One-off Nmcn water arm costs tip Galliford Try into the red

Aaron Morby 4 months ago
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Galliford Try tipped back into the red during the first half of the year due to £9.7m of exceptional costs, mainly from its acquisition of Nmcn’s water business for £1m last October.

Bill Hocking says Galliford Try is successfully managing industry-wide material shortages and inflation
Bill Hocking says Galliford Try is successfully managing industry-wide material shortages and inflation

The firm this morning reported a pre-tax loss of £2.6m compared to a £3.9m profit last year from revenue up 10% to £594m in the six months to the end of December.

Before taking into account £6.3m of water business integration/restructuring costs and £4.3m implementing a new Oracle Fusion cloud-based  computing system, pre-exceptional profits were up at £7.1m

This improved trading performance was driven by more selective tendering, which saw operating margins edge forward from 1.6% a year ago to 2.2% during the period.

Trading divisions
Revenue Op profit Margin
H1 2022 H1 2021 H1 2022 H1 2021
Building £386m £374m £8.4m £6m 2.2%
Infrastructure £204m £164m £4.3m £2.4m 2.1%
PPP Invest. £3.4m £3.1m -£0.5m -£0.7m

Bill Hocking, chief executive, said that Galliford Try was on track to deliver its sustainable growth plans and target margin of 3%.

He said: “The group has continued to perform well in the first half of the financial year, successfully managing industry-wide material shortages and inflation.

“I am pleased to report that we are making good progress against our Sustainable Growth Strategy, and our target of 3% divisional operating margin across Building and Infrastructure. 

“The acquisition of Nmcn’s water businesses is fully aligned with our strategy and offers significant opportunity for our growing Environment business – enhancing our water, engineering, off-site build and asset optimisation capabilities.”

Galliford said it had made further improvements in its subcontractor and supplier payment performance during the priod with 98% of invoices paid within 60 days and average days to pay reduced from 32 to 25.

Improvements in payment times did not impact average month-end cash, which remained stable at £180m.

Looking forward the order book edged ahead to £3.4bn thanks to contributions from Nmcn. On a pro-rata basis, Nmcn is expected to contribute around £120m in revenue from a team of 900.

Hocking said: “The group’s strong balance sheet continues to be a differentiator, supporting our ability to win high quality contracts and framework positions as well as providing confidence to our supply chain.

“We are well positioned to capitalise on current market conditions and are operating in sectors with significant future opportunities.”

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