Galliford Try Holdings plc
Annual Report and
Financial Statements
2021
People-orientated,
progressive and
values-driven
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Financial performance
Revenue
£1,124.8m
(2020: pre-exceptional £1,089.6m
and statutory £1,121.6m)
Operating profit before amortisation
£10.1m
(2020: pre-exceptional loss £62.2m
and statutory loss £37.1m)
Profit before tax
£11.4m
(2020: pre-exceptional loss £59.7m
and statutory loss £34.6m)
Dividend per share
4.7p
(2020: nil)
Net cash
£216.2m
(2020: £197.2m)
Key developments in the year
Successfully transitioned to a leading
UK construction business.
Embedded excellent culture,
with teams aligned to our purpose.
Published our net zero
carbon ambitions.
Strengthened foundations of risk
management and contract discipline.
Performed strongly: controlled
growth, cash generation and
improved margins.
Returned to profitability and
reinstated dividends.
Excellent order book and strongly
positioned to contribute to the
UK’s economic recovery.
Strategy update
Our updated strategy elevates our ambitions and
aligns profit with purpose. Sustainability driven
by digitalisation, decarbonisation and social value,
is at its heart, responding to stakeholder needs
and increasing the long-term operational and
financial resilience of the organisation.
Our strategy p18
In this report
Strategic report
2
4
8
Our business at a glance
Our business model
Our investment case
10 Chairman’s statement
12 Chief Executive’s review
16 Market review
18 Our strategy
20 Q&A with the Chief Executive
22 Operating sustainably
23 People and culture
26 Health and safety
28 Environment and climate change
31 Supply chain
32 Clients
33 Communities
34 Human rights and modern slavery
36 Risk management
42
Financial review
46 Operating review
50
Stakeholder engagement and s172(1) statement
Governance
54 Chairman’s review
56 Directors and Executive Board
58 Governance review
67 Nomination Committee report
68 Audit Committee report
70 Remuneration Committee report
73 Directors’ Remuneration Policy report
80 Annual report on remuneration
86 Directors’ report
89
Statement of directors’ responsibilities
Financial information
90
Independent auditors’ report
97 Consolidated income statement
98
Consolidated statement of
comprehensive income
99 Balance sheets
100
Consolidated and Company statements
of changes in equity
101 Statements of cash flows
102 Notes to the consolidated financial statements
143 Five-year record (unaudited)
144 Shareholder information
About
Why us
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News
Share price 128.76p at 16:13
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We are a people-orientated,
progressive business,
driven by our values
Visit our Results Centre to watch our results presentation &
About us
Galliford Try is one of the UK's leading construction groups,
working to improve the UK’s built environment and
delivering lasting change for the communities we work in
Read more &
Visit: www.gallifordtry.com for more information.
Cover photo: The Exchange, Birmingham.
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© Galliford Try Holdings plc
Annual Report and Financial Statements 2021
Sustainable
growth
Over the last year, we have emerged stronger,
returning to profitability and confirming our
position as a leading UK construction group,
despite the challenges of the pandemic.
Our updated strategy will ensure that we
develop our business in a sustainable and
profitable way, while deepening our
commitment to a progressive culture,
socially and environmentally responsible
delivery, quality and innovation.
Our purpose, vision and values
shape our culture, proactively
guiding our day-to-day activities,
keeping us focused on what’s
important and delivering
long-term sustainable value
for our stakeholders.
Bill Hocking
Chief Executive
Our strategy p18
1
Our purpose
To improve people’s lives by building
the facilities and infrastructure that
communities need while providing
opportunities for our people to learn,
grow and progress; working with our
supply chain to promote the very best
working practices; and caring for the
environment in which we work.
Our vision
To be a people-orientated, progressive
construction business, driven by our
values to deliver for our stakeholders
and the communities we work in.
Our values
Excellence
Striving to deliver the best.
Passion
Committed and enthusiastic
in all we do.
Integrity
Demonstrating strong
ethical standards with
openness and honesty.
Collaboration
Dedicated to working
together to achieve results.
Annual Report and Financial Statements 2021
Strategic reportGovernanceFinancial information 2
Our business at a glance
A progressive UK
construction business
We are passionate about our role in providing vital buildings and
infrastructure across the country, committed to the idea that what
we do makes a real difference to people’s lives.
What we do
Operating as Galliford Try and Morrison Construction, our core capabilities are delivered
through our Building and Infrastructure divisions, complemented by PPP Investments and
FM. We have a leading position in the public and regulated sectors and actively target and
maintain places on some of the most significant frameworks (page 48). We focus on sectors
where we have core and proven strengths and work collaboratively with carefully selected
clients and supply chain partners.
Operating review p46
Building
is focused on the health, education
and defence sectors and also serves
commercial clients.
Infrastructure
carries out civil engineering projects,
specialising in the highways and
environment sectors.
PPP Investments
delivers major building and infrastructure
projects through public-private
partnerships and co-development
opportunities, generating work for
the wider business in the process.
Galliford Try Holdings plc
Facilities Management (FM)
works with Building, with an emphasis on
the education and health sectors, allowing us
to provide high-quality, full life-cycle solutions
to our clients.
3
1
2
3
4
5
6
7
8
9
Annual Report and Financial Statements 2021
Where we do it
Our network of regional offices offers
clients national strength with local
delivery. Infrastructure operates
nationally, with Building operating
across the UK through nine regions.
Areas of Building office locations
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
Strategic reportGovernanceFinancial information 4
Our business model
Ensuring
long-term value
Our business model enables us to operate
sustainably and creates long-term value for
our key stakeholders.
How we do it
Our approach
Promote a
people-orientated ,
progressive culture
We believe that what we do
makes a real difference to
people’s lives, so we seek to
attract and retain talented
individuals who are aligned to
our purpose and uphold our
values. We believe success
comes from our people and
we promote an inclusive culture
in which people can thrive,
knowing that inclusivity
facilitates the diversity of
thought, approach and
experiences that leads to
innovation. We do this by
prioritising health, safety
and wellbeing, creating an
environment in which everyone
feels valued as an individual,
enabling our people to reach
their potential through learning
and development; empowering
individuals and providing a
rewarding career.
Our Executive Board sets and
promotes the culture, values
and behaviours we want to
see in our people through
leadership and training. Our
high standards of corporate
governance, Code of Conduct
and Business Management
Systems ensure they are
embedded across our business.
Galliford Try Holdings plc
Manage our
risks effectively
Risk management is
fundamental to our strategy
and is embedded within our
culture and operations.
We ensure we only pursue
opportunities within our chosen
markets where we have the
experience, knowledge,
resources and supply chain
to deliver, and with the right
terms and margins. We aim to
secure a forward order book
that provides a high degree of
certainty, seeking clients who
value a collaborative approach
and long-term relationships.
This allows opportunities for
repeat work, and contributes
to better understanding
between parties and early
mitigation of risks. Our project
level controls and commercial
health checks also help us
manage risks and uncertainties
from design to delivery.
Collaborate with our
supply chain
A large portion of our work is
delivered in collaboration
with our supply chain, so
building successful long-term
relationships is vital. Our
‘Advantage through Alignment’
programme aligns key supply
chain members with our vision,
values and working practices by
allowing them to benefit from
our cultural and training
programmes and providing
an insight into our pipeline of
work and future opportunities.
This deeper understanding
creates greater efficiencies and
opportunities for innovation,
as well as upskilling workforces
and allowing the SMEs we work
with to grow. Our commitment
to the Prompt Payment Code
further helps to strengthen our
relationships and demonstrates
we are serious about good
payment practices.
Deliver quality
and innovation
We seek to work in frameworks
with our clients. Frameworks
are used by the public and
regulated sectors as a
procurement vehicle and
provide greater opportunities
for deeper, strategic
collaboration and long-term
partnering which support the
achievement of wider strategic
and social goals. We deliver
excellence by constantly
pursuing new and better ways
of working. We embrace new
technologies, construction
methods and management tools
that help us to harness data,
deliver efficiency and improve
quality to support clients to
achieve objectives such as
carbon reduction goals.
Our award-winning approach
to technical services enables
us to design buildings and
infrastructure with lower
emissions, shorter programmes,
reduced whole-life costs,
using digital and technical
capability and Modern
Methods of Construction.
Operate sustainably to
deliver long-term value
for our stakeholders
We are firmly committed to
doing the right thing so we
assess and address our impacts
across six fundamental areas
of sustainability: health and
safety, environment and
climate change, our people,
communities, clients and supply
chain. This recognises the
urgency of the climate change
agenda and the role we have
to play in decarbonising the
economy for a greener, more
sustainable future. We use
our activities to deliver greater
social value, working with
our supply chain to promote
the very best working practices
and making a positive impact on
communities. Our commitment
to these environmental,
social and corporate
governance responsibilities
ensures we address our
stakeholder interests to
create long-term value.
5
Who we work with
We primarily work with public and regulated sector organisations, focusing on
education, defence, health, highways and environment, as well as blue-chip
private sector companies.
Order book by client type
Order book by sector
1. Public and regulated sectors
91%
1. Environment
2. Highways
3. Education
4. Defence and custodial
5. Health
6. FM
7. Commercial
£298m
8
7
7
6
£403m
6
£836m
1
1
£300m
5
5
£3.3bn
4
4
£389m
3
3
£530m
2
2
£512m
2. Private sector
9%
Annual Report and Financial Statements 2021
Strategic reportGovernanceFinancial information 6
Our business model
continued
How we make money
We aim to generate a fair return for shareholders by operating a profitable and
sustainable business.
High-quality revenue
We target lower-risk contracts with clients that typically comprise:
Cost reimbursable where an overall target contract value is agreed with the client,
including margin, risk and inflation contingencies, and the actual cost of the work plus
agreed fee is paid by the client. Any cost savings or overspends against the target are
shared between the client and contractor.
Fixed-price where the final price and programme is negotiated on a sole basis following
early involvement, resulting in a fixed-price for a defined scope at point of final
contract award.
In addition to construction projects, we earn revenue and profit from our PPP Investments
and Facilities Management businesses, which offer lower-risk annuity type income and
margin accretion.
Robust commercial control and rigorous risk management
We make a profit by carefully selecting the work we take on. Approval controls for bids
and contracts include our risk-based heat map tool to support contract selection and
bid approval processes. We ensure the terms and conditions are within the parameters
of our strict criteria to mitigate risk and we make certain we have the expertise and
resources to successfully complete the work. During construction, we rigorously manage
risk at every stage of our projects using robust review processes and health checks.
We secure a high-quality forward pipeline so we do not have to pursue projects with
less favourable terms.
Good capital management
Our business is typically cash generative, as we receive regular payments from clients
as projects progress. We are well-capitalised with a strong balance sheet that benefits
from a robust cash position and a PPP asset portfolio, giving clients and our supply chain
confidence in our ability to partner with them well into the future.
Our business 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.
Our capital allocation and dividend policy is set out in the Financial review.
Galliford Try Holdings plc 7
Our key resources and relationships
We are committed to successfully managing the key resources and relationships that are
necessary for the long-term success of our business.
Our impact
People
Our success comes from our people. We therefore
need to attract, retain and develop the right talent
for our business, prioritise their health, safety and
wellbeing and create an inclusive environment in
which they can thrive.
People and culture p23 and Health and safety p26
We place the highest priority on protecting our people’s
health, safety and wellbeing. We target no harm and have
increased our investment in mental wellbeing alongside
physical health and safety.
We commit to supporting our people personally and
professionally at every level to help them achieve their
potential. We offer a fast-paced, exciting environment
that guides, challenges and develops them.
0.08
Accident Frequency Rate
13.2%
voluntary churn
Natural resources
Our building processes use natural resources,
including land, materials and energy.
We aim to optimise our use of natural resources and
reduce our associated carbon and environmental impact,
recognising that environmental protection and climate
change are among the greatest challenges we face.
Environment and climate change p28
Clients
We carefully choose the sectors we want to work
in and the clients we partner with.
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
business and sustainability objectives.
Clients p32
39%
reduction in carbon emissions
from calendar year 2019 to
2020 and 43% reduction
from 2018 to 2019
95%
waste diverted from landfill
87%
of our order book is in frameworks
90%
of full year 2022 planned
revenue secured
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 p31
We support jobs and local economies through our supply
chain, as well as our own business, and help suppliers and
subcontractors to develop their businesses alongside ours.
Our Advantage through Alignment programme provides
a programme of support, training and education to
key supply chain members to foster collaborative,
mutually-beneficial relationships.
Gold
status from the Supply Chain
Sustainability School
93%
of invoices paid in 60 days
Communities
The impact of our work on communities is
significant, both through the way we work
and the legacy we leave in the form of buildings,
infrastructure and other assets.
Communities p33
We aim to create greater social value through what we
do by providing local employment, using local supply
chain partners, and sustainably delivering buildings and
infrastructure that are fit for the future. We engage with
local schools to promote awareness of health and safety
as well as careers in our industry, and we work with local
causes to support their objectives by providing time,
donations, materials and labour.
40.6
Considerate Constructors
Scheme score
£250,000
charitable donations
Financial resources
We maintain a robust balance sheet to give clients,
our supply chain and shareholders reassurance
that we are a financially sustainable business.
Carefully managing our financial resources helps ensure
that shareholders typically benefit from rising earnings
and dividends and create future value, while ensuring we
remain soundly financed.
£164m
average month end cash
Financial review p42
Stakeholder engagement p50
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 8
Our investment case
A compelling investment
01.
03.
02.
A clear strategy
Our strategy builds on
our strong foundations by
focusing on the sectors
where we have proven
strength and the right risk
profile, and identifying
and focusing on margin
enhancing and revenue
growth opportunities
across the medium term.
Sustainability, driven by
digitalisation, decarbonisation
and social value, is at the heart of our
strategy, responding to stakeholder
needs and increasing the long-term
operational and financial resilience
of the organisation.
A people-orientated,
progressive culture
driven by our values
We believe in our purpose
to improve people’s lives
and achieve this by
attracting and developing
individuals who share
our vision.
Our commitment to delivering
excellence pushes us to constantly
pursue new and better ways of
working – embracing new
technologies, construction methods
and management tools that help
us lead the sector. Our inclusive
culture fuels innovation by allowing
individuals to thrive.
Our socially and environmentally
responsible approach is not only the
right thing to do, it is also increasingly
important to employees, clients and
supply chain members and makes
our business more sustainable in
the long term.
People and culture p23
A strong foothold
in a growing market
We have a highly disciplined
approach and only
operate in chosen sectors
where we have core
and proven expertise.
We have a robust position in the
public and regulated sectors, leading
places on the UK’s most significant
frameworks (page 48), and excellent
client and supplier relationships.
Our alignment to the Government’s
continued investment in the UK’s
social and economic infrastructure
is a fundamental driver of demand
for our services and plays to
our strengths in the health,
education, defence, highways
and environment markets.
Our framework position allows
us to work in long-term relationships
and benefit from major, continuing
public sector, infrastructure and
regulatory spending.
Market review p16
90%
of FY22 planned
revenues already secured
Galliford Try Holdings plc 9
05.
Financial strength
We are well-capitalised
and cash positive, with a
strong balance sheet.
Sustainable growth will drive
controlled growth and an improved
dividend policy, generating long-term
shareholder value.
Financial review p42
04.
Focused risk
management
Rigorous risk management is
central to our strategy and
embedded in our business.
We determine our risk appetite and
stand firm to ensure we only pursue
opportunities where we have the
skills, resources and contract terms
and conditions to be successful.
We then monitor risk across the
lifecycle of our projects.
Our approach is mature and the
result is a high-quality order book
and pipeline we can be confident of,
and that will deliver the margins we
are targeting.
Risk management p36
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 10
Chairman’s statement
Focused on
successful delivery
Having successfully returned to profitability,
our business looks forward to a positive future
with an updated strategy, with sustainability at
its core, positioning us strongly to contribute to
the UK’s economic recovery.
This was Galliford Try’s first full year
as a pure construction business
and I am pleased with the progress
we have made in delivering our
plans. In particular, we have continued
our focus on risk management
(page 36) and worked hard to ensure
robust operational and financial
performance, against the backdrop
of the Covid-19 pandemic.
Peter Ventress
Chairman
Significantly, the business has returned to
profitability and with our new contract portfolio
delivering higher margins, we recorded a profit
before tax of £11.4m. We have also maintained
a strong balance sheet, which continues to
differentiate us in our market. At the end of the
year, our net cash balance was £216m, up £19m
over the 12 months. Our average month end
cash balance during the year was £164m.
Shareholder returns
As a responsible contractor, we believed it
was right to repay the furlough monies
received in the financial year. Coupled with
our performance this year, this enabled us to
reinstate dividends. Having paid an interim
dividend of 1.2p per share in March 2021, the
Board has proposed a final dividend of 3.5p per
share. The total dividend of 4.7p per share is
2.0 times covered by earnings from continuing
operations. The final dividend will be paid on
10 December 2021 to shareholders on the
register at 12 November 2021.
We have always recognised the importance of
dividends to shareholders and, looking forward,
we expect to increase the dividend as earnings
grow, within our improved dividend cover range
of 2.0–2.5 times.
A sustainable strategy
In April 2021, the Board performed a review of
the Group’s strategy for the next five years to
assess our strategic ambitions over this period.
We held a dedicated session to discuss the
challenges and opportunities presented to the
business, how the Group was responding to
these and the risk appetite that the Board
was prepared to take in pursuit of its strategic
objectives. The discussion focused on
controlled revenue growth, the importance of
Environmental, Social and Governance (ESG)
factors to the strategy, the macro environment
and the competitive landscape (page 60).
Galliford Try Holdings plc
11
Succession planning is also key beyond Board
level, enabling us to fill a number of vacancies
internally during the year. Work to ensure a
suitable pipeline of talent continues and is a
high priority for the Board.
Looking forward
We are focused on sectors that play to our
strengths and in which market conditions and
Government policy are favourable. Our job
now is to continue to deliver, so we can create
sustainable value for all of our stakeholders.
Peter Ventress
Chairman
Our updated strategy is set out on pages 18 to
21 and positions us strongly to contribute to the
UK’s economic recovery from the pandemic.
As Chairman, I have also looked to ensure that
during our regular meetings the Board is able
to focus on strategy rather than operational
issues. It is a mark of how well the business is
being run that we achieved this during the year.
Delivering long-term stakeholder value
Sustainability and creating social value are
fundamental to our strategy. A key part of
our approach is ensuring we understand
stakeholders and that we take their views into
account in our decision-making. The Board
has a designated Non-executive Director,
Terry Miller, who chairs our Stakeholder
Steering Committee and our Employee Forum.
This gives the Board a direct insight into our
business’s stakeholders as well as sustainability
matters which are now a remit of the
Committee. You can read more about this
in our section 172 statement on page 50.
People and culture
People and culture are important
considerations for the Board and we continue
to support efforts to enhance the business’s
diversity. The Board has oversight of Galliford
Try’s culture and we have seen a significant
positive shift, that our leadership team
continues to drive forward.
Our improved performance this year reflects
the way that risk management has become
ingrained into our culture, as has the way that
our people take accountability. The prominence
of sustainability and diversity also reflects this
cultural change.
The pandemic has made this a difficult period
for every business and I want to thank our
people for the way they have responded.
The challenges posed have unleashed their
creativity, while at the same time requiring us
to have a relentless focus on maintaining the
highest standards on our sites and protecting
everyone’s health, safety and wellbeing.
Bill Hocking’s statement on page 12 explains
more about our approach.
Management and the Board
There was one change to Board membership
this year, with Jeremy Townsend stepping down
as a Non-executive Director, as previously
announced. This resulted in some changes to
Board Committee responsibilities, as described
on page 59. Looking forward, the Board is aware
of its responsibility to ensure good succession
and appropriate diversity among the directors.
Targeting strong and predictable shareholder returns
We are committed to delivering value to our shareholders through sustainable growth and improved profitability.
Objective
2026 target
Focus on bottom line margin growth.
Disciplined contract selection
and sustainable revenue growth.
Divisional operating margin growth to
3.0%.
Revenue growth towards
£1.6bn.
Maintain strong balance sheet.
Operating cash generation.
Sustainable dividends.
Dividend cover of
2.0-2.5x.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information
12
Chief Executive’s review
Well-positioned
for the future
The last year has shown the strength and
resilience of Galliford Try in challenging
circumstances. We have proven our business,
returned to profitability, and successfully laid
the foundations upon which we can deliver
our updated strategy.
Well-capitalised and profitable with a
bright outlook
The end of this financial year marks a great
milestone for us as we announce our first set of
full year results as a pure construction group.
We have made an excellent transition following
the strategic disposal of the housebuilding
divisions and our significant progress in
strengthening our foundations has enabled
us to return to profitability, repay furlough
money and reinstate the dividend.
Our operating profit before amortisation was
up to £10.1m and profit before tax increased
to £11.4m, from pre-exceptional losses of
£62.2m and £59.7m respectively in the
previous financial year. Our improved results
demonstrate the performance of our newer
contract portfolio in our £3.3bn order book,
which remains selective, focused on our
strengths and aligned to our risk appetite.
Despite the pandemic, we remained fully
operational on all of our sites in the period,
with productivity close to normal levels.
Combined with our focus on core markets,
this means our revenue remained stable
and on target at £1.1bn (2020: £1.1bn).
Our excellent cash position remained
resilient during the pandemic. We remain
well-capitalised with a strong balance sheet,
giving clients and supply chain confidence in
our ability to deliver for them as a partner
over the long term.
Without doubt, the past year has been a
huge test of our mettle and I am inspired
by the way our people have responded.
There has been a fantastic sense of
camaraderie and, against the odds,
we’ve achieved a great deal in a
relatively short amount of time. This is a
true testament to all our people and
I am proud to lead a team of passionate,
dedicated and skilled individuals who
are all so aligned to our purpose.
Bill Hocking
Chief Executive
Galliford Try Holdings plc 13
The Government’s Construction
Playbook underpins long-term industry
sustainability and confirms we are
well-positioned with key clients for
projects that will be brought to
market by the public sector over
the medium term.
Bill Hocking
Chief Executive
Our career paths and learning and development
programmes continue to be popular and
effective. Coupled with leadership from the
top, training, succession planning programmes
and recruitment processes are designed to
ensure we seek out and develop the right
people for our business, which contributes
to a great culture.
Inclusion is important to us and our continued
focus on early careers enables us to grow our
talent pool as an investment in the future.
We now have more women in higher paid
graduate positions. The improving diversity
of this population is pleasing and will stand us
in good stead in the future, helping to address
the gender pay gap in our industry.
We recognise we need to do better when
it comes to addressing barriers to entry in
particular to ethnic minorities. Going forward
we want to realise our inclusivity ambitions,
as this facilitates the diversity of ideas and
experiences that create multi-skilled teams.
Without doubt, the past year has been a huge
test of our mettle and I am inspired by the way
our people have responded. There has been a
fantastic sense of camaraderie and against the
odds, we’ve achieved a great deal in a relatively
short amount of time. This is a true testament to
all our teams and I am proud to lead a team of
passionate, dedicated and skilled individuals
who are all so aligned to our purpose.
People and culture p23
Prioritising health, safety and wellbeing
Health, safety and wellbeing will always remain
absolutely paramount and, during the period,
the importance of good mental health was
thrown into even sharper focus. The inevitable
stresses of the pandemic brought mental
health issues to the fore for society, and we
addressed this within our business by expanding
our ‘Be Well’ programme. This included live
weekly sessions on key wellbeing topics from
in-house and external professionals, podcasts
and access to further tools and resources to
benefit our people and their families.
Moving forward, the Government’s
Construction Playbook underpins long-term
industry sustainability and confirms we are
well-positioned with key clients for projects
that will be brought to market by the public
sector over the medium term. While the
industry has been affected by shortages of
materials in some areas, we maintain excellent
relationships and collaboration programmes
with our supply chain (page 31). This has
ensured we have not been materially affected
to date and, coupled with early planning,
will enable us to deliver in the long term.
Our performance and outlook have provided
the Board with the confidence to reinstate
dividends with an enhanced policy. Under the
new policy we have reduced dividend cover
to 2.0–2.5 times. As a result, we reintroduced
the interim dividend at the half year at 1.2p
per share and recommend a final dividend
of 3.5p per share to give a total dividend of
4.7p per share.
My thanks and appreciation go to all our staff,
supply chain and clients who have worked so
well together to keep our projects safely on
track, despite the challenging circumstances.
Financial review p42 and Operating review p46
A people-orientated,
progressive culture
Success comes from our people, which is
why we put such a focus on being a people-
orientated, progressive and values-driven
business that remains committed to always
doing the right thing. The core of this at
Galliford Try is:
Building diverse teams aligned to
our purpose
Construction is all about people, so the skills,
expertise and culture we nurture as an
organisation are important.
We received positive feedback regarding the
work we carried out to support our people in
the year. We took specific action to survey our
site-based teams to understand how to improve
the working environment for those who had
to be present in the field during lockdowns.
Again, the feedback we received was very
positive with 83% of those who responded
feeling supported, 82% stating communication
was good and 81% having confidence in our
response to Covid-19.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 14
Chief Executive’s review
continued
Operating sustainably
Fundamental to the business’s long-term
success is our belief that we can only create
value over the long term if we understand and
address the views of our stakeholders and
ensure they are part of our strategy. We believe
strongly that the interests of all stakeholders
– our people, suppliers, clients, communities
and investors – are fully aligned and will all
benefit from our focus on operating sustainably.
We have continued to make significant progress
across all six pillars of our sustainability agenda
comprising: health and safety, environment
and climate change, our people, communities,
clients and supply chain. Our work to update
our strategy confirmed these are the right
overall fundamentals to recommit to, with new
objectives and means of delivery (see right).
A key development this year was our
commitment to achieve net zero carbon across
our own operations by 2030 and all activities
by 2045, working with the Science Based Target
Initiative to validate our approach.
Operating sustainably p22
Bill Hocking
Chief Executive
We cautiously navigated out of lockdown,
publishing our own roadmap to mirror the
Government’s different plans across England,
Scotland and Wales to ensure we could
continue to safeguard the health, safety and
wellbeing of all our people as national
restrictions started to lift. As well as continuing
our own specific Covid-19 risk assessments
and protocols, we ensured works were carried
out in full compliance with the Construction
Leadership Council’s Site Operating Procedures
throughout the period.
We took the opportunity to refresh our
award-winning behavioural safety programme
‘Challenging Beliefs, Affecting Behaviour’ to
ensure all our teams and subcontractors remain
engaged in our belief that nothing we do is so
important we cannot take the time do it safely.
Despite this, we were disappointed that our
Accident Frequency Rate (AFR) increased
slightly to 0.08, although this remains an
encouraging performance relative to the
industry. We are already placing more emphasis
on the proactive management measures that
will return us to a lower AFR and lead to further
improvements as we instil a no-harm culture
across the business. Recent accreditation to
the new standard for occupational health and
safety management systems, ISO 45001,
confirmed this focus on continual improvement.
The Grenfell Tower tragedy in 2017 highlighted
the critical importance of the safety of all
buildings we live, work and play in. Our
involvement in the Building a Safer Future
Charter demonstrates our commitment to
promoting a positive culture and putting
people’s safety first in how we plan, design,
build and maintain the built environment.
Health and safety p26
Galliford Try Holdings plc 15
Outlook: a firm foundation to update our strategy
At the end of our strategy period to 2021, we are in an excellent position. We have made great progress and have built a solid foundation for
growth, with a higher quality order book giving us a clear path to grow our margins. We now look forward to moving ahead with confidence with
our updated strategy, building on these solid fundamentals and aligning our financial objectives with our sustainability and stakeholder aspirations
to deliver sustainable profit and long-term stakeholder value, in line with our purpose.
Our strategy is covered in more detail on page 18, following our Market review.
A people-orientated,
progressive culture driven
by our values.
Health and safety: prioritising
health, safety and wellbeing and
ensuring no harm to anyone linked
with our operations.
Our people: creating an inclusive
environment and progressive
culture that enables all individuals
to reach their potential.
Protect the environment
and create greater social value
for communities.
Environment and climate change:
adopting sustainable resourcing
and consumption practices and
taking measures to mitigate
carbon production and climate
change to protect our environment
and biodiversity.
Communities: making a positive
impact in communities where
we operate by delivering greater
social value and improving lives.
Deliver excellence
for our clients.
Clients: delivering lower
carbon, superior buildings
and infrastructure with a better
social footprint for clients in our
chosen markets through a focus
on innovation, digitalisation
and quality.
Supply chain: aligning our
supply chain with our culture and
creating collaborative relationships
that deliver best practice,
innovation and sustainable
outcomes for clients, communities
and the environment.
A progressive
culture
Quality and
innovation
Strategy
Deliver high-quality
buildings and
infrastructure in a socially
responsible way and
provide a sustainable return
for our shareholders.
Socially
responsible
delivery
Sustainable
financial returns
Earn a sustainable return
on the value we deliver.
Taking a disciplined approach to
selecting the work we take on and
carefully managing risk at every
stage of the project.
Delivering strong, predictable cash
flows and margin improvement.
Generating increasing
shareholder returns.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 16
Market review
Seizing opportunities
The majority of our revenue derives from public and regulated sector clients.
The Government’s investment in the UK’s social and economic infrastructure
is therefore a fundamental market driver of demand for our services.
Our strategy responds to our markets
Market drivers
How our alignment positions us to benefit
Investment in the UK’s social and
economic infrastructure
Key contractor for public and regulated sectors.
Levelling up agenda
National coverage with local relationships and supply chain.
UK’s drive to
‘build back better’
Urgency of climate crisis
Net zero carbon target.
Committed to creating greater social value.
Innovation
Digitalisation and adoption of Modern Methods of Construction.
Support clients’ carbon objectives through our carbon toolkit.
Market opportunity
Government
investment in the UK’s
social and economic
infrastructure
National Infrastructure Strategy (NIS)1:
the NIS is part of the Government’s plans to
invest more than £600bn over the next five
years. It sets out plans to transform the
approach to infrastructure policy and delivery,
to meet both the short and long-term challenges
facing the UK. Its objectives are to ‘build back
better’ from the pandemic, focus on helping
the Government achieve its net zero carbon
emissions target by 2050, creating greater
social value, and adopting digital and technical
innovation. The UK Infrastructure Bank
has been established to help mobilise these
plans with £22bn of funding available for
co-investment alongside the private sector
in some of these projects.
Levelling up agenda2: the Government’s
levelling up agenda aims to tackle geographic
disparities in key services and outcomes,
such as health, education and jobs. It recognises
the key role investing in infrastructure will have
in improving lives by bringing more places
across the UK closer to opportunity.
Under the Levelling Up Fund, £4.8bn will
be invested in local projects, such as
regeneration and transport across England,
Scotland and Wales.
Construction Playbook3: up to £37bn of
contracts will be brought to market over
the next year across economic and social
infrastructure. The Construction Playbook has
been published to achieve the Government’s
ambition to deliver ‘better, greener, faster public
works’. The Playbook places a major focus on
social value, industry sustainability and supply
chain engagement and it favours long-term
contracting across portfolios; standardised
designs, components, and interfaces; and
innovation and Modern Methods of
Construction (MMC).
Investment in local projects
£4.8bn
Contracts brought to market
£37bn
Our response
We have a national presence with local
delivery which aligns to the levelling up
agenda’s focus on local priorities in local
communities such as health and education,
which are our largest sectors.
A significant 87% of our order book is in
frameworks, which are a key public sector
procurement route for the delivery of
national infrastructure projects. Similarly,
91% of our order book is in the public and
regulated sectors.
The drive for digitalisation within our Group
is led jointly by our Group Technical Director
and Chief Information Officer, with input
from a cross-section of operations to ensure
better design, quality and delivery.
Our commitment to creating greater social
value matches the Government’s aims to
deliver value to society.
1 https://assets.publishing.service.gov.uk/
government/uploads/system/uploads/attachment_
data/file/938049/NIS_final_web_single_page.pdf
2 https://assets.publishing.service.gov.uk/
government/uploads/system/uploads/attachment_
data/file/966138/Levelling_Up_prospectus.pdf
3 https://assets.publishing.service.gov.uk/
government/uploads/system/uploads/attachment_
data/file/941536/The_Construction_Playbook.pdf
Galliford Try Holdings plc 17
Market challenge
Managing labour and
supply shortages
The combined impact of Brexit and the
pandemic has caused delays in the delivery
of supplies as well as increased costs.
Skilled and experienced people are in
high demand. Post-Brexit, this is putting
pressure on labour demands in London and
the South East, although the proportion of
workers from the EU is much lower
elsewhere in the country.
Our response
We maintain excellent relationships with
key suppliers and subcontractors by giving
them an insight into our pipeline, paying
them promptly and offering them training
and resources, for example through our
Advantage through Alignment scheme, our
Challenging Beliefs, Affecting Behaviour
safety programme and membership of the
Supply Chain Sustainability School. This
leads to mutual benefits and ensures we
remain a priority customer for them during
times of heightened demand.
We maintain matrices of key materials
to ensure we are aware of any materials
shortages or longer lead-in times and
ensure we plan effectively to mitigate any
potential delays. These processes are
stepped up during times of shortages.
Inflation is built into our bids, with earlier
planning giving us better visibility during
times of higher demand.
Our recruitment, training and development
activities ensure we have the skills we need
to carry out our operations. Our graduate
and apprentice programmes allow us to build
our own talent pool. Succession planning
enables us to meet the future needs of our
business with less likelihood of disruption
to operations.
Initiatives such as Smart and 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 actively promote our business and
industry to school and college leavers,
graduates and experienced people through
school presentations, visits to our sites
and careers exhibitions and help to
encourage a career in construction for
future generations. Our work breaks down
stereotypes of the industry and presents
the industry as an important enabler of the
UK’s plans for the future.
Market opportunity
Drive for
decarbonisation
and action on
climate change
The Committee on Climate Change believes
we have ‘a once-in-a-lifetime opportunity’ to
address climate change as we rebuild from the
pandemic. It has highlighted the need to deliver
an economic recovery that accelerates the
transition to a cleaner, net zero emissions
economy and strengthens the country’s
resilience to the impacts of climate change.
The Government’s Ten Point Plan4 for a Green
Industrial Revolution prioritises ‘clean growth’
as it delivers on its aim to achieve net zero
carbon emissions by 2050. The plan involves
£12bn of public spending over the coming years
in areas from energy generation to building
retrofits. Key initiatives include the energy
efficiency of homes, schools and hospitals;
protecting the environment; ending the sale of
new petrol and diesel cars and vans by 2030
and developing the cutting-edge technologies
needed to reach these new ambitions.
Our response
Our sustainability agenda, record of
reducing our own carbon emissions and
commitment to achieving net zero carbon
across our own activities by 2030 and all
activities by 2045 are attractive to existing
and potential clients.
Our digital approach and adoption of new
technologies, construction methods and
management tools drive innovation and
help clients to achieve wider objectives for
example by using Modern Methods of
Construction which can save time and
reduce waste.
4 https://www.gov.uk/government/publications/
the-ten-point-plan-for-a-green-industrial-
revolution/title
Adopting blockchain
technology to capture insights
Our Environment business has been utilising new and
innovative software to capture and track information
such as actual carbon emissions and to measure the use
of plant and materials across our operations in real time,
comparing performance of planned work against what
actually happened. These insights help us to save money,
build better and can facilitate an agile approach to operations
that can help reduce risk by responding better to events
outside our control.
This pioneering technology, Hypervine, has been
adopted on projects for Scottish Water and Angus Council,
streamlining operational work and reducing reporting and
compliance events, freeing up valuable time.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 18
Our strategy
Sustainable growth
Having established Galliford Try as a robust player in the market,
our updated strategy elevates our ambitions and sets objectives
which align profit with purpose. Sustainability, driven by digitalisation,
decarbonisation and social value, is at its heart, responding to stakeholder
needs and increasing the long-term operational and financial resilience of
our organisation.
Our purpose
Our purpose is to improve people’s lives by building the facilities and infrastructure that communities need,
providing opportunities for our people to learn, grow and progress, working with our supply chain to promote the
very best working practices and caring for the environment.
Our strategy
Our strategy is to deliver high-quality buildings and infrastructure in a socially responsible way and
provide a sustainable return for our shareholders.
01.
Progressive
culture
Health & safety
Prioritising health, safety
and wellbeing and ensuring
no harm to anyone linked with
our operations.
Our strategic priorities
02.
Socially responsible
delivery
03.
Quality and
innovation
Environment & climate change
Adopting sustainable resourcing
and consumption practices and
taking measures to mitigate
carbon production, waste and
climate change to protect our
environment and biodiversity.
Clients
Delivering lower carbon, superior
buildings and infrastructure with
a better social footprint for
clients in our chosen markets
through a focus on innovation,
digitalisation and quality.
Our people
Creating an inclusive environment
and progressive culture that
enables all individuals to reach
their potential.
Communities
Making a positive impact in
communities where we operate
by delivering greater social value
and improving lives.
Supply chain
Aligning our supply chain
with our culture and creating
collaborative relationships that
deliver best practice, innovation
and sustainable outcomes for
clients, communities and
the environment.
04.
Sustainable
financial returns
Earning a sustainable return on
the value we deliver.
Galliford Try Holdings plc 19
Our KPIs have been updated to reflect our new strategy period to 2026.
Sustainability pillar
Objective
KPI
FY20
FY21
Ambition
Progressive culture
Health
and safety
Our people
Prioritising health, safety
and wellbeing and ensuring
no harm to anyone linked
with our operations.
Creating an inclusive
environment and progressive
culture that enables all
individuals to reach
their potential.
Socially responsible delivery
Accident Frequency Rate
Lost Time Incident Rate
0.07
0.26
Early careers as a % of
total employees
Women as a % of
total employees
Employee advocacy
8.0%
22%
0.08
0.26
7.2%
23%
No harm.
No harm.
Year-on-year increase.
Year-on-year increase.
*Note 1
*Note 1
Year-on-year increase.
Environment
and climate
change
Communities
Adopting sustainable
resourcing and consumption
practices and taking
measures to mitigate carbon
production and climate
change to protect our
environment and biodiversity.
Scope 1 and 2 carbon
emissions (CO2e tonnes)
Scope 3 carbon emissions
(CO2e tonnes)
Waste intensity
(tn/£100k revenue)
Making a positive impact
in communities where
we operate by delivering
greater social value and
improving lives.
Social value as a %
of turnover
Considerate Constructors
Scheme performance
14,127
8,881
Net zero by 2030.
*Note 2
*Note 2
Net zero by 2045.
13.04
7.6
Year-on-year
reduction.
*Note 3
*Note 3
Year-on-year increase.
41.1
(industry ave. 37.1)
40.6
(industry ave. 38.0)
>38 and above
industry average.
Quality and innovation
Clients
Supply chain
Delivering lower carbon,
superior buildings and
infrastructure with a better
social footprint for clients in
our chosen markets through
a focus on innovation,
digitalisation and quality.
Aligning our supply chain
with our culture and creating
collaborative relationships
that deliver best practice,
innovation and sustainable
outcomes for clients,
communities and
the environment.
% of repeat business in our
order book
% of full year planned
revenue secured at the
start of the financial year
% of business unit core
trades spend with
Aligned subcontractors
Prompt payment –
% of invoices paid
within 60 days
91%
90%
58%
88%
92%
90%
59%
93%
>80%
>85%
70%–80%
>95%
Sustainable financial returns
Finance
Earning a sustainable return
on the value we deliver.
Focus on bottom line
margin growth
Disciplined contract
selection and sustainable
revenue growth
Maintain strong
balance sheet
Sustainable dividends
Divisional
operating margin
(5.0)%
Revenue
£1,090m
Divisional
operating margin
2.0%
Revenue
£1,125m
2026 target
Divisional operating
margin growth to 3.0%
Revenue growth
towards £1.6bn
Average month
end cash £141m
Dividend cover =
n/a
Average month
end cash £164m
Dividend cover of
2.0x4
Operating cash
generation
Dividend cover of
2.0-2.5x
Notes
1 Employee advocacy will be measured through regular employee surveys.
2 Historically, we have only reported on one element of our Scope 3 emissions, business use of private vehicles. As part of our commitment to net zero by 2045 and setting a
science based interim carbon reduction target, we are currently in the process of performing a Scope 3 screening review to identify the most material Scope 3 emissions
categories. We will then develop reporting methodologies for the most material Scope 3 categories and intend to start reporting our Scope 3 emissions from 2023.
3 Our Social Value Calculator was updated and relaunched during the second half of FY21. It captures social value outcomes across six key measures which are then
multiplied by the proxy values in the national TOMS framework to give an estimate of total social value delivered. We do not have a full year of data to report in FY21 but
intend to start reporting this KPI in FY22.
4 Based on earnings from continuing operations.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information
20
Q&A
with the Chief Executive
Q.
A.
What does this new era for
Galliford Try look like ?
The space in which we work has been
rapidly changing as a result of the urgency
of the climate change crisis and a shift in
mindsets about social responsibility.
The pandemic has accelerated this
transition and put a spotlight on low
carbon economies, digitalisation and
social responsibility.
Employees want to work for a socially
responsible employer that focuses on
more than the bottom line, clients want
to work with contractors with leading
sustainable practices who can help
them achieve their carbon and social
objectives, subcontractors want
collaborative relationships and fair
payment terms, and communities
desire an improved environment.
Construction is an enabler of this change
across the UK. This is reflected in the
Government’s levelling up agenda to invest
in economic and social infrastructure,
its net zero carbon objectives and the
Construction Playbook which takes a
mature, sustainable approach to public
sector procurement and values long-term
relationships to support innovation and
greener construction.
Our updated strategy responds to this by
aligning profit and purpose through four
strategic priorities. It pulls together our
financial objectives with our operational
priorities, sustainability aspirations and
progressive culture so that we can create
long-term value for our stakeholders.
If we have the right culture, we will attract
and retain the right people. With the right
people, we work with the best clients and
deliver higher quality projects, so financial
success follows. Sustainability resides at
the heart of this and so the part we have
to play in the future of the country is
very exciting.
Q.
A.
Q.
A.
How has the strategy
been updated?
We carried out extensive research and
engaged with clients, investors, advisers
and our own teams to understand their
key interests and priorities. We considered
this against the macro environment, the
competitive landscape facing the business
and, importantly, we looked at where we
want to be, the areas we want to influence
and our own appetite for risk. We consider
we have the right fundamentals in place
with some measured refocusing and
renewing of our ambitions as outlined
on pages 18 and 19.
The strategy targets financial
growth in terms of revenue and
profit to deliver increased
shareholder return. How will this
be achieved?
We have the right building blocks to
improve our margin. The Market review
(page 16) shows there is strong demand
for our work as a direct result of the
Government’s objective to ‘build back
better’ from the pandemic. The size of
our markets is increasing and we’re also
monitoring new opportunities. We’re in a
position to increase our share of current
and potentially suitable markets and our
embedded robust risk management
processes will continue to form the
cornerstone of any future growth and drive
order book quality. Digitalisation and
decarbonisation (page 21) will play a key
role, as by their nature, they typically drive
us to cut out inefficiencies in time, costs
and materials, adding to the bottom line.
We also plan to increase our dividend.
This combination of controlled increased
turnover, increase in profit and dividend
will drive shareholder return.
Bill Hocking
Chief Executive
Galliford Try Holdings plc
Strategic report
Governance
Financial information
21
A commitment to
net zero carbon
We have pledged to achieve net zero carbon
across our operations by 2030 and to widen
that scope to include all activities by 2045 at
the latest.
To provide a clear route to reduce greenhouse
gas emissions, we have committed to achieving
a verifiable science-based target validated by
the Science Based Targets initiative (SBTi).
In doing so, we have joined the Business
Ambition for 1.5°C to limit global warming to
1.5 degrees and the UN-backed campaign
Race to Zero.
We are already well advanced on our carbon
reduction journey across our operations, having
reduced carbon dioxide equivalent emissions
(Scope 1, 2 and operational Scope 3) by 59%
from 2015 to 20201. Our success in significantly
cutting emissions to date has been achieved by:
Using renewable energy sources, where
possible, for permanent offices and
supporting electric vehicle use with
charging points at our workplaces.
Encouraging the use of electric or plug-in
hybrid vehicles, which currently represent
36% of the total vehicle fleet and have
helped reduce average carbon emissions
across the company fleet from 133g/km
in 2011 to 86g/km in 2020.
Promoting the use of electric and
alternatively-fuelled plant on sites.
Earlier grid connections to minimise diesel
use on projects.
Operating an Agile Working policy
since 2018 and maximising the use of
technology to reduce travel and improve
work-life balance.
We are confident about achieving net zero
across our own operations by 2030 through
further reduction measures, many of which
are aligned to the Construction Leadership
Council’s CO2nstruct Zero priorities.
1 Historical figures exclude disposed
housebuilding divisions.
Our updated strategy pulls together our
financial objectives with our operational
priorities, sustainability aspirations and
progressive culture so that we can create
long-term value for our stakeholders.
The part we have to play in the future
of the country is very exciting.
Bill Hocking
Chief Executive
Annual Report and Financial Statements 2021 22
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. This is why our sustainability commitments are integral to our
strategy. Importantly, they are at the core of delivering stakeholder value.
How our sustainability pillars align to the UN Sustainable Development Goals
Our six fundamental pillars
1 1
3
6
9
Health &
safety
s
n i t i e
u
m
C o m
C
l
i
e
n
t
s
7
4
Our
pillars
Supply
chain
12
10
E
n
vir
clim
o
n
a
t
e
m
1
3
5
c
e
h
n
a
t
n
&
g
e
O ur people
8
Mapped to the UN Sustainable
Development Goals.
3 Good health and wellbeing.
4 Quality education.
5 Gender equality.
6 Clean water and sanitation.
7 Affordable and clean energy.
8 Decent work and economic growth.
9 Industry, innovation and infrastructure.
10 Reducing inequalities.
11 Sustainable cities and communities.
12 Responsible consumption and production.
13 Climate action.
Our commitment to sustainability
As a responsible business, we manage our
impacts in relation to six fundamental areas:
our people, health and safety, environment and
climate change, communities, clients, and supply
chain. As part of our strategy update, we have
reviewed the sustainability priorities of our
principal stakeholder groups and renewed
our key commitments across these six pillars.
Management
The Executive Board has overall responsibility
for setting policy and monitoring our
sustainability performance as a standing agenda
item. Main Board oversight of sustainability
performance is also maintained through the
Stakeholder Steering Group.
UN Sustainable Development Goals
The UN Sustainable Development Goals (SDGs)
provide an international blueprint for how
organisations can work towards greener,
more inclusive economies, and stronger,
more resilient societies. They recognise that
economic growth must also address a range of
social needs including education, health, social
protection, and job opportunities, while tackling
climate change and environmental protection.
This belief mirrors our own and so each of our
six pillars aligns to at least one SDG.
Galliford Try Holdings plc
23
Operating sustainably
People and culture
A people-orientated,
progressive culture
We seek to attract and retain talented individuals
who are aligned to our purpose and uphold our
values, creating an inclusive environment where
they can truly be themselves and thrive.
Embedding and reinforcing our culture
We believe that developing the right culture
is a fundamental strength of our business and
embedding and reinforcing our culture is a
continuous process.
Our Code of Conduct, ‘Doing the right thing’,
defines the behaviours and values we expect
at Galliford Try and provides a framework of
standards and policies to ensure everything we
do is in line with our values, legally compliant
and morally correct.
It is underpinned by our valued-based
Leadership Framework, which demonstrates
what great leadership looks like to us and the
capabilities that it comprises. The importance
of living our values is also driven by our
Performance and Development Review
process, which all employees are encouraged
to participate in at once a year, supported by
ongoing development discussions and training.
We raise awareness of our policies within
contracts of employment and new starter
inductions, and communicate material changes
or new policies through a number of means
including communication from our Chief
Executive, and training, where necessary.
We mandate training on key themes such as
diversity, discrimination, GDPR, anti-bribery
and cyber security, refreshing content to
ensure it remains relevant and up-to-date.
Our policies are held within our change-
controlled Business Management System (BMS)
which allows effective implementation of our
policies, practices, guidelines, processes and
procedures in the execution of our work.
We promote a transparent culture, and
encourage our teams to speak up about any
potential non-compliance with our policies to
line managers, senior management, our HR
or Legal teams or through our independent,
anonymous whistleblowing facility.
Engagement
The restrictions of the pandemic created an
additional need to engage employees, with
many office-based staff working remotely and
all those in the workplace continuing to social
distance and limiting face-to-face contact
where not absolutely required. As well as
‘business as usual’ communication, our
Employee Forum (page 24) provided a channel
for gathering two-way engagement across the
business and we carried out a company-wide
virtual roadshow hosted by the Chief Executive.
During the year, we maintained
our voluntary employee churn at 13.2%
(2020: 12.8%).
Key commitments
Sustainability
pillar
Objective
Progressive culture
KPI
Rationale
FY20
FY21
Ambition Link to UN SDGs
Our people
Creating an inclusive
environment and
progressive culture
that enables all
individuals to reach
their potential.
Early careers as a
% of total employees
Women as a % of
total employees
Employee advocacy
A focus on early careers gives us the
greatest influence over the diversity
of the workforce of the future.
Attracting more women into our
business is key to accessing the
skills we need and promoting a
more diverse culture.
Advocacy is a powerful indicator
of employee sentiment towards
the company and our culture.
8.0%
7.2%
22%
23.0%
YoY
increase
YoY
increase
*Note 1
*Note 1
YoY
increase
Notes:
1 Employee advocacy will be measured through regular employee surveys.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information
24
Taking action to drive
employee advocacy
The challenge
We received consistent feedback from our Employee Forum that our ongoing response to the
Covid-19 pandemic was well-received. Key themes and actions arising from employees are
outlined below:
The feedback
Our response
More communication requested.
As part of our response, we delivered
a virtual Chief Executive roadshow
including a presentation from
each business unit on strategy
and progress.
The result
Around 1,500 people (65%), a record
number, attended the roadshow and
97% of those who provided feedback
found the sessions useful and most
said they felt engaged, committed
or included.
More direct access to wellbeing
support requested.
We introduced a programme of
weekly online Wellbeing Wednesdays
with trained professionals for our
staff and their families to attend and
discuss a range of topics from financial
stability to family-life and physical and
mental wellbeing.
We followed up with a survey to
site staff specifically to gauge our
progress. 83% of those who
responded said they were aware of
the wellbeing resources available to
them and felt supported; 82% were
positive about communication; and
81% had confidence in our response
to Covid-19.
83%
felt supported
82%
felt well communicated with
Early careers
Early careers are the focus of many of our
recruitment activities, as they allow us to grow
our own talent. Our Graduate Programme,
apprenticeships and traineeships remain
popular, so 7.2% of our workforce are in
these positions.
Inclusion and diversity
Diversity of thought, approaches and
experiences enrich our culture so we
continually strive to create an environment
which is inclusive.
Agile working remains a cornerstone of our
approach, offering flexibility to suit individual
needs. It goes beyond remote working and
offers our people the ability to take advantage
of a blended approach to work, including
staggered start and finish times, job shares,
compressed hours, sabbaticals and return to
work programmes.
This improves our ability to attract and retain
people from more diverse talent pools, who may
not wish to or be able to work regular hours due
to their personal circumstances.
This financial year saw a slight increase in the
proportion of females across our business at
23% compared with 22% the previous year and
our mean gender pay gap reduced to 28.8%.
Early careers allow us to bring talent into the
business and develop them into more senior
positions. This contributes to narrowing the
pay gap typical in our industry where a greater
proportion of staff are male and a significant
proportion of higher paid roles are carried out
by males. In our Gender Pay Report this year,
which provides data for April 2020, we reported
a negative mean gender pay gap at -12.4%
(2019: -6.10%) across early careers meaning
females in this population typically out-earn
males. This can be attributed to the fact
that we see more females in higher paid
graduate positions than the apprentice/trainee
starting salaries.
plc Board
Senior grades (A-D)2
Total company including
plc Board
Gender1
Female
Male
2
46
4
427
585
1,927
1 Gender figures are based on employee numbers at
year end.
2 Senior grades are defined as job grades A–D which
encompasses senior managers and directors,
excluding Board directors.
Galliford Try Holdings plc 25
Tackling unemployment
with a Kickstart
to careers
In partnership with the Department for
Work and Pensions, we were pleased to offer
22 Kickstart placements, which provide
six-month long work placements for 16-24
year-olds who are perceived to be at risk of
long-term unemployment and are claiming
Universal Credit.
The scheme is funded by Government to
25 hours per week, with the Group contributing
the difference to provide full-time roles where
possible. As well as receiving a fully-paid
placement and hands-on experience in a
construction environment, individuals receive
additional support such as employability
skills, goal setting, CV building and interview
behaviours to help develop their employability
and boost their employment prospects in
the future.
We are accredited as a Disability Confident
Employer, confirming our commitment to
removing barriers to disabled people and
those with long-term health conditions
in employment.
We recognise that military personnel have
skills that can be transferred to roles with us .
We have participated in The Armed Forces
Corporate Covenant since 2016.
To support inclusion across the business,
we revamped our interview skills workshop
to ensure our managers are more inclusive
while hiring and they are aware of any potential
biases to ensure these do not influence their
decision-making processes.
Skills and development
We have extensively developed and modelled
our career paths which continue to support
employees at all levels to fulfil their potential
and enable individuals to take control of their
development and progress at a pace that is right
for them. This includes developmental and
educational support which helps individuals to
identify the steps they need to take and receive
the support needed, ensuring they stay on
track. Career paths are designed to support
succession planning. We were pleased to
add to them our new Project Management
Development Framework (PMDF) and
Commercial Development Framework (CDF).
These have been designed to support excellent
and consistent project delivery, as well as
sharing best practice, and raising commercial
awareness across all of our people.
Having previously moved much of our learning
and development to an online environment to
ensure our teams could receive training while
also protecting their health in light of the virus,
we introduced a ‘blended’ approach to the
delivery of learning and development consisting
of a mix of face-to-face training, e-learning and
self-learning. This ensures that our offering is
more accessible to all and supports our agile
working agenda while providing our teams
with the best possible training.
We delivered a total of 6,353 training days
during the year (2020: 4,647), equivalent to
2.5 days per employee (2020: 1.5).
Areas of focus for 2021/22
Continue to drive diversity and inclusiveness
by creating role models through recruitment
and career progression.
Maintain our focus on early careers
recruitment and development.
Embed agile working into business as
usual working practices, maintaining the
learning and benefits experienced during
the pandemic.
Placements offered
22
Ages involved
16-24 years
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 26
Operating sustainably
Health and safety
Prioritising health,
safety and wellbeing and
ensuring no harm
Our objective is to create and maintain an environment where care for
our people and those who work with us is our top priority. We achieve
this through our award-winning programmes, Challenging Beliefs,
Affecting Behaviour and Be Well.
Sustainability
pillar
Objective
KPI
Rationale
FY20
FY21
Ambition Link to UN SDGs
Progressive culture
Health and
safety
Prioritising health,
safety and wellbeing
and ensuring no harm
to anyone linked with
our operations.
Accident
Frequency Rate
Lost Time
Incident Rate
Although internally, we use
Lead Indicators to drive
improvement, accident rates
remain the industry standard
measure of safety performance.
0.07
0.08
No harm
0.26
0.26
Challenging Beliefs,
Affecting Behaviour
Our safety culture is embedded through
Challenging Beliefs, Affecting Behaviour,
a programme based on awareness, training,
coaching and visible leadership, which has
formed the backbone of our approach since its
inception in 2012. We have gradually evolved
the programme over the years and, this year,
we refreshed the training programme and
toolkit with more thought-provoking content
and more up-to-date examples. This includes
our focus on ‘Lead Indicators’ and our aspiration
of no harm, underpinned by a culture of care.
Lead Indicators allow us to be more forward-
looking and proactive and span six key areas
of Leadership, Communication, Competence,
Culture, Contractors and Planning.
The programme is a key way in which we engage
with our subcontractors, who widely praise its
ability to capture the importance of safety in a
mindset changing way (page 27).
Leadership and management
The overall responsibility for health and safety
lies with our Executive Board. Health and safety
is the top agenda item for all management
meetings and monthly reporting at business
unit and divisional Board meetings enable
statistics and trends to be identified and,
where needed, addressed.
Business unit management is responsible
for the implementation of our Health and
Safety Policy which provides a framework
to effectively manage all aspects of health,
safety and wellbeing, and ensuring all health
and safety risks are assessed and safe systems
of work are devised in line with the Galliford
Try Health, Safety and Environmental
Management Systems.
The Health, Safety & Environment Director
manages a team of Health, Safety and
Sustainability (HS&S) professionals and
each business unit benefits from an assigned a
Lead HS&S advisor. Advisors play an active
role in planning, as well as visiting sites
regularly to monitor adherence to our
policies and procedures.
Visible leadership through site safety tours,
and an open dialogue with our site teams is a
powerful way for management to promote and
maintain safe behaviours on site by engaging
with operatives to correct poor practice and
reaffirm positive behaviour. We were pleased
to be able to resume these as the strictest
Covid-19 measures eased across the UK
and consequently we increased the number
of director tours from 663 to 755. We also
conducted 60,411 Safe Behaviour Discussions
(2020: 61,143).
Operating in the pandemic
Our focus remained on providing Covid-19
secure working environments. All our
workplaces were subject to specific Covid-19
risk assessments to ensure works were
carried out in full compliance with the latest
Construction Leadership Council Site
Operating Procedures, as well as adhering
to our own strict protocols, and wellbeing
measures (page 24).
Performance
We received eight awards from RoSPA (The
Royal Society for the Prevention of Accidents),
which includes four Order of Distinction awards
for 15–24 Consecutive Gold Awards.
While we achieved an Accident Frequency
Rate (AFR) of zero across seven business units,
we were disappointed to slightly increase our
overall AFR to 0.08 (2020: 0.07). We take this
very seriously and are committed to improving
our behaviour by learning from high-potential
incidents and near misses, and continuing to
promote behaviours that drive excellence
in safety.
We successfully achieved ISO 45001, the new
ISO certification replacing OHSAS 18001
for Occupational Health and Safety, which
demonstrates our leadership approach to
health and safety.
Areas of focus for 2021/22
Our key focus in 2021/22 will be reinforcing
health and safety procedures across both our
own employees as well as our supply chain to
ensure our processes are fully understood and
embedded as we aspire for no harm.
Galliford Try Holdings plc 27
Industry lessons
from Grenfell
The Grenfell Tower disaster is a tragic and
severe reminder to the industry that how and
what we build really matters. We became one of
the first companies to subscribe to the Building
a Safer Future (BSF) Charter, which has been
created to promote an urgent and positive
culture and behaviour change in the safety
of the built environment, with particular
reference to high-rise residential buildings.
Reinforcing a culture
of behavioural safety
What makes it successful?
Five training modules which
outline the psychology of
behaviour, our aims and
where the individual fits in.
Director tours
visibly demonstrate
safety leadership.
Golden Rules provide the
minimum standards and Back
to Basics test that we have
the right person, planning,
equipment and workplace.
Trained Coaches drive best
practice on site.
Constant reinforcement
includes Safe Behaviour
Discussions, First Ten
Minutes Briefing, Toolbox
Talks, visual awareness,
safety shutdown days.
We believe that Challenging Beliefs, Affecting Behaviour is a leading
safety programme and we are constantly vigilant that it remains that way.
Our refresh of the programme reinforces its importance within the
business and is an important step on our journey towards no harm.
Mike Webb
Health, Safety and Environment Director
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 28
Operating sustainably
Environment and climate change
Protecting our
environment
We recognise the urgency of the climate change agenda and champion
the role we have to play in decarbonising the economy for a greener, more
sustainable future. Our focus is on minimising the carbon emissions within
our own operations and reducing the whole-life carbon of the buildings,
infrastructure and services we provide.
Key commitments
Sustainability
pillar
Objective
Socially responsible delivery
Environment
and climate
change
Adopting sustainable
resourcing and
consumption practices
and taking measures
to mitigate carbon
production and climate
change to protect our
environment and
biodiversity.
KPI
Rationale
FY20
FY21
Ambition Link to UN SDGs
Scope 1 and 2
carbon emissions
(CO2e tonnes)
Scope 3 carbon
emissions
(CO2e tonnes)
We have the greatest control
over Scope 1 and 2 emissions.
14,127
8,881
Scope 3 emissions are the
most significant element of our
overall carbon footprint.
*Note 1
*Note 1
Waste intensity
(tn/£100k revenue)
Reducing waste limits the use of
scarce natural resources, reduces
embodied carbon and reduces cost.
13.04
7.6
Net zero
by 2030
Net zero
by 2045
Year-on-
year
reduction
Notes
1 Historically, we have only reported on one element of our Scope 3 emissions, business use of private vehicles. As part of our commitment to net zero by 2045 and setting a
science-based interim carbon reduction target, we are currently in the process of performing a Scope 3 screening review to identify the most material Scope 3 emissions
categories. We will then develop reporting methodologies for the most material Scope 3 categories and intend to start reporting our Scope 3 emissions.
All Scope 1, 2 and 3 activities – Net Zero by 2045
Key
Net Zero by 2030
Net Zero by 2045
Greenhouse Gases
SCOPE 2
Indirect
SCOPE 1
Direct
Purchased
electricity
Owned
transport
SCOPE 3
Indirect
Fuel
combustion
Transportation
and distribution
Process and
fugitive
emissions
Processing of
sold products
SCOPE 3
Indirect
Business
travel
Capital goods
Leased
assets
Employee
commuting
Purchased goods
and services
Waste from
operations
Transportation
and distribution
Fuel and
energy-related
activities
Use of sold
products
End-of-life
treatment of sold
products
Leased
assets
Franchises
Investments
Upstream activities
(Supply chain)
Galliford Try
Downstream activities
(Customers/end users)
Galliford Try Holdings plc
29
This year we were pleased to publish our
pledge to achieve net zero carbon across our
own operations by 2030, and across all
activities by 2045 at the latest (page 21).
To provide a clear route to reduce greenhouse
gas emissions, we have committed to achieving
a verifiable science-based target validated by
the Science Based Targets initiative (SBTi).
In doing so, Galliford Try has joined the Business
Ambition for 1.5°C to limit global warming to
1.5 degrees and the UN-backed campaign
Race to Zero. Progress in the calendar year
2020, is detailed below.
Carbon dioxide equivalent emissions
(Scope 1, 2 & 3)2,3,4,5
Tonnes of CO2e
Emissions from combustion of gas tCO2e (Scope 1)
Emissions from combustion of fuel for transport purposes (Scope 1)
2020
100
1,099
2019
3,388
2,476
Emissions from fuel oil supplies ie diesel consumed (Scope 1)
5,683
16,623
Fugitive emissions from office facilities ie air conditioning systems
(Scope 1)
Emissions from use of LPG (Scope 1)
5
0
19
5
2019
(restated)4
672
1,880
9,997
9
1
Emissions from business travel in employee-owned vehicles where
company is responsible for purchasing the fuel (Scope 3)
2,784
7,270
4,869
Emissions from purchased electricity (Scope 2, location-based)
1,994
3,709
1,568
Emissions from purchased electricity (Scope 2, market-based)
998
Not
reported
Not
reported
Scope 3
Scope 2
Scope 1
4 Restated to exclude discontinued housebuilding divisions.
Galliford Try’s operations are wholly within
the UK and as such this is where reported
emissions arise.
been approved as an IEMA Training Centre.
During the year, we delivered 304 training days
covering environment.
33,379
4,989
2,884
25,506
18,996
4,869
1,568
12,559
11,665
2,784
1,994
6,887
Actual
2018
Actual
2019
Actual
2020
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 Scope 3 to reflect industry best
practice and compliance with ISO 14064-1.
4 Restated to exclude discontinued
housebuilding divisions.
5 Galliford Try measures dual Scope 2 emissions
using the location-based and market-based
approach as demonstrated in the table on the top
right. However, for emissions reporting purposes,
we use location-based Scope 2 emissions.
Streamlined Energy & Carbon
(SECR) Reporting
The data included in the table covers the new
reporting requirements detailed in the 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 years 2020 and 2019, with the
2019 data restated to exclude the disposed
housebuilding divisions and therefore provide
more meaningful comparisons.
We are pleased to report a reduction in our
Scope 1, 2 and 3 carbon emissions within our
current carbon reporting boundaries to
1.17 tonnes of carbon dioxide equivalent
emissions per £100,000 of revenue in 2020
from 1.40 in 2019). While some of this reduction
is due to reduced travel during the pandemic,
this also reflects the longer term 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 within
our current carbon reporting boundaries by
59% since 2015, ie from 28,152 tonnes of
carbon dioxide equivalent emissions in 2015
to 11,665 tonnes in 2020.
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 2020, 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 kWh. See graphic
(page 28) for the scope of our reporting.
Annual energy usage
Our total energy use, calculated from Defra
2020 conversion factors, for all our UK
activities related to our Scope 1, 2 and 3
activities (within our current carbon reporting
boundaries) was 40,194,724 kWh (location-
based), which is a 48% reduction in our
total energy use in 2019 (77,235,523 kWh;
location-based). This excludes our PPP
Investments operations, but includes joint
ventures where we have operational control.
Waste performance
In the financial year to 30 June 2021,
we reduced waste per £100,000 of revenue
to 7.6 tonnes, compared to 13.0 tonnes the
previous financial year.
Initiatives
We have developed a new bespoke one-day
environmental training course that has been
approved by the Institute of Environmental
Management & Assessment (IEMA). The
course, which can be delivered remotely during
the pandemic, focuses on environmental
management through each phase of project
delivery to ensure the effective implementation
of robust management controls to optimise
environmental performance and assure
effective and efficient project delivery.
Additionally, to deliver this course internally
by our in-house team of environmental
professionals Galliford Try has successfully
We continue to support, promote and
implement CIRIA’s BIG Challenge initiative
which is focused on biodiversity enhancement
at a project level. We continue to support,
promote and implement the disposal of waste
wood via the National Community Wood
Recycling Project.
Management
Our Environmental Policy sets out our
obligations to protecting and enhancing the
environment, covering the assessment,
management and control of environmental
issues into the management of our business.
Our Energy Policy 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).
The policies referred to are contained within
our BMS and owned by the Executive Board
with responsibilities discharged, as appropriate,
by Divisional boards, management, employees
and supply chain members.
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.
Areas of focus for 2021/22
We will continue to implement initiatives to
further reduce our Scope 1 and 2 carbon
emissions, including installing electric vehicle
charging points in our key office locations and
mandating the use of lower carbon ‘eco cabins’
for site welfare and offices.
Having committed to setting a science-based
target for carbon reduction, we are now
focusing on screening our Scope 3 activities to
identify the activities that represent the most
material elements of our total carbon footprint.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 30
Operating sustainably
Environment and climate change
continued
We will then develop methodologies to capture
and report our most material Scope 3 emissions
and develop carbon reduction targets and
action plans consistent with our commitment
to align to a 1.5 degree warming target.
We continue to seek innovative and proactive
ways to improve our environmental
performance across all our activities. Building
on 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 on 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 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.
Climate related financial disclosures
We acknowledge and support the requirement
for companies with a premium listing to
make disclosures consistent with the
recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD)
for accounting periods beginning on or after 1
January 2021. We are well-positioned to make
the required disclosures in our 2022 Annual
Report and already comply with many of
the recommendations:
Governance – ESG, including climate-related
matters, is a standing agenda item for our
Executive Board. Sustainability matters
are now reviewed by our Stakeholder
Steering Committee.
Strategy – our refreshed strategy reflects
the market opportunity related to supporting
our clients’ transition to low carbon buildings
and infrastructure.
Risk management – our enterprise risk
management approach captures some of the
potential physical and transition risks and
opportunities where they impact on our
principal risk themes of work winning, project
delivery, resources, and regulatory compliance.
Metrics and targets – we already measure and
report on our Scope 1 and 2 GHG emissions
and have committed to net zero targets for
Scope 1 and 2 by 2030 and Scope 3 by 2045.
We have also committed to setting an interim
science-based carbon reduction target, aligned
to a 1.5 degree global warming ambition.
Our focus in 2021/22 is to develop our
approach in relation to each of these four
pillars and the 11 recommended disclosures,
with a particular focus on:
Enhancing plc Board oversight of climate
related risks and opportunities.
Articulating the key climate-related risks
and opportunities in the short, medium and
longer term, and how they relate to the
achievement of our strategic objectives
and financial performance.
Embedding the assessment of climate-
related risks and opportunities into our
enterprise risk management processes,
including the oversight provided by the
Executive Risk Committee.
Developing methodologies to capture
and report carbon emissions relating
to the Scope 3 categories that comprise
the most material element of our overall
carbon footprint.
Leading research into dynamic
charging for road vehicles
As the UK strives towards its carbon targets and transitions
to ending the sale of fossil-fuel goods vehicles by 2040,
our business is at the forefront of a new research project
into the feasibility of dynamic charging for road vehicles.
Working in collaboration with UK partners Honda R&D
Europe (UK), TRL and Miralis, alongside Honda R&D from
Japan, the £1.1m ElectroRoad project, let via the £20m
Zero Emission Road Freight funding competition managed
by Innovate UK, will complete a comprehensive study into
an innovative dynamic charging system to support the
decarbonisation of the road network.
The technology is designed to charge electric vehicles on the
move to help them travel longer distances without needing to
recharge their batteries. The ElectroRoad project funded by
the Department of Transport, will complete an assessment
of the UK Strategic Road Network to consider how best to
deploy Honda’s side conductive power technology in the UK
and to identify suitable locations for future field trials.
The project closely follows Galliford Try’s project
investigating the implications for Connected and
Autonomous Vehicles (CAVs) on the UK motorway network,
which was a winner in Highways England’s 2019 Innovation
and Air Quality Competition and was awarded £1m from
the Innovation and Modernisation Fund.
Galliford Try Holdings plc
31
Operating sustainably
Supply chain
Delivering in partnership
The majority of our work is delivered in partnership with our supply chain
so we align key supply chain members with our culture and develop
collaborative relationships that improve social, environmental and
economic outcomes for us, them and our clients.
Key commitments
Sustainability
pillar
Objective
Quality and innovation
Supply chain Aligning our supply chain
with our culture and
creating collaborative
relationships that
deliver best practice,
innovation and
sustainable outcomes
for clients, communities
and the environment.
KPI
Rationale
FY20
FY21
Ambition Link to UN SDGs
% of business unit
core trades spend
with Aligned
subcontractors
Prompt payment –
% of invoices paid
within 60 days
Having an aligned supply chain is
fundamental to helping us deliver
our desired outcomes in relation
to safety, quality, innovation and
carbon reduction.
Prompt payment helps to
maintain the financial health
of our supply chain.
58%
59%
70%–
80%
88%
93%
>95%
Our supply chain predominantly comprises
subcontractors, who operate on our sites, and
suppliers, who provide materials. We define
contractual levels at Group level to minimise
risk to our projects and business; selection and
management of our subcontractors then takes
place at a local level which allows us to provide
greater social benefits directly within the
communities where we are carrying out our
projects. This approach is coupled with the
central procurement of key commodities to
benefit from strategic supplier partnerships
and economies of scale.
Building a resilient supply chain is key to
achieving our objectives as a business.
We therefore seek to work with subcontractors
and suppliers who share our values and
develop long-term relationships that benefit
both our businesses. Seventeen of our supply
chain agreements have entered or are entering
a 10-year working relationship.
A healthy cash flow is the lifeblood of any
business and late payment of invoices can be
problematic for small suppliers of goods and
services. As a signatory of the Prompt Payment
Code, we have committed to paying 95% of
supply chain invoices within 60 days, and
achieving the new standards announced on
19 January 2021 for suppliers with fewer than
50 employees. In the last six months of the
period we paid 95% of invoices within 60 days.
We purchase the majority of our materials from
preferred suppliers, either directly or via our
subcontractors. As outlined in our Responsible
Sourcing Policy, we seek to select, support and
collaborate with preferred suppliers that take
steps to address sustainability issues.
Advantage through Alignment
Advantage through Alignment is a unique
initiative devised by our business which goes
beyond pure collaboration with our supply
chain, into a much deeper relationship. Aligned
subcontractors are appointed a dedicated point
of contact within our business for improved
communication. Through a programme of
support, training and education, we align our
Upskilling our
supply chain
We continue to retain Gold status from
the Supply Chain Sustainability School,
an award-winning collaboration designed to
upskill its members through free training and
resources covering sustainability, off-site
manufacturing, BIM, Lean and Management.
During the year, we have worked with the
school to deliver to our supply chain:
3,211 hours of CPD training.
2,000+ e-learning modules, with 666
attendees across various workshops.
We actively encourage our Aligned
subcontractors to join the school and
improve their score. Out of our 266 Aligned
suppliers 72% are registered with the school.
suppliers and subcontractors with our
working practices, our values and our
vision. This includes access to our award-
winning behavioural safety programme,
Challenging Beliefs, Affecting Behaviour;
BIM training and access to Continuing
Professional Development.
This deeper understanding creates greater
efficiencies and opportunities for innovation,
as well as upskilling workforces and allowing
the small and medium subcontractors we work
with to grow.
Areas of focus for 2021/22
We have a number of areas currently under
focus to improve our operations, such as:
Continuing to work with our key supply chain
partners to identify lower carbon plant,
equipment and site accommodation
solutions to accelerate our journey to net
zero operational carbon by 2030.
Collating an inventory of examples of
Modern Methods of Construction (MMC)
used across the business in all sectors,
identifying gaps in knowledge, analysing
current design and procurement processes
and agreeing how we can influence
our clients to consider MMC in their
design choices.
Carrying out the ‘Standard Wall Build Up’
exercise in collaboration with our Group
preferred suppliers for building materials,
to try to pre-empt changes in Building
Regulations for both fire and u-value
requirements and the impact these have on
safety, compliance, buildability and costs.
Annual Report and Financial Statements 2021
Strategic reportGovernanceFinancial information
32
Operating sustainably
Clients
Delivering high quality
Delivering excellence for our clients is key to the long-term sustainability of
our business. 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.
Key commitments
Sustainability
pillar
Objective
Quality and innovation
KPI
Rationale
FY20
FY21
Ambition Link to UN SDGs
Clients
Delivering lower carbon,
superior buildings and
infrastructure with a
better social footprint
for clients in our chosen
markets through a
focus on innovation,
digitalisation and quality.
% of repeat business
in our order book
% of full year planned
revenue secured at
the start of the
financial year
Repeat business demonstrates
we are delivering for our
clients and building trusted,
long-term relationships.
This is an indicator of collaborative
client relationships as it
demonstrates a shared commitment
to a pipeline of work.
91%
92%
>80%
90%
90%
>85%
Client satisfaction is independently assessed by
a third party and we use a dedicated software
platform to internally analyse the data and
develop improvement plans.
Areas of focus for 2021/22
We will invest in our digital tools and
collaborate with our supply chain to
research, design and achieve efficiencies
for our clients through the standardisation
of components and products, improving
quality, reducing design and construction
periods and providing value for money.
We will use the lessons from our net zero
redesign review of Newman School to
develop a carbon toolkit which will enable
us to model the carbon footprint of building
designs and construction methodologies
and help us offer lower-carbon solutions
to our clients.
The roll-out of the Dalux
platform is the next step in the
BIM strategy that we have put
into place. With our emphasis
on creating the right policies
and procedures and giving
people the right training, this
new software is the final piece
of the puzzle.
John Ford
BIM and Digital Lead
Our focus on delivering quality outcomes and
building trusted relationships with our clients is
reflected in the fact that 92% of our order book
is repeat business. Collaborative relationships
provide the platform for our teams to provide
trusted advice and focus on performance
with clear customer priorities and outputs
all underpinned by our accreditation to
the ISO 44001 Collaborative Business
Relationships Standard.
Critical to these long-term relationships is our
ability to deliver consistently high-quality
projects, embracing innovation to improve
productivity and efficiency. Our ISO 9001
certified management system underpins our
approach which is supported by the latest
technology and innovation to deliver right
first time.
Quality throughout the project lifecycle,
from design to operation, is supported by
our investment in digital tools. For example,
during design development, reviews with
customers are conducted using our Dalux
cloud-based BIM viewer and mark-up tool.
Dalux is a fully mobile-enabled viewer and
reflects our commitment to making BIM more
accessible and adding value to our projects and
our people by keeping simplicity in mind.
All projects, whether BIM is a specified client
requirement or not, will use Dalux to improve
the efficiency of projects, help aid design and
construction management, and improve the
quality and co-ordination of information.
Galliford Try Holdings plc
Strategic report
Governance
Financial information
33
Operating sustainably
Communities
Positive change for
communities
Because our purpose puts communities at its very centre, we relish the
opportunity we have to deliver positive change for communities. We achieve
this through the facilities and infrastructure they need, educational and
employment opportunities, and working with local causes and charities.
Key commitments
Sustainability
pillar
Objective
KPI
Rationale
FY20
FY21
Ambition
Link to UN SDGs
Socially responsible delivery
Communities Making a positive impact
in communities where
we operate by delivering
greater social value and
improving lives.
Social value as a
% of turnover
Considerate
Constructors
Scheme (CCS)
performance
Combined social value provides a
composite measure of outcomes
delivered across a range of
community stakeholders.
CCS scores address a broad range
of community measures and allow
for cross sector comparison.
*Note 1
*Note 1
41.1
(industry
ave. 37.1)
40.6
(industry
ave. 38.0)
YoY
increase
>38 and
above
industry
average
Notes:
1 Our Social Value Calculator was updated and relaunched during the second half of FY21. It captures social value outcomes across six key measures which are then
multiplied by the proxy values in the national ‘TOMS’ framework to give an estimate of total social value delivered. We do not have a full year of data to report in FY21 but
intend to start reporting this KPI in FY22.
Delivering a legacy of positive social value
outcomes in the communities in which we
operate is a key part of our strategy. This is
the right thing to do as a responsible business
and is also an increasingly important priority
for our clients. Our project teams undertake a
needs analysis with our clients to identify
the key priorities in relation to employment,
training, SMEs and wellbeing in the local area.
This analysis is used to develop bespoke Social
Value Plans and Employment and Skills Plans.
The outcomes delivered are reported using a
Social Value Calculator.
The Group achieved an average CCS score of
40.6 (2020: 41.1), which continues to exceed
the industry average of 38.0 (2020: 37.1).
We donated more than £250,000 in time,
materials and money to charitable causes
(2020: £195,000) and we were pleased to
mark 22 years of supporting CRASH, which
assists homelessness and hospice charities
with construction-related projects. We
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 business units 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. Our
projects also support local charities and
causes and we take part in VCSEs (Voluntary
Community and Social Enterprises) to support
economic growth. These not only support with
revenue, but provide members with support
and guidance to gain access to our supply chain.
Areas of focus for 2021/22
Having updated our Social Value Calculator,
we have the opportunity to measure and
monitor social value outcomes across our
projects and business units which in turn will
allow us to identify and replicate examples of
good practice across the business.
We are developing a suite of materials to
support our project teams in delivering on
their community engagement objectives.
These include activity plans for work
placements and work experience, lesson
plan templates and structured plans for
site tours.
Social Value
Calculator update
Many of our project teams have historically
captured and reported social value metrics
to our clients using a variety of different tools.
We have now updated and relaunched our
Social Value Calculator which captures data
at a project level and allows us to aggregate
and report our impact at a framework,
business unit and company-wide level.
The calculator measures our impact across
six key measures of social value: local
employment, training, apprenticeships, work
placements, local spend and volunteering.
Since July 2021, we have been using the
updated calculator on all projects of a value
greater than £5m.
We continue to monitor our impact beyond
the scope of the six metrics above where
desired by our clients.
Annual Report and Financial Statements 2021
34
Human rights and modern slavery
Ensuring
human rights
We comply with all UK legislation on human rights, recognising modern
slavery and human trafficking to be the most significant human rights risks to
UK construction businesses. We respect all human rights and are committed
to taking appropriate and proportionate steps specifically to mitigate the risk
of these violations occurring within our business and our supply chain.
Action and performance
Since the Modern Slavery Act came into force,
we have run an awareness campaign comprising
posters, videos and educational material aimed
at helping people recognise the typical signs of
modern slavery.
Anti-bribery and corruption
Policy and management
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
their mandatory courses are flagged to the
Executive Board.
Twice a year, every business unit managing
director and head of support function is
required to sign a declaration to the Chief
Executive that their respective teams are aware
of the policy and the Code of Conduct, comply
with their contents, and that any issues have
been reported.
Performance
No material issues were reported or identified
through our audits.
Galliford Try Holdings plc Non-financial information statement and
non-financial key performance indicators
35
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:
Area
Employees
Key policies – available on our website
Health and Safety Policy Statement
Employee Wellbeing Policy
Flexible Working Policy
Maternity Leave Policy
Paternity Leave Policy
Adoption Leave Policy
Shared Parental Leave (Birth) Policy
Shared Parental Leave (Adoption) Policy
Further information on related risks,
KPIs and performance
Pages 22–27
Environmental matters
Energy Policy
Pages 28–30
Environmental Policy Statement
Responsible Sourcing Policy
Sustainability Policy
Biodiversity Policy
Modern Slavery Statement
Code of Conduct Doing the Right Thing
Human rights
Social matters
Anti-bribery and corruption
Policy and Guidance on the Prevention of Corruption and Fraud
Business model
Principal risks
n/a
n/a
Page 34
Page 33
Page 34
Pages 4–6
Pages 36–41
Annual Report and Financial Statements 2021
Strategic reportGovernanceFinancial information 36
Risk management
Effective risk
management
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 strategy. During
the past year, this ability has continued to
enable the Group to navigate through the
significant uncertainty and change during the
pandemic and position the business to deliver
sustainable growth.
This is the first full year that Galliford Try has
operated as a construction business following
the disposal of the housebuilding divisions in
January 2020. This has enabled us to take a
more targeted and consistent approach to risk
management and to create a more transparent
link between collective principal risks across the
business and the business unit risk registers.
Against the backdrop of the pandemic and the
UK’s departure from the EU, the Board has
carried out regular reviews of the principal
risks and uncertainties, together with the key
mitigations in place. Our principal risks are
presented on pages 37 to 40.
Audit Committee
Responsible for keeping under review
the adequacy and effectiveness of
our 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 principal and emerging risks to
the Executive Board and the plc Board
at least three times a year.
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.
plc Board
Has overall responsibility for setting the risk appetite of the business and
maintaining oversight of our processes for identifying, assessing, managing and
reporting on principal risks.
Reviews 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 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, HR Director, Chief Information
Officer, Head of Supply Chain Management, and a representative from each of
Building, Infrastructure and Specialist Services (Investments & FM).
Meets three times a year to review and update 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 business 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
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 Holdings plc 37
Link to our
strategic priorities
Progressive
culture
Socially
responsible
delivery
Quality
and
innovation
Fair and
sustainable
financial returns
Our principal risks
In previous years, we have monitored and
reported our principal risks using a framework
comprised of 12 risk themes. There was a high
degree of interdependence between these
risk themes because in many cases, they
represented causes rather than impacts.
For example, we had separate risk themes in
relation to the opportunity pipeline, project
selection and work winning, but the ultimate
risk for the Group is that we fail to secure an
appropriate pipeline of projects to achieve our
revenue and profitability targets. At a Group
level, the Board now monitors risk using the
following four principal risks, a detailed analysis
of which is provided below:
Work winning.
Project delivery.
Resources.
Compliance and cyber security.
This simplified approach facilitates a more
targeted focus on the most significant risks and
the actions being taken to manage them.
At an individual business unit level, our risk
management process still captures and
monitors risks and mitigations using the 12 risk
themes so that we can take targeted actions to
address issues that are specific to the regions
and sectors in which they operate.
Work winning
Risk description
We fail to secure an appropriate pipeline of
projects to achieve our revenue and
profitability targets.
Our risk appetite
We aim to secure a forward order book that
provides a high degree of certainty of current
year plus following year revenue, while
reflecting appropriate margin, cash and
risk attributes.
Maintaining discipline in the projects that
we bid for is a fundamental element of our
internal control framework. We will only
bid for projects where we are confident that
we have the experience, knowledge and
supply chain to deliver effectively and
where the client relationships and
commercial terms support a collaborative
approach to managing risk.
Potential causes of risk
A significant and sustained reduction in
Government investment in building and
infrastructure projects reduces the
opportunity pipeline.
Delays to and/or reduced levels
of private sector investment due to
macro-economic conditions.
Failure to secure positions on key
procurement frameworks.
Failure to meet the increasing
sustainability expectations of our clients.
Poor quality bid submissions.
Failure to maintain discipline in
project selection.
Current risk environment
Public sector opportunities are now coming
to market quicker as funding has been
secured. Likewise, the private sector market
remains resilient with opportunities in
commercial sectors such as Private Rented
Sector (PRS) and student accommodation
increasing both for Construction and
Investments. Medium to longer term, the
outlook for public sector markets remains
positive. However, there is a greater degree
of uncertainty in the private sector as the
longer-term impacts of the pandemic on the
way we live and work, and the buildings that
are required, are not yet clear.
Maintaining discipline in project selection
remains absolutely fundamental to delivering
on our strategic objectives. Our risk
management in evaluating opportunities is
robust and is supported by a clear sector
focus. The Procurement Playbook sets out
principles for a more collaborative approach
to sharing of risks between client and
contractor. However, these principles will
take time to become embedded in client
behaviours and we still observe some clients
attempting to pass more risk on. We remain
vigilant to this risk and maintain discipline
in reviewing and challenging onerous
contract conditions.
We continue to be successful in winning work
and securing positions on key frameworks
with good quality clients. However, the
market remains very competitive and we
must compete not just on price, but by
demonstrating our ability to deliver against
the clients’ priorities, especially in relation
to carbon reduction.
Market review p16
Emerging risks
Clients start to move away from the
traditional main contractor/subcontractor
model, instead opting for more self-
delivery and enterprise delivery models.
We innovate or adopt new technologies
too early, incurring costs associated with
being an early adopter, or too late, losing
market share.
Client attitudes to sustainability
shift at differing rates, leaving some
clients focused on construction cost
and others on whole-life cost and
carbon performance.
We fail to balance the need to be
competitive with delivering long-term
sustainability in the assets we build and/or
we are not adequately rewarded for the
long-term value we deliver to clients.
PRS becomes a less attractive market to
invest in, reducing the opportunities in
this market.
The political arena in the UK continues to
be increasingly unpredictable. Radical
shifts in Government policy reduce the
certainty of opportunities in the public
and regulated sectors.
Mitigations
We manage the potential impact of an
economic downturn by building a
high-quality order book with projects that
meet our strict risk profile.
We concentrate on sectors where we have
core strengths and clients with long-term
growth and profitability potential.
We focus on securing positions on key
procurement frameworks (page 48) and
repeat business with key clients through a
centralised, dedicated pre-construction
team. This allows for strategic planning,
better collaboration and reduced risk of
project failure.
We have robust review and approval
controls for bids and contracts supported
by a risk-based heat map tool to ensure
that project selection is aligned to our risk
appetite. Any potentially onerous terms
or other misalignment to our contract
selection criteria are flagged early
on in the process and escalated for
Board review.
We typically target lower-risk contract
types as described on page 6.
We carry out peer reviews of bids where
relevant to ensure robust review and
challenge of risks and assumptions
and to promote knowledge sharing
across the business.
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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 38
Risk management
continued
Project delivery
A values-driven approach to project
delivery focusing on close collaboration
and client satisfaction to enable
achievement of end goals for both parties.
Robust review and approval of contractual
terms, pre-contract to ensure we do not
sign up to contracts with onerous terms.
This includes the employment of margin
thresholds and escalation to the Board of
any contracts that do not meet our criteria.
Rigorous quality control in our business
management system policies and
procedures and digitalisation to improve
data, quality and efficiency.
Due diligence to select competent
designers and subcontractors to work
with and use specialist consultants at
key review stages.
Comprehensive commercial training.
We have introduced standardised
formats (value cost analysis and cost
and value reconciliation) for monitoring
and reporting project performance
and forecasts.
Monthly cross-disciplinary contract
review meetings on all projects enable a
robust assessment of programme status,
risks and commercial forecasts and
are investing in upgrading our existing
ERP systems.
A programme of commercial ‘health
checks’ to provide an independent
assessment of the project team’s reported
project performance and forecast outturn.
Operational controls including health and
safety site risk assessments, which are
monitored through a regular audit process.
Introduction of Technical and
Business Support Forums that drive
process improvements across health
and safety, digitalisation, carbon
reduction, procurement, design
management, mechanical and electrical,
and commercial activities.
Escalation processes to respond promptly
and appropriately to incidents.
Key risk indicators
RIDDOR and AFR scores.
Forecast project margins.
Risk description
We fail to deliver projects safely, on time,
in agreement with contractual terms, and to
a high quality for our clients.
Risk appetite
We prioritise health and safety above
everything else and believe that nothing is
so important that we cannot take the time
to do it safely.
We will not tolerate poor quality and strive
to deliver high quality buildings and
infrastructure for our clients that provide
safe environments for the occupiers and
users of the assets.
We aim to provide realistic and transparent
forecasts of project performance with
potential risks to programme and margins
identified and addressed before
they materialise.
Potential causes of risk
Changing regulations.
Non-compliance with health and safety
regulations and/or poor safety behaviours.
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.
Failure to comply with quality
control procedures.
Extended periods of adverse
weather conditions.
Subcontractor poor performance
and/or insolvency.
Unrealistic estimates, including cost
to complete, inflation estimates, outcomes
of disputes and final value included in
project forecasts.
Current risk environment
Safety performance has remained strong
through the second half of the financial year.
The Covid-19 site operating procedures are
embedded and have driven a greater focus on
planning. This was further supported by the
refresh of our Challenging Beliefs, Affecting
Behaviours behavioural safety programme
in the first half of 2021. We have had an
increased focus on wellbeing across the
Group through initiatives such as Wellbeing
Wednesdays and Feel Good Fridays which
have been well-received by our people.
Our thinking on safety now extends to
consideration of the safety in use of the
buildings we construct and, in the case of
our FM business, the buildings we operate.
The disruption to programmes caused earlier
in the Covid-19 pandemic has subsided and
extensions of time agreed wherever possible.
Covid-19 site operating procedures are now
very well established, and productivity has
returned to normal levels. Any additional
costs associated with Covid-19 health and
safety measures are built into all project
forecasts but do not have a material impact
on margins. The latest round of project
commercial health checks, performed in
March 2021 again observed that project risks
are well understood and where necessary,
reflected in the forecasts.
As a side effect of the increased scrutiny of
fire safety on legacy projects, 12-year defects
claims are becoming more common.
Defending these claims incurs legal costs and
can take up management resource and
therefore it remains important that quality
inspection records are well maintained within
Fieldview and Viewpoint as most claims
relate to defects in design or workmanship.
Our Technical Services team is working on a
wide range of initiatives to drive continuous
improvement in quality, including investment
in digital tools to support better design
integration and visualisation. The revised
approach to auditing compliance with our
quality management systems and processes
has been implemented and ActivSHEQ
(the platform that we use for safety auditing
and reporting) is being used to record and
report the results of quality management
system audits. This will drive greater
consistency in auditing and more visibility
of compliance trends.
Emerging risks
Insurers withdraw from the market for
PI cover for construction contractors
and/or insurance cover becomes
prohibitively expensive.
We fail to adapt our processes to meet
the requirements of our clients to have
better and more reliable data about the
assets we design and build for them.
The country fails to learn from Covid-19
and any potential new global pandemic
has a significant/similar impact on the
construction industry that it had
with Covid-19.
Building designs and construction
methodologies fail to adapt to the effects
of climate change, leading to reduced
productivity, programme delays and
cost overruns.
Mitigations
Continued reinforcement of our
behavioural safety programme
Challenging Beliefs, Affecting Behaviour,
and the introduction of Lead Indicators
which target no harm.
Galliford Try Holdings plc Link to our
strategic priorities
Progressive
culture
Socially
responsible
delivery
Quality
and
innovation
Fair and
sustainable
financial returns
39
The pandemic continues to have a huge
impact on people, particularly their mental
health. We are supporting our teams through
several initiatives including Wellbeing
Wednesdays, Feel Good Fridays, the Be Well
Podcast Library and targeted employee
surveys. A Company-wide employee survey
is planned for later in 2021. Large
infrastructure schemes and a mismatch
between skilled worker supply and demand
are driving salaries up and increasing the risk
of employees leaving for higher reward
packages. We continue to develop our
own people and provide them with
opportunities for progression. However, it
remains a competitive market for talent
and we continue to improve the way we
promote the business and develop our
employee offering.
We continue to manage cash effectively
and the extra disciplines that have been
introduced in the past 12 months have
further improved the accuracy of our cash
forecasting and helped improve our cash
performance. The introduction of domestic
reverse charge for VAT during the year
created a one-off improvement to cash flow,
but we have passed this back to our supply
chain by making further improvements in the
time we take to pay.
Emerging risks
There is a generational shortage of skills as
more experienced staff retire who are not
replaced in sufficient numbers because
the construction sector cannot compete
with other sectors in attracting talent.
Innovations in the use of technology will
require us to attract a workforce with a
very different set of skills.
Depletion or increased scarcity of
non-renewable materials may lead to
greater volatility in prices and more
regular disruption to supply.
Mitigations
The Group has an established HR strategy
based on best practice principles and
relevant legislation which, among other
things, includes the regular review of
remuneration and benefits packages to
ensure we remain competitive.
Our succession planning and talent
management processes enable continuity
and identification of future leaders.
We operate graduate and trainee
programmes to develop our own pipeline
of talent.
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.
Our 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 paying 95% of supply
chain invoices within 60 days, and
achieving the new standards of the
Prompt Payment Code.
We monitor subcontractor financial
strength using a credit tracker on the
Dun & Bradstreet portal.
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
Material and trade shortages.
Voluntary staff churn rate.
Prompt Payment Code
performance statistics.
Average month end cash.
Resources
Risk description
We fail to secure the right people and other
resources necessary to deliver our projects
and manage our business.
Risk appetite
We aim to recruit employees from a
diverse talent pool who are aligned to our
values and behaviours.
We seek to work with financially resilient
subcontractors, suppliers and joint venture
partners who share our values in relation to
safety, quality and sustainability.
Potential causes
We are unable to attract, retain and/or
develop the right staff to meet our future
needs, we mismatch our staffing levels
to peaks and troughs in activity or
lack diversity.
Lack of capacity in the supply chain
due to high levels of activity in the
construction sector.
Subcontractor and/or client insolvency.
Failure to comply with fair
payment practices.
Lack of geographical coverage.
Current risk environment
The availability and pricing of products and
materials in most categories are being
adversely affected by a significant and
sustained demand and supply imbalance.
Multiple factors including Covid-19
disruption to manufacturers, the Suez Canal
backlog, new customs procedures, and a
shortage of drivers are all causing supply-side
issues. Meanwhile, the high levels of activity
in the housebuilding and infrastructure
sectors in particular are leading to
unprecedented demand. We are mitigating
this risk through early engagement with the
supply chain and incorporating inflation
clauses into contracts wherever possible.
If tender lead-in times are high, we re-price
projects to account for any inflation.
Subcontractor insolvency risk has reduced
as most of our Aligned subcontractors
continued to work throughout the pandemic
without furloughing staff. The more
significant subcontractor risk is the current
skills shortages in certain trades, including
bricklayers and joiners. Such shortages could
extend to other trades as construction
activity continues to increase.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information Link to our strategic priorities
Progressive
culture
Socially
responsible
delivery
Quality
and
innovation
Fair and
sustainable
financial returns
Emerging risks
Greater devolution or even full
independence may lead to very different
regulatory regimes in Scotland and the
rest of the UK.
Mitigations
Galliford Try has comprehensive policies
and guidance at every level including our
Code of Conduct, mandatory regulatory
and cyber security e-learning for all
employees, an anonymous and
independent whistleblowing helpline,
regular legal updates and briefings,
six-monthly compliance declarations,
and conflict of interest registers and
authorisations.
The Ethics and Compliance Committee,
chaired by the General Counsel &
Company Secretary, provides ongoing
monitoring and oversight of policy and
compliance activity in relation to key
areas of legislation.
Key risk indicators
Number of external enforcement cases.
40
Risk management
continued
Regulatory compliance
Risk description
We fail to comply with requirements of the
various legal and regulatory regimes in
which we operate, resulting in a high-profile
breach and regulatory censure.
Our risk appetite
We have zero tolerance for non-compliance
with regulations. We expect all employees
and subcontractors to be aware of all
regulations relevant to their role and to
comply at all times. We also expect our
people to speak up if they observe or
suspect non-compliance.
Potential causes
Failure to update our procedures to
reflect changes to key legislation
and regulations.
Failure to provide sufficient and
effective training to all staff.
Failure to implement effective
compliance monitoring processes.
Current risk environment
During the year, we have successfully
managed the transition to new regulatory
requirements in relation to off-payroll
working (IR35) and the introduction of the
Domestic Reverse Charge VAT procedure.
We continue to monitor the findings and
recommendations from the Grenfell inquiry
and will be ready to adapt to any changes
in building regulations. Where necessary,
we have already incorporated the lessons
learned from Grenfell into our processes,
specifically in relation to design
co-ordination and accountabilities.
We are preparing for the expected review
and update of the Modern Slavery legislation
in the next 12 months. A review of the likely
changes is under way with our focus on
moving beyond basic legal compliance to
adopting and advocating for good practice
throughout our supply chain.
As part of the Group’s continued compliance
with anti-fraud and bribery legislation, we
issued e-learning focused on the Criminal
Finances Act 2017, and new Corporate
Criminal Offences (CCO) introduced in
the Act.
Galliford Try Holdings plc Viability Statement
As required by provision 31 of the 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 of prospects
has been made using a period of five years,
which aligns to our strategic plan period.
The assessment of viability has been made
using a period of three years, which aligns with
our budget period and provides reasonable
visibility of future revenue from the existing
order book. Since the sale of the housebuilding
businesses and the recapitalisation of the
business in January 2020, 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.
Assessment of prospects
As outlined in our Strategic report, the
long-term prospects of the business are
supported by a refreshed strategy which builds
on our existing strengths and the growth
opportunities in our target markets.
Our alignment to the Government’s continued
investment in the UK’s social and economic
infrastructure is a fundamental driver of
demand for our services and plays to our
strengths in the health, education, defence,
highways and environment markets. Our ability
to achieve sustainable growth within these
markets is underpinned by our position on the
most significant procurement frameworks, our
commitment to supporting the decarbonisation
of the built environment and our investment
in digital technologies to drive continuous
improvement in quality and productivity.
Our people remain the key to our success and
our focus on attracting and retaining a more
diverse workforce as well as increasing the
proportion of apprentices and graduates help
us access the skills and expertise required to
deliver on our sustainable growth strategy.
41
Assessment of viability
The base case for the cash flow projections modelled in our assessment of viability is the budget for
the three years from 1 July 2021 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 a combined
downside scenario that includes a number of these sensitivities occurring together. The scenarios
modelled and their link to the underlying principal risks are described in the table below.
Although we have included a further national lockdown scenario in our stress testing, the business
and our cash performance has shown a high degree of resilience throughout the Covid-19 pandemic.
Our sites have largely remained open and the adherence to stringent risk mitigation measures in our
sites and offices, together with good engagement with our clients and supply chain has minimised
the disruption to project delivery.
Scenario modelled
Scenario 1
Reduction in construction volumes
Our cash performance is correlated with earnings growth and therefore
reliant on construction activity being in line with our assumptions.
We have modelled a reduction in construction volumes that would
equate to a 10% reduction in monthly cash receipts offset by a
proportionate reduction in payments, relative to our base case forecast.
Scenario 2
Deterioration in working capital
We have modelled the impact of a deterioration in our working capital,
which could be caused by delays in receiving payments from clients
and/or earlier payments to our supply chain.
Scenario 3
Irrecoverable cost increases
There is a risk of a prolonged period of materials cost inflation and
therefore we have modelled the impact of failing to fully mitigate
these cost increases on our projects.
Scenario 4
Covid – national lockdown
While considered unlikely, there is the potential for new variants
combined with seasonal pressure on the NHS to result in further national
lockdowns during the winter of 2021/22. In this scenario, we have
modelled the impact on working capital of programme delays and
reduced operational efficiency.
Link to principal risks
Work winning
Resources
Resources
Project delivery
Scenario 5
‘Perfect storm’
We also tested the unlikely but plausible scenario where all of scenarios
1–4 combine at the same time.
Work winning
Resources
Project delivery
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. 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 that 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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 42
Financial review
Delivering
our plan
We have returned to profitability, in line
with our plan, with a resumption of dividend.
Our improving operating performance, strong
financial position and quality order book
provide confidence in our future performance.
I am delighted with our strong financial
performance which provides an
excellent platform to deliver sustainable
growth with our strategy update.
Andrew Duxbury
Finance Director
Financial performance1
Revenue
£1,124.8m
(2020: pre-exceptional £1,089.6m and
statutory £1,121.6m)
Operating profit before
amortisation
£10.1m
(2020: pre-exceptional loss £62.2m and
statutory loss £37.1m)
Profit before tax
£11.4m
(2020: pre-exceptional loss £59.7m and
statutory loss £34.6m)
Dividend per share
4.7p
(2020: nil)
Net cash
£216.2m
(2020: £197.2m)
PPP portfolio
£49.1m
(2020: £40.7m)
Galliford Try Holdings plc 43
Cost
management
and commercial
discipline
Being a profitable organisation relies on effective cost
management and commercial acumen. Our approach is
strengthened through:
A Business Management System with processes
and procedures designed to give us confidence in
commercial decisions.
Project level controls and management oversight of
project forecasts.
Monthly cross-disciplinary contract review meetings
on all projects.
Standardised formats 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.
Performance2
We have delivered a return to profit, with our
sites continuing to operate at normal levels of
productivity throughout the financial year while
adopting Covid-secure practices. Our profit
margin was in line with expectations, and we
expect this to improve in future years.
Revenue
Our revenue for the year was up 3% at
£1,124.8m (2020: pre-exceptional £1,089.6m).
The increase reflects the resumption of site
operations following the first Covid lockdown
in Spring 2020, partly offset by an expected
reduction in Infrastructure’s revenue as we
transitioned into the new AMP7 programme.
Of the total, Building contributed revenue of
£789.2m (2020: £719.9m), up 10%, while
Infrastructure recorded revenue of £329.2m
(2020: pre-exceptional £357.1m and statutory
£389.1m). PPP Investments’ revenue was
£6.4m (2020: £8.2m).
Operating profit before amortisation
Our operating profit before amortisation was
£10.1m (2020: pre-exceptional loss £62.2m and
statutory loss £37.1m).
Of this, Building generated profit of £15.9m
(2020: pre-exceptional loss of £51.9m and
statutory loss £53.9m), representing a margin
of 2.0% (2020: pre-exceptional (7.2)%), and
Infrastructure generated profit of £6.0m
(2020: pre-exceptional loss of £1.8m and
statutory profit £25.5m), representing a margin
of 1.8% (2020: pre-exceptional (0.5)%).
The combined divisional operating margin of
2.0% (2020: pre-exceptional (5.0)%) has been
achieved ahead of our expectations, with
further details of divisional performance set
out on pages 46 to 49.
There was an £11.8m net loss in PPP Investments
and Central Costs (2020: £(8.5)m), with Central
Costs being slightly higher than their 2020 level
predominantly reflecting increased bonus and
share-based payment costs. For the financial year,
we did not benefit from any Government
Covid-19 support as the £1.5m received from
the Government furlough scheme that we
received after 1 July 2020 was fully repaid.
Net interest income
Net interest income of £2.9m was lower than
the comparable income of £4.8m in 2020,
due to lower interest receivable from PPP
sub-debt investments.
Profit before tax
The profit before tax for the year was £11.4m
(2020: pre-exceptional loss £59.7m and
statutory loss £34.6m). Pre-exceptional profit
or loss before income tax is an alternative
performance measure and a key metric we
use to monitor our performance in years with
exceptional items, such as 2020.
There were no exceptional items in 2021.
Exceptional income in 2020 of £25.1m included
£28.0m income in respect of the settlement of
legacy contracts and £2.9m costs associated
with restructuring. Further details of
exceptional items are set out in note 4 to
the financial statements.
1 Continuing operations.
2 See note 32 for a reconciliation of statutory
numbers to Alternative Performance Measures.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 44
Financial review
continued
Taxation
The tax charge for the year is £1.0m
(2020: pre-exceptional tax credit £6.8m),
which equates to an effective tax rate of 8.8%
(2020: 11.4%), lower than the standard UK rate
of corporation tax due to the utilisation of
brought forward tax losses. We anticipate that
the effective tax rate will remain below the
mainstream UK tax rate for the medium term.
We have a constructive and open relationship
with HMRC, and look to comply with both
the letter and spirit of relevant regulations
and to pay our fair share of tax. Our tax
strategy is available from our website at
www.gallifordtry.co.uk.
Earnings and dividends per share
We recorded earnings per share for the year
of 9.5p (2020: pre-exceptional loss per share
47.7p; statutory loss per share 29.4p).
The Board declared an interim dividend of
1.2p per share, which was paid to shareholders
on 9 April 2021, and has declared a final
dividend of 3.5p per share, bringing the total
dividend for the financial year to 4.7p per share.
In the previous financial year, following the
outbreak of Covid-19, the Board considered it
prudent to not make any dividend payment
during a period of significant uncertainty.
At 30 June 2021, the Company had distributable
reserves of £100.7m (2020: £100.0m).
Critical accounting policies
and assumptions
Our 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.
We use alternative financial performance
indicators to monitor our performance,
alongside standard measures, which 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 32.
Our strong balance sheet, supported by
a robust cash performance and valuable
PPP assets, is important for our clients;
has enabled us to improve our payment
performance to our supply chain; and
continues to underpin for future plans.
Financial position
Our strong balance sheet, supported by a
robust cash performance and valuable PPP
assets, is important for our clients; provides
confidence, and has enabled us to improve our
payment performance to our supply chain; and
continues to provide a strong underpin for our
future plans.
Cash and investments
We have no debt or defined benefit pension
obligations, and at 30 June 2021 had a
cash balance of £216.2m (2020: £197.2m).
The average month end cash balance in the
year was £164m (2020: £141m), which is ahead
of the expectations we set at the start of the
year. Our operating cash generation in the
year, of £63.6m, reflects very strong cash
collection performance.
We are committed to pursuing a collaborative
and open approach with all our supply chain and
our performance under the Prompt Payment
Code improved again, with 93% of invoices paid
within 60 days (2020: 88%) and 95% in the most
recent six-month period.
At 30 June 2021, we had a PPP portfolio of
£49.1m (2020: £40.7m), reflecting a blended
7% discount rate (2020: 9%). This portfolio
contributes to our balance sheet strength
and generated interest income of £3.9m in
the period.
Working capital
We have modest working capital requirements.
At 30 June 2021, net working capital employed
was £242.1m (30 June 2020: £211.3m), with
the main elements as follows:
Trade and other
receivables
Contract assets
and liabilities
2021
£m
2020
£m
84.2
75.5
60.0
59.7
Trade and other payables
(386.3)
(346.5)
Net working capital
(242.1)
(211.3)
Net working capital decreased by £30.8m
during the year. This reduction is primarily due
to increased VAT liabilities held at the year end
following the introduction of the Direct Reverse
Change (DRC) regime for construction services,
in April 2021, and an increase in contract
accruals as volumes in June 2021 were
significantly higher than the comparative
period in 2020.
As previously disclosed, we 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 we have
submitted claims and variations to the value of
£95m in respect of these costs (2020: £95m).
We have received extensive advice on our
entitlement and we have been successful in two
adjudications supporting the validity of our
position. Taking into account the requirements
of IFRS 15, we 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 2021,
we updated our assessed recoverability in
accordance with IFRS 15 which was unchanged
in the year (see Note 1 to the consolidated
financial statements). We also updated our
assessed expected credit loss provision in
accordance with IFRS 9 and noted there was
no change in the required provision, albeit the
range of possible outcomes within our
probability weighted matrix has changed.
Total equity at the year end was £134.1m
(2020: £120.5m).
Capital allocation and dividends
The Board is committed to maintaining a strong
balance sheet, which provides the Group with
competitive advantage in its market and
supports our growth strategy. Our capital
allocation priorities are to support the Group’s
ongoing operational requirements and invest
in strategic opportunities that enhance our
capabilities and returns; maintain sufficient
cash reserves to mitigate the effects of any
future market downturn; and to pay a
sustainable and growing dividend to
shareholders. We continually review the
cash requirements of the business and as
the Group progresses delivery of its strategy
the Board will continue to assess capital
allocation and shareholder returns.
Consistent with this approach the Group
expects dividend per share to increase with
earnings, with dividend cover expected to be
in the range of 2.0-2.5 times earnings.
Contingent liabilities
The directors ensure that contingent liabilities
are appropriately assessed, documented and
monitored. More information can be found in
note 29.
Going concern and viability statement
Our going concern statement, together with
further related information, can be found in the
Directors’ report on page 88. Our viability
statement can be found on page 41.
Galliford Try Holdings plc 45
Financial targets
Divisional operating margin %1
(5.0)%
2.0%
Actual 20202
Actual 2021
Revenue £m
£1,124.8m
Actual 2021
£1,089.6m
Actual 20202
Objective
Focus on bottom line margin growth.
Target
Divisional operating margin growth to 3.0%.
Objective
Disciplined contract selection and
sustainable revenue growth.
Target
Revenue growth towards £1.6bn.
Towards £1.6bn
£1,089.6m £1,124.8m
2020
2021
Target
2.0%
3.0%
2021
Target
(5.0)%
2020
Cash £m
£216.2m
Actual 2021
£197.2m
Actual 2020
Dividend per share p
4.7p
Actual 2021
nil p
Actual 2020
Objective
Maintain strong balance sheet.
Target
Operating cash generation.
Objective
Sustainable dividends.
Target
Dividend cover 2.0-2.5x.
£197.2m
£216.2m
2020
2021
1 This is defined as the pre-exceptional operating profit before amortisation as a percentage of revenue for the total of the Building and Infrastructure segments (note 32).
This measure represents the trading performance of the Group’s primary operations.
2 Pre-exceptional.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 46
Operating review
Operating review
Our operational performance continued to improve with our
focus on risk management contributing to a higher quality order
book and our programme of process improvements delivering
better quality for our clients. Our alignment to market priorities
provides a strong pipeline of future work in our chosen sectors.
the procurement method, contractual terms,
and conditions and price. All contracts over
£25m in value, or which have a heightened risk
indicator on any other measure, are reviewed
by the Executive Board prior to approval to bid.
Once in contract, we have established weekly
and monthly processes to manage progress,
including peer reviews across the business that
act as early warning mechanisms.
Risk management p36
Order book
Operating in our chosen markets and with strict
risk management has enabled us to return to
profitability and provides a clear platform for
further margin progression.
During the year, we secured £1.2bn of work,
contributing to an overall order book at
30 June 2021 of £3.3bn (2020: £3.2bn).
This order book, which underpins our future
plans, is made up of projects that meet our strict
risk criteria that have been through our internal
tendering process set out above. Our
confidence in the quality of the order book
comes from key features of its composition:
We strive for operational excellence so that
we can deliver a better experience and higher
quality for our clients, ‘lean’ our processes to
reduce waste and costs, and increase efficiency
for our teams. Our approach has been enhanced
during the year through the appointment of a
Technical Director to oversee all aspects of our
delivery, including procurement, quality and
digital methodology.
As well as our own processes and controls,
we carefully monitor changing trends in our
client requirements.
Increasingly, clients and our supply chain are
placing value on the quality that we bring to
projects. During the year, the UK Government
published the Construction Playbook, which
places an emphasis on working in partnership
to deliver projects in a sustainable and
collaborative way. The objectives of the
Playbook are mirrored by our own approach,
including investment in our people, our focus
on technical expertise, digital and modern
methods of construction and our strong
financial position (page 16).
Risk management
Across the business, we have a disciplined
approach to market opportunities, ensuring
that we only select projects that meet our risk
criteria, and where we are able to successfully
deliver the projects. These bidding and project
management processes are embedded in our
culture across the business.
Our focus on client relationships means that
we typically bid through framework positions
or on two-stage tenders, in which the client
selects a shortlist based on quality criteria
before negotiating specific contract terms.
Each time we bid for a contract, we follow
our internal “heat map” process, identifying
risks across a range of criteria including the
client and their advisors, project location
and our local supply chain, our technical
experience, our internal resources and capacity,
Galliford Try Holdings plc 47
Taking BIM
to the next stage
Our whole-team approach to BIM,
assimilating it into business processes to
focus fully on outcomes, as opposed to a
technology-first mindset, earned us the
coveted title of BIM Constructor of the Year
in 2020. Since then, we have introduced
Dalux (page 32) to provide a business-wide
BIM solution moving forward.
At our Invercannie Wastewater Treatment
Works project, delivered by our ESD joint
venture, the team has gone one stage
further, using the Synchro 4D system, which
allows them to take the modelled 3D design
and enhance it by adding an element of time.
The use of Synchro has allowed the team to
visualise and virtually create all phases of
the project ahead of constructing them,
allowing for clashes to be identified and the
programme and procurement to be phased
appropriately. Crucially, that phasing now
leads to both time and cost savings and has
allowed the project to proceed more safely.
Our focus on our core sectors increases our
understanding of contract risk, our ability to
put appropriate mitigations in place, and our
ability to successfully deliver quality projects.
– Of Building’s order book of £1.9bn at
30 June 2021, around 85% was provided
by the four largest sectors, with 27%
in Education, 20% in Defence and
Custodial, 21% in Facilities Management
and 16% in Health.
– In Infrastructure, around 38% of the order
book is provided by Highways, with the
remainder mainly in Environment.
We actively target and maintain places on
some of the most significant public sector
frameworks in the UK. Frameworks help
mitigate risk by generating a high level of
repeat business with clients who we know
and on established and well-understood
terms and conditions. They provide
consistent pipelines of work and create
the opportunity to deepen relationships with
our client and stakeholder groups which
leads to greater innovation and better
public infrastructure (page 48).
– At 30 June 2021, 87% of our order book
was in frameworks (2020: 90%).
Our focus on the public and regulated
sectors helps mitigate risk by working
with repeat clients on a relationship
basis, and provides a strong pipeline of
future opportunities.
– At 30 June 2021, 91% of our order book
was in the public and regulated sectors
(2020: 81%), and 9% in the private sector
(2020: 19%) with carefully selected
blue-chip clients.
High visibility of the following year’s
revenue provides our teams the confidence
to bid with the appropriate discipline
and selectivity.
– At 30 June 2021, 90% of planned revenue
for the 2022 financial year was secured
(2020: 90%).
Although value of contract is only one factor
of risk, it is a useful indication of the size of
risk being accepted.
– At 30 June 2021, the average contract size
in Building’s order book is less than £20m.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 48
Operating review
continued
Greater outcomes
through frameworks
87%
of our order book is in frameworks
A framework is a collaborative agreement between clients and
contractors to deliver a programme of works through a stable,
long-term partnership, allowing strategic planning, continuous
improvement and enhanced project outcomes. A framework can
generate tens or hundreds of millions of pounds of work for us
over its duration.
Why do we target working as part of a framework?
It offers repeat business with clients who we know and on
established and well-understood terms and conditions.
It gives greater certainty in tendering and typically reduced cost
of tenders.
There is improved risk allocation.
There is improved ability to plan for retention of our project teams.
Early involvement leads to greater influence over value-adding and
social outcomes.
Examples of key frameworks include Department for Education’s
school building framework (six lots); Crown Commercial Service (CCS)
Capital Works Framework; Ministry of Justice Strategic Alliance
Framework (multiple lots); Defence Infrastructure Organisation
Capital Works Framework; hub North Scotland, hub South East
Scotland, hub South West Scotland and hub West Scotland;
London Construction Programme; Highways England
Delivery Integration Partnership; and AMP7 – Yorkshire Water,
Southern Water and Thames Water.
Strong visibility of workload
D
E
C
Building
£1.92bn
A
B
A Education
B Defence & custodial
C Facilities management
D Health
E Commercial
£m
530
389
403
300
298
A
Infrastructure
£1.35bn
B
A Highways
B Environment
£m
512
836
Galliford Try Holdings plc 49
Outlook
We continue to see good demand across our
core markets, coupled with our disciplined
approach to risk management and contract
selection and are well positioned for the next
phase of our strategy.
We are confident we have a clear strategy in
place with the right culture, strength of our
people, focus on quality, innovation and
sustainability, and strong balance sheet to
win future contract opportunities and
enhance shareholder value.
Performance review
We are contributing to the UK’s post-pandemic
economic recovery by constructing the
buildings and infrastructure that the country
needs. Our market opportunity is created by
the investment required to meet the UK’s
ongoing challenges of decarbonisation and
digitalisation, as well as the Government’s
levelling up agenda.
Each of our businesses in Building and in
Infrastructure is focused on core sectors in
which we have a proven successful track record
of delivery, and which provide a strong pipeline
for future work. For example, in Education, our
largest Building sector, the Government has
identified a £14bn budget for primary and
secondary education; and in Highways there
is a £28bn National Roads Fund.
Performance – Building
Revenue (£m)
Operating profit/(loss)
(£m)
Operating profit margin
(%)
2021
789.2
2020*
719.9
15.9
(51.9)
2.0
(7.2)
Order book (£m)
1,920
2,152
* Pre-exceptional
Building (which includes our FM business)
generated revenue of £789.2m (2020:
£719.9m), generating an operating profit before
amortisation of £15.9m (2020: pre-exceptional
loss of £51.9m), which represents a margin of
2.0% (2020: (7.2)%). The increase in profit
reflects the encouraging performance of
projects that were added to the order book in
recent periods and reduced impact of Covid-19.
Our FM business, which forms part of Building,
continues to complement our operations by
providing building maintenance services.
We provide high-quality facilities management
services and continue to grow the capabilities
of this operation.
Building won contracts and positions on
frameworks worth over £641m, (2020:
£1,021m). Significant appointments and wins
for Building included:
the £10.5bn NHS Shared Business
Services framework;
the £2.1bn Construction West
Midlands framework;
a £105m contract for the commercial and
PRS development at Monk Bridge for
Highline Investments;
the £60m Winchburgh Schools project
contract in West Lothian for West Lothian
Council; and
the £50m refurbishment contract for the
280 Bishopsgate project in London for
Arax Properties.
Building’s order book stands at £1,920m,
compared to £2,152m last year.
Performance – Infrastructure
Revenue (£m)
Operating profit/(loss)
(£m)
Operating profit margin
(%)
2021
329.2
2020*
357.1
6.0
1.8
(1.8)
(0.5)
Order book (£m)
1,348
1,010
* Pre-exceptional
Infrastructure’s revenue was £329.2m
(2020: pre-exceptional £357.1m). As expected,
revenue was impacted in the year by the
transition to the AMP7 programme.
Infrastructure generated an operating
profit before amortisation of £6.0m
(2020: pre-exceptional loss of £1.8m) which
represents a margin of 1.8% (2020: (0.5)%).
The improved profit performance is in line
with our expectations, and includes the
reduced impact of Covid-19.
Infrastructure won contracts and positions on
frameworks worth £590m, (2020: £377m).
These included:
Scottish Water’s new Non-Infrastructure
Framework for the SR21–27 investment
programme, valued at £700m over a
six-year timeframe.
Six lots out of 13 across the £400m North
East Procurement Organisation’s (NEPO)
Civil Works framework.
Lots 3 and 6 of Thames Water’s £590m
AMP7 four-year framework in the
London region.
Contract for the £85m M56 junctions 6 to
8 works for Highways England.
Infrastructure had an order book of £1,348m,
up from £1,010m last year, including £512m in
Highways and £836m in Environment.
Performance – PPP Investments
Revenue (£m)
Operating loss
Net interest income
Directors’ valuation (£m)
2021
2020
6.4
(1.8)
3.9
49.1
8.2
(0.3)
2.9
40.7
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 £120m.
At the year end, the directors’ valuation of our
PPP portfolio was £49.1m (2020: £40.7m),
which is the fair value included in the balance
sheet reflecting a blended discount rate of 7%
(2020: 9%). The valuation compared with a
value invested of £36.2m (2020: £34.9m).
There is an active secondary market for these
assets, which generated an annuity interest
income of £3.9m (2020: £5.4m) and contributes
to our balance sheet strength.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 50
Stakeholder engagement
s172(1) statement
As a business which prides itself on delivering a positive impact to a wide
range of stakeholder groups, the importance of considering our stakeholders’
views has featured heavily in decision-making and forms a cornerstone of
our updated strategy.
Shareholder engagement activities are
overseen by the Board, and the Chief Executive
and Finance Director lead our activities,
as described on page 52. 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 pages 55 and 58.
Site visits by the Board typically enable
directors to gain a first-hand insight into our
culture in action. Presentations from our
businesses on operational matters and
information in monthly Board packs enable
discussion around managing the interests of our
people, clients, suppliers and communities.
Environmental impact
Information about the Group’s environmental
impact can be found on page 28.
Our Code of Conduct outlines our
responsibilities to our colleagues, clients,
suppliers, communities, the environment and
governance, setting a framework to ensure
everything we do is in line with our values,
legally compliant and ethically acceptable.
Our Stakeholder Steering Committee, a
committee of the Board, takes this further
by considering the priorities of each of these
stakeholder groups and areas, reviewing and
overseeing these relationships and reporting
these views to the Board so that they can
be reflected in our decision-making. The
Committee also has oversight of how our
sustainability framework is embedded within
the Group’s stakeholder engagement strategy.
s172(1) statement
The Board continues to carry out its
obligations under Section 172(1) of the
Companies Act 2006 with regard to
considering the impact of our decisions on
key stakeholders and acting in a way that
promotes the long-term success of the
business. We recognise the importance
of this within our own strategy. Further
details on how the directors discharge
their duties can be found here:
Strategic report p1.
Governance review p58.
How the Board upholds high standards
of business conduct
The Board plays an active role in monitoring and
maintaining high standards of business conduct.
Galliford Try has a strong ethical culture,
underpinned by our values, policies and our
Code of Conduct, all of which are promoted and
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 34.
How the Board engages with
our stakeholders
The directors are committed to the long-term
success of the Group and play an active role in
understanding, considering and addressing
stakeholder interests. Engagement takes
place both directly and indirectly.
Established in 2019 as a Board-level Committee
and chaired by Senior Independent Director
Terry Miller, our Stakeholder Steering
Committee reviews and oversees the Group’s
relationships with key stakeholders, identifies
ways to create two-way communication
between stakeholders and the Board, and
ensures their views are considered in Board
discussions and decisions. The Committee met
twice during the year, as discussed on page 58.
Galliford Try Holdings plc 51
How we engage
Actions in the year
Outcomes
Who and why
Our people
We are reliant
on our people
to achieve
our purpose
People and culture
p23 and Health and
safety p26
Top business and
sustainability
stakeholder
interests identified
in our Stakeholder
Materiality Matrix
Purpose
and culture.
Health, safety
and wellbeing.
Inclusion.
Investment in
learning and
development.
Career
progression.
Rewards and
benefits.
Embedding and reinforcing our culture is a continuous
process. We ensure employees understand our culture
and purpose from the recruitment stage. On joining, all
employees take part in an induction with members of
our Executive Board, outlining our purpose, strategy,
values and business processes and giving the opportunity
to ask their questions. Graduates attend a bespoke
welcome event.
New starter and refresher training ensure our culture
and processes are embedded. Our Employee Engagement
Forum seeks the views of employees on strategic
decisions and provides updates from the business.
Engagement also takes the form of a roadshow from our
Chief Executive, emails from him to all staff, e-bulletins,
an employee magazine, PDRs and toolbox talks.
Access to our Employee Assistance Programme
offers support to our people while our whistleblowing
hotline enables them to confidentially report suspicion
of wrongdoing.
Board engagement
Chaired by the Senior Independent Director,
the Employee Forum meets twice a year to discuss
matters important to employees.
Clients
Satisfied clients
are essential
for a sustainable
and profitable
business
Clients p32
Financial
stability and
ability to deliver.
Time, cost
and quality.
Meeting
carbon and
sustainability
objectives.
Creating greater
social value.
We impart important information about our business
through the tendering process, comprehensively
addressing the key areas our clients are concerned with.
On appointment, we carry out a Customer Start
Meeting which identifies outcomes for the end of
the project discussions and are retained for record
purposes. Dedicated quality managers conduct
regular audits, complemented by our internal audit
department and external audits of our ISO 9001
certified management system.
Frameworks allow us to deepen our relationships
with our client and stakeholder groups which leads to
greater innovation and better public infrastructure.
0.08 AFR.
13.2% churn rate.
83% of site staff
surveyed feel
supported;
82% were
positive about
communication
and 81% had
confidence in our
response to
Covid-19.
Reported a
negative mean
gender pay
gap for our
early careers
population, which
will contribute to
narrowing the
gender pay gap
between males
and females as
these populations
progress through
their careers.
87% of our
order book in
frameworks.
Changed the structure
of our CEO Roadshow
to provide local as well
as Group information,
and provide a better
opportunity for staff
to engage in discussion.
Refreshed behavioural
safety programme.
Launched a new
style of Employee
Engagement Survey
to target specific
populations with
respect to topical
themes and take
quick action.
Introduced Wellbeing
Wednesdays.
Continued focus on
inclusion and diversity.
Ensured key priorities
continue to be
addressed by our
updated strategy.
Appointment of a
Group Technical
Director to oversee all
aspects of our delivery,
including procurement,
quality and digital
methodology.
Carried out research
projects which
compare standard
build projects with
newer methodologies
to identify cost and
carbon best practice.
Worked with the
UK BIM Framework
group to draft a new
suite of standards and
guidance resources
aimed at modernising
the industry’s
approach to
information
production and
management.
Ensured key priorities
continue to be
addressed by our
updated strategy.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 52
Stakeholder engagement
continued
Top business and
sustainability
stakeholder
interests identified
in our Stakeholder
Materiality Matrix
Health, safety
and wellbeing.
Fair treatment
and prompt
payment.
Pipeline
of work.
Collaborative
relationships.
Access to
training,
educational
resources and
learning
opportunities.
Health,
safety and
environment.
High quality
buildings and
infrastructure.
Use of
local labour,
resources and
employment
opportunities,
educational
opportunities
and wider
investment
in their
community.
A sustainable
business model
and strategy.
Financial
performance
and dividend
policy.
Corporate
governance.
Risks to the
business.
Who and why
Suppliers
The majority of our
work is delivered
in partnership with
our supply chain
so they must be
aligned to our
values and
objectives
Supply chain p31
Communities
We want to be
welcomed in the
communities we
operate in and
create greater
social value where
we operate
Communities p33
Shareholders
We want our
shareholders to
have confidence
in the long-term
success of our
business
How we engage
Actions in the year
Outcomes
We seek to build long-term relationships with key
suppliers and contractors who share our principles.
Robust contracts set the terms for both parties in our
relationships, and regular meetings, workshops and
working groups ensure two-way communication.
Through our Advantage through Alignment programme
of support, training and education, we align our suppliers
and subcontractors with our working practices, our values
and our vision.
We engage with local communities through town halls,
newsletters, project websites, social media, press releases
and planning meetings.
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.
Through events such as Build UK’s Open Doors,
recruitment fairs, school visits and site tours, we showcase
our industry and invite communities to learn more about
our industry, business, projects and careers on offer.
Continued to support
key subcontractors
through our Advantage
through Alignment
programme.
Continued to promote
the Supply Chain
Sustainability School.
Ensured key priorities
continue to be
addressed by our
updated strategy.
59% of business
unit core
trades spend
with Aligned
subcontractors.
93% of invoices
paid within
60 days.
Gold member
of Supply Chain
Sustainability
School.
Developed a National
Social Value Calculator.
Ensured key priorities
continue to be
addressed by our
updated strategy.
40.6 average
CCS score.
£250,000
donated in time,
money and
materials.
We engage directly with our shareholders 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 includes an up-to-date website,
press coverage, engaging in social media, trading updates;
corporate and financial videos; and contributions to
investor decision-making resources.
AGM.
Ensured key priorities
continue to be
addressed by our
updated strategy.
4.7p dividend
per share.
Policies relating to each of these stakeholder groups can be found in the pages on our website. Risks are detailed from page 36.
Galliford Try Holdings plc 53
Review of dividend
policy and dividend
payments
Overview
Following the outbreak of Covid-19 in
March 2020, the Board considered it
prudent to cancel dividend payments to
shareholders in order to preserve liquidity
during a period of significant uncertainty
and resume payment of dividends on the
Group’s return to profitability. Following a
return to profitability in the first half of
this financial year, the Board took the
opportunity to review and refresh the
dividend policy.
In considering the dividend policy
objectives and resumption of dividends,
the Board carefully considered the
following factors:
The Group’s return to profitability, its
strong balance sheet and high-quality
order book.
The medium-term balance between
business growth and dividend
progression and the Group’s
longer-term prospects.
The Group’s cash performance and
availability of Group cash resources.
The broader capital structure and
requirements of the Group.
Repayment of furlough monies.
Stakeholder engagement
Several trading updates were provided
to investors during the financial year.
In addition, the Board considered feedback
provided by investors through direct
investor meetings.
Outcome
The Board reviewed the Group’s results
and outlook for the financial year and
agreed to introduce a dividend cover range
of 2.0–2.5 times cover and declare an
interim dividend of 1.2p per share, which
was paid to shareholders in April 2021.
In addition, the Board declared a final
dividend of 3.5p to be paid on
10 December 2021 to shareholders
on the register at 12 November 2021.
Updating our strategy
Overview
In the lead up to the conclusion of our strategy to 2021, the Group commenced work on the
development of an updated strategy, designed to ensure the long-term sustainability of the
Group. Through its work on the Stakeholder Steering Committee, feedback from management
and its own experience, the Board recognised the importance of considering stakeholder
views as part of this process and undertook the actions detailed below.
When updating the strategy, the Board carefully considered the following factors across the
environment in which we operate:
The focus on economic recovery past the pandemic.
Government support for major infrastructure projects (page 16).
The UK moving into post-Brexit ‘normal’.
The urgency of the climate crisis, innovation and digitalisation, particularly with respect to
our clients’ objectives.
Expectations from existing and new employees in terms of an employee value proposition.
Maintaining a committed supply chain which will support the delivery of our objectives.
Evolving regulatory environment post Grenfell.
Stakeholder engagement
The Board carried out extensive stakeholder engagement including the establishment of a
Sustainability Working Group. The Group was led by the Finance Director, and included our
General Counsel & Company Secretary, Building Managing Director, Director of Risk and
Assurance, Technical Services Director, Pre-construction Director and Research &
Development Manager. This Group feeds into the Stakeholder Steering Committee.
Why them?
Membership of this group was carefully selected to represent the views of a cross-section of
our stakeholder groups, particularly investors and clients when updating our strategy.
How did they engage with key stakeholders?
This group was tasked with the role of researching stakeholder priorities and material
impacts through conversations with investors, external advisers, ESG consultants and
clients; awareness of client priorities through the framework bidding process; desktop
research; and analysis of our existing position. The findings were tested with the
Stakeholder Steering Committee.
What was considered?
What’s important to our stakeholders?
What’s right for us and where we want to be?
What do we want to influence?
The result
This enabled us to develop measures and targets, action plans, data capture and reporting,
supported by appropriate governance.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 54
Chairman’s review
Governance overview
A strong and
effective Board
The past year has shown the strength and
resilience of Galliford Try in challenging
circumstances. We have proven our business,
returned to profitability, and successfully laid
the foundations upon which we can deliver
our updated strategy.
Corporate governance
Board leadership and
company purpose
Division of responsibilities
Composition, succession
and evaluation
Audit, risk and internal control
Remuneration
p61
p61
p62
p63
p63
Maintaining and applying
effective governance during the
Covid-19 pandemic
The global impact of the Covid-19 pandemic
has brought many challenges to our business
and to all of our stakeholders, and as a
consequence, the Board has spent considerable
time considering a number of material issues
during the year and their impact on our
stakeholders. Following an encouraging return
to profitability during the first half of the
financial year, a strong balance sheet and overall
capital position, the Board declared an interim
dividend of 1.2p per share which was paid to
shareholders in April 2021. Having reviewed
the Group’s results and the outlook, the Board
is recommending a final dividend of 3.5p per
share which, subject to approval, will be paid
on 10 December 2021 to shareholders on the
register at 12 November 2021. This will result
in a total dividend for 2021 of 4.7p per share.
We recognise the importance of dividends to
shareholders and, in formulating our dividend
policy, we considered the Group’s financial
performance, its strong balance sheet and
high-quality order book, as well as its longer-
term prospects.
High standards of corporate
governance are at the core of our
culture and underpin our strategy,
so that we may deliver sustainable
performance and long-term
stakeholder value.
Peter Ventress
Chairman
Galliford Try Holdings plc 55
In addition, the Stakeholder Steering
Committee has met twice during the year to
review our arrangements for engaging with our
key stakeholders. Our key stakeholders are
detailed on pages 50 to 53. Our stakeholders
are integral to our business, and their interests
are factored into the Board’s discussions and
decision-making.
Our strategy
The future of our business is positive. Earlier
this year, the Board performed a review of the
Group’s five-year strategy to 2026 to reassess
our strategic ambitions over this period, identify
which sectors have profitable growth potential,
assess both the barriers and opportunities
to enter new markets, and our operational
capabilities to deliver long-term value creation
to our stakeholders. At the heart of our strategy
are the six sustainability pillars which are
integral to our strategic priorities.
Please see pages 18 to 19 for further information.
Reducing our carbon footprint
We recognise the critical importance of
climate change and the impact of our business
operations on the environment. We manage
and mitigate our environmental impacts
through our ISO 14001 certified management
system, and will continue to work towards
reducing our carbon footprint, focusing
on our offices, site accommodation, fleet and
site waste.
Please see our Environment and climate change
section on pages 28 to 30 for further information.
In June 2021, we published our commitment
to achieve net zero across the Group’s own
operations by 2030 and across all activities
by 2045, validated by Science Based Targets.
The Board is mindful of the requirement for
companies with a premium listing to report
under the Task Force on Climate-Related
Financial Disclosures (TCFD), which apply
to financial years beginning on or after
1 January 2021, and will undertake further
work as necessary to ensure that we may
report fully on these new requirements in
our 2022 Annual Report.
Communicating effectively with
shareholders and investors
During the year, we have continued to engage
with our shareholders, prospective new
investors and major institutions in a positive
manner, utilising technology and virtual
platforms to good effect. We have updated
investors on key activities, our response to the
pandemic and areas of focus for the Board,
as well as our strategic plans for the Group.
Further detail can be found on page 66.
As a result of the pandemic, shareholders were
unable to attend our 2020 AGM in person.
Arrangements were put in place to allow
shareholders to submit their questions in
advance of the meeting to the General
Counsel & Company Secretary by email.
This year’s AGM will be held at the offices of
Peel Hunt LLP, 7th floor, 100 Liverpool Street,
London, EC2M 2AT on Friday 12 November
2021 at 11.00am. The Board remains cognisant
of the continued uncertainty around the
Covid-19 pandemic and ongoing public health
risk and recognises that the situation in relation
to the pandemic can change quickly. The Board
will continue to monitor developments and
will make changes to the arrangements for
the AGM as necessary. Any changes to the
AGM arrangements will be communicated to
shareholders before the AGM through our
website at www.gallifordtry.co.uk and, where
appropriate, by RNS announcement. Further
information on arrangements for the AGM and
voting instructions are set out fully in the Notice
of AGM and Form of Proxy.
I would like to close by thanking our employees
for their dedication and contributions during
these challenging times, and our investors,
clients and supply chain with whom we have
worked closely to ensure the safe and
successful delivery of our objectives despite
the pandemic.
On behalf of the Board
Peter Ventress
Chairman
During the year, we remained focused on
monitoring our approach to health and safety
and the wellbeing of all our employees,
subcontractors and supply chain and supporting
them during this challenging period. We have
overseen arrangements with management to
ensure that all our projects, where permitted,
remained operational in line with the latest
Government and industry guidelines; that our
employees could work safely and flexibly on our
sites and in our offices; our working practices
remained of a high standard; and site teams
had all of the necessary support and guidance
to operate safely in a Covid-19 environment.
We also worked closely with our supply
chain to ensure that they were implementing
and adhering to our working practices and
safety measures.
Promoting our culture, values
and purpose
We are a people-orientated, progressive and
values-driven business, and strive to create
a culture where everybody feels valued,
included and motivated to perform at their
best. Following the announcement of our
2020 full year results in September 2020,
Bill Hocking, Chief Executive, held 14 virtual
staff roadshows updating everyone on our
plans for the business and future direction of
the Group. We also carried out an employee
survey of our site-based staff in December
2020, to better understand how they felt about
our approach to dealing with the pandemic and
wellbeing generally. Participation in the survey
was excellent, with 68% of those invited taking
part, and providing more than 1,400 comments.
Overall responses to the survey were positive
and we will address feedback from the survey
in the coming year.
Please see our People and culture section on
pages 23 to 25 for further information.
Employee voice and
stakeholder engagement
Since its introduction in 2019, the Employee
Forum has been instrumental in providing staff
with an effective platform to debate key issues,
provide suggestions and ideas on improving
work–life balance and, through our Employee
Forum Chair, reporting employee-voiced
matters to the Board for consideration. One of
the important initiatives during the year was
the introduction of a series of online weekly
wellbeing sessions for staff and their families,
delivered by both in-house and external
subject matter experts. The response to these
initiatives has been positive and we hope to
build upon them in the year ahead.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 56
Directors and Executive Board
Our Board and Leadership
In 2008, he was appointed head of
all Staples’ activities outside the
United States and Canada. Peter
was formerly a Non-executive
Director of Signature Aviation plc,
Softcat plc, Premier Farnell plc and
Staples Solutions B.V.
External appointments: Peter is
Chairman of Bunzl plc, the
FTSE 100 specialist international
distribution and services group.
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.
Our Board
Peter Ventress N R
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.
Gavin Slark A N R
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.
Bill was Chief Executive of the
Construction & Investments
division 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.
Bill Hocking E
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, clients,
employees and other stakeholders.
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.
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
and Senior Independent Director
of AO World plc, a leading
European online electrical retailer.
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.
Andrew Duxbury E
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.
Marisa Cassoni A N R
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,
Terry Miller A N R
Senior Independent Director
Appointment date: Terry Miller
was appointed to the Board of
Galliford Try 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
sectors. 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
Galliford Try Holdings plc 57
He chairs the Executive Risk
Committee and has responsibility
for the management of Legal,
Secretariat, Communications
and Property functions.
Vikki Skene E
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.
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.
Mark Baxter E
Managing Director,
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
responsibility for the Group’s
Investments division.
Executive Board
Kevin Corbett E
CEng MICE MIStructE
General Counsel &
Company Secretary
Appointment date: Kevin 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, risk management,
insurance, finance, governance
and strategy experience, in the
UK and overseas.
Ian Jubb E
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.
plc Board composition (page 56)
Balance of non-executive and
executive directors
Non-executive
Executive
Diversity
Male
Female
Length of appointment
0–2 years
2–5 years
5–10 years
4
2
4
2
1
2
3
As at 30 June 2021
A Audit Committee
N Nomination Committee
R Remuneration Committee
E Executive Board
Denotes Chair of respective
Committee
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 58
Governance review
Group governance
structure
Our governance and controls framework ensures there is a clear and effective division between the Board, its Committees and operational
management. Our governance framework is detailed below.
plc Board
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.
Please see page 56 on directors’ biographies.
Nomination Committee
Oversees Board and Committee
composition, succession planning for
directors and other senior executives, Board
evaluation, taking into consideration the
balance of skills, experience, independence
and knowledge of the Company, its diversity,
including gender, how the Board works
together as a unit, and other factors relevant
to the Board’s effectiveness.
Audit Committee
Oversees matters in relation to financial
reporting; keeps under review the adequacy
and effectiveness of the Company’s internal
financial controls systems that identify,
assess, manage and monitor financial
risks and other internal control and risk
management systems; and seeks to ensure
the adequacy and security of the Company’s
whistleblowing arrangements for its
employees and contractors.
Remuneration Committee
Responsible for designing remuneration
policies and schemes that support strategy
and promote long-term sustainable success.
Please see Audit Committee report on pages 68
to 69 for further information.
Please see Nomination Committee report on
page 67 for further information.
Please see Remuneration Committee report on
pages 70 to 85 for further information.
Executive Board
Oversees the operational management of the
Group and is responsible for implementing the
policies and strategy, including the Group’s
Health, Safety & Sustainability, financial, HR
and risk policies, as agreed by the plc Board.
Please see page 66 for further information.
Executive Risk Committee
Assists the Board and Audit Committee in
monitoring and updating the Group’s principal
and emerging risks.
Please see page 36 for further information.
Stakeholder Steering Committee
Meets twice per year to review and oversee
relationships with the business’s key
stakeholders, collating stakeholder views
and reporting these views to the Board.
Considering the importance of the Group’s
sustainability strategy across all stakeholders,
the Board agreed the Committee’s remit should
also include oversight of the sustainability work
of the Group and its overall governance. This
will be reviewed and developed in parallel with
the development of the Group’s sustainability
strategy. The Committee is chaired by Terry
Miller, Senior Independent Director, and
comprises representatives from Building,
Infrastructure and support services,
the Health, Safety & Environment Director
and the Sustainability Manager.
Please see page 50 for further information.
Employee Forum
Meets twice per year to receive and gather
the views of the workforce and reports them
to the Board. The Committee is chaired by
Terry Miller, Senior Independent Director,
and comprises employee representatives
from across the Group.
Please see page 79 for further information.
The role of the Board and its
Committees
As at 30 June 2021, the composition of
the Board comprised the Chairman, three
independent non-executive directors,
the Chief Executive and the Finance Director.
Biographical summaries for each of the
directors as at 30 June 2021, their respective
responsibilities and their external directorships
are set out on page 56.
All of the non-executive directors, as well as the
Chairman, are considered by the Board to be
independent. 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 and 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 2021 AGM.
Additionally, and in line with the UK Corporate
Governance Code, the roles of the Chairman,
Chief Executive and Senior Independent
Director were reviewed during the year.
These documents can be found on our website
at www.gallifordtry.co.uk/about/governance-
and-policies/.
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 the
Board and each Committee are reviewed
annually against corporate governance best
practice and are available on our website.
Galliford Try Holdings plc
59
Director appointments and
succession planning
As reported in our 2020 Annual Report,
Jeremy Townsend stepped down from the
Board on 30 September 2020, having served
as a Non-executive Director since September
2017. There were no other changes to the
Board during the year. In line with the UK
Corporate Governance Code, all directors
will stand for re-election at the 2021 AGM.
The performance of the directors continues
to be effective, and commitment to their
respective roles is clearly demonstrated.
Succession plans were reviewed and
refreshed during the year. Good progress
has been made with refining our leadership
programme to target each individuals’
development requirements and support
them in their progression and development
within the Company.
Delegated authorities
The Board continues to operate an established
framework of financial, commercial and
operational matters delegated 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
Matters delegated
to management
Group values and
standards
Operational
management of Group
Group strategy,
business plans and
annual budgets
Implementation of
Group policies
Acquisitions, disposals
and contracts over a
prescribed value
Allocation of
Group resources
Contracts up to a
prescribed value
Management
succession planning
Risk management
Material joint
arrangements
Approval of
Group policies
Material changes to
Group share capital
Group borrowing
facilities
Approval of circulars
and financial reports
2020/21 Board and Committee meetings attendance table
Number of meetings
(attended/scheduled)
Peter Ventress
Chairman
Bill Hocking
Chief Executive
Andrew Duxbury
Finance Director
Terry Miller
Senior Independent Director
Gavin Slark
Non-executive Director
Marisa Cassoni
Non-executive Director
Kevin Corbett
General Counsel & Company
Secretary
Jeremy Townsend1
Former Non-executive Director
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
8/8
by invitation
2/2
3/3
8/8
by invitation
by invitation
by invitation
8/8
by invitation
8/8
8/8
8/8
8/8
2/8
3/3
3/3
3/3
3/3
1/3
n/a
2/2
2/2
2/2
2/2
–
n/a
3/3
3/3
3/3
3/3
2/3
1 Jeremy Townsend stood down as Non-executive Director and Chair of the Audit Committee on
30 September 2020.
Board activities during the year
The Board, supported by the General Counsel & Company Secretary, ensures that Board
meetings are carefully structured to allow enough time for open discussion. The Board
regularly reviews and discusses the following topics:
The financial performance of the businesses.
Reports on health, safety, environment and sustainability.
Corporate strategy and operational reviews.
The relative performance of the Company’s share price.
Comments by market analysts, along with any shareholder feedback, to ensure that the
Board has a full understanding of the views of major shareholders.
In addition, 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 advisers on pertinent matters as and
when required. Board members are encouraged to undertake their own continuing
professional development.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 60
Governance review
continued
Key areas of Board discussion during 2020/21
The Board met on eight occasions during the year and there was full attendance at each meeting.
Since March 2020, all meetings of the Board and Committees have been held in a virtual and hybrid format. The Board agenda is structured between
standing agenda items, governance requirements and areas of operational and strategic focus (including material contracts). Activities and actions
taken during the year are summarised in the table below.
Activity
Actions taken
Board’s response to Covid-19
Financials and performance
Strategy review and operations
Health and safety
People, culture and values
Risk management
Approved temporary fee/salary reductions for the non-executive directors, Executive Board members and
senior management.
Considered arrangements for the 2020 AGM and, to comply with Government guidelines, agreed that the
meeting was to be held as a closed meeting.
Facilitated virtual and hybrid Board and Committee meetings throughout 2020/21.
Monitored the Group’s liquidity and approved plans to cease claiming the Government’s furlough grant from
1 September 2020 and for staff to be returned from furlough.
Reviewed Group and divisional budgets which form the basis for setting the Group’s 2020–2023 annual budget.
Reviewed performance against half and full year forecasts, cash forecasts and impact of VAT changes.
Reviewed and approved the Group’s 2020 results in September 2020 and 2021 interim results in March 2021.
Declared an interim dividend of 1.2p paid to shareholders in April 2021 and approved a new dividend policy to
reduce dividend cover to 2.0–2.5 times.
Reviewed Prompt Payment Code performance.
Received business review presentations in relation to information on the business, its people, health and safety,
sector and clients, opportunities and financial performance.
Approved several large projects (value over £100m) to support the growth and strategy of the Group.
Held a Board Strategy Meeting with the Executive Board in April 2021 to review the Group’s plans and five-year
strategy to 2026.
Received regular reports and a presentation on the health and safety strategy from the Director of Health,
Safety & Environment.
Monitored Covid-19 site and safety procedures and practices.
Received reports from the Employee Forum Chair.
Approved the launch of the all-employee Sharesave scheme and SAYE invitation to staff in March 2021.
Approved publication of the Gender Pay Report.
Reviewed regular reports from the Head of Internal Audit and Assurance on the status of the internal audit
programme and commercial health checks.
Considered changes to the Group’s principal risks and emerging risks that could impact long-term strategy.
Stakeholder engagement
Received reports from the Stakeholder Steering Committee Chair following each Committee meeting and took
into account feedback provided by representatives.
Governance
Approved the adoption of the Board’s terms of reference and matters reserved for the Board.
Agreed the Board evaluation 2021 process and review of progress on actions from the 2020 evaluation exercise.
Received regular reports from the General Counsel & Company Secretary on the latest governance
developments, and best practice.
Conducted an internal performance evaluation on the performance of the Board and Committees in April 2021,
with the results presented to the Nomination Committee in May 2021.
Board Strategy Meeting
Working in collaboration with
the Executive team to review our
progress and set our strategic
priorities to 2026.
The Board held its Strategy Meeting in April
2021 with the Executive Board, the agenda
for which was agreed between the Executive
Board and non-executive directors.
The Chief Executive provided an overview of
the strategy presentation, setting the context
and background. The Board reviewed the
successes achieved for the construction
business during 2020 and discussed the
strategic objectives to 2026, focusing on
margin enhancement, controlled revenue
growth, the importance of Environment,
Social and Governance (ESG) factors to the
strategy, and opportunities in markets that
have the potential to deliver growth. The
Board reviewed the macro environment
and the competitive landscape facing the
business. Debate focused on the challenges
and opportunities presented to the business,
how the Group was responding to these and
the risk appetite that the Board was prepared
to take in pursuit of its strategic objectives.
The Executive Board provided an overview
and update of the markets and operations
in the various sectors in which the Group
operates, highlighting the business’s
capabilities in these areas and potential
opportunities available to the business to
2026. The HR Director reported on the
Group’s emphasis on people, including
diversity initiatives, improving HR data and
plans, and succession. The Board discussed
risk management processes and the General
Counsel & Company Secretary highlighted
plans to further improve risk management
across the business.
The strategy discussions concluded with the
Finance Director providing an update on
financial performance, the investor relations
strategy to drive greater shareholder value,
and future capital allocation plans.
The Board considered the interests of all
stakeholders and the contributions from
Executive management in the discussions.
Galliford Try Holdings plc 61
UK Corporate Governance Code compliance
As a UK premium listed company, the 2018 UK Corporate Governance Code (Code) is the standard against which we measured ourselves during
2020/21. Throughout the year, the Board has applied the Principles and complied with all the Provisions of the 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.
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.
The schedule of matters reserved for the Board, which is
reviewed by the Board annually, provides that the Board is
responsible for establishing the values and strategy of the
Company. The Employee Forum chaired by Terry Miller,
Senior Independent Director, remains 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.
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.
The annual budget is reviewed and agreed by the Board in July
each year. In addition, the Group has continued to review its
mature risk management and governance processes in place to
identify, report and manage risk, ensuring they remain robust.
The Executive Risk Committee provides regular reports to the
Board and assists the Board and Audit Committee in monitoring
and updating the Group’s principal and emerging risks.
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.
The Stakeholder Steering Committee, chaired by Terry Miller,
Senior Independent Director, continued to meet during the year.
The Committee oversees relationships with the business’s key
stakeholders, including collating stakeholder views and reporting
these to the Board.
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 Code of Conduct ‘Doing the right thing’ sets out our
organisational policies and procedures and defines behaviours.
In addition, there are Group policies that define our approach
to managing health, safety, environmental and social matters
affecting our employees. These policies are regularly reviewed
and 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.
See page 59
for further
information and
list of matters
reserved for
the Board.
See our People
and culture
section on pages
23 to 25
for further
information.
See our Principal
risks section on
pages 37 to 40
for further
information.
See our
Stakeholder
engagement
section on
pages 50 to 53
for further
information.
See our People
and culture
section on
pages 23 to 25
for further
information.
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 judgment 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 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,
in conjunction with the General Counsel & Company Secretary,
ensures that directors receive accurate, timely and clear
information. 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 Director without the Chairman present.
See page 64
for further
information
and Board
effectiveness
review.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 62
Governance review
continued
Further information
See page 58
for further
information.
See the section on
Board evaluation
on page 64
for further
information.
Principle
How we apply the Principle
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. NEDs’ role and time commitment
Non-executive directors should have sufficient time to
meet their Board responsibilities. They should provide
constructive challenge and 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, and cognitive and personal strengths.
The Board comprises the Chairman (who was independent on
appointment), Chief Executive, Finance Director and three other
independent non-executive directors. 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 executive leadership and management of the business
through defined delegated authority limits. The non-executive
directors 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 continues to assess
the performance and effectiveness of directors and their
commitment to meet their Board responsibilities.
The General Counsel & Company Secretary ensures that the
Board receives 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’ inductions and Board evaluation exercises and
supports succession planning and recruitment of new non-
executive directors.
Succession plans were reviewed and refreshed during the year.
The Board and Executive management recognise its importance
to overall business performance. Inclusion and diversity is a
key driver to the Group’s overall development plans.
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 non-executive directors’
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 non-
executive directors 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. The Board
undertook an internally-facilitated Board evaluation this year,
and further information can also be found on page 64.
Galliford Try Holdings plc 63
Principle
How we apply the Principle
Further information
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.
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 2021 half year
and full year results and the 2021 Annual Report. In addition,
the Board evaluation process confirmed that the Group’s system
of internal controls had operated effectively during the year.
N. Fair, balanced and understandable assessment
The Board should present a fair, balanced and
understandable assessment of the company’s position
and prospects.
The Audit Committee reviewed the 2021 Annual Report and
Accounts in September 2021 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.
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.
The procedures for managing risk have continued to work well
during the year. 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 and emerging
risks and recommends any changes to risk appetite to the Board.
The Group risk register is reviewed regularly by the Board.
See the Financial
and operating
review section
on pages 42 to 49
for further
information.
See Our risk
management
process section
on page 36
for further
information.
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.
The Remuneration Policy was approved by 99.66% of
shareholders who voted at the 2020 AGM. The Remuneration
Committee continues to review remuneration policies and
practices to ensure that they are aligned to the Group’s long-term
success and based on stretching performance metrics that reflect
the interests of shareholders.
See the Directors’
Remuneration
Policy report on
pages 73 to 79.
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.
The Remuneration Committee has continued to apply
robust procedures for determining executive remuneration
and operates in accordance with its terms of reference.
The remuneration of non-executive directors is 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
Policy can be
found on pages
73 to 79 within
the Directors’
Remuneration
Policy report.
The terms of
reference for the
Remuneration
Committee can
be found on
our website at
www.gallifordtry.
co.uk/about/
governance-and-
policies/.
R. Independence of remuneration outcome decisions
Directors should exercise independent judgment and
discretion when authorising remuneration outcomes,
taking account of company and individual performance,
and wider circumstances.
The Remuneration Committee comprises solely independent
non-executive directors. The Committee takes advice
from external remuneration consultants and ensures that
remuneration for the 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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 64
Governance review
continued
Board evaluation: 2020 update and 2021 performance evaluation
The 2020 Board evaluation exercise was internally-facilitated and closely followed those undertaken in 2017 and 2018. The evaluation found that the
Board and its Committees were operating effectively. The findings were presented to the May 2020 Board meeting and actions were subsequently
agreed by the Board to address the recommendations of the evaluation. The table below summarises the substantive recommendations made and
actions undertaken during the financial year to address them.
2020 Board evaluation
recommendations
Succession planning
Inclusion and
diversity initiatives
Commercial audit reports
Actions taken during the year
A detailed review of succession plans at executive level was undertaken by the Nomination Committee in
December 2020.
The Nomination Committee received a presentation from the HR Director covering inclusion and diversity
initiatives in December 2020.
Summary reports of commercial health checks undertaken by the Internal Audit team are regularly included in
the Audit Committee papers. An annual review of internal controls and risk management was undertaken by the
Board in September 2020 ahead of publication of the full year’s results.
Sustainability session
Our approach to sustainability was reviewed at the Board’s strategy session in April 2021.
The findings of the evaluation exercise were
presented to the Board in May 2021. Overall,
the evaluation confirmed that the Board and
its Committees are continuing to operate
effectively. The evaluation results found
that the composition of the Board remains
appropriate for the size and structure of the
business currently, however, the Board has
identified a need to consider succession to
the Board within the next two-to-four years
in view of the length of service of several
non-executive directors.
The Board has identified the following
recommendations in which it would like to
make improvements over the forthcoming
financial year:
Succession planning: review and plan for
required non-executive director succession.
ESG: review and develop the scope of the
Stakeholder Steering Committee to include
oversight of sustainability and its overall
governance within the Group.
Stakeholder engagement: continue to
receive regular reports to the Board from
the Stakeholder Steering Committee and
Employee Forum Chair on stakeholder
engagement and employee matters.
Shareholder relations: continue to engage
as required with institutional shareholders
on key matters of relevance to the Group
and its operations.
Inclusion and diversity
As at 30 June 2021, women held 33% of Board
positions, meeting the targets set by the
Hampton and Alexander Review, the final
report being published in February 2021.
Strategies to improve inclusion and diversity
at all levels in the workforce have continued to
build on the work undertaken in 2020, to ensure
each business has the right culture, procedures
and policies in place. The Company actively
supports the National Association for Women
in Construction to encourage individuals to
pursue, establish and sustain successful careers
in the construction industry, and the Leadership
& Diversity Group Scotland, and is a member
of the Supplier Diversity Group Working Party
supported by Highways England, a key client.
Membership of these groups highlights our
commitment to promote equality, diversity
and inclusion, share learning with industry
peers and promote opportunities in our
business. In addition, a variety of inclusive
initiatives, such as gender-neutral recruitment
advertising, 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 pages 24
and 25.
Board effectiveness review
In line with the Code, the Board continues to
review its own effectiveness and that of its
Committees on an annual basis, with an
externally-facilitated review at least every third
year (the last being undertaken in May 2019).
The 2021 Board evaluation was once again
internally facilitated by the Chairman in
conjunction with the General Counsel &
Company Secretary, and conducted between
March and May 2021. Questions were
reviewed in line with the Code and best practice
to ensure their continued relevance, but
remained broadly similar to previous internal
evaluations to allow the comparison of results
over time and to measure progress and change.
This year’s evaluation included additional
questions on section 172 duties (understanding
around key stakeholders), ESG factors and
succession planning.
The format of the 2021 effectiveness review
followed that undertaken in 2020, whereby a
detailed and comprehensive questionnaire was
securely sent online to each individual director
to complete and return. 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 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
Director then meets with the Chairman to
provide feedback.
Galliford Try Holdings plc Strategic report
Governance
Financial information
65
Q&A
with Terry Miller, Senior
Independent Director
I am proud to be a director of
Galliford Try, and as Senior
Independent Director,
I appreciate the support from
the Board and management,
including from levels below
the Executive Board.
Terry Miller
Senior Independent Director
Q.
A.
Q.
A.
What is the Board dynamic like?
The Board is a strong group of talented
individuals who work well together. The
spirit of our Board meetings is collegial and
one of constructive challenge; our Board
meetings are well chaired and there is
always a good debate on anything requiring
consideration, with everyone on the Board
lending their views and expertise to reach
the right outcome.
What excites you about the future
of Galliford Try?
Our business has coped remarkably well
with the challenges brought about by the
pandemic over the past 18 months and
what has stood out is the extraordinary
teams we have across the business.
I can honestly say that the spirit and
determination with which our site teams
in particular have risen to the challenges
we have been presented with have been
admirable. In my view, much of this has
been achieved as a result of the people-
orientated culture led by Bill and the
Executive Board, so that the teams at
Galliford Try truly believe in the Company
purpose and carrying out an excellent job.
This, coupled with Galliford Try’s excellent
platform for future growth, supported by a
strong Board and Executive team, presents
a great opportunity to deliver our strategy
to 2026 and provide long-term value
creation to our stakeholders.
Q.
A.
Q.
A.
What has changed for the Board
over the past year?
This has been a transformative year for
Galliford Try. Despite the unprecedented
challenges presented by the pandemic,
the Company has transitioned seamlessly
into a new business with a strong vision,
purpose and culture at its core. This,
together with the change in ‘normal’ have
made quite a difference to the way the
Board engages. For example, our review
of the business’s activities is much
closer to operations due to the more
straightforward structure of the business.
We have also become accustomed to
meeting virtually/hybrid. We can also
meet more people from across the business
with more ease.
How does your role as Chair of
both the Employee Forum and
Stakeholder Steering Committee
help you and the Board to better
understand the needs of
our stakeholders?
Being involved in the Employee Forum and
the Stakeholder Steering Committee has
given me a great opportunity to regularly
meet with a cross-section of individuals,
teams, roles and site and office staff from
the Group and discuss the matters that are
most important to them. It builds on the
conversations we already have in our
Board meetings, our site visits when
we are safely able to conduct them,
and the presentations we receive from
the business, providing another valuable
channel for the Board to hear directly from
our people. There is full participation at
these meetings and debate often leads to
some excellent insights on key issues and
actions which enable me to better support
the interests of our employees and wider
stakeholders at our Board meetings.
The minutes from these meetings are also
included in the Board packs for disclosure
and discussion. Over the past year, it has
become increasingly clear that the
sustainability strategy is extremely
important for all our stakeholders and is
now a key element of the Committee’s
ongoing agenda.
Annual Report and Financial Statements 2021 66
Governance review
continued
Executive Board report
Membership of the Executive Board is detailed
on page 57.
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 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.
Despite the challenges of the pandemic, the
Executive Board has continued to maintain its
programme of 11 scheduled meetings during
the year. Meetings of the Executive Board have
been held virtually/hybrid; however, in line with
our office safety procedures and protocols, a
number of our Executive Board members have
visited office locations to maintain a visible
presence among staff and provide support
during these challenging times.
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
featuring as the first agenda items at every
meeting, highlighting the importance of such
matters to the Group.
Governance policies
The Group has continued to operate a suite
of governance and risk management policies,
procedures and training programmes,
all of which address obligations arising
under relevant legislation. Policies, procedures
and authority matrices by which the central
functions and businesses operate, were
reviewed and refreshed during the
financial year.
Due to the pandemic, and in order to safeguard
the health and wellbeing of the Company’s
shareholders, as well as its directors, officers
and employees and in accordance with
Government guidance, the Company’s AGM
was held as a closed meeting in November
2020. Shareholders were able to submit
questions relating to the business of the AGM
in advance of the meeting. No questions were
received in advance of the meeting. However,
where considered, appropriate questions of a
non-AGM nature received following the AGM
were responded to specifically by the General
Counsel & Company Secretary. Attendance was
limited to the minimum number of directors,
such that the legal requirements to hold the
meeting were satisfied. Arrangements for the
meeting, including notice period and voting
arrangements, followed the requirements of
the Code and related best practice.
We hope to welcome shareholders to this
year’s AGM, which will be held on Friday 12
November 2021 at the offices of Peel Hunt LLP,
7th floor, 100 Liverpool Street, London,
EC2M 2AT at 11.00am. Shareholders who
wish to attend the AGM will receive an update
on the Company’s performance and have the
opportunity to put their questions to the Board
directly. However, as the situation surrounding
the pandemic continues to be uncertain, we will
follow Government guidelines in place at the
time to protect the health and safety of our
shareholders as well as our directors, officers
and employees. Arrangements for the meeting
and voting instructions will be set out fully in the
Notice of AGM and Form of Proxy.
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 86 to 88.
Additionally, the Group has complied with
sections 414CA and 414CB as well as section
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 35 in the Strategic report highlights where
non-financial information can be found within
this Annual Report.
Reporting, risk, internal audit
and controls
The Governance review, commencing on
page 54, 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 page 36.
A separate programme of 11 internal audits was
also completed across the Group’s operations,
and progress checks were completed against
previous recommendations.
Shareholder relations
Despite the pandemic, the Chief Executive
and Finance Director continued to meet
with existing and prospective institutional
shareholders throughout the year, utilising
various virtual formats. The management team
also engaged with Capital Access Group,
Vox Markets and Investor Meet Company
during the year to expand the reach to further
investors. In total, 74 meetings were held during
the course of the year, with 92 institutions
including 25 shareholders, who together
represented 44% of the share register, and 67
potential investors. The management team
attended four conferences in the year, meeting
with 18 institutions. Key areas of discussion
included the Company’s strategy and targets,
dividend policy, capital allocation, future
pipeline and ESG factors.
The Finance Director has this year focused on
building strong investor relationships, engaging
with a third-party specialist advisory business
to schedule roadshows and provide further
research coverage, while Vox Markets has been
engaged to create digital content following
news updates.
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 Director and
other non-executive directors are available to
attend meetings with shareholders and address
any significant concerns that shareholders may
have. The Chairman and General Counsel &
Company Secretary met one shareholder
virtually to discuss the business.
Galliford Try Holdings plc Nomination Committee report
I am pleased to report on the
Committee’s activities during the
financial year.
During the year, Jeremy Townsend stepped
down from his role as a Non-executive Director
and Chair of the Audit Committee, having
served as a Non-executive Director since
September 2017. On the same date Marisa
Cassoni, Non-executive Director and then
Chair of the Remuneration Committee,
assumed the role of Chair of the Audit
Committee with Terry Miller, Senior
Independent Director, replacing Marisa as
Chair of the Remuneration Committee.
Terry was previously interim Chair of the
Remuneration Committee between
November 2017 and February 2019.
Composition and remit
Membership of the Committee is detailed on
page 56. The General Counsel & Company
Secretary acts as Secretary to the Committee.
The Committee has reviewed the terms of
reference and updated them to ensure that
they are in line with the 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 continue the
development, monitoring and oversight of
succession planning processes below the
Executive Board and identify potential
candidates for future promotion and the steps
necessary to support their ability to move
forward. Succession plans developed by the
business were reviewed during the year.
Overall, good progress has been made in
succession considerations generally across
the Group, with the business taking ownership
of the process and management understanding
the importance of good succession and
developing their teams. In addition, the
Committee received updates from the HR
Director in relation to the implementation of a
range of inclusive and diversity-supporting
initiatives within the Group.
At the financial year end, the Committee
comprised a majority of independent non-
executive directors, complying with provision
17 of the Code. During the financial year, the
Committee prioritised the calendar of key
activities and areas of focus as set out below.
Calendar of 2020/21 Committee
activities and areas of focus
December
2020
May
2021
Succession planning.
Succession planning.
Non-executive directors
appointment review and
Committee membership.
Terms of reference review
and approval.
Board appointments
There were no new appointments made to
the Board during the financial year. Any new
appointments to the Board continue to be
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.
Review of the composition of the Board
The Board evaluation process continues to
assess whether the composition of the Board
and mix of skills, experience, knowledge and
The Committee continues to
monitor plans to develop our pipeline
of diverse talent and put into place
robust succession plans to ensure
that our next leaders can deliver on
the Group’s strategy.
Peter Ventress
Nomination Committee Chair
67
diversity of opinion remain suitable in the
context of the new structure of the Group.
The composition of the Board and its
Committees continues to be regularly reviewed.
Given the size and simpler structure of our
Group, the size and composition of the
Board and Nomination Committee remain
appropriate. Further details on how the Board
evaluation process was conducted and its
outcomes can be found on page 64.
Inclusion and diversity
The Committee remains 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 24. Inclusion and
diversity will be a key consideration when
assessing the composition of the Board to
ensure the development of a diverse pipeline
for succession.
During the year, the Company has continued
to monitor inclusion and diversity across the
Group more effectively, and achieved
recognition for our efforts in this area.
Highlights include:
Supporting the National Association for
Women in Construction through our
presence at their events, sharing best
practice from our organisation and
promoting opportunities in our business.
Supporting the Leadership & Diversity
Group Scotland, which focuses on best
practice through collaboration in terms
of the equality, diversity and inclusion
agenda, through our position on the
group’s steering committee.
Supplier Diversity Group – we are a member
of the working party which is focused on
improving inclusive behaviour, creating a
more diverse industry, sharing learning and
best practice.
Maintained accreditation as a Disability
Confident Employer – a Government
initiative to challenge attitudes towards
disability, remove barriers to disabled people
and those with long-term health conditions
in employment, and ensure that disabled
people have the opportunities to fulfil their
potential and realise their aspirations.
Other inclusion and diversity activities include a
range of initiatives with direct participation
from management, 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 Committee remains
dedicated to retaining and attracting 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 23 and 24.
Peter Ventress
Nomination Committee Chair
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 68
Audit Committee report
On behalf of the Board, I am pleased
to present my first report as Chair of
the Audit Committee, summarising
the work that has been carried out in
2020/21.
The Committee comprises independent
non-executive directors. Additional details
on the Committee’s members can be found
on page 56. Following Jeremy Townsend’s
departure from his role as a Non-executive
Director on 30 September 2020, I assumed
the role as Chair of the Committee effective
from that date.
The Committee has continued to support the
Board in fulfilling its corporate governance
responsibilities, monitoring and reviewing
developments in corporate governance,
overseeing the internal audit process, and
assessing the integrity of the financial
statements and the adequacy and effectiveness
of the risk management and internal control
framework of the Group.
Composition of the Committee
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 acts as Secretary to the Committee.
The Committee has continued to ensure that
each Committee member has sufficient
knowledge, training and expertise to contribute
effectively to the work of the Committee – a key
requirement of Provision 24 of the Code and
the FRC’s Guidance on Audit Committees.
As Committee Chair, I have extensive
experience in numerous roles, which include
previous roles as Group Finance Director of
the John Lewis Partnership, Royal Mail Group,
Britannic Assurance Group and Prudential UK
Group. I am a Non-executive Director of
AO World plc and was previously a Non-
executive Director of Skipton Building
Society 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 a
s a Non-executive Director with two Goldman
Sachs group companies and a regulated
insurance company. Gavin Slark is 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.
Prior to stepping down from the Board on
30 September 2020, Jeremy Townsend had
significant financial expertise gained in his
previous executive and non-executive roles on
various FTSE-listed company Boards, and of
chairing Audit Committees in his non-executive
roles. The Board remains satisfied that, as a
whole, the Committee has competence relevant
to the sector in which the Group operates.
The Committee considers that the 2021 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
undertaken by the Committee during the
financial year. The Committee also continues
to meet with internal and external audit teams,
without Executive management present, in
order to discuss any matters which the auditor
may wish to raise in confidence.
Calendar of 2020/21 Committee
activities and areas of focus
September
2020
February
2021
May
2021
Contract accounting
judgments.
Committee review of
2019/20 full year results,
including external auditor
presentation, going concern
review and approval of
‘fair, balanced and
understandable’ process.
Review of draft 2020
annual results statement.
Risk, internal audit and
whistleblowing reports.
Review of UK Corporate
Governance Code.
Contract accounting
judgments.
Committee review of
2020/21 half year results,
including external auditor
presentation, going concern
review and approval of
‘fair, balanced and
understandable’ process.
Review of draft half-year
2021 results statement.
Risk, internal audit and
whistleblowing reports.
Review and approval of
the Internal Audit Plan
2021/22.
Approval of the external
audit plan.
Review of Audit &
Corporate Governance
White Paper.
Anti-money
laundering update.
Risk, internal audit and
whistleblowing reports.
Review of terms of
reference and Non-Audit
fee policy.
The Committee continued to monitor
and review the effectiveness of our
internal and external audit functions,
the integrity of the financial statements,
the principal and emerging risks for the
Group and the effectiveness of risk
management and internal controls.
Marisa Cassoni
Audit Committee Chair
FRC Audit Quality Review
We note that, as part of their normal cycle of
reviews of auditors, the Financial Reporting
Council (FRC) is reviewing BDO LLP’s audit of
the 30 June 2020 Annual Report. We met with
the FRC as part of this review and will consider
their findings once finalised.
Risk and internal audit
The Committee continues to review and
approve the scope of work of the Risk and
Internal Audit team on an annual basis, including
assessing the adequacy of the team’s resources.
Galliford Try Holdings plc 69
During the financial year, the Risk and Internal
Audit team has continued to focus 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. Status reports on commercial
health checks, based on a sample of 12
contracts from across the business, are
reported to the Audit Committee at each
meeting. Projects included in commercial health
checks provide a representative mix of business
units, project values, current commercial
performance and stage of completion.
The risks of the Group are reviewed by the
Executive Risk Committee, which reports to
the Executive Board and the Board. In addition,
the Committee has continued to review
procedures in place to identify emerging risks.
The Executive Risk Committee has a standing
agenda item at its meetings to review and
document emerging risk themes that could have
a significant impact on our business. 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 36 to 40.
In line with the requirements of the Code,
an annual review of the effectiveness of the
Group’s risk management and internal
control systems is reviewed by the Board
prior to the approval of the full-year results,
covering all material controls, including
financial, operational and compliance controls.
In addition, the Director of Risk and Assurance
provides an Internal Audit Report to the
Audit Committee at each Committee meeting,
which includes the status of audits from the
agreed internal audit plan and implementation
of agreed actions.
External auditor effectiveness
and independence
The Company’s external auditor is BDO LLP.
Their appointment as auditor was approved by
shareholders at the 2019 AGM, following an
audit tender process undertaken in the second
half of 2018. The audit plan is submitted
annually and is approved by the Committee.
The Committee meets privately with the
auditor, and the Chair of the Committee
speaks regularly with the audit partner
throughout 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.
The Committee is satisfied that the external
audit relationship is effective and that
BDO LLP remained sufficiently independent
in accordance with the relevant professional
ethical standards.
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.
There were no non-audit-related assurance
services provided by BDO LLP during the
financial year.
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 continues to
promote a culture of acting ethically and with
demonstrable integrity. Our ethical standards
and approach are set out in ‘Doing the right
thing’, our Code of Conduct. 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 continued to maintain 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. During the year, the Group
has reviewed and enhanced its procedures for
the approval and sign-off of Commercial and
Legal Authorities Matrices (CLAM) for
specific projects.
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 judgments
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 of the following areas
of significance:
Contract revenue and provisions:
in conjunction with the annual audit, the
Committee continued to review key judgments
in respect of revenue recognition and contract
provisions, in relation to certain significant
long-term construction contracts.
Going concern and viability: The Committee
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.
Deferred tax assets: The Committee
reviewed the Group’s considerations on
future profitability to evaluate the judgment
that it is probable the deferred tax assets
are recoverable.
PPP portfolio valuation: The Committee
reviewed the discount rate used to determine
the fair value of each of the Group’s
PPP investments.
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.
Marisa Cassoni
Audit Committee Chair
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 70
Remuneration Committee report
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 2021. The 2021
Remuneration report is divided into
three parts: this Annual Statement; the
Directors’ Remuneration Policy report,
which sets out the Remuneration
Policy (Policy) that was approved by
shareholders at the 2020 AGM,
describing the framework within
which the Company remunerates its
directors; and an Annual report on
remuneration, which sets out how the
Policy was applied during the year
ending 30 June 2021.
The Remuneration Committee has primarily
focused on addressing the challenge of the
pandemic around management remuneration
and implementation of the Policy approved by
shareholders at the 2020 AGM. The Committee
continued to apply the recommendations of the
UK Corporate Governance Code insofar as they
relate to remuneration, and decisions relating
to remuneration matters are set out in the
relevant sections of this report.
During 2020, and in response to the global
pandemic, the Company implemented a
temporary salary reduction for the Board and
senior management while protecting our lower
paid employees. From 1 May to 30 June 2020,
the directors and Executive Board volunteered
a 25% salary or fee reduction. Salaries and fees
were reinstated to normal levels with effect
from 1 July 2020. The Company made no use
of the Government’s Recovery Loan Scheme;
however, for a limited duration, the Company
used the Government’s Job Retention Scheme
until August 2020 and has since repaid all
amounts that were claimed from the scheme
during the 2020/21 financial year (£1.5m).
This report has been prepared in accordance
with the relevant provisions of the Companies
Act 2006, The Companies (Directors’
Remuneration Policy and Directors’
Remuneration Report) Regulations 2019,
the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations
(Amended) 2013 and the Financial Conduct
Authority’s Listing Rules.
Board and Committee changes
On 30 September 2020, Jeremy Townsend,
Non-executive Director and Chair of the Audit
Committee, stepped down from the Board. On
the same date, Marisa Cassoni, Non-executive
Director and then Chair of the Remuneration
Committee, assumed the role of Chair of the
Audit Committee, and I replaced Marisa as
Chair of the Remuneration Committee. I was
previously interim Chair of the Remuneration
Committee between November 2017 and
February 2019. Marisa remains a member of
the Remuneration Committee and I am grateful
for her support during the handover.
Remuneration Policy
The Policy was submitted to shareholders for
approval at the 2020 AGM held in November
2020. It was subject to a binding vote and was
approved by 99.66% of shareholders who
voted. The three-year life of the Policy will
expire at the 2023 AGM, where we will be
required to seek approval for a new binding
Policy. The Committee considers the existing
Policy, which was updated in accordance with
best practice, and its structure comprising base
salary, pension, benefits, annual bonus and Long
Term Incentive Plan (LTIP), remain appropriate.
The Policy is set out in full on pages 74 to 79.
Application of Remuneration Policy
in 2021/22
For 2021/22, no changes to the Policy are
proposed. The key elements of how the Policy
is being applied are set out below:
Base salaries: as a consequence of the Covid-19
pandemic, the 2020/21 salary review, usually
undertaken in July, was deferred to April 2021.
The Committee has determined that further
annual salary reviews will be undertaken in
April going forward. Merit-based salary
increases were awarded to staff on review in
April 2021, and a budget of 2.5% was provided
to the Group to cover all salary increases.
Bill Hocking and Andrew Duxbury’s salaries
have been increased by 2.0%, in line with the
average increase across the workforce. Andrew
Duxbury’s salary review is effective 1 April
2021 and Bill Hocking’s is effective 1 July 2021.
The Committee continues to monitor and
review pay and conditions across the Group and
in line with the external market.
The principal work of the Remuneration
Committee this year has been to review
management remuneration against
the backdrop of the pandemic and
implement the Remuneration Policy
approved by shareholders at the
2020 AGM.
Terry Miller
Remuneration Committee Chair
Galliford Try Holdings plc 71
Annual Bonus Plan (ABP): no changes to
metrics or structure are planned for 2021/22.
The metrics for the Annual Bonus Plan
for 2021/22 are based on the 2020/21
performance metrics, which remain relevant to
the Group’s objectives and are in accordance
with the approved Policy. Profit, cash and
construction order book are key elements
of business performance. However, the
Committee will, during the year, review
developing practices on ESG performance
metrics with a view to introducing ESG metrics
for the 2022/23 Annual Bonus Plan. All bonus
awards will be subject to an overall Committee
discretion, taking into account health and safety,
ESG factors and the underlying performance of
the Group.
LTIP: no changes to metrics or structure are
proposed for the 2021 awards. The metrics will
continue to comprise earnings per share (EPS)
and average cash management.
There will be one advisory vote at the
AGM in November 2021, on the Directors’
Remuneration report.
Committee activities during 2020/21
The Committee met three times during the year. The key activities during the year are
summarised below:
July 2020
September
2020
Proposal of performance metrics for LTIP 2020 grant of awards.
Update on 2019/20 annual bonus forecast, performance and proposal of
2020/21 annual bonus scheme.
Determination of 2019/20 bonus payments.
Long Term Bonus Plan (for roles below Executive Board level) 2020 proposal.
Finalisation of 2020 Remuneration Policy review.
2020 Directors’ Remuneration report.
2020 Long Term Incentive and Bonus Plan awards.
Review of 2019/20 annual bonus performance to 30 June 2020.
Approval of the 2020 Directors’ Remuneration report.
Review of Executive Annual Bonus Plan rules.
Employee Share Trust market purchase programme (Sept 2020 – March 2021).
February 2021 2020/21 Salary review outcome.
Approval of the Executive Annual Bonus Plan rules.
Review of Terms of Reference.
Review of Employee Share Trust shareholdings.
Terry Miller
Remuneration Committee Chair
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 72
Remuneration at a glance
The following is a summary of the
executive directors’ remuneration in
2020/21 and proposed application of
the Policy approved at the 2020 AGM.
Remuneration Policy and framework
Our approach to remuneration and our Policy
are set out on pages 73 to 79 of this report.
The Policy was approved by 99.66% of
shareholders who voted at the 2020 AGM.
The elements of executive directors’
remuneration are:
Fixed element: comprises base salary,
taxable benefits (such as a company car or
cash equivalent allowance, private medical
insurance), and a pension.
Variable element: annual bonus which
incentivises and rewards the achievement
of stretching annual targets (both financial
and non-financial) that support the Group’s
annual and strategic objectives, with
two-thirds of any bonus earned in excess of
50% of salary required to be deferred into
restricted shares.
Long-term element: the LTIP incentivises
the achievement of sustained long-term
financial and operational performance over a
three-year performance period. Any share
awards that vest are subject to a two-year
holding period.
Actual remuneration in 2020/21
The following table summarises the executive directors’ remuneration in 2020/21:
Director
Role
Bill Hocking3
Chief Executive
Andrew Duxbury Finance Director
Fixed
remuneration1
£000
Variable
remuneration2
£000
Total
remuneration
£000
487
394
540
366
1,027
760
1 Comprises base salary, taxable benefits and pension contributions. See page 80 for further information.
2 Comprises annual bonus awarded during the year (including deferred element). See page 81 for
further information.
3 As disclosed on page 72 of the 2020 Annual Report, Bill Hocking was granted an incentive award in
October 2019 relating to the successful completion of the disposal of the Group’s housebuilding businesses
to Vistry Group plc in January 2020. The award was granted prior to his appointment as Chief Executive and
to the Board on 3 January 2020, and accordingly, he received a payment of £181,587 in December 2020 in
his prior capacity as Chief Executive of the Construction Division. See page 81 for further information.
Variable pay outcomes
Annual bonus payments for 2020/21
The annual bonus payments made to the executive directors are summarised in the table below.
Director
Bill Hocking
Andrew Duxbury
On-target bonus
(% of salary)1
Bonus outcome
(% of salary)
100%
100%
120%
100%
Cash
£000
£330
£244
Shares
£000
£210
£122
1 Under the Policy, the maximum bonus 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.
See page 81 for further information.
Proposed application of the Policy in 2021/22
Element
Bill Hocking
£459,000
8% of salary
Andrew Duxbury
£373,000
6% of salary
Base salary
Pension
ABP
LTIP
Malus and clawback
Maximum bonus opportunity of 120% of salary for the Chief Executive
and 100% of salary for other executive directors.
Award of up to 150% of salary, based on performance metrics,
75% of the award is based on earnings per share (EPS) and 25% on a
cash performance metric (average month-end cash as a percentage
of revenue).
The EPS number to be achieved in the final year of the performance
period (1 July 2023 to 30 June 2024) is 17.7p. Achieving 15.9p would
generate 25% vesting and 19.5p would generate 100% vesting on a
straight-line basis. Average month end cash to be achieved in the final
year of the performance period is 9% as a percentage of annual turnover.
Achieving 8% would generate 25% vesting and 10% would generate
100% vesting on a straight-line basis. Any vested LTIP shares must be
held for two years after vesting (after payment of tax).
Malus and clawback apply at any time within a three-year period
post-vesting or payment of cash bonuses in circumstances of error,
material misstatement, misconduct, reputational damage or corporate
failure as a result of poor risk management.
Galliford Try Holdings plc Directors’ Remuneration Policy report
73
This report sets out the Remuneration Policy that was approved by 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.
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. The Policy is shaped by ESG 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 clawback provisions are contained within both the ABP and LTIP and 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.
How the Remuneration Policy aligns with the 2018 UK Corporate Governance Code
The 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.
Simplicity
Remuneration structures should avoid complexity and their rationale
and operation should be easy to understand.
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.
The Committee has continued to operate a consistent approach,
which is well understood internally and by investors. Consultation with
shareholders on the revisions to the Policy was undertaken before
shareholder approval was sought at the AGM.
The Committee has continued to take measures to ensure pay
arrangements are balanced, simple in their design with a small number
of relevant performance measures, and clearly linked to strategy.
Incentive targets have been set which the Committee believes are
stretching and achievable within the risk appetite set by the Board.
Under the Policy, the Committee has discretion to override formulaic
incentive outcomes if they do not accurately or fairly reflect the
underlying performance of the Group.
The incentive scheme recovery provisions include reputational damage
or corporate failure arising from poor risk management, which ensures
that malus and clawback provisions are considered to be sufficiently
wide-ranging.
The Committee has continued to maintain 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.
The Committee has discretion to reward exceptional individual
contributions within the limits set out in the Policy. When doing so,
the Committee will have regard to governance best practice and views
expressed to the Committee previously by shareholders.
Bonus and incentive schemes are reviewed by the Committee to ensure
consistency with the Group’s purpose, values and strategy.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 74
Directors’ Remuneration Policy report
continued
The full Remuneration 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 April 2021.
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 an executive 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.
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).
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.
The rate offered of 8% for the Chief
Executive and 6% (increasing to 8% at
age 50) for the Finance Director is
unchanged and 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.
Galliford Try Holdings plc 75
Component and
link to strategy
Annual Bonus Plan (ABP)
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.
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 discovers 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 becomes 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 clawback
provision shall operate at the sole discretion of the Committee.
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.
Payments are 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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 76
Directors’ Remuneration Policy report
continued
Component and
link to strategy
Operation
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.
Executive directors may be granted awards under the rules of the
LTIP. The LTIP provides for awards 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.
All-employee schemes
To encourage employee
share participation.
The Group may from time to time operate tax-approved share plans
(such as an approved Save As You Earn (SAYE) scheme for the benefit of
all staff) for which executive directors could be eligible on the same
terms as other staff. A new SAYE invitation was launched in March 2021
following the announcement of the Group’s half-year results.
Shareholding guidelines
To ensure the interests
of the executive directors
are aligned to those
of shareholders.
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 approval of
the Policy at 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.
Framework to assess performance and
maximum opportunity
Performance metrics for FY21 were
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.
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.
Galliford Try Holdings plc 77
Component and
link to strategy
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 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.
Framework to assess performance and
maximum opportunity
The Committee and the executive
directors are guided by the general pay
increase for the broader employee
population, but on occasion may need
to recognise, for example, changes in
responsibility or time commitments.
Current fee levels are disclosed on
page 85.
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).
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.
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.
Executive director
remuneration scenarios
The individualised potential executive reward
charts set out below have been prepared using
the following assumptions:
For minimum remuneration: only fixed
salary, benefits and pensions payments have
been included.
Illustration of application of Remuneration Policy
Remuneration (£000s)
£2,080
50%
£1,736
40%
£1,116
31%
25%
44%
£497
100%
31%
26%
29%
24%
Salary levels are based on those applying on
1 April 2021 or 1 July 2021, for the Chief
Executive, and the value of taxable benefits
is estimated based on the cost of supplying
those benefits (as disclosed) for the year
ended 30 June 2021. 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.
£1,613
52%
£1,333
42%
28%
30%
23%
25%
£867
32%
22%
46%
£400
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
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 78
Directors’ Remuneration Policy report
continued
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.
ABP
In line with existing schemes.
LTIP
In line with Group policies and
LTIP rules.
Other share awards
The Committee may make an
incentive award to replace
deferred pay forfeited by
an executive leaving a
previous employer.
In line with the 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.
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 remains at 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.
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.
Awards would, where possible, be consistent with the awards forfeited in terms of
structure, value, vesting periods and performance conditions.
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 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 employees below Board level) or, at the discretion of the
Committee, they may be amended to bring them in line with the policy for executive directors.
For a new non-executive Chairman or non-executive director, the fee arrangement would be set in accordance with the approved Remuneration 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 2021 are detailed below:
Non-executive directors
Peter Ventress
Terry Miller
Gavin Slark
Marisa Cassoni
Executive directors
Bill Hocking
Andrew Duxbury
Contract date1 Notice period2,3 (months)
3 January 2020
3 January 2020
3 January 2020
3 January 2020
3 January 2020
3 January 2020
6
6
6
6
12
12
1 Date shown is the director’s 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. All directors will stand for re-election at
the 2021 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.
Galliford Try Holdings plc 79
The Board engages with employees through the
Employee Forum. The agenda for the Employee
Forum meetings includes business updates,
feedback from Employee Representatives on
key topics such as reward and benefits, people
and engagement initiatives, communication and
wellbeing. 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 Director and
Committee Chair.
Executive directors’ service contracts are
available at the Group’s registered office
and will be available for inspection at the
2021 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.
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 Policy,
where appropriate, or individual executive
director salary packages. As reported in our
2020 Annual Report, the most recent
consultation took place in June 2020 in
connection with the Remuneration Policy
which was presented to shareholders for
approval at the 2020 AGM.
Wider workforce remuneration and
how the views of employees have
been taken into account
The Group ceased claiming the Government’s
Job Retention Scheme from 1 September 2020
and has since repaid all amounts that were
claimed from the scheme during the 2020/21
financial year (£1.5m). During the time that
the Group accessed support under the
Government’s Job Retention Scheme, pay for
impacted employees was topped up above
the minimum level of government support
to protect those employees during the
challenging period.
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
Group offers a comprehensive range of benefits
which include a 28-day minimum holiday
entitlement, plus the opportunity to purchase
further holidays, as well as a comprehensive
pension plan, a regular SAYE scheme and health
insurance plan. The wider total package on offer
remains competitive at all levels.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 80
Annual report on remuneration
This part of the Directors’ Remuneration report sets out how the Policy was implemented over the year ended 30 June 2021. It will be put to an
advisory vote at the 2021 AGM. Certain sections of the Annual report on remuneration have been subject to audit.
The Directors’ Remuneration report has been prepared in accordance with The Companies (Directors’ 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).
Directors’ remuneration and single-figure annual remuneration (audited)
The remuneration of the directors serving during the financial year under the current Policy, together with 2020 comparative figures, was as follows:
Salary and fees
£000
Taxable
benefits1
£000
Pensions2
£000
Total fixed
remuneration
£000
Annual
bonus
£000
LTIP
£000
Sharesave
£000
Total variable
remuneration
£000
Total
remuneration
£000
2021 20203 2021 2020
2021 2020
2021 2020
2021 2020
2021 2020
2021 2020
2021 2020
2021 2020
Executive
directors
Bill Hocking4
Andrew Duxbury
Non-executive
directors
Terry Miller
Gavin Slark
450
367
205
350
63
44
54
42
Peter Ventress
202
193
Marisa Cassoni
52
53
Former directors
Jeremy Townsend5
13
50
1
5
–
–
1
–
–
5
19
36
22
18
21
487
394
228
390
540
366
98
250
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
63
44
54
42
203
194
52
53
13
50
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
540
366
98 1,027
250
760
326
640
–
–
–
–
–
–
–
–
–
–
63
44
54
42
203
194
52
53
13
50
1 Includes the value of benefits such as car allowance and private medical insurance.
2 This is a salary supplement paid to the directors in lieu of direct pension contributions.
3 In the context of Covid-19, from 1 May 2020, the executive directors and non-executive directors volunteered a temporary 25% salary and fee reduction. Normal salaries
and fees were reinstated from 1 July 2020.
4 Remuneration received by Bill Hocking in respect of 2020 relates to the period from appointment as Chief Executive on 3 January 2020. As disclosed on page 72 of the
2020 annual report, Bill Hocking was granted an incentive award in October 2019 for the successful completion of the disposal of the Group’s housebuilding businesses to
Vistry Group plc in January 2020. The award was granted to Bill Hocking in his role prior to his appointment as Chief Executive and to the Board on 3 January 2020 and
accordingly, he received a payment of £181,587 in December 2020.
5 Jeremy Townsend stepped down from the Board on 30 September 2020 and his remuneration in the table reflects the time period he served as a director.
2021 Annual bonus outcome (audited)
For the financial year ended 30 June 2021, the annual bonus measures, targets and performance against those targets are set out in the table below.
Senior management was subject to similar targets, which were applied to their respective business performance. The weightings and performance
targets are shown in the table below:
Measure
Threshold (% of
maximum
bonus)
On-target (% of
maximum
bonus)
Maximum (% of
maximum
bonus)
Actual
performance
Payout % of
bonus
maximum
Weighting
Performance target
Pre-exceptional full year Group profit before tax
50.0%
£6.7m (0%)
£7.1m (25%) £7.8m (50%)
Group cash management
Construction order book
Total payout (% of maximum bonus)
37.5%
12.5%
100.0%
(18.7%)
83.0%
secured
(0%)
18.7%
(18.7%)
85.0%
secured
(6.2%)
50.0%
(37.5%)
87.0%
secured
(12.5%)
100.0%
£11.4m
37.5%
90%
secured
50.0%
37.5%
12.5%
100.0%
The Committee considered the performance of the Group in its first full financial year as a pure construction business and, notwithstanding the
challenge of the pandemic, the Group achieved a strong performance against targets set at the start of the financial year. Taking into account the
Group’s return to profitability and resumption of dividends to shareholders, the Committee determined that the bonus level produced by the scorecard
(100%) is an appropriate reward given overall performance. This treatment is consistent with that applied for all participants of the ABP. Under the
approved Policy, the Committee may, at its discretion, acting fairly and reasonably, adjust bonus outcomes if it considers the payout is inconsistent
with the Group’s performance during the year, taking into account factors including safety and ESG. A formulaic health and safety bonus deductor,
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. In reviewing the Group’s health and safety performance, the Committee took these factors into
consideration. The Group achieved an overall Accident Frequency Rate (AFR) of 0.08 for 2020/21, with seven business units achieving an AFR of
zero during the year.
Galliford Try Holdings plc 81
The Committee determined that, in respect of the year to 30 June 2021, the resulting annual bonus awards were as follows:
Bill Hocking
Andrew Duxbury
On-target
bonus
(% of salary)
Maximum
bonus
(% of salary)
100%
100%
120%
100%
Actual bonus
payable for
2020/21
(£000)
540
366
Cash
(£000)
330
244
Shares
(£000)
210
122
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. Malus and clawback apply at any time within a three-year period post-vesting or payment of cash bonuses in
circumstances of error, material misstatement, misconduct, reputational damage or corporate failure as a result of poor risk management.
Incentive awards made prior to Board appointment
As previously reported on page 72 of our 2020 Annual Report, Bill Hocking was granted an incentive award in October 2019 for the successful
completion of the disposal of the Group’s housebuilding divisions in January 2020, and prior to his appointment as Chief Executive and to the Board
on 3 January 2020. He received a payment of £181,587 in December 2020.
Directors’ share plan interests (audited)
Outstanding awards held by Bill Hocking and Andrew Duxbury are detailed in the table below.
Director
Plan
Date
Share price
at grant
Number of
awards
outstanding
at 1 July 2020
Granted
Vested
Lapsed
Number of
awards
outstanding
at 30 June
2021
Value of
awards
vested during
financial year
£000
Bill Hocking LTIP1
13.03.20
£1.1554
584,213
–
Andrew
Duxbury
LTIP
LTIP1
ABP2
LTIP
23.09.20
£0.80
–
843,750
13.03.20
£1.1554
474,705
–
23.09.20
£0.8442
23.09.20
£0.80
–
–
52,969
685,593
–
–
–
–
–
–
–
–
–
–
584,213
843,750
474,705
52,969
685,593
–
–
–
–
–
Actual or
anticipated
vesting date
13.03.23
23.09.23
13.03.23
23.09.23
23.09.23
1 Awards are based on a maximum percentage of salary. The number of shares shown in the table represents the maximum number of shares, ie 150% of salary.
2 In accordance with the rules of the Annual Bonus Plan, the average of the Company’s closing share price for the five business days following (and including) the
announcement of the annual results on 16 September 2020 was 84.42 pence.
Awards granted during the year (audited)
On 23 September 2020, the following conditional LTIP awards were made to Bill Hocking and Andrew Duxbury.
Director
Bill Hocking1
Andrew Duxbury1
Date of grant
23 September 2020
23 September 2020
Number of shares
awarded
Basis of award
843,750 150% of base salary
685,593 150% of base salary
Share price
used to determine
level of award1
£
£0.80
£0.80
Face value
£
675,000
548,475
1 The share price used for awards made on 23 September 2020 was the closing mid-market share price of the Company on the day prior to the award.
The performance conditions attached to these awards made in September 2020 are as follows:
Date of grant
September 2020
Performance conditions
Vesting based on underlying EPS performance over the three years to 30 June 2023.
Vesting of up to 75% of the award is based on underlying EPS. 25% will vest for 12.6p, increasing to 100%
vesting on a straight-line basis if 15.4p is achieved.
Vesting of up to 25% of the award is based on average month end cash as a percentage of annual turnover.
8% would generate 25% vesting and 10% would generate 100% vesting on a straight-line basis.
Any shares which vest will be subject to a two-year post vesting holding period in accordance with the
shareholder approved Remuneration Policy. Malus and clawback apply at any time within a three-year period
post-vesting or payment of cash bonuses in circumstances of error, material misstatement, misconduct,
reputational damage or corporate failure as a result of poor risk management.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 82
Annual report on remuneration
continued
Directors’ share interests (audited)
As at 30 June 2021, 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
Marisa Cassoni
Peter Ventress
Former directors
Jeremy Townsend3
Legally owned1
30.6.21
30.6.20
LTIP (unvested)
Deferred bonus
awards (unvested)
Total
30.6.21
% of salary held
under share
ownership
guidelines2
119,778
24,955
119,778
2,939
1,427,963
1,160,298
–
1,547,741
52,969
1,238,222
2,066
1,600
–
14,098
2,066
1,600
–
14,098
3,333
3,333
–
–
–
–
–
–
–
–
–
–
2,066
1,600
–
14,098
3,333
37%
29%
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. 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 Jeremy Townsend are based on the number of shares held at the time of leaving the Group on 30 September 2020.
There were no changes in the directors’ interests from 30 June 2021 to the date of this Annual Report.
Performance graph
The graph shows the TSR for Galliford Try
shares over the past 10 financial years. It shows
the value to 30 June 2021 of £100 invested in
Galliford Try on 30 June 2011 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 closing mid-market quotation for the
Company’s shares on 30 June 2021 was £1.407.
The high and low during the year were £0.70
and £1.474.
Total Shareholder Return
Value (£) (rebased)
500
400
300
200
100
0
Jun
11
Jun
12
Jun
13
Jun
14
Jun
15
Jun
16
Jun
17
Jun
18
Jun
19
Jun
20
Jun
21
Galliford Try
FTSE All Share
Source: Datastream from Refinitiv
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 past 10 financial years.
2012
2013
2014
20151
2016
2017
2018
20192
20203
2021
Chairman
Chief Executive
Year ended 30 June
Total remuneration (£000)
2,468
4,114
3,212
2,811
1,262
1,461
1,043
1,448
824
660
1,027
Annual bonus (% of maximum)
LTIP (% of maximum)
88%
93%
94%
87%
97%
63%
79%
63%
74%
47%
74% 46.3% 86.5%
57.0% 36.7% 100.0%
–
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. He stepped down from the Board and as Chief Executive 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. A full-year remuneration figure based on the aggregate paid to Bill and Graham is shown here to
aid comparison.
Payments for loss of office to former directors (audited)
As previously reported on page 73 of our 2020 Annual Report, Graham Prothero, former Chief Executive of Galliford Try, left the Group with effect
from 3 January 2020 following the successful completion of the sale of the housebuilding divisions to Vistry Group plc. Payment of his pro-rata 2019/20
bonus for the period up to 31 December 2019 was subject to the finalisation of the corporate transaction closing adjustment. The Company finalised
the closing adjustment with Vistry Group plc in September 2020, and accordingly, a bonus payment of £64,189 was made to Graham Prothero in
November 2020.
Galliford Try Holdings plc 83
CEO pay ratios
Under Option B (gender pay data), three employees have been identified as the best equivalents to represent the lower, median and upper quartiles.
Option B provides a clear methodology involving fewer adjustments to calculate full-time equivalent earnings.
Year
2019/20
2020/21
Method CEO single figure All UK employees
Lower quartile
Median
Upper quartile
Option B
£660,587
Option B
£1,026,671
Ratio
Total pay
Salary
Ratio
Total pay
Salary
24:1
£27,407
£25,500
27:1
£37,399
£36,134
15:1
£43,165
£35,249
19:1
£54,374
£43,781
9:1
£74,351
£61,057
14:1
£73,385
£66,927
To allow a comparison to be made to 2019/20, 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 by the Companies (Miscellaneous Reporting) Regulations 2018,
we will build this analysis over a 10-year reporting period.
Compared to 2020/21, there were increases in all three ratios reflecting the fact that a greater proportion of the Chief Executive’s total reward is linked
to annual performance through a higher annual bonus opportunity than that of the average employee (of which a percentage is subject to deferral into
restricted shares). 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.
Percentage change in remuneration of executive directors and non-executive directors
The table below shows the percentage change in salary or fee, taxable benefits and annual bonus of each individual director in respect of the financial
years ended 30 June 2020 and 30 June 2021:
Executive directors
Bill Hocking3,4
Andrew Duxbury
Non-executive directors
Peter Ventress
Terry Miller
Gavin Slark
Marisa Cassoni
Former directors
Jeremy Townsend5
P50 median employee
Salary change1 Benefits change2
Bonus change
Salary change6 Benefits change
Bonus change
2021
Year ended 30 June
2020
119.5%
4.9%
(85.5)%
(70.9)%
449.8%
46.5%
5.0%
15.3%
5.0%
(1.1)%
(73.9)%
24.2%
n/a
n/a
n/a
n/a
n/a
4.5%
n/a
n/a
n/a
n/a
n/a
50.0%
n/a
273%
(1.3)%
(1.3)%
(1.3)%
49.3%
(1.2)%
(1.2)%
n/a
226%
n/a
n/a
n/a
n/a
n/a
0.6%
n/a
369%
n/a
n/a
n/a
n/a
n/a
–
1 Salaries for the executive directors were increased by 2.0% with effect from 1 April 2021 (Andrew Duxbury) and 1 July 2021 (Bill Hocking). Fees for the non-executive
directors (including the Chairman) were increased by 2.5% with effect from 1 April 2021. The salary increases shown in the table above were also inclusive of the
reinstatement of salary and fees to normal levels with effect from 1 July 2020, following the voluntary reduction referred to in note 6 below.
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 ABP and LTIP.
3 Bill Hocking was appointed as Chief Executive on 3 January 2020. As such, the percentage increase numbers shown above compare his salary, benefits and bonus for the
full financial year ended 30 June 2021 against a five-month period in the prior financial year (ie 3 January 2020 to 30 June 2020). The percentage increase numbers are
therefore misleadingly high. If a comparison is made against a full prior financial year and Bill Hocking had been employed as a director for the full year, the percentage
changes for Bill Hocking’s salary, benefits and bonus (including elements of salary and bonus awards earned in his former role as Chief Executive of Construction &
Investments) would be 4.3% for salary, (94.8)% for benefits and 93% for bonus.
4 As disclosed on page 81, Bill Hocking was granted an incentive award in October 2019 for the successful completion of the disposal of the Group’s housebuilding businesses
to Vistry Group plc in January 2020. The award was granted prior to his appointment as Chief Executive and to the Board on 3 January 2020. He received a payment of
£181,587 in December 2020.
5 Jeremy Townsend stepped down from the Board on 30 September 2020.
6 As reported on page 74 in our 2020 Annual Report, as a consequence of the Covid-19 pandemic, the Board volunteered a temporary salary/fee reduction of 25% of base
salary/fee from 1 May 2020. Salary and fees were reinstated to normal levels with effect from 1 July 2020.
To allow for comparison, the Committee has elected to compare the total remuneration of the P50 median employee (median) from this year (2020/21)
to that used last year. The Committee continues to ensure that the wider total package on offer to employees remains competitive at all levels.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 84
Annual report on remuneration
continued
Relative importance of spend on pay
Total overall spend on pay (£m)
Dividends (£m)
Share buyback (£m)
Group corporation tax credit/(charge) (£m)1
Effective tax rate (%)1
1 Pre-exceptional measures for 2019/20.
2019/20
188.8
2020/21
165.3
–
–
6.8
11.4
5.2
–
(1.0)
8.8
Change
(12.4)%
100%
–
£(7.8)m
(2.6) ppts
The equivalent total overall spend on pay in 2020/21 is disclosed in note 5 to the financial statements. The total overall spend on pay equates to average
remuneration per staff member of £62,100 per annum for the year ended 30 June 2021 (2020: £61,100).
Composition of Remuneration Committee and attendance
Membership of the Committee is detailed on page 56. Aside from the Chair, Terry Miller, the other members were Marisa Cassoni, Gavin Slark 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 nor 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. The terms of
reference were reviewed during the year and are available on the Group’s website (www.gallifordtry.co.uk).
Remuneration advice and advisers
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)
remained as the Committee’s remuneration consultant throughout the year. Fees paid to Mercer during the financial year were £26,250
(2020: £79,907).
Mercer 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.
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. Following the
announcement of the 2020 final year results in September 2020, the EST entered into a six-month trading plan with the Company. The EST instructed
Peel Hunt LLP to acquire ordinary shares of 50 pence each in the Company for the Trust. Purchases were made at the best price and limited to 250,000
shares in any single calendar month. The shares are to be used to satisfy potential future vesting(s) to be made to employees under the various executive
share incentive schemes.
As at 30 June 2021, the EST held 1,721,603 ordinary shares in the capital of the Company (1.55%) (2020: 221,603 shares). Under the terms of the
Trust Deed, the Trust may only hold up to a maximum of 5% of the issued shares in the Company.
As reported on page 76 of the 2020 Annual Report, 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 2020/21 financial year, the EST sold 14,132 Vistry Group plc shares for £183,000 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, no new shares were issued arising from share scheme-related activities under the SAYE share option scheme. As at 30 June 2021,
the total number of shares outstanding under the SAYE share option scheme was 1,989,993. The Group has complied with the dilution guidelines of the
Investment Association (Guidelines).
Applying the Guidelines, the Group has 8.21% 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.
Galliford Try Holdings plc 85
Shareholder voting on the Directors’
Remuneration report
The Committee takes account of annual
shareholder voting trends in connection with
the Directors’ Remuneration report. Votes cast
in support of the annual advisory resolution to
approve the Directors’ Remuneration report
during the past five AGMs are included in the
chart below.
Forward-looking implementation of Policy
Base salaries
The 2020/21 salary review was completed in April 2021. The Committee carefully scrutinised pay
and conditions across the Group. Against a backdrop of market conditions, sector peer group
comparisons and overall performance of the Group, the overall pay budget increased to 2.5%.
With effect from 1 April 2021, Andrew Duxbury was awarded an annual salary increase of 2.0%,
taking his annual salary from £365,650 to £373,000. Additionally, and with effect from 1 July 2021,
Bill Hocking’s annual salary increased from £450,000 to £459,000, an increase of 2.0%. These
increases are no higher than the average pay increase across the workforce.
Votes cast
(%)
0.32
2.15
13.97
14.27
35.57
99.68
97.85
86.03
85.73
64.43
2016
2017
2018
AGM Year
2019
2020
Votes For
Votes Against
In 2020, 35.57% of the votes cast were
against the Directors’ Remuneration report.
The proportion of votes withheld were 58,078
shares (0.10%). The Board understands that
shareholders’ concern was the Finance
Director’s 2019/20 annual bonus, where 50%
was based on the successful completion of the
disposal of the Group’s housebuilding divisions
in January 2020. While appreciating the view of
many shareholders that transaction-focused
measures should not be regularly included
in executive director incentives, the
Committee’s decision to base half of the
Finance Director’s 2019/20 annual bonus on
the successful completion of the disposal
reflected that this transformational corporate
transaction represented a significant focus
of the Finance Director’s duties and
responsibilities in the 2019/20 financial year.
In making the award in respect of the disposal,
the Committee carefully considered the one-off
nature of the transaction in the context of the
Finance Director’s wider contribution and
the underlying performance of the Group.
This decision was permitted under the remit
of the Committee and the Company’s
Remuneration Policy in force at the time of
granting the bonus award.
The Board will continue to engage with
shareholders to ensure their views are fully
understood and considered and can be taken
into account by the Committee in the future.
The current Policy was approved by 99.66% of
shareholders who voted at the 2020 AGM.
ABP
For the financial year to 30 June 2022, the Committee has determined that 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. The Committee will review
ESG annual bonus objectives aligned to the Group’s strategy on ESG, with a view to introducing
appropriate ESG objectives in 2022/23. Malus and clawback apply at any time within a three-year
period post-vesting or payment of cash bonuses in circumstances of error, material misstatement,
misconduct, reputational damage or corporate failure as a result of poor risk management.
LTIP
Any award granted to the executive directors in 2021 will be within the current approved
Remuneration Policy and based on performance metrics comprising 75% based on earnings per
share and 25% on a cash performance metric, based on average month end cash as a percentage
of revenue.
Performance measures applied over a three-year performance period to 30 June 2024 are:
25% of the EPS element will vest if underlying EPS is 15.9p, increasing to 100% vesting on a
straight-line basis if 19.5p is achieved.
25% of the cash element will vest if average month end cash is 8% of revenue, increasing to 100%
vesting on a straight-line basis if 10% is achieved.
Any shares which vest will be subject to a two-year post-vesting holding period in accordance with
the shareholder approved Remuneration Policy.
Chairman and non-executive fees
The Committee determined that the Chairman’s fee for 2021 be increased by 2.5% with effect from
1 April 2021. In addition, and following a review of the non-executive directors’ fees by the Board,
it was agreed that the non-executive directors’ fees would increase by 2.5% from 1 April 2021.
Accordingly, the annual fees effective from 1 April 2021 are as follows:
Chairman1
Non-executive directors
Base fee
Additional fees:
Senior Independent Director
Chairs of Board Committees
Chair of Employee Forum and Stakeholder
Steering Committee
2021
20202
Increase %
£206,128
£201,100
£44,690
£43,600
£4,459
£8,405
£4,350
£8,200
£8,405
£8,200
2.5%
2.5%
2.5%
2.5%
2.5%
1 Peter Ventress received no benefits in connection with his position as Chairman, other than membership of the
Group’s medical insurance plan.
2 As reported in our 2020 Annual Report, the Chairman and non-executive directors voluntarily reduced their
fees by 25% with effect from 1 May to 30 June 2020. Salaries and fees were reinstated to normal levels with
effect from 1 July 2020.
For and on behalf of the Board
Terry Miller
Remuneration Committee Chair
16 September 2021
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 86
Directors’ report
The directors present their Annual
Report and audited financial
statements for the Group for the
financial year ended 30 June 2021.
Principal activities
Galliford Try is a trading name of Galliford Try
Holdings plc, a leading UK construction group
which is listed on the London Stock Exchange.
Operating as Galliford Try and Morrison
Construction, the Group carries out building
and infrastructure projects with clients in the
public, private and regulated sectors across the
UK. 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 in the
Strategic report on pages 2 to 53. The principal
subsidiaries and joint ventures operating within
the Group’s businesses are shown in note 33 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 2 to 53.
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 the 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
50 to 53.
The Corporate governance report on pages 54
to 66 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 profit for the year before income
tax was £11.4m, as shown in the consolidated
income statement on page 97. On 4 March
2021, the Board declared an interim dividend of
1.2p per share which was paid to shareholders
on 9 April 2021. The Board is recommending
a final dividend of 3.5 pence per share
which, subject to approval will be paid on
10 December 2021 to shareholders on the
register at 12 November 2021. Together with
the interim dividend of 1.2 pence per share
paid in April, this will result in a total dividend
for 2021 of4.7 pence per share. Dividend
cover is expected to be in the range of
2.0–2.5 times earnings.
Please refer to page 6 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 2021, 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 2021 AGM
will renew all three of the directors’ standing
authorities relating to share capital, which are
further explained in the Notice of 2021 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 UK 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 1.55% 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 a general meeting.
Amendments to the Articles require the
approval of shareholders in a 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.
Galliford Try Holdings plc 87
Significant agreements
There are no persons with whom 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 33.
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 29 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 subcontractors, 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. The Group remained a
signatory to the Prompt Payment Code
throughout the financial year which contains,
among other things, commitments to pay
suppliers within agreed contract terms.
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 42 and
in note 24 to the financial statements.
Important developments during
the year
There have been no material events or
developments affecting the Company or any of
its operating subsidiaries since 30 June 2021.
Significant direct and indirect holdings
As at 16 September 2021, 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
Premier Miton
Group plc
Standard Life
Aberdeen plc
Aberforth
Partners LLP
J O Hambro Capital
Management Limited
Ameriprise
Financial Inc.
Dimensional Fund
Advisors LP
Brewin Dolphin Ltd
Interest % capital
13,478,603
12.13
6,436,890
5.80
5,857,304
5.27
5,738,929
5.17
5,734,661
5.16
5,552,697
5,169,266
4.97
4.66
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 2021 are on page 56.
As reported in our 2020 Annual Report,
Jeremy Townsend stepped down from the
Board on 30 September 2020, having served
as a Non-executive Director since September
2017. There were no other changes to the
Board during the year. The interests of the
directors in the share capital of the Company
are set out in the Annual report on
remuneration on page 82 and details of
executive directors’ service contracts and
non-executive directors’ letters of appointment
can be found in the Directors’ Remuneration
Policy report on page 78.
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 Directors’
Remuneration Policy report on pages 73 to 79.
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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 88
Directors’ report
continued
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
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 2021 AGM will be held at Peel Hunt LLP,
7th floor, 100 Liverpool Street, London,
EC2M 2AT on Friday 12 November 2021 at
11.00am. The notice convening the AGM, sent
to shareholders separately, explains the items
of business which are not of a routine nature.
Further information on arrangements for the
AGM and voting instructions will be set out fully
in the Notice of AGM and Form of Proxy.
Fair, balanced and understandable
In accordance with the principles of the
Code, 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 2 to 53, and the Corporate
Governance report and Directors’
Remuneration report, on pages 70 to 85,
were approved by the Board of Directors on
16 September 2021.
For and on behalf of the Board
Kevin Corbett
General Counsel & Company Secretary
16 September 2021
Galliford Try Holdings plc 89
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 that law, the directors have prepared
the Group and Parent Company financial
statements in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006.
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 they have been prepared in
accordance with international accounting
standards in conformity with the
requirements of the Companies Act 2006,
subject to any material departures disclosed
and explained in the financial statements;
state whether they have been prepared in
accordance with international financial
reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies
in the European Union, subject to any
material departures disclosed and explained
in the financial statements;
prepare the financial statements on the
going concern basis unless it is inappropriate
to presume that the Company will continue
in business;
prepare a Directors’ report, a Strategic
report and Directors’ Remuneration report
which comply with the requirements of the
Companies Act 2006.
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 ensuring the
Annual Report and the financial statements
are made available on a website. Financial
statements are published on the Company’s
website in accordance with legislation in the
United Kingdom governing the preparation
and dissemination of financial statements,
which may vary from legislation in other
jurisdictions. The maintenance and integrity of
the Company’s website is the responsibility of
the directors. The directors’ responsibility also
extends to the ongoing integrity of the financial
statements contained therein.
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 page 56, confirms that
to the best of their knowledge:
The Parent Company financial statements
have been prepared in accordance with the
applicable set of accounting standards and
Article 4 of the IAS Regulation and give a true
and fair view of the assets, liabilities, financial
position and profit and loss of the Group and
the Parent Company.
The Annual Report and Accounts includes a
fair review of the development and
performance of the business and the
financial 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 2021
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 90
Independent auditors’ report
to the members of Galliford Try Holdings plc
Opinion on the financial statements
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 2021 and
of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006;
the Group financial statements have been properly prepared in
accordance with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union;
the Parent Company financial statements have been properly prepared
in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 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.
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 2021 which comprise the consolidated income statement,
consolidated statement of comprehensive income, 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
accounting standards in conformity with the requirements of the
Companies Act 2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union, and as regards the Parent Company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
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 auditors’ responsibilities for
the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion. Our audit opinion is consistent with the
additional report to the Audit Committee.
Independence
Following the recommendation of the Audit Committee, we were
appointed by the members on 13 November 2020 to audit the financial
statements for the year ended 30 June 2021 and subsequent financial
periods. The period of total uninterrupted engagement including
retenders and reappointments is two years, covering the years ending
30 June 2020 to 30 June 2021. We remain 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. The non-audit services prohibited by that standard were
not provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’
assessment of the Group and the Parent Company’s ability to continue
to adopt the going concern basis of accounting included:
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.
We evaluated the directors’ downside sensitivities including delays to
construction resulting in reduced volume of work, impact of materials
and labour price inflation as well as the cash impact of a potential
further lockdown where construction may be paused.
We assessed the actual cash performance against forecast for current
financial year and post year end to evaluate the directors’ accuracy and
achievability of the forecasts prepared.
We evaluated the monthly cash position during the financial year and
post year end.
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.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and the Parent
Company’s ability to continue as a going concern for a period of at least
12 months from when the financial statements are authorised for issue.
Galliford Try Holdings plc 91
In relation to the Parent Company’s reporting on how it has applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the Financial
Statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group
and its environment, including the Group’s system of internal control, and
assessing the risks of material misstatement in the financial statements.
We also addressed the risk of management override of internal controls,
including assessing whether there was evidence of bias by the directors
that may have represented a risk of material misstatement.
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 five significant components were subjected to full scope
audits for Group purposes. Due to the requirements of statutory audits
for the insignificant components, full scope audits were also performed
concurrently with the group audit. All components are located in the UK
and were audited by the Group audit team.
Overview
Coverage1
92% (2020: *%) of Group profit before tax
97% (2020: 96%) of Group revenue
99% (2020: 96%) of Group total assets
2021
2020
Key audit
matters
Revenue and profit recognition for
construction contracts
Recognition and recoverability of
claims and variations
Revenue and profit recognition for
housing developments
Accounting for the disposal
of Linden Homes and
Partnerships & Regeneration
Impairment of goodwill
Going concern
Revenue and profit recognition for housing
developments and the accounting for the disposal of
Linden and Partnerships are no longer considered to be
key audit matters because the Linden and Partnerships
divisions were disposed in the prior period.
Impairment of goodwill is no longer considered to
be a key audit matter because the CGUs have returned
to profitability.
Going concern is no longer considered to be a key audit
matter because the Group has returned to profitability,
has significant cash reserves and no debt.
Materiality
Group financial statements as a whole
£1.5m (2020: £2.6m) based on 0.14% (2020: 0.15%)
of revenue
1 These are areas which have been subject to a full scope audit by the group
engagement team.
* Due to the profit on disposal and the losses in certain significant components,
it is not feasible to present a meaningful comparison of the coverage of the prior
year profit.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 92
Independent auditors’ report
continued
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.
How the scope of our audit addressed the key audit matter
Key audit matter
Revenue and profit recognition for construction contracts
Note 1 on page 103 to the financial
statements gives further detail
regarding the estimates and
judgments made by the Group in
this regard. Note 1 on page 104 to
the financial statements provides
the accounting policy for
construction services.
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
costs applied to the estimated
forecast revenue.
This is considered a significant
audit risk as the stage of
completion, forecast value and
forecast costs on contracts are
areas of significant judgment.
These judgments have a
consequential impact on a
number of contract balances within
the financial statements including
the related judgments and
estimates disclosures.
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.
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 project teams as well as 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.
Reperforming 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.
Corroborated a sample of forecast costs for significant subcontractor packages to documentary evidence and
challenged management when subcontractor projected final accounts significantly differed from the amount
included in the contract forecast.
Compared the % procured to the forecast costs and challenged management where there are substantial
costs yet to procure as this presents a greater risk. We corroborated a sample of un-procured subcontractor
costs 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
anticipated completion date and impact of any delays, whether there are any disputes with third parties on the
contract and the reason for any movements in forecasts from tender to 30 June 2021. We obtained
corroborating evidence for the explanations provided.
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 which includes comparing the revenue recognised
to amounts certified or final accounts where applicable. From the specific contract information reviewed for
these contracts, we considered whether there was an indication of risks within the contract such as delays and
un-procured costs for which we then performed additional procedures to address the risk.
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 2020 to 30 June 2021 for projects that are substantially completed at the year-end as well
as from tender to the 30 June 2021 for all contracts.
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 appropriate.
Galliford Try Holdings plc 93
Key audit matter
How the scope of our audit addressed the key audit matter
Recognition and recoverability of claims and variations
Note 1 on page 103 to the financial
statements gives further detail
regarding the estimates and
judgments made by the Group in
this regard. Note 1 on page 104 to
the financial statements provides
the accounting policy for
construction services.
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 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 management’s
external legal counsel numerous times throughout the year. 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.
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.
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. There is a risk these
significant judgments and estimates
are not adequately disclosed.
In addition there are some
downstream claims against 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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 94
Independent auditors’ report
continued
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.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
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.
Based on our professional judgment, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements
Parent company
financial statements
2021
£m
1.5
2020*
£m
2.6
2021
£m
1.4
2020
£m
1.5
0.14% of
turnover
0.15% of
turnover
95% of
Group
materiality
95% of
specific
materiality
See below See below See below See below
65%
65%
65%
65%
On the basis of our risk assessment, together with our
assessment of the Group’s overall control environment
and history of adjustments, our judgment was that
overall performance materiality for the Group should
be 65% of materiality
Materiality
Basis for
determining
materiality
Rationale for
the benchmark
applied
Performance
materiality
Basis for
determining
performance
materiality
*
In the year ended 30 June 2020 financial statement materiality was set at
£2.6m due to the impact of the disposal of Linden Homes and Partnerships &
Regeneration. We set a lower specific materiality of £1.6m for the continuing
business based upon 0.15% of the turnover for the continuing business.
Rationale for the benchmark applied
On an ongoing basis and in previous years an adjusted measure of profit
before tax has been the basis which users of the financial statements
would be interested in and which has been used as the basis of materiality.
We adjusted this basis in the prior year due to previous losses incurred by
the continuing businesses and the continuing impact of Covid-19 on the
business. As the Group continues to return to profitability, 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 0.14% (2020: 0.15%) of
Group revenue.
Component materiality
We set materiality for each component of the Group based on a
percentage of between 5% and 95% (2020: 5% and 90%) of Group
materiality dependent on the size and our assessment of the risk of
material misstatement of that component. Component materiality
ranged from £0.1m to £1.35m (2020: £0.3m and £2m). In the audit
of each component, we further applied performance materiality levels
of 65% (2020: 65%) of the component materiality to our testing to
ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all
individual audit differences in excess of £30,000 (2019:£52,000).
We also agreed to report differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual report
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.
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 course of 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 this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Galliford Try Holdings plc 95
Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation
to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the parent company’s compliance with
the provisions of the UK Corporate Governance Statement specified for
our review.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our
knowledge obtained during the audit.
Going concern
and longer-term
viability
Other Code
provisions
The directors’ statement with regards to the
appropriateness of adopting the going concern basis
of accounting and any material uncertainties
identified set out on page 88; and
The directors’ explanation as to its assessment of the
entity’s prospects, the period this assessment covers
and why the period is appropriate set out on page 41.
Directors’ statement on fair, balanced and
understandable set out on page 88;
Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out
on page 36;
The section of the annual report that describes the
review of effectiveness of risk management and
internal control systems set out on page 68; and
The section describing the work of the audit
committee set out on page 68.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed
during the course of the audit, we are required by the Companies Act
2006 and ISAs (UK) to report on certain opinions and matters as
described below.
Strategic
report and
Directors’
report
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
the Strategic report and the Directors’ report
have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the
Group and 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.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Matters on
which we are
required to
report by
exception
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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 96
Independent auditors’ report
continued
Responsibilities of directors
As explained more fully in the Statement of directors’ responsibilities, 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.
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.
Extent to which the audit was capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below:
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. We also communicated relevant
identified laws and regulations and potential fraud risks to all engagement
team members and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout the audit.
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 within the
significant judgments and estimates that represented a risk of material
misstatement due to fraud.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, 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, misrepresentations or through
collusion. There are inherent limitations in the audit procedures
performed and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
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 2021
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Galliford Try Holdings plc Consolidated income statement
for the year ended 30 June 2021
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit/(loss)
Share of post tax profits/(losses) from joint ventures
Finance income
Finance costs
Profit/(loss) before income tax
Income tax (expense)/credit
Profit/(loss) from continuing operations for the year
(Loss)/profit from discontinued operations, net of income tax for the year
Profit for the year
Earnings/(loss) 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
There were no exceptional items in the year.
The notes are an integral part of the consolidated financial statements.
97
2021
Total
£m
Pre-
Exceptional
items
£m
Exceptional
items
(note 4)
£m
2020
Total
£m
Notes
3
1,124.8
1,089.6
32.0
1,121.6
(1,049.7)
(1,085.9)
75.1
3.7
(6.3)
25.7
(1,092.2)
29.4
(67.1)
(68.0)
(0.6)
(68.6)
8.0
(64.3)
25.1
(39.2)
16
6
6
7
8
34
10
10
10
10
0.5
4.1
(1.2)
11.4
(1.0)
10.4
(2.7)
7.7
9.5p
7.0p
9.1p
6.8p
(0.2)
5.8
(1.0)
(59.7)
6.8
(52.9)
353.0
300.1
(47.7)p
270.9p
(47.7)p
270.9p
–
–
–
25.1
(4.8)
20.3
–
20.3
(0.2)
5.8
(1.0)
(34.6)
2.0
(32.6)
353.0
320.4
(29.4)p
289.2p
(29.4)p
289.2p
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 98
Consolidated statement of comprehensive income
for the year ended 30 June 2021
Profit for the year
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurement of retirement benefit obligations – 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
Movement in fair value of PPP and other investments – continuing operations
17
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 for the year net of tax
Notes
2021
£m
7.7
2020
£m
320.4
–
–
–
–
7.3
–
7.3
7.3
2.0
2.0
0.8
(0.4)
(1.8)
(0.1)
(1.5)
0.5
Total comprehensive income for the year
15.0
320.9
The notes are an integral part of the consolidated financial statements.
Galliford Try Holdings plc Balance sheets
Assets
Non-current assets
Intangible assets
Goodwill
Property, plant and equipment
Right-of-use assets
Investments in subsidiaries
Investments in joint ventures
PPP and other investments
Retirement benefit asset
Deferred income tax assets
Total non-current assets
Current assets
Trade and other receivables
Current income tax assets
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Provisions for other liabilities and charges
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions for other liabilities and charges
Total non-current liabilities
Total liabilities
Net assets
Equity
Ordinary shares
Other reserves
Retained earnings
99
30 June
2021
£m
Notes
Group
30 June
2020
£m
30 June
2021
£m
Company
30 June
2020
£m
11
12
13
14
15
16
17
35
23
18
19
20
14
21
14
21
25
27
27
5.7
77.2
4.4
19.5
–
0.2
49.1
–
14.3
170.4
243.3
8.8
216.2
468.3
638.7
7.8
77.2
3.8
22.8
–
0.2
40.7
1.0
4.3
–
–
–
–
–
–
–
–
173.9
141.2
–
–
–
–
–
–
–
–
157.8
173.9
141.2
247.5
23.1
197.2
467.8
625.6
–
–
100.7
100.7
274.6
–
–
100.0
100.0
241.2
(485.4)
(458.8)
(7.3)
–
(9.5)
(13.9)
(492.7)
(482.2)
(11.9)
–
(11.9)
(504.6)
(12.8)
(10.1)
(22.9)
(505.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
134.1
120.5
274.6
241.2
55.5
118.4
(39.8)
134.1
55.5
85.7
(20.7)
120.5
55.5
118.4
100.7
274.6
55.5
85.7
100.0
241.2
Total equity attributable to owners of the Company
The profit for the Parent Company for the year was £34.7m (2020: loss of £46.5m in the period).
The notes are an integral part of the consolidated financial statements.
The financial statements on pages 97 to 142 were approved and authorised for issue by the Board on 16 September 2021 and signed on its behalf by:
Bill Hocking
Chief Executive
Andrew Duxbury
Finance Director
Galliford Try Holdings plc
Registered number: 12216008
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information
100
Consolidated and Company statements of changes in equity
for the year ended 30 June 2021
Ordinary
shares
£m
Share
premium
£m
Other
reserves
£m
Notes
Retained
earnings
£m
Total
shareholders’
equity
£m
Consolidated statement
At 30 June 2019
Adjustment as a result of transition to IFRS 161
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
Share-based payments – discontinued operations
At 30 June 2020
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners:
Dividends
Purchase of shares
Share-based payments – continuing operations
Recycling of retained earnings to merger reserve on reversal of
impairment of investment in Galliford Try Limited
At 30 June 2021
Company statement
On incorporation at 19 September 20202
Loss for the year
Other comprehensive income
Total comprehensive expense
Transactions with owners:
Capital reorganisation2
Recycling of merger reserve to retained earnings on impairment of
investment in Galliford Try Limited
At 30 June 2020
Profit for the year
Total comprehensive expense
Transactions with owners:
Dividends
Recycling of retained earnings to merger reserve on reversal of
impairment of investment in Galliford Try Limited
At 30 June 2021
9
34
27 & 34
9
27
27 & 34
27
9
27
55.5
–
55.5
197.7
–
197.7
–
–
–
–
–
–
–
55.5
–
–
–
–
–
–
–
55.5
–
–
–
–
55.5
–
55.5
–
–
–
–
55.5
–
–
–
–
–
(197.7)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.8
–
4.8
–
–
–
–
–
80.9
–
85.7
–
–
–
–
–
–
32.7
118.4
421.3
(1.0)
420.3
320.4
0.5
320.9
(38.9)
(840.0)
116.8
0.2
(20.7)
7.7
7.3
15.0
(1.3)
(1.1)
1.0
(32.7)
(39.8)
679.3
(1.0)
678.3
320.4
0.5
320.9
(38.9)
(840.0)
–
0.2
120.5
7.7
7.3
15.0
(1.3)
(1.1)
1.0
–
134.1
–
–
–
–
–
–
(46.5)
(46.5)
–
–
(46.5)
(46.5)
232.2
–
287.7
(146.5)
85.7
–
–
–
146.5
100.0
34.7
34.7
–
241.2
34.7
34.7
(1.3)
(1.3)
32.7
118.4
(32.7)
100.7
–
274.6
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.
Galliford Try Holdings plc was incorporated on 19 September 2019. 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 to trading on the main market for listed securities of the London Stock Exchange. 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 (note 34).
Galliford Try Holdings plc Statements of cash flows
for the year ended 30 June 2021
101
Cash flows from operating activities
Profit/(loss) for the year
Adjustments for:
Loss/(profit) for the year from discontinued operations
Income tax expense/(credit) – continuing operations
Net finance income – continuing operations
Profit/(loss) before finance costs for continuing operations
Adjustments for continuing operations:
Depreciation and amortisation
(Reversal of impairment)/impairment of investment in subsidiary undertaking
Profit on sale of PPP and other investments
Dividends received from subsidiary undertakings
Share-based payments
Share of post-tax (profits)/losses from joint ventures
(Decrease)/increase in provisions
Net cash generated from/(used in) operations before changes in
working capital
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash generated from/(used in) operations
Interest received
Interest paid
Net surplus returned on wind up of defined benefit pension scheme
Income tax received
Net cash generated from/(used in) operating activities from
continuing operations
Net cash used in operating activities from discontinued operations
Net cash generated from/(used in) operating activities
Cash flows from investing activities
Dividends received from joint ventures and associates
Amounts advanced to joint ventures
Acquisition of PPP and other investments
Proceeds from disposal of PPP and other investments and loan repayments
Dividends received from subsidiary undertakings
Acquisition of property, plant and equipment
Net cash (used in)/generated from investing activities from
continuing operations
Net cash (used in)/generated from investing activities from
discontinued operations
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Repayment of lease liabilities
Purchase of own shares
Dividends paid to Company shareholders
Net cash used in financing activities from continuing operations
Net cash used in financing activities from discontinued operations
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
Notes
2021
£m
Group
2020
£m
Company
20201
£m
2021
£m
7.7
320.4
34.7
(46.5)
34
8
6
11, 13 & 14
15
17
16
21
16
17
17
13
14
9
19
19
2.7
1.0
(2.9)
8.5
13.3
–
–
–
1.0
(0.5)
(0.3)
22.0
9.4
27.4
58.8
4.1
(1.2)
1.0
4.5
67.2
(3.6)
63.6
0.5
(5.2)
(1.9)
0.7
–
(2.1)
(8.0)
(23.7)
(31.7)
(10.5)
(1.1)
(1.3)
(12.9)
–
(12.9)
19.0
197.2
216.2
(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
141.6
197.2
–
–
–
34.7
–
(32.7)
–
(2.0)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.0
–
2.0
–
2.0
–
–
(1.3)
(1.3)
–
(1.3)
0.7
100.0
100.7
–
–
–
(46.5)
–
146.5
–
(100.0)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.0
–
100.0
–
100.0
–
–
–
–
–
–
100.0
–
100.0
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 to trading on the main market for listed securities of the London Stock Exchange (note 34).
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 102
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 3 Frayswater Place, Cowley, Uxbridge, UB8 2AD.
The Company has its listing on the London Stock Exchange.
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)
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). As a result of the disposal, the Linden Homes and
Partnerships & Regeneration segments have been treated as
discontinued operations in accordance with IFRS 5: Non-Current Assets
Held for Sale and Discontinued Operations for both the current and prior
years. Further details of the transaction and discontinued operations can
be found in note 34, in addition to the details within notes 9 and 32 of the
Group’s annual financial statements for the year ended 30 June 2020.
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).
Basis of accounting
These consolidated financial statements have been prepared in
accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006 and international financial
reporting standards adopted pursuant to Regulation (EC) No. 1606/2002
as it applies in the European Union. All accounting policies have been
consistently applied relevant to its operations. 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 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 41) and the Strategic Report (from page 1).
As at 30 June 2021, 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 any economic uncertainties resulting from
Covid-19. All sites were open throughout the year, with appropriate
operating procedures adopted, including social distancing measures
(see page 26).
The Group’s forecasts have been prepared in the context of the current
economic conditions (as at 30 June 2021) and additionally, the directors
have considered a range of downside sensitivities (as discussed in detail
in the Viability Statement on page 41). Even in the worst-case scenario,
the Group is forecast to continue to meet its obligations and remain cash
positive for a period of at least 12 months from the date the financial
statements are authorised for issue.
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 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 standards impacting the Group that have been adopted for the first
time in this set of financial statements are listed below:
Amendments to IFRS 17 and IFRS 4, ‘Insurance contracts’,
deferral of IFRS 9 (effective 1 January 2020)
Amendments to IFRS 3 – Definition of a Business
(effective 1 January 2020)
These standards have been assessed to have no significant impact on the
Group’s results (other than certain revised disclosures) as they are either
not relevant to the Group’s activities or require accounting which is
consistent with the Group’s previous accounting policies.
The following are new standards, interpretations and amendments, that
are not yet effective or have not been endorsed. The Group has chosen
not to adopt these early. These may however have an effect on the
Group’s future financial statements:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform – Phase 2 (effective 1 January 2021)
Amendment to IFRS 16 – Covid-19-Related Rent Concessions
beyond 30 June 2021 (effective 1 April 2021)
Narrow scope amendments to IFRS 3, IAS 16, IAS 37
(effective 1 January 2022)
Annual improvements to IFRS 1, IFRS 9, IAS 41 and IFRS 16
(effective 1 January 2022)
Amendments to IAS 1, ‘Presentation of financial statements’
on classification of liabilities as current or non-current
(effective 1 January 2023)
Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8
(effective 1 January 2023)
IFRS 17 ‘Insurance Contracts’, including amendments
(effective 1 January 2023)
Amendment to IAS 12 ‘Deferred Tax related to Assets and Liabilities
arising from a Single Transaction’ (effective 1 January 2023)
The Group has yet to assess the full outcome of these new standards,
amendments and annual improvements. It is not expected that these
will 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, 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 have been treated as discontinued
operations in accordance with IFRS 5: Non-Current Assets Held for Sale
and Discontinued Operations in both the current and prior year.
The disposal of the housebuilding operations to Vistry Group plc did
not represent either a common-control transaction or a business
combination as defined by IFRS 3 Business Combinations, it was
accounted for as a reorganisation using merger accounting principles.
Consequently, the prior year consolidated financial statements were
prepared with the consolidated Group balances of the retained
businesses unchanged from the transaction with the consolidated total
equity reflecting the legal position of the Group (the share capital and
merger reserve of the parent, Galliford Try Holdings plc, and retained
earnings representing the balance).
Galliford Try Holdings plc 103
1 Accounting policies (continued)
Basis of consolidation (continued)
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.
Material estimates, judgments and assumptions are made in particular
with regards to establishing the following policies:
(i) Impairment of goodwill and intangible assets (judgment and estimate)
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 as 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 12.
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 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 international accounting
standards 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, international accounting standards
measures of profit.
Covid-19
The Group has continued to operate sites in a safe and appropriate
manner and strictly in accordance with both Government and the
Construction Leadership Council health and safety guidelines and
regulations. The Group performed a review of its accounting policies
in light of the outbreak of the pandemic. Some of the key points that
remain applicable from this review are highlighted below:
The Group utilised the Government’s Job Retention Scheme in the
previous year, with all income received in respect of July and August
2020 repaid. The grant income received was offset against the costs
incurred in line with our existing accounting policy in the Income
Statement (in accordance with IAS 20).
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 12. 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.
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. Critical judgments are those management has
made when applying its significant accounting policies, whereas critical
estimates are assumptions and estimates made at the end of the reporting
period that have a significant risk of resulting in a material adjustment to
the carrying amounts of assets and liabilities within the next financial year.
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.
(ii) Revenue and profit recognition for long term contract accounting
(judgment and estimate)
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 estimate the outcome of both the total costs to complete the contract
as well as the final contract value. The Group has to allocate total costs of
the construction contracts between the amount incurred on the contract
to the end of the reporting 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.
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.
The estimation of costs to complete is based on all available relevant
information such as procured packages and management experience and
includes estimation of final accounts and any potential maintenance and
defect liabilities. Recoveries resulting from actual or potential claims
against a subcontractors are accounted for in accordance with IAS 37
and are recognised only when they meet the virtually certain threshold.
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 costs to complete and 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, three are materially complete with two
remaining on-site:
Overall contract value (including total estimated end of
contract variations and claims after IFRS 15 constraints)
Revenue in the year
Total estimated end of contract variations and claims
before IFRS 15 constraints
Total estimated end of contract variations after
IFRS 15 constraints
£m
447.2
106.4
167.0
62.7
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 104
Notes to the consolidated financial statements
continued
1 Accounting policies (continued)
Critical accounting estimates and judgments (continued)
(ii) Revenue and profit recognition for long term contract accounting
(judgment and estimate) (continued)
These five positions represent the most significant estimates of revenue.
The aggregate unagreed variations and claims constrained revenue
recognised at year end of the subsequent five largest unagreed variations
and claims is £4.0m.
In respect of contract assets of £159.1m, and in assessing receivable
provisions calculated on an expected loss basis, the Group has recorded a
provision of £14.0m (2020: £14.0m). The directors’ estimate represents a
reasonably possible outcome within an estimated reasonable range of
outcomes of nil to £24m (2020: nil to £21m).
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 £159.1m 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 advice, exceed 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 44 and note 18.
(iii) Taxation (judgment and estimate)
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 23).
The Group has assessed that an asset equal to the value of unutilised tax
credits expected to be utilised over the next three financial years is
appropriate, as, based on the already secured work for that timeframe,
management has assessed it is probable that the Group will have
sufficient taxable profits to enable the deferred tax asset to be recovered.
Any remaining unutilised tax credits have not been recognised.
(iv) Exceptional items (judgment)
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 (estimate)
At 30 June 2021, £49.1m (2020: £40.7m) 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. Individual
discount rates have been used which result in an overall blended discount
rate of 7.0% (2020: 9.0%), which reflects the rates typically experienced in
the marketplace and this resulted in a gain through other comprehensive
income of £7.3m in the year (2020: £1.8m). 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 £4.3m (note 17).
(vi) Impairment of investments in subsidiaries (judgment and estimate)
During the prior year, the value of the investment held by Galliford Try
Holdings plc in Galliford Try Limited was impaired, following an
assessment of the impact of Covid-19 on the company. This impairment
required 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 15,
some of which reversed in the current year.
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 for the Group’s continuing operations is recognised as follows:
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
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 expected 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.
Facilities management – management services and facilities management
contracts typically represent a single performance obligation. Revenue is
recognised over time as control passes to the customer and is typically
measured on a straight-line basis as this is considered to be a reliable
estimate of the pattern of transfer to the customer.
Recoveries from claims against third parties
The recognition of expected reimbursements resulting from certain
third-party claims is accounted for in accordance with IAS 37 Provisions,
Contingent Liabilities and Contingent Assets. This requires recovery to
be ‘virtually certain’ before an asset can be recognised.
Galliford Try Holdings plc 105
1 Accounting policies (continued)
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.
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
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.
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.
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 can 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) Customer contracts and relationships – on a straight-line basis over
up to 10 years.
(b) Computer software – once the software is fully operational,
amortisation is on a straight-line basis over up to 10 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 its
estimated residual value over its expected useful life. Freehold land is not
depreciated. The annual rates of depreciation on cost, applied on a
straight line basis, are as follows:
Freehold buildings
Plant and machinery
Fixtures and fittings
2%
15% to 33%
10% to 33%
In addition to systematic depreciation, the book value of property,
plant and equipment is written down to estimated recoverable amounts
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 arrangements
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 on unaudited accounts drawn up
to the Group’s accounting reference date.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 106
Notes to the consolidated financial statements
continued
1 Accounting policies (continued)
Joint arrangements (continued)
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.
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 cost.
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 is 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 and 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 prior year, management has reviewed the
classification of PPP investments and considers 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
The Group has applied the principles of IFRS 16 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.
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.
Trade payables
Trade payables on normal terms are not interest bearing and are stated
at their nominal value. Trade payables on extended terms 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.
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.
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 obligations
For defined contribution schemes operated by the Group, amounts
payable are charged to the income statement as they accrue.
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.
Galliford Try Holdings plc 107
1 Accounting policies (continued)
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.
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).
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.
The following policies are relevant only to the Group’s
discontinued operations.
Revenue
Private housing 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). Un-invoiced amounts are presented as contract assets.
Management does not expect a financing component to exist in respect
of HA contracts.
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.
Developments
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.
Other investments
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.
Retirement benefit obligations
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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 108
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. Management has determined the operating segments of the
continuing Group to be Building, Infrastructure, PPP Investments and Central (primarily representing central overheads).
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.
Income statement
Year ended 30 June 2021
Revenue
Operating profit/(loss) before amortisation of intangible assets
Share of post tax profits from joint ventures
Finance income
Finance costs
Profit/(loss) before amortisation and taxation
Amortisation of intangible assets
Profit before taxation
Income tax expense
Profit for the year
Year ended 30 June 2020
Pre-exceptional revenue
Exceptional items (note 4)
Revenue
Pre-exceptional operating loss before amortisation of intangible assets
Exceptional items (note 4)
Operating (loss)/profit before amortisation and taxation
Share of post tax profits from joint ventures
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
Total
£m
789.2
329.2
6.4
–
1,124.8
15.9
–
–
(0.3)
15.6
(1.0)
14.6
6.0
–
0.1
(0.6)
5.5
–
5.5
(1.8)
(10.0)
0.5
3.9
–
2.6
–
2.6
–
0.1
(0.3)
(10.2)
(1.1)
(11.3)
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
(0.3)
–
(0.3)
(0.2)
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
10.1
0.5
4.1
(1.2)
13.5
(2.1)
11.4
(1.0)
10.4
Total
£m
1,089.6
32.0
1,121.6
(62.2)
25.1
(37.1)
(0.2)
5.8
(1.0)
(32.5)
(2.1)
(34.6)
2.0
(32.6)
Inter-segment revenue, which is priced on an arm’s length basis, is eliminated from revenue above. In the year to 30 June 2021, this amounted to £39.4m
(2020: £51.8m) for continuing operations, of which £nil (2020: £16.9m) was in Building, £24.7m (2020: £21.9m) was in Infrastructure and £14.7m
(2020: £13.0m) was in central costs.
Galliford Try Holdings plc 2 Segmental reporting (continued)
Balance sheet
30 June 2021
Goodwill and intangible assets
Working capital employed
Net cash
Net assets
Total Group liabilities
Total Group assets
30 June 2020
Goodwill and intangible assets
Working capital employed
Net cash
Net assets
Total Group liabilities
Total Group assets
Other segmental information
Year ended 30 June 2021
Investment in joint ventures
Contracting revenue
Capital expenditure – property, plant and equipment
Total depreciation
(Decrease) in provision for receivables
Share-based payments
Amortisation of intangible assets
Year ended 30 June 2020
Investment in joint ventures
Contracting revenue
Capital expenditure – property, plant and equipment
Total depreciation
Increase in provision for receivables
Share-based payments
Amortisation of intangible assets
Notes
Building
£m
Infrastructure
£m
PPP
Investments
£m
42.9
(82.3)
87.0
47.6
37.2
(132.0)
44.6
(50.2)
–
40.0
(10.0)
30.0
19
Notes
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
19
Central
£m
2.8
9.3
94.6
106.7
Central
£m
3.9
(12.6)
162.4
153.7
Building
£m
Infrastructure
£m
PPP
Investments
£m
Central
£m
–
789.2
0.3
4.5
–
0.2
1.0
–
329.2
0.4
4.5
–
0.1
–
Building
£m
Infrastructure
£m
–
712.4
–
353.5
0.2
4.5
0.1
0.1
1.0
0.1
4.0
–
0.1
–
0.2
–
–
–
–
0.1
–
–
–
1.5
2.2
(1.5)
0.6
1.1
PPP
Investments
£m
Central
£m
0.2
7.4
–
0.1
–
–
–
–
–
1.1
3.1
1.1
(0.2)
1.1
Notes
16
13 & 14
18
26
11
Notes
16
13 & 14
18
26
11
109
Total
£m
82.9
(165.0)
216.2
134.1
(504.6)
638.7
Total
£m
85.0
(161.7)
197.2
120.5
(505.1)
625.6
Total
£m
0.2
1,118.4
2.2
11.2
(1.5)
1.0
2.1
Total
£m
0.2
1,073.3
1.4
11.7
1.2
–
2.1
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 110
Notes to the consolidated financial statements
continued
3 Revenue
Nature of revenue streams
(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, and water 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 dependent 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-reimbursable (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). Un-invoiced amounts
are presented as contract assets.
Management does not expect a financing component to exist.
Facilities management* Contracts undertaken within the Building segment that provide full life-cycle solutions to clients, are accounted for as a single
performance obligation, with revenue recognised over time and typically on a straight-line basis.
* Facilities management represents less than 5% of the total Building segment turnover.
(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 considers the split of revenue by operating segment to be the most appropriate disaggregation. All revenue has been derived from
performance obligations settled over time (2020: £0.8m was considered to be settled at a point in time, with all remaining revenue recognised
over time).
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 2021
Building
Infrastructure
Total Construction
PPP Investments
Total transaction price allocated to performance obligations yet to be satisfied
2022
£m
550.5
239.3
789.8
1.8
791.6
2023
£m
117.1
72.8
189.9
1.8
191.7
2024
onwards
£m
4.7
14.4
19.1
24.4
43.5
Total
£m
672.3
326.5
998.8
28.0
1,026.8
Galliford Try Holdings plc 111
3 Revenue (continued)
Disaggregation of revenue (continued)
Revenue – year ended 30 June 2020
Building
Infrastructure
Total Construction
PPP Investments
Total transaction price allocated to performance obligations yet to be satisfied
2021
£m
519.3
203.1
722.4
1.9
724.3
2022
£m
172.9
49.6
222.5
1.6
224.1
2023
onwards
£m
10.3
27.3
37.6
25.1
62.7
Total
£m
702.5
280.0
982.5
28.6
1,011.1
Any element of variable consideration is estimated at a value that is highly probable not to result in a significant reversal in the cumulative revenue recognised.
4 Exceptional items
Revenue – impact of legacy contracts1
Cost of sales – charge on legacy contracts1
Cost of sales – restructure costs2
Administrative expenses – restructure costs2
Operating profit
2021
£m
–
–
–
–
–
2020
£m
32.0
(4.0)
(2.3)
(0.6)
25.1
There were no exceptional items in the year. The items in respect of the prior year were as follows:
1 The Group agreed settlement terms with a client in respect of the final account of a major infrastructure project and the settlement income of £32.0m was recognised
(in revenue) net of final cost estimates of £4.0m (in cost of sales) as exceptional items.
2 Following the disposal of the housebuilding divisions 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).
5 Employees and directors
Employee benefit expense during the year
Wages and salaries
Social security costs
Other pension costs
Share-based payments
Restructure costs
Total
Notes
26
2021
£m
133.5
15.0
14.3
1.0
1.5
Group
2020
£m
153.1
17.3
15.5
–
2.9
165.3
188.8
Company
2020
£m
2021
£m
–
–
–
–
–
–
–
–
–
–
–
–
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.
All pension costs in the current and prior years were in respect of the Group’s defined contribution schemes. Of the total charge, £7.6m (2020: £8.2m)
and £6.7m (2020: £7.3m) were included, respectively, within cost of sales and administrative expenses.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 112
Notes to the consolidated financial statements
continued
5 Employees and directors (continued)
Average monthly number of people (including Executive and non-executive directors) employed
By business:
– Building
– Infrastructure
Construction
PPP Investments
Central
Total
2021
Number
Group
2020
Number
2021
Number
Company
2020
Number
1,356
1,060
2,416
79
167
1,603
1,188
2,791
78
218
2,662
3,087
–
–
–
–
6
6
–
–
–
–
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.
2021
£m
2020
£m
Salaries and short-term employee benefits
Retirement benefit costs
Share-based payments
Total
6 Net finance income
Group
Interest receivable on bank deposits
Interest receivable from PPP Investments and joint ventures
Other interest receivable
Finance income
Other (including interest on lease liabilities)
Finance costs
Net finance income
3.4
0.2
0.9
4.5
4.5
0.3
–
4.8
2021
£m
2020
£m
0.1
3.9
0.1
4.1
(1.2)
(1.2)
0.3
5.4
0.1
5.8
(1.0)
(1.0)
2.9
4.8
Galliford Try Holdings plc 7 Profit before income tax
The following items have been included in arriving at profit before income tax:
Employee benefit expense
Total depreciation
Amortisation of intangible assets
Repairs and maintenance expenditure on property, plant and equipment
(Decrease)/increase in provision for receivables
Exceptional profit
113
Notes
5
13 & 14
11
18
4
2021
£m
165.3
11.2
2.1
0.8
(1.5)
–
2020
£m
188.8
11.7
2.1
0.8
1.2
25.1
In addition to the above, the Group incurs other costs classified as cost of sales relating to labour, materials and subcontractors’ costs.
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:
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
A description of the work of the Audit Committee in respect of the auditor’s independence is set out in the Governance report.
2021
£m
0.2
2020
£m
0.2
0.5
0.1
0.6
0.8
0.8
0.1
0.9
1.1
8 Income tax charge
Group
Analysis of expense in year
Current year’s income tax
Current tax
Deferred tax1
Adjustments in respect of prior years
Current tax
Deferred tax
Income tax expense/(credit)
Tax on items recognised in other comprehensive income
Tax recognised in other comprehensive income
Total taxation
1 Includes impact of change in rate of tax.
Notes
2021
£m
2020
£m
23
23
0.5
5.0
(4.8)
0.3
1.0
–
1.0
(7.1)
0.3
8.2
(3.4)
(2.0)
–
(2.0)
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 114
Notes to the consolidated financial statements
continued
8 Income tax charge (continued)
The total income tax expense for the year of £1.0m (2020: credit of £2.0m) is lower (2020: tax credit was lower) than the blended standard rate of
corporation tax in the UK of 19.0% (2020: 19.0%). The differences are explained below:
Loss before income tax
2021
£m
11.4
2020
£m
(34.6)
Loss before income tax multiplied by the blended standard corporation tax rate in the UK of 19.0% (2020: 19.0%)
2.2
(6.6)
Effects of:
Expenses not deductible for tax purposes
Non-taxable income
Adjustments in respect of prior years
Change in tax rates
Other1
Income tax charge/(credit)
1 Including write-off of unutilised tax credits.
0.7
(1.1)
(4.5)
(2.1)
5.8
0.5
(1.0)
4.8
–
0.3
1.0
(2.0)
In the Spring Budget 2021, the UK Government announced that from 1 April 2023, the corporation tax rate would increase from 19% to 25%. This new
law was substantively enacted in the Finance Bill 2021 and received Royal Assent on 10 June 2021. Where appropriate, deferred taxes at the balance
sheet date have been measured using the appropriate tax rates (based on when the underlying balance is expected to crystallise) and reflected in these
financial statements.
The Group has assessed that a deferred tax asset equal to the value of unutilised tax credits expected to be utilised over the next three financial years is
appropriate, as, based on the already secured work for that timeframe, management have assessed it is probable that the Group will have sufficient
taxable profits to enable the deferred tax asset to be recovered. Any remaining unutilised tax credits have not been recognised (note 23).
9 Dividends
Group and Company1
Previous year final
Current year interim
Dividend recognised in the year
The following dividends were declared by the Company in respect of each accounting period presented:
Interim
Final
Dividend relating to the year
2021
pence
per share
–
1.2
1.2
2021
pence
per share
1.2
3.5
4.7
£m
–
1.3
1.3
£m
1.3
3.9
5.2
2020
pence
per share
35.0
–
35.0
2020
pence
per share
–
–
–
£m
38.9
–
38.9
£m
–
–
–
The directors are proposing a final dividend in respect of the financial year ended 30 June 2021 of 3.5 pence per share (2020: nil), bringing the total
dividend in respect of 2021 to 4.7 pence per share (2020: nil). The final dividend will absorb approximately £3.9m of equity. Subject to shareholders’
approval at the AGM to be held on 12 November 2021, the dividend will be paid on 10 December 2021 to shareholders who are on the register of
members at the close of business on 12 November 2021.
1 The Company became the ultimate holding company of the Group on 3 January 2020 and the dividend of 35.0 pence per share was paid in December 2019 by the previous
ultimate holding company of the Group (Galliford Try Limited, previously known as Galliford Try plc).
Galliford Try Holdings plc 115
10 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
Weighted
average
number of
shares
Earnings
£m
2021
Per share
amount
pence
Weighted
average
number of
shares
Earnings
£m
2020
Per share
amount
pence
10.4 109,976,145
10.4 109,976,145
n/a
3,804,698
10.4 113,780,843
10.4 113,780,843
9.5
9.5
n/a
9.1
9.1
(52.9) 110,798,602
(47.7)
(32.6) 110,798,602
(29.4)
n/a
–
(52.9) 110,798,602
(32.6) 110,798,602
n/a
(47.7)
(29.4)
7.7 109,976,145
7.0
300.1 110,798,602
270.9
7.7 109,976,145
n/a
3,804,698
7.7 113,780,843
7.7 113,780,843
7.0
n/a
6.8
6.8
320.4 110,798,602
289.2
n/a
–
300.1 110,798,602
320.4 110,798,602
n/a
270.9
289.2
The discontinued operations loss per share for the year was 2.5p (2020: earnings per share of 318.6p) and the diluted loss per share for the year was
2.3p (2020: earnings per share of 318.6p).
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 116
Notes to the consolidated financial statements
continued
11 Intangible assets
Group
Cost
At 1 July 2019
Additions
Disposals
At 1 July 2020 and 30 June 2021
Accumulated amortisation
At 1 July 2019
Amortisation in year – continuing operations
Amortisation in year – discontinued operations
Disposals
At 1 July 2020
Amortisation in year – continuing operations
At 30 June 2021
Net book amount
At 30 June 2021
At 30 June 2020
At 30 June 2019
Customer
contracts and
relationships
£m
Computer
software
£m
17.4
2.2
(7.4)
12.2
(10.3)
(1.2)
(0.9)
4.2
(8.2)
(1.0)
(9.2)
3.0
4.0
7.1
10.9
–
–
10.9
(6.2)
(0.9)
–
–
(7.1)
(1.1)
(8.2)
2.7
3.8
4.7
Brand
£m
10.8
–
(10.8)
–
(10.8)
–
–
10.8
–
–
–
–
–
–
Total
£m
39.1
2.2
(18.2)
23.1
(27.3)
(2.1)
(0.9)
15.0
(15.3)
(2.1)
(17.4)
5.7
7.8
11.8
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 two years and six months. The remaining period of amortisation on
customer contracts and relationships is three years.
Additions in the prior year relate to the acquisition of Strategic Teams Group, (STG) which was subsequently sold with the housebuilding operations
to Vistry Group plc on 3 January 2020.
Disposals in the prior year relate to intangible assets transferred to Vistry Group plc as part of the sale of the Group’s housebuilding divisions on
3 January 2020 (note 34).
Galliford Try Holdings plc 12 Goodwill
Group
Cost
At 30 June 2019
Addition
Disposal
At 30 June 2020 and 30 June 2021
Aggregate impairment at 1 July 2019
Disposal
At 30 June 2020 and 30 June 2021
Net book amount
At 30 June 2021
At 30 June 2020
At 30 June 2019
117
£m
160.3
6.9
(90.0)
77.2
(0.7)
0.7
–
77.2
77.2
159.6
The addition in the prior year related to the acquisition of STG and the disposal was in respect of the sale of the Group’s housebuilding divisions to
Vistry Group plc on 3 January 2020 (note 34).
Goodwill is allocated to the Group’s CGUs identified according to business segment. The goodwill is attributable to the following business segments:
Building
Infrastructure
2021
£m
40.0
37.2
77.2
2020
£m
40.0
37.2
77.2
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.
Any continuing 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 reflecting ongoing standard operating procedures and costs to reflect Government and industry health and
safety guidelines.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 118
Notes to the consolidated financial statements
continued
12 Goodwill (continued)
Building CGU
A pre-tax discount rate of 15.8% (2020: 14.5%) in Building has been applied to the future cash flows, based on an estimate of the weighted average cost
of capital (WACC) 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 cash flows) 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.
Infrastructure CGU
A pre-tax discount rate of 15.7% (2020: 14.7%) 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 £16m).
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, if no mitigating action was taken by management.
The detailed sensitivity analysis indicates that the following changes in each of these key assumptions could result in an impairment:
Budgeted revenue annual growth rates across the three years of the budget period, range from 12% to 17% at an average of 13.6%. A reduction of
this rate to 11.1% per annum would result in the headroom being eliminated.
Gross operating margins (before divisional and central overheads and contingencies) are forecast to increase across the three year budget period.
These gross margins (ie before divisional and central overheads and contingencies) would need to reduce by an average of approximately 0.3% per
annum to eliminate the headroom.
The pre-tax discount rate is 15.7% and an increase of more than 23% to 19.3% 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 24% 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.
Galliford Try Holdings plc 119
Total
£m
38.2
1.4
0.6
(24.2)
16.0
2.2
(4.6)
13.6
(22.0)
(2.4)
(0.4)
12.6
(12.2)
(1.6)
4.6
(9.2)
4.4
3.8
16.2
Land and
buildings
£m
Plant and
machinery
£m
Fixtures and
fittings
£m
2.2
0.2
–
(1.9)
0.5
0.6
–
1.1
(0.9)
–
(0.1)
0.7
(0.3)
(0.1)
–
(0.4)
0.7
0.2
1.3
9.7
0.5
0.1
(8.2)
2.1
1.1
(0.1)
3.1
(0.7)
(0.2)
(0.1)
–
(1.0)
(0.2)
0.1
(1.1)
2.0
1.1
9.0
26.3
0.7
0.5
(14.1)
13.4
0.5
(4.5)
9.4
(20.4)
(2.2)
(0.2)
11.9
(10.9)
(1.3)
4.5
(7.7)
1.7
2.5
5.9
13 Property, plant and equipment
Group
Cost
At 1 July 2019
Additions
Acquisition of a subsidiary
Disposals
At 1 July 2020
Additions
Disposals
At 30 June 2021
Accumulated depreciation
At 1 July 2019
Charge for the year – continuing operations
Charge for the year – discontinued operations
Disposals
At 1 July 2020
Charge for the year – continuing operations
Disposals
At 30 June 2021
Net book amount
At 30 June 2021
At 30 June 2020
At 30 June 2019
There has been no impairment of property, plant and equipment during the year (2020: £nil).
Disposals in the prior year relate predominantly to assets transferred to Vistry Group plc as part of the sale of the Group’s housebuilding divisions on
3 January 2020 (note 34).
The Company has no property, plant or equipment.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 120
Notes to the consolidated financial statements
continued
14 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 1 July 2020
Additions
Disposals
At 30 June 2021
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 1 July 2020
Charge for the year – continuing operations
Disposals
At 30 June 2021
Net book amount
At 30 June 2021
At 30 June 2020
At 1 July 2019 (on transition to IFRS 16)
Land and
buildings
£m
Plant and
machinery
£m
Motor
vehicles
£m
19.9
0.8
(9.7)
11.0
0.2
(1.2)
10.0
–
(2.6)
(1.0)
1.0
(2.6)
(2.4)
0.8
(4.2)
5.8
8.4
19.9
10.7
1.8
(4.7)
7.8
2.4
(3.1)
7.1
–
(2.9)
(1.0)
1.8
(2.1)
(2.5)
1.9
(2.7)
4.4
5.7
10.7
11.5
5.0
(4.0)
12.5
5.4
(1.5)
16.4
–
(3.8)
(0.9)
0.9
(3.8)
(4.7)
1.4
(7.1)
9.3
8.7
11.5
Total
£m
42.1
7.6
(18.4)
31.3
8.0
(5.8)
33.5
–
(9.3)
(2.9)
3.7
(8.5)
(9.6)
4.1
(14.0)
19.5
22.8
42.1
Disposals in the prior year relate predominantly to assets transferred to Vistry Group plc as part of the sale of the Group’s housebuilding divisions on
3 January 2020 (note 34).
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
2021
£m
7.3
11.9
19.2
2021
£m
9.6
0.9
7.9
0.5
18.9
2020
£m
9.5
12.8
22.3
2020
£m
9.3
1.0
12.1
0.4
22.8
The total cash outflow for leases in the year to 30 June 2021 for continuing operations was £11.4m, of which £0.9m was included in net interest expense
– note 6 (2020: £11.0m and £1.0m respectively).
Galliford Try Holdings plc 121
Total
£m
8.0
10.5
5.4
23.9
Total
£m
9.5
12.0
5.6
27.1
Land and
buildings
£m
Plant and
machinery
£m
Motor
vehicles
£m
1.7
2.9
5.4
10.0
2.0
1.8
–
3.8
4.3
5.8
–
10.1
Land and
buildings
£m
Plant and
machinery
£m
Motor
vehicles
£m
2.9
4.7
0.2
7.8
2.4
2.1
5.4
9.9
4.2
5.2
–
9.4
2021
£m
2020
£m
287.7
–
287.7
–
287.7
287.7
(146.5)
32.7
(113.8)
–
(146.5)
(146.5)
173.9
141.2
14 Leases (continued)
Lease liabilities (continued)
Maturity of contractual undiscounted future lease payments:
As at 30 June 2021
Less than 1 year
Between 1 and 5 years
More than 5 years
Total
As at 30 June 2020
Less than 1 year
Between 1 and 5 years
More than 5 years
Total
15 Investments in subsidiaries
Company
Cost
Opening/on incorporation at 19 September 20201
Additions
At 30 June
Aggregate impairment
Opening/on incorporation at 19 September 20201
Reversal of impairment/(impairment)
At 30 June
Net book value
At 30 June
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 to trading on the main market for listed securities of the London Stock Exchange.
The addition of £287.7m in the prior year 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 (note 34). This valuation reflected the net assets of Galliford Try Limited at that date.
However, during the remainder of the prior 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 in the prior year 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 12 (goodwill).
The carrying value of investments has been reviewed and a partial reversal of £32.7m has been recorded in the year.
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 Incorporated in Scotland.
2 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 33.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 122
Notes to the consolidated financial statements
continued
16 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
2021
£m
0.2
(0.5)
–
–
0.5
–
0.2
2020
£m
67.0
–
(1.6)
(71.8)
(0.2)
6.8
0.2
Disposals in the prior year relate predominantly to those investments transferred to Vistry Group plc as part of the sale of the Group’s housebuilding
divisions on 3 January 2020 (note 34).
Joint ventures
At 30 June 2021, the Group held interests in joint ventures, all of which are incorporated in England and Wales or in Scotland, as set out in note 33.
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
Revenue
Expenses
Finance cost
Income tax
Share of post-tax profits/(losses) from joint ventures
2021
£m
9.1
–
(8.9)
–
0.2
2020
£m
4.6
–
(4.4)
–
0.2
6.1
0.9
Continuing operations
Discontinued operations
2021
£m
45.3
(44.7)
0.6
–
(0.1)
0.5
2020
£m
23.9
(24.1)
(0.2)
–
–
(0.2)
2021
£m
–
–
–
–
–
–
2020
£m
100.6
(87.4)
13.2
(6.4)
(0.2)
6.6
The disclosures above exclude those material joint ventures that are separately disclosed in note 17 (PPP and other investments).
The Group’s share of unrecognised losses of joint ventures is £0.8m (2020: £0.1m).
As at 30 June 2021, amounts due from joint ventures of £6.1m (2020: £0.9m) 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 2021
(2020: £nil).
The Group has no commitments (2020: £nil) to provide further subordinated debt to its joint ventures.
Our share of joint ventures’ external bank funding (outside of the PPP and other investments portfolio) was £nil at 30 June 2021 (2020: £nil). The joint
ventures have no significant contingent liabilities to which the Group is exposed (2020: £nil). The joint ventures had no capital commitments as at
30 June 2021 (2020: £nil).
Galliford Try Holdings plc 17 PPP and other investments
Group
At 1 July
Additions
Disposal of housebuilding divisions
Disposals and subordinated loan repayments
Movement in fair value
At 30 June
123
2021
£m
40.7
1.9
–
(1.0)
7.5
49.1
2020
£m
41.6
6.6
(0.5)
(5.2)
(1.8)
40.7
These comprise PPP/PFI investments and investments in other listed securities (acquired during the prior 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).
None of the financial assets are past their due dates (2020: £nil) and the directors expect an average maturity profile of 10 years. Further disclosures
relating to financial assets are set out in note 24.
During the year, additional subordinated loans and other investments of £1.9m (2020: £6.6m) were added to the Group’s PPP/PFI investments,
subordinated loans of £0.5m (2020: £2.4m) were repaid and the Group disposed of interests held at £0.5m (2020: £2.8m), generating a profit on
disposal of £nil (2020: £0.6m). Of the total fair value movement in the year of £7.5m, £7.3m relates to PPP investments and has been recorded in equity
whilst £0.2m relates to the residual Vistry Group plc shares held and has been recorded in the income statement. Additionally, £0.4m relating to shared
equity receivables was sold during the prior year, as part of the disposal of the housebuilding divisions to Vistry Group plc.
The Group has commitments of £nil (2020: £1.9m) to provide further subordinated debt to its investments.
This portfolio reflects a blended discount rate of 7.0% (2020: 9.0%). The reduction in the year reflects the rates typically experienced in the
marketplace. A further reduction of 1.0% would result in an increase in the fair value of approximately £4.3m.
Our share of PPP and other investments’ external bank funding was £267.7m at 30 June 2021 (2020: £280.0m). Our share of these entities’ other
external funding consists of £64.1m (2020: £64.1m) 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 (representing over 99% of
the PPP and other investments portfolio) 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 16, Investments
in joint ventures).
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 124
Notes to the consolidated financial statements
continued
17 PPP and other investments (continued)
Income statement – extracts
Revenue
Depreciation and amortisation
Finance income
Finance expense
Income tax expense
Profit (100%)
Other comprehensive income/(expense)
Total comprehensive income/(expense) (100%)
Group’s share of profit/(loss) and total comprehensive profit/(loss)
Dividends received by the Group during the year
Balance sheet – extracts
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%)
1 Material due to their holdings and/or issuing listed debt.
Aberdeen Roads
(Finance) Plc1
Aberdeen Roads
Limited
2021
£m
–
–
25.4
(25.4)
–
–
2.4
2.4
0.8
–
0.2
–
0.2
562.7
(18.6)
(5.5)
(24.1)
(489.0)
(53.4)
(542.4)
(3.6)
2020
£m
–
–
26.9
(26.9)
–
–
(1.5)
(1.5)
(0.5)
–
0.2
–
0.2
577.1
(18.2)
(4.2)
(22.4)
(502.6)
(58.2)
(560.8)
(5.9)
2021
£m
64.6
–
31.1
(25.4)
–
–
–
–
–
–
2020
£m
3.4
–
30.8
(26.9)
–
–
–
–
–
–
28.0
5.1
33.1
27.8
4.9
32.7
556.2
566.8
–
(26.6)
(26.6)
–
(562.7)
(562.7)
–
–
(22.4)
(22.4)
–
(577.1)
(577.1)
–
Details of related party transactions with joint ventures are given in note 30. The Group’s shareholding in each joint venture can be seen in note 33.
18 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
22
2021
£m
51.8
(0.1)
51.7
159.1
6.1
12.8
13.6
243.3
Group
2020
£m
49.4
(1.6)
47.8
172.0
0.9
9.8
17.0
247.5
Company
2020
£m
2021
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Contract assets of £159.1m at 30 June 2021 includes a life-time expected credit loss allowance of £14.0m (2020: £14.0m).
Retentions will be collected in the normal operating cycle of the Group and are therefore shown as a current asset. It is expected that £30.6m
(2020: £36.9m) will be collected within 12 months from the balance sheet date.
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 to the value of £95m in respect
of these costs. Our work on these contracts formally ceased on their termination in August 2018. The Group has taken extensive 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.
Galliford Try Holdings plc 125
18 Trade and other receivables (continued)
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 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 likely 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. Our assessment of the credit
worthiness of the underlying contracting entities includes reviewing their latest audited financial statements to 31 December 2019 (as well as their
immediate parent and investor whose latest filed financial statements are to 31 December 2020), 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 2021 and consequently, there has been no change to the expected credit loss provision since
the prior year, whilst recognising that the range of possible outcomes within our probability weighted matrix has changed. The expected credit loss
provision (among our overall portfolio of contracts) is discussed further in note 1 Critical accounting estimates and judgments.
The expected credit loss provision for this contract (amongst our overall portfolio of contracts) is discussed further in note 1 within critical accounting
estimates and judgments.
There has been no change to our assessment of the constrained revenue under IFRS 15 or the expected credit loss under IFRS 9 in the year to
30 June 2021. The Group continues to vigorously defend the counterclaims made by the counterparty, that we consider are without merit, and as
such no amounts have been provided on the basis the Group considers the possibility of an outflow of resources to be remote.
Movements on the Group provision for impairment of trade receivable were as follows:
At 1 July
Decrease/(increase) in provision for receivables impairment
At 30 June
2021
£m
(1.6)
1.5
(0.1)
2020
£m
(0.4)
(1.2)
(1.6)
Provisions for impaired receivables have been included in cost of sales and administrative expenses 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 16. 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 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 8% (2020: 9%) 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.
As of 30 June 2021, trade receivables of £15.2m (2020: £20.9m) 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
2021
£m
2020
£m
1.5
3.7
0.7
0.3
9.0
15.2
4.2
1.2
3.1
0.8
11.6
20.9
As of 30 June 2021, 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 £0.1m (2020: £1.6m). The allocation of the provision is as follows:
Number of days past due date:
Greater than 120 days
2021
£m
2020
£m
0.1
0.1
1.6
1.6
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 126
Notes to the consolidated financial statements
continued
19 Cash and cash equivalents
Cash at bank and in hand and per the statement of cash flows
2021
£m
216.2
Group
2020
£m
197.2
2021
£m
100.7
Company
2020
£m
100.0
Cash at bank above includes £nil (2020: £nil) of restricted cash. The effective interest rate received on cash balances is 0.1% (2020: 0.6%). The Group
has no bank borrowings or loans.
Net cash excludes IFRS 16 lease liabilities (note 14).
Cash and cash equivalents and bank overdrafts are presented on a net (offset) basis. 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 the Group demonstrated its intention to offset by formally
sweeping the balances. Consequently, the balances have been offset in the financial statements.
20 Trade and other payables
Trade payables
Contract liabilities
Other taxation and social security payable
Other payables
Accruals
Notes
22
2021
£m
90.9
99.1
30.5
1.2
263.7
485.4
Group
2020
£m
108.1
112.3
18.6
1.2
218.6
458.8
Company
2020
£m
2021
£m
–
–
–
–
–
–
–
–
–
–
–
–
All payables are unsecured. Retentions will be paid in the normal operating cycle of the Group and are therefore shown as a current liability.
The undiscounted future cash flows of non-derivative financial liabilities are £355.8m (2020: 327.9m) and these are expected to be settled within one
year of the balance sheet date.
21 Provisions for other liabilities and charges
Group
At 1 July 2019
Created in the year
Utilised in the year
At 30 June 2020
Utilised in the year1
At 30 June 2021
Analysis of total provisions
Current
Non-current
At 30 June
Total
£m
0.8
23.7
(0.5)
24.0
(24.0)
–
2020
£m
13.9
10.1
24.0
2021
£m
–
–
–
The provision created in the prior year resulted from the working capital adjustment agreed in respect of the disposal of the housebuilding divisions
(note 34). This was fully settled in the year to 30 June 2021. The Company does not hold any provisions.
1 £0.3m was in respect of continuing operations and £23.7m was in respect of disconnected operations.
Galliford Try Holdings plc 127
22 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 Group opening to closing contract balances is shown below:
At 30 June 2020
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 year from contract assets to trade receivables
Contract
asset
£m
2021
Contract
liability
£m
172.0
(112.3)
–
1,073.5
–
(1,086.4)
–
51.3
(38.1)
Contract
asset
£m
332.8
(68.3)
1,051.3
–
2020
Contract
liability
£m
(264.0)
127.6
70.3
(46.2)
–
–
(1,143.8)
30 June 2021
159.1
(99.1)
172.0
(112.3)
Revenue allocated to performance obligations that are unsatisfied at 30 June, are expected to be recognised as disclosed in note 3.
The Company has no contract balances.
1 Disposal of housebuilding divisions (note 34).
2 Of the revenue recognised in the prior year, £32m was in respect of the final agreement for Aberdeen Western Peripheral Road (AWPR). The revenue was previously
constrained due to uncertainty of the ongoing negotiation as at 30 June 2019.
23 Deferred income tax
Deferred income tax is calculated in full on temporary differences under the liability method and is measured at the average tax rates that are expected
to apply in the periods in which the timing differences are expected to reverse.
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
2021
£m
15.0
15.0
(0.7)
(0.7)
Group
2020
£m
5.3
5.3
(1.0)
(1.0)
Net deferred income tax
14.3
4.3
The movement for the year in the net deferred income tax account is as shown below:
At 1 July
Current year’s deferred income tax – continuing operations1
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 – discontinued operations
Transfer from current tax assets and change in rates of deferred income tax1
Acquisition of subsidiaries2
Disposal of subsidiaries3
At 30 June
2021
£m
4.3
(8.9)
–
(0.3)
–
–
19.2
–
–
14.3
Group
2020
£m
1.3
(0.3)
0.3
3.4
(0.1)
(0.1)
–
(1.0)
0.8
4.3
1 Includes impact of change in rate of tax.
2 The acquisition of STG during the year to 30 June 2020, which was subsequently disposed as part of the housebuilding divisions on 3 January 2020.
3 Disposal of housebuilding divisions on 3 January 2020 (note 34).
Company
2020
£m
2021
£m
–
–
–
–
–
–
–
–
–
–
Company
2020
£m
2021
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 128
Notes to the consolidated financial statements
continued
23 Deferred income tax (continued)
The Group has recorded a deferred tax asset in respect of unutilised tax credits resulting from historic trading contract losses. This asset was previously
recorded within current tax assets and was transferred in the year. The Group has assessed that an asset equal to the value of unutilised tax credits
expected to be utilised over the next three financial years is appropriate, as, based on the already secured work for that timeframe and the approved
Group budgets, management have assessed it is probable that the Group will have sufficient taxable profits to enable the deferred tax asset to be
recovered. These losses can be carried forward indefinitely and have no expiry date.
Any remaining unutilised tax credits have not been recognised and the Group has approximately £95m of unrecognised trading losses.
Movements in deferred income tax assets and liabilities during the year are shown below:
Deferred income tax assets
Group
At 1 July 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
Expense taken to income statement – continuing operations1
Adjustment in respect of prior years – continuing operations
Transfer from current tax assets and change in rates of deferred income tax1
At 30 June 2021
1 Includes impact of change in rate of tax.
Disposals in the prior year related to the housebuilding divisions (note 34).
Deferred income tax liabilities
Group
At 1 July 2019
Income taken to income statement – discontinued operations
Income taken to income statement – continuing operations
Transfer from deferred income tax assets
Transfer to deferred income tax assets
Disposal of subsidiaries
At 30 June 2020
Income taken to income statement – continuing operations
At 30 June 2021
Disposals in the prior year related to the housebuilding divisions (note 34).
Accelerated
tax
depreciation,
losses and
other
£m
2.1
(0.1)
(0.5)
0.8
(0.1)
(0.1)
(0.1)
–
3.3
5.3
(9.2)
(0.3)
19.2
15.0
Share-based
payments
£m
0.4
(0.4)
–
–
–
–
–
–
–
–
–
–
–
–
Interest
provisions &
intangible
assets
acquired
£m
3.2
0.2
–
–
–
–
–
0.8
(4.2)
–
–
–
–
–
Accelerated
tax
depreciation
£m
Fair value
adjustments
£m
Retirement
benefit
obligations
£m
Intangible
assets
acquired
£m
(0.1)
–
–
–
0.1
–
–
–
–
(3.0)
–
2.6
–
–
0.4
–
–
–
(1.3)
0.8
–
–
–
0.3
(0.2)
0.2
–
–
–
–
(0.8)
–
–
(0.8)
0.1
(0.7)
Total
£m
5.7
(0.3)
(0.5)
0.8
(0.1)
(0.1)
(0.1)
0.8
(0.9)
5.3
(9.2)
(0.3)
19.2
15.0
Total
£m
(4.4)
0.8
2.6
(0.8)
0.1
0.7
(1.0)
0.3
(0.7)
Galliford Try Holdings plc 129
24 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 cash
and cash equivalents, receivables, payables and PPP and other investments 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 in the prior year. 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. The Group has no borrowing or debt facilities and hence no gearing targets.
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 2021 (2020: nil).
(ii) Price risk
Other than a residual interest in equity securities following the disposal of the housesbuilding divisions on 3 January 2020 (which are considered to have
limited risk to the Group and are not held as long term investments), the Group and Company are not exposed to equity or 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, deposits and borrowings with banks and financial institutions,
as well as credit exposures to customers, including outstanding 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 18. 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.
The Group’s maximum exposure to credit risk at the end of the reporting period is the carrying amount (book value) of each class of financial asset set
out on the following page.
(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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 130
Notes to the consolidated financial statements
continued
24 Financial instruments (continued)
Fair value of other 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.
Primary financial instruments held or issued to finance the Group’s operations:
Financial liabilities:
Current financial liabilities measured at amortised cost
Financial assets:
PPP and other investments
Current assets measured at amortised cost
Cash and cash equivalents
2021
2020
Notes
Book value
£m
Fair value
£m
Book value
£m
Fair value
£m
20
17
18
19
355.8
355.8
327.9
327.9
49.1
229.7
216.2
49.1
229.7
216.2
40.7
230.5
197.2
40.7
230.5
197.2
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 20.
There is no difference between the book value and the fair value of the Company’s financial assets and financial liabilities.
Borrowing facilities
The Group had no committed borrowing facilities available at 30 June 2021 or 2020.
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 17.
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
There were no transfers between levels during the year.
Level 3
£m
49.1
49.1
2021
Total
£m
49.1
49.1
Level 3
£m
40.7
40.7
2020
Total
£m
40.7
40.7
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)
At 1 July
Additions
Movement in fair value
Disposal of housebuilding divisions (note 34)
Disposals and subordinated loan repayments
Closing balance
2021
£m
40.7
1.9
7.5
–
(1.0)
49.1
2020
£m
41.6
6.6
(1.8)
(0.5)
(5.2)
40.7
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 fair value of the portfolio reflects a blended discount rate of 7.0% (2020: 9.0%)
and is based on current market conditions. The sensitivity to discount rates is set out in note 17. If receipts were to occur earlier than expected, the fair
value would increase.
Galliford Try Holdings plc 131
Total
£m
253.2
–
(197.7)
55.5
Total
£m
–
–
55.5
55.5
Number of
shares
Ordinary
shares
£m
Share
premium
£m
111,032,617
55.5
20,872
–
–
–
111,053,489
55.5
197.7
–
(197.7)
–
Number of
shares
Ordinary
shares
£m
Share
premium
£m
–
2
111,053,487
111,053,489
–
–
55.5
55.5
–
–
–
–
25 Ordinary shares and share premium
Group
At 1 July 2019
Allotted under share option schemes
Capital reorganisation1
At 30 June 2020 and 30 June 2021
Company
On incorporation on 19 September 2020
Issue of shares on incorporation
Capital reorganisation1
At 30 June 2020 and 30 June 2021
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 2021, the total number of shares outstanding under the SAYE share option scheme was 1,989,993 (2020: nil) and under the LTIPs was
5,496,703 (2020: 2,248,829 ) as detailed in note 26.
26 Share-based payments
The Group operates performance-related share incentive plans for Executives, details of which are set out in the Directors’ Remuneration report.
The Group also operates sharesave schemes. The total charge for the year relating to employee share-based payment plans was £1.0m (2020: £nil),
all of which related to equity-settled share-based payment transactions. After deferred tax, the total charge was £1.0m (2020: £nil).
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 three 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.
The options were valued using the binomial option-pricing model. The fair value per option granted and the assumptions used in the calculation are
as follows:
Grant date
07.04.21
Shares under
option
Share price at
grant date
Exercise
price
Contract
date
Expected
volatility
Option life
(years)
Risk free
rate
Dividend
yield
Employee
turnover
before vesting
Fair value
per option
1,989,993
130p
112p
01.06.21
60%
3
0.2%
3.1%
10%
50p
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 132
Notes to the consolidated financial statements
continued
26 Share-based payments (continued)
Savings related share options (continued)
The expected volatility is based on historical volatility in the movement in the share price over the past three years up to the date of grant (or since
incorporation of the Company in January 2020). 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 savings related share awards over the
year to 30 June 2021 is shown below:
Outstanding at 1 July
Awards
Forfeited
Cancelled
Expired
Exercised
Outstanding at 30 June
Exercisable at 30 June
2021
Weighted
average
exercise price
2020
Weighted
average
exercise price
Number
Number
–
1,998,476
(5,141)
(3,342)
–
–
–
1,606,224
112p
112p
112p
–
(30,420)
(164,538)
–
–
(1,390,394)
(20,872)
1,989,993
112p
–
–
–
–
908p
–
867p
879p
913p
868p
–
–
The weighted average fair value of awards granted during the year was 50p (2020: nil). There were nil share options exercised during the year ended
30 June 2021 (2020: 20,872) and the weighted average share price at the date of exercise was nil (2020: 868p). The weighted average remaining
contractual life is 2 years and 11 months (2020: nil).
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
23.09.20
Shares under
option
Share price at
grant date
2,248,829
3,247,874
123p
78p
Vesting
period/option
life (months)
Risk free
rate
Dividend
yield
Fair value
per option
36
36
0.3%
(0.1)%
3.1%
3.1%
112p1
71p
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 past 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
Exercised
Outstanding at 30 June
Exercisable at 30 June
2021
Number
2020
Number
2,248,829
1,087,808
3,247,874
2,248,829
– (1,052,695)
–
(35,113)
5,496,703
2,248,829
–
–
The weighted average fair value of awards granted during the year was 71p (20201: 0p). There were nil options exercised during the year ended
30 June 2021 (2020: 35,113). The weighted average remaining contractual life is nil as the shares are exercised on the day that they vest (2020: nil).
1 The assessment of the non-market conditions associated with the grant in the prior year resulted in the underlying fair value per option of 112p being recognised as nil.
Galliford Try Holdings plc 133
27 Other reserves and retained earnings
Group
At 30 June 2019
Adjustment as a result of transition to IFRS 16 on 1 July 2019
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
Impairment of investment in Galliford Try Limited and associated recycling of merger reserve to
retained earnings
At 30 June 2020
Profit for the year
Dividends paid
Share-based payments
Movement in fair value of PPP and other investments
Purchase of own shares
Reversal of impairment of investment in Galliford Try Limited and associated recycling of retained earnings to
merger reserve
At 30 June 2021
The Group’s other reserves relates to a merger reserve amounting to £118.4m (2020: £85.7m).
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 year
At 30 June 2020
Profit for the year
Dividends paid
Reversal of impairment of investment in Galliford Try Limited and associated recycling of retained earnings to
merger reserve
At 30 June 2021
Other
reserves
£m
Retained
earnings
£m
Notes
4.8
–
4.8
–
–
–
–
–
–
–
227.4
–
(146.5)
85.7
–
–
–
–
–
32.7
118.4
Other
reserves
£m
–
232.2
(146.5)
–
85.7
–
–
32.7
118.4
421.3
(1.0)
420.3
320.4
(38.9)
2.0
0.2
(1.8)
0.4
(0.1)
(29.7)
(840.0)
146.5
(20.7)
7.7
(1.3)
1.0
7.3
(1.1)
(32.7)
(39.8)
Retained
earnings
£m
–
–
146.5
(46.5)
100.0
34.7
(1.3)
(32.7)
100.7
9
35
26
17
23
1
1 & 34
15
9
26
17
15
Notes
15
9
15
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).
The cumulative amount of goodwill arising on acquisition and written off directly against reserves is £9.5m (2020: £9.5m).
At 30 June 2021, the Galliford Try Employee Share Trust (the Trust) held 1,721,603 (2020: 221,603) Galliford Try Holdings plc shares. The nominal
value of the shares held is £0.9m (2020: £0.1m). 1,500,000 shares were acquired during the year (2020: nil) at a net cost of £1.1m (2020: £nil) and a
further £nil (2020: £nil) was paid in relation to other share related transactions. Nil (2020: 61,974) 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 2021 was £2.4m (2020: £0.3m). No shareholders (2020: 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, 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 a number of tranches, with the first two tranches of a total of 84,792 shares sold in
the prior year for £1.1m cash and a further tranche of 14,132 shares sold in the current year for £0.2m cash with a residual 28,265 shares held by the
Group at 30 June 2021 (2020: 42,397). These shares are recorded at fair value, with the movement being reflected in profit or loss.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 134
Notes to the consolidated financial statements
continued
28 Financial and capital commitments
The Group had no commitments for subordinated debt to joint ventures or other investments at 30 June 2021 (2020: £nil), nor any commitment for
other capital expenditure.
29 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 £146.8m (2020: £157.4m).
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.
30 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
2021
£m
2020
£m
Amounts owed by
related parties
2021
£m
2020
£m
110.5
75.8
42.2
35.9
Interest and dividend income
from related parties
2021
£m
2020
£m
4.4
4.5
The related party transactions above reflect continuing operations. Sales to related parties within discontinued operations amount to £nil (2020: £50.3m)
and interest and dividend income received from related parties amount to £nil (2020: £11.1m).
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 27 years (2020: 28 years).
These receivables are unsecured, with interest rates varying between a range of 9% and 12%. Payables are due within one year (2020: 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
2021
£m
2020
£m
2.0
100.0
The Company has provided performance guarantees in respect of certain operational contracts entered into between joint ventures and a
Group undertaking.
31 Post balance sheet events
There have been no post balance sheet events.
Galliford Try Holdings plc 135
32 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. The APMs adopted by the Group are also commonly used in the sectors it operates in.
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.
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 accounting
standards in conformity with the requirements of international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the EU and in line with the Group’s accounting policies, that can be found on pages 102 to 107.
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) Operating profit before amortisation
The Group adjusts operating profit to exclude the amortisation of intangible assets as this better reflects the ongoing performance of the business.
Operating margin reflects the ratio of operating profit before amortisation of intangible assets and revenue. This differs from the statutory measure of
operating profit which includes the amortisation of intangible assets.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 136
Notes to the consolidated financial statements
continued
32 Alternative performance measures (continued)
Measuring the Group’s performance (continued)
Alternative performance measures (continued)
b) Profit from operations and operating margin (continued)
A reconciliation of the statutory measure to the Group’s performance measure is shown below, based on continuing operations:
Year ended 30 June 2021
Statutory operating profit/(loss)
add: amortisation of intangible assets (note 11)
Operating profit before amortisation
Revenue
Operating margin
Year ended 30 June 2020
Statutory operating (loss)/profit
add: amortisation of intangible assets (note 11)
exclude: exceptional items (note 4)
Pre-exceptional operating loss before amortisation
Pre-exceptional revenue
Operating margin
Building
£m
Infrastructure
£m
PPP
Investments
£m
14.9
1.0
15.9
6.0
–
6.0
789.2
329.2
2.0%
1.8%
(54.9)
1.0
2.0
(51.9)
25.5
–
(27.3)
(1.8)
719.9
357.1
(7.2)%
(0.5)%
(1.8)
–
(1.8)
6.4
n/a
(0.3)
–
–
(0.3)
8.2
n/a
Central
£m
(11.1)
1.1
(10.0)
Total
£m
8.0
2.1
10.1
–
1,124.8
n/a
0.9%
(9.5)
1.1
0.2
(8.2)
(39.2)
2.1
(25.1)
(62.2)
4.4
1,089.6
n/a
(5.7)%
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, based on continuing operations:
Statutory profit/(loss) before tax
add: exceptional items (note 4)
Pre-exceptional profit/(loss) before tax
2021
£m
11.4
–
11.4
2020
£m
(34.6)
(25.1)
(59.7)
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 for its
continuing operations.
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, based on continuing operations:
Statutory results
add: exceptional items (note 4)
Pre-exceptional earnings/(loss) per share
Earnings
£m
Ave number
of shares
10.4 109,976,145
–
n/a
10.4 109,976,145
2021
EPS
pence
9.5
n/a
9.5
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)
Galliford Try Holdings plc 33 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 2021.
(i) Subsidiary undertakings
Entity name
Alumno GT Limited
Alumno GT Management Limited
Birch Construction Division Limited
Registered office or principal place of business
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
Chancery Court Business Centre Limited
3 Frayswater Place, Uxbridge, UB8 2AD
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 Brick Factors Limited
Galliford Try Building 2014 Limited
Galliford Try Construction Limited
Miller House, Pontefract Road, Normanton, WF6 1RN
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
3 Frayswater Place, Uxbridge, UB8 2AD
Galliford Try Construction & Investments Holdings Limited
3 Frayswater Place, Uxbridge, UB8 2AD
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
Galliford Try Estates Limited
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
Galliford Try Facilities Management Limited
3 Frayswater Place, Uxbridge, UB8 2AD
Galliford Try HPS Limited
Galliford Try Infrastructure Limited
Galliford Try International Limited
3 Frayswater Place, Uxbridge, UB8 2AD
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
3 Frayswater Place, Uxbridge, UB8 2AD
Galliford Try Investments Consultancy Services Limited
3 Frayswater Place, Uxbridge, UB8 2AD
Galliford Try Investments Limited
3 Frayswater Place, Uxbridge, UB8 2AD
Galliford Try Investments NEPS Limited
3 Frayswater Place, Uxbridge, UB8 2AD
Galliford Try Plant Limited
Galliford Try Limited
Galliford Try Properties Limited
Galliford Try Qatar Limited
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
Galliford Try Secretariat Services Limited
3 Frayswater Place, Uxbridge, UB8 2AD
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
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
GT (North Hub) Investments Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
GT (North Tyneside) Limited
3 Frayswater Place, Uxbridge, UB8 2AD
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
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
GT Car Parks Leicester (Holdings) Limited
3 Frayswater Place, Uxbridge, UB8 2AD
GT Car Parks Leicester Limited
GT Emblem Investments Limited
GT Guildford Crescent Limited
GT Integrated Services Limited
3 Frayswater Place, Uxbridge, UB8 2AD
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
3 Frayswater Place, Uxbridge, UB8 2AD
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
GT Inverness Investments Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
137
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%
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 138
Notes to the consolidated financial statements
continued
Entity name
GT PPP Limited
GT Telford (Holdings) Limited
GT TMGL Limited
GTFM (Cavalry) Limited
Kingseat Development 1 Limited
Registered office or principal place of business
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
3 Frayswater Place, Uxbridge, UB8 2AD
Morrison House, Kingseat Business Park, Kingseat, Newmachar,
Aberdeenshire, AB21 0AZ
Leicester GT Education Company Limited
3 Frayswater Place, Uxbridge, UB8 2AD
Morrison Construction Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Morrison Highway Maintenance Limited
3 Frayswater Place, Uxbridge, UB8 2AD
Oak Dry Lining Limited
Oak Fire Protection Limited
Primaria Limited
Regeneco (Services) Limited
Regeneco Limited
Rock & Alluvium Limited
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
Schools for the Community Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
Try Accord Limited
Try Construction Limited
Try Group Limited
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
3 Frayswater Place, Uxbridge, UB8 2AD
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.
(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
Community Ventures Primary Care Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB
GBV JV Limited
3 Frayswater Place, Uxbridge, UB8 2AD
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
65 Gresham St, London, EC2V 7NQ
Proportion of
capital held Financial year end
33%
33%
33%
50%
60%
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-Sep
30-Jun
31-Mar
31-Mar
31-Mar
30-Jun
31-Mar
31-Dec
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.
Galliford Try Holdings plc 139
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%
6%
33 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
Hub South West Scotland Limited
Hub SW Cumbernauld DBFMCo Limited
Hub SW Cumbernauld Holdco Limited
PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB
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
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.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 140
Notes to the consolidated financial statements
continued
34 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), following 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 25).
As a result of this disposal, the Linden Homes and Partnerships & Regeneration segments were classified as discontinued operations.
The (loss)/profit of these discontinued operations are as follows:
Year ended 30 June 2021
Revenue
Operating loss and loss before taxation
Income tax expense
Loss after tax of discontinued operations
Central
£m
–
(2.7)
–
(2.7)
These costs were primarily residual professional fees and other costs relating to the transaction and discontinued operations. The Group is not
expecting to incur any further costs in respect of these discontinued operations.
Year ended 30 June 2020 – 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
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)
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 received
Transaction costs
Total net disposal consideration
Carrying amount of net assets sold
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
Total
£m
–
(2.7)
–
(2.7)
Total
£m
651.9
40.9
(6.6)
34.3
(0.7)
(1.0)
32.6
(7.8)
24.8
2020
£m
476.3
(18.9)
457.4
(969.2)
(511.8)
840.0
328.2
–
328.2
353.0
Galliford Try Holdings plc 141
34 Discontinued operations (continued)
The total proceeds received of £476.3m consisted of £300.0m in cash, the transfer of the £100.0m Private Placement 10-year sterling notes to the
buyer and a further working capital adjustment of £76.3m. The Group incurred total third-party adviser 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 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.
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.
35 Retirement benefit assets
As stated in note 5, all employees are entitled to join the Galliford Try Pension Scheme, a defined contribution scheme established as a stakeholder
plan. Previously, the Group also operated three defined benefit pension schemes, as detailed below, but all of these have either been transferred or
wound-up as at 30 June 2021 and the Group has no remaining defined benefit pension schemes or liabilities.
Defined benefit schemes
Historically, the Group 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. 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 (note 34) while the remaining scheme (the Galliford Group Special Scheme) was wound-up during the year and the surplus cash of £1.0m returned
to the Company.
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:
Gilts
Present value of defined benefit obligations
Surplus in scheme recognised as non-current asset
Value £m
–
–
–
–
2021
–%
–%
Value £m
1.0
1.0
–
1.0
2020
100%
100%
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information 142
Notes to the consolidated financial statements
continued
35 Retirement benefit assets (continued)
Accounting results
The amounts recognised in the income statement for continuing operations are as follows:
Net interest income on net defined benefit asset
Net income recognised in the income statement
The actual return on scheme assets was £nil (2020: £0.1m).
2021
£m
–
–
2020
£m
(0.1)
(0.1)
There were no amounts recognised in the statement of comprehensive income for continuing operations (2020: £nil) and there were no actuarial gains
related to discontinued operations (2020: £2.0m).
Movement in present value of defined benefit obligations
At 1 July
Interest cost
Actuarial loss arising from changes in financial assumptions
Benefit payments
Disposal of liabilities to Vistry Group plc (note 34)
At 30 June
Movement in fair value of scheme assets
At 1 July
Interest income
Return on plan assets, excluding interest income
Employer contributions
Expenses
Benefit payments
Disposal of assets to Vistry Group plc (note 34)
Cash received on wind-up of scheme
At 30 June
Movement in fair value of net asset
At 1 July
Net interest income
Return on plan assets, excluding interest income
Actuarial losses
Employer contributions
Expenses
Disposal of net assets to Vistry Group plc (note 34)
Cash received on wind-up of scheme
2021
£m
–
–
–
–
–
–
2021
£m
1.0
–
–
–
–
–
–
(1.0)
–
2021
£m
1.0
–
–
–
–
–
–
(1.0)
2020
£m
238.7
2.6
6.0
(5.2)
(242.1)
–
2020
£m
245.7
2.7
8.0
4.0
(0.2)
(5.2)
(254.0)
–
1.0
2020
£m
7.0
0.1
8.0
(6.0)
4.0
(0.2)
(11.9)
–
At 30 June
–
1.0
Galliford Try Holdings plc Five-year record (unaudited)
143
Revenue
Profit/(loss) before exceptional items
Exceptional items
Profit/(loss) before taxation
Tax
Profit/(loss) after taxation attributable to shareholders
Fixed assets (including IFRS 16 right-of-use assets), investments in joint ventures,
PPP and other investments
Intangible assets and goodwill
Net current assets/(liabilities)
Other long term assets
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
2017
£m
2018
£m
20191
£m
20201
£m
20211
£m
2,662.1
2,931.6
1,400.1
1,121.6
1,124.8
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)
67.5
85.0
(14.4)
5.3
(22.9)
120.5
55.5
65.0
120.5
–
(47.7)
(47.7)
11.4
–
11.4
(1.0)
10.4
73.2
82.9
(24.4)
14.3
(11.9)
134.1
55.5
78.6
134.1
4.7
9.5
9.1
1 2019, 2020 and 2021 Income Statement and earnings per share balances reflect continuing operations only, accounted for in accordance with IFRS 5 (2017–2018 reflects
the total Group in those years, including housebuilding). The 2019 balance sheet reflects the whole Group in that year.
2 Pre-exceptional.
Annual Report and Financial Statements 2021Strategic reportGovernanceFinancial information Analysis of shareholdings at 30 June 2021
Size of shareholding
1 – 10,000
10,001 – 50,000
50,001 – 500,000
500,001 – highest
% of
holders
Number
of holders
92.41%
3,410
143
% of
shares
3.24%
2.79%
Number of
shares
3,597,373
3,100,977
99 14.87% 16,516,607
38 79.10% 87,838,532
3.88%
2.68%
1.03%
Total
100.00%
3,690 100.00% 111,053,489
Registered office
Galliford Try Holdings plc
Blake House
3 Frayswater Place
Cowley
Uxbridge
Middlesex
UB8 2AD
Stockbrokers
Peel Hunt LLP
HSBC Bank plc
Bankers
Barclays Bank PLC
HSBC Bank PLC
Registration
England and Wales 12216008
Independent auditor
BDO LLP
144
Shareholder information
Financial calendar 2021
Half year results announced
Full year results announced
Ex dividend date
Final dividend record date
Annual General Meeting
Final dividend payment
4 March
16 September
11 November
12 November
12 November
10 December
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 Accounts 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).
Galliford Try Holdings plc Printed on GalerieArt Satin, an FSC® Mixed
Sources paper manufactured using pulp
from well managed forests at a mill
accredited with EMAS and ISO 14001
environmental standards.
Printed by Pureprint Group.
Pureprint are ISO 14001 certified,
CarbonNeutral® and FSC® chain of Custody
certified. The inks used are vegetable oil based.
Designed and produced by Friend.
www.friendstudio.com.
Galliford Try Holdings plc
Blake House
3 Frayswater Place
Cowley
Uxbridge
Middlesex
UB8 2AD
T: 01895 855 001
W: gallifordtry.co.uk
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