Galliford Try Holdings (AIM:GFRD) said it remains confident in the future of the business after entering the new financial year well-capitalised and with a strong order book up 10%.
In a trading update, the group said both site closures and reduced productivity significantly reduced revenue in the final quarter of the financial year with a material reduction in gross margin and divisional operating margins expected to show a loss of around 5%.
Despite operating losses, the UK construction firm said it remains well-capitalised, with £195m cash at 30 June 2020 (2019: net debt £57m) and average month-end cash of £140m.
The group also has a strong order book, up 10% at £3.2bn (2019: £2.9bn), with 90% of revenue for the new financial year secured (2019: 88%) with an ‘encouraging pipeline.’
Galliford Try noted that it had responded quickly and decisively to the Covid-19 pandemic and that all UK construction sites are now operational with underlying operations performing well.
The Group said it had made use of the Government’s Job Retention Scheme during the lockdown period and that the majority of affected employees have now returned to work.
It also initiated measures to reduce costs and conserve cash to account for both the impact of Covid-19 and our future business requirements including temporary salary reductions of between 15% and 25% for the company’s most senior employees.
Shares in Galliford Try Holdings were trading 11.34% higher at 112.19p on Wednesday.
The group said its strong order book has given it confidence as it looks to increase operating margins, capitalise cost reduction measures and maintain a disciplined approach to contracts.
The strong order book, with 81% in the public and regulated sectors, and recent Government announcements on capital expenditure mean is well placed to contribute to the UK’s economic recovery from Covid-19 and to benefit from opportunities in its chosen sectors.
“The financial year just ended was a year of transition for the Group and I am confident about the future for the business,” said Bill Hocking, Chief Executive of Galliford Try Holdings.
He added, “Going forward we are well placed to benefit from the planned spending in our chosen sectors and to support the rebuilding of the economy and I will provide an update on our strategic priorities at results in September.”
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