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Galliford Try resumes dividend as it returns to profit

10:33, 4th March 2021
Francesca Morgan
Vox Newswire
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In its report for the six months ended 31 December 2020, Galliford Try said it is to  resume dividend payments to its shareholders following a return to profitability over the period.

Financial Highlights 

While revenue for the period was down at £542m, from £636m in 1H20, the Group’s profit before tax came in at £4.1m (1H20: £5.6m pre-exceptional loss) with a divisional operating margin of 1.6%, in line with its expectations and strategy for sustainable earnings growth. Earnings per share was therefore 3.4p on a continuing basis versus 4.ip loss for 1H20. 
 
Galliford operated with daily net cash, no debt facilities and no defined benefit pension liabilities. Average month end cash balances for the first half year were £158m, with the equivalent amount for the full financial year now expected to be in the range £145m to £165m. It also benefitted from a PPP asset portfolio of £44m, valued at an 8% discount rate 
 
As a result, the Company informed investors that it has resumed dividend payments under a new and enhanced dividend policy, with an interim dividend of 1.2p per share declared. 
 
Commenting on the Group’s performance, Bill Hocking, Chief Executive of Galliford Try said, "The first half of the financial year has seen our people continuing to respond excellently to the challenge of the Covid-19 pandemic, maintaining the highest standards on our sites and protecting the health, safety and wellbeing of our staff, clients and stakeholders.” 
 
He said he was “encouraged” by the expected future demand across the building, highways and environment businesses. Currently, all projects continue to be fully operational and delivering near normal productivity with no Governmental support needed in FY21. 
 
To date, 96% of the Company’s projected revenue for the current financial year is secured, and 76% is secured for the next financial year (1H20: 96% and 72% respectively), it noted. 

Outlook 

Galliford reported a ‘high quality’ order book of £3.3bn (1H20: £3.2bn) to be in line with its risk-focused approach while average month-end cash for the period came to £158 million. 
 
The Group highlighted that the UK Government's commitment to further investment in infrastructure and the built environment is expected to provide further opportunities for the Company to contribute to the UK's economic recovery from the COVID-19 pandemic. 
 
Galliford said it hopes to report a profit in the present financial year of around £10m with revenue between £1.1bn and £1.3bn while the Group’s average month end cash is now expected to be in the range £145m to £165m, which is higher than previous expectations. 
 
The Company said it is now in the process of repaying the £1.5m claimed in the current financial year from the UK Job Retention Scheme which it withdrew from in August 2020. 
 
Galliford said it continues to trade at near normal levels and it does not currently anticipate significant Covid-19 related disruption through the remainder of the financial year. 
 
“I am confident for the future. Our strategy remains focused on sustainable growth, careful cash management and margin progression to drive long-term value creation,” said Hocking. 
 
As a result of a strong first half result to 31 December 2020, the Group has now resumed dividend payments under a new and enhanced dividend policy of 1.2p per share declared. 
 
Multi-year contracts unveiled in these 1H21 results and the Group’s risk-based approach to new business now provides Galliford significant confidence in market expectations for FY21 and beyond. 
 
Shares in Galliford Try have increased by over 25% since the beginning of December 2020. While the impact of COVID-19 resulted in the business losing around half of its value last year, it has since regained its value and the Company has reported a return to profitability. 

GFRD price chart

Reasons to Follow

Galliford Try is a leading UK construction group 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 in the UK.  

Strategy for Sustainable and Profitable Growth  

The Group is well capitalised with no debt, no pension liability, a portfolio of high-quality PPP assets, a strong order book and is expecting to be profitable this year and reinstating its Dividend at the Half Year stage.  

Risk Management at Its Core  

Galliford Try is laser focused on robust risk management and concentrating on growth sectors where the Company has a highly differentiated offering with a high value proposition for its clients.  

High Visibility on Future Earnings  

Galliford Try has signed a number of high-value longstanding contracts with exposure to long-term Government funded Infrastructure projects as part of its economic recovery plan.  
 
The leading UK construction platform, combined with the Company’s strong client relationships, provides the Board with confidence in the future performance of the business.  

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Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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