A trading update from Galliford Try today for its financial year ended 30th June 2020 was notable for its positivity, despite revenue and profit margins both taking a hit from the Covid-19 lockdown.
While we won’t know the precise numbers until they are published in September, Galliford Try gave a clear steer that they would not be good.
“As expected, the combination of site closures and reduced productivity significantly reduced revenue in the final quarter of the financial year. Along with the cost of implementing our new operating procedures and lengthened site programmes, this has led to a material reduction in gross margin in the financial year to June 2020, with divisional operating margins expected to show a loss of c5%,” it said.
However all of its construction sites across the UK are now operational with underlying operations performing well, it said.
“Productivity levels on our sites have gradually increased since the beginning of the lockdown, and we start the new financial year with productivity close to normal and operating margins expecting to improve in line with our target,” it added. “Throughout the lockdown we have been encouraged by the pipeline of new opportunities across our chosen sectors in the public, regulated and private markets together with a number of significant contract wins.”
Since the sale of the housing businesses to Bovis Homes in January 2020, Galliford try is debt free, with cash at 30th June 2020 of £195m (2019: net debt £57m) and average month-end cash during the six months to 30th June 2020 of £140m.
Chief executive Bill Hocking said: "Following the disposal of the housebuilding businesses earlier in the year the group is firmly focused on its core strengths of regional building, highways and environment.
“Throughout the Covid-19 pandemic I have been impressed by the energy, commitment and resilience of our employees and subcontractors, as they adapted to the new Covid-19 secure working practices. Their strength of character is exemplary, and I thank them for their efforts.
“The financial year just ended was a year of transition for the group and I am confident about the future for the business. The impact of the global pandemic in the UK continues to be uncertain but innovative ways of working, better use of technology and improving efficiencies have been successfully embedded in our business in response to the crisis. Going forward we are well placed to benefit from the planned spending in our chosen sectors and to support the rebuilding of the economy and I will provide an update on our strategic priorities at results in September.
“Whilst these are challenging times, I look forward to the new financial year with confidence. The group is well capitalised with a strong order book and is well positioned to make progress on its strategic priorities and margin improvement targets."