to equity-settled share-based payment transactions. After deferred tax,
the total charge was £nil (2019: £0.8m).
Following the disposal of the housebuilding operations to Vistry Group plc on 3 January 2020 (notes 1 & 9) and the associated scheme of arrangement
resulting in Galliford Try Holdings plc becoming the ultimate holding company of the Galliford Try Group, all existing savings related share options
and performance-related long-term incentive plans vested or expired. Following the completion of the transaction, a new performance-related
long-term incentive plan was established and 2.2m options were granted to the members of the Executive Board. As at 30 June 2020, these are
therefore the sole in-flight share options.
Savings related share options
The Company operates an HMRC approved sharesave scheme under which employees are granted an option to purchase ordinary shares in the
Company at up to 20% less than the market price at grant, in either three or five years’ time, dependent on their entering into a contract to make
monthly contributions into a savings account over the relevant period. These funds are used to fund the option exercise. This scheme is open to all
employees meeting the minimum employment period. No performance criteria are applied to the exercise of sharesave options. There are no live
grants as at 30 June 2020.
A reconciliation of savings related share awards over the year to 30 June 2020 is shown below:
2020
Weighted
average
exercise price
Number
2019
Weighted
average
exercise price
Number
Outstanding at 1 July
Awards
Forfeited
Cancelled
Expired
Exercised
Outstanding at 30 June
Exercisable at 30 June
1,606,224
908p
1,416,686
–
–
820,542
(30,420)
(164,538)
(1,390,394)
(20,872)
–
–
867p
879p
913p
868p
–
–
(57,318)
(526,523)
(42,708)
(4,455)
1,606,224
966p
823p
931p
926p
956p
862p
908p
–
–
The weighted average fair value of awards granted during the year was nil (2019: 76p). There were 20,872 share options exercised during the year
ended 30 June 2020 (2019: 4,455) and the weighted average share price at the date of exercise was 868p (2019: 863p). The weighted average
remaining contractual life is nil (2019: two years and four months).
129
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
31 Share-based payments (continued)
Performance-related long-term incentive plans
The Company operates performance-related share incentive plans for Executives, details of which are set out in the Directors’ remuneration report.
The awards that vest are satisfied by the transfer of shares for no consideration.
The outstanding options were valued using a Black-Scholes model. The fair value per option granted and the assumptions used in the calculation are
as follows:
Grant date
13.03.20
Shares under
option
Share price at
grant date
Vesting
period/option
life (months)
Risk free
rate
Dividend
yield
Fair value
per option
2,248,829
123p
36
0.3%
3.1%
0p1
1
The assessment of the non-market conditions associated with this grant resulted in the fair value recognised being nil.
The expected volatility is based on historical volatility in the movement in the share price of the Company and its comparator group and the correlations
between them over the last three years. The expected life is the average expected period to exercise. The risk free rate is the yield on zero-coupon UK
Government bonds of a term consistent with the assumed option life. A reconciliation of performance-related share awards over the year to 30 June is
shown below:
Outstanding at 1 July
Granted
Expired
Forfeited
Exercised
Outstanding at 30 June
Exercisable at 30 June
2020
Number
2019
Number
1,087,808
994,630
2,248,829
627,012
(1,052,695)
(158,378)
–
(292,045)
(35,113)
(83,411)
2,248,829
1,087,808
–
–
The weighted average fair value of awards granted during the year was 0p (2019: 0p). There were 35,113 options exercised during the year ended
30 June 2020 (2018: 83,411). The weighted average remaining contractual life is nil as the shares are exercised on the day that they vest (2018: nil).
130
Galliford Try 32 Other reserves and retained earnings
Group
At 30 June 2018 (as originally reported)
Restatement
Restated at 1 July 2018
Adjustment as a result of transition to IFRS 9 and IFRS 15 on 1 July 2018 (restated)
Adjusted at 1 July 2018
Profit for the year
Movement in fair value of PPP and other investments – continuing operations
Deferred and current tax on movements in equity – continuing operations
Actuarial losses recognised related to retirement benefit obligations – discontinued operations
Deferred and current tax on movements in equity – discontinued operations
Movement in fair value of derivative financial instruments – discontinued operations
Dividends paid
Share-based payments
Restated at 30 June 2019
Notes
40
19
28
11
31
Adjustment as a result of transition to IFRS 16 on 1 July 2019
1, 16 & 39
Restated at 1 July 2019
Profit for the year
Dividends paid
Actuarial gains recognised related to retirement benefit obligations – discontinued operations
Share-based payments – continuing and discontinued operations
Movement in fair value of PPP and other investments
Movement in fair value of derivative financial instruments
Deferred and current tax on movements in equity
Capital reorganisation1
Disposal of housebuilding divisions to Vistry Group plc
11
31
19
28
1 & 9
1 & 9
Other
reserves
£m
Retained
earnings
£m
4.8
–
4.8
–
4.8
–
–
–
–
–
–
–
–
4.8
–
4.8
–
–
–
–
–
–
–
518.6
(94.3)
424.3
(10.4)
413.9
86.9
0.8
(0.1)
(2.4)
0.7
0.5
(79.9)
0.9
421.3
(1.0)
420.3
320.4
(38.9)
2.0
0.2
(1.8)
0.4
(0.1)
227.4
–
(29.7)
(840.0)
Impairment of investment in Galliford Try Limited and associated recycling of merger reserve to
retained earnings
At 30 June 2020
17
(146.5)
146.5
85.7
(20.7)
The Group’s other reserves relates to a merger reserve amounting to £85.7m (2019: £4.7m) and the movement on PPP and other investments
amounting to £nil (2019: £0.1m).
Company
On incorporation at 19 September 2019
Creation of merger reserve and other reserve on acquisition of Galliford Try Limited
Impairment of investment in Galliford Try Limited and associated recycling of merger reserve to
retained earnings
Loss for the period
At 30 June 2020
Notes
Other
reserves
£m
–
232.2
17
(146.5)
–
85.7
Retained
earnings
£m
–
–
146.5
(46.5)
100.0
1
Following the disposal of the housebuilding divisions of Galliford Try Limited (formerly Galliford Try plc), effective from 3 January 2020, the entire issued share capital
of Galliford Try Holdings plc, was admitted to the premium listing segment of the Official List of the FCA and to trading on the main market for listed securities of the
London Stock Exchange with a corresponding cancellation of all shares of Galliford Try Limited (formerly Galliford Try plc).
131
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
32 Reserves (continued)
The cumulative amount of goodwill arising on acquisition and written off directly against reserves is £9.5m (2018: £9.5m).
At 30 June 2020, the Galliford Try Employee Share Trust (the Trust) held 221,603 (2019: 283,577) shares. The nominal value of the shares held is
£0.1m (2019: £0.1m). No shares were acquired during the year (2019: nil) at a cost of £nil (2019: £nil) and a further £nil (2019: £nil) was paid in relation
to other share related transactions. 61,974 (2019: 95,959) shares were transferred during the year. The cost of funding and administering the Trust
is charged to the income statement of the Company in the period to which it relates. The market value of the shares at 30 June 2020 was £0.3m
(2019: £1.8m). No shareholders (2019: none) have waived their rights to dividends.
As part of and as a result of the disposal of the housebuilding operations to Vistry Group plc on 3 January 2020 and the associated scheme of
arrangement completed under Part 26 of the Companies Act 2006, the number of shares held in Galliford Try Limited (formerly Galliford Try plc)
as at 3 January 2020 (221,603) were exchanged for an equivalent number of shares in Galliford Try Holdings plc and 127,189 shares in Vistry Group
plc (at a rate of 0.57406 Vistry Group plc shares for each Galliford Try Limited share). As the Group is not a strategic investor and does not wish to
formally trade in external shares (ie the shares held in Vistry Group plc), they are being sold in three tranches, with the first two tranches of a total of
84,792 shares sold for £1.1m cash with a residual 42,397 shares held by the Group at 30 June 2020. These shares are recorded at fair value with the
movement being reflected in profit or loss.
33 Retirement benefit assets
All employees are entitled to join the Galliford Try Pension Scheme, a defined contribution scheme established as a stakeholder plan, with a company
contribution based on a scale dependent on the employee’s age and the amount they choose to contribute. Since 1 July 2013 all non-participating
and newly-employed staff have been auto-enrolled into the separate stakeholder plan and are entitled to increase their contribution rates in line with
existing members. Since 1 April 2009, the Group has operated a pension salary sacrifice scheme which means that all employee pension contributions
are paid as employer contributions on their behalf.
Pension costs for the schemes were as follows:
Defined benefit schemes – expense recognised in the income statement
Defined contribution schemes
Total included within employee benefit expenses (note 5)
2020
£m
–
15.5
15.5
2019
£m
–
15.2
15.2
Of the total charge for all schemes £8.2m (2019: £7.3m) and £7.3m (2019: £7.9m) were included, respectively, within cost of sales and administrative
expenses. £nil (2019: nil) was included within net finance costs.
Defined benefit schemes
Historically, the Group has also operated three defined benefit pension schemes under the UK regulatory framework that pay out pensions at
retirement based on service and final pay, each with assets held in separate trustee administered funds: the Galliford Try Final Salary Pension
Scheme, the Galliford Group Special Scheme and the Kendall Cross (Holdings) Ltd Assurance & Pension Scheme.
The prior year balance sheet (for 2019) includes all three of these schemes. However, the Group’s two principal funded defined benefit pension
schemes (being the Galliford Try Final Salary Pension Scheme and the Kendall Cross (Holdings) Ltd Assurance & Pension Scheme) were transferred
to Vistry Group plc as part of the disposal of the Linden Homes and Partnerships & Regeneration divisions to Vistry Group plc on 3 January 2020
(see notes 1 & 9).
The most recent actuarial valuation of the remaining Galliford Group Special Scheme was prepared using the defined accrued benefit method as at
1 April 2016. No further contributions are expected to be required for this Scheme and in July 2018, an insurance bulk annuity buyout transaction was
completed for £7m, securing the pensioner liabilities of the scheme. Options for winding–up the scheme are now being reviewed and it is expected that
this will be completed during the coming financial year, at which time it is expected that the remaining surplus assets will be returned to the Group.
Therefore, the balances detailed below represent the current value of these remaining surplus assets.
Principal assumptions
The valuation of the Group’s remaining pension scheme has been updated to 30 June 2020 (albeit this relates solely to the residual assets as there
are no liabilities following the buy-out completed in the prior year). The principal actuarial assumptions used in the calculation of the disclosure items
are as follows:
Rate of increase in pensionable salaries
Rate of increase in pensions in payment
Discount rate
Retail price inflation
Consumer price inflation
2020
n/a
n/a
n/a
n/a
n/a
2019
n/a
3.10%
2.25%
3.25%
2.25%
For the Galliford Try Final Salary Pension Scheme, the life expectancies as at 30 June 2019 were based on S2NA tables (90% scaling factor applied for
males with a future improvement in mortality assumptions in line with CMI 2018 tables with a long-term rate of improvement of 1.25%).
Male member age 65 (current life expectancy)
Male member age 45 (life expectancy at age 65)
Female member age 65 (current life expectancy)
Female member age 45 (life expectancy at age 65)
At 1 July 2018, the date of the last valuation, the scheme had 1,123 deferred members and 890 pensioners.
132
2020
n/a
n/a
n/a
n/a
2019
22.5
23.8
24.5
26.0
Galliford Try 33 Retirement benefit assets (continued)
Assets in the Scheme
The fair value of the assets and present value of the obligations at 30 June of the Group’s defined benefit arrangements are as follows:
Equities1
Gilts1
Bonds1
Diversified growth funds1
Liability driven investments1
Cash
Unquoted insured annuities
Present value of defined benefit obligations
Surplus in scheme recognised as non-current asset
2020
0%
100%
0%
0%
0%
0%
0%
100%
Value
£m
–
1.0
–
–
–
–
–
1.0
–
1.0
Value
£m
37.4
2.6
20.2
42.9
57.2
1.7
83.7
245.7
(238.7)
7.0
1
Equities, gilts, bonds and the diversified growth funds are quoted assets. The asset classes are intended to minimise the volatility of the funding position.
Accounting results
The amounts recognised in the income statement for continuing operations are as follows:
Net interest (income) on net defined benefit asset
Losses on settlements – treated as an exceptional item (note 4)
Net (income)/expense recognised in the income statement
The actual return on scheme assets was £0.1m (2019: £0.1m).
The amounts recognised in the statement of comprehensive income for continuing operations are as follows:
Total amount of actuarial gains in the year
Cumulative actuarial gains
There were actuarial gains related to discontinued operations of £2.0m (2019: losses of £2.4m).
Movement in present value of defined benefit obligations
At 1 July
Interest cost
Experience losses
Actuarial loss arising from changes in financial assumptions
Actuarial (gain) arising from changes in demographic assumptions
Benefit payments
(Gains) on settlements
Past service cost
Disposal of liabilities to Vistry Group plc (see notes 1 & 9)
2020
£m
(0.1)
–
(0.1)
2020
£m
–
–
2020
£m
238.7
2.6
–
6.0
–
(5.2)
–
–
(242.1)
2019
15%
1%
8%
17%
23%
1%
35%
100%
2019
£m
(0.1)
0.9
0.8
2019
£m
–
–
2019
£m
228.6
5.9
0.4
23.1
(5.0)
(11.6)
(6.2)
3.5
–
At 30 June
–
238.7
133
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
33 Retirement benefit assets (continued)
Accounting results (continued)
Movement in fair value of scheme assets
At 1 July
Interest income
Return on plan assets, excluding interest income
Employer contributions
Expenses
Benefit payments
(Losses) on settlements
Disposal of assets to Vistry Group plc (see notes 1 & 9)
At 30 June
Movement in fair value of net asset/(liability)
At 1 July
Net interest income
Return on plan assets, excluding interest income
Experience gains
Actuarial (losses)
Employer contributions
Expenses
(Losses) on settlements
Past service cost
Disposal of net assets to Vistry Group plc (see notes 1 & 9)
2020
£m
245.7
2.7
8.0
4.0
(0.2)
(5.2)
–
(254.0)
2019
£m
235.6
6.1
16.1
7.2
(0.6)
(11.6)
(7.1)
–
1.0
245.7
2020
£m
7.0
0.1
8.0
–
(6.0)
4.0
(0.2)
–
–
(11.9)
2019
£m
7.0
0.2
16.1
(0.4)
(18.1)
7.2
(0.6)
(0.9)
(3.5)
–
At 30 June
1.0
7.0
The contributions expected to be paid to the defined benefit schemes during the year ended 30 June 2020 are £nil.
34 Financial and capital commitments
The Group had no commitments for subordinated debt to joint ventures or other investments at 30 June 2020 (2019: £nil), nor any commitment for
other capital expenditure.
35 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 £157.4m (2019: £239.2m).
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.
134
Galliford Try 36 Related party transactions
Transactions between the Group and its related parties are disclosed as follows:
Group
Trading transactions
Related parties
Non-trading transactions
Related parties
Sales to
related parties
2020
£m
2019
£m
Amounts owed by
related parties
2020
£m
2019
£m
Amounts owed to
related parties
2020
£m
2019
£m
23.1
8.4
35.9
331.6
–
24.8
Interest and dividend income
from related parties
2020
£m
2019
£m
4.5
3.8
The related party transactions above (sales to related parties and interest and dividend income from related parties) have been re-presented to reflect
only continuing operations. Sales to related parties within discontinued operations amount to £50.3m (2019: £63.7m), interest and dividend income
received from related parties amount to £11.1m (2019: £12.7m). Amounts owed by and to related parties have not been re-presented, consistent with
the presentation of the balance sheet.
Sales to related parties are based on terms that would be available to unrelated third parties. Amounts owed by related parties consist predominantly
of subordinated debt within the PPP and Other Investments portfolio, that if held to maturity would be due over the next 28 years (2019: 29 years).
These receivables are unsecured, with interest rates varying between a range of 9% and 12%. Payables are due within one year (2019: one year) and
are interest free.
Company
Transactions between the Company and its subsidiaries which are related parties, which are eliminated on consolidation, are disclosed as follows:
Non-trading transactions
Subsidiary undertakings
Interest and dividend income
from related parties
2020
£m
2019
£m
100.0
n/a
The Company has provided performance guarantees in respect of certain operational contracts entered into between joint ventures and a
Group undertaking.
37 Post balance sheet events
Subsequent to the year end, the working capital adjustment in respect of the disposal of the housebuilding divisions to Vistry Group plc was
provisionally agreed which will result in the working capital adjustment being £76.3m (note 9) and therefore resulting in a repayment to Vistry
Group plc of £23.7m.
38 Alternative performance measures
Throughout the Annual Report and Accounts, 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.
Providing clarity on the Group’s alternative performance measures
The Group has included this note and the enclosed explanations and reconciliations with the aim of providing transparency and clarity on the measures
adopted internally to assess performance.
Throughout this report the Group has presented financial performance measures which are considered most relevant to the Group and are used
to manage the Group’s performance. These measures are chosen to provide a balanced view of the Group’s operations and are considered useful to
investors as these measures provide relevant information on the Group’s performance. The APMs adopted by the Group are also commonly used
in the sectors it operates in.
The Board believes that disclosing these performance measures enhances investors’ ability to evaluate and assess the underlying financial performance
of the Group’s operations and the related key business drivers.
These financial performance measures are also aligned to measures used internally to assess business performance in the Group’s budgeting process
and when determining compensation.
135
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
38 Alternative performance measures (continued)
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 International Financial
Reporting Standards (IFRSs) as adopted by the EU and as issued by the International Accounting Standards Board (IASB) and in line with the
Group’s accounting policies, that can be found on pages 93 to 99.
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 one–off (exceptional) 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) Profit from operations and operating margin
The Group uses an operating profit measure which is inclusive of its share of operating profit generated from its joint ventures as this is equivalent to the
operating profit generated by its subsidiaries and reflects the profitability of the total activity performed by the Group during the year. Additionally, this
APM excludes exceptional items, the share of joint ventures’ interest and tax and amortisation of intangible assets. Operating margin reflects the ratio
of profit from operations 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.
A reconciliation of the statutory measure to the Group’s performance measure is shown below for continuing operations:
Year ended 30 June 2020
Statutory (loss)/profit before finance costs
add: amortisation of intangible assets (note 13)
exclude: exceptional items (note 4)
Pre–exceptional loss from continuing operations
(excluding amortisation of intangible assets)
Pre–exceptional revenue
Operating margin – continuing operations
Year ended 30 June 2019
Statutory (loss)/profit before finance costs
add: amortisation of intangible assets (note 13)
add: share of joint ventures’ interest and tax
exclude: exceptional items (note 4)
Pre–exceptional (loss)/profit from continuing operations
(excluding amortisation of intangible assets)
Building
£m
Infrastructure
£m
PPP
Investments
£m
Central
£m
(54.9)
1.0
2.0
25.5
–
(27.3)
(0.5)
–
–
(9.5)
1.1
0.2
Total
£m
(39.4)
2.1
(25.1)
(51.9)
(1.8)
(0.5)
(8.2)
(62.4)
719.9
357.1
(7.2)%
(0.5)%
(11.5)
(51.0)
1.0
0.1
0.9
–
–
45.5
(9.5)
(5.5)
8.2
n/a
4.4
–
0.1
–
4.5
4.4
1,089.6
n/a
(5.7)%
(8.4)
(66.5)
1.1
–
0.9
2.1
0.2
47.3
(6.4)
(16.9)
Pre–exceptional revenue
858.3
527.0
17.0
0.6
1,402.9
Operating margin – continuing operations
(1.1)%
(1.0)%
n/a
n/a
(1.2)%
c) Pre-exceptional profit before tax
The Group uses a profit before tax measure which excludes exceptional items as noted above. This differs from the statutory measure of profit before
income tax which includes exceptional items.
A reconciliation of the statutory measure to the Group’s performance measure is shown below:
Statutory loss before tax
add: exceptional items (note 4)
Pre-exceptional loss before tax
136
2020
£m
(34.6)
(25.1)
(59.7)
2019
£m
(64.5)
47.3
(17.2)
Galliford Try 38 Alternative performance measures (continued)
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:
Continuing operations
Statutory results
add: exceptional items (note 4)
Pre-exceptional earnings per share
Earnings
£m
Ave number of
shares
(32.6) 110,798,602
(20.3)
n/a
(52.9) 110,798,602
2020
EPS
pence
(29.4)
n/a
(47.7)
Earnings
£m
Ave number of
shares
(49.5) 110,704,829
37.7
n/a
(11.8) 110,704,829
2019
EPS
pence
(44.7)
n/a
(10.7)
39 Impact of the adoption of IFRS 16 Leases
The following is the impact of transition on the individual balance sheet accounts:
As originally
stated at
30 June 2019
£m
Impact on
continuing
operations
£m
Impact on
discontinued
operations
£m
As at 1 July
2019 Group
total
£m
Right of use assets
Lease prepayment assets (de-recognised)
Lease liabilities
Lease accrual liabilities (de-recognised)
Deferred tax (associated with leases)
Net impact on retained earnings on transition at 1 July 2019
–
0.7
–
(0.9)
–
(0.2)
25.5
(0.4)
(25.6)
0.2
–
(0.3)
16.6
(0.3)
(17.9)
0.7
0.2
(0.7)
The following is a reconciliation of the operating lease commitment disclosed at 30 June 2019 to opening lease liability at 1 July 2019:
Operating lease commitment disclosed at 30 June 2019
Less: short term leases1
Balance of commitment
Discounted at the incremental borrowing rate2
Adjustments as a result of a different lease term under IFRS 16
Lease liability recognised at 1 July 2019
42.1
–
(43.5)
–
0.2
(1.2)
£m
41.6
(1.9)
39.7
(2.6)
6.4
43.5
1
2
Short term leases and leases of low value assets are expensed on a straight–line basis over the term of the lease.
The weighted average borrowing rate was 3.77%, with a range of values between 3.10% and 5.98%.
Impact in the period
As a result of the application of IFRS 16, the operating lease rental expense previously charged to operating profit in the income statement is replaced
by an amortisation charge for the ‘right of use’ assets recognised in operating profit and an interest charge on the lease liabilities recognised in finance
costs. During the year ended 30 June 2020, for the total Group including continuing and discontinued operations, the depreciation charge relating to
right of use assets was £9.3m and the interest charge was £1.0m. Further lease charges have been recognised as operating expenses of £12.1m in
respect of exempt short term leases and £0.4m in respect of exempt low value long term leases.
137
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
40 Prior year adjustments
The Group has a number of prior year adjustments, primarily as a result of revisiting the initial application of the accounting standards IFRS 9 and 15
and as a result of discussions with the FRC’s Corporate Reporting Review Team (‘CRRT’) following the conclusion of their review of the Group’s 2018
financial statements.
Their review was based on the Group’s Annual Report and Accounts and did not benefit from detailed knowledge of Galliford Try’s business or an
understanding of the underlying transactions entered into. It was, however, conducted by staff of the FRC who have an understanding of the
relevant legal and accounting framework.
As a result of the opening net assets for the comparative year being adjusted following the application of these prior year adjustments, an additional
prior year comparative consolidated balance sheet (as at 30 June 2018) has also been disclosed.
The prior year adjustments relate to:
AWPR contract accounting
Accounting for downstream claims
Accounting for other legacy contracts
The total impact of these adjustments is summarised below:
(i) AWPR contract
As at 30 June 2018 and 30 June 2019, the Group had recognised an asset (within ‘Trade and Other Receivables’) in relation to the AWPR contract,
in respect of the amount assessed to be recoverable from claims against the client, Transport Scotland (TS). The Group had previously considered that
this balance was assessed in accordance with the appropriate accounting standard (IAS 11 Construction Contracts) as at 30 June 2018. Reference to
these expected recoveries was included in the Annual Report at 30 June 2018 and 30 June 2019.
As disclosed in the Group’s 30 June 2019 financial statements, the CRRT undertook a review of the Group’s 30 June 2018 financial statements.
Following this review and discussions held between the CRRT and the Group, the Group has revised its assessment as to whether negotiations with
TS had reached a sufficiently advanced stage to allow the Directors to reliably assess the amount of revenue expected to be recovered and concluded
that it was incorrect to recognise revenue and the associated contract asset in respect of the claim under IAS 11 as at 30 June 2018, or under IFRS 15
as at 30 June 2019.
The Group has therefore undertaken a prior year adjustment to reverse the recognition of the Trade and Other Receivables balance of £80.0m
(and the associated tax liability), reduce those items to nil and to restate retained earnings by £64.8m as at 30 June 2018 and 30 June 2019. This
adjustment would have reduced revenue and profit before tax in the years to 30 June 2017 and 30 June 2018 by £62.5m and £17.5m respectively.
As a result of the above adjustments, following settlement with the client, the Group has recognised exceptional income of £32.0m (net of final cost
estimates of £4.0m) in the year to 30 June 2020 (note 4).
(ii) Downstream claims
On adoption of IFRS 15 from 1 July 2018, as disclosed in the 30 June 2019 financial statements, the Group concluded that the recognition of expected
reimbursements resulting from certain third–party claims (previously accounted for under IAS 11 Construction Contracts) would now be accounted
for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The requirements of IAS 37 are more stringent than IAS 11, requiring
recovery to be ‘virtually certain’ before an asset can be recognised. Accordingly, in the 30 June 2019 financial statements, the Group included £28.7m
as a net IFRS 15 transition adjustment.
As part of its review of the financial statements for the year ended 30 June 2018, the CRRT challenged the Group as to whether or not it was in
sufficiently advanced negotiations with third parties over certain downstream claims to warrant recognising an asset under the previous IAS 11
accounting standard. The Group has reviewed its accounting at 30 June 2018 and concluded that it had incorrectly recognised net assets of £21.9m
at 30 June 2018 relating to these downstream claims under IAS 11. Therefore, the Group is now of the opinion that £21.9m of the total net balance
of £28.7m that was derecognised on transition to IFRS 15 on 1 July 2018 should have been presented as the correction of an error under IAS 11 at
30 June 2018. This adjustment would have increased cost of sales and reduced profit before tax in the years to 30 June 2016 and earlier, 30 June 2017
and 30 June 2018 by £13.8m, £8.7m and £4.6m respectively.
(iii) Other contract assets
On 23 December 2019, the Group announced that an adverse adjudication on a historical contract had resulted in a loss of £9.4m. On reviewing
this adjudication decision, the Group has reconsidered whether or not the amount of revenue previously recognised in relation to this contract
met the criteria for recognition under IAS 11 and IFRS 15. As a result, the Group is now of the opinion that it had overstated revenue by £8.0m and had
understated costs by £1.4m as at 30 June 2018 and 30 June 2019. The impact of the correction of this error is to reduce retained earnings at 30 June
2018 and 30 June 2019 by £7.6m, increase trade and other payables by £9.4m and to reduce the corporation tax creditor by £1.8m. This adjustment
would have reduced revenue by £8.0m, increased cost of sales by £1.4m and reduced profit before tax by £9.4m in the year ended 30 June 2018.
The impact of these adjustments to the reported prior year net assets can be summarised as below:
Closing net assets as originally reported
Net asset restatement in respect of:
(i) AWPR contract
(ii) Downstream claims
(iii) Other contracts assets
Total net asset restatement
Restated closing net assets
138
30 June 2019
£m
30 June 2018
£m
751.7
776.5
(64.8)
–
(7.6)
(72.4)
679.3
(64.8)
(21.9)
(7.6)
(94.3)
682.2
Galliford Try 40 Prior year adjustments (continued)
(iii) Other contract assets (continued)
The impact on the individual balances in the balance sheet as at 30 June 2019 is shown below:
30 June 2019
as reported
£m
Adjustment
(i)
£m
Adjustment
(ii)
£m
Adjustment
(iii)
£m
30 June 2019
restated
£m
Assets
Non-current assets
Intangible assets
Goodwill
Property, plant and equipment
Investments in joint ventures
PPP and other investments
Trade and other receivables
Retirement benefit asset
Deferred income tax assets
Total non-current assets
Current assets
Developments
Trade and other receivables
Current income tax assets
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Financial liabilities
– Borrowings
Trade and other payables
Current income tax liabilities
Provisions for other liabilities and charges
Total current liabilities
Non-current liabilities
Financial liabilities
– Borrowings
– Derivative financial liabilities
Other non-current liabilities
Provisions for other liabilities and charges
Total non-current liabilities
Total liabilities
Net assets
11.8
159.6
16.2
67.0
41.6
238.4
7.0
1.3
542.9
876.7
754.3
–
591.2
2,222.2
2,765.1
(547.8)
(1,253.1)
(8.3)
(0.4)
(1,809.6)
(100.0)
(0.4)
(103.0)
(0.4)
(203.8)
(2,013.4)
751.7
–
–
–
–
–
–
–
–
–
–
(80.0)
6.9
–
(73.1)
(73.1)
–
–
8.3
–
8.3
–
–
–
–
–
8.3
(64.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.8
–
1.8
1.8
11.8
159.6
16.2
67.0
41.6
238.4
7.0
1.3
542.9
876.7
674.3
8.7
591.2
2,150.9
2,693.8
–
(547.8)
(9.4)
(1,262.5)
–
–
–
(0.4)
(9.4)
(1,810.7)
–
–
–
–
–
(100.0)
(0.4)
(103.0)
(0.4)
(203.8)
(9.4)
(7.6)
(2,014.5)
679.3
139
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
41 Group undertakings
In accordance with section 409 of the Companies Act, the following is a list of all of the Group’s undertakings as at 30 June 2020.
(i) Subsidiary undertakings
Entity name
Alumno GT Limited
Alumno GT Management Limited
Birch Construction Division Limited
Registered office or principal place of business
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Chancery Court Business Centre Limited
Cowley Business Park, Uxbridge, UB8 2AL
Charles Gregory (Civil Engineering) Limited
Miller House, Pontefract Road, Normanton, WF6 1RN
Charles Grip Surfacing Limited
Construction Holdco 1 Limited
Construction Holdco 2 Limited
Galliford Linden Limited
Galliford Brick Factors Limited
Galliford Try Building 2014 Limited
Galliford Try Construction Limited
Miller House, Pontefract Road, Normanton, WF6 1RN
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Cowley Business Park, Uxbridge, UB8 2AL
Galliford Try Construction & Investments Holdings Limited
Cowley Business Park, Uxbridge, UB8 2AL
Galliford Try Construction Holdco Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Galliford Try Corporate Holdings Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Galliford Try Employment Limited
Cowley Business Park, Uxbridge, UB8 2AL
Galliford Try Facilities Management Limited
Cowley Business Park, Uxbridge, UB8 2AL
Galliford Try HPS Limited
Galliford Try Infrastructure Limited
Galliford Try International Limited
Galliford Try Investments Limited
Cowley Business Park, Uxbridge, UB8 2AL
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Galliford Try Investments NEPS Limited
Cowley Business Park, Uxbridge, UB8 2AL
Galliford Try Plant Limited
Galliford Try Properties Limited
Galliford Try Qatar Limited
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Galliford Try Secretariat Services Limited
Cowley Business Park, Uxbridge, UB8 2AL
Galliford Try Services Limited
Galliford Try Supplies Limited
Galliford Try Telecoms Limited
GT (Barking and Havering) Limited
GT (Buidheann) Limited
GT (Leeds) Lift Limited
GT (Leicester) Limited
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
GT (North Hub) Investments Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
GT (North Tyneside) Limited
Cowley Business Park, Uxbridge, UB8 2AL
GT (Scotland) Construction Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
GT Asset 24 Limited
GT Camberwell (Holdings) Limited
GT Camberwell Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
GT Car Parks Leicester (Holdings) Limited
Cowley Business Park, Uxbridge, UB8 2AL
GT Car Parks Leicester Limited
GT Emblem Investments Limited
GT Guildford Crescent Limited
GT Integrated Services Limited
Cowley Business Park, Uxbridge, UB8 2AL
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Cowley Business Park, Uxbridge, UB8 2AL
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
GT Inverness Investments Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
GT PPP Limited
GT Telford (Holdings) Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
140
Shareholding
(direct or indirect)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Galliford Try 41 Group undertakings (continued)
Entity name
GT TMGL Limited
Registered office or principal place of business
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Galliford Try Investments Consultancy Services Limited
Cowley Business Park, Uxbridge, UB8 2AL
Kingseat Development 1 Limited
Kingseat Development 3 Limited
Morrison Construction Limited
Morrison House, Kingseat Business Park, Kingseat, Newmachar,
Aberdeenshire, AB21 0AZ
13 Queen’s Road, Aberdeen, AB15 4YL
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Morrison Highway Maintenance Limited
Cowley Business Park, Uxbridge, UB8 2AL
Oak Dry Lining Limited
Oak Fire Protection Limited
Galliford Try Estates Limited
Primaria Limited
Regeneco (Services) Limited
Regeneco Limited
Rock & Alluvium Limited
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Schools for the Community Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Try Accord Limited
Try Construction Limited
Try Group Limited
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Cowley Business Park, Uxbridge, UB8 2AL
Leicester GT Education Company Limited
Cowley Business Park, Uxbridge, UB8 2AL
Shareholding
(direct or indirect)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All subsidiary undertakings are incorporated in the UK unless otherwise specified and are included in the consolidated financial statements of the
Group as a majority of voting rights are held in each case.
No company is dormant and exempt from preparing individual accounts by virtue of s394A of Companies Act 2006 and/or from filing individual
accounts with the registrar by virtue of s448A of Companies Act 2006.
(ii) Joint venture undertakings
Entity name
Registered office or principal place of business
Aberdeen Roads (Finance) PLC
Aberdeen Roads Holdings Limited
Aberdeen Roads Limited
Maxim 7, Maxim Office Park, Parklands Avenue, Eurocentral,
Holytown, Scotland, ML1 4WQ
Maxim 7, Maxim Office Park, Parklands Avenue, Eurocentral,
Holytown, Scotland, ML1 4WQ
Maxim 7, Maxim Office Park, Parklands Avenue, Eurocentral,
Holytown, Scotland, ML1 4WQ
ACP: North Hub Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Community Ventures (Management) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Community Ventures Investments Limited
4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Community Ventures Partnerships Limited
4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
GBV JV Limited
Cowley Business Park, Uxbridge, UB8 2AL
GT Equitix Inverness Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
GT Equitix Inverness Holdings Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Hub South East Scotland Limited
8 Melville Street, Edinburgh, EH3 7NS
Kingseat Development 2 Limited
Morrison House, Kingseat Business Park, Kingseat, Newmachar,
Aberdeenshire AB21 0AZ
Space Scotland Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Urban Vision Partnership Limited
Civic Centre, Chorley Road, Swinton, M27 5AS
The above entities are all incorporated in the UK and considered to be joint ventures based on the shareholding agreements in place.
1
Treated as a joint venture as indicated by its joint venture agreement.
Proportion of
capital held Financial year end
33%
33%
33%
50%
60%
60%
60%
50%
50%
50%
50%
50%
83%1
30%
31-Dec
31-Dec
31-Dec
31-Dec
30-Sep
30-Sep
30-Sep
30-Jun
31-Mar
31-Mar
31-Mar
30-Jun
31-Mar
31-Dec
141
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Notes to the consolidated financial statements
continued
41 Group undertakings (continued)
(iii) Associated and other significant undertakings
Entity name
Registered office or principal place of business
Aberdeen Community Health Care Village Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Alliance Community Partnership Limited
Galliford Try Qatar LLC
Hub North Scotland (Alford) Limited
Hub North Scotland (FWT) Limited
Hub North Scotland (O&C) Limited
Avondale House, Suites 1l – 1o Phoenix Crescent Strathclyde
Business Park, Bellshill, North Lanarkshire, Scotland, ML4 3NJ
PO Box 11726 Doha, State of Qatar (incorporated in Qatar)
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Hub North Scotland (O&C) Holdings Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Hub North Scotland Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
James Gillespie’s Campus Subhub Holdings Limited
8 Melville Street, Edinburgh, EH3 7NS
James Gillespie’s Campus Subhub Limited
8 Melville Street, Edinburgh, EH3 7NS
LBP DBFM Holdco Limited
LBP DBFMco Limited
ELCH DBFMCo Limited
ELCH DBFM Holdco Limited
WCHS DBFMCo Ltd
WCHS DBFM Holdco Ltd
JICC DBFMCo Ltd
JICC DBFM Holdco Ltd
QHS DBFMCo Ltd
QHS DBFM Holdco Ltd
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
REH Phase 1 Subhub Holdings Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
REH Phase 1 Subhub Limited
REH Phase 2 DBFM HoldCo Limited
REH Phase 2 DBFMCo Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Durham & Tees Community Ventures Limited
4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures Primary Care Limited
4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures HoldCo (No.1) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures FundCo (No.1) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures HoldCo (No.2) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures FundCo (No.2) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures HoldCo (No.3) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures FundCo (No.3) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures HoldCo (No.4) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures FundCo (No.4) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Durham & Tees Community Ventures HoldCo (No.5) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Hub North Scotland (I&F) Holdings Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Tees & Durham (LIFT) Investments Limited
4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
Hub North Scotland (I&F) Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Hub SW Cumbernauld DBFMCo Limited
Hub SW Cumbernauld Holdco Limited
Avondale House, Suites 1l – 1o Phoenix Crescent Strathclyde
Business Park, Bellshill, North Lanarkshire, ML4 3NJ
Avondale House, Suites 1l – 1o Phoenix Crescent Strathclyde
Business Park, Bellshill, North Lanarkshire, ML4 3NJ
The above entities are all incorporated in the UK except Galliford Try Qatar LLC which is incorporated in Qatar.
Entities listed above with 50% ownership percentage are treated as associates as indicated by their ownership agreements.
Proportion of
capital held by
class
30%
10%
49%
30%
30%
30%
30%
30%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
18%
18%
18%
18%
18%
18%
18%
18%
18%
18%
18%
30%
30%
30%
6%
6%
142
Galliford Try Five-year record (unaudited)
Revenue
Profit/(loss) before exceptional items
Exceptional items
Profit/(loss) before taxation
Tax
Profit/(loss) after taxation attributable to shareholders
Fixed assets, investments in joint ventures, PPP and other investments
Intangible assets and goodwill
Net current assets/(liabilities)
Long-term receivables
Long-term payables and provisions
Net assets
Share capital
Reserves
Shareholders’ funds
Dividends per share (pence)
Basic earnings per share (pence)2
Diluted earnings per share (pence)2
2016
£m
2017
£m
2018
(restated
– note 40)
£m
20191
(restated
– note 40)
£m
20201
£m
2,494.9
2,662.1
2,931.6
1,400.1
1,121.6
135.0
–
135.0
(26.1)
108.9
60.8
152.2
633.2
78.0
(324.2)
600.0
41.4
558.6
600.0
82.0
132.5
131.3
147.6
(88.9)
58.7
(10.0)
48.7
72.6
179.1
509.6
113.7
(299.5)
575.5
41.4
534.1
575.5
86.0
53.1
52.9
188.7
(45.0)
143.7
(25.4)
118.3
93.4
174.9
579.8
155.9
(321.8)
682.2
55.5
626.7
682.2
77.0
121.1
120.6
(17.2)
(47.3)
(64.5)
15.0
(49.5)
124.8
171.4
340.2
246.7
(203.8)
679.3
55.5
623.8
679.3
58.0
(10.7)
(10.6)
(59.7)
25.1
(34.6)
2.0
(32.6)
44.7
85.0
(14.4)
28.1
(22.9)
120.5
55.5
65.0
120.5
–
(47.7)
(47.7)
1
2
2019 and 2020 Income Statement and earnings per share balances reflect continuing operations only accounted for in accordance with IFRS 5 (2016-2018 reflects the
total Group in those years including housebuilding). The 2019 balance sheet reflects the whole Group in that year.
Pre-exceptional.
The results for the years ending 30 June 2016, 2017 and 2018 have not been restated either for the impact of the discontinued operations or the
impact of the transition to IFRS 9 and IFRS 15 at the relevant dates whilst 2019 has not been restated for the impact of the transition to IFRS 16.
143
Annual Report and Financial Statements 2020Strategic reportGovernanceFinancial information Analysis of shareholdings at 30 June 2020
% of
holders
Number
of holders
% of
shares
Number of
shares
92.35%
3,635
3.56%
3,948,514
3.76%
2.72%
1.17%
148
2.99%
3,325,533
107 14.86% 16,504,363
46 78.59% 87,275,079
100.00
3,936 100.00% 111,053,489
Size of shareholding
1 – 10,000
10,001 – 50,000
50,001 – 500,000
500,001 – highest
Total
Registered office
Galliford Try Holdings plc
Cowley Business Park
Cowley
Uxbridge
Middlesex
UB8 2AL
Stockbrokers
Peel Hunt LLP
HSBC Bank plc
Bankers
Barclays Bank PLC
HSBC Bank PLC
Registration
England and Wales 12216008
Independent auditor
BDO LLP
Shareholder information
Financial calendar 2020
Half year results announced
Full year results announced
Annual General Meeting
12 March
16 September
13 November
Shareholder enquiries
The Company’s registrars are Equiniti Limited. They will be pleased to deal
with any questions regarding your shareholding or dividend payments.
Please notify them if you change your address or other personal
information. Call the shareholder contact centre on 0371 384 2202.
Lines open from 8.30am to 5.30pm, Monday to Friday; overseas
shareholders should call +44 121-415-7047 or, alternatively, write to
them at:
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
You can find a number of shareholder services online via their website
at www.shareview.co.uk, including the portfolio service which gives
you access to more information on your investments such as balance
movements, indicative share prices and information on recent dividends.
You can also register your email address to receive shareholder
information and Annual Report and Financial Statements electronically.
Share dealing service
A telephone and internet dealing service is available through Equiniti
which provides a simple way of buying and selling Galliford Try shares.
Commission is currently 1.5% with a minimum charge of £60 for
telephone dealing and a minimum charge of £45 for internet dealing.
For telephone sales call 0345 603 7037 between 8.00am and 4.30pm,
Monday to Friday, and for internet sales log on to www.shareview.co.uk/
dealing. You will need your shareholder reference number as shown on
your share certificate. Share dealing services are also widely provided
by other organisations. The Company is listed on the London Stock
Exchange under the code GFRD and the SEDOL and ISIN references
are BKY40Q3 and GB00BKY40Q38.
Group website
You can find out more about the Group on our website
www.gallifordtry.co.uk which includes a section specifically
prepared for investors. In this section you can check the Company’s
share price, find the latest Company news, look at the financial
reports and presentations as well as search frequently asked
questions and answers on shareholding matters. There is also further
advice for shareholders regarding unsolicited boiler room frauds.
Company contact
Contact with existing and prospective shareholders is welcomed
by the Company. If you have any questions please contact the
General Counsel & Company Secretary, either at the registered
office or via email (kevin.corbett@gallifordtry.co.uk).
144
Galliford Try Printed on GalerieArt Satin, an FSC® certified
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Galliford Try
Cowley Business Park
Cowley
Uxbridge
Middlesex
UB8 2AL
T: 01895 855 001
W: gallifordtry.co.uk