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Share Name Share Symbol Market Type Share ISIN Share Description
Galliford Try Holdings Plc LSE:GFRD London Ordinary Share GB00BKY40Q38 ORD 50P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.10 0.08% 128.00 126.62 128.94 130.00 125.44 128.92 290,824 16:35:11
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Construction & Materials 1,121.6 -34.6 289.2 0.4 279

Galliford Try Holdings PLC Annual Financial Report

06/10/2020 4:00pm

UK Regulatory (RNS & others)


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RNS Number : 2825B

Galliford Try Holdings PLC

06 October 2020

GALLIFORD TRY HOLDINGS PLC

PUBLICATION OF ANNUAL REPORT AND FINANCIAL STATEMENTS 2020 AND NOTICE OF 2020 ANNUAL GENERAL MEETING

Galliford Try Holdings plc has today, in accordance with LR 9.6.1 R of the Listing Rules, submitted to the Financial Conduct Authority's National Storage Mechanism copies of the following:

   --      The Annual Report and Financial Statements 2020. 
   --      Notice of 2020 Annual General Meeting. 
   --      Form of Proxy for the 2020 Annual General Meeting. 

The documents will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

The Annual Report and Financial Statements and Notice of Annual General Meeting are also available on the Galliford Try website at www.gallifordtry.co.uk/investors/reports-presentations/2020.

A condensed set of the Group's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in Galliford Try Holdings plc's Final Results Announcement on 16 September 2020. That information, together with the information set out below which is extracted from the Annual Report and Financial Statements 2020 constitute the material required by DTR 6.3.5 of the Disclosure Guidance and Transparency Rules which is required to be communicated to the media in full unedited text through a Regulatory Information Service. This announcement is not a substitute for reading the full Annual Report and Financial Statements 2020. Page and note references in the text below refer to page numbers and note references in the Annual Report and Financial Statements 2020. To view the results announcement, slides of the results presentation and the results webcast please visit www.gallifordtry.co.uk/investors.

Enhancements to our risk management process

The corporate transaction has provided the opportunity to review and refresh all aspects of our risk management process and tailor our approach to reflect the revised organisation structures and refocused activities of the Group. Accordingly, the key changes to our risk management process include:

1 Refreshing the membership of the Executive Risk Committee to reflect the organisation structure of the Group, with the Building, Infrastructure and Investments businesses now each having representation.

2 Reviewing and updating the articulation of our risk universe, reflecting our changing risk profile and to facilitate a more transparent view of risks from the bottom-up and top-down.

3 Introducing an enhanced risk and opportunity register to record and track project level risks and opportunities throughout the lifecycle of the project.

The Group's business model is now entirely focused on construction and therefore our risk profile has changed.

Our risk management process

The Group's risk management and governance structure is designed to facilitate both a bottom-up and top-down view of principal and emerging risks and is summarised in the diagram below.

Audit Committee

> Responsible for keeping under review the adequacy and effectiveness of the Group's risk management processes and systems of internal control.

> Responsible for reviewing and approving statements included in the Annual Report concerning internal controls, risk management and the Viability Statement.

Risk and Internal Audit

> Facilitates the identification, reporting and management of risk throughout the governance structure.

> Provides a risk update, including the updated Group principal risks to the Executive Board and the plc Board at least three times a year.

plc Board

> Has overall responsibility for setting the risk appetite of the business and maintaining oversight of the Group's processes for identifying, assessing, managing and reporting on principal risks.

> Reviews the Group principal and emerging risks three times a year.

Executive Board

> Responsible for implementing the strategy and risk appetite set by the Board and ensuring that appropriate risk management and internal control procedures are embedded in our day-to-day operations.

> Reviews the Group principal and emerging risks at least three times a year.

Executive Risk Committee

> Chaired by the General Counsel & Company Secretary and comprises the Finance Director, Director of Risk and Assurance and a representative from each of the Buildings, Infrastructure and Specialist business divisions.

> Meets three times a year to review and update the Group principal and emerging risks, based on the risks reported up from the business units, and to consider any emerging risks that may have an impact on the Group in the longer term.

Business unit Boards

> Maintain a business unit risk register that records the key risks applicable to that business, key mitigations and further actions required to manage the risk.

> Risk registers are reviewed twice a year, with one of the reviews facilitated by the Group Risk and Internal Audit team.

Project teams

> Create a project Risk and Opportunity Register at the bid stage and maintain throughout the lifecycle of the project.

> Review the risk and opportunities at key checkpoints and as part of the monthly contract review meetings.

Our principal risks

We have reviewed our principal risks to reflect the disposal of the housebuilding divisions and to align them with the construction focus of the Group. A detailed analysis of the principal risks that have the greatest potential to have a material impact on the development, performance, position or future prospects of the Group is presented on pages 32 to 33. This includes an assessment of the impact of Covid-19 on each principal risk. A summary of the other principal risks including our key mitigations and the metrics we use to monitor the risk is presented on page 34.

Market

Opportunity pipeline R

   >          Insufficient pipeline of opportunities in our target markets. 

Project selection

   >          We take on the wrong projects, at the wrong price, or on the wrong terms. 

Work winning

   >          Failure to win work within our target markets and clients. 

Project delivery

Safety

   >          Failure to maintain high standards of health and safety performance. 

Margin erosion R

   >          We fail to deliver project margins in line with tender and/or forecasts. 

Quality

> Failure to deliver high-quality, defect-free buildings and infrastructure to our clients.

Resources

Cash management R

   >          We are unable to maintain sufficient net cash reserves to finance business operations. 

Supply chain and joint arrangement partners R

> We are unable to secure subcontractors and joint venture partners with the quality, capacity and financial resilience that we need.

People

   >          We do not have sufficient staff with the skills and experience that we require. 

Operations

Cyber security

> Loss of data from or loss of access to business critical IT infrastructure and applications.

Sustainability

   >          We fail to keep pace with the sustainability expectations of our key stakeholder groups. 

Regulatory compliance

   >          We have a high profile breach of applicable laws or regulations. 

Key: R Risk in focus - see p32-33.

Principal risks

Risks trend key: increasing decreasing no movement

 
 Opportunity pipeline < > 
 Risk description 
 
  *    Insufficient pipeline of opportunities in our target 
       markets. 
 Risk appetite 
 
   *    We only pursue opportunities within our chosen 
        markets where we have the experience, knowledge and 
        supply chains to deliver effectively. We aim to 
        secure a forward order book that provides a high 
        degree of certainty of current year plus following 
        year revenue. 
 Potential causes 
 
   *    A significant and sustained reduction in Government 
        investment in building and infrastructure projects. 
 
 
   *    Delays to and/or reduced levels of private sector 
        investment due to macro-economic conditions. 
 Emerging risks 
 
   *    Public and/or private sector clients pursue 
        alternative procurement strategies and move away from 
        the traditional tier one contractor model. 
 Mitigations 
 
   *    We manage the potential impact of an economic 
        downturn by building a strong order book. 
 
 
   *    We concentrate on sectors and clients with long-term 
        growth and profitability potential. 
 
 
   *    We focus on securing positions on key procurement 
        frameworks and repeat business with key clients. 
 
 
   *    We have appointed sector leads to manage activity in 
        each of our core areas. 
 Key risk indicators 
 
   *    Percentage of planned revenue secured. 
 
 
   *    Percentage of pipeline in frameworks. 
 
 
   *    Order book by client type. 
 
 
   *    Percentage of repeat business with existing clients. 
 Movement in the year 
 Prior to the outbreak of Covid-19, the general market and 
  opportunity outlook appeared to be improving. The UK Government's 
  commitment to a large-scale programme of infrastructure investment 
  was signalled in the General Election campaign and reiterated 
  in the March budget. Following the General Election in December 
  2019, we had also started to see confidence return in the 
  commercial sector, including demand in London and the Private 
  Rented Sector. 
  The longer-term impact of the Covid-19 pandemic on our opportunity 
  pipeline is still uncertain. Given the scale of the fiscal 
  intervention from the Government, we believe that infrastructure 
  investment will be used to stimulate economic recovery. It 
  is possible that investment in commercial sectors that have 
  been particularly affected by Covid-19 will either be delayed 
  or cancelled. 
 
 
 Margin erosion > 
 Risk description 
 We fail to deliver project margins in line with tender and/or 
  forecasts. 
 Risk appetite 
 We carefully assess the risk and profit of each project and 
  aim to secure and deliver profitable projects with margins 
  in line with our strategic targets. We require our project 
  forecasts to be reliable and provide a realistic and transparent 
  view of project performance. 
 Potential causes 
 
   *    Programme delays and cost escalation. 
 
 
   *    Poor control of client and subcontractor variations 
        and claims processes. 
 
 
   *    Contractual notices not given as per contract 
        requirements. 
 
 
   *    Poor record-keeping and document management. 
 
 
   *    Poor design quality and/or co-ordination. 
 
 
   *    An imbalance between supply and demand for materials 
        and subcontractors results in higher than expected 
        prices. 
 
 
   *    Unrealistic estimates, including cost to complete, 
        inflation estimates, outcomes of disputes, final 
        value included in project forecasts. 
 Emerging risks 
 
   *    Increasing regularity and severity of extreme weather 
        may delay programmes and increase costs. 
 
 
   *    Failure to innovate quickly enough or make the right 
        strategic decisions in relation to the investment in 
        and adoption of Modern Methods of Construction. 
 
 
   *    Procurement, methodology, resourcing and programming 
        changes as a consequence of unforeseen events and 
        circumstances (such as Covid-19). 
 Mitigations 
 
   *    Robust review and approval of contractual terms, 
        pre-contract to ensure we do not sign up to contracts 
        with onerous terms. 
 
 
   *    Margin thresholds employed. 
 
 
   *    Monthly cross-disciplinary contract review meetings 
        on all projects. 
 
 
   *    Project level controls and management oversight of 
        project forecasts has been strengthened and 
        visibility of risks and exposures has improved. 
 
 
   *    Standardised formats (value cost analysis and cost 
        and value reconciliation) for monitoring and 
        reporting project performance and forecasts. 
 
 
   *    Comprehensive commercial training. 
 
 
   *    A programme of commercial 'health checks' to provide 
        an independent assessment of the project team's 
        reported project performance and forecast outturn. 
 Key risk indicators 
 *    Forecast project margins. 
 
 Movement in the year 
 Construction margins are significantly lower than housebuilding 
  margins and therefore overall Group performance is now more 
  exposed to margin erosion on a single project. 
  Failure to adhere strictly to contract administration requirements 
  and issues in relation to the quality and co-ordination of 
  design continue to be typical causes of margin erosion. 
  The disruption to normal operations resulting from Covid-19 
  has necessitated a reassessment of forecast margins on all 
  projects. This discipline will be maintained as the longer-term 
  impacts of the new ways of working become clearer. 
 
 
 Supply chain and joint arrangement partners > 
 Risk description 
 We are unable to secure subcontractors and joint venture partners 
  with the quality, capacity and financial resilience that we 
  need. 
 Risk appetite 
 We build strong relationships with our supply chain and joint 
  venture partners. We have national coverage with local delivery 
  which provides us with good quality relationships all over 
  the UK. 
  We predominantly work with subcontractors and joint venture 
  partners who are financially resilient and who share our values 
  in relation to safety and quality, and who are aligned to 
  our ways of working. 
 Potential causes 
 
   *    Lack of capacity in the supply chain due to high 
        levels of activity in the construction sector. 
 
 
   *    Lack of geographical coverage. 
 
 
   *    Subcontractor insolvency. 
 
 
   *    Failure to comply with fair payment practices. 
 Emerging risks 
 
   *    Potential shortage of skilled workers in key trades 
        as a result of the end of freedom of movement with 
        the EU. 
 
 
   *    Insufficient numbers of UK nationals entering the 
        construction industry to address the potential skills 
        shortages. 
 
 
   *    Failures due to recessionary factors and/or 
        consequence of disruption arising from Covid-19. 
 Mitigations 
 
   *    We develop long-term relationships with key suppliers 
        and subcontractors to ensure that we remain a 
        priority customer when resources and materials are in 
        short supply. 
 
 
   *    The Group's Advantage through Alignment programme 
        facilitates greater engagement with our key supply 
        chain members and provides them with greater 
        visibility of our pipeline of projects. 
 
 
   *    We are committed to meeting the requirements of the 
        Prompt Payment Code. 
 
 
   *    We use a credit tracker on the Dun and Bradstreet 
        portal to monitor subcontractor financial strength. 
 Key risk indicators 
 
   *    Prompt Payment Code performance statistics. 
 
 
   *    Material and trade shortages. 
 Movement in the year 
 Prior to the outbreak of Covid-19, construction activity was 
  rebounding strongly from the Brexit uncertainty that had been 
  holding back activity in 2019. The Government's commitment 
  to infrastructure investment and a general increase in construction 
  activity could have led to a lack of capacity in the supply 
  chain and potentially material shortages. Both of these supply 
  chain risks could also be exacerbated by the still unknown 
  impact of Brexit on the availability of skilled workers and 
  the future trading relationship with the EU. 
  As a result of Covid-19 and the sudden and significant reduction 
  in construction activity, there is an increased risk of subcontractor 
  insolvency, especially as activity levels increase again. 
  To reduce this risk, we have sought to keep cash flowing through 
  the supply chain by continuing to pay our subcontractors and 
  suppliers on time. The current situation also increases the 
  risk of insolvency of a joint venture partner. Their financial 
  stability is monitored closely to identify any early warning 
  signs. 
  Maintaining the supply of materials, especially those sourced 
  indirectly by subcontractors from builders' merchants, was 
  one of the most acute challenges during the pandemic. We continually 
  review the measures we can take to improve the resilience 
  of our materials supply chain. 
 
 
 Cash management > 
 Risk description 
 We are unable to maintain sufficient net cash to finance business 
  operations 
 Risk appetite 
 We have the expertise and structure to maintain a strong net 
  cash position and to have a high degree of visibility of cash 
  flow. 
 Potential causes 
 
   *    Loss-making projects. 
 
 
   *    Inability to produce accurate cash forecasts. 
 
 
   *    Significant amounts of cash locked up in WIP and 
        claims against clients. 
 
 
   *    Insolvency of a key client. 
 Emerging risks 
 
   *    Potential reform of the law and practices in relation 
        to retentions. 
 
 
   *    Increased use of project bank accounts and/or 
        increased scrutiny on our payment practices. 
 Mitigations 
 
   *    Each business unit reviews its cash forecast weekly 
        and monthly, and the Group prepares a detailed daily 
        cash book forecast for the following eight-week 
        period to highlight any risk of intra-month 
        fluctuations. 
 
 
   *    These forecasts are reviewed at business unit, 
        division and Group level. 
 Key risk indicators 
 *    Average month end cash. 
 
 Movement in the year 
 The disposal of the housebuilding divisions means that the 
  balance sheet no longer has debt or associated covenants. 
  However, it has also removed a key lever (the timing and value 
  of land acquisitions and disposals) available to manage cash. 
  Therefore, our cash position is more exposed to unexpected 
  variances from forecast in the construction business. 
  Cash management has been a critical area of management focus 
  throughout the Covid-19 pandemic. Interventions have included 
  maximising the value our clients will certify and pay, chasing 
  down retentions and postponing or cancelling discretionary 
  expenditure. 
  We also introduced more detailed and regular monitoring controls, 
  including divisional and Finance Director review and approval 
  of all supplier payments proposed by business units, as a 
  temporary measure during the onset of the Covid-19 pandemic. 
 
 
 Project selection 
 Risk description 
 We take on the wrong projects, at the wrong price, or on the 
  wrong terms. 
 Key mitigations 
 We have robust review and approval controls for bids and contracts 
  including a risk-based heat map tool to ensure that project 
  selection is aligned to our risk appetite. 
 Key risk indicators 
 Project margins. 
 
 
 Work winning 
 Risk description 
 Failure to win work within our target markets and clients. 
 Key mitigations 
 We have a centralised, dedicated pre-construction team, focused 
  on securing our place on the most strategically important 
  construction procurement frameworks. 
 Key risk indicators 
 Total value of order book. 
  % of current year's revenue target already secured. 
 
 
 Safety 
 Risk description 
 Failure to maintain high standards of health and safety performance. 
 Key mitigations 
 We have operational controls in place, including an H&S site 
  risk assessment for every site, which are monitored through 
  a regular audit process. 
  Both the 'Golden Rules' and the award-winning Challenging 
  Beliefs, Affecting Behaviour safety programme help drive a 
  strong safety culture. 
 Key risk indicators 
 Accident Frequency Rate. 
  RIDDORs in past 12 months. 
  Director safety tours. 
 
 
 Quality 
 Risk description 
 Failure to deliver high quality, defect-free buildings and 
  infrastructure to our clients. 
 Key mitigations 
 Quality control is embedded within the Business Management 
  System policies and procedures, with compliance monitored 
  through a programme of internal audits. 
  We select competent designers and subcontractors to work with 
  and use specialist consultants at key review stages. 
 Key risk indicators 
 Average ageing of retentions. 
  Average net promoter score. 
 
 
 People 
 Risk description 
 We do not have a sufficient amount of staff with the skills 
  and experience that we require. 
 Key mitigations 
 We undertake regular reviews of remuneration and benefits 
  packages to ensure we remain competitive. 
  We operate graduate and trainee programmes to develop our 
  own pipeline of talent. 
 Key risk indicators 
 Number of vacancies. 
  Voluntary churn rate %. 
 
 
 Regulatory compliance 
 Risk description 
 We have a high-profile breach of applicable laws or regulations. 
 Key mitigations 
 The Group has comprehensive policies and guidance at every 
  level including the Group's Code of Conduct, mandatory e-learning 
  for all employees, regular legal updates and briefings, six-monthly 
  compliance declarations, and conflicts of interest registers 
  and authorisations. 
 Key risk indicators 
 Number of external enforcement cases. 
 
 
 Sustainability 
 Risk description 
 We fail to keep pace with the sustainability expectations 
  of our key stakeholder groups. 
 Key mitigations 
 We have a Stakeholder Steering Committee to engage with and 
  help us understand the priorities of our key stakeholder groups. 
  We carry out regular engagement with analysts and investors 
  to understand the evolving ESG expectations of the investor 
  community. 
 Key risk indicators 
 Carbon dioxide emissions. 
  Waste per GBP100,000 of revenue. 
 
 
 Cyber security 
 Risk description 
 Loss of data from or loss of access to business critical IT 
  infrastructure and applications. 
 Key mitigations 
 Tools to protect and monitor our networks and data such as 
  scanning of email attachments to detect and intercept malware. 
 Key risk indicators 
 Number of user accounts breached. 
  Number of successful malware infections. 
 

Viability Statement

As required by provision 31 of the 2018 UK Corporate Governance Code, the Board has assessed the prospects and financial viability of the Group, taking account of the Group's current position and the potential impact of the principal risks to the Group's ability to deliver its business plan. The assessment has been made using a period of three years, which aligns with our normal business planning period and provides reasonable visibility of future revenue from the existing order book. Following the sale of the housebuilding divisions and the recapitalisation of the business, the Group no longer has any debt facilities and associated covenants, therefore viability has been assessed in terms of the headroom against available cash reserves.

The base case for the cash flow projections modelled in our assessment of viability is the budget for the three years from 1 July 2020 which incorporates appropriate contingencies against plausible day-to-day downside risks, primarily the Group's principal risks as disclosed previously. The base case shows average month end net cash growing in line with earnings and assumes that the Group continues to operate without debt facilities. Against this base case, we have stress-tested the forecasts and modelled the impact on cash flow and liquidity of a number of downside scenarios related to our principal risks, including the impact of Covid-19 as well as a combined downside scenario that includes a number of these sensitivities occurring together.

The most significant risks considered in relation to the viability assessment are reductions in the opportunity pipeline, lack of new work winning (albeit the Group is protected by its place on a number of public and regulated sector frameworks), margin erosion, poor project delivery and performance and cash management. The scenarios modelled included reductions in volumes leading to a fall in monthly revenue of up to 25%, delays of up to six months in the recovery of outstanding amounts such as retentions and a general deterioration in working capital performance. We have also specifically modelled the impact of further local and national lockdowns as a result of Covid-19.

As part of the viability assessment, the Board also considered the mitigations and interventions available to manage the impact of one or more of the downside scenarios occurring but has not assumed any potential future assistance from the UK Government such as a new Coronavirus Job Retention Scheme or deferrals to tax payment dates. The base case already includes significant cash contingencies and the Board has considered further mitigating actions that are available to it.

Based on the results of this analysis, the Board has concluded it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period of its assessment.

Related party transactions

Transactions between the Group and its related parties are disclosed as follows:

 
                                           Amounts owed        Amounts owed 
                       Sales to related     by                  to 
                        parties             related parties     related parties 
---------------------  ------------------  ------------------  ------------------ 
                       2020      2019      2020      2019      2020      2019 
                        GBPm      GBPm      GBPm      GBPm      GBPm      GBPm 
---------------------  --------  --------  --------  --------  --------  -------- 
Trading transactions 
Related parties        23.1      8.4       35.9      331.6     -         24.8 
 
 
                           Interest and 
                            dividend income 
                            from related 
                            parties 
-------------------------  ------------------ 
                           2020      2019 
                            GBPm      GBPm 
-------------------------  --------  -------- 
Non-trading transactions 
Related parties            4.5       3.8 
-------------------------  --------  -------- 
 

The related party transactions above (sales to related parties and interest and dividend income from related parties) have been re-presented to reflect only continuing operations. Sales to related parties within discontinued operations amount to GBP50.3m (2019: GBP63.7m), interest and dividend income received from related parties amount to GBP11.1m (2019: GBP12.7m). Amounts owed by and to related parties have not been re-presented, consistent with the presentation of the balance sheet.

Sales to related parties are based on terms that would be available to unrelated third parties. Amounts owed by related parties consist predominantly of subordinated debt within the PPP and Other Investments portfolio, that if held to maturity would be due over the next 28 years (2019: 29 years). These receivables are unsecured, with interest rates varying between a range of 9% and 12%. Payables are due within one year (2019: one year) and are interest free.

Company

Transactions between the Company and its subsidiaries which are related parties, which are eliminated on consolidation, are disclosed as follows:

 
                          Interest and 
                           dividend income 
                           from related 
                           parties 
------------------------  ------------------ 
                          2020      2019 
                           GBPm      GBPm 
------------------------  --------  -------- 
Non-trading transactions 
Subsidiary undertakings   100.0     n/a 
 

The Company has provided performance guarantees in respect of certain operational contracts entered into between joint ventures and a Group undertaking.

Discontinued operations

On 3 January 2020, the Group completed the disposal of the Linden Homes and Partnerships & Regeneration divisions of Galliford Try plc (in addition to certain other assets and liabilities transferred to Vistry Group plc as part of this transaction). This followed the initial steps in this transaction which included the implementation of a Group restructuring and scheme of arrangement under Part 26 of the Companies Act 2006 becoming effective on 2 January 2020. Additionally, with effect from 8:00 a.m. on 3 January 2020, 111,053,489 Galliford Try Holdings plc shares with a nominal value of 50p each, being the entire issued share capital of Galliford Try Holdings plc, were admitted to the premium listing segment of the Official List of the FCA and to trading on the main market for listed securities of the London Stock Exchange with a corresponding cancellation of all shares of Galliford Try plc (note 30).

Further information on the transaction is included in note 1.

As a result of this disposal, the Linden Homes and Partnerships & Regeneration segments have been classified as discontinued operations in accordance with IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations. Accordingly, prior periods in the income statement and the statement of cash flows have been restated to show separately those balances in respect of discontinued operations.

Business combinations

On 1 July 2019, the Group's Partnerships & Regeneration division acquired Strategic Team Group (STG) for GBP10.7m (of which GBP1.8m was deferred), delivering a mature operating platform in Yorkshire and expanding the Group's presence in Cheshire. STG is a well-established regional business with 120 employees and a revenue in its last full year of approximately GBP60m.

The acquisition was of the entire share capital and control of the holding company Strategic Team Group Limited and its trading subsidiary Strategic Team Maintenance Company Limited. STG operates a new homes contracting business and a maintenance and minor works business. The profile and geographical split of its order book provides an excellent strategic fit with a client base known to the Group's Partnerships & Regeneration business and STG is on the Homes England Delivery Partner Panel. These assets and liabilities were transferred to Vistry Group plc on 3 January 2020 as part of the disposal of the housebuilding segments to Vistry Group plc (notes 1 & 9) and is therefore reported within discontinued operations.

The goodwill of GBP6.9m arising from the acquisition is attributable to the acquired workforce of STG. None of the goodwill recognised is expected to be deductible for income tax purposes.

Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under company law the directors have prepared the Group and Parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. Under company law, the directors must not approve the financial statements, unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group and Parent Company for that period.

In preparing the financial statements, the directors are required to:

> select suitable accounting policies and then apply them consistently;

> make judgments and accounting estimates that are reasonable and prudent;

> state whether applicable IFRSs as adopted by the EU have been followed, subject to any material departures disclosed and explained in the financial statements; and

> prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group and Parent Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and the Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the Group and Parent Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Parent Company's performance, position, business model and strategy.

Each of the directors, whose names and functions are listed on pages 48 and 49 confirms that to the best of their knowledge:

> the Parent Company financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Parent Company;

> the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

> the Strategic report contained on pages 1 to 45 includes a fair review of the development and performance of the business and the position of the Group and Parent Company, together with a description of the principal risks and uncertainties that it faces.

In the case of each director in office at the date the Directors' Report is approved:

> so far as the director is aware, there is no relevant audit information of which the Group and Group's auditors are unaware; and

> they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Group and Group's auditors are aware of that information.

For further enquiries:

 
Galliford Try Holdings   Kevin Corbett, Company 
 plc                      Secretary                        01895 855001 
 Clara Melia, Investor Relations                           020 3289 5520 
Tulchan Communications   James Macey White                 0207 353 4200 
 Giles Kernick 
 Amber Ahluwalia 
 

Notes to Editors

Galliford Try Holdings plc 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 across the UK.

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