Galliford Try Holdings plc
Annual Report and
Financial Statements 2024
Galliford Try Holdings plc Annual Report and Financial Statements 2024
Delivering
Sustainable
Growth
Revenue
£1,772.8m
(2023: £1,393.7m)
Pre-exceptional operating
profit before amortisation
1
£29.6m
(2023: £19.1m)
Divisional operating margin
2
2.5%
(2023: 2.4%)
Pre-exceptional
profit before tax
1
£32.7m
(2023: £20.6m)
Profit before tax
£30.9m
(2023: £10.1m)
Average month-end cash
3
£154.8m
(2023: £134.7m)
Pre-exceptional
earnings per share
1
27.9p
(2023: 16.6p)
Earnings per share
36.2p
(2023: 8.7p)
Full year dividend
per share
15.5p
(2023: 10.5p)
Order book
£3.8bn
(2023: £3.7bn)
1 Stated before exceptional items. Exceptional items relate to our investment
in cloud-based Enterprise Resource Planning (ERP) and recovery of a
Corporation Tax Group Relief adjustment. See note 32 for a reconciliation
of statutory numbers to Alternative Performance Measures.
2 Divisional operating margin is defined as operating profit before amortisation
as a percentage of revenue.
3 Average month-end cash is a non-statutory measure the Group refers to,
being the average month-end cash balance over the financial year.
Performance
Strategic report
1 Our investment case
2 Business overview
4 Our business model
8 Chair’s statement
10 Market review
Delivering Sustainable Growth
14 Our Sustainable Growth Strategy
18 Chief Executive’s review
22 Operating sustainably
A people-orientated, progressive culture
25 Health and safety
28 Our people
Socially and environmentally
responsible delivery
32 Environment and climate change
36 Communities
Quality and innovation
40 Clients
44 Supply chain
46 Human rights and modern slavery
Sustainable financial returns
48 Financial review
52 Operating review
56 Risk management
61 Task Force on Climate-related
Financial Disclosures
74 Stakeholder engagement and
s172(1) statement
Governance
80 Chair’s review
82 Directors and Executive Board
84 Governance review
95 Nomination Committee report
99 Audit Committee report
104 Remuneration Committee report
108 Directors’ Remuneration Policy report
117 Annual report on remuneration
127 Directors’ report
131 Statement of directors’ responsibilities
Financial statements
132 Independent auditor’s report
141 Consolidated income statement
142 Consolidated statement of comprehensive income
143 Balance sheets
144 Consolidated and Company statements
of changes in equity
145 Statements of cash flows
146 Notes to the financial statements
193 Five-year record (unaudited)
194 Shareholder information
Strong performance
across all operations
delivering increased
revenue and profit.
Pre-exceptional profit
before tax
1
increased
by 59% to £32.7m
(2023: £20.6m).
Divisional operating
margin
2
increased to
2.5% (2023: 2.4%).
Final dividend payment
of 11.5p (2023: 7.5p),
together with an interim
dividend of 4.0p giving
a total dividend for the
financial year of 15.5p,
up 47.6%.
Well-capitalised
debt-free balance sheet,
average month-end
cash for the period
of £154.8m (2023:
£134.7m), PPP asset
portfolio of £41.8m
(2023: £44.6m) and no
pension liabilities.
Confident outlook
with high-quality
£3.8bn order book
(2023: £3.7bn)
positioned across our
chosen sectors and
92% of FY25 revenue
already secured.
Additional capital return
through £10m share
buyback programme.
Capital Markets Event,
held on 23 May 2024,
set out the Group’s
growth strategy to 2030,
building further on the
strong operational and
financial performance
delivered since 2021.
A compelling investment
A progressive culture
Our approach to running a good construction
business that can perform consistently and
predictably revolves around retaining and developing
our people and attracting new people, who share our
purpose, values, objectives and approach to business.
We create a working environment where people are
motivated to give their best, we empower them with
the tools and resources required to carry out their
work, and we reward them competitively. This is
reflected in our consistently high, and above average,
employee advocacy score of 87%, and low churn
rate of 11.4%.
Robust market opportunity
There is robust and consistent long-term demand
across our sectors driven by climate change,
population growth and ageing social and economic
infrastructure, which needs to be replaced, repaired
or upgraded. This demand is underpinning growth
in our chosen markets, where we benefit from
established positions. We are also growing in our
adjacent markets (page 14), where the work is
complementary to our existing capabilities, where
there is strong demand, where the risk profile is
within our appetite, and the margins are higher.
Our geographical footprint, excellent client and
supplier relationships and the barriers to entry at
the scale at which we operate in these markets also
give us an advantage.
Rigorous risk management
The vast majority of the work in our order book
is won on a differentiated quality basis over price,
giving us a well bid, non-cyclical, high-quality pipeline
of work. Some 91% of our clients are in the public
and regulated sectors; we know these clients well
and work collaboratively with them under long-
term agreements. This manages risk and offers
excellent future visibility of work. Visibility enables
us to plan our resources and sustains our strategy
of only pursuing opportunities where we have the
skills, resources and contract terms and conditions
to be successful. Knowing we have a quality future
workload means we can remain selective about the
work we take on.
Strong financial position
Our robust balance sheet is attractive to clients,
as they seek to work with contractors who can
deliver for them in the long term. It is also valued
by our supply chain who want prompt payment and
forward visibility of work, and employees for whom
job security is key. Balance sheet strength means we
can invest in our business, people and technology
and gives us the agility and ability to react quickly to
strategic opportunities when they arise. Once again,
it reinforces our strategy to remain selective about
the work we take on.
Delivering
Sustainable
Growth
We are proud to be one of the
UK’s largest construction companies,
and are passionate about our role
in delivering vital social and economic
infrastructure across the country,
making a real difference to
people’s lives.
Where we are going
We are demonstrating a track record of improving,
consistent and predictable financial results. Having
delivered increased revenue and divisional operating
margin and progressed our original 2026 strategic
targets ahead of plan, our updated Sustainable
Growth Strategy to 2030 targets further growth
across core and adjacent markets, retaining a strong
balance sheet and cash position, and delivering
sustainable returns for shareholders.
See our Sustainable Growth Strategy to 2030 on page 14.
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Financial statementsGovernanceStrategic report
Bill Hocking
Chief Executive
One of the
UK’s leading
construction
groups
Business overview
What we do
We are a major construction
group, operating predominantly
as Galliford Try in England and Wales,
and Morrison Construction in Scotland.
Our business is organised into three
areas: Building, Infrastructure and
Investments, which cover our core
markets. We have growing capabilities
in higher margin Specialist Services.
Our network of regional offices is
a key advantage, offering clients
the benefit of national strength
with local relationships.
See more on page 4.
2 Galliford Try Annual Report and Financial Statements 2024
What we believe
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
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.
Scan the QR code to watch
our What we do video.
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Our business model
What we do
Building
Operates across the UK, designing, constructing
and refurbishing assets across markets where
we have significant expertise and opportunities,
particularly the education, health, defence, custodial
and affordable homes sectors. In addition, we
work with carefully selected blue-chip clients in
the commercial sector. Our Facilities Management
business works with Building, predominantly in the
education and health sectors. Its capabilities include
delivering high-quality, full life-cycle solutions and
green retrofit solutions to enhance the sustainability
performance of client assets.
Infrastructure
Carries out vital civil engineering projects
across the UK. It comprises:
Environment covering the water and sewage
sectors, where we are one of the largest
contractors in the market, carrying out capital
design and delivery, alongside maintenance,
and asset optimisation.
Highways where we contribute substantially
to the national road network and carry out
major project delivery of large-scale schemes
for local authorities, as well as active travel,
maintenance work and urban, multi-modal
transport schemes.
Investments
Has expertise in leading bid consortia and
arranging finance to devise and secure the right
solution for our clients on an individual basis.
We specialise in managing construction through
to operations for major building projects via public
private partnerships. These skill sets are used to
progress co-development opportunities, with
a focus on the Private Rented Sector (PRS).
Specialist Services
In addition to our three main businesses,
we are growing our Specialist Services businesses
including our fire-protection and façade
remediation specialists Oak Specialist Services;
our active security business Asset Intelligence;
and our Digital Infrastructure business which
offers property access, installation of telecoms
infrastructure for the Radio Access Network
market and is expanding into sectors such as
defence and private 5G networks.
A progressive
UK construction
business
We are proud to deliver vital
buildings and infrastructure across
the country that make a real difference
to people’s lives.
We are one of the UK’s tier one contractors. We lead
the overall management of a project, liaising with
designers, and hiring and managing subcontractors
to carry out the works under our direction.
Galliford Try Annual Report and Financial Statements 20244
Who we work with
We primarily work with clients in the public and regulated
sectors, where we have core strengths and a track record,
based on a strong understanding of client requirements,
the market and risk profile. In Building, this includes major
public sector bodies including the Department for Education,
the Ministry of Defence, the Ministry of Justice, the
Department for Health and Social Care, and Homes
England. In our Environment business, we work with all
13 of the UK’s largest water and sewerage companies.
Our Highways business partners with National Highways as
well as local authorities across the country, and Investments
works with major investment funds and PRS businesses.
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5
Our business model continued
How we do it
1
Identifying opportunities
We seek opportunities within our chosen markets
and only pursue those where we have the skills,
expertise and resources to successfully complete
the work safely, profitably and to a high quality. We
work with clients who value a collaborative approach
and long-term relationships, often by working
under frameworks (page 53). These are multi-year
procurement vehicles which public and regulated
sector clients use to procure goods and services from
a list of pre-approved contractors, with agreed terms
and conditions. Once awarded, frameworks typically
run for one to four years and provide opportunities
for deeper, collaborative working and support the
achievement of wider strategic and social goals,
better understanding between parties, early
mitigation of risk and repeat business.
2
Alignment to risk appetite
Our businesses follow a well-established contract
selection process to ensure all aspects of a contract’s
terms and conditions satisfy our strict criteria.
Initial selection considers factors such as the type
of work, our geographical presence, local sensitivities,
client, size of the project, technical complexities,
our experience of similar projects and resource
availability in that area. Contracts meeting this criteria
are considered by our teams and subjected to a
rigorous assessment of risk. All contracts with a
value exceeding £25m, or specific risk parameters
require Executive Board review before proceeding.
It speaks to our culture that very few projects reach
Board level that are not subsequently approved,
demonstrating cross-company alignment to the
Board’s strict risk appetite.
3
Assembling a team and procuring
products and services
Delivering a construction project requires different
disciplines, some of which are specialist. Our role
includes assembling the right team, including
subcontractors and sometimes consultants,
who have the skills, knowledge, experience and
organisational capability to carry out the required
works, such as mechanical and electrical work.
Because the majority of the construction phase
is delivered with our supply chain, we align key
supply chain members with our culture and develop
collaborative relationships using our Advantage
through Alignment programme. We choose our
partners based on their ability to deliver the work
and improve social, environmental and economic
outcomes for us and our clients.
Our reputation as a prompt payer and collaborative
client who seeks mutually beneficial relationships
works to our advantage when selecting supply chain
partners, particularly in times of high demand or
skills shortages.
4
Planning and managing construction
We plan, manage, monitor and oversee the project’s
construction phase, subcontracting packages of
work to specialist trade supply chain partners.
Pre-construction and planning activities are an
essential part of managing a construction project
and we look to start as early as possible to influence
design decisions. During these phases, we identify and
resolve risks such as those relating to health and safety,
resources and build conditions, presence of asbestos,
underground or overhead services, site restrictions,
ground conditions and logistical challenges.
In the construction phase, we carry out the agreed
work managing and monitoring safety, time,
budget, quality and sustainability requirements.
We co-ordinate with the client, designer and all
contractors and workers involved, and supervise
the overall works to track progress, resolving any
challenges including unforeseen events and make
any required adjustments.
5
Handover
Before handover, we check the project against
contractual requirements and ensure all final
installations and outstanding deliverables have
been completed. This includes resolving any
potential issues or deficiencies identified during
final quality inspections.
The project is then approved by the client and
a final completion certificate is typically issued,
confirming the project has been handed over in
a satisfactory manner. In some instances, we may
also take on the maintenance of the asset through
our Facilities Management business.
Galliford Try Annual Report and Financial Statements 20246
How we generate profit
The quality of our order book and contract
portfolio continue to be drivers of our margin
improvement strategy.
We operate in our selected core markets which
we know and understand, and we are targeting
growth in adjacent markets, that are within
our risk appetite and typically earn a higher
margin (page 14). In addition, we earn revenue
and profit from our Investments and FM
businesses, which offer lower-risk annuity
type income and margin accretion.
Our clients are increasingly scoring our tenders
on a quality basis, as seen in the pie chart.
We win work on quality outcomes such as our
ability to deliver safely and to a high-quality,
while meeting criteria including social value
and carbon commitments. This procurement
method provides a far more mature,
sustainable contract environment with higher
levels of collaboration between all parties
and a more equitable allocation of risk.
Typical work winning criteria
Non-financial criteria
Management 20%
Project delivery 19%
Health, Safety
and Environment 6%
Quality 9%
Sustainability and carbon 8%
Social value 8%
Contract management 10%
Typical scoring criteria
Non-financial 80%
Financial 20%
We typically use target cost/cost
reimbursable, two-stage or negotiated
tendering methods to win work, which are
lower risk:
Target cost/cost reimbursable contract
An overall target contract value is agreed
with the client, including margin, risk and
inflation contingencies, and the actual cost
of the work plus an agreed fee is paid by
the client. Any cost savings or overspends
against the target are shared.
Two-stage tendering
An initial information stage facilitates early
collaboration between client and contractor,
helping to ensure design, cost certainty and
project timescales. This initial phase allows
us to submit details under a pre-construction
agreement and includes aspects regarding
project preliminaries, method statements,
design, overheads and profit. The second stage
of the process is a package pricing exercise,
using the criteria agreed in the first stage,
and where the contract is negotiated by us,
subject to the approval of the design team.
Negotiated tendering
The client approaches us and the terms of
the contract and price are then negotiated.
Under single-stage tendering, projects are priced
with margin, risk and inflation contingencies,
with all the relevant information provided by
the client at the point of issue. This procurement
route means that clients are unable to benefit
from early contractor engagement.
Order book procurement route
Target cost/
cost reimbursable 48.7%
Two-stage 42.5%
Negotiated 7.9%
Single-stage 0.9%
Our focus on quality and digital drives margin
by saving the time and cost of redoing work and
waste created, taking a ‘Right first-time approach’.
This is driven by our Business Management
System (BMS) which sets out the processes and
templates required to provide quality assurance
at every step of a project’s journey.
We are increasingly taking a digitised approach
to project delivery to improve safety, quality and
collaboration, drive down carbon and reduce
errors and waste in construction (page 43).
Modern Methods of Construction such as
off-site construction techniques and factory
assembly, as alternatives to traditional building,
similarly improve our efficiency and margins
by speeding up delivery, reducing labour costs,
eliminating unnecessary waste and improving
quality (page 13).
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A strategy for continued sustainable growth
In May 2024, we announced our updated strategic targets
to 2030, having consistently delivered increased revenue
and divisional operating margin, and progressed the growth
strategy we set out in 2021 ahead of plan.
Despite macro-economic headwinds including a global
pandemic; inflation shocks; the cost of living crisis and
supply chain constraints in the wider economy over that
period, the Group has delivered on its plan to establish
Galliford Try as a leading construction group, delivering
controlled margin and revenue growth, through a focus
on risk management. Furthermore, it is a hallmark of
Chief Executive Bill Hocking’s leadership and commitment
to being a people-orientated and progressive company
that this success has been achieved with the passion and
commitment of the 4,000 plus strong team at Galliford Try,
as reflected in the high employee advocacy scores received
in the employee survey.
Driving
shareholder
returns
Our strategy to 2030 is designed
to continue our disciplined growth
and provide long-term sustainable
value for our stakeholders.
Alison Wood
Chair
Chair’s statement
8 Galliford Try Annual Report and Financial Statements 2024
The plan for the future was set out at a Capital Markets
Event in May this year, where management outlined
Galliford Try’s ambitions for growth and margin expansion
over the period to 2030. The strategy is an evolution of
what the Group has already been doing, successfully,
to grow in core and adjacent markets, and is built on the
same fundamentals that have served well over the past
four years. You can read more about these plans in the
Chief Executive’s review on page 18 and Strategic Report,
as well as the Board decision-making on updating the
strategy on page 78.
The importance of culture and engagement
It is my responsibility, as Chair, to monitor and assess
our culture; how we engage with our stakeholders, their
interests and how we manage ESG (Environment, Social
and Governance) matters. These items are built into the
Group’s strategy, as construction by its nature must take
into consideration ESG, and being sustainable helps the
Group to win work and engage employees. Demonstrating
good ESG is often a requirement of the Government
procured frameworks we pursue. These are therefore
important themes for the Board, and our ESG Committee
and Employee Forum provide valuable insights into what
is most important to our people and stakeholders to
inform decision-making. More detail is provided in the
Governance review.
Experienced leadership
I am pleased to say that we have an experienced team
in place that enables us to draw on different skills and
expertise that will support the delivery of the updated
strategy. On 1 March 2024, Kevin Boyd joined the
Board as a Non-executive Director of Galliford Try and
on 2 September 2024, Kris Hampson joined the Board as
our new Chief Financial Officer (CFO). Andrew Duxbury,
Finance Director, resigned from the Board in May 2024
and we wish him every success in his new role.
Kevin and Kris bring strong financial and strategic
expertise to the Group which will complement existing
skill sets and support the Group with the delivery of the
updated strategy. Kris, for example, has considerable
financial experience with a FTSE 100 company, and his
interest in ESG will play a key role in delivering the Group’s
future growth plans on a day-to-day basis. We have an
excellent breadth of experience and capabilities in the
Board composition as we move forward.
Increasing shareholder value
Generating attractive returns and rewarding shareholders
must be a priority if we wish to deliver on our strategy.
Our strategy to 2030 targets sustainable dividends with
earnings cover of 1.8x. The full dividend for the year
increased by 47.6% to 15.5p (2023: 10.5p).
The Board monitors the Group’s cash position, and
considers, where appropriate, additional capital returns.
On 3 October 2024, we announced a further share buyback
programme of a maximum of £10m, reflecting both
a corporation tax refund and our confidence in future
cash generation.
I have enjoyed hearing from our shareholders and
understand what they want to see from our business;
their interests have been considered with due attention
in the development of our strategy to 2030.
I look forward to meeting with shareholders at our AGM
in November to share our performance, hear their views
and answer their questions.
Alison Wood
Chair
Engaging senior leaders
Management plays a crucial role in organising,
influencing, motivating and leading people within an
organisation. Our Leadership Conference brought
together our most senior leaders to hear about our
progress, opportunities and future challenges through
a series of informative and interactive sessions and
networking, preparing them for the next phase of
the strategy and providing renewed motivation.
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192
of our senior management team
were brought together for our
Leadership Conference
Non-cyclical,
long-term
demand for
our services
The new Labour Government has
committed to kickstarting economic
growth with a 10-year infrastructure
strategy to set national priorities
and oversee the design and delivery
of projects.
The new Government has
emphasised the importance of
kickstarting the economy and
to “get Britain Building again”.
The UK Government has committed to
revolutionising the built environment, overseen
by a new National Infrastructure and Service
Transformation Authority (Nista) that will reset
how infrastructure is delivered, and public services
are upgraded. Nista will be given new powers to
drive more effective delivery of major projects and
infrastructure across the country. This will include
forging ahead with new roads, railways, reservoirs
and other nationally significant infrastructure,
as well as to fulfil the ambition of full gigabit and
national 5G coverage by 2030.
Established operations in growth markets: we are
a key contractor for the Government working across
sectors including roads, water, education, health,
custodial, defence and digital infrastructure, which
form the backbone of the country. A significant 91% of
our order book is in the public and regulated sectors
and 86% of our order book is in frameworks, which are
a key procurement route for the delivery of national
infrastructure projects.
National presence and local relationships: we have
a national presence from the Highlands in Scotland,
to Plymouth in the South West of England. Our local
relationships position us well to help the Government’s
aim to tackle geographic disparities in key services and
outcomes such as health, education, jobs, and improving
lives by bringing more places across the UK closer to
opportunity through infrastructure.
Link to strategy: growth via core and adjacent markets.
Market opportunity How our approach responds to the market
Market review
10 Galliford Try Annual Report and Financial Statements 2024
Prime Minister Sir Keir Starmer, Deputy Prime Minister Angela Rayner
and Mayor of London Sadiq Khan visit our project at Plot 14,
Brent Cross Town development, on behalf of Related Argent during
the election campaign, setting out the Labour Party’s manifesto.
Market opportunity How our approach responds to the market
National presence and scale of activity: we are now
one of the biggest contractors in the sector and have
48 frameworks covering 13 water and sewerage clients
and are positioned well to serve their current and future
needs across spend cycles.
We have evolved our capabilities to include capital
maintenance and asset optimisation through the
acquisitions of nmcn’s water operations, Lintott, MCS
Control Systems, Ham Baker and more recently AVRS.
This also gives us a ‘Source to Sea’ approach which enables
us to work across the life cycle of client assets, to improve
asset efficiency, resilience and optimisation.
Our investment in digitalisation, including digital twins
and AI, is enabling optimisation of processes. It allows for
benchmarking and real-time analysis and decision-making
by multi-disciplinary, dispersed teams via technology.
Our carbon capabilities are enabling our clients to meet
both their net zero carbon ambitions, and their objectives
to deliver value for customers in the long run.
Link to strategy: growth via core and adjacent markets.
Our water sector clients are
facing unprecedented, widely
publicised challenges which are
driving urgent investment.
Long-term underinvestment in water infrastructure
has resulted in an ageing asset base that requires
more frequent maintenance or is in need of replacing.
The resilience of this infrastructure to manage the
effects of increased storm events and severe weather
is exacerbated by poor asset condition.
There is also increasing focus on asset optimisation to
extend the operational lifespan of existing facilities
and more clients are seeking a full-service offering
covering design, build, operation and maintenance.
This is taking place against a backdrop of increasingly
stringent environmental and carbon regulations
such as The Environment Act 2021, which introduced
targets to improve biodiversity, tackle pollution,
reduce waste and to deliver a supply of clean and
plentiful water for all. In addition, the Government’s
new Water (Special Measures) Bill seeks to cut
sewage spills and attract investment to upgrade
infrastructure.
As a result, the expenditure proposed by the water
and sewerage companies for the Asset Management
Programme (AMP) 8 totals £96bn, almost doubling
the previous period’s planned value of £51bn.
Scotland has a different regulatory period spanning
2021 to 2027. Its planned value is £5.8bn and, again,
it is anticipated that this will double in the next
spending review period starting in 2027.
We already have good local authority and housing
association relationships, and are seen as a partner
of choice.
Establishing ourselves in this sector will generate
higher margin and increased revenue as part of our
2030 strategy.
Our experience coupled with our established supply
chain allows our business to deliver the mid-rise housing
schemes that are key to regeneration in our towns
and cities.
Since 2020, we have been building our reputation for
high-density urban schemes and have delivered more
than 3,000 homes.
Link to strategy: growth via adjacent markets.
There is significant, long-term
demand to deliver affordable
homes in the UK.
In July 2024, the Deputy Prime Minister recognised
the under-delivery of 130,000 affordable homes that
need to be delivered per annum and announced the
biggest boost to affordable housing in a generation,
with more investment.
The Government committed to reform planning
to accelerate delivery, and set mandatory housing
targets for all councils.
The National Housing Federation and charity
Crisis have long estimated the level of housing
need at 145,000 affordable homes a year.
Market opportunity How our approach responds to the market
Scan the QR code to watch Ian Wardle, CEO of A2Dominion, a London
housing association, outline the urgent need for contractors in the
affordable homes market, and the welcome re-entry of Galliford Try.
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