Galliford Try ends year at upper end of analyst expectations

11th Jul 2023 09:19

(Sharecast News) - Galliford Try Holdings reported significant progress in an update on its trading performance for the year just ended on Tuesday, ahead of its full-year results.

The London-listed firm reported good operational progress aligned with its sustainable growth strategy, despite facing macroeconomic challenges such as delays in signing new contracts in 2022.

It said it successfully integrated its acquisitions of nmcn's water businesses in October 2021 and, more recently, MCS Control Systems and Ham Baker.

The positive impact of the specialist teams was being observed in the environment business, and across "significant" AMP 8 opportunities in the regulated water sector in England.

A long-running, complex multi-contract dispute was resolved, resulting in a cash payment of £26m to the group.

As a result, Galliford Try said it was planning to distribute a special dividend of 12p per share to shareholders in October.

The company said it had maintained close engagement with its supply chain and clients, effectively managing and mitigating risks associated with material shortages and inflation, which were now subsiding.

It said it expected full-year pre-exceptional profit before tax for the 12 months ended 30 June to be at the upper end of current analyst forecasts, ranging from £22.1m to £23.3m.

The firm said it achieved a strong balance sheet position, with around £220m in cash at the end of June.

Its average month-end cash during the financial year was around £135m, in line with expectations due to recent acquisitions, previous contract delays, ongoing investment in cloud-based digital systems, and dividends and capital returns.

Galliford Try said that since January, it had secured several significant projects and participated in major frameworks, including the £5.1bn Defence Estate Optimisation Portfolio, the £4.5bn Southern Construction Framework, the £2.5bn Ministry of Justice Constructor Services Framework, the £600m Southern Water AMP8 Framework, and the £140m Carlisle Southern Link Road, among others.

The delays in new contract awards experienced in 2022 had subsided, the board added, resulting in a robust order book as of 30 June, and an increased level of secured revenue for the upcoming financial year.

"The group expects to report another year of strong performance across all its operations with increased revenue and profit before tax, and we continue to progress our sustainable growth strategy, supporting our financial targets to 2026," said chief executive officer Bill Hocking.

"An important differentiator for our clients and suppliers is the group's ability to maintain its balance sheet strength and continue our success in maintaining a high-quality order book in our chosen public and regulated sectors.

"The group prides itself on a progressive culture that invests in and supports its staff and I am grateful to all our people for their professionalism and work ethic which delivered the performance of the group during the year."

Hocking noted that during the year the company resolved a major dispute, enabling a significant initial cash distribution, by way of special dividend, to shareholders.

"We are excited about new financial year and the opportunity to deliver further strong future performance and long-term sustainable value for all stakeholders."

At 0901 BST, shares in Galliford Try Holdings were up 3.4% at 201.63p.

Reporting by Josh White for Sharecast.com.