One-off costs of NMCN鈥檚 water business send firm into first half loss
Galliford Try said its daily net cash did not drop below the 拢100m mark in the first six months of its new financial year as the firm said the strength of its balance sheet meant it was able to turn down risky jobs more easily.
Chief executive Bill Hocking said the contractor was picking and choosing which projects to work on 鈥� rather than being lumbered with onerous contracts.
Its average monthly cash balance in the six months to December 2021 was 拢180m with this number staying in three figures every day of the period.
鈥淚t gives our clients confidence that we will start and finish jobs,鈥� Hocking said. 鈥淚t gives the supply chain confidence they will get paid. It allows us to maintain discipline and not take on the wrong type of work.鈥�
He said the firm was turning down 鈥渜uite a lot of work鈥� either because contract terms were not right, schemes were in the wrong area of the country or it was a job the firm decided it could not do.
Galliford Try said it paid 98% of its invoices within 60 days and its average payment time was 25 days.
The firm said it racked up 拢9.7m of exceptional costs which sent the firm into the red, racking up a pre-tax loss of 拢2.6m from a 拢4.1m profit last time on turnover up 10% to 拢594m. Pre-exceptional pre-tax profit was up 73% to 拢7.1m.
Analysts are expecting full-year revenue to be around 拢1.3bn with profit around 拢17.5m.
The firm said it spent 拢6.3m on integration and restructuring costs following its decision to buy the 900-strong water division of NMCN last October which had collapsed into administration at the start of that month.
The deal, completed for 拢1m days after NMCN sank, will add around 拢120m to the firm鈥檚 turnover and profits of between 2.5% and 3%.
Hocking added: 鈥淚t鈥檚 a really good acquisition for us, operationally and financially. We looked at other bits of NMCN but the water business was the jewel in the crown.鈥� A further 拢3.4m of one-off cost was spent by the firm on upgrading its IT systems.
Operating margins for the period came in at 2.2% with the firm targeting a revenue of 拢1.6bn and operating margin of 3% by 2026.
Hocking said the war in Ukraine will see energy prices head north, with timber 鈥� a large proportion of which is supplied by Russia 鈥� also set to see an increase in price.
He said the firm ships in timber mainly from Scandinavia and had locked down prices on the product. 鈥淲e have managed issues around inflation and shortages without any material impact on the group.鈥�
He added that the firm, two-thirds of whose business is in building with the remainder in civils, was expecting brick prices to go up as well. 鈥淚f we know the price is going up, we will build that into our tenders.鈥�
The firm鈥檚 order book during the period was up 拢100m to 拢3.4bn.
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