Galliford Try Holdings PLC

Strategic Report

Our business model

A progressive UK construction business

We are proud to deliver vital buildings and infrastructure across the country that make a real difference to people’s lives. What we do

We are a major construction group, operating as Galliford Try in England and Wales, and Morrison Construction in Scotland. Our network of regional offices is a key advantage, offering clients the benefit of national strength with local delivery. We are focused on markets where we have proven strengths, operating predominantly in the public and regulated sectors.

Building operates across the UK, designing, constructing and refurbishing assets across markets where we have proven expertise and significant opportunities, particularly the education, health, defence, justice and commercial sectors.

Infrastructure comprises our Environment and Highways businesses, which carry out vital civil engineering projects across the UK. Environment covers the water and sewage sectors, where we are one of the largest players and carry out capital delivery and maintenance, and asset optimisation. Our work in Highways has contributed substantially to the national infrastructure network, from major project delivery of large-scale schemes to delivering road surfacing works and maintenance as a leading player.

Investments has historically specialised in managing construction through to operations for major building projects via public private partnerships. These skill sets are now being used to progress co-development opportunities, with a focus on the PRS (Private Rented Sector). Our expertise in leading bid consortia and arranging finance to devise and secure the right solution on an individual basis makes us attractive to clients.

Facilities Management works with Building, with an emphasis on the education and health sectors. Our capabilities include delivering high-quality, full life-cycle solutions to our clients, including green retrot.

Chairman’s statement

"We have made an excellent start to our Sustainable Growth Strategy, delivering risk managed controlled growth, and it’s exciting to be at the forefront of the vital role construction is playing in the future of the UK.

The great thing about our strategy is that all our stakeholders’ interests are aligned. We are contributing to the decarbonisation of the economy, unlocking the potential of digitalisation to drive efciency, and working in partnership with our supply chain to de liver for our clients and communities.

With our passionate teams, strong balance sheet, market-leading sector positions, excellent client and supplier relationships and high-quality order book, we are excited about the future and look forward with condence.”

Bill Hocking
Chief Executive

Chief Executive’s review

Our values

Excellence Striving to deliver the best.
Passion Committed and enthusiastic in all we do.
Integrity Demonstrating strong ethical standards with openness and honesty.
Collaboration Dedicated to working together to achieve results.

Our vision

To be a people-orientated, progressive business, driven by our values to deliver for our stakeholders and the communities we work in.

Our purpose

To improve people’s lives by building the facilities and infrastructure that communities need, while providing opportunities for our people to learn, grow and progress; working with our supply chain to promote the very best working practices; and caring for the environment in which we work.

Strategic report

Operating sustainably

Health, safety and wellbeing

Our people

Environment and climate change

Communities

Clients

Supply chain

Human rights and modern slavery

Risk management

Task Force on Climate-related Financial Disclosures

Financial review

Operating review

Stakeholder engagement and s172(1) statement

Governance

Chairman's review

Directors and Executive Board

Governance review

Nomination Committee report

Audit Committee report

Remuneration Committee report

Directors’ Remuneration Policy report

Annual report on remuneration

Directors’ report

Statement of directors’ responsibilities

Financial information

Independent auditor's report

Consolidated income statement

Consolidated statement of comprehensive income

Balance sheets

Consolidated and Company statements of changes in equity

Statements of cash ows

Notes to the consolidated nancial statements

Five-year record (unaudited)

	2022	2021	2020
Pre-exceptional earnings per share	11.6 p	9.5 p
2022 statutory earnings per share			5.8p
Dividend per share	8.0 p	4.7p
Average month-end cash	£174 m	£164 m
Order book	£3.4bn	£3.3bn
Revenue	£1,237.2m	£1,124.8m
Pre-exceptional profit before tax	£19.1m	£11.4m
2022 statutory profit before tax			£5.4 m
Divisional operating margin	2.4%	2.0%
Pre-exceptional operating profit before amortisation	£18.5m	£10.1m

See note 32 for our alternative performance measures.

Focused risk management
Our established approach to risk management has laid a strong platform for our strategy to 2026 and continues to underpin our future ambitions.
Read more p43

Safety above all
We are committed to prioritising the health, safety and wellbeing of our people, and those around us, aiming for no harm.
Read more p21

Drivers of market growth
Our chosen markets remain favourable and we are well placed to benefit from sustained investment in the UK’s economic and social infrastructure.
Read more p10

Built-in sustainability
Our sustainability commitments are built into our strategy, allowing us to be more efficient, win work and engage with our employees and supply chain, while benefiting the community and environment.
Read more p20

Key sections of our report

Strategic report
Governance
Financial information

Galliford Try Holdings plc
Annual Report and Financial Statements 2022

Visit: www.gallifordtry.com for more information.

Group websites
* Morrison Construction
* #
* $
* %

Sitemap
Cookies
Privacy Notice
Accessibility
Modern Slavery Statement

About us
Galliford Try is one of the UK's leading construction groups, working to improve the UK’s built environment and delivering lasting change for the communities we work in.
Read more &

We are a people-orientated, progressive business, driven by our values.
Visit our Results Centre to watch our results presentation &

Share price
128.76p at 16:13

Contact '
About
Why us
Sectors
Sustainability
Careers
Investors
News# Operating review

Who we work with

We primarily work with clients in the public and regulated sectors, where we have core and proven expertise, based on a strong understanding of client requirements, the market and risk profile. We focus on education, defence, health, justice, highways and environment, as well as the commercial sector. We seek clients who value a collaborative approach and long-term relationships, for example by working in frameworks. Frameworks are a multi-year procurement vehicle used by public and regulated sector clients which provide greater opportunities for deeper, collaborative working and support the achievement of wider strategic and social goals, better understanding between parties, early mitigation of risks and ultimately repeat business.

91% of our order book is in the public and regulated sectors.
94% of our order book is with repeat clients.
90% of our order book is in frameworks.

How we do it

Stages of a typical construction project

Identifying and bidding opportunities

We seek opportunities within our chosen markets and only pursue those where we have the expertise and resources to successfully complete the work safely, profitably and to a high quality. Our initial selection process considers factors such as geography, client, size of the project, technical complexities and our experience of similar projects. Contracts meeting this criteria are interrogated by our teams to ensure we fully understand and can meet client requirements. They are filtered through our risk-based heat map which facilitates a rigorous assessment of risks to ensure all aspects of a contract including terms and conditions satisfy our strict criteria. All contracts with a value exceeding £25m, and lower value contracts with specified risk parameters, require Executive Board approval.

Early engagement

Depending on the contract, we may be involved in the design. These contracts, called Design and Build, are different from traditional contracts, where the client appoints consultants to design their scheme and a contractor is selected to execute the works. Design and Build contracts can provide greater opportunities for selecting building features, systems, equipment and materials which deliver lower life cycle cost or carbon emissions and shorter programmes while meeting the required performance, quality, reliability, and safety requirements.

Assembling a team and procuring products and services

Delivering a construction project requires many different disciplines, some of which are specialist. This is because it is unlikely that any one contractor will have all the required skills to complete every aspect of a construction project. Our role includes assembling the right team, including subcontractors, and sometimes consultants, to carry out specific aspects of works such as mechanical and electrical work. This phase also involves other preparatory processes before mobilising on site, such as obtaining permissions and permits. It is about further reducing risk, improving productivity, selecting partners, and digitally testing the solutions to improve health, safety and quality and eliminate waste. Early procurement also mitigates risk.

Construction

This phase consists of all the physical processes of building, landscaping or refurbishing a project in addition to mobilising teams and services such as power and utilities. It includes erection of hoardings and welfare facilities, site clearance, demolition or remediation works, site preparation, excavation works, installation of foundations, frame construction, civil engineering works and fit out, where applicable. It can also include rebuilding work and alterations or additions to buildings or infrastructure. A key part of this phase is ensuring the project’s performance is controlled to ensure that it is running safely, on schedule and within budget. Day-to-day supervision from a project team is required to set and track progress, resolve any challenges including unforeseen events such as extreme weather, supply or labour issues, and make any required adjustments. Documentation, digital tools and communication are vital within this phase as they enable the team to monitor performance against programme expectations as well as providing a blueprint of what is required in the final product.

Diligent planning in the early pre-construction phase goes a long way in ensuring that construction takes place on time, to budget and to a high quality.

Handover

Before completion of a project, final inspections are made. The project is then approved by the client and a final completion certificate is issued, confirming the project has been handed over in a satisfactory manner. In some instances, we may also take on the maintenance of the asset.

How we make money

We aim to generate a return for shareholders by operating a profitable and sustainable business. We make a profit by carefully selecting the work we take on and executing it well.

Our investment case

A compelling investment

Our leading positions in thriving markets, strong foundations and a progressive culture provide an engine for growth.

High-quality order book
Good visibility of pipeline
Strong balance sheet
Strong culture of discipline and risk awareness

High-quality revenue

We target lower-risk contracts with clients that typically comprise:

Target cost/cost reimbursable where an overall target contract value is agreed with the client, including margin, risk and inflation contingencies, and the actual cost of the work plus an agreed fee is paid by the client. Any cost savings or overspends against the target are shared between the client and contractor.
Fixed-price where the final price and programme is negotiated on a sole basis following early involvement, resulting in a fixed-price for a defined scope at point of final contract award.

In addition to construction projects, we earn revenue and profit from our PPP Investments and Facilities Management businesses, which offer lower-risk annuity type income and margin accretion.

Good capital management

Our business is typically cash generative, as we receive regular payments from clients as projects progress. We are well-capitalised with a strong balance sheet that benefits from a robust cash position and a PPP asset portfolio, giving clients and our supply chain confidence in our ability to partner with them. Our business does not require significant investment in fixed assets or working capital. We therefore deploy a modest amount of cash for ongoing investment in the business and for investing in PPP, co-development or green retrofit projects. Our capital allocation and dividend policy is set out in the Financial review (page 55).

Strong balance sheet

Performing consistently and predictably in this way provides us with a strong balance sheet. This is important to clients as they prefer to work with contractors who can deliver for them in the long term and it provides further confidence to our supply chain who look to partner with businesses that can pay them promptly. Balance sheet strength means we can invest in our people, technology and business to develop our capabilities. Finally, a strong cash balance gives us agility and enables us to react quickly to strategic opportunities, including bolt-on acquisitions aimed at enhancing our capabilities and driving up margin. Coming full circle, a strong balance sheet enables us to reinforce our culture of being selective about the work we pursue, so the cycle continues, delivering a compelling investment proposition.

High-quality order book and good visibility of pipeline

Being selective about the work we take on and focusing on bottom line growth over revenue drives a high-quality order book which is characterised by its quantum; longevity through frameworks; a repeat client base who we know and can work collaboratively with; and embedded cash and margin profiles. This leads to work we can execute with a high degree of confidence in addition to pipeline visibility, which enables us to effectively resource projects with our people and supply chain. This approach underpins our strategy and facilitates controlled growth, generating long-term shareholder value.# Strategic report

Governance

Financial information

Highlights of the year

Market review

Market opportunity

Our chosen markets remain favourable. The construction sector is expected to benefit from sustained investment as a means to drive the UK’s recovery from the challenges of the pandemic, and to address global factors and the issue of climate change. We have a major role to play across these areas, driving efficiency through digitalisation and off-site build and delivering wider societal value. While we remain vigilant about the macro-economic backdrop of cost inflation, resource scarcity and geopolitical challenges resulting from the war in Ukraine, these challenges are less pronounced across our areas of operation.

Investment in the UK’s social and economic infrastructure

There is a drive to build a stronger economy following the pandemic, using construction as a way to stimulate activity and ensuring we have the infrastructure to support the country.

A strong culture of discipline and risk awareness

Our approach to running a good construction business that can perform consistently and predictably revolves around the right people, who share our purpose, values and objectives. We have a strong culture of discipline and risk management and only pursue opportunities where we have the skills, resources and contract terms and conditions to be successful. This is complemented by our incentive models, which mirror our attitude and are predicated on profit, cash and Environment, Social and Governance (ESG) measures.


7 Annual Report and Financial Statements 2022	Strategic report	Governance
Financial information	Read more p 17 and 43	Read more p 59
Read more p 55

The main themes of this are to tackle regional and local inequalities through improved facilities and better transport links, decarbonise the built environment and increase the UK’s productivity. The Levelling Up agenda aims to lessen geographic disparities in key services and outcomes, such as health, education and jobs. It recognises the key role investing in infrastructure will have in improving lives by bringing more places across the UK closer to opportunity. Under the Levelling Up Fund, £4.8bn has been set aside for local projects, such as regeneration and transport across England, Scotland and Wales. The Construction Playbook sets out guidance for how public works are procured. The Playbook (page 18) places a major focus on social value, industry sustainability and supply chain engagement. It favours long-term contracting across portfolios; standardised designs, components, and interfaces; and innovation and MMC.

Our response

We are a key contractor for the Government working across sectors including highways, environment, education, health and defence, which form the backbone of the country’s infrastructure. We have a national presence from the Highlands in Scotland, down to Plymouth in the South West of England which will help us to support the levelling up agenda. Our commitment to creating greater social value matches the Government’s aims to deliver value to society. A significant 90% of our order book is in frameworks, which are a key procurement route for the delivery of national infrastructure projects. Similarly, 91% of our order book is in the public and regulated sectors. We are focusing heavily on decarbonisation, both by reducing our own carbon footprint and helping our clients to lower carbon from their projects. The combined skills of our FM and construction businesses means that we are well-placed to retrofit and optimise existing facilities so that they have a better environmental and operational performance. We are driving productivity and innovation with investment in our digital capabilities and MMC.

1 https: / / assets. publishing. service.gov.uk/ government/uploads/ system/uploads/attachment_ data/le/9661 38 /Levelling_ Up_prospectus .pdf
2 https: / / assets. publishing. service.gov.uk/ government/uploads/ system/uploads/attachment_ data/le/9 4 1536/ The_Construction _Playbook.pdf

Our strategy responds to our markets

Market drivers

How our alignment positions us to benefit

Investment in the UK’s social and economic infrastructure
- Key contractor for public and regulated sectors.
- National coverage with local relationships and supply chain.
- Committed to creating greater social value.
Urgency of climate crisis
- Net zero carbon target.
- Support clients’ carbon objectives through our increasing capabilities.
Innovation
- Digitalisation and adoption of Modern Methods of Construction (MMC).

THE CONSTRUCTION PLAYBOOK

Government Guidance on sourcing and contracting public works projects and programmes

Version 1.0 December 2020

10 Galliford Try Holdings plc

Market opportunity

Drive for decarbonisation and action on climate change

The UK’s Ten Point Plan for a Green Industrial Revolution prioritises ‘clean growth’ as it delivers on its aim to achieve net zero carbon emissions by 2050, and rebuild from the pandemic greener. The plan involves £12bn of public spending in areas from energy generation to building retrots. Key initiatives include the energy efciency of homes, schools and hospitals; protecting the environment; ending the sale of new petrol and diesel cars and vans by 2030 and developing the cutting-edge technologies needed to reach these new ambitions.

Our response

Our sustainability commitments, record of reducing our own carbon emissions and commitment to achieving net zero carbon across our own activities by 2030 and all activities by 2045 are attractive to existing and potential clients. An estimated 80% of buildings that will exist in 2050 have already been built and many of these will not meet the energy efciency standards of the buildings we are designing today. Our capabilities in retrot and asset optimisation enable our clients to reduce carbon emissions and increase the life span of their facilities. Over all, our clients’ ambitions to tackle decarbonisation provide a revenue opportunity for us. The emissions associated with the materials used in construction, known as ‘embodied carbon’, can represent up to half of the carbon footprint of a building and an even greater proportion of some infrastructure assets such as roads. We have the knowledge to select and transition to lower carbon materials and manufacturing processes to reduce embodied carbon now. Our approach to digitalisation and adoption of new technologies such as design rationalisation using our Building Information Modelling (BIM) tools and experience helps us avoid over-specication and reduce materials consumed. Similarly, using MMC such as ofsite manufacture helps to minimise waste and use materials more efciently.

Market challenge

Managing ination, and labour and supply shortages

In the last year, we have been operating in an inationary environment, which is forecast to continue for the foreseeable future. The combined impact of Brexit and the pandemic has caused delays in the delivery of supplies, as well as increased costs. Skilled and experienced people are in high demand across the UK.

Our response

We maintain excellent relationships with key suppliers and subcontractors by giving them an insight into our pipeline, paying them promptly and offering them training and resources, for example through our Advantage through Alignments scheme, our behavioural safety programme, membership of the Supply Chain Sustainability School and our newly launched Net Zero Partners initiative. This leads to mutual benets and ensures we remain a priority customer for our supply chain during times of heightened demand. Early planning giving us better visibility of product availability during times of higher demand. We maintain matrices of key materials to ensure we are aware of any materials shortages or longer lead-in times and ensure we plan effectively to mitigate any potential delays. These processes are stepped up during times of shortages. Ination is also assessed and managed during bidding. We also take preventative measures such as building protections into our contracts and procuring materials early to mitigate against rises in ination and building in a degree of tolerance. Our recruitment, training and development activities ensure we have the skills we need to carry out our operations. Our graduate and apprentice programmes allow us to build our own talent pool. Succession planning enables us to meet the future needs of our business with less likelihood of disruption to operations. Our people-orientated approach, including initiatives such as agile working and our focus on wellbeing, make Galliford Try a more attractive employer and will help us to appeal to a more diverse audience, broadening the pool of potential recruits and supporting retention. We actively promote our business and industry to school and college leavers, graduates and experienced people through school presentations, visits to our sites and careers exhibitions, helping to encourage a career in construction for future generations. Our approach breaks down stereotypes of the industry and presents it as an important enabler of the UK’s plans for the future.

3 https: / / www.gov.uk / government / publications / the-ten-point -plan-for -a-green-industrial- revolution /title
4 UK Green Building Council. Pictured, our Education Director Claire Jackson took part in a panel event focused on targeting zero carbon in school buildings at Education Estates, using our work at Greenhe ad College (page 30) as an example. We shared our insights on the future of the water sector, against the backdrop for water service delivery, supply chain challenges from Brexit and the pandemic, the economic environment and the drive for sustainability as part of a new report produced by the Water Industry Forum (WIF), entitled The optimal delivery model for AMP8.

11 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Our strategy targets sustainable growth across revenue and margin. Our focus is on margin growth, with revenue targeted where markets support growth. Growth will be achieved by:

Increasing volumes in our existing markets within Highways, Environment and Building by growing in our existing geographies.
Why? We understand these markets and their risk profiles and are already working in these sectors, predominantly in frameworks. We have the potential to grow within these areas by bringing all of our business units up to critical mass.
The second main growth area is in complementary and adjacent markets and has three main strands:
- i) Private Rented Sector (PRS).
- ii) Green retrot.### iii) Capital maintenance and asset optimisation within the existing Environment sector (page 14).

Why? These are all higher-margin activities and will contribute considerably to our margin growth targets. The nature of the work is complementary to our existing capabilities, we are present in these markets across the UK, and they have risk profiles within our appetite. We will improve our margin by continuing with sustainable fundamentals of a focus on risk management and disciplined contract selection, targeting a high-quality order book, investing in our people, and embracing digitalisation and MMC.

Our strategy

Sustainable Growth

Our strategy is to deliver high-quality buildings and infrastructure in a socially responsible way and provide a sustainable return for our shareholders.

Targeted sustainable revenue and margin growth to 2026 from a basis of FY21.

	2026 targets	FY21
Revenue	£1.6bn	£1.1bn
Divisional operating margin	3.0%	2.0%

Strategy in action

We continue to target frameworks

A framework is a collaborative agreement between client and contractor to deliver a programme of works through a stable, long-term partnership, allowing strategic planning, continuous improvement and enhanced project outcomes. A framework can generate millions of pounds of work over its duration.

Why do we target working as part of a framework?

It offers repeat business with clients who we know, on established and well-understood terms and conditions.
It gives greater certainty in tendering and typically reduced cost of tenders.
There is improved risk allocation.
There is improved ability to plan for retention of our project teams.
Early involvement leads to greater influence over value-adding and social outcomes.

Examples of key frameworks include the Department for Education’s school building framework (six lots); Crown Commercial Service (CCS) Capital Works Framework, including ProCure23; Ministry of Justice Strategic Alliance Framework (multiple lots); hub North Scotland; hub South East Scotland; hub South West Scotland; hub West Scotland; National Highways Delivery Integration Partnership; AMP7 with Northumbrian Water, Yorkshire Water, Southern Water, Thames Water and Severn Trent Water; Southern Construction Framework; Procure Partnerships Framework and Midlands Highways Alliance +.

Contractor of the Year

Our industry relies on its contractors and supply chain partners to drive forward best practice in construction, innovative techniques and sustainability, while maintaining high health and safety and employment standards. The award for Contractor of the Year recognises Galliford Try’s commercial success, agenda-setting innovation, environmental stewardship and workforce best practice.

Water Industry Awards Judges 2022

Our strategy continued

Strategy in action

Developing complementary and adjacent market opportunities

Private Rented Sector (PRS)

We already build PRS schemes for private sector clients. By co-developing or developing our own schemes, we can benefit from development margins as well as construction margins, which will augment the overall profit margin. We have extensive experience and knowledge of this sector and understand the opportunities and challenges well.

Green retroﬁt

The UK Green Building Council estimates that 80% of the buildings that will exist in 2050 have already been built and many of these won’t meet the energy efficiency standards of the buildings we are designing today. The combined skills of our Facilities Management and construction businesses positions us well to retroﬁt existing building stock to support our clients as they seek to reduce their energy use and carbon footprint. This is a big focus of the Government’s decarbonisation strategy and a significant market opportunity, again representing higher margin work for our business.

Environment business

Our Environment business is one of the largest players in the water sector. We deliver design and build work for 10 out of the 11 major water and sewage companies in the UK, where our national footprint and established client relationships are a key advantage. As the water industry looks to invest in its ageing asset base, where existing plant and equipment is in need of investment through building, refurbishing and maintaining assets, this gives us an excellent base from which to grow. Most of our work currently centres around designing and commissioning water and wastewater facilities, and a natural next step is to maintain and optimise the performance of those facilities. The acquisitions of nmcn water (including Lintott Control Systems) and MCS Control Systems, have advanced this plan as they extend our capabilities in design and MEICA (Mechanical, Electrical, Instrumentation, Control and Automation), asset optimisation and capital maintenance, respectively which will drive growth with higher margins.

| |
| | It does not yet reflect the addition of MCS Control Systems, which was acquired in July 2022.

Chief Executive’s review

A Strong start to our strategy

16 Galliford Try Holdings plc

Our excellent cash position holds and we had £174m of month-end of cash on average. Not once in the last year did our cash balance fall below £100m. In addition, we have £48m of PPP assets, no debt and no defined benefit pension fund. The strength of our position gives confidence to our clients, who can be assured of our ability to deliver. It is also important to our suppliers and sub-contractors, enabling prompt payment and helping to mitigate supplier-liquidity issues, which have impacted some businesses during the pandemic. Through our strong relationships, and collaboration with our supply chain, we have effectively managed the challenges of inflation on materials and labour and produced a great result that exceeds expectations. Looking ahead, the Government’s investment in the rebuilding of the economy supports growth in our core markets. Our excellent performance and positive outlook give us confidence as we go into the new financial year and I thank all our teams, supply chain partners and clients for their relentless efforts in keeping our projects safely on track and enabling us to deliver a good result.

Financial review p55
Operating review p58

Delivering Sustainable Growth

In order to deliver sustainable financial returns, our strategy focuses on a progressive culture, socially responsible delivery, and quality and innovation to deliver sustainable financial returns, as detailed on pages 20 to 42:

A people-orientated, progressive culture

Health & Safety
The health, safety and wellbeing of our staff, sub-contractors, suppliers, clients and the public remains our top priority and we will not rest until we have achieved our goal of no harm. Our safety programme Challenging Beliefs, Affecting Behaviour is the backbone to this, centering on the belief that nothing we do is so important that we cannot take the time to do it safely. This was reflected in our employee survey, where our highest scoring area was health and safety, with 99% of respondents stating we give health and safety high priority. Our approach delivered an improved Accident Frequency Rate (AFR), which fell to 0.06 (2021: 0.08) and was zero across eight business units.

Our People
To deliver our plans successfully we need to ensure we have the right talent supported by a great culture. Our approach to this is to retain and invest in our existing teams, while also attracting new high-calibre people. A key highlight of the year was achieving an employee advocacy score of 85% (sector average 80%), which confirms our people recommend us as an employer. This was also demonstrated by a stable churn rate in a competitive market for talent, and awards for Top Apprentice and Graduate Employer. Early careers roles enable us to grow our own talent and our efforts at this grassroots level are driving improvement in our diversity. Around 6% of our population are in early careers. We continue to work towards our aspiration to be a destination employer by supporting our people with personal and professional development, flexible working, an inclusive environment, technology and a comprehensive benefits package. A social conscience is also increasingly important to employees, so we were pleased that 96% of our people believe our commitment to ESG matters is genuine. Recognising the national cost of living challenge, we looked at how we could support our employees and the Group agreed to make a one-off payment in Autumn 2022 of circa £1.0m, in total, to over 1,800 of its staff.

Socially responsible delivery

Communities
Our clients and employees value being socially responsible, so we make sure we make a positive difference in the locality of our projects for the long run by purchasing local goods and services, using local labour and engaging local communities to leave a legacy of training and a better economic environment as well as our buildings and infrastructure. In the year, we continued to develop the tools that we use to capture and monitor the positive social value outcomes that we are delivering to the wider community, including the impact on the local economy through job creation and spend with the local supply chain, apprenticeships, work experience, training, and volunteering.

Contractor of the Year: we won ‘Contractor of the Year’ at the national Water Industry Awards for driving forward best practice in construction, innovative techniques and sustainability, while maintaining high health and safety and employment standards. The award recognised the highly successful acquisition and integration of the nmcn water business, and we were also finalists for ‘Digitalisation Project of the Year’, ‘Partnership of the Year’ and ‘Customer Initiative of the Year’.

Leading the industry for digital solutions: our collaborative approach to BIM (Building Information Modelling) and our knowledge of the subject has enabled us to contribute to the authorship of the ISO 19650 series, as well as being active authors of industry guidance via the UKBIM framework.

Highlights of the year
17
Annual Report and Financial Statements 2022
Strategic report
Governance
Financial information

In our first year of Group-wide partnership with the Social Value Portal, a tool which is backed by the National TOMs (Themes, Outcomes and Measures) Framework, which helps organisations measure, report and enhance their social value, we evaluated 28 projects and assessed their combined social and local economic value delivered to be £306m. In addition, we increased our average Considerate Constructors Scheme score from 40.6 to 41.8, which exceeds the industry average of 39.0.

Environment and climate change
Tackling climate change is an essential sustainability priority for us as a business as well as for many of our clients, investors, people and regulators. Last year, we joined the UN-backed campaign Race to Zero and pledged to achieve net zero carbon across our own operations by 2030 and all activities by 2045 supported by setting interim carbon reduction targets using the Science Based Targets initiative (SBTi). In the year, we drove down our scope 1 and 2 emissions by a further 6.3% which reflects a number of ongoing initiatives including early connections to mains electricity supply, the transition to mandating electric and hybrid vehicles in our fleet, more energy efficient site offices and welfare, and a transition to alternative fuels. We also invested in our own capabilities to support clients with their objectives. Activities included a focus on how we design, build and maintain low carbon infrastructure and buildings through selection of materials and construction methodologies, operational energy consumption and, where relevant, end-of-life decommissioning. We established a cross-disciplinary Carbon Reduction and Social Value Forum to improve employee carbon literacy, carbon calculation, reporting and training.

Quality and innovation

Clients
The Government’s investment in rebuilding the economy supports growth in our core markets. Its procurement aims align with our strategy, with the Construction Playbook and Gold Standards demonstrating a move towards a more mature approach to delivery where there is a more equitable sharing of risk, longer term collaboration and repeat contracting relationships. Key client ambitions are to achieve greener, faster and better delivery. We are well positioned to support their carbon journeys, having made significant strides in our low carbon capabilities in the last two years, and furthering that with the launch of our Net Zero Partners Programme with our supply chain. Faster delivery while achieving high quality is also a key client aim. Our focus on digitalisation is an enabler of this and investment in identifying and acquiring innovative technologies means we are able to take an entirely digitised approach to project delivery, improving safety, quality and collaboration, while driving down carbon. We are leading the industry with our approach to BIM, and have authored parts of the international standard of BIM, as well as being one of the few contractors in the UK with advanced knowledge in the UK Government’s chosen standard industry exchange scheme, COBie. The value we bring is reflected in the levels of repeat business we receive at 94%.

Chief Executive’s review continued

We continue to prioritise a culture of industry-leading health, safety and wellbeing across all our workplaces. Pictured, Project Manager Alex Mills receives our Site Safety Award for an exemplary safety record at our St Marylebone Bridge SENs School in Queens Park, London from Building Southern Managing Director Gavin Bridge.

18
Galliford Try Holdings plc

Supply chain
Strong supply chain relationships have never been more critical and we are pleased to be a partner of choice.# Prompt payment is at the core of that.

During the period, we paid 98% of invoices within 60 days, exceeding the target of 95% set by the Prompt Payment Code (PPC). Beyond payment, we have a number of value-adding initiatives that make us attractive, such as our Advantage Through Alignment programme which provides selected suppliers with greater insight into our operations and pipeline and provides access to our training programmes. Our Net Zero Partners initiative shares carbon insights with our supply chain. We retained Gold status from the Supply Chain Sustainability School, a collaboration designed to upskill suppliers through free training and resources covering sustainability, off-site manufacturing and BIM.

Sustainable financial returns

All of the aspects described above make us more efficient, deliver a higher-quality product and make us more profitable. This enables us to deliver a good return to our shareholders, which we have produced again this year and look forward to building on in the new financial year.

Outlook

We are pleased with the progress we have made in the first year of our Sustainable Growth Strategy, including the successful integration of bolt-on acquisitions during the year. With our strong foundations of excellent teams and business culture, embedded processes and a favourable pipeline in chosen markets, we look forward to delivering controlled growth with sustainable dividends supplemented by additional capital returns. We are confident in delivering our 2026 targets, backed by a robust balance sheet strength that supports our operations.

Bill Hocking
Chief Executive

The technology enables data capture from the use of plant and materials, extracts embodied carbon data from material tickets and has brought efficiencies through purchasing processes. Collating such meaningful data has enabled more productive planning of work, driving efficiencies and reducing carbon impact. This important data and learning have been shared amongst the wider Group delivery teams to inform decision-making on future activities and provide operational insights to save money and build better and faster. Having access to this real-time, verifiable data has enabled an agile approach to on-site operations to be taken, reduced risk and identified immediate opportunities to lower carbon.

Using AI and blockchain to reduce time and cost, and improve carbon tracking

We have deployed innovative Artificial Intelligence and blockchain technology across various projects under Delivery Vehicle 2 with Scottish Water, as well as AMP7 frameworks including for Thames Water, Yorkshire Water and Northumbrian Water. This revolutionary Hypervine technology tracks and measures carbon emissions and embodied carbon in real-time overcoming the challenges in accurately capturing carbon emissions data from on-site construction operations (including people and equipment).

19 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Our commitment to sustainability

Sustainability underpins our long-term success as a business and is a core part of how we operate. We monitor our Environmental, Social and Governance (ESG) practices and performance through a robust structure and are committed to publicly reporting our progress across six fundamental areas: our people, health and safety, environment and climate change, communities, clients, and supply chain.

Management

The Executive Board has overall responsibility for setting policy and monitoring our sustainability performance as a standing agenda item. Main Board oversight of sustainability performance is also maintained through the Stakeholder Steering Group and the Carbon Reduction and Social Value Forum. These are chaired by the Senior Independent Director, and Finance Director, respectively.

UN Sustainable Development Goals

The UN Sustainable Development Goals (SDGs) provide an international blueprint for how organisations can work towards greener, more inclusive economies, and stronger, more resilient societies. They recognise that economic growth must also address a range of social needs including education, health, social protection, and job opportunities, while tackling climate change and environmental protection. This belief mirrors our own and so each of our six pillars aligns to at least one SDG. In our report, we have outlined how our sustainability priorities align to the UN SDGs.

Operating sustainably

Sustainability is central to our strategy. Being sustainable helps us to win work, engages our employees, benefits communities and the environment, and makes us more efficient. This is why our ESG commitments are an integral part of our strategy, residing at the core of how we deliver stakeholder value.

How our sustainability pillars align to the UN Sustainable Development Goals

Our pillars	Clients	Communities	Health & safety	Environment & climate change	Our people	Supply chain
Mapped to the UN Sustainable Development Goals.	3 Good health and wellbeing.	4 Quality education.	5 Gender equality.	6 Clean water and sanitation.	7 Affordable and clean energy.	8 Decent work and economic growth.
	9 Industry, innovation and infrastructure.	10 Reducing inequalities.	11 Sustainable cities and communities.	12 Responsible consumption and production.	13 Climate action.

20 Galliford Try Holdings plc

Operating sustainably continued

Health, safety and wellbeing

People and culture

Our objective is to prioritise health, safety and wellbeing and ensure no harm to anyone linked with our operations. We achieve this through our renowned Challenging Beliefs, Affecting Behaviour and Be Well programmes. 99% of our people say we give Health & Safety a high priority.

21 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Performance in the year

We were pleased to reduce our overall Accident Frequency Rate (AFR) to 0.06 (2021: 0.08) and achieve an AFR of zero across eight business units. Our Lost Time Incident Rate remained stable at 0.26. We take safety extremely seriously and our improved result is demonstrative of our commitment to improve our behaviour, for example by learning from high-potential incidents and near misses, and continuing to promote behaviours that drive excellence in safety.

Leading from the front

While accident rates remain the industry standard measure of safety performance, internally, we use Lead Indicators to drive improvement in safety culture and behaviour as they enable a proactive approach to the management of health and safety. Our Lead Indicators span six areas: Leadership, Communication, Competence, Culture, Contractors and Planning, which are underpinned by our Challenging Beliefs, Affecting Behaviour programme. Visible leadership through site safety tours, and an open dialogue with our site teams are a powerful way for management to promote and maintain safe behaviours on site by engaging with operatives to correct poor practice and reaffirm positive behaviour. We increased the number of director tours from 755 to 1,144 this year. We also conducted 65,281 Safe Behaviour Discussions (2021: 60,411).

A culture of Challenging Beliefs, Affecting Behaviour

We were pleased to see that health and safety featured as one of our strengths in the employee survey conducted during the year. 98% of our staff responded that they understand their role in keeping themselves and their colleagues safe, and 99% believe that Galliford Try gives Health & Safety a high priority. The survey results provided excellent feedback that our ‘Challenging Beliefs, Affecting Behaviour’ framework, which targets no harm through a culture of speaking up, continues to drive a strong safety culture across the business.

Wellbeing

Wellbeing remains a core area of activity for us and in the year we provided sessions on a range of themes covering mental health, diet and nutrition, women’s health, stress, dealing with grief, and financial wellbeing. Our approach covered online resources, face-to-face briefings, Employee Assistance Programmes through phone lines and counselling, as well as our Wellbeing Wednesday webinars.

Award-winning approach

Awards provide great recognition of our approach. We received an Order of Distinction from RoSPA (The Royal Society for the Prevention of Accidents). We also earned the prize for Health, Safety and Wellbeing Excellence at the Construction News Awards in September 2021. We did not receive any prohibition or improvement notices during the year and there were no fatalities on any of our projects (either our own employees or supply chain employees).# Op erating sus tainab ly conti nued

People an d cultur e

H ealth , s afet y an d well b eing ( contin ue d)

Key commitm ent s

KPI	F Y20	F Y21	F Y2 2	Ambitio n	Link to U N SD Gs
Acciden t F requenc y Ra te	0.0 7	0.08	0.06	N o harm
Los t Time In cide nt Rate	0. 26	0 . 26	0. 26	N o harm

22 Galli ford Try Ho ldin gs pl c

Looking forward

BM S refres h – moving s afet y ‘to the lef t ’

We have refresh ed our B usines s Manage ment System (BMS), with th e primar y ob jec tive of ensur ing that he alth and s afet y issue s are consid ered fro m the ver y b eginning of t he proje ct life cycl e. S ome of th e key changes inclu de cons ulting with th e Health , Saf ety a nd Environm ental A dvisor s earlier in th e biddin g proc ess an d updatin g the saf ety g uidance a nd exp ec tations w e share with th e supp ly chain whe n we tende r subco ntrac t pa ckages . In additi on, s ome of th e key areas of fo cus over the n ext yea r inclu de:

Reviewin g our in duc tion pro cess to make it more im pac t ful.
Reviewin g our pla nt minimum s tan dards to enhan ce in-b uilt safet y feature s and ensure e quipm ent sup por t s our carbon targets.
Educ ation ab out e nvironme ntal manage ment to en sure our s tan dards an d app roach a re fully un ders tood a nd ap plied .
Foc using on pro ac tive occu pational h ealth controls ove r and ab ove PPE.

Visi ble leadersh ip through s ite saf et y tours and an open di alogue with our si te teams i s a power ful way for managem ent to prom ote and maintain safe behavio urs.

In Aug ust 20 21, our H ealth , Safet y an d Environm ent (HS& E) Forum identi ed the nee d to continu e with a fo cus on p revention of falling object s . We commissione d a lm to use as a ‘ T oolb ox T alk ’ or training s ess ion base d on rece nt high pote ntial inciden ts . An intera c tive training pa ckage wa s develop ed to m eet th e following o bjec tives:

Raise aw arene ss of the a cti ons ne ede d for th e preventio n of falling obje ct s.
Incl ude th e relevanc e of behavio urs and im pac t of pe rsona l decision s with referen ce to the Cha llenging B eliefs , Af fec ting B ehavio urs Progr amme .
Provid e engag ing and in terac tive me dia for th e HS &E team to de liver .
Provid e a fresh an d innova tive app roach for deli vering critic al healt h and sa fet y messages across projects.

The n ew trainin g solutio n ‘Choos e the Safe Pa th’ was introdu ced to sites in January 2022. The se intera ctive s ess ion s allow the audie nce to determ ine the o utcome o f the lm by debatin g and choosing to do the right thin g, th ereby preve nting an inc ident . The w orksh ops go o n to show the o utcom e of not ch oosing t he safe p ath. From Jan uar y to June 2 022 , 245 peopl e have bee n throug h this trainin g, in cluding b oth Galliford T r y sta ff a nd me mber s of our sup ply ch ain. T he early f eedba ck fro m t he atte nde es has b een ver y positi ve. Hea dline fe edbac k includ es:

96% of atte nde es woul d recom men d the ‘Cho ose th e Safe Path – Preventi on of Falling Obj ec ts’ se ssion to oth ers .
81% of atte nde es rated th e ses sion as excellent o r ver y goo d.

Strate gic rep or t

O ur p e o pl e

People and cult ure

Our o b ject iv e i s t o cr ea t e an i nc l us iv e e nv i r on men t a nd pr o gr es s i ve c ult u re t ha t en ab l e s all in di v id ua ls to re a c h th eir p ote nt ial .

8 5% employ ee advocacy score

24 Gal lifor d T ry H old ing s plc

Performance in the year

Employe e ad voc ac y

Employe e advo cac y of ou r busine ss is a powe rf ul indic ator as it me asures e mployee connection and commit ment to our company and it s culture a nd goals , with hig her sc ores prom oting bet ter p er forman ce, inn ovation , retention a nd at trac tion of ta lent . D uring the year , we under took our rst empl oyee eng ageme nt sur vey since Galliford T r y be cam e a sta ndalon e cons truc tion g roup. We had a resp ons e rate of 7 4% , which provid es a repre sent ative view fro m empl oyees , and we a chieved a n employe e advo ca cy sc ore of 85% compa red to a sec tor average of 80% . This gure repres ents how likely employe es are to reco mme nd us as an empl oyer , which he lps us be nchma rk our progre ss towards b eco ming a des tination comp any whe re peo ple aspire to wo rk. Ou r overall empl oyee eng ageme nt score , which is m ade up of a n umbe r of fac tors inclu ding motivati on, co mmitme nt to our vision an d prid e in the com pany , wa s also above th e sec tor avera ge at 72% .

Early c are ers as a % o f total emp loyees

Early c aree rs are th e focu s of many of our recr uitment a cti vities , as they allo w us to grow our own talent and additiona lly give us inuen ce over the dive rsit y of our fu ture work forc e . Ou r gradua te and ap prentice p rogram mes remain p opular , wit h 6.1% of our p opulation in se po sitions. Ou r commitm ent to early c aree rs led to us be coming o ne of jus t 58 compa nies out of a pa rtic ipating 6 0 0, rep resen ting 1. 2 million em ployee s, to be re cognis ed with a G old Award th rough T he 5% Club’s 2021 Employer A udit S chem e. Th e audit validates em ployers’ a ctiv ities by exp loring their p lans an d commitm ent s to ‘ earn an d learn’ sc hem es, th e qualit y of training a nd dev elopment schemes a nd approac h to social m obilit y , diversit y an d inclusio n. We are pleas ed to have be en consis tently recog nised as a ‘ T op Gra duate & Ap prenti ce Employer ’ by Th eJo bCrowd , a leag ue tab le base d on fee dback f rom emp loyees , which place d us sec ond in th eir leag ue tab le for our se cto r and 17th bes t emp loyer for grad uates and trainee s in the UK , conrming our p osition as a d estinati on empl oyer for early c aree rs.

Notes:

Em ploye e ad voc ac y is mea sure d thro ugh reg ular e mploye e sur vey s. A s emp loyee a dvo ca cy w as prev ious ly unm easu red , throu gh ou r insigh ts , we have up date d our ta rge t to g reater t han 8 0% .
We have u pdate d our t arge t from a ye ar -o n-year i ncre ase to m ore tha n 8% to give a c leare r signa l of our a mbiti on.

Key commitm ent s

KPI	F Y20	F Y21	F Y2 2	Ambitio n
Emp loye e ad voc ac y	Not rep or ted	Not rep or ted	85%	>8 0%
Early c are ers as a % o f total employ ees	8.0%	7. 2 %	6.1 %	>8% 2
Women as a % of tot al emp loyees	22%	23 . 0%	21 . 2%	Y o Y increas e

25 An nual Re po rt a nd Fin ancia l Statem ent s 2022

Strate gic rep or t

Gover nance

Financial information

Our p e o pl e

People and cult ure

Women as a % of tot al emp loyees

Attra c ting more wo men into o ur busine ss is key to accessing t he skills we ne ed an d prom oting a mo re diverse c ulture, s o for our s trateg y pe riod, w e are targe ting year -on - year inc rease fo r women a s a perce ntage of total emp loyees . For th e repo rted ye ar , the pro por tion of female s acro ss Galliford T r y was 24. 3% comp ared to 23 .0 % last year e xcluding nmc n water , and 21. 2 % includin g the acq uisition of nmc n water . We continue d to prom ote our agile wo rking pra ctice s, w hich remain a co rner stone of our app roach , offe ring exibility to suit indivi dual ne eds . It goes b eyond re mote workin g and of fe rs our p eop le the ab ility to take adv antage of a b lend ed ap proac h to work , including stag gere d star t and nish times , job sha res, c ompre ssed h our s, sabb aticals a nd return to wo rk progr amme s. Und erpinnin g all of the se areas , is our Ret ain and G ain app roach w hich foc uses o n culture , engagement and l earning an d dev elopment of our p eop le.

Our c ulture

The re sult s fro m th e employe e engag ement sur vey dem onst rated we have th e right culture . Our hi ghes t scorin g area ac ross the s ur vey was he alth, s afet y and et hics , whe re we rated 93% an d 99 % of pe ople re spon ded f avourabl y to the s tatemen t that we give he alth and s afet y high pri orit y . Th e highe st sco res com pared to the in dustr y we re our com mitment to s ocial resp onsibilit y at 96%, havin g a vision that motivate s our p eopl e at 94%, a nd th eir ability to have a say in matte rs that involve th em at 93% . T hes e highlight s mirror th e impo rt ance we place a cross th ese a reas. Develo ping an d maintainin g the righ t culture is a fun dament al stre ng th of our b usines s and so we con tinue to pla ce a focu s on it, le ading fro m th e top.

Skil ls and development

Our b usine ss is commit ted to sup por ting empl oyees at all levels to full their potential . All emp loyees a re enco uraged to p arti cipate in our Per fo rmanc e and D evelop ment Review proc ess, w hich ta kes place on ce a year , an d is supported by ongoi ng development discussi ons and t raining. O ur ap proa ch takes th e shap e of Care er Paths , which p rovide a ra nge of opti ons to supp or t empl oyees to develo p the skills th ey nee d to build th eir care er with us a t their own pace . Care er paths a re design ed to sup por t succe ssion plan ning an d link to our Lea der ship Framewor k wh ich dene s th e capabilities and behav iours th at are imp or tant to us . Comp leme nting this is our G T Ac ade my , an online p latfo rm of lear ning an d d evelop ment tools an d reso urces , and o ur Lun ch & Lear ns, whic h a re shor t , impac t ful webin ars op en to ever yone , covering topi cs fro m per sonal skills develop ment to business- spec ic subjec t s all hos ted by subje ct m atter ex per t s.

This in clude d enco uraging o ur teams to spea k up abo ut any p otential non- comp liance with ou r policie s to line manage rs, s enior manage ment , our H R or Lega l teams or through our independent, anonymous whis tleblow ing fac ilit y.D uring the ye ar , we restr uc tured our in duc tions fo r new s tar ters , so that fro m the ver y s tar t of their c aree r with us , they lea rn what o ur busine ss rep resent s an d what we priori tise. O ur indu ctio ns are com preh ensive and comp rise three session s, the rst of which is led by a m embe r of the E xecuti ve Board . They c over our b usine ss, culture , healt h and safet y, our busine ss pro cesses, s trateg y an d tech nical a pproach. We refresh ed our C ode of Co nduc t w hich set s out wh at doing th e right thing m eans to us by outlining o ur stro ng ethic al st andards a nd providin g a fram ework to ens ure we behave in a way that re ec ts our purp ose, vision and value s includin g our enviro nmen tal, so cial and governan ce resp onsibilities .

People and culture

O ur pe ople cont i nue d The a cquisitio n of nmcn wa ter broug ht with it a team of 967 peo ple to our b usine ss followin g a perio d of ins tabilit y at their previo us emp loyer . Our ob jec tive was to quickly a nd ef fe cti vely comm unicate w ith the in coming em ployee ba se to ensure busin ess contin uity a nd imp rove employe e sentim ent. A ctio ns we took in clud ed:

Holding an initi al brien g chaired by the CEO for all staf f within the rst hour of the a cquisition b eing com pleted , with follow- up calls over th e nex t t wo days.
Paying s taf f on day t wo of th e acquisitio n.
Se tting up a da ily integration m eetin g with me mber s from key disciplin es from th e joining an d exis ting busin esse s with th e objec tive of deve loping a nd deliverin g an integratio n plan .
Developing a communicati ons plan design ed to intro duce em ployee s to our busin ess an d comm unicate wit h them as proc esse s transitio ned to Gallifo rd T ry ’s.
Ca rr ying out c ompre hensive in duc tions to our bu siness .
Makin g our S enior Le ader ship T eam available fo r ques tions a nd up dates at regular in terva ls.
Creating a d esignate d platf orm for que stions a nd an swer s for emp loyees joining th e busin ess.

The actio ns demonst rate our appr oach to inclusio n and en suring in dividuals a re welcom ed to ou r Group f rom day one .

967 pe ople inte grated into o ur bus ines s

Strateg y in ac tio n

Su cces sfully integ rating emp loyees from nmcn wat er

Op erating sus tainab ly conti nued

G allif ord T r y Ho ldin gs p lc

We delivered a total o f 10,5 88 train ing days during th e year (20 21: 6, 353), equiva lent to 3. 3 days p er empl oyee (2021: 2 .5). T he inc rease was pa rtly a re sult of po stp one d cours es due to lockdow n and b eing abl e to resume d eliver y of in-p erso n training . New ma ndator y programmes for c ommercial and project teams als o contrib uted to the in crease .

G ender Pay R epor ting

From April 2 018, com panies h ave been re quired to di sc lose a nu mber of speci c gender pay and bonus comparisons on an annual basis. Our la st repo rt p rovide d our data as a t 5 April 2 021, which t herefo re exclude s our a cquired comp anies in th e year . For the re por ted yea r , the p ropo rtio n of males a nd fema les ac ross Galliford T r y remain ed st able wit h 23% of our empl oyees b eing femal e and 7 7% b eing male . Our m ean gen der pay g ap remain ed st able at 28. 8% a s did our m edian gen der pay ga p at 33 .8 % (2020 : 32 . 2%). Our m ean an d media n gende r pay gaps f or our ea rly years p op ulation are bot h negati ve, sta nding at - 10. 8% and - 7 . 8% re spe ctivel y , which ree ct s the gender split of tal ent joining o ur busin ess at an en tr y level, with t he ambitio n of develop ing this tal ent into senio r roles over tim e. Our mean and medi an gender bonus gaps both re duce d, from 65 .5% to 49 .1 % an d 49 . 9 % to 38 . 2% , res pec tively.

Cost of livi ng

Recog nising the natio nal cos t of living cha llenge, we loo ked at how we co uld supp ort our empl oyees an d the G roup ag reed to make a one -of f paym ent in Aut umn 202 2 of circa £1.0 m , in total, to over 1 , 80 0 of it s st af f.

Looking forward

We recognise t here is a res ourcin g challenge acros s the natio n and in dustr y a nd have enga ged in vario us ac tivitie s to curb th e impac t of tho se challen ges within o ur busin ess . Our app roach inclu des a signi ca nt in ves tme nt in reso urcing ac tivi ties. A s well as hir ing a new Hea d of Reso urcing , we have par tne red with a sp ecialist consult ant to help to de ne and co mmuni cate our va lue prop osition to dif ferent e mployee g roups to su ppo rt o ur app roach to ret aining an d gaining th e tale nt we ne ed to succe ed in ou r ambition s. Th is app roach s egme nts o ur audie nces an d of fer s greater insig ht into what key dem ograp hics or ca ndidate t yp es are se eking wit hin their empl oyment , what m akes them s tay with a n empl oyer and w hy they move . It also con siders the lan guage we u se to be mo re inclusive , how we p resent o ur busin ess to ta rget hires , and w here we a dver tise . For examp le, we continu e to develop h ow we use s ocial me dia plat forms to p romote ou r busine ss to potential employees across d if ferent demographics. Our p lans also in clude a dding s uppo rt to hirin g manage rs in ide ntif ying an d recr uiting tale nt into th e business. In additi on, in J uly 202 2, we f orme d a par tne rship with Cle ar A ssured , a comp any which s pecialise s in the p rovision of incl usive talen t managem ent . Working togeth er , we aim to use th e Clear A ssure d frame work to iden tif y and re move barri ers from re cruitm ent an d retention p rac tices w hich have the p otential to exclude u nder -rep resen ted group s inclu ding disabl ed, B AME and LGB TQ+ ca ndidates a cross the em ployee life cycl e. Initially o ur focu s will be on retaining talent , nding talent , as sessing talen t and revie wing our p olicie s and proc edure s, bu t will move to other a reas of foc us as our jo urney p rogre sses . We are prou d to have been a ccredite d as a Disabilit y Cond ent Employer for a numb er of years , conrming our commitm ent to rem oving barrie rs to disable d pe ople a nd tho se with long-term h ealth con ditions in em ploym ent. A s par t of our co mmitme nt to promotin g inclusio n, we s tar ted a ne w serie s which put s a spotlig ht on dif fere nt commu nities acros s the UK t hrough b logs a nd inter views . Th e series a ims to break down b arriers b y educ ating p eopl e abo ut the ex perie nces of in dividua ls, sharin g comm onalities a nd cele brating dif feren ces . So fa r , it h as inclu ded religious f esti vals such as Ei d, Eas ter and Vaisakhi, exp erien ces of gay m en in the cons truc tion in dus try a s well as blog s for wome n in cons truc tion . Our p ost s were v iewed by 71,000+ people
1,800+ pe ople dire ctl y enga ged wit h these posts

Strateg y in ac tio n

Prom oti ng inclu sion by sharin g exp erie n ces

Proportion of males and females across our busi ne ss at 30 June 2022

Gender	Female	Male
plc B oard	4	4
Senior gra des (A- D)	256	508
T otal comp any inclu ding plc B oard	737	2,740

1 Gende r g ure s are bas ed on employe e numbe rs at yea r -en d.
2 Se nior gra des are den ed as job gr ade s A –D which enc omp asse s senior mana gers an d dire c tors , exclu ding B oard dir ec tors .

A nn ual Rep or t and F inan cial Sta teme nts 2 022

Strate gic rep or t

Gover nance

Financial information

E nvi r o nment and cl i ma t e chang e

Socially responsible deliv er y

Our o b ject iv e i s t o ado pt s u sta i n ab le r esou r c i ng a nd co ns u mp ti o n pr acti c es an d tak e me as u r es t o m i ti ga t e car bon pr oduct io n and cli ma te c ha n ge to pr ote c t ou r en v iro n m e nt an d bi o di ve r sit y .

9 6% of our p eop le say our co mmitment to socia l resp onsib ility is genuine

Op erating sus tainab ly conti nued

Galli ford Try Ho ldin gs p lc

Performance in the year

We saw a fur ther 6 . 3% red uc tion in our s cope 1 and 2 e missions in 2 021 and remain o n track to achieve o ur targe t of achiev ing net zero by 203 0 . T he bi gge st contrib utor to this fa ll was our re duc tion in th e amou nt of diesel u sed to powe r plant an d equip ment on o ur sites . Our overall per form ance reec t s a numb er of ongoin g initiatives incl uding earl y conn ec tions to mains ele ctri city s upply, more en erg y ef cie nt s ite of ce and welfare cabin s, and a t ransition to alter native fue ls. In Se ptembe r 2021, we co mmit ted to providin g only el ec tric or plu g-in hybrid vehicl es in our comp any car eet. A s at 30 Jun e 20 22 , 5 1% of the 1,122 vehicle s in our company car eet were ele ctri c or plug-in hyb rid and t he average emission s per veh icle redu ced to 6 0.1g /k m (as at 30 J une 2021: 7 7 .9g /k m).

Our w aste intensit y inc reased in t he year , ree ctin g th e p rojec t mix, with a greater prop or tion of high er was te intensit y projec t s. Howeve r , w aste contin ues to b e an area of foc us, wit h increas ed use of M MC , esp ecially of f -site man ufa ctu re, redu cing the vo lumes o f waste p rodu ced. We also m anage ou r waste strea ms to maximis e rec ycling and m inimise waste to l an dll and have inc reased the prop or tion of was te diverted from land ll to 96. 3% (2021: 94 .5%). Educ ation is a large p art o f awaren ess, a nd during th e year , we delivere d 25 1 training day s covering env ironme nt (2021: 3 04).

Carbon Reduction and So cial V alue Forum

We have estab lished a C arb on Reduc tion a nd So cial V alu e Forum , which re por t s into the Direc tor of Risk a nd S ustaina bility a nd is chaired b y our Finan ce Direc tor o n a quar terly basis. It s pur pos e is to oversee t he initiatives bein g develop ed an d delivere d across t he dif ferent a reas of our j ourn ey to net zero.These include: Developing and rolling out a Journey to Net Zero e-learning module to equip all our staff with literacy in the key carbon reporting concepts and terminology, and to provide them with an understanding of our carbon reduction ambition and how they can support us in achieving it. Piloting the use of carbon calculators, integrated with our existing BIM tools to model the embodied and operational carbon of building and infrastructure designs. This is allowing us to support our clients by identifying opportunities to make different design choices to improve the energy efficiency of the asset in use or reduce the embodied carbon in the materials used. Developing a Low Carbon Process to embed carbon reduction targets and principles into the business-as-usual project delivery process. Designing and rolling out our Net Zero Partners supply chain engagement initiative, with the aim to help upskill our supply chain partners and equip them to support us in delivering low carbon buildings and infrastructure. Developing a low carbon site playbook to accelerate the adoption of good practice across our projects and support the transition to diesel-free construction sites.

1 Carbon dioxide equivalent emissions are reported by calendar year, therefore the emissions reported for FY22 relate to the calendar year 2021. Since 2014, our reported emissions have been externally verified to the ISO 14064-3 assurance standard.
2 In 2020 and prior years, the emissions associated with business use of company cars where the employee purchased the fuel and was reimbursed through an expenses claim were reported under scope 3 – business travel. In 2021, these emissions have been reported under scope 1 in order to be consistent with the reporting of emissions from company cars where the fuel is paid for by a corporate fuel card. To aid comparison with earlier years, the data for 2019 and 2020 has been restated using the methodology used for 2021.

Key commitments
| KPI | FY20 1,2 | FY21 1,2 | FY22 1 | Ambition | Link to UN SDGs |
|---|---|---|---|---|---|
| Scope 1 and 2 carbon emissions (CO2e tonnes) | 18,732 | 11,525 | 10,795 | Net zero by 2030 | |
| Scope 3 carbon emissions (CO2e tonnes) | Not reported | Not reported | 6,040 | Net zero by 2045 | |
| Waste intensity (tonnes/£100k revenue) | 13.04 | 7.57 | 20.96 | YoY reduction | 29 |

Annual Report and Financial Statements 2022
Strategic report
Governance
Financial information
Socially responsible delivery
Environment and climate change continued

Streamlined Energy & Carbon (SECR) Reporting
The data included in the table on page 31 covers the reporting requirements detailed in the SECR regulations. As we report our carbon and energy data in calendar years, the following section represents our carbon and energy performance for Galliford Try for the calendar years 2021 and 2020. We are pleased to report a reduction in our Scope 1 and 2 carbon emissions intensity (see changes in reporting below) to 0.91 tonnes of carbon dioxide equivalent emissions per £100,000 of revenue in 2021 from 1.16 in 2020. While some of this reduction is due to business travel remaining below pre-pandemic levels, this also reflects the various initiatives we have taken to become more energy efficient and reduce the carbon footprint of our own operations. Overall, we have reduced our scope 1 and 2 carbon dioxide equivalent emissions by 61% since 2015, ie from 27,837 tonnes of carbon dioxide equivalent emissions in 2015 to 10,795 tonnes in 2021.

Changes in reporting
In 2020 and prior years, the emissions associated with business use of company cars where the employee purchased the fuel and was reimbursed through an expenses claim have been reported under scope 3 – business travel. In 2021, these emissions were reported under scope 1 in order to be consistent with the reporting of emissions from company cars where the fuel is paid for by a corporate fuel card. To aid comparison with earlier years, the data for 2019 and 2020 has been restated using the methodology used for 2021.
During 2021, we expanded our scope 3 reporting boundary to include all other elements of business travel, fuel and energy-related activities and employee commuting. As part of our commitment to achieve net zero by 2045 and setting a science-based interim carbon reduction target, we are currently in the process of performing a Scope 3 footprinting review to identify the most material Scope 3 emissions categories. We will then develop reporting methodologies for these categories and start reporting all material Scope 3 emissions.

Greenhead College is part of the first wave of the Department for Education’s School Rebuilding Programme. The project involves the partial redevelopment of the college campus to provide new modern teaching and learning facilities within energy efficient net zero carbon in operation accommodation. Our design for Greenhead College removes the use of fossil fuels and adopts a fabric-first approach to improving the envelope of the college thus reducing the energy demand through passive design methods. We have met the standard of reducing energy use, staying below the maximum energy use intensity of 74 kWh/sq m per year. This has been achieved by reducing the amount of energy consumed in the operation of the building with the aim of ensuring the building is highly efficient. Our design and construction is future-proofed against the potential risks of climate change by modelling the design to future weather data and ensuring that any adaptations required can be achieved without changes to the structure of the buildings. The project will include improving an extensive biodiverse green roof combined with photovoltaic cells that will generate electricity and create a new habitat. We have also maximised the benefits of the existing vegetation and microclimate.

Maximum energy use of intensity per year of 74kWh/sq m
Strategy in action
Net zero in operation at Greenhead College
Operating sustainably continued
Credit: Ryder
30
Galliford Try Holdings plc
Methodology
Carbon dioxide equivalent emissions (tCO2e) are calculated using the methodology in ISO 14064-1 and the UK Government GHG Conversion Factors and Methodology for Company Reporting 2021, which are also subject to external verification. Emissions cover all those arising from our fleet, gas and electricity in all offices and sites and all other fuel used directly (for example diesel on site) including our share of emissions from joint ventures. Where data is obtained in litres used and distance travelled, these conversion factors have been used to convert to kWh.

Annual energy usage
Our total energy use, calculated from Defra 2021 conversion factors, for all our UK activities was 48,382,602 kWh (location-based), which is a 20.4% increase in our total energy use (2020: 40,194,724 kWh (location-based)). This increase in reported energy use reflects the inclusion of certain scope 3 emission categories within our reporting boundary in 2021. On a like-for-like basis, our total energy use was 37,203,327 kWh (location based) which is a 7.4% reduction in our total energy use compared to 2020. This excludes our PPP Investments operations, but includes joint ventures where we have operational control.

Looking forward
Some of the key areas of focus over the next year include:
* Continuing to roll out the use of carbon calculators across the business.
* Completing our scope 3 footprinting review and having our science-based carbon reduction targets verified by the SBTi (Science Based Target initiative).
* Further embedding carbon reduction principles into our project delivery methodology by developing our processes to meet the PAS 2080 Carbon in Infrastructure standard.
* Developing carbon data capture and reporting processes so that we can provide our project teams with better information to help them modify their operations to reduce carbon.
* Developing and rolling out role-based learning content to support the low carbon processes.

	Tonnes of CO2e
	2021	2020	2019
Emissions from combustion of gas (tCO2e (Scope 1))	383	100	672
Emissions from combustion of fuel for transport purposes (Scope 1)	13,482	3,742	6,485
Emissions from fuel oil supplies ie diesel consumed (Scope 1)	4,556	5,683	9,997
Fugitive emissions from office facilities ie air conditioning systems (Scope 1)	212	59
Emissions from use of LPG (Scope 1)	0	0	1
Emissions from purchased electricity (Scope 2 , location-based)	2,161	1,994	1,568
Emissions from purchased electricity (Scope 2 , market-based)	1,341	998	Not reported
Emissions from fuel and energy-related activities (Scope 3)	2,738	Not reported	Not reported
Emissions from business travel (Scope 3)	1,429	1,412	264
Emissions from employee commuting (Scope 3 )	2,874	Not reported	Not reported

Galliford Try’s operations are wholly within the UK and as such this is where reported emissions arise.# Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Communities

Socially responsible delivery

Our objective is to make a positive impact in communities where we operate by delivering greater social value and improving lives. Operating sustainably continued.

Pozzoni

32 Galliford Try Holdings plc

Performance in the year

Delivering a legacy of positive social value outcomes in the communities in which we operate is a key part of our strategy. This is the right thing to do as a responsible business and is also an increasingly important priority for our clients.

Social and Local Economic Value

The ability to measure the social and local economic outcomes we deliver on our projects is now a requirement for many of our clients, especially in the public sector. The Construction Playbook states that central Government tenders must include a minimum of 10% of their evaluation criteria dedicated to social value, and the priority themes and outcomes are set out in 2020’s Procurement Policy Note (PPN) 06/20 – Taking Account of Social Value in the Award of Central Government Contracts.

During the year, we extended the scope of our partnership with the Social Value Portal (SVP), a tool which is backed by the National TOMs (Themes, Outcomes and Measures) Framework, which helps organisations measure, report and enhance their social value. We are now able to report the social value we deliver on our projects across the group in a consistent way.

We have evaluated 28 projects completed during the year and on these projects, we delivered a combined Social and Local Economic Value (SLE V) of £306m.

Now that we have more data from our use of the SVP, we have a better understanding of the drivers of the SLE V metric. The local economic value element is calculated by applying a multiplier to spend with the local supply chain which varies significantly depending on location. In a relatively small population of projects, this can have a distorting impact on the average SLE V as a percentage of contract value, making it a volatile and unreliable metric.

Therefore, we have redefined our KPI to be the percentage of our completed projects over £5m that achieve greater than 25% SLE V as a percentage of project value. The threshold of 25% has been selected based on the SVP’s 2021 Social Value Benchmarking Report. The SVP’s analysis of 1,480 UK construction projects identified that the average SLE V as a percentage of project value was 24.67%.

During this financial year, 14 projects (50%) delivered a SLE V as percentage of contract value greater than our target of 25% and we have set our ambition for 60% of projects to exceed this threshold.

During the year we donated time, materials and money to the value of £268,000 (2021: £250,000) to charitable and community causes.

Considerate Constructors Scheme

The Considerate Constructors Scheme (CCS) is an industry-wide organisation that strives to improve the image of the construction industry and leave a positive legacy through implementation of best practice in the areas of community engagement, the environment and workforce wellbeing. CCS scores and benchmarks construction sites in terms of their positive impact within their locality.

Our average CCS audit score has increased from 40.6 to 41.8 and remains above the industry average of 39.0. We have worked closely with CCS for over 15 years and this year were proud to receive a Partnership Award in recognition of our engagement with the scheme and commitment to innovation to raise standards.

Key commitments	FY20	FY21	FY22	Ambition	Link to UN SDGs
% of completed projects delivering > 25% SLE V as a % of contract value	Not reported	Not reported	50%	60%
Considerate Constructors Scheme (CCS) performance	41.1 (industry ave. 37.1)	40.6 (industry ave. 38.0)	41.8 (industry ave. 39.0)	> 38 and above industry average

In 2022, Galliford Try marked its 15-year anniversary of being a Considerate Constructors Scheme Partner. This is a significant achievement and demonstrates the commitment the organisation has to raising its standards and delivery for communities.

33 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Performance highlights

Local delivery supported by Group-wide network

Social value delivery is managed by a network of regional Social Value Managers (SVMs) who define, agree, plan and report on the community engagement and social value activities on each of our projects. This is based on a needs analysis, performed through collaboration with national and local stakeholders, which identifies the needs and priorities of the local community and the commitments made by our clients.

During the year, the Group Communities and Social Value Manager established a Social Value Forum, comprised of the regional SVMs to promote the sharing of good practice. This has included providing training in the National TOMs Framework and supporting the implementation of the Social Value Portal.

Educational support

We have developed an online resource for our teams to support schools engagement. The hub includes internal guidance as well as access to external resources, including learning plans aligned to key stages 2 to 5, available through Go Construct.

Looking forward

Much of the value we add to communities takes place locally, whether it is by providing employment, using the local supply chain or providing work experience and education opportunities. We aim to continue to support these activities at a project level while also targeting the following areas:

CRASH is the construction industry charity dedicated to delivering meaningful social impact to communities across the UK by helping homelessness charities and hospices with vital construction projects. We have been a corporate patron of CRASH for 21 years, and continue to engage with them to identify ways to expand the scope of the support we provide.

Developing our use of the Social Value Portal to include modelling potential social value outcomes and agree targets at the bid stage and to monitor performance against targets through project delivery.

Socially responsible delivery

Communities continued

My Future Pathway

Our Morrison Construction business has partnered with Renfrewshire Council on its’ My Future Pathway into Construction’ programme. The pathway programme sees students from Renfrewshire schools with a keen interest in working in construction complete the year-long programme and learn a number of skills from industry partners to help them with their future career. This includes site visits, career talks, taster days and work experience.

Operating sustainably continued

34 Galliford Try Holdings plc

Clients

Quality and innovation

Our objective is to deliver lower carbon, superior buildings and infrastructure with a better social footprint for clients in our chosen markets through a focus on innovation, digitalisation and quality.

35 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Performance in the year

We continue to have a strong pipeline of secured work in our chosen markets, with 90% of FY23 revenue already secured. These are important indicators demonstrating we are building trusted, long-term relationships with our clients based on a track record of delivering on their key priorities.

Trusted, long-term client relationships

Our focus on delivering quality outcomes and building trusted relationships with our clients is reflected in the fact that 94% of our order book is repeat business. Collaborative relationships provide the platform for our teams to provide trusted advice and focus on performance with clear customer priorities and outputs, all underpinned by our accreditation to the ISO 44001 Collaborative Business Relationships Standard.

Client satisfaction is independently assessed by a third party and we use a dedicated software platform to analyse the data and develop improvement plans.

Delivering low carbon buildings

Critical to these long-term relationships is our ability to support clients in achieving their carbon reduction objectives, demonstrating how together we can meet the Government strategy for net zero carbon, alongside our own net zero commitment by 2045.# T o achieve th is we are de ploying th e latest te chno log y and innovatio n and d ebunk ing many of th e myt hs that exis t aroun d redu cing ca rbon e missions .

The key too ls we use ac ross our b usine ss to redu ce the c arbo n footp rint of the sc hem es we deliver f or our clien ts inc lude:

Ca rbon litera cy t raining for t he busin ess to ensure we i dentif y an d maximis e the car bon sav ings a cross th e entire life c ycle of the p rojec t.
Wh ole-lif e carb on tools to a ssess a nd meas ure the c arbo n per fo rmance of comp one nts an d materials to provi de our client s with a clea r under sta nding an d inform ed de cisions to ma ximise the redu ctio n in carb on .
Digit al techn olog y to ass ess , capt ure and record d ecision s that inform f uture p rojec ts and p rovide a ba seline fo r compa ring the per fo rmanc e of the ass et in ope ration .

Leveraging Mo dern Meth ods of Construction

Lon g-t erm re lationship s with client s allow our teams t o provide early cont rac tor e ngagement, to de-risk p rojec ts a nd prov ide inn ovative meth ods to re duce ca rbon , an d improve pro duc tivit y and ef cienc y. The proa cti ve nature of o ur relationship s bring s a share d commitment to outcome s, rather than sco pe, that unlo cks in novation .

MMC are help ing to achieve t hese o utcom es acro ss the co mpany, with exa mple s includin g:

Eas tern Comman d and Custod y Unit – we won a Co nstr uc ting Excelle nce O f f -site Manu fac turin g Award by using M MC to redu ce the req uired work fo rce from 50 to 12 op erative s, sho rte ning the p rogram me by 10 weeks a nd eliminatin g work at hei ght. We had a zero AFR an d zero defe ct s.
A 5 2 Mea dow Lane Footb ridge – as par t of the A 52 improvemen t works , we ins talled a n 81m pede strian br idge. T he brid ge was manu fac ture d of f -site, as sembl ed adja cent to its nal lo cation and then lif ted into place in one night. This demon strate d th e b ene ts of component -based standardisa tion to minimise disr uption an d guar antee qualit y.
Goddard s Green w astewate r treatme nt work s – a m odularis ed plant room was b uilt and te sted of f-site, facilit ating mo dular cons truc tion of t he buildin g and p lant within t wo days .

Industry leading BIM and in formation modelli ng capabili ties

T o supp or t our client s achi eve their obj ec tives, we have investe d s ign ica nt resource s t owa rds identif y ing an d acquirin g innovative techn ologie s to improve ou r ability in providin g our client s exceptio nal ser vice s, pro duc ts an d value . We are leading t he ind ustr y with o ur wh ole team ap proac h to BIM , assimilating it into our busin ess pro cess es, a nd work ing towards an entirely digitis ed ap proac h to projec t delive ry using th e latest tec hnolo gies an d indus tr y sta ndards to get t here.

Our k nowle dge on th e subjec t is well reg arded and ha s enabl ed us to auth or par t of IS O 1 9650 as well as b eing ac tive con tributor s to free indus tr y guida nce develo pme nt via the UK BIM Framewor k. T ogeth er with s tan dards such a s ISO 16739 and our BI M and te chnic al ser vice s policie s, th ese f orm the f oundati on of our BI M strateg y, which is up dated reg ularly to keep abrea st of ad vance ment s in the eld .

Q ual it y a nd inn ovation

Client s co ntinu ed Key commitm ents	KPI	FY20	FY21	FY22	Ambition	Link to UN S DG s
% of rep eat bus ines s in our order book		91%	92%	94%	>80 %
% of full yea r planned re venue sec ured at th e sta rt of t he nan cial y ea r		90%	90%	90%	>8 5%

Op erating sus tainab ly conti nued

36 Gallif ord Try Ho ldin gs pl c

Looking forward

So me of the key area s of focu s over the n ext year incl ude:

Contin uing the e xtern al asse ssment o f the maturit y of our relati onships b uilding on t he collabo rative succ esse s across t he bu siness .
Furt her em bed ding car bon as sessm ent s throu gh our p re-co nstr uc tion pro cesse s to provide c lients w ith data to make informed deci sions.
Cont ributing to th e ado ption of th e Cons truc tion Play boo k to drive for ward collabo rative pro curem ent mo dels to improve ef cien cy an d pro duc tivit y.

Marjo rie Mc Clure Sch ool

Marjo rie Mc Clure Sch ool is a n ew build Sp ecial Educ ational N ee ds and D isabilities sch ool in th e Lon don Bo rough of B romley fo r stu dent s with a ran ge of dif ferent co mplex nee ds whic h includ e physic al, me dical a nd/or learn ing dif culties and disabilities . The p rojec t to re-b uild the s choo l was awarde d to Galliford T r y as par t of a Sus tainab ility Pilot by th e Depa rt ment fo r Educ ation in resp ons e to the UK G overnm ent targe t to achieve ne t - zero ‘ gre enho use ga s’ emission s by 205 0.

Reducing energ y demand

Marjo rie Mc Clure Sch ool is d esigne d to redu ce the ne ed fo r energ y u se. Ou r daylighting s trateg y inclu des a win dow design w hich bala nces daylig ht and overhe ating by the us e of ex ternal sha ding but als o a care ful consi deration of n atural light an d ventilation to redu ce ene rg y use. Hea ting and h ot water gen eration is fo ssil fue l free by m eans of an air s ource h eat pum p and p hotovoltaic s on th e roof gene rate energ y to b e of fse t agains t the overa ll usage. T he building is co nstr uc ted from tim ber Struc tura l Insulated Pa nels (SIP s) which have the benet s of enh ance d fa bric per fo rmanc e. T he SIPs s ystem allo ws the buildin g to be manu fac ture d of fsite whic h ben et s the programm e, quality and the overall sus tainabilit y pe rf orman ce of the proje ct by re ducing e mbo died c arbo n.

Enhanci ng biodivers ity

The sche me enhanc es the e xterna l environm ent an d increa ses bio diversit y. The p lan is pun ct uated by t wo cour t yards, which a llow daylight an d air to pen etrate the circ ulation spac es. T he cou rt yards have be en care fully det ailed to incl ude se nsor y garde ns, a n animal c are area , stor y telling and p er form ance spa ces , outdo or dining , fruit tre es an d growin g areas . The sc hem e provides an accessible outdoor class room using th e existing m ature oak tre e as a centrep iece an d also incl udes g rowing are as which a re acce ssi ble an d will enhan ce the curric ulum by inclu ding plantin g to comp lemen t subjec t area s such as fo od techn olog y, histor y , scie nce an d English .

Strateg y in ac tio n

A sust ai nab i li ty pi lo t for t he Depar tmen t of Educat ion

37 A nnu al Rep or t and F inan cial State men ts 2 022

Strate gic rep ort

Gover nance

Financial information

S upply cha i n

Q ualit y an d in novati on

Our o b ject iv e i s t o a l i gn ou r s up ply c h ai n wi th ou r cu ltu r e and cr ea t e coll ab orative rel ationships that del iver b es t p rac tice, inn ovation and su s t ai na b le o ut co m e s fo r clie nt s , c om m u ni ti e s a n d th e en v iro n m e nt .

Op erating sus tainab ly conti nued

38 Ga llifo rd T ry H old ing s plc

Performance in the year

We continue to fo cus on d eveloping collabo rative, lo ng-term relationsh ips with ou r suppl y chain par tn ers thro ugh our A dvanta ge throug h Alignm ent ( AtA ) progr amme , with 6 0% of o ur core Alig ned trad es sp end no w with Align ed sub contra cto rs. At A is a progra mme d evised by o ur busin ess which go es b eyond p ure collabo ration with o ur supp ly chain , into a much d eep er relations hip. Align ed sub contra ctor s are app ointed a dedic ated p oint of conta ct w ithin our b usine ss for impro ved communicat ion. Through support , training a nd ed ucatio n, we alig n our sup pliers and s ubcont rac tors with o ur workin g prac tice s, our valu es an d our visio n. T his includ es acc ess to our awa rd-winnin g behavio ural saf ety progr amme , Challen ging Belief s, A f fec ting Behavi our; B IM training a nd acce ss to Contin uing Profes sional De velopm ent . T his de epe r unde rsta nding c reates an align ed healt h an d safety app roach , greater ef cienc ies and o ppo rt unities fo r innovatio n, as well a s upskilling wo rkf orces an d allowin g the small and m edium sub contr ac tors we work w ith to de velop.

A healthy cash ow is the lifeblo od of any busin ess an d late paymen t of invoices ca n be prob lematic for s upplie rs of goo ds and s er vices . A s a signator y of the Pro mpt Paym ent Co de, we have commit ted to payin g 95% of supply c hain invoices wit hin 60 days , and p aying 95% of invoices fro m supp liers with fe wer than 5 0 empl oyees wit hin 30 days . We have made fur the r improvem ent s in how quick ly we pay our sup pliers , with 98 % now pai d within 6 0 days and t he average days to pay re duce d to 25 days.

We continue to ret ain Gol d status f rom the Sup ply Chain S ust ainabilit y Sch ool , an award-w inning collab oratio n design ed to upskill it s memb ers th rough f ree trainin g and reso urces coverin g sust ainabilit y , of f -site manufacturing, BIM, Lean and Managemen t.

Per form ance hig hlights

Subcontractor spend analysis dashboards

In order to su ppo rt o ur busin esse s in manag ing enga gemen t with their s upply c hain, w e have developed and i mplemented subcon trac tor dashb oards . T he das hboa rds allow our tea ms to manage s ubcon trac tor spe nd mo re ef fec tively, for example by monitor ing the proportion of busin ess we are d oing with o ur Align ed subc ontrac tors a nd S MEs a nd makin g sure that we are not ove rexpo sed to any in dividual subc ontrac tors . We will continue to d evelop the dash boa rd by integrating it w ith other sys tems to provi de inform ation to help us monito r suppl y chain pe rf orman ce and , whe re nec essar y, identif y sub contra cto rs who n ee d more s uppo rt .# Key Commitments

KPI	FY20	FY21	FY22	Ambition	Link to UN SDG
% of business unit core trades spend with Aligned subcontractors	58%	59%	60%	70%-80%
Prompt payment – % of invoices paid within 60 days	88%	93%	98%	>95%	39

Annual Report and Financial Statements 2022

Strategic Report

Governance

Financial Information

Strategy in Action

Rolling out low carbon welfare units

Net Zero Partners

In the year we launched our Net Zero Partners initiative to help remove the main barriers for first generational net zero carbon supply chain in the collective journey to net zero carbon. The programme empowers our supply chain to make decisions around their own carbon strategy and understand what is required to work with Galliford Try on our journey to net zero, using a clear set of guidelines and recommendations, and in turn provides us with industry insight to inform and adjust that journey. The initiative is based on three key pillars of carbon literacy, upskilling and continual improvement, and quality. These encourage an understanding of what carbon is and how to measure it properly, the skills, knowledge and training required for low carbon construction, and how to utilise low carbon construction methods and digital tools to maximise quality.

Looking forward

Some of the key areas of focus over the next year include:
* Embedding the Net Zero Partners programme across all our businesses.
* Working closely with our supply chain to identify innovation and upcoming technologies that can play a part in our net zero journey. This will be key to ensuring we pick the most effective products at the time and provide our business with the flexibility to evolve with the changing technologies and innovation in this space.

Quality and Innovation

Supply Chain Continued

Galliford Try is using modern welfare units which reduce carbon dioxide emissions, minimise fuel consumption and lower noise pollution by targeting the use of solar power, water harvesting systems and smart telemetry. The units’ smart telemetry system features a live dashboard for real-time monitoring including automated system start/stop, fault resolution and management of service intervals which facilitate optimal utilisation of welfare. A smart eco-water system with rainwater harvesting and an on-chemical water tank provides bigger and better hygiene and wash facilities while reducing costs and carbon. The system stores hot water for instant warm water instead of using a generator-powered immersion heater to heat water on-demand. It's large capacity, along with the smart telemetry, has eliminated 90% of automatic weekly services, and also saved the equivalent of 872 litres of fuel based on a single unit over nine weeks. Compared to traditional units that are typically powered by diesel generators, the new units run entirely on solar/lithium batteries, unless a top-up charge is required to power a working office, two separate WCs and full welfare facilities including appliances such as kettles and microwaves. Four units deployed over three months generated savings of:
* £1,220kg in CO2 emissions
* £2,000 in operational costs

Operating sustainably continued

40 Galliford Try Holdings plc

Action and Performance

Since the Modern Slavery Act came into force, we have run an awareness campaign comprising posters, videos and educational material aimed at helping people to recognise the typical signs of modern slavery. During the year, we refreshed our Code of Conduct, and promoted awareness of modern slavery again. We ask all suppliers of equipment and materials to our businesses to consider the risk of modern slavery and to make a commitment to ensure that there is no slavery or trafficking in their supply chain. Our widely available whistleblowing procedure allows any employee or third party to confidentially raise a concern.

Anti-bribery and corruption

Policy and Management

Every three years, all employees must complete an online course regarding the Bribery Act, which is also a topic covered in employee inductions. Twice a year, every business unit managing director and head of support function is required to sign a declaration to the Chief Executive that their respective teams are aware of the policy and the Code of Conduct, comply with their contents, and that any issues have been reported.

Performance

No material issues were reported or identified through our audits.

Human Rights and Modern Slavery

Ensuring Human Rights

We are committed to upholding human rights for our people and those who work with us, and we take steps to prevent slavery and human trafficking from taking place in our business and supply chain. We comply with all UK legislation for human rights, recognising modern slavery and human trafficking to be the most significant human rights risks to UK construction businesses.

41 Annual Report and Financial Statements 2022

Strategic Report

Governance

Financial Information

Non-financial information statement and non-financial key performance indicators

The information required to be included in our non-financial information statement, under sections 414CA and 414CB of the Companies Act 2006, can be found in the following places in the Strategic Report:

Area	Key policies – available on our website	Further information on related risks, KPIs and performance
Employees	Health and Safety Policy Statement	Pages 21–27
	Employee Wellbeing Policy
	Flexible Working Policy
	Maternity Leave Policy
	Paternity Leave Policy
	Adoption Leave Policy
	Shared Parental Leave (Birth) Policy
	Shared Parental Leave (Adoption) Policy
Environmental matters	Energy Policy	Pages 28–31
	Environmental Policy Statement
	Responsible Sourcing Policy
	Sustainability Policy
	Biodiversity Policy
Human rights	Modern Slavery Statement	Page 41
Social matters	Code of Conduct – Doing the Right Thing	Page 26
	Anti-bribery and corruption Policy	Page 41

	and Guidance on the Prevention of Corruption and Fraud
Business model	n/a	Pages 2–3
Principal risks	Risk Management Policy	Pages 44–47

42 Galliford Try Holdings plc

Risk Management

Effective Risk Management

Our ability to identify, assess and manage risks and uncertainties is one of the key enablers to delivering our Sustainable Growth Strategy. It is vital that we understand the potential risks associated with every project opportunity and ensure that we only bid for projects that align to our risk appetite and our ability to manage the risks. We must also be able to identify and manage the risks associated with operating in a dynamic external environment. Our embedded culture of risk awareness has been particularly important to enable the business to successfully mitigate the macro economic challenges of the last financial year, such as rising inflation. It also helps us identify and monitor the development of emerging risks, including the potential impact of climate change – both the physical risks and the risks associated with the transition to a low carbon economy.

Our approach to managing risk is structured, pragmatic and targeted, with key risk mitigation measures embedded into management processes and activities. These include:
* A Business Management System with processes and procedures designed to give us confidence in commercial decisions.
* Project level controls and management oversight of project forecasts.
* Monthly cross-disciplinary contract review meetings on all projects.
* Standardised formats 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.

These activities are supported by a governance structure that provides oversight of key risks from the plc Board through to individual projects. Our principal risks are presented on pages 44-47.

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.

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 principal and emerging risks at least three times a year.

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 Risk and Internal Audit team.# Executive Risk Committee

Chaired by the General Counsel & Company Secretary and comprises the Finance Director, Director of Risk and Sustainability, and a representative from each of Building, Infrastructure and Specialist Services (Investments & FM). Meets three times a year to review and update 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 business in the longer term.

plc Board

Has overall responsibility for setting the risk appetite of the business and maintaining oversight of our processes for identifying, assessing, managing and reporting on principal risks. Reviews principal and emerging risks three times a year. Create a project Risk and Opportunity Register at the bid stage and maintain it throughout the life cycle of the project. Review the risk and opportunities at key checkpoints and as part of the monthly contract review meetings.

Project teams

Facilitates the identification, reporting and management of risk throughout the governance structure. Provides a risk update, including the updated principal and emerging risks to the Executive Board and the plc Board at least three times a year.

Audit Committee

Risk and Internal Audit

Responsible for keeping under review the adequacy and effectiveness of our 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.

43 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Risk description

We fail to secure an appropriate pipeline of projects to achieve our revenue and profitability targets.

Risk appetite

We aim to secure a forward order book that provides a high degree of certainty of current year plus following year revenue, while reflecting appropriate margin, cash and risk attributes. Maintaining discipline in the projects that we bid for is a fundamental element of our internal control framework. We will only bid for projects where we are confident that we have the experience, knowledge and supply chain to deliver effectively and where the client relationships and commercial terms support a collaborative approach to managing risk.

Potential causes of risk

A significant and sustained reduction in Government investment in building and infrastructure projects reduces the opportunity pipeline.
Increased costs make some schemes economically unviable leading to delays or cancellation of projects.
Delays to and/or reduced levels of private sector investment due to macro-economic conditions.
Failure to secure positions on key procurement frameworks.
Failure to meet the increasing sustainability expectations of our clients.
Poor quality bid submissions.
Failure to maintain discipline in project selection.

Current risk environment

Pipeline in our chosen markets remains strong, supported by Government policy on infrastructure spending and levelling up. The long-term transition to low carbon buildings and infrastructure is creating market opportunity – net zero new builds and energy-efficient refurbishments and retrofits. Inflation is making it more challenging to agree contract values – increased risk that some opportunities may go away if they become unaffordable for the client. However clients appreciate the issues with inflation and are more receptive to a more collaborative approach to sharing the risk. Quality is becoming increasingly important to clients, not just price – clients across all sectors are looking for solutions that support their carbon reduction and social value objectives. This aligns well with our strengths, but we need to continue to develop our capability and offering.

Emerging risks

Clients start to move away from the traditional main contractor /subcontractor model, instead opting for more self-delivery and enterprise delivery models.
We innovate or adopt new technologies too early, incurring costs associated with being an early adopter, or too late, losing market share.
Client attitudes to sustainability shift at differing rates, leaving some clients focused on construction cost and others on whole-life cost and carbon performance.
Changes to planning policy and regulations to deliver the UK’s net zero ambition limit the ability of our clients to pursue new build constructions schemes.
Shifts in Government policy and public spending could reduce the certainty of opportunities in the public and regulated sectors.

Mitigations

We manage the potential impact of an economic downturn by building a high-quality order book with projects that meet our strict risk profile. We concentrate on sectors where we have core strengths and clients with long-term growth and profitability potential. We focus on securing positions on key procurement frameworks (page 13) and repeat business with key clients through a centralised, dedicated pre-construction team. This allows for strategic planning, better collaboration and reduced risk of project failure. Each time we bid for a contract, we follow our internal “heat map” process, identifying risks across a range of criteria including the client and their advisors, project location and our local supply chain, our technical experience, our internal resources and capacity, the procurement method, contractual terms, and conditions and price. All contracts over £25m in value, or which have a heightened risk indicator on any other measure, are reviewed by the Executive Board prior to approval to bid. We typically target lower-risk contract types. We carry out peer reviews of bids where relevant to ensure robust review and challenge of risks and assumptions and to promote knowledge sharing across the business. Adjacent markets strategy, including PRS and nmcn acquisition, expand our target markets in a risk-managed way.

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.

Our principal risks

At a Group level, the Board monitors risk using the following four principal risks, a detailed analysis of which is provided below:

Work winning.
Project delivery.
Resources.
Regulatory compliance.

This approach facilitates a targeted focus on the most significant risks and the actions being taken to manage them. At an individual business unit level, our risk management process captures and monitors risks and mitigations using more detailed risk themes aligned to the four principal risks so that we can take more targeted actions to address issues that are specific to the regions and sectors in which they operate.

Work-winning

Risk management continued

44 Galliford Try Holdings plc

Risk description

We fail to deliver projects safely, on time, in agreement with contractual terms, and to a high quality for our clients.

Risk appetite

We prioritise health and safety above everything else and believe that nothing is so important that we cannot take the time to do it safely. We will not tolerate poor quality and strive to deliver high quality buildings and infrastructure for our clients that provide safe environments for the occupiers and users of the assets. We aim to provide realistic and transparent forecasts of project performance with potential risks to programme and margins identified and addressed before they materialise.

Potential causes of risk

Changing regulations.
Non-compliance with health and safety regulations and /or poor safety behaviours.
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.
Failure to comply with quality control procedures.
Extended periods of adverse weather conditions.
Subcontractor poor performance and / or insolvency.
Unrealistic estimates, including cost to complete, inflation estimates, outcomes of disputes and final value included in project forecasts.

Current risk environment

Our Accident Frequency Rate improved from 0.08 to 0.06 in the year. Covid outbreaks are no longer a significant risk to programmes but there remains the risk of isolated examples of disruption. Staff shortages increase the sense of workers feeling stretched which could impact on safety and wellbeing. Short-notice delays, cancellations or incomplete deliveries are causing disruption to programmes, but are manageable. Storing materials on site reduces the available space which needs to be planned properly to maintain safe site operations. It also increases the risk of theft. Relatively benign weather conditions across the year with periods of extreme heat managed through pragmatic guidance on modifications to working practices. Continue to drive initiatives to improve quality through training, tools, quality alerts.# Emer ging risks

PI cover for c onst ruc tion cont rac tors and / or in suran ce cover be come s proh ibitively ex pen sive. We fail to adap t our pro cesse s to mee t the re quireme nts of o ur client s to have bet ter an d more reliabl e data abo ut the asset s we de sign an d build for t hem . Th e countr y f ails to learn fro m Covid- 1 9 and a ny potential ne w global p ande mic has a signi can t/similar impac t on the cons truc tion in dus try t hat it had with Covid- 1 9 . Buildin g design s and co nstr uc tion meth odo logies f ail to adapt to th e physic al ef fec t s of climate change , inclu ding more regular a nd mo re ex treme weat her event s, lea ding to redu ced pro duc tivit y, progr amme d elays and co st overr uns.

Mitigatio ns

Contin ued rein forcem ent of our behavioural safet y program me Challen ging Belief s, A f fec ting Be haviour , and t he introd uc tion of Lea d Indic ators which t arget n o harm . A valu es-drive n appro ach to proj ec t deliver y fo cusing on c lose collab oratio n and clie nt satisf ac tion to enab le achieve ment of en d goals fo r both pa rtie s. Robu st review a nd ap proval of con trac tual terms , pre- contra ct to en sure we do n ot sign up to contr ac ts with o nero us terms . This in clude s the emp loym ent of margin thres holds a nd es calation to th e Boa rd of any contr ac ts that d o not me et our cri teria. Rigoro us qualit y contro l in our bu siness management system polic ies and proc edure s and digit alisation to imp rove data , qualit y and ef cien cy. Du e diligence to sel ec t comp etent designers and su bcontractors to w ork with an d use sp ecialist co nsulta nts at key review sta ges . Com prehe nsive com mercial trainin g. We have introd uced s tan dardise d format s (value co st ana lysis and co st and va lue reco nciliation) for m onitoring and re por ting p rojec t per fo rmanc e and f orec ast s. Mo nthly cros s-disciplina ry c ontrac t review m eeting s on all proje ct s enab le a robus t asse ssme nt of progr amme stat us, risk s and co mmercial f orec ast s and a re investing in u pgra ding our ex isting ERP systems. A prog ramm e of comm ercial ‘health che cks’ to provid e an ind epen dent asse ssmen t of the proj ec t team’ s rep or ted proje ct p er forma nce an d forec ast o utt urn. Op eratio nal controls in cluding h ealth and s afet y site risk asses sment s, w hich are monito red thro ugh a reg ular audit p roces s. Intro duc tion of T ech nical a nd Busin ess Sup por t For ums that drive p roce ss improvem ent s acros s health a nd safet y, digitalisation , carb on red uc tion , proc urement , design mana gement , mechanic al and elec trical, and comm ercial ac tivitie s. Es calation p roce sses to re spon d prom ptly and a ppro priately to incid ents . Key risk indic ators RID DOR a nd AFR s cores . Forec ast p rojec t marg ins. Project deliver y Link to our strate gic prioritie s Progres sive culture Socially responsible deliv er y Qua lity and innovatio n Sust ainable nancial returns 45 A nnu al Rep or t and F inan cial State men ts 20 22 Strate gic rep or t Gover nance Financial information

Risk desc ription

We fail to secure t he right p eop le and ot her reso urces n ecess ar y to deliver o ur projec t s and ma nage ou r busine ss.

Risk appetit e

We aim to recruit em ployee s from a diver se talen t poo l who are a ligned to o ur value s and be haviours. We se ek t o work with nancially resilient subc ontrac tors , sup pliers an d joint ventu re par tne rs wh o share our va lues in relatio n to safet y, quality an d sust ainabilit y .

Potential cause s

We are unabl e to attra ct , retain an d/or develop t he right s taf f to me et our f uture nee ds, we mismatch our s taf ng levels to peak s and t rough s in ac tivit y or lack dive rsit y . L ack of c apacit y in th e suppl y chain due to high l evels of ac tivit y in the construction sector . Sub contr ac tor and / or clie nt insolve nc y . Failure to comply w ith fair payme nt practi ces. La ck of geographic al coverage.

Curren t risk environ ment

Material cost ination is being driven by shor t term s upply/demand imb alance s and hi gh ener g y prices , exac erbated by the conic t in Ukra ine. However we take mea sures to mana ge material cos t ination (early procure ment , supply chain en gagem ent, ris k allowan ces in ten der s etc). Lon g lead tim es fo r bulk items like steel a nd bri cks are n ow fac tore d into our p rogramm es an d pro cureme nt plannin g. H owever , we are se eing mo re shor t -n otice delays , can cellations or incomplet e deliver ies. Sub contr ac tor insolve nc y is an incre asing risk, b ut we mana ge by being s elec tive in who w e work with , mon itoring our exp osure an d ensurin g we pay our suppliers promptly . It remain s a comp etitive market for t alent . La rge infras truc ture s chem es an d a mismatch betwe en skilled worker supply and d eman d is driving sa laries up a nd increa ses th e risk of empl oyees le aving for highe r reward pa ckage s. We are workin g hard on d eveloping o ur emp loyee valu e prop osition as p ar t of the bro ader ‘retain and g ain’ peo ple str ateg y . We continue to d evelop ou r own pe ople and p rovide th em with th e opp or tunities for p rogressio n. T he result s of our s taf f sur vey indic ate that we have high l evels of enga geme nt and satis fa ctio n within ou r sta ff a nd we co ntinue to imp rove the way we prom ote the b usiness a nd devel op our empl oyee of fering . Contin ued fo cus on w ellbeing . Stron g balance sh eet a nd net c ash p osition gives con denc e to clients and allows us to continua lly improve ou r promp t payment performance.

Emer ging risks

Th ere is a gene rational sh or tage of sk ills as more e xperi enced s taf f retire a nd are n ot replac ed in suf  cient numbe rs bec ause the construction sector cannot c ompete with oth er sec tors in at tra ctin g talent . Inn ovations in th e use of tec hnolo g y will require us to at trac t a wo rkf orce with a dif fere nt set of skills . De pletion o r increa sed sc arcit y of non -renew able materials may l ead to greater volatilit y in price s and m ore regular dis ruption to su pply. Th e drive towards n et zero cons truc tion may lead to a n increas ed risk of de fec ts and q uality iss ues as we s tar t to use n ew, low ca rbon m aterials who se long-term per fo rman ce is unp roven.

Mitigatio ns

Th e Grou p has an es tablish ed HR s trateg y base d on be st pr ac tice princ iples an d relevant l egislation wh ich, a mong ot her thing s, inc lude s the reg ular review of remun eration and ben et s package s to ensure w e remain comp etitive . Ou r succes sion plan ning and t alent manage ment p roces ses ena ble contin uity and identi catio n of futu re lea der s. We oper ate graduate a nd train ee progr amme s to develop o ur own pip eline of talent . We develop lo ng-term relationship s with key supp liers an d subco ntrac tors to ensure th at we remain a pri orit y cus tomer w hen res ource s and materials are in sho rt s upply. Our A dvanta ge through Align ment pro gra mme f ac ilitate s gre ater enga gemen t with our key sup ply chain mem bers a nd provi des th em with gre ater visibility of o ur pip eline of proje ct s. We are commit ted to payin g 95% of supp ly chain invoice s within 6 0 days, and a chievin g the ne w stan dards of th e Prompt P ayment Code. We m onitor subcont rac tor nancial stren gt h using a credit t racker on th e Dun & B rads treet p or tal. Ea ch busine ss unit revie ws its c ash fore cas t weekly a nd mo nthly, and the Gro up prepa res a det ailed daily c ash bo ok fore cas t for the f ollowing eig ht -week peri od to highlig ht any risk of intra-m onth uc tuation s. Thes e foreca sts are reviewed at busin ess unit , division a nd Gro up level.

Key risk indic ators

Materi al and trade s hor tages. Voluntar y st af f churn rate . Prompt Pa yment Code per fo rmanc e statis tics . Average m onth- end c ash .

R esourc es

Risk manag ement conti nued 46 G a l li f o r d Tr y H o l d i n g s p l c

Risk desc ription

We fail to compl y with require ment s of the vario us legal a nd reg ulatory re gimes in w hich we operate , res ulting in a high-pro le breach an d re gulator y cens ure.

Our risk appe tite

We have z ero t olerance for non-compl iance with reg ulations . We expec t all em ployee s and subc ontrac tors to b e aware of all reg ulations relevant to th eir role an d to compl y at all times . We also exp ec t our p eop le to speak u p if they o bser ve or su spe ct n on-c omplian ce.

Potential cause s

Failure to update our proced ures to ree ct chan ges to key legislation an d regulatio ns. Failure to provide suf ci ent and effe c tive training to all s taf f. Failure to implem ent ef fec tive co mpliance monitor ing processes.

Curren t risk environ ment

Buildin g Safet y Ac t – while w e welcom e the dri ve for greater q uality a nd consis tenc y , the A ct ha s the p otential for signic ant conse quen ces in relation to ex ten de d liabiliti es . Contin ue to invest in c yb er se curit y sur veillance to ols, rec ognising th e potential risk of c yber -att ack s linked to th e con ic t in Ukrain e. Se eking re cognitio n of our info rmation sec urity s tan dards an d proce dures throu gh ISO 270 01 acc reditatio n. Th e regulator y lan dsc ape in relatio n to ES G repo rtin g is evolving qu ickly an d will require us to m onitor an d pub lish more inform ation an d compl y with new sta ndards (ie I SSB).

Emer ging risks

Gre ater devolutio n or even full inde pen denc e may lead to ver y dif fe rent regulator y reg imes in S cotland a nd th e rest o f the UK . Climate- change / c arbo n related legislatio n eg a ban o n diesel .# Mitigatio ns

Galliford Try has comprehensive policies and guidance at every level, including our Code of Conduct, mandatory regulatory and cybersecurity e-learning for all employees, an anonymous and independent whistleblowing helpline, regular legal updates and briefings, six-monthly compliance declarations, and conflict of interest registers and authorisations. The Ethics and Compliance Committee provides ongoing monitoring and oversight of policy and compliance activity in relation to key areas of legislation. We continue to review the detail of the Building Safety Act and are preparing through training, continued investment in digital tools to support quality, and a proactive approach to managing claims.

Key risk indicators
* Number of external enforcement cases.

Regulatory compliance

Link to our strategic priorities
* Progressive culture
* Socially responsible delivery
* Quality and innovation
* Sustainable financial returns

47
Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

The built environment is responsible for around 40% of global carbon emissions; therefore, as a business operating in the construction sector, we have a responsibility to play our part in reducing emissions. We have reduced the carbon emissions within our own operations by 61% since 2015 and have set ambitious targets to achieve net zero in our operations by 2030 and across our value chain by 2045 (pages 30-31).

However, as well as continuing to address the impact that our activities have on the environment, over the past year, we have increased our focus on how climate change may have an impact on our strategy and the risks and opportunities presented. We have made disclosures that are consistent with the TCFD core elements areas of Governance, Strategy, Risk Management and Metrics and Targets and cover the 11 specific recommended disclosures, with the exception of the following two recommendations where we are not yet able to disclose full compliance:

We have not yet completed a quantitative scenario analysis to model the resilience of our strategy under different global warming scenarios.
While we have existing metrics and targets in relation to our Scope 1 and 2 and some Scope 3 GHG emissions, we need to expand these to include all relevant Scope 3 emissions categories and develop metrics and targets that are more closely aligned to the climate-related risks and opportunities we have identified.

Climate change considerations are embedded into our existing governance and risk management framework. Therefore, to avoid duplication, the key disclosures in relation to the 11 TCFD recommendations are included in the relevant sections of the Annual Report, as indicated in the table on pages 49 and 50. In this section, we have provided information on the disclosures that are not addressed in other sections.

Task Force on Climate-related Financial Disclosures (TCFD)

Our climate-related risks and opportunities

The nature and scope of our activities and the commercial environment in which we operate provide us with a number of inherent advantages in terms of our exposure to climate-related risks:

We do not have capital tied up in production facilities or other assets that could be at risk of stranding, i.e. their useful economic life being curtailed due to the transition to a low carbon economy.
The need to decarbonise the built environment provides a market opportunity for our services.
Our operations are entirely in the UK and therefore, while still exposed to rising mean temperatures and more severe weather events, we have limited exposure to the climate extremes that are predicted to make human life unsustainable in some regions of the world.
At any given time, across the UK we have a geographically dispersed portfolio of projects, therefore we are not exposed to damage to a business-critical facility, such as a factory or distribution centre, due to extreme weather.
We are not exposed to rapid and unpredictable shifts in consumer preferences and behaviour as our work is for long-term repeat clients, largely in the public and regulated sectors.
We are not exposed to the capital investment cost or risk associated with developing new, low carbon alternatives to existing product ranges as this is typically carried out by our supply chain partners.
Where we have good visibility of rising costs, these can be priced into our bids and recovered from clients.

Addressing climate change

We are taking action to ensure that our business continues to adapt and thrive in a changing climate. Our Net Zero Partners empowers our supply chain to make proactive decisions around their own carbon strategy and understand what is required to work with Galliford Try on our journey to net zero. Around 45 supplier organisations attended the launch event near Glasgow, and the programme has now been rolled out nationwide.

48
Galliford Try Holdings plc

Notwithstanding these structural advantages, during the year, the Executive Risk Committee performed a detailed review of the key climate-related risks and opportunities, based on analysis that had been prepared by the Director of Risk and Sustainability. The methodology adopted for the review closely followed the format of the CDP risk disclosures and therefore included assessments of the primary potential financial impact, the time horizon, likelihood and magnitude of each of the risks and opportunities identified. The outputs from the Executive Risk Committee’s review, which are outlined on pages 50 – 53, were reviewed by the Executive Board and plc Board.

Our most significant risks and opportunities are related to how effectively we manage the transition to a low carbon economy, as opposed to physical risks to our existing assets.

In assessing the likely timeline when risks and opportunities will begin to have an impact on the business, we have applied the following definitions:

Short term (0 – 3 years): aligns to our current pipeline of opportunities and projects and reflects issues and trends that are already having some impact.
Medium term (3 – 10 years): issues or trends that are already visible, but are not yet having a significant impact.
Long term (10 – 30 years): potential issues or trends that are foreseeable, but there is a high degree of uncertainty on how they develop and what impact they will have on the business.

Managing climate-related risks

The climate-related risks we face are managed through our existing strategic and operational management processes. For example, the risk and opportunity created by the increased carbon reduction requirements and expectations of clients is one of the key drivers of our Sustainable Growth Strategy. This is supported by operational responses, led by the Executive Board, to deliver the strategy. These responses include investment in new carbon reduction roles, creation of cross-disciplinary working groups, development of new processes and tools, and upskilling our own people and our supply chain.

Climate scenario analysis

We are developing scenario-based analysis, using plausible extremes scenarios – a 1.5ºC warming trajectory (aligned with the Paris Agreement) and a 2.7ºC warming trajectory (consistent with the Climate Action Tracker’s assessment of current policies and pledges).

Our high-level assumption is that a 1.5º C scenario will only be achieved through radical policy interventions, such as carbon taxes, or mandatory carbon offsets. Therefore under this scenario, we would expect the transition risks to be greater as we would have to respond more quickly to changing client expectations and a very different regulatory landscape.

By contrast, the 2.7ºC scenario would be characterised primarily by increased physical risks as a result of unchecked climate change and the resultant increase in the frequency and severity of extreme weather events.

Our qualitative assessment is that the potential impact of the risks and opportunities we have identified would be greater under a 1.5ºC scenario, given that they are more closely aligned with transition rather than physical risks. However, over the coming year, we will develop and refine this analysis further, and evaluate the potential implications on our strategy and business model.

TCFD Pillar	Recommended disclosures	How addressed
Governance	Disclose the organisation’s governance around climate-related risks and opportunities.	a. Describe the Board’s oversight of climate-related risks and opportunities. Governance over climate-related risks and opportunities is embedded into our business-as-usual governance processes and structures. This approach allows us to assess climate-related risks and opportunities in the context of the broader risk environment and develop pragmatic responses that are aligned with our overall Sustainable Growth Strategy.

b. Describe management’s role in assessing and managing climate-related risks and opportunities.

Strategy

Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning where such information is material.

a. Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.

See ‘Our climate-related risks and opportunities’ section overleaf and on page 51.

b. Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning.

c. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

We have not yet completed a quantitative scenario analysis to model the resilience of our strategy under different global warming scenarios. We have begun to develop qualitative analysis based on plausible extreme scenarios and will develop this analysis further over the coming year. See overleaf for further information.

Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Task Force on Climate-related Financial Disclosures (TCFD) continued

Risks

Fail to develop a competitive low carbon construction capability

Risk description and potential impact on the business
Our clients, in both the public and commercial sectors, are increasingly required to operate low carbon buildings and infrastructure. They expect us to have the capability to model the embedded and operational carbon, use lower carbon materials and extend the life of their existing assets through retrofitting. Planning policies and building regulations may also move towards ensuring that embedded and/or operational carbon targets are incorporated into the design and construction of buildings and infrastructure. If we fail to develop these capabilities quickly enough, we may not remain competitive and may not be able to win positions on key frameworks. Ultimately, if we cannot win new work, we may generate reduced levels of revenue and profits.

Risk mitigation
We have committed to achieving net zero across our own operations by 2030 and across all value chain operations by 2045. To do this, we have developed our ‘Journey to Net Zero’ framework and are taking multiple actions to achieve our carbon reduction targets including:
* Working closely with our clients to understand their carbon reduction ambition and targets, and developing solutions to meet those objectives.
* Investment in key carbon reduction roles.
* Carbon literacy training for all staff.
* Supply chain engagement and upskilling.
* Development of carbon reduction management process.
* Use of carbon calculators to model embodied and operational carbon.
* Development of systems and applications to improve carbon data and reporting.

| TCFD Pillar | Recommended disclosures | How addressed # Time horiz on Sh or t ter m Potential impac t on nancia l performance Increa sed dire ct co st s Link to ou r p rincipa l ris ks Work -winning Resources

51 A nnu al Rep or t and F inan cial Sta temen ts 2 022

Strate gic rep or t Gover nance Financial information

T ask Fo rce on C li ma te-r el at ed Fin anci al Di sclos ures ( T C F D ) c onti nued

F ailu re t o manag e the adopt ion of ne w tec hnology

Risk desc ription and potential impa ct on the bu sine ss
A s the fo cus on em bed ded c arbo n increa ses , we exp ec t to increasing ly be re quired to use l ower ca rbon a lternatives f or cons truc tion materials, e spe cially car bon-inten sive materials suc h as steel , conc rete and gla ss. T here is a risk as sociated w ith the a doptio n of new materials and u sing manu fac turer s and sup pliers w e have no exp erien ce of workin g with previ ously. Witho ut ef ctive pro duc t an d design evaluation a nd rob ust qua lity ass urance p roce dures , there is a risk of increa sed de c ts , whic h in turn coul d result in th e profes sional inde mnit y insuran ce market resp on ding throu gh fur th er increa ses in premiu ms or res tric tions/ limitatio ns in cover . Similarly, to achieve o ur s cop e 1 and 2 n et zero by 203 0 ta rget, we will have to signic antly redu ce (if not eliminate) our use of diese l-powe red plant a nd eq uipment . Th e non -dies el alternative s, such a s HVO, elec tric an d hydrogen , may not b e available in th e volume s we require , at an equival ent cost, or deliver suf cien t safety and/ or operational per formance.
Risk mitigatio n
Resp onse in clude s: Deve lopm ent an d implem entatio n of digital too ls to drive qualit y such a s Fieldv iew, BIM and Da lux. Inves tment in e mployee t raining incl uding en hance d PMD F mod ules . Using o ur T echnic al an d Qualit y , Rese arch an d Develo pmen t and Sup ply Chain tea ms to evaluate new m aterials, pla nt and e quipm ent and ot her ne w techn olog y an d supp or t their a doptio n acros s the b usines s. Qualit y ale rt s to share lea rning an d inform ation wh ere potential issue s with par ticula r p roduc t s have bee n identie d.

Risk desc ription and potential impa ct on the bu sine ss

The re are a numb er of climate- related driver s that may result in sust ained in creas es in materials cos ts in t he cons truc tio n sec tor . This is drive n throug h a combinati on of the ma rket dynami cs of sup ply and d eman d imbalan ces, a s well as Gover nment p olic y to incentiv ise car bon re duc tion . Our bi dding discip lines an d contra ct ual protec tions largely in sulate us from th e direc t impa ct of co st inc reases . Howeve r , the in direc t conse quen ce of rising con stru cti on cost s coul d be potential p rojec ts b eco ming unaf forda ble for o ur client s, le ading to a reduc tion in o pp ort unities an d revenu e. Manu fac turer s are develo ping inn ovative, low er - ca rbon mate rials all the tim e and this is v ital if we are to re duce th e embo died c arb on of the buildin gs an d infras truc ture we co nstr uc t. H owever , as new p rodu ct s come o n to the market an d es tablish cre dibilit y, deman d for the se materials coul d grow more q uickly tha n the pro duc tion c apa city, resulting in h igher m aterial cost s. In the sh or t to medium te rm, th e supp ly and d eman d imbalan ces in globa l energ y ma rkets are likely to be s ustain ed as co untrie s manage t he t win challen ge of dec arb onising ele ct ricity ge neratio n and in creasing s ecurit y of sup ply. High ene rg y prices w ill continue to increas e the co st of materials that h ave energ y inten sive manu fac turing p roce sses , such a s steel , concre te, and g lass. In additi on to the mar ket imbalance s, reg ulator y moves to us e carb on pricin g to incentivis e carb on red uc tion may ad d fur the r upwards pres sure on th e price of c arbo n-intensive materials . It is also p ossible that the U K -En erg y T rading S cheme is ex tende d to other s ec tors consid ered to be c arb on intensive , includin g cons truc tion .
Risk mitigatio n
Mainta in bidding a nd contr ac ting disciplin e to protec t ours elves from shor t -term cost ination and maximise cost recover y. Use of B IM and c arb on cal culators to optim ise desig ns and re duce the am ount of c arb on-intensive ma terials. Inc rease th e adop tion of of f-site manufa ctu re and oth er MM C to reduc e cost s throu gh minimising wa ste and s hor tening construction programmes. Work with client s to sup por t de sign soluti ons that minimis e the material re quirem ents e g. tran sitioning f rom new b uild to retro-t ting and refurb ishment .

Increa s ed m at er ia l c o s t s m a ke p r oj e c t s u n af f o rd a b le

Time horiz on	Sh or t ter m	Potential impac t on nancia l performance	De crease d revenue s due to red uced dema nd for p rodu ct s and s er vices	Link to ou r p rincipa l ris ks	Work -winning Resources
Time horiz on	Me dium te rm	Potential impac t on nancia l performance	Increa sed dire ct co st s	Link to ou r p rincipa l ris ks	Work -winning Resources
## 52 G a l li f o r d Tr y H o l d i n g s p l c
### Opp or tunit y Dev elopment and/ or expansi on of low carbon construc tion
Op por tunit y descrip tion and potential impac t on the busi ness
In order to d eca rbonis e the b uilt environm ent in the U K , there is a nee d for o ur client s to ensure that ex isting as sets a re either re place d with new, m ore energ y-e cient asset s, or increasing ly , ensure that they are modi ed to ex tend their life and improve th eir energ y ef cie nc y . Deman d for b oth new b uild and retrot of existin g assets with low e mbo died an d ope rational c arbo n per fo rmanc e is lik ely to create a pip eline of op por tunitie s within ou r target ma rkets .
Op por tunit y realisation
The a c tions we are t aking to realise t he op por tunitie s are the s ame as the a ctio ns we are ta king to mitigate th e risk of failing to devel op our low ca rbon c onst ruc tion c apabilit y , ie: Working clo sely wit h our client s to und erst and th eir car bon redu ctio n ambition a nd ta rgets a nd devel oping s olutions to m eet thos e objec tive s. Inves tment in key ca rbon re duc tion rol es. Ca rbon litera cy t raining for a ll staf f. Su pply ch ain enga gement a nd ups killing. Deve lopm ent of ca rbon re duc tion ma nagem ent proc ess. Use of c arb on cal culators to mo del em bodi ed an d operationa l carbon . Deve lopm ent of sy stems an d app lication s to improve ca rbo n data an d repo rtin g.
Time horiz on	Sh or t ter m	Potential impac t on nancia l performance	Increa sed reven ues re sulting fro m increas ed dema nd for p rodu ct s and s er vices	Link to ou r p rincipa l ris ks	Work -winning Resources
## 53 A nnu al Rep or t and F inan cial State men ts 20 22
### Strate gic rep or t Gover nance Financial information
As required by p rovision 31 of the U K Corp orate G overnan ce Code , the B oard has asse ssed the prosp ec ts and nan cial viability of the G roup, t aking ac count of th e Gro up’ s curren t position a nd th e potential imp ac t of the princ ipal risks to th e Grou p’ s abilit y to deliver its b usines s plan . The a ssess ment of p rospe ct s has been mad e using a period of ve year s, which is ju st beyo nd ou r strategic p lan pe riod. The a sses sment of viab ility has b een ma de using a peri od of thre e years , which a ligns with o ur bud get peri od an d provide s reaso nable visibilit y of futu re revenue f rom the ex isting ord er bo ok. Since t he sale of t he ho useb uilding busin esse s and t he rec apitalis ation of the b usine ss in Januar y 2 020, t he Gro up no lo nger has a ny debt facilitie s and a ssociated c ovenant s, th erefore viabilit y has be en asse ssed in te rms of the hea droom a gains t available ca sh reser ve s.
#### Asse ssment of pros pe ct s
A s outline d in our Strateg ic repo rt , the long-term p rospe ct s of the b usine ss are supp or ted by a st rateg y which b uilds on our exis ting st reng ths an d the g rowt h opp or tunitie s in our tar get market s. Our a lignmen t to the UK ’ s contin ued investm ent in so cial and e cono mic infras truc ture is a f undam ental d river of dema nd for o ur ser vice s and p lays to our stren gt hs in th e h ealth , educ ation , defe nce, highways a nd enviro nment ma rkets . Our ab ility to achieve su staina ble grow th wi thin the se market s is under pinne d by our p osition on t he mos t signica nt procurem ent framew orks , our commitment to supporting the decarbonisa tion of the b uilt environm ent an d our inves tment in digital te chnol ogies to drive c ontinuo us improvem ent in qualit y an d prod uc tivit y . Our p eop le remain th e key to our succe ss and our fo cus on at tra cting a nd reta ining a mo re divers e work force as we ll as increasin g the prop or tion of ap prentice s and g raduate s help us acce ss the sk ills and exp er tise req uired to deliver o n our sus tainab le grow th str ateg y .
#### A ssessment of vi ability
The base cas e for th e cash ow proj ec tions mod elled in ou r ass essm ent of viabilit y is the budg et for the th ree year s from 1 July 2 022 w hich inco rpor ates app ropriate contin gencie s again st plau sible day-to-day down side risks , prima rily the G roup’ s principal r isks as discl osed p reviou sly . Th e base cas e shows s trong l evels of average m onth- end n et cash a nd ass umes th at the G roup contin ues to ope rate witho ut debt f acilities . A gains t this base cas e, we have stres s-t es ted the forec ast s and modelle d the imp ac t on ca sh o w and liq uidity of a n umb er of down side scen arios related to o ur princ ipal risks , inclu ding a comb ined down side scen ario that inc lude s a numb er of the se sen sitivities o ccurrin g together . T he scen arios mo delled , and th eir link to the un derly ing prin cipal risks , are de scrib ed in the t able b elow.# Alth ough we h ave not inclu ded a f urt her natio nal lockdo wn scena rio in our s tress tes ting , the busin ess an d our c ash pe rfo rman ce has show n a high de gree of re silience thro ugho ut the Cov id- 19 pan demic . Ou r sites largely re mained o pen a nd the a dhere nce to st ringent risk mitig ation mea sures in our s ites and of ce s, together with good enga geme nt wit h ou r client s and suppl y chain , minimised the disr uption to proj ec t deliver y.

Scenario mo delled Link to p rinc ipal ris ks

Sce nario 1 Reduc tio n in const ruc tion volume s

Our c ash p er forman ce is correlate d with ear nings g rowt h and th erefore reliant on con stru ctio n ac tivit y bein g in line wit h ou r assump tions . We have modelle d a redu ctio n in cons truc tion vol umes th at would equate to a 10% re duc tion in m onthly c ash receip ts of f set by a prop or tionate red uc tion in paym ent s, relative to ou r base c ase fore cas t.
Wor k -winning

Sce nario 2 Deteri oration in working capita l

We have modelle d the im pac t of a deterio ration in ou r working c apita l, which c ould be c aus ed by delays in re ceiving p ayment s from c lients and / or e arlier paym ent s to our sup ply chain .
Resour ces

Sce nario 3 Irrecove rable cost increa ses

The re is a risk of a prolo nged peri od of materials cost ination and there fore we have mo delle d the impa c t of failing to fully miti gate the se cos t increas es on o ur projec t s.
Resour ces
Projec t deliver y

Sce nario 4 ‘Per fe ct storm’

We also teste d the unlikely bu t plausible s cenario w here all of s cenario s 1 –3 combine at th e same tim e.
Wor k -winning
Resour ces
Projec t deliver y

A s par t of the viab ility ass essm ent, th e Boa rd also consi dered th e mitigatio ns and inte rve ntions available to man age the im pac t of one o r more of th e down side scen arios o ccurring . Th e base c ase alread y include s signi ca nt c ash contingen cies and the Board has considere d f urt her mitigating ac tions th at are available to it . Base d on the re sults o f this analy sis, the B oard has c onclu ded that it h as a reaso nable ex pec tatio n that th e Group w ill be able to co ntinue in op eratio n and m eet it s liabilities as th ey fall due over t he three -year pe riod of it s asse ssme nt.

Via bilit y Statem ent
54
G a l l if o r d T r y Ho l d i n g s pl c
Finan cial review
D eli ve rin g sus t ain ab l e g row t h
Performance 1,2

We have delivered an increase in prot and divide nds . O ur prot margin has increase d, show ing excellent p rogress a gains t our margin im proveme nt target s.

Re venue

Our reve nue fo r the year wa s up 10% at £1, 237 . 2m (2021: £1,124. 8m), re ec ting disciplin ed grow th in Inf rastr uc ture. A s exp ec ted, Inf rastr uc ture’s revenue incre ased as the A MP7 pro gramm e in the wate r sec tor gath ered mo mentu m, an d this was supp leme nted by our a cquisition of t he water bu siness of n mcn pl c (in adminis tration). Of th e total, B uilding cont ributed reve nue of £789 .1 m (20 21: £789 . 2m), broa dly in line wit h 2021 as a resul t of some d elays to new co ntrac t sta rt s towards the end of the nancial year as exp ec ted given th e increa sed le ng th of client proc ureme nt in resp onse to rising ination . Infras truc ture re corde d revenue of £4 41.9m (2021: £329 . 2m), including £ 7 4.1m from the nmc n acquisitio n. PPP Inves tment s’ revenu e was £6. 2m (202 1: £6.4m).

Our r esults reec t the strong found at ions of the bu si ness and excellent per forman ce of o ur pe ople.

And rew Duxbu ry
Finan ce Direc tor

W e h a ve d e l iv e r ed gr o w th i n l i ne w it h ou r str a t egy and ex pec ta t io ns, r es ul t i ng i n i ncr ea sed s h ar e ho ld er r etu r ns. The c on t i nue d im pr o v eme n t i n ou r oper a t i ng p e r f o r ma n c e , al o n g sid e ou r s t ro n g n a n cia l p o sit io n a n d hi gh - q ua lit y or de r b o o k , p ro vi d e co n  d e n c e in o ur ab ilit y to m e e t o ur sus t ai na bl e gro w th t ar ge t s .

1 S ee n ote 32 fo r a reco nciliatio n of st atuto ry n umb ers to A ltern ative Per f ormanc e M easur es.
2 P re- except ional i tems fr om cont inuin g ope ratio ns, u nles s othe rw ise s tated .

55
Ann ual Rep or t and F inan cial Sta teme nts
2 022
Strate gic rep or t
Gover nance
Financial information
Financi al per formance

	2022	2021
Revenue	£1,237.2m	£1,124.8m
Divisional operating margin	2.4%	2.0%
Operating profit before amortisation	£18.5m	£10.1m
Profit before tax	£19.1m	£11.4m
Dividend per share	8.0p	4.7p
Average month-end cash	£174m	£164m
PPP portfolio	£47.5m	£49.1m

Operating p rot before am or tisation

Our pre- exceptio nal operatin g p rot before amo rtis ation was £18. 5m (2 021: £1 0.1m). Of this, Buildin g gen erated prot of £ 18 .9m (2021: £15.9m), representin g a margin of 2 .4% (2021: 2 .0 %), and Inf rastr uc ture gene rated prot of £ 10. 8m (2021: £6. 0m), represe nting a margin of 2 .4% (2021: 1. 8%). Th e combin ed divisiona l oper ating margin of 2 .4% (2021: 2. 0 %) has be en achi eved in line wit h o ur margin improvem ent ta rgets , with f urt her det ails of divisiona l per for mance s et out on p ages 58 to 6 0. The re was an £11. 2m net los s in PPP Investm ent s and Ce ntral Cos ts (2021: £(1 1. 8)m), with Centr al Cost s be ing in line wit h th eir 2021 level .

Excep tional items

Excep tional item s of £1 3 .7m were incurre d in the perio d, as set out in note 4 to the na ncial state ment s. £7 .7 m related to th e acq uisition and inte gration of th e nmc n water busin esse s, acq uired in Oc tob er 2021. T he rema ining £6 .0 m relates to our inve stme nt in clou d-base d Enterpris e Res ource Planning (ERP) nance and comm ercial sys tems sc hedul ed to contin ue into Sp ring 2023 , par t of our inve stm ent in our digital a nd data c apabilitie s, whi ch unde r update d acco unting guida nce, is n ot allowe d to be c apitalise d. T here were n o exceptio nal items in 20 21.

Net interes t in come

Net intere st inc ome of £ 2 . 9m is in line w ith 2021, ree ctin g th e stable por t folio of PPP sub- debt inve stme nts .

Prot before tax

Pre- exception al prot before tax for the year was £1 9 .1m (2021: £1 1.4 m). Pre-exce ptional prot bef ore income tax is an alternati ve per fo rmanc e measure a nd a key metric w e use to monitor o ur pe rf orman ce in years wi th exceptio nal items , such as 2 022 . Post-exception al prot before tax was £5.4 m (2 021 : £11 .4 m) .

T a xation

The p re- exceptiona l tax cha rge for th e year is £1.7m (2021: £1.0 m), which eq uates to an ef fec tive ta x rate of 8 . 9 % (2021: 8 .8 %), lower than th e sta ndard UK r ate of corp oration tax d ue to the re cognition o f previou sly unrec ognise d broug ht for ward t ax loss es and co rpo rate interest re stric tion s. Th e pos t -exce ptional t ax credit is £ 0.9m (2021: charge o f £1.0 m). We have a constr uc tive and o pen relatio nship with HM RC, a nd lo ok to comp ly with b oth the le tter an d spirit of relev ant regulatio ns and to pay o ur fair sha re of tax . Ou r tax strateg y is availab le from o ur website at w w w.gallifordtry .co.uk .

Earni ngs and divide nds per share

We recorde d pre- exception al earnin gs pe r share fo r the year of 16 .0 p (2021: 9.5p). The p os t -excepti onal earn ings p er share in 202 2 was 5. 8p. The B oard de clared a n interim divide nd of 2. 2p p er share (2 021: 1. 2p), which was p aid to shareh older s on 8 Ap ril 2022 , an d has decla red a nal divide nd of 5. 8p per share (2021: 3 .5 p), bringing the tot al divide nd for the nancial year to 8 .0 p per share (2021: 4.7p). The full yea r dividen d in 202 2 is covered 2 .0 tim es (20 21: 2. 0 times) by pre- exceptio nal earnin gs , in line wit h th e Boa rd’ s s tated p olicy. At 3 0 June 2 022 , the Co mpany ha d distrib utabl e reser ve s of £1 09.7 m (2 021 : £10 0 .7m).

Critica l ac countin g p olicies and assu mptio ns

Our p rincipa l accou nting polici es are se t out in note 1 to the nan cial s tateme nts , t oget her with a de scriptio n of the key es timates an d judgm ent s af fec ting th e applic ation of thos e policie s and a moun ts rep or ted in the nanc ial st atement s. We use alternative nan cial p er forma nce indic ators to mo nitor our p er forma nce, alon gside s tan dard meas ures, w hich are design ed to b e useful to inve stors by p roviding a balan ced view of o ur op erations . An e xplanatio n of the se mea sures an d recon ciliations to the corre spon ding st atutor y mea sures are in clud ed in note 32 .

Finan cial p osition

Our s trong b alance sh eet , supp or ted by a robus t ca sh per for mance a nd valua ble PPP asset s, is im por ta nt for ou r clients; p rovide s con denc e to our supply chain; and continue s to provid e a stron g unde rpin for o ur future p lans .

Cas h an d inv es tme nts

We have no debt or den ed ben et pensio n obligatio ns, a nd at 3 0 Jun e 2022 h ad a ca sh balan ce of £218 . 9m (20 21: £216. 2m). The average m onth- end c ash balan ce in the yea r was £17 4 m (2021: £164m) an d our daily minimum c ash balan ce was ab ove £100 m, which s hows co ntinue d stron g cash per fo rmanc e throug hout t he year . O ur ope rating ca sh gene ration in the ye ar , ree ct s very stron g cash per forma nce acros s the b usiness . We are commit ted to pur suing a collab orative and o pen a pproa ch with all o ur supp ly chain and our performance under the P rompt Payme nt Cod e improved a gain, w ith 98% of invoices pa id within 6 0 days (2021: 93%) and aver age days to pay invoices re duce d to 25 days (20 21: 36 days). At 3 0 June 2 022 , we had a PPP p or tf olio of £4 7 .5m (2021: £4 9 .1m ), reec ting a bl ende d 7% disco unt rate (2021: 7 %).# Working Capital

We have modest working capital requirements. At 30 June 2022, net working capital employed was £255.5m (30 June 2021 (restated, see note 35): £237.6m), predominantly reflecting the net contract liabilities acquired with nmcn. The Group has restated the balance sheet classification of some prior year working capital balances, as set out in note 35. As previously disclosed, the Group provided services in respect of three contracts with entities owned by a major infrastructure fund of a blue-chip listed company. Our work on these contracts formally ceased on their termination in August 2018. Costs were significantly impacted by client-driven scope changes and the Group has submitted claims and variations to the value of circa £95m in respect of these costs (2021: circa £95m). The Group has taken extensive legal advice on our entitlement, and we have been successful in two adjudications supporting the validity of the Group’s position. The claim is progressing in line with the original expected timetable. Taking into account the requirements of IFRS 15, the Group had constrained the revenue recognised in prior periods to the extent that it was highly probable not to result in a significant reversal in the future. At 30 June 2022, the Group has updated its assessed recoverability in accordance with IFRS 15. Given the progress, in line with expectations during the year, this is unchanged. The Group has also updated its expected credit loss provision in accordance with IFRS 9 for which there was no material change in the required provisions since the prior year end. Total equity at the year-end was £132.1m (2021: £134.1m).

Capital Allocation and Dividends

The Board is committed to maintaining a strong balance sheet, which provides the Group with competitive advantage in its market and supports our growth strategy. Our capital allocation priorities are:

Supporting operational requirements and strategic opportunities

A strong balance sheet is an important element in delivering the Group’s Sustainable Growth Strategy, as it provides a competitive advantage in the market, supports the Group’s disciplined approach, and provides confidence to our clients and supply chain. We are also able to allocate capital to assist the development of our adjacent markets. Furthermore, and as demonstrated by the recent acquisition of the water businesses of nmcn, a strong cash balance sheet enables the Group to react quickly to strategic opportunities, including bolt-on acquisitions that enhance our capabilities and increase future value.

Mitigating the effect of future market downturns

The current outlook across our markets remains encouraging and supports our strategy, but the Group ensures that it is prepared for any adverse change in market conditions that may arise. Our strong balance sheet is particularly important for the Group to continue to operate its disciplined approach to contract selection and focus on operating margin, irrespective of any short term economic concerns. The recent inflationary pressures clearly demonstrate the value and importance of the Group’s risk management framework and focus.

Paying sustainable dividends to shareholders

The Board understands the importance of dividends to shareholders, and in setting its dividend considers the Group’s profitability, its strong balance sheet, high-quality order book and longer term prospects. Consistent with this approach the Group expects dividend per share to increase in line with earnings, with dividend cover of 2.0 times annual earnings. We continue to assess the cash requirements of the business to ensure the Group remains well positioned to deliver on its Sustainable Growth Strategy and has sufficient funds to invest in the business. Given the capital allocation priorities and requirements set out above, the Board anticipates retaining average month-end cash and PPP assets of £175m to £250m to support delivery of our financial targets to 2026. For the year ended 30 June 2022, the aggregate of month-end cash and PPP assets was £221m, towards the top of this range early in the strategy period. Where average month-end cash and PPP asset increase above the level required, then the Board will consider making additional returns to shareholders. In line with this approach, on 21 September 2022, we announced an initial share buyback programme to repurchase up to £15m of ordinary shares.

Contingent Liabilities

The directors ensure that contingent liabilities are appropriately assessed, documented and monitored. More information can be found in note 28.

Going Concern and Viability Statement

Our going concern statement, together with further related information, can be found in the Directors’ report on page 101. Our Viability Statement can be found on page 54.

Financial Targets

Objective	Focus	2026 target	Actual 2022	Actual 2021
Divisional operating margin growth to 3.0%	Focus on bottom line margin growth.	3.0%	2.4%	2.0%
Revenue growth towards £1.6bn	Disciplined contract selection and sustainable revenue growth.	£1.6bn	£1,237.2m	£1,124.8m
Operating cash generation	Maintain strong balance sheet.		£174m	£164m
Dividend cover 2.0x	Sustainable dividends.	2.0x	8.0p	4.7p

¹ This is defined as the pre-exceptional operating profit before amortisation as a percentage of revenue for the total of the Building and Infrastructure segments (note 2). This measure represents the trading performance of the Group’s primary operations.

2026 target	2022	2021
3.0%	2.4%	2.0%

2022	2021	2026 target
4.7p	8.0p

£1.1m	£1.2m	£1.6m

£164m	£174m

Performance – Building

	2022	2021
Revenue (£m)	789.1	789.2
Operating profit (£m)	18.9	15.9
Operating profit margin (%)	2.4	2.0
Order book (£m)	2,047	1,920

Building (which includes our FM business) had a revenue of £789.1m (2021: £789.2m), generating an operating profit before amortisation of £18.9m (2021: £15.9m), which represents a margin of 2.4% (2021: 2.0%). Revenue is in line with the previous year as a result of some delays to new contracts towards the end of the financial year, reflecting increased length of client procurement in response to rising inflation. The improved profit reflects the continuing improving performance of projects that were added to the order book in recent periods in line with our margin improvement targets. Our FM business continues to complement our operations by providing high-quality building maintenance services. We continue to grow the capabilities of this operation, with a specific focus on decarbonising existing buildings through retrofit and other interventions. This ‘green retrofit’ capability will grow over the coming years and we plan to allocate some additional capital to support this growth. Building won contracts and positions on frameworks worth over £945m, (2021: £641m). Significant appointments and wins for Building included:

The new four-year £1.6 bn LHC Public Buildings, Construction and Infrastructure PB3 framework which covers projects across all public sector buildings.
A share of the £7bn Department for Education 2021 Construction Framework.
The £55m Galashiels Community Campus on behalf of Scottish Borders Council and Hub South East.
A £56m private rented sector (PRS) scheme in Milton Keynes.
A £25m project under the Department for Education (DfE) Net Zero Carbon in Operation (NZCIO) scheme for Greenhead College in Huddersfield.
Five lots on the Crown Commercial Service (CCS) and Associated Services Framework covering projects worth up to £20m across the North East, North West, East of England and South East to drive economic growth. In addition, the business has been appointed to Lot 3, which includes projects above £70m in value.
Positions on the NHS Shared Business Services (SBS) second generation Hard FM framework, to deliver Security, Fire and Hard FM Managed Services valued up to £800m by SBS.

Building’s order book stands at £2,047m, compared to £1,920m last year including 31% in Education, 23% in Defence and Custodial, 18% in Facilities Management and 11% in Health.

Operating Review

A Strong Performance

We delivered a very strong set of results during the financial year, with improved margin and profit growth across our core businesses comprising Building, Infrastructure and PPP Investments. We secured £1.4bn of work, contributing to an overall order book at 30 June 2022 of £3.4bn (2021: £3.3bn).# G a ll i f o rd Tr y H o l d in g s p l c

Build ing a hi gh- qual ity or der b ook

Our o rder b ook un derpin s our fu ture plans a nd give s us excellent m edium term visibilit y of pipelin e, me aning that n o par t of the b usine ss nee ds to take on inap prop riate levels of risk. It s comp osition is th erefo re pivotal , which is why we se ek to build a hig h-qua lity ord er bo ok.

Our cond ence in the quality of the order book come s from key features of its co mpositio n:

Ou r focu s on our co re sec tors in crease s our un ders tan ding of contra c t risk, o ur abilit y to put ap prop riate mitigations in p lace, an d our a bility to succe ssf ully deliver q uality p rojec ts . We ac tively tar get and m aintain pla ces on p ublic sec tor f ramewo rks in the U K as they h elp mitigate risk by ena bling us to work w ithin est ablishe d and w ell-und ersto od term s and co ndition s and p rovide consis tent pipelin es of wor k (page 13).

At 3 0 June 2 022 , 9 0% of ou r order b ook wa s in fram ework s (2 021 : 87 % ).

Similarl y , our fo cus on t he pub lic and reg ulated se ctor s helps miti gate risk by workin g with rep eat client s on a relation ship basis, a nd prov ides a stron g pipelin e of futu re opp or tunities . At 3 0 June 2 022 , 91% of our ord er bo ok was in th e public a nd reg ulated sec tors (2 021: 91%), and 9% in t he pri vate sec tor (2021: 9 %) with care fully sel ec ted blue -chip clie nts .

High visibilit y of the following year ’ s revenue gives us furt her cond ence to bid with th e app ropriate discip line and s elec tivit y. At 30 June 202 2, 90 % of plann ed revenue for the 2023 nancial year was se cured (2 021: 90 %).

Alth oug h value of con trac t is only o ne fa ctor of ris k, it is a use ful indic ation of th e size of risk being acc epted . At 3 0 June 2 022 , the aver age contra ct size in Buil ding’s order b ook is less t han £2 0m .

Strong visibi lit y of workload

	£2.0 bn	£m	£1.4b n	£m

A Education	640		A Highways	622
B Defence & custodial	476		B Environment	774
C Facilities management	362
D Health	228
E Commercial & other	341

Infrastructure
Order book by client type	FY22	FY21	FY20
	£3.4bn	£3.2bn	£3.3bn
Public and regulated	91%	81%	19%
Private	9%	9%	91%

An nual Re por t an d Fina ncial St atem ent s 2022

Strate gic rep or t Gover nance Financial information

Per forman ce – Infrast ruc ture

	2022	2021
Revenue (£m)	4 41 . 9	3 29 . 2
Op erating prot /(loss) (£m)	10. 8	6.0
Op erating prot margin (%)	2 .4	1.8
Orde r boo k (£m)	1, 396	1,348

Infras truc ture’s revenue wa s £441.9m (2021: £329 . 2m). As ex pec ted , revenu e increa sed du e to the high er level of a ctiv ity from th e AMP7 p rogram me in th e water sec tor . Additio nally, the acquire d water op eration s of nmc n plc (in adm inistratio n) contribute d £7 4.1m revenue in th e year .

Infra stru ctu re gene rated an op erating pro t b efore amo rtis ation of £10.8 m (2021: £6 .0 m) which re pres ents a ma rgin of 2 .4% (2021: 1 .8 %). The improve d prot per forma nce is in line with our expe ct ations , and include s the b enet of new contrac t framewo rks.

Following t he ac quisition of nm cn’ s water busin esse s in Oc tobe r 2021, we have rest ruc tured o ur Environm ent busin ess to provid e enhan ced se rv ice deliver y ac ross UK ope rations in cluding w ater , engine ering , of f -site build a nd asse t optimisatio n, an d asse t secu rity. The a cquisitio n has provid ed the G roup w ith additi onal geo graph ic scal e and in crease d cap abilities in th e water se ctor , fu rth er supp leme nted by th e a cquisition of M C S Control Sys tems Limite d in July 20 21 ( note 31).

Infra truc ture w on contra ct s an d positio ns on fram ework s wor th £46 6m (2021: £ 5 9 0m). These i ncluded :

Ap point ment to the P rocure Pa rt nersh ips (PP) Nor th West Frame work valu ed at £1. 8bn in th e Nor th Wes t of England , in conjun cti on with th e Building b usines s.
A share of t he £3 . 5bn Sc hem e Deliver y Framewor k for Nation al Highways .

Infras truc ture h ad an ord er bo ok of £1, 396m, co mpare d to £1,3 4 8m last ye ar , inclu ding £622m in Highw ays and £ 77 4m in Environm ent.

Per forma nce – PPP Inve st men ts

	2022	2021
Revenue (£m)	6.2	6.4
Operating lo ss (£m)	(0.9)	(1.8)
Net intere st inc ome	3.9	3.9
Direc tors’ valua tion (£m)	4 7. 5	4 9.1

With th e redu ctio n in traditio nal PPP /P FI biddin g opp or tunities , PPP Investm ent s has contin ued to m ove its fo cus towards co- develop ment of P rivate Rented S ec tor (PRS) projec t s. During the year , its rst schem e, in Cardif f, obta ined p lanning co nsent a nd the b usines s is working towa rds reach ing nan cial clo se with an op erator which will allow cons truc tion to co mmen ce during th e nex t nan cial year. At th e year en d it was the prefe rred bid der on t wo fu rth er PRS s chem es with a gro ss develop ment va lue of c £2 0 0m a nd anticipate s fur the r opp or tunities in th e futu re.

At th e yea r - end , the direc tors’ val uation of our PPP p or tfo lio was £4 7 .5m (2 021: £4 9 .1m), which is t he fair val ue inclu ded in th e balan ce she et reec ting a blen ded discou nt rate of 7% (2021: 7%). T he valuatio n compa red with a value inve sted of £3 5.7m (2021: £36. 2m). Th ere is an ac tive se conda r y market for th ese as sets , which ge nerate d an ann uity intere st in come of £3 .9m (2021:£3.9m) an d contr ibutes to ou r balance sheet streng th .

Opera ti ng re vie w conti nued

G a l li f o r d Tr y H o l d i n g s p l c

Stak eholder engagement

Consid eration of s takeho lders is in graine d in the way we co ndu ct b usines s and o ur Board remains co mmit ted to consid ering the cons eque nces of o ur decisio ns on dif fe rent sta keholde rs and a cting in a way that pro motes the lo ng-term succe ss of the b usines s.

How the Board engages with our stakeholders

The dire cto rs are com mitte d to the lon g-t er m succe ss of the G roup an d play an a ctive ro le in und erst anding , con sidering a nd ad dressing stakeholder int erest s. Engagement tak es place both dire ctl y and in direc tly and is ro oted in the p rinciple s of our Co de of Co nduc t wh ich is signe d by the B oard an d outline s our dutie s to our colle ague s, clie nts , supplie rs, co mmuniti es, the env ironme nt and gover nance .

Det ails of how we en gage d with key sta keholde rs and how their interest s in uence d Boa rd de cisions during the nancial year are set ou t on the fo llowing pa ges .

In 2019 , we e stab lished a B oard-level Commi ttee ch aired by S enior In dep ende nt Direc tor T err y Miller , to review a nd overs ee the G roup’s relationships w ith key stakeh older s. This Stakehol der Steering Commit tee identies ways to create t wo-w ay commu nication bet wee n stakeh older s and th e Boa rd, an d ensure s their vi ews are co nsidere d in Board discuss ions and decis ions. The Committee met tw ice during t he year , as disc ussed o n page 67 .

This info rmation co mplem ents regular up dates to the Bo ard whic h includ e key interest s of our s takehol ders su ch as He alth and S afet y , which is the rst agenda item of ever y meeting ; pe ople mat ters; su staina bility an d chan ging market dy namic s with rega rd to client and supp lier prioritie s. The B oard a dditionall y receive pre sent ations on th e se mat ters thro ugh out the ye ar , which p rovide in- dep th update s from ea ch stakeholder group.

Direc tors gain a r st -han d insight into our cult ure in ac tion thro ugh site visit s, pres entatio ns from o ur busin esse s on ope rational mat ters a nd info rmation in m onthly Boa rd pack s. Th ese e nable disc ussion aro und manag ing the intere st s of our p eop le, client s, supp liers an d comm unities .

Direc t eng agem ent with inves tors als o takes place th rough inve stor pre sent ations an d the Ann ual Ge neral M eeting .

s 1 72( 1 ) s t at e m e n t The Bo ar d r e ma in s co mm i tte d to ca rryi n g out i ts ob l i ga t i ons u nd er the Comp ani es Ac t .

An nual Re po rt a nd Fin ancia l St atem ent s 202 2

Strate gic rep or t Gover nance Financial information

Wh o and w hy

| Key busin ess a nd sustainability stakeholder intere st s identi ed in our S takeholder Mater iality M atrix | How we engage # Stakeholder engagement

Ca rried ou t an all sta f f Employ ee Engagement Sur vey to ga uge empl oyee sentim ent on key areas. D elivered our seco nd all st af f virtual roadsh ow with natio nal and loc al infor mation for ou r staf f. Res truc tured our indu ctio n sessio ns. Star ted a s eries foc used o n spotlightin g dif ferent co mmuniti es to prom ote inclusion throu gh awaren ess. C ontinue d and expanded our Wel lb ei ng W ednesda ys programme. Ensure d key prioritie s continu e to be add resse d by our up dated s tra teg y. 0.06 AFR. 99 % of our p eop le believe w e give Health & Safet y a high prio rity. 15. 5% chu rn rate. 8 5% em pl oyee advo ca cy sc ore. 94% of emp loyees are moti vated by our v ision.

Clients

Satis ed client s are ess ential for a sus tainab le and pro table business (Cl ient s p35). F ina ncia l stabi li ty and abilit y to delive r. T ime , cost and qua lity. M eeting carbon and sustainability objectiv es. Cre ating greater social value. Collab orative relation ships prov ide the p latfo rm for o ur teams to prov ide trus ted a dvice an d foc us on pe rf orman ce with clea r custo mer p riorities a nd out put s all unde rpinn ed by our a ccredita tion to the IS O 4 4 0 01 Collabor ative Busin ess Relation ships Sta ndard. On ap pointm ent , we car ry o ut a Cus tomer Sta rt Mee ting which identie s outcome s fo r th e end of the p rojec t discus sions an d are retain ed for re cord purp ose s. D edica ted qualit y manage rs con duc t regular a udit s, com plem ented by ou r internal au dit depa rtm ent an d exte rnal au dits of ou r ISO 9 0 01 cer tie d ma nageme nt system. Framewor ks allow us to de epe n our relatio nships wit h our client a nd s takehol der grou ps whic h leads to gre ater innovatio n and b etter public inf rastr uc ture. Engaged in sec tor and client disc ussion s on areas of c hallenge s and opp or tunit y such a s service delivery , supply chain disru ption fro m Brexit a nd lear nings fro m Cov id- 19, the economic en vironment an d t he drive fo r sustainability. Inves ted in our lo w carb on and digital cap abilitie s to he lp achieve client objectiv es. Contin ued to ta rget and w in place s on fram ework s with ne w and e xisting clien ts.

9 0% of ou r order b ook is in framewo rks.
94% re peat business.

Suppliers

Who and why	Key busin ess a nd sustainability stakeholder intere st s identied in our S takeholder Mater iality M atrix	How we engage	Ac tion s in the ye ar	Ou tcome s
Suppliers	The m ajorit y of our work is de livered in par tne rship with our sup ply ch ain so th ey must b e alig ned to our values and objectiv es (S upp ly ch ain p38)	H ealth, safet y and we llbeing. Fair treatm ent and prompt payment. Pip eline of work. Collaborative relationsh ips. A cce ss to training, educ ational reso urces an d learning oppo rtunities.	We seek to build l ong-term relation ships with key supp liers an d contra ctor s who sh are our p rinciple s. Robus t contra ct s set t he terms fo r both pa rti es in our relationsh ips, a nd regula r meetin gs, works hops a nd workin g groups e nsure t wo- way commu nicatio n. Through our Advan tage through Alignment programme of supp or t, t raining an d educ ation, we align o ur supp liers an d subco ntrac tors w ith our wo rking pra cti ces, our valu es an d our visio n.	Contin ued to sup po rt key subcontractor s through our Advantage throug h Alignment programme. Launched Net Zer o Partn ers Programme to supp or t supp ly chain wit h t heir carb on upskill ing. Contin ued to p romote the S uppl y Chain Sus tainab ilit y S choo l. Ensure d key prioritie s continu e to be add resse d by our up dated s tra teg y. 6 0% of b usiness unit core tr ades spe nd with Ali gned subcontra ctors. 98% of invoice s paid wit hin 60 days. G old member of Sup ply Chain Sust ainability Scho ol.

Communities

We want to be welcom ed in th e communities we ope rate in and create greater social va lue wh ere we operate (Co mmunities p32).

H ealth, safet y an d environment.
Hi gh qualit y buildin gs an d infrastruc ture.
Us e of local labo ur, reso urces an d employment oppo rtunities, educ ational oppo rtunities and wider inves tme nt in their communit y.

We engage w ith loc al comm unities th rough tow n halls, n ewslet ters, proje ct web sites, s ocial me dia, pres s release s and p lanning m eeting s. A s a dedic ated Par tne r of the Co nsiderate Co nstr uc tors Sch eme, we stri ve to continuo usly imp rove the image of the in dust ry, focusin g on the key areas o f safet y, community, envi ronment, workforce and appearance. Thro ugh event s such a s Build UK’s Open D oor s, recr uitment f airs, s cho ol visits an d site tours, we showc ase o ur indus tr y and inv ite communit ies to learn m ore ab out ou r indus tr y, bu siness, proje ct s and care ers on o ff er.

Contin ued to a dd to the social value of our work by su ppo rtin g loc al busin ess, providin g emp loyme nt and t raining, charita ble donations and voluntee ring for local cause s. E xten ded th e scop e of our pa rtnership w ith the So cial V alue Portal. D eveloped our cap abilit y to re por t our S ocial an d Loc al Economic Value (SLE V).

4 1.8 ave rag e CCS sc ore.
Re po rte d 5 0% of projec ts deliverin g more tha n 2 5% o f percent age of contrac t value.
£2 68,000 o f charita ble donations.

Shareholders

We want our shareh olde rs to have condence in the lo ng-term success of our b usiness.

A s ustain able busin ess mo del and str at egy.
F ina ncia l per formance and dividend p o l i c y.
Corporate governa nce.
Risk s to the business.

We engage dire ctl y with our sha rehol de rs th rough investor ro adsh ows; fa ce-to-face, vide o or telep hon e comm unicatio ns; Ca pital Ma rkets Days, result s pres entatio ns and webca sts; ana lyst briengs; AGMs; o ur An nual Rep ort; consul tations; and Reg ulator y New s Ser vice anno uncem ent s. Indire ct en gagem ent incl udes a n up-to- date website, pres s coverage, engag ing in soc ial me dia, trading update s; corporate and nan cial vid eos; and contrib utions to inves tor de cision-ma king reso urces.

Hel d a busine ss brie ng for inves tors and p rovide d a recordin g on our websi te.
AGM.
Ensure d key prioritie s continu e to be add resse d by our up dated s tra teg y.
8.0 p dividend per s hare.

Policies relatin g to each of th ese s takeho lder gro ups c an be fo und in th e page s on our we bsite. Risk s are deta iled fro m p age 4 3 and f urth er info rmation is contain ed in th e Sus tainabilit y se ctio n fro m page 2 0.

Stakeholder engagement cont inued

Considering stak eholder int erest s w h e n ac q u i r i n g n m c n w a t e r

Over view

So on af ter the la unch of th e Gro up’ s S usta inable G roup Strateg y, nmc n plc ann ounced that it ha d entered in to administ ration af ter a plann ed renan cing of the busin ess collapse d. Wh en deci ding to acquire p ar t of the b usiness, the B oard c arefully consid ered th e followin g fac tors:

Wh ether the acquisitio n t with the strateg y to grow in adjacent and complementary mark ets.
The nmcn wat er bus iness’ geogr aphic c over age, cu stomer relationsh ips and te chnic al ca pabilities in relatio n to how comp lemen tar y they we re to Galliford T r y’s existin g ope rations o r whet her it wo uld create dup lication.
The a udited reven ue of th e busine sses b eing a cquired an d prot s prior to sub sequ ent re-sta tement s.
The p urchas e price, transa cti on and re str uc turing cos ts, contra ct ual liabilities an d comme rcial and le gal terms.

The f ollowing s takeho lder intere st s were consi dered:

The m anagem ent res ource ta ken to lead integrati on of the busin esse s and th e impa ct on t he exis ting pe ople w ithin the b usines s.
Potential impa ct o n existing c lients an d wh ether tim e would nee d to be diver ted f rom tho se op erations.
The f uture of th e empl oyees wit hin the nm cn busin ess.
Our a bility to su ccess fully delive r for ou r new client s.
Supp ly chain considerations.
Potential share holde r returns.
Broa dening c apab ilities to ser ve client s and co mmuniti es nationwi de as a resul t of the ac quisition.

Who did the Board engage in maki ng its decision?

The B oard liaise d with a cross- sec tion of s takehol der gro ups inclu ding the Ma naging D irec tor of the Enviro nment b usines s, the G ene ral Coun sel & Com pany Se creta ry, HR Direc tor an d ex ternal sp ecialist a dviso rs to consid er all aspe ct s of th e trans ac tion, includin g the intere st s of existing e mploye es, client s and sha rehol de rs.

The res ult

Galliford T r y comp leted th e acq uisition of the n mcn water busin esse s on 8 Oc tob er 2021. T he tra nsac tion p rotected the jobs of m ore than 9 00 direc tly em ployed s taf f as well as e nsuring continuit y fo r the client s an d commu nities ser ve d by the nm cn busin ess, protec ting the v ital water o peratio ns the b usin ess car ries out. Set ting up a d edicate d integratio n team to combin e the t wo busin esse s also me ant that exis ting op eration s were not imp ac ted for exis ting st af f and clie nts.# G a ll i f o rd Try H o l di n g s p lc

In formi ng and engagi ng our i n v estors

A s the lo ckdown me asures ea sed , we took th e decisio n t o hold a face-to-face Busin ess Brien g with th e purp ose of gi ving det ailed insigh ts into par ts o f the bu siness , introd uce investo rs an d analy st s to some of th e mana gement tea m to dem onst rate the cultu re of our bu siness a nd exp er tise of our tea m, to provi de a dee per und erst anding o f where t he contro lled revenu e and ma rgin grow th t argeted th rough o ur strate gy would co me fro m, an d to provide a c hann el for pe ople to direc tly q ues tion our B oard an d management on key topics. Th e pres entation is ava ilable at w w w.gallifordtry .co.uk / investors

A nnu al Rep or t and F inan cial State men ts 2 022

Strate gic rep or t

Gover nance

Financial information

Am ong th e key events of th e year , we oversaw the G roup’s strong re spo nse to the C ovid- 19 pan demic an d supp or t to staf f, contin ued to monito r the suc cess ful exec ution of th e strateg y, includin g the ac quisition of nmcn’s water bu siness , and a ppo inted Aliso n Wood and S ally Boyl e to the Boa rd as non -exec utive direc tors . As Ch air - design ate, Aliso n will succe ed me a s I retire from th e Board o n 21 Septem ber 20 22 , ensurin g a smoot h transitio n of the role . Mo re informatio n on strateg y a nd Bo ard app ointme nts c an be foun d in my statem ent in th e Strategic rep or t.

Sustainable value for al l stakeholders

The G roup’s strateg y is d esigne d to create sust ainable v alue for a ll of ou r st akehold ers. In par ticular , we are a h ighly p eopl e-o rientated busin ess , and we co ntinue to listen c aref ully to employe es thro ugh b oth sur veys an d the Employe e Forum . Our St akehold er Steering Commi ttee als o plays an imp or tant f unc tion , ensuring effec tive stakeholder engagement. Sus tainab ility is also inte gral to our s trateg y and t he Boa rd will caref ully mon itor the Gro up’ s pro gress towa rds its n et zero goals .

Chairman’ s review

Gover na nc e over vi ew

Maint aining hi g h s t a n dards of co r p o rate gover nan c e

On behalf of the Board I am ple ased to pr esent the Company’ s corporate gove rnance report for the year ended 3 0 June 2022 . A robust corporat e governance struc ture suppor ts th e decision -ma king ne ede d to impl ement our strate g y , helpi ng us to de liver sustainable per formance and long- term st ak ehold er value.

Board leadership and compan y purpose p76
Divisio n of res po nsib ilitie s p7 7
C omposition, success ion and evalu ation p7 7
Aud it, risk and int ernal contr ol p7 8
R emun eration p7 8

Corp orate governan ce

C o ns id er i n g ou r stak e ho ld er s i n th e d ec i s i on s we m ak e i s not o nl y th e ri gh t th i ng t o do , but bu i ld in g me an i ngf u l r e l a t io ns hi ps w it h k ey p arti es i s cr i ti ca l t o ach i e vi ng bo th ou r d ay-t o- d a y ob j ecti ve s and l on g-t er m am bi ti on s.

G allif ord T r y Ho ldin gs pl c

Employee voice a nd stakeholder engagement

Durin g the year w e carrie d out a n employe e sur vey . We were delig hted to achieve a par ticipatio n rate of 7 4% of thos e invited an d an ab ove average eng agem ent rate (page 2 5). While over all respo nses w ere positi ve, the re are also s ome are as whe re we can u se the fee dback p rovided a s a spur to do b et ter , such a s improved a rtic ulation of ca reer pat hs, and we w ill addre ss fee dback f rom th e su rvey in th e co ming year . Th e Board t akes a keen interes t in the G roup’s culture, as I dis cuss in my statem ent in th e strategic re por t . Pleas e se e our Pe opl e sec tio n on pa ges 24 to 27 for furthe r information.

The Em ployee For um, int roduc ed in 2019 , mee ts th ree time s a year and g ives emp loyees anoth er route , out side of line ma nagem ent str uct ures , to provide su gge stions a nd ideas a bou t working p rac tices . The se are comm unicate d to the Bo ard by the Emp loyee Forum ch air , enabling th e Board to co nsider empl oyees’ fee dbac k and op inions w hen it makes de cisions ab out th e Grou p’ s op eration s. Focus a reas durin g the year have in clude d the empl oyee eng ageme nt sur vey , our w ellbeing app roach , the int roduc tion o f T ot al Reward Statem ents , exible and agile working , and our app roach to returning to the Grou p’ s of ces post - Covid.

Engagement with our wider stakeholders is vital to th e succe ss of the b usines s and th e Boa rd fac tors th eir interes ts into it s discus sions and s trategic d ecision- making . Our St akehold er Steering C ommit tee met t wic e during th e year , to review th e ways we eng age with key sta keholde rs and e nsure that t hese evo lve and remain ap prop riate to the Gro up’ s s trategic priori ties. O ur key sta keholder s are det ailed on page s 6 1 to 65.

Our s trategy

We are making go od pro gress towa rds our Sus tainab le Grow th Stra teg y and o ur target of 3% div isional an d oper ating margin s acros s our B uilding an d Infras truc ture div isions. The a cquisitio n of nmcn’s water busin ess during th e year is f ully aligne d with our s trateg y and e nhan ces our c apab ilities. T he Boa rd thoro ughly re viewed th e strate gy a t our ann ual strateg y me eting and we are satis ed that it remains a ppro priate and alig ned to th e Grou p’ s purp ose . This als o led to the a cquisitio n of MC S Contro l Systems in J uly 202 2. Plea se se e pag es 1 to 65 fo r fur th er in form ation .

Carbon

We recognise t he critic al imp or tance of climate chang e and th e impac t of o ur busine ss ope rations o n the enviro nment . We manage and miti gate our enviro nmen tal impa ct s throu gh our ISO 1 40 01 cer tied mana gement sys tem and w ill continue to wo rk towards redu cing our c arb on footp rint, f ocusin g on our of ces , site accom mo dation, eet an d site wa ste . In Jun e 2021, we p ublishe d our com mitmen t to achieve n et zero acro ss the G roup’s own ope rations by 2 03 0 and a cross o ur who le value ch ain by 20 45, validated b y Scien ce Base d T ar gets . Invest ment s in this area inclu de app ointing a Dire ctor of Sus tainabilit y, recr uiting a Low C arbo n Manage r , e sta blishing a Carb on Red uc tion Gro up, dedi cated c arbo n e-lea rning fo r all employe es an d the laun ch of our N et Zero Par tne rs prog ramme . Pleas e se e our Env iron men t and c limate c han ge sec ti on on pa ges 2 8 to 31 for f ur the r info rmati on, an d page s 48 to 53 o ur re por tin g un der th e T as k Force o n Clim ate- Relate d Fina ncia l Dis clos ure s.

Communicating ef fec tively wit h shareholders and i nvestors

Durin g the year , we have co ntinue d to engage positi vely with o ur shareh older s, pro spe ctive investor s and ma jor ins titutions , combin ing face -to-face m eeting s, tec hnolo g y and vir tual plat forms to go od ef fe ct . We have updated investor s on key ac tivities , our re spo nse to the pan demic and cost ination and areas of focus for th e Board , as well as o ur strategi c plans fo r the G roup. In M ay 2022 we w rote to major shareh olde rs of fering t he opp or tunit y to mee t the Chair -d esignate, A lison Woo d. Furth er det ail can b e foun d on page 81.

The B oard an d Audit C ommit tee contin ue to monitor t he G overnme nt’s prop osals for res toring tr ust in a udit and c orpo rate governan ce, wit h a view to imple ment ation and compli ance.

Board per formance e valua tion

The 2 018 UK Corp orate G overnan ce Code (the “Code” ) require s the Bo ard to have an ex ternally fa cilitated evaluati on at leas t ever y three ye ars, a nd this to ok place in Feb ruar y an d March 2 022 . Over all, the o utcome w as positive , nding that the Board ben ets fro m a highly exp erienc ed grou p of non- execu tive direc tors , with skillset s ap prop riate to the Grou p’ s strateg y, and op erates in a n environm ent of healt hy challenge a nd an ap prec iation of the Gro up’ s s takehol ders . The inte gration of th e new non -exec utive director s was ide ntied as an are a of focu s, to ensu re that the B oard continu es to pe rf orm well as it s mem bers hip evolves . Furth er det ails abo ut the p rocess c an be fo und on p age 79 .

Looking forward

This is my las t year as your C hairman an d I would like to close b y thanking s hareho lder s, Board col leagues and the Company’ s empl oyees fo r their sup por t dur ing my seven years in of ce. I have thorou ghly enjoyed my time at Gallif ord T ry a nd leave th e busine ss with a c apabl e Board a nd mana gement tea m, stron g balan ce shee t, market -le ading p osition and go od p rogres s towards it s Sus tainabl e Grow th Stra teg y . I am delig hted to welcom e Aliso n to Galliford T r y as a Non -exec utive Direc tor an d my succe ssor . Sh e has a wealt h of exp erien ce and h er app ointme nt will fur the r stren gt hen th e indep en dence a nd th e exp erienc e of the Bo ard.

On b ehalf of th e Board

Peter Ventress
Chairman

Ann ual Rep or t an d Finan cial St ateme nts 2 022

Financial information

Gover nance

Strate gic rep or t

Peter Ventre ss

Chairman

Ap point ment d ate: Peter jo ined t he Bo ard on 3 0 Apr il 2015 an d was a ppo inted Cha irman o n 1 1 November 201 6.

Board exp erien ce:

Ex tern al ap point ment s: Pete r joine d the B oard of How dens J oine r y Grou p Plc on 1 J uly 20 22 as Chair man De signa te and N on- exec utive Dir ec tor and a ssum es th e role of Ch airma n with ef fe ct f rom 21 Sep tembe r 202 2. P eter is als o Chairm an of Bun zl plc , the F T SE 10 0 sp ecialis t intern ationa l dist ributi on an d ser vice s gro up.

Skill s and e xpe rien ce: Peter has signi ca nt exp erie nce of ch airing b oard s and of b eing a Non -exe cuti ve Direc tor o f both p ublic a nd pr ivate comp anie s.# Directors and Executive Board

Our Board

Bill Hocking

Chief Executive
Appointment date: Bill was appointed as Chief Executive on 3 January 2020.
Board experience:
Skills and experience: Bill is a civil engineer with more than 35 years of experience in the construction industry. He has full day-to-day responsibility for delivering the Group’s strategy, having regard to the Group’s responsibilities to its shareholders, customers, employees and other stakeholders. Bill joined Galliford Try as Managing Director of Construction in September 2015. He was previously at Skanska UK plc, which he joined in 1990 and where he held the position of Executive Vice President on the Executive Management Team from 2008. From 1 August 2016 until his appointment as Chief Executive of Galliford Try, Bill was Chief Executive of the Group’s Construction & Investments division.

Andrew Duxbury

Finance Director
Appointment date: Andrew joined the Board on 26 March 2019 as Finance Director.
Board experience:
Skills and experience: Andrew is a Fellow of the Institute of Chartered Accountants in England and Wales, with extensive knowledge of the operating environment in construction. He has operational responsibility for managing the Group’s finances and oversees the Risk and Sustainability, Internal Audit, Finance, Tax and Treasury, IT and Shared Service Centre functions. He chairs our Carbon Reduction and Social Value Forum on a quarterly basis. He joined Galliford Try in March 2012 as Group Financial Controller and from 2016, held a number of operational finance roles, including Finance Director of Linden Homes. Prior to joining Galliford Try, Andrew worked for PwC.

Alison Wood

Non-executive Director and Chair-designate
Appointment date: Alison was appointed to the Board on 1 April 2022.
Board experience:
Skills and experience: Alison has a background in engineering, economics and management and extensive corporate experience with leading engineering companies. She spent nearly 20 years at BAE Systems PLC in a number of strategy and leadership roles, including as Group Strategic Director, and was the Global Director of Strategy and Corporate Development at National Grid PLC from 2008 to 2013. Alison has previously held Non-executive Director positions with BTG PLC, Thus Group PLC, e2v PLC, Cobham PLC and Costain plc.
External appointments: Alison is a Non-executive Director and Chair of the Remuneration Committee at TT Electronics PLC and Capricorn Energy PLC and Senior Independent Non-executive Director and Chair of the Remuneration Committee at Oxford Instruments PLC. Alison is also Senior Independent Non-executive Director and Chair of the Remuneration Committee at the British Standards Institution.

Terry Miller

Senior Independent Director
Appointment date: Terry was appointed to the Board on 1 February 2014.
Board experience:
Skills and experience: Terry brings strong commercial experience to the Board, gained at a senior level in both the public and private sectors. Terry was a Trustee of the Invictus Games Foundation and previously General Counsel for the London Organising Committee of the Olympic and Paralympic Games (LOCOG). Her LOCOG role included experience of major construction projects in overseeing negotiation of all overlay construction contracts for the London 2012 Olympic and Paralympic Games. Prior to her LOCOG appointment, Terry spent 17 years with Goldman Sachs in London and was its International General Counsel.
External appointments: Terry is a Non-executive Director of Goldman Sachs International and Goldman Sachs International Bank, part of the global Goldman Sachs Group. She is also a Non-executive Director of insurance company Rothesay Life plc, and a Non-executive Director and Senior Independent Director of Stelrad Group plc.

Gavin Slark

Non-executive Director
Appointment date: Gavin was appointed to the Board on 13 May 2015.
Board experience:
Skills and experience: Gavin has strong leadership skills and commercial experience gained in his various executive-level roles. He is Chief Executive Officer of Grafton Group plc and was Group Chief Executive of BSS Group plc, a leading UK distributor to specialist trades including the plumbing, heating and construction sectors.
External appointments: Since July 2011, Gavin has been Chief Executive Officer of Grafton Group plc, a publicly quoted distributor of building materials operating in the merchanting, DIY retailing and mortar manufacturing markets in the UK, Ireland and mainland Europe.

Executive Board

Kevin Corbett

CEng MICE MIStructE
General Counsel & Company Secretary
Appointment date: Kevin joined the Executive Board on 1 February 2012 and was appointed General Counsel & Company Secretary on 1 March 2012.
Board experience:
Skills and experience: Kevin is a solicitor and chartered civil and structural engineer. He was previously Chief Counsel Global for AECOM. Kevin has significant corporate law, risk management, insurance, finance, governance, strategy and extensive UK and overseas experience. He chairs the Executive Risk Committee and has responsibility for the management of Legal, Secretariat, Communications and Property functions.

Vikki Skene

HR Director
Appointment date: Vikki joined the Executive Board on 3 January 2020.
Board experience:
Skills and experience: Vikki is an experienced senior HR leader, with more than 20 years’ experience in both Construction and HR and was previously UK Employee Relations Director at Balfour Beatty, where she held a number of senior HR roles. She joined the Group in June 2016 as HR Director of the Construction & Investments division.

Ian Jubb

Managing Director, Building
Appointment date: Ian was appointed to the Executive Board on 3 January 2020.
Board experience:
Skills and experience: Ian has nearly 40 years’ experience in the industry, with the last 20 years including senior positions with Miller Construction and Taylor Woodrow. He joined the Group as Managing Director for the North and Scotland Building division on the acquisition of Miller Construction in July 2014, subsequently taking responsibility for all Building Operations in May 2019.

Mark Baxter

Managing Director, Investments and Specialist Services
Appointment date: Mark was appointed to the Executive Board on 3 January 2020.
Board experience:
Skills and experience: Mark has a wealth of industry and PPP experience, gained through a number of senior roles spanning more than 20 years. He joined the Group in February 2014 from Miller Construction, taking on the responsibility for the Group’s Investments division. In March 2018, Mark additionally took on responsibility for the FM division and, in 2019, the specialist businesses Rock & Alluvium and Oak Dry Lining. In his career to date, he has held a number of senior roles including Director for all PPP activities at Miller Construction.

Board Committee Membership

A: Audit Committee
N: Nomination Committee
R: Remuneration Committee
E: Executive Board

Board Experience

Business ethics and integrity
Construction
Commercial
Finance
Governance
Human resources
Strategy and risk

Marisa Cassoni

Non-executive Director
Appointment date: Marisa was appointed to the Board on 1 September 2018.
Board experience:
Skills and experience: Marisa is a chartered accountant with more than 40 years’ experience as a finance professional. She has strong leadership and commercial experience gained through her various executive and non-executive roles. Her early career was initially in audit but she progressed into advisory services including corporate finance, investigations and restructuring across a variety of industries and jurisdictions. Marisa’s previous executive roles include Group Finance Director of the John Lewis Partnership, Royal Mail Group, Britannic Assurance Group and Prudential UK Group. Marisa has over 20 years’ experience as an Executive Board member and was recently a Non-executive Director of Skipton Building Society and Ei Group plc.# Ex tern al ap point ment s:

Ma risa is cu rrentl y a Non-executive Director and Senior Independent Dire cto r of AO World plc , a le ading Eu rope an onli ne electric al retailer .

Sally Boyle Non-executive Director

Appoint ment d ate:

Sall y was ap poin ted to the B oard on 1 May 2 022 .

Board exp erien ce:

Sall y qualie d as a solicito r at Simm ons a nd Si mmo ns. A fte r sever al year s in priv ate pra cti ce as an e mploy ment la w spe cialist , she j oine d Gol dman S achs I nternat ional a s an emp loym ent law yer ; she late r be cam e Hea d of Hum an Cap ital M anage ment f or EME A . Sh e was nam ed Par tn er in 2010 an d worke d as the Intern ationa l Hea d of Hum an Ca pital M anage men t, coverin g EME A , In dia an d APAC, until s he retire d from G old man Sa chs . Sall y was on t he Bo ard of Go ldman S ach s Intern ationa l and it s Man agem ent Com mitte e and c o- chaire d the EM EA D iver sity a nd Incl usion Co mmit tee , whils t also sit ting o n the gl obal Dive rsit y Comm itte e.

Ex tern al ap point ment s:

Sa lly is a No n-e xecu tive Dire cto r of the Roya l Air Forc e.

Balance of non-executive and executive directors

Non-executive	Executive
6	2

Diversity

Male	Female
4	4

plc Board composit ion

Length of appointment
0–2 years	2
2–5 years	3
5–10 years	3

A s at 30 J une 2 022

AN R A E E N R E E
69
Ann ual Rep or t an d Fina ncial St ateme nt s 202 2

Financial information

Gover nance

Strate gic rep or t

Governance review

Gov ernance structure

# Ou r governan ce fra mework

Our gove rnance a nd cont rols fram ework en sures th ere is a clea r and ef fe cti ve division b etwe en the B oard , its Co mmitte es an d ope rational management . Our governance fra mework is detailed below.

The B oard p romotes th e Comp any ’ s long-t erm sus tainab le succe ss an d is the key decisio n-makin g forum f or all strate gic matte rs. It monito rs prog ress ag ainst th e Comp any’s strateg ic prioriti es and e nsures t here is a rob ust and e ff ec tive control e nvironm ent, s o that princ ipal an d emerg ing risks are a ppro priately assessed and manag ed. Pleas e se e page s 68 a nd 69 on dir ec tors’ b iogr aph ies .

graph TD
    A[plc Board] --> B(Board);
    B --> C(Board Committees);
    B --> D(Executive Board);
    D --> E(Executive Committees);

Executive Boar d and Committees

Executive Boar d

Over see s the G roup’s operatio nal mana gement and im plem ents it s st rateg y and p olicies , inclu ding the H ealth , Safet y & S ustaina bility, nan cial, HR an d risk polic ies, as agree d by the pl c Board . Pleas e se e page 81 fo r fur th er inf orm ation .

Executiv e Risk Commi ttee

A ssist s the Bo ard and A udit Com mittee in monito ring an d updating t he Gro up’s principal and e mergin g risks . The co mmit tee is chaired by the G ene ral Coun sel & Com pany Se creta ry. Pleas e se e page 4 3 for f ur the r info rmat ion .

Board Commi ttees

Audit Com mittee

Over see s nancial repor ting matter s; keep s und er review th e ade quac y and e f fec tivene ss of the Co mpany ’s internal contro l and risk manage ment s ystem s; and s eeks to en sure the ef fe c tivene ss of the Co mpany ’s whis tleblow ing arran geme nts fo r its employees and contractors. Pleas e se e Audit C omm itte e rep or t in pag e 84 for furthe r information.

Nomination Commit tee

Oversees Board and Comm ittee composit ion, succe ssion plan ning for D irec tors an d other senio r executi ves, a nd the B oard evalua tion, consid ering th e Board’s balan ce of skills, experience, independen ce and knowledge of the Co mpany, its diver sity, how the B oard work s togethe r as a unit, a nd oth er fac tors relevant to th e Board’ s ef fe cti venes s. Please see Nomination Committee report on pag e 82 for f ur the r info rmati on.

Remunera tion Commi ttee

De signs remu neratio n policie s and s chem es that sup por t th e Group’s strateg y a nd prom ote its lo ng-t erm sust ainable su ccess . Pleas e se e Remu nera tion C ommi tte e rep or t on pag e 87 for f urt her i nfor matio n.

ESG Stak eholder Steeri ng Committee

A Boa rd-level comm ittee c haired by T err y Miller , Sen ior Ind epen dent Dire cto r . The C ommit tee me ets at l east t wice a yea r to review an d overse e the G roup’s relationship s with it s key stakeho lders , iden tif y ways of creating t wo -way comm unicatio n bet wee n sta keholde rs and t he Boa rd, an d ensure sta keholde r views are c onside red in Boa rd discus sions an d decision s. D uring th e year the Dire cto r of Sus tainabilit y an d Risk joine d the Committee. Pleas e se e page 67 fo r fur th er inf orm ation .

The C arb on Redu ctio n and S ocial Value Forum is ch aired by th e Finance D irec tor , on a quar terly ba sis and ena bles B oard oversig ht and inu ence across the se ESG areas . The f orum ha s bee n esta blishe d to co- ordinate an d overse e the vario us ca rbon redu ctio n initiatives we are t aking to ac hieve our n et zero target s , in additio n to the so cial value a dding p rac tice acro ss our G roup with resp ec t to the work w e do in our co mmunitie s. This gro up is comp rised of re pres entative s from a cross ou r dif ferent op eratio nal division s and sup por t se rv ices f unc tions . Moni toring of ES G an d the ou tput s from the C arbo n Reduc tion a nd the S ocial Value Forum a re repor ted by t he Finan ce Direc tor at plc B oard me etings .

Employ ee Forum

Chaired by T er ry M iller and ma de up of empl oyee repre sentati ves from a cross the G roup, th e Employe e Forum me ets at leas t tw ice a year an d provide s a valuabl e chann el for co mmuni cating th e views of our wo rkf orce to the B oard. Pleas e se e page 67 fo r fur th er inf orm ation .

ESG
70
G allifo rd T r y Hol ding s pl c

The role of the Board and its Committees

A s at 30 Jun e 20 22 , th e Board comprise d the Chairman, ve indep ende nt non-e xecutive direc tors , the Chie f Exec utive an d the Fina nce Dire ctor . Th e Boa rd conside rs all the n on- executi ve direc tors, inclu ding the Cha irman , to be ind epen dent . T o ensure a sm ooth tra nsition of th e impo rt ant role of Chair of th e Remune ration Co mmitte e it is intende d that T err y Miller , S enior In depe nde nt Non -exec utive Dire ctor a nd Chair of th e Remun eration Co mmit tee, is exp ec ted to con tinue on the B oard in he r current rol es beyo nd the n ormal n ine year s , whic h occur s in Februa ry 2 023, for a sh or t p eriod until Septemb er 2023 . T his limited ex tension to th e term of of ce is conside red app ropriate by th e Board a nd the Re mune ration Com mittee a nd T err y Miller w ill remain inde pen dent in cha rac ter an d judgem ent.

Biogra phic al summa ries for e ach of th e direc tors as at 3 0 Jun e 2022 , th eir resp ec tive resp onsibilities a nd th eir exter nal direc torship s are set o ut on page 6 8 . The ro les of th e Chairman , Chief E xecuti ve and S enior In dep end ent Dire ctor are s et out in w riting and s ummarise d bel ow. In line with the C ode , the Bo ard reviewe d thes e roles d uring the yea r . The se do cume nts c an be fo und o n our web site at https: / /w w w.g allifordtr y.co.uk /abo ut/ governance-an d-policies/

| Role | Sum mar y of re spo nsibilit ies 1. Ma risa - Non-executive Director and Senior Independent Director of AO World plc. She is currently a Non-executive Director and Senior Independent Director of AO World plc, a leading European online electrical retailer.
2. Sally Boyle - Non-executive Director. Sally was appointed to the Board on 1 May 2022.
- Board experience: Sally qualified as a solicitor at Simmons and Simmons. After several years in private practice as an employment law specialist, she joined Goldman Sachs International as an employment lawyer. She later became Head of Human Capital Management for EMEA. She was named Partner in 2010 and worked as the International Head of Human Capital Management, covering EMEA, India and APAC, until she retired from Goldman Sachs. Sally was on the Board of Goldman Sachs International and its Management Committee and co-chaired the EMEA Diversity and Inclusion Committee, whilst also sitting on the global Diversity Committee.
- External appointments: Sally is a Non-executive Director of the Royal Air Force.

Balance of non-executive and executive directors

Non-executive	Executive
6	2

Diversity

Male	Female
4	4

plc Board composition

Length of appointment
0–2 years	2
2–5 years	3
5–10 years	3

As at 30 June 2022

AN R A E E N R E E
69
Annual Report and Financial Statements 2022

Financial information

Governance

Strategic report

Governance review

Governance structure

# Our governance framework

Our governance and controls framework ensures there is a clear and effective division between the Board, its Committees and operational management. Our governance framework is detailed below.

The Board promotes the Company’s long-term sustainable success and is the key decision-making forum for all strategic matters. It monitors progress against the Company’s strategic priorities and ensures there is a robust and effective control environment, so that principal and emerging risks are appropriately assessed and managed. Please see pages 68 and 69 on directors’ biographies.

graph TD
    A[plc Board] --> B(Board);
    B --> C(Board Committees);
    B --> D(Executive Board);
    D --> E(Executive Committees);

Executive Board and Committees

Executive Board

Oversees the Group’s operational management and implements its strategy and policies, including the Health, Safety & Sustainability, financial, HR and risk policies, as agreed by the plc Board. Please see page 81 for further information.

Executive Risk Committee

Assists the Board and Audit Committee in monitoring and updating the Group’s principal and emerging risks. The committee is chaired by the General Counsel & Company Secretary. Please see page 43 for further information.

Board Committees

Audit Committee

Oversees financial reporting matters; keeps under review the adequacy and effectiveness of the Company’s internal control and risk management systems; and seeks to ensure the effectiveness of the Company’s whistleblowing arrangements for its employees and contractors. Please see Audit Committee report on page 84 for further information.

Nomination Committee

Oversees Board and Committee composition, succession planning for Directors and other senior executives, and the Board evaluation, considering the Board’s balance of skills, experience, independence and knowledge of the Company, its diversity, how the Board works together as a unit, and other factors relevant to the Board’s effectiveness. Please see Nomination Committee report on page 82 for further information.

Remuneration Committee

Designs remuneration policies and schemes that support the Group’s strategy and promote its long-term sustainable success. Please see Remuneration Committee report on page 87 for further information.

ESG Stakeholder Steering Committee

A Board-level committee chaired by Terry Miller, Senior Independent Director. The Committee meets at least twice a year to review and oversee the Group’s relationships with its key stakeholders, identify ways of creating two-way communication between stakeholders and the Board, and ensure stakeholder views are considered in Board discussions and decisions. During the year the Director of Sustainability and Risk joined the Committee. Please see page 67 for further information.

The Carbon Reduction and Social Value Forum is chaired by the Finance Director, on a quarterly basis and enables Board oversight and influence across these ESG areas. The forum has been established to coordinate and oversee the various carbon reduction initiatives we are taking to achieve our net zero targets, in addition to the social value adding practice across our Group with respect to the work we do in our communities. This group is comprised of representatives from across our different operational divisions and support services functions. Monitoring of ESG and the outputs from the Carbon Reduction and Social Value Forum are reported by the Finance Director at plc Board meetings.

Employee Forum

Chaired by Terry Miller and made up of employee representatives from across the Group, the Employee Forum meets at least twice a year and provides a valuable channel for communicating the views of our workforce to the Board. Please see page 67 for further information.

ESG
70
Galliord Try Holdings plc

The role of the Board and its Committees

As at 30 June 2022, the Board comprised the Chairman, five independent non-executive directors, the Chief Executive and the Finance Director. The Board considers all the non-executive directors, including the Chairman, to be independent. To ensure a smooth transition of the important role of Chair of the Remuneration Committee, it is intended that Terry Miller, Senior Independent Non-executive Director and Chair of the Remuneration Committee, is expected to continue on the Board in her current roles beyond the normal nine years, which occurs in February 2023, for a short period until September 2023. This limited extension to the term of office is considered appropriate by the Board and the Remuneration Committee and Terry Miller will remain independent in character and judgement.

Biographical summaries for each of the directors as at 30 June 2022, their respective responsibilities and their external directorships are set out on page 68. The roles of the Chairman, Chief Executive and Senior Independent Director are set out in writing and summarised below. In line with the Code, the Board reviewed these roles during the year. These documents can be found on our website at https://www.galliordtry.co.uk/about/governance-and-policies/

| Role | Summary of responsibilities The non-executive directors’ role is to offer advice and guidance to the executive directors and, when required, constructively challenge the executive directors and Group senior management on performance and strategy matters. The roles and responsibilities of the non-executive directors are specified in their letters of appointment. The letters of appointment are available for inspection on request at the Group’s registered office and will be available immediately prior to and during the 2022 AGM. The Board has delegated certain responsibilities to its committees. Each committee has its own terms of reference, available on our website at https:/ /www.gallifordtry.co.uk/about/governance-and-policies/. These are reviewed annually and updated where necessary, to ensure they remain in line with best practice guidance.

Director appointments and succession planning
Alison Wood joined the Board as a Non-executive Director on 1 April 2022. The Board intends that Alison will become Chair of the Board on the current chair stepping down. Sally Boyle joined the Board as a Non-executive Director on 1 May 2022. In line with the Code, all directors, excluding Peter Ventress who will be stepping down as previously announced, will stand for re-appointment or re-election at the 2022 AGM. The directors’ performance continues to be effective, and they clearly demonstrate their commitment to their respective roles. The Nomination Committee reviewed and refreshed succession plans during the year. Good progress has been made with refining our leadership programme to target each individual’s development requirements and support them in their progression within the Group.

71
Annual Report and Financial Statements 2022
Financial information Governance Strategic report
Governance review continued
Operational management of the Group
Management succession planning
Allocation of Group resources
Implementation of Group policies
Risk management
Contracts up to a prescribed value
Matters reserved for the Board
Matters delegated to management
Group values and standards
Group strategy, business plans and annual budgets
Acquisitions, disposals and contracts over a prescribed value
Material contracts and joint arrangements
Approval of Group policies
Material changes to Group share capital
Group borrowing facilities
Approval of circulars and financial reports

Delegated authorities
The Board continues to operate an established framework of financial, commercial and operational matters delegated to management, which is reviewed annually. A summary of the matters reserved for the Board and the matters delegated to management is set out in the table below.

72
Galliford Try Holdings plc 2021/22

Board and Committee meetings attendance table

	Number of meetings (attended/scheduled)
	Board	Audit	Nomination	Remuneration
		Committee	Committee	Committee
Peter Ventress	8/8	by invitation	2/2	3/3
Chairman
Bill Hocking	8/8	by invitation	by invitation	by invitation
Chief Executive
Andrew Duxbury	8/8	by invitation	n/a	n/a
Finance Director
Terry Miller	8/8	3/3	2/2	3/3
Senior Independent Director
Gavin Slack	8/8	3/3	2/2	3/3
Non-executive Director
Marisa Cassoni	8/8	3/3	2/2	3/3
Non-executive Director
Alison Wood	1/2	0/1	0/1	n/a
Non-executive Director
Sally Boyle	0/1	0/1	1/1	n/a
Non-executive Director
Kevin Corbett	8/8	3/3	2/2	3/3
General Counsel & Company Secretary

Alison Wood was unable to attend the final Board, Nomination and Audit committee meetings of the year, in May 2022, due to a pre-existing commitment to attend the AGM of Capricorn Energy PLC. Sally Boyle was unable to attend the final Board and Audit Committee meetings due to illness.

Board activities during the year
The Board, supported by the General Counsel & Company Secretary, ensures that Board meetings are carefully structured to allow enough time for open discussion. The Board agenda is structured between standing agenda items, governance requirements and areas of operational and strategic focus, and the Board regularly reviews and discusses the following topics:

Reports on health, safety, environment and sustainability.
The financial performance of the businesses.
Progress against the Group strategy and operational reviews.
The relative performance of the Company’s share price.
Comments by market analysts, along with any shareholder feedback, to ensure that the Board has a full understanding of the views of major shareholders.
Insights from the Employee Forum and Stakeholder Steering Committee.

In addition, the Board receives regular presentations from the businesses on operational matters, helping Board members to stay up-to-date with specific operational matters and sector-relevant issues. The Board also receives updates from advisers, as and when required. Board members are encouraged to undertake their own continuing professional development. The non-executive directors’ roles on other boards also help them to develop a broad range of skills and perspectives, from which the Group can benefit.

73
Annual Report and Financial Statements 2022
Financial information Governance Strategic report

Key areas of Board discussion during 2021/22
The Board held eight scheduled meetings during the year and also held ad hoc meetings in relation to succession and strategic matters. Board and Committee meetings were mostly face-to-face during the year, with virtual or hybrid meetings held when appropriate. Some of the Board’s key activities and actions taken during the year are summarised in the table below.

Stakeholders considered	Strategy and implementation	Considered and approved proposals for the acquisition of substantially all of nmcn’s water business, providing additional geographic coverage, customer relationships and technical capabilities to complement the Group’s existing operations. Monitored the integration of the nmcn water business into the Group.
	Covid-19	Monitored the impact of the Covid-19 pandemic on the Group and its stakeholders.
	Sustainability	Oversaw the Group’s sustainability initiatives. Received reports from the Chairs of the Stakeholder Steering Committee, Employee Forum and Carbon Reduction and Social Value Forum.
Culture, resources and people	Operational performance	Received health, safety and environmental (“HS&E”) reports at every meeting and received a presentation from the HS&E Director on the Group’s HS&E performance in 2020/21. Received regular divisional business performance reports and business review presentations from the Group’s principal divisions throughout the year. Received regular reports from the Company’s brokers and investor relations advisers. Following the relaxation of pandemic restrictions, visited the facilities of the acquired Lintott Control Systems business, part of the nmcn water business. Review ed Prompt Payment Code performance.
	Succession planning	Instigated the search for new non-executive directors and Chair and approved the appointment of Alison Wood and Sally Boyle, on the recommendation of the Nomination Committee.
	Employees	Received updates from the Employee Forum Chair after each Forum meeting, including observations on the Group’s culture. Approved publication of the Gender Pay Report. Approved the 2022 Share save invitation.

Key to stakeholders: Clients, Shareholders, People, Suppliers, Communities

Governance review continued
74
Galliford Try Holdings plc

Stakeholders considered	Governance	Compliance	Received regular updates from the General Counsel & Company Secretary on governance and regulatory developments. Reviewed the Schedule of Matters Reserved for the Board and the Committee’s Terms of Reference.

The non-executive directors’ role is to offer advice and guidance to the executive directors and, when required, constructively challenge the executive directors and Group senior management on performance and strategy matters. The roles and responsibilities of the non-executive directors are specified in their letters of appointment. The letters of appointment are available for inspection on request at the Group’s registered office and will be available immediately prior to and during the 2022 AGM. The Board has delegated certain responsibilities to its committees. Each committee has its own terms of reference, available on our website at https:/ /www.gallifordtry.co.uk/about/governance-and-policies/. These are reviewed annually and updated where necessary, to ensure they remain in line with best practice guidance.

72
Galliford Try Holdings plc 2021/22

Board and Committee meetings attendance table

	Number of meetings (attended/scheduled)
	Board	Audit	Nomination	Remuneration
		Committee	Committee	Committee
Peter Ventress	8/8	by invitation	2/2	3/3
Chairman
Bill Hocking	8/8	by invitation	by invitation	by invitation
Chief Executive
Andrew Duxbury	8/8	by invitation	n/a	n/a
Finance Director
Terry Miller	8/8	3/3	2/2	3/3
Senior Independent Director
Gavin Slack	8/8	3/3	2/2	3/3
Non-executive Director
Marisa Cassoni	8/8	3/3	2/2	3/3
Non-executive Director
Alison Wood	1/2	0/1	0/1	n/a
Non-executive Director
Sally Boyle	0/1	0/1	1/1	n/a
Non-executive Director
Kevin Corbett	8/8	3/3	2/2	3/3
General Counsel & Company Secretary

Reports on health, safety, environment and sustainability.
The financial performance of the businesses.
Progress against the Group strategy and operational reviews.
The relative performance of the Company’s share price.
Comments by market analysts, along with any shareholder feedback, to ensure that the Board has a full understanding of the views of major shareholders.
Insights from the Employee Forum and Stakeholder Steering Committee.

73
Annual Report and Financial Statements 2022
Financial information Governance Strategic report

Stakeholders considered	Strategy and implementation	Considered and approved proposals for the acquisition of substantially all of nmcn’s water business, providing additional geographic coverage, customer relationships and technical capabilities to complement the Group’s existing operations. Monitored the integration of the nmcn water business into the Group.
	Covid-19	Monitored the impact of the Covid-19 pandemic on the Group and its stakeholders.
	Sustainability	Oversaw the Group’s sustainability initiatives. Received reports from the Chairs of the Stakeholder Steering Committee, Employee Forum and Carbon Reduction and Social Value Forum.
Culture, resources and people	Operational performance	Received health, safety and environmental (“HS&E”) reports at every meeting and received a presentation from the HS&E Director on the Group’s HS&E performance in 2020/21. Received regular divisional business performance reports and business review presentations from the Group’s principal divisions throughout the year. Received regular reports from the Company’s brokers and investor relations advisers. Following the relaxation of pandemic restrictions, visited the facilities of the acquired Lintott Control Systems business, part of the nmcn water business. Review ed Prompt Payment Code performance.
	Succession planning	Instigated the search for new non-executive directors and Chair and approved the appointment of Alison Wood and Sally Boyle, on the recommendation of the Nomination Committee.
	Employees	Received updates from the Employee Forum Chair after each Forum meeting, including observations on the Group’s culture. Approved publication of the Gender Pay Report. Approved the 2022 Share save invitation.

Key to stakeholders: Clients, Shareholders, People, Suppliers, Communities

Governance review continued
74
Galliford Try Holdings plc

Governance

Strategic Report

Governance Review Continued

UK Corporate Governance Code Compliance

As a premium listed company, the 2018 UK Corporate Governance Code (“Code”) sets the standards against which we measure ourselves. Throughout the year to 30 June 2022, the Board has applied the Principles and complied with all the Provisions of the Code, as set out below:

| Principle | How we apply the Principle # The Company Secretary

The Board, supported by the Company Secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently. The General Counsel & Company Secretary ensures that the Board receives high-quality papers in a timely manner. He advises the Board on all governance matters, including compliance with the Code. He works with the Chairman and Committee chairs to ensure that the right matters are escalated to the Board and Committees at the appropriate time and that sufficient time is devoted to strategic matters. He oversees Board induction and evaluation arrangements and supports succession planning and recruitment of new non-executive directors.

3. Composition, succession and evaluation

J. Board appointments

Appointments to the Board should be subject to a formal, rigorous and transparent procedure, and an effective succession plan should be maintained for Board and senior management. Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths. The Board followed a clear and formal process for appointing directors, which was followed for the recruitment of Alison Wood and Sally Boyle during the year. These appointments were in line with the Board’s succession plans, which were reviewed and refreshed during the year. The Board and Executive management recognise the importance of succession planning to overall business performance. Inclusion and diversity are key drivers to the Group’s overall development plans. See the Nomination Committee report on pages 82 to 83.

K. Skills, experience and knowledge

The Board and its committees should have a combination of skills, experience and knowledge. Consideration should be given to the length of service of the Board as a whole and membership regularly refreshed. The Nomination Committee regularly reviews the balance, composition and structure of the Board, as well as the length of service of each Board member. The Nomination Committee also makes recommendations about the re-appointment of Non-executive Directors and any extensions to their term.

L. Board evaluations

Annual evaluation of the Board should consider its composition, diversity and how effectively members work together to achieve objectives. Individual evaluation should demonstrate whether each director continues to contribute effectively. The Board conducts an annual evaluation of its own performance and the performance of its committees and individual directors. An externally facilitated Board evaluation was conducted this year. Further information can be found on page 79.

77 Annual Report and Financial Statements 2022 Financial information Governance Strategic report Governance review continued

Principle	How we apply the Principle	Further information
4. Audit, risk and internal control
M. Financial reporting integrity	The Board should establish formal and transparent policies and procedures to ensure the independence and effectiveness of internal and external audit functions and satisfy itself on the integrity of financial and narrative statements.	The Board delegates detailed oversight of the Group’s system of internal controls to the Audit Committee, to ensure the integrity of the Group’s full year and half year results and the Annual Report and Accounts. On the Audit Committee’s recommendation, the Board reviewed and approved the 2022 half year and full year results and the 2022 Annual Report. In addition, the Board evaluation process confirmed the Board’s view that the Group’s system of internal controls had operated effectively during the year.
N. Fair, balanced and understandable assessment	The Board should present a fair, balanced and understandable assessment of the company’s position and prospects.	The Audit Committee reviewed the 2022 Annual Report and Accounts in September 2022 and was satisfied that it presents a fair, balanced and understandable assessment of the Group’s position and prospects. The Audit Committee reported its findings to the Board. See the Financial Review section on pages 55 to 57 for further information.
O. Risk management and internal control framework	The Board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long-term strategic objectives.	The procedures for managing risk have continued to work well during the year. Both the Executive Risk Committee and Audit Committee continually monitor the Group’s risk management and internal control systems on the Board’s behalf. The Executive Risk Committee (chaired by the General Counsel & Company Secretary) reviews the Group’s principal and emerging risks and recommends any changes to risk appetite to the Board. The Board regularly reviews the Group Risk Register. See Our risk management process section on page 43 for further information.
5. Remuneration
P. Supporting strategy and long-term sustainable success	Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to company purpose and values, and be clearly linked to the successful delivery of the company’s long-term strategy.	Shareholders approved the current Remuneration Policy at the 2020 AGM. The Remuneration Committee continues to review remuneration policies and practices to ensure they are aligned to the Group’s long-term success and based on stretching performance metrics that reflect shareholder’s interests. See the Remuneration Committee Report on pages 87 to 99.
Q. Remuneration Policy	A formal and transparent procedure for developing policy on Executive remuneration and determining director and senior management remuneration should be established. No director should be involved in deciding their own remuneration outcome.	The Remuneration Committee has continued to apply robust procedures for determining executive remuneration, in line with the policy approved by shareholders, and operates in accordance with its terms of reference. The remuneration of non-executive directors is a matter for the Chairman and the executive directors. No one can be involved in any discussion or decision about their own remuneration. The Remuneration Policy can be found on pages 87 to 89 within the Remuneration Report. The Remuneration Committee’s terms of reference can be found on our website at https://www.gallifordtry.co.uk/about/governance-and-policies/.
R. Independence of remuneration outcome decisions	Directors should exercise independent judgment and discretion when authorising remuneration outcomes, taking account of company and individual performance, and wider circumstances.	The Remuneration Committee members are all independent non-executive directors. The Committee takes advice from external remuneration consultants and ensures that remuneration for Board and senior management is suitably structured to attract, retain and motivate executives, and to link reward to corporate and individual performance and all relevant internal and external factors.

78 Galliford Try Holdings plc

Board effectiveness review

In line with the Code, the Board reviews its own effectiveness and that of its Committees each year, with an externally facilitated review at least every third year.

2022 effectiveness review

In 2022, Clare Chalmers Limited (Clare Chalmers) facilitated the Board evaluation process. The Board considers Clare Chalmers to be independent, as it has no other connection to Galliford Try or its Directors. The brief for the process was agreed following a scoping meeting with the Chairman. The evaluation process included Clare Chalmers: reviewing a selection of Board and Committee papers and terms of reference; observing a Board meeting and an Audit Committee meeting; and interviewing Board Members and a number of external advisers who regularly interact with the Board.

Clare Chalmers produced a report which was positive about the Board’s functioning. The report also included a number of recommendations and suggested actions (see below), particularly ensuring the successful integration of new non-executive directors. The report was discussed with the Chairman and General Counsel & Company Secretary and then presented to the Board at its May 2022 meeting. A number of key areas of focus were identified and agreed as set out below. The Board will monitor progress against these as appropriate and any ongoing areas of focus will form part of the 2023 internal evaluation.

Induction: ensure appropriate time with senior managers, advisors and site visits.
Senior Independent Director role: consider as part of future succession planning.# Governance Review Continued

Presentations from management: Consider expanding current participation of management in plc Board meetings.
Stakeholders: Greater consideration of views from management and Stakeholder Steering Committee.
Competitor analysis: Expand business and management presentations.
ESG: Consider enhancing external communications to demonstrate Board oversight.

Actions Arising From the 2021 Effectiveness Review

As shown below, the Board has successfully addressed the actions arising from the effectiveness review in 2021:

Recommendation	Actions Taken
Succession planning	Review and plan for required Non-Executive Director succession. The Nomination Committee focused on succession planning during the year and this work supported the recruitment of Alison Wood and Sally Boyle.
ESG	Review and develop the scope of the Stakeholder Steering Committee to include oversight of sustainability and its overall governance within the Group. The Stakeholder Steering Committee has oversight of sustainability and its overall governance. The Director of Risk and Sustainability joined the committee as a member during the year.
Stakeholder engagement	Continue to receive regular reports to the Board from the Stakeholder Steering Committee and Employee Forum Chair on stakeholder engagement and employee matters. The Board received regular reports from the Senior Independent Director, who chairs both the Stakeholder Steering Committee and the Employee Forum.
Shareholder relations	Continue to engage as required with institutional shareholders on key matters of relevance to the Group and its operations. The Executive Directors continued to conduct a comprehensive investor relations programme, with feedback provided to the Board.

79 Annual Report and Financial Statements 2022

Financial Information

Governance

Strategic Report

Q&A with Alison Wood, Non-Executive Director and Chair-designate

Q. What attracted you to Galliford Try?
A. My background and career is Engineering which provides a natural attraction to construction and I have followed Galliford Try’s progress over time. It is clear to see that the Company is a leader in its field, with fantastic opportunities and a great vision which have been captured in its Sustainable Growth Strategy. What I find personally admirable is the Group’s people culture, risk management and integrity when delivering for the wider society. Since joining Galliford Try I have been impressed by the quality and passion of its teams which is evident across the organisation, from the Boardroom to site.

Q. What are your first impressions of Galliford Try?
A. Galliford Try has an impressive reputation and portfolio of projects nationwide and I have been fortunate to have already benefited from the opportunity to meet staff on and off site. What strikes me is the camaraderie of the teams, and the sense of working towards a common goal. There is an infectious positivity, and a desire to do better by anticipating future needs of stakeholders. An example of this culture to continuously improve is demonstrated by the role digital tools and technology are increasingly playing in day-to-day activities – from the big to the small – to make processes more efficient, improve quality and reduce health and safety risks as well as to help decarbonise the environment.

Q. What are you most looking forward to in Galliford Try’s future?
A. Galliford Try is making a significant contribution to the future of the UK, not only through the buildings and infrastructure it builds, but the positivity legacy it leaves in communities through education, upskilling of people and SMEs and community engagement. This means the Company has a chance to be hugely influential within society, and it’s great to be part of this. As I said earlier, I also anticipate the emerging role of new technology at Galliford Try to be a force in the construction industry and I look forward to seeing Galliford Try’s role in this sphere. I am looking forward to helping shape this bright future, and building on Galliford Try’s successes.

Alison Wood
Non-Executive Director and Chair-designate

Galliford Try has an impressive reputation and portfolio of projects nationwide and I have been fortunate to have already benefited from the opportunity to meet staff on and off site. Alison Wood will assume Chair of the Board of Galliford Try when the current Chair steps down in September 2022.

Galliford Try Holdings plc

Executive Board Report

The Chief Executive chairs the Executive Board, which is responsible for the Group’s operational management under terms of reference set by the Board. This includes making recommendations to the Board on all matters reserved for Board authorisation. The Executive Board focuses on long-term strategic issues and matters of Group-wide policy, with health, safety and sustainability and business ethics being key agenda items at every meeting, highlighting their importance to the Group. The Executive Board also receives and considers regular performance and operational reports and presentations from business management. The minutes of Executive Board meetings are included in the Board packs.

The Executive Board held 11 scheduled meetings during the year. Additional meetings are convened to consider and authorise specific operational or project matters. Meetings have taken place both in-person and through hybrid/virtual participation, at all times observing our Covid-safe procedures and protocols. The Executive Board also held short virtual meetings each week throughout the year. Executive Board members maintain a visible presence within the business by holding meetings at regional offices and visiting office and site locations. Membership of the Executive Board is detailed on page 69. The Assistant Company Secretary acts as Secretary to the Executive Board.

Governance Policies

The Group has a suite of governance and risk management policies, procedures and training programmes, all of which address the Group’s legal obligations. During the financial year, the Executive Board reviewed and refreshed the policies, procedures and authority matrices under which the central functions and businesses operate.

Reporting, Risk, Internal Audit and Controls

The Governance review, starting on page 70, details the actions the Group took during the financial year, including those with a risk management focus. The Board’s approach to risk and internal audit, including its systems in relation to the preparation of consolidated accounts, and the material controls of the Group’s established internal control framework, are disclosed in the Risk Management section on pages 43 to 47. A separate programme of 13 internal audits was also completed across the Group’s operations, and progress checks were completed against previous recommendations.

Shareholder Relations

The Chief Executive and Finance Director continued to meet with existing and prospective institutional shareholders throughout the year. 72 meetings were held with 20 shareholders, who together represented 45% of the share register, and 42 meetings with potential investors. In addition, the management team attended three conferences in the year, meeting with 11 institutions. Key areas of discussion included the Company’s strategy and targets, dividend policy, capital allocation, future pipeline and ESG factors, as well as macro-economic factors such as inflation. A Business Briefing for analysts and investors was held in the second half of the year, featuring presentations from senior management on the Building, Environment and low-carbon construction areas of the business.

The Finance Director has this year focused on building strong investor relationships, engaging with a third-party specialist advisory business to schedule roadshows and provide further research coverage, while Proactive Investors and InvestorMeetCompany have been engaged to create digital content following news updates, focusing on retail investors. The Board as a whole continues to engage actively with institutional shareholders, in line with the Financial Reporting Council’s UK Stewardship Code, on key matters of relevance to the Group and its operations, such as governance, strategy or remuneration, or more general market themes. Specific reports regarding shareholder views are provided to the Board for analysis and discussion.

Separately, the Chairman, Senior Independent Director and other Non-Executive Directors are available to attend meetings with shareholders and address any significant concerns that shareholders may have. The Chairman and General Counsel & Company Secretary met one shareholder virtually. Major shareholders were also invited to meet the Chair-designate. We plan to hold our 2022 AGM on Friday 11 November 2022 at the offices of Peel Hunt LLP, 7th floor, 100 Liverpool Street, London, EC2M 2AT at 11.30am.The Board will be pleased to welcome shareholders, answer questions, listen to suggestions and encourage shareholders’ participation in the business to be discussed at the meeting. With regard to Covid-19, we will follow the guidelines and best practice in place at the time of the AGM.

Compliance statement

The Group remains compliant with the Financial Conduct Authority’s Listing Rule 9.8.6 and Disclosure Guidance and Transparency Rule 7.2.1. Related information can be found in the Directors’ report on pages 100 to 102. Additionally, the Group has complied with sections 414CA and 414CB as well as 414C of the Companies Act 2006. Relevant information can be found throughout the Strategic report and Governance section of this Annual Report. The summary table on page 42 in the Strategic report highlights where non-financial information can be found within this Annual Report.

81 Annual Report and Financial Statements 2022

Financial information
Governance
Strategic report

I am pleased to present my report on the Nomination Committee’s activities during the financial year ended 30 June 2022. This year the Committee focused on Board succession, including for my own role as Chair of the Board, following my announcement of my intention to step down in September 2022, having served over seven years with the Group. In line with its succession plans, the Board recruited two Non-executive Directors, including my successor, Alison Wood. The process for identifying the new Chair was led by the Senior Independent Director and overseen by the Committee, resulting in Alison’s appointment as a Non-executive Director and Chair-designate with effect from 1 April 2022. Alison also became a member of the Committee on her appointment in April and becomes Chair of the Board and of this Committee when I step down. I also led the search for a new Non-executive Director, Sally Boyle, who joined the Board on 1 May 2022. Sally became a member of this Committee on joining.

Composition and remit

The Committee’s membership is detailed on pages 68 and 69. The General Counsel & Company Secretary acts as Secretary to the Committee. At the financial year-end, the Committee comprised a majority of independent non-executive directors, complying with provision 17 of the 2018 Code. During the year, the Committee reviewed and updated its terms of reference in line with best practice, making only minor changes. The Committee’s current terms of reference can be found on the Group’s website (www.gallifordtry.co.uk).

The Board has delegated the following principal authorities to the Committee:

Reviewing the Board’s size, structure and composition.
Evaluating the Board’s balance of skills, knowledge, diversity and experience, including the impact of new appointments.
Overseeing and recommending the recruitment of any new directors.
Ensuring appointments are made against objective criteria.
Keeping the Group’s leadership and succession requirements under active review.

Succession planning below the Executive Board remained a key area of focus for the Committee during the financial year. The Committee received updates from the HR Director on progress with implementing the Group’s succession plan, with a focus on developing a diverse talent pool of employees demonstrating high potential for promotion.

During the financial year, the Committee prioritised the key activities and areas of focus set out below.

Calendar of 2021/22 Committee activities and areas of focus

December 2021: Succession planning.
March 2022: Review and appointment of a new Non-executive Director and Chair-designate.
April 2022: Review and appointment of a new Non-executive Director.
May 2022: Succession planning. Non-executive directors’ appointment review and Committee membership. Terms of reference review and approval.

Board appointments

Appointments to the Board are subject to formal, rigorous and transparent procedures. The Committee oversees, and makes recommendations to the Board on the identification, assessment and selection of candidates for appointment to the Board. During the financial year there were two appointments to the Board. Russell Reynolds Associates, an executive search consultancy, was appointed to assist the Committee with the search process. Russell Reynolds has no other connection to Galliford Try or its directors. The Committee agreed a brief based on the capabilities, skills and experience required on the Board and which would support the business’s strategy.

Nomination Committee report

The Committee’s work on succession planning and appointing two new Non-executive Directors has ensured the Company has a strong, independent and diverse Board. I am pleased to be handing over to a new Chair with the Group in excellent shape.

82 Galliford Try Holdings plc

Appointment – Alison Wood

In October 2021, the Board initiated a search process led by the Senior Independent Director to identify a new Non-executive Director to take on the role of Chair of the Board upon my stepping down from the role. In making this appointment, the Committee was seeking a candidate with:

substantial experience as a Non-executive Director on quoted company boards;
a strong understanding of corporate governance;
the ability to lead the Board effectively; and
relevant experience gained in executive roles, including strategy.

Alison Wood was selected as the preferred candidate and the Committee recommended her appointment to the Board. She was appointed to the Board as a Non-executive Director and Chair-designate with effect from 1 April 2022. Alison will seek re-appointment by the Company’s shareholders at its forthcoming AGM.

Appointment – Sally Boyle

The Committee’s criteria for appointing a new Non-Executive Director included:

substantial experience in senior roles in major organisations;
a professional background in human resources and the capability to add value to Board discussions;
diversity and inclusion, culture and succession planning; and
the skills and experience to take on the role of chair of the Remuneration Committee.

Sally Boyle was selected and upon the recommendation of the Committee she was appointed to the Board as a Non-executive Director with effect from 1 May 2022. Sally will seek election by the Company’s shareholders at its forthcoming AGM.

Review of the Board’s composition

The Committee regularly reviews the composition of the Board and its Committees. The Board evaluation plays an important part in this process, as it includes an assessment of whether the Board’s composition and mix of skills, experience, knowledge and diversity of opinion remain suitable, in the context of the Group’s structure, strategy and objectives. Given the size and structure of our Group, the composition and size of the Board and its committees remains appropriate. Further details on the Board evaluation and its outcomes can be found on page 79. To ensure a smooth transition of the important role of Chair of the Remuneration Committee, the Committee expects that Terry Miller will remain on the Board in her current roles until September 2023, which is beyond the normal term of nine years. The Board and Committee consider that this limited extension to Terry’s term of office is appropriate and Terry will remain independent in character and judgement.

Inclusion and diversity

The Committee is committed to embedding inclusion and diversity throughout the Group, continuing to attract and retain the best candidates and ensuring the full development of all Group employees. Inclusion and diversity is a key consideration when assessing the Board’s composition, to ensure the development of a diverse pipeline for succession. The gender balance at Board and senior management level is reported in the People and Cultures section on page 27. The Committee is also aware of and supportive of the recommendations of the Parker Review and will ensure that ethnic diversity is appropriately considered in future recruitment to the Board. The Group has a range of inclusion and diversity initiatives, including action plans and agile working arrangements, with a flexible culture and working practices to suit everybody’s needs. The Group also takes part in industry and other initiatives to improve inclusion and diversity, including supporting the National Association for Women in Construction, the Leadership & Diversity Group Scotland and the Supplier Diversity Group. Galliford Try is an accredited Disability Confident Employer. This Government initiative aims to challenge attitudes towards disability, remove barriers to employment for disabled people and those with long-term health conditions, and ensure that disabled people have the opportunities to fulfil their potential and realise their aspirations. For further information on our approach to gender diversity, please see our People and culture section on pages 24 and 27.# Audit Committee Report

Peter Ventries Nomination Committee Chair

Annual Report and Financial Statements 2022

Financial information

Governance

Strategic report

I am pleased to present my report as Chair of the Audit Committee. Throughout the year the Committee supported the Board in fulfilling its corporate governance responsibilities, including monitoring and reviewing developments in corporate governance, overseeing the internal audit process, and assessing the integrity of the financial statements and the adequacy and effectiveness of the risk management and internal control framework of the Group.

Composition of the Committee

All Committee members are independent Non-executive Directors. Additional details on the Committee’s members can be found on pages 68 and 69. The Committee has continued to ensure that each member has sufficient knowledge, training and expertise to contribute effectively to the Committee’s work, which is a key requirement of Provision 24 of the 2018 UK Corporate Governance Code and the FRC’s Guidance on Audit Committees. The Board remains satisfied that, as a whole, the Committee has competence relevant to the sector in which the Group operates.

As Committee Chair, I have extensive experience in numerous roles, which include Group Finance Director of the John Lewis Partnership, Royal Mail Group, Britannic Assurance Group and Prudential UK Group. I also have experience of being a Non-executive Director with Skipton Building Society, AO World plc and Ei Group plc.

Terry Miller has wide-ranging commercial experience, including construction experience from overseeing the negotiation of the construction contracts as General Counsel for the London 2012 Olympic and Paralympic Games. She also has considerable experience as a Non-executive Director and currently serves as a Non-executive Director with two Goldman Sachs group companies and a regulated insurance company.

Gavin Slark is Chief Executive Officer of Grafton Group plc, an independent company operating in the merchanting, DIY retailing and mortar manufacturing markets in Britain, Ireland and Belgium. He was previously Group Chief Executive of BSS Group plc, a leading UK distributor to specialist trades including the plumbing, heating and construction sectors.

Alison Wood joined the Committee on her appointment as a Non-executive Director on 1 April 2022. Alison has a background in engineering, economics and management and substantial corporate experience with leading engineering companies. She spent nearly 20 years at BAE Systems PLC in a number of strategy and leadership roles, including as Group Strategic Director, and was the Global Director of Strategy and Corporate Development at National Grid PLC from 2008 to 2013. Alison is a Non-executive Director and Chair of the Remuneration Committee at TT Electronics PLC and Capricorn Energy PLC and Senior Independent Non-Executive Director and Chair of the Remuneration Committee at Oxford Instruments PLC. Alison has previously held Non-executive Director positions with BTG PLC, Thus Group PLC, e2v PLC, Cobham PLC and Costain plc.

Sally Boyle joined the Committee on her appointment on 1 May 2022. Sally spent several years in private practice as an employment law specialist, before joining Goldman Sachs International where she became Head of Human Capital Management for EMEA. She was named Partner in 2010 and worked as the International Head of Human Capital Management, covering EMEA, India and APAC until she retired from Goldman Sachs. Sally was on the Board of Goldman Sachs International and its Management Committee and co-chaired the EMEA Diversity and Inclusion Committee, whilst also sitting on the global Diversity Committee. Sally is also a Non-executive Director of the Royal Air Force.

The Chairman of the Board, Chief Executive and Finance Director attend Committee meetings by invitation, together with the Head of Internal Audit and the Group Financial Controller. The General Counsel & Company Secretary, or his delegate, acts as Secretary to the Committee.

Remit and activities

The Committee met three times during the year, which it deems appropriate to its role and responsibilities. The Committee’s delegated authorities and calendar of prioritised work have not changed substantially from those disclosed in previous years and remain in line with the Code’s requirements.

The Committee’s key responsibilities are: delegated responsibility from the Board for financial reporting; monitoring external audit, internal audit, risk and controls; and reviewing instances of whistleblowing and the Group’s procedures for detecting fraud.

The table below summarises the Committee’s key activities during the financial year.

The Committee also continues to meet with internal and external audit teams, without Executive management present, in order to discuss any matters which the auditor may wish to raise in confidence.

Audit Committee report

The Committee supported the Board in fulfilling its corporate governance responsibilities, including overseeing the internal and external audit processes.

Calendar of 2021/22 Committee activities and areas of focus
September 2021
February 2022
May 2022

Financial Reporting Council

During the year the Financial Reporting Council’s Corporate Reporting Review Team (“CRRT”) carried out a review of the Company’s Annual Report for the year ended 30 June 2021. The response by the Company to the request for information was discussed with me in my capacity as Chair of the Audit Committee, prior to responding to the CRRT. Details of the enquiry raised by the CRRT and the Company’s response thereto were also considered by the Committee. The CRRT has closed its enquiries and the Company has agreed to enhance disclosures in a small number of areas in response to the review. The Committee is satisfied that the enhancements proposed and agreed with the CRRT have been appropriately incorporated in the 2022 Annual Report.

In June 2022 the FRC concluded its review and published sanctions imposed on PricewaterhouseCoopers LLP in relation to its audit of the Group’s financial statements in FY2018 and FY2019. These findings had no direct impact on the Group in preparing its 2022 Annual Report.

During the year the FRC also concluded its review of BDO LLP’s audit of the 30 June 2020 Annual Report, performed as part of its normal reporting cycle of reviews of auditors. BDO addressed the matters raised in its planning for the audit of the June 2022 Annual Report.

External audit

The Company’s external auditor is BDO LLP. Its appointment followed an audit tender process undertaken in the second half of 2018 and was subsequently approved by shareholders. The audit plan is submitted annually and is approved by the Committee. The Committee meets privately with the auditor, and the Chair of the Committee speaks regularly with the audit partner throughout the year. Each year, the Committee assesses the independence and effectiveness of the external audit process, which includes discussing feedback from the members of the Committee and key senior management within the Group. The Committee is satisfied that the external audit relationship is effective and that BDO LLP remained sufficiently independent in accordance with the relevant professional ethical standards.

A resolution is to be proposed at the forthcoming AGM for the re-appointment of BDO LLP as auditor of the Group, at a rate of remuneration to be determined by the Audit Committee.

Internal audit

Each year, the Committee reviews and approves the scope of work of the Internal Audit team, which includes assessing the adequacy of the team’s resources. During the financial year, the Internal Audit team continued to deliver its agreed internal audits annual plan and provided commercial and risk management support across the Group, at the request of the Committee, the Executive Board and senior management.# Audit Committee Report

Bi-annual status reports on commercial health checks, based on a typical sample of 12 contracts from across the business, are reported to the Audit Committee. Projects included in commercial health checks provide a representative mix of business units, project values, current commercial performance, and stage of completion. The Executive Risk Committee reviews the Group’s risks and reports to the Executive Board and the plc Board. In addition, the Executive Risk Committee has continued to review the procedures in place to identify emerging risks, as well as its disclosure obligations. The Executive Risk Committee has a standing agenda item at its meetings to review and document emerging risk themes that could have a significant impact on our business. This year, the Executive Risk Committee has also reviewed the climate-related risks and opportunities, in support of our TCFD disclosures. More information about the Group’s principal risks, its process of identifying and managing emerging risks, its long-term viability, and its risk management systems can be found in the Risk management section on pages 43 to 47. In line with the Code’s requirements, the Board reviews an annual assessment of the effectiveness of the Group’s risk management and internal control systems prior to approving the full-year results. This review covers all material controls, including financial, operational, and compliance controls. In addition, the Head of Internal Audit provides an Internal Audit Report to the Audit Committee at each Committee meeting, which includes the status of audits from the agreed internal audit plan and implementation of agreed actions.

85 Annual Report and Financial Statements 2022

Financial Information

Governance

Strategic Report

Non-audit services

The Group has policies and review mechanisms governing the provision of material non-audit services and safeguarding the objectivity and independence of the external auditor. These remained in force throughout the financial year. The policy specifies: the types of non-audit services for which the use of the external auditor is pre-approved (i.e., approval has been given in advance as a matter of policy); the services for which specific approval from the Committee is required before the auditor is contracted; and the services from which the external auditor is excluded. In respect of pre-approved services, a financial threshold is in place, applicable to individual and aggregated services in any year. Furthermore, should the total value of non-audit service engagements exceed a defined percentage of the total Group audit fee for the previous financial year, the Committee shall consider and give specific prior approval for any subsequent non-audit service engagements.

Each year, the Committee assesses the independence and effectiveness of the external audit process, which includes discussing fee feedback from the members of the Committee and key senior management within the Group and from regulatory sources.

Internal control framework

The day-to-day management of our principal risks is supported by an internal control framework which is embedded in our management and operational processes. The most significant elements of the Group’s internal control framework include the following:

Organisational structure: each business unit is led by a managing director and management team, providing a clear hierarchy and accountabilities.
Code of Conduct: the Group promotes a culture of acting ethically and with demonstrable integrity. Our ethical standards and approach are set out in ‘Doing the right thing’, our Code of Conduct. It is supported by training modules and its themes and importance are communicated to new starters as part of their induction.
Contractual review and commitments: the Group has policies and procedures for entering into contracts which apply across its business units and operations and are enforced through the Group’s legal authorities matrix.
Operational activity: site operations are performed in line with established business management systems and processes that incorporate all operational activities, including health, safety, and environmental procedures, regular performance monitoring, quality management, and external accountability to stakeholders.
Financial planning framework: a detailed annual budget is prepared for each financial year, which is approved by the Board.
Operational and financial reporting: an exacting profit and cash reporting and forecasting regime is in place across the Group. This emphasises cash flow, income, and balance sheet reporting, as well as health, safety, and environmental matters within monthly operational reports.
Internal audit: the Internal Audit team develops and delivers an annual programme of internal audits, which includes business unit key control reviews, audits of Group processes and other specific risk areas, and reviews of significant change programmes.
Assurance provided by non-audit functions: a number of other Group functions provide assurance in areas including, but not limited to, health, safety and environment, legal contract reviews and compliance, and construction industry regulation.

Significant issues and other accounting judgements

The Committee reviewed the integrity of the Group’s financial statements and all formal announcements relating to the Group’s financial performance. This included an assessment of each critical accounting policy, as set out in note 1 to the financial statements, as well as review and debate on the following areas of significance:

Contract revenue and provisions: in conjunction with the annual audit, the Committee continued to review key judgments in respect of revenue recognition and contract provisions, in relation to certain significant long-term construction contracts.
Business combinations: the Committee considered the accounting for, and disclosure of, the acquisition of the water business of nmcn plc (in administration).
Going concern and viability: the Committee considered other commercial and economic risks to the Group’s going concern status and longer-term viability and reported to the Board on its findings.
Goodwill impairment review: during the year, the Committee considered the judgments made in relation to the valuation methodology adopted by management and the model inputs used, as well as the sensitivities used by management and the related disclosures.
Significant transactions: the Committee has given particular consideration to the accounting for and presentation of individually significant transactions, and areas where alternative performance measures are required to ensure that the financial statements give a fair, balanced, and understandable view of the Group’s performance, and that statutory measures are equally clear and prominent. This specifically included the presentation of the investment in cloud-based commercial and accounting systems, which has been reported as an exceptional cost.
PPP portfolio valuation: the Committee reviewed the discount rate used to determine the fair value of each of the Group’s PPP investments.

Fair, balanced, and understandable consideration

The Committee considers that the 2022 Annual Report and financial statements are fair, balanced, and understandable, in terms of the form and content of the strategic, governance, and financial information presented therein, and that they provide the information necessary for shareholders to assess the Company’s position and performance, business model, and strategy.

Marisa Cassoni
Audit Committee Chair

Audit Committee report continued

86 Galliford Try Holdings plc

Committee Chair’s annual statement

I am pleased to present the Directors’ Remuneration Report for the financial year ended 30 June 2022. The Remuneration Report is divided into three parts: this Annual Statement; the Directors’ Remuneration Policy Report; and an Annual Report on Remuneration, which sets out the application of the Policy during the year ended 30 June 2022.

The background to the Remuneration Report is the Group’s delivery of another year of improved operational and financial performance. In line with the rules of the Annual Bonus Plan (“ABP”), the Committee has therefore approved payments for the year ended 30 June 2022 at 100% of maximum. For the Long Term Incentive Plan (“LTIP”), the Committee has approved the vesting of awards granted to Executives under the LTIP in March 2020. Based on performance up to the financial year ended 30 June 2022, 89% of the March 2020 LTIP will vest on 13 March 2023, three years after grant. Further details of remuneration, in accordance with the shareholder-approved Remuneration Policy, can be found overleaf.

During the year, and in recognition of the increasing importance of ESG factors to the Group and all stakeholders, the Committee oversaw the development of appropriate ESG performance metrics, aligned to the Group’s strategy, which will be incorporated into the Executive team’s ABP from 1 July 2022.# Remuneration Committee report

The Remuneration Committee has continued to apply the recommendations of the UK Corporate Governance Code and decisions relating to remuneration matters are set out in the relevant sections of this report. This report has been prepared in accordance with the relevant provisions of the Companies Act 2006, The Companies (Director’s Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations (Amended) 2013 and the Financial Conduct Authority’s Listing Rules.

Board and Committee changes

Alison Wood and Sally Boyle joined the Board and Committee on 1 April and 1 May 2022 respectively. Peter Ventress will cease to be a member of the Committee on 21 September 2022, when he will step down from the Board, with Alison assuming the role of Chair of the Board.

Remuneration Policy

The Remuneration Policy (the “Policy”) was submitted to shareholders for approval at the 2020 AGM, held in November 2020. The Policy was subject to a binding vote and was approved by 99.66% of shareholders who voted. The Policy will expire at the 2023 AGM, where we will be required to seek approval for a new binding Policy. The Committee considers the existing policy and structure comprising base salary, pension, benefits, annual bonus and LTIP remains appropriate and no changes are proposed at this time. The Policy is set out in full on pages 88 to 89.

Reflecting stakeholder interests and the Group’s strategy, the Committee has developed key ESG metrics for the annual bonus plan, starting in 2022/23. These measures align with the Group’s strategy encompassing order book, employees, carbon, community and supply chain.

Application of Remuneration Policy in 2022/23

The key elements of how the Policy is being applied are set out below:

Base salaries: The Committee continues to monitor and review pay and conditions across the Group and the external market. Taking into account the rising cost of living and external market conditions, a budget of 4.5% was approved for annual staff salary increases across the Group from 1 April 2022. Bill Hocking and Andrew Duxbury’s salaries were increased by 3.5% from 1 April 2022, below the average increase across the workforce.
Annual Bonus Plan (“ABP”): Proposals for the Annual Bonus Plan for 2022/23 are based on the 2021/22 performance metrics, which remain relevant to the Group’s objectives and are in accordance with the approved Policy, with the addition of ESG metrics as noted overleaf. All bonus awards will be subject to the Committee’s discretion, taking into account health and safety performance and the underlying performance of the Group. 2022/23 targets will be disclosed as usual in the 2023 Annual Report.
LTIP: No changes to metrics or structure are proposed for the 2022 awards. The metrics will continue to comprise earnings per share (“EPS”) and average cash management. A summary of the 2021/22 ABP and 2020/23 LTIP outcome can be found in the Annual report on remuneration on pages 89 to 99.

There will be one advisory vote at the AGM in November 2022, on the Directors’ Remuneration Report.

Cost of living

Recognising the national cost of living challenge, we looked at how we could support our employees and the Group agreed to make a one-off payment in Autumn 2022 of circa £1.0m, in total, to over 1,800 of its staff.

Remuneration Committee report continued

Committee activities during 2021/22

The Committee met three times during the year. The key activities during the year are summarised below:

July 2021
- Proposal of performance metrics for LTIP 2021 grant of awards.
- Update on 2021/22 annual bonus forecast, performance and proposal of 2021/22 annual bonus scheme.
- Consideration of bonus discretion and Committee guidance.
- Long Term Bonus Plan (for roles below Executive Board level) 2021 proposal.
- Finalisation of 2021 Remuneration Policy review.
- Review of draft 2021 Directors’ Remuneration Report.
September 2021
- Consideration of 2021 Long Term Incentive and Bonus Plan awards.
- Review of 2020/21 annual bonus performance to 30 June 2021.
- Approval of the 2021 Directors’ Remuneration Report.
- Approval of Employee Share Trust purchase programme.
February 2022
- 2022 salary review (effective 1 April 2022).
- Proposed ESG metrics for 2022/23 Annual Bonus Plan.
- Long Term Bonus Plan Interim Award Proposal.
- Review of Terms of Reference.
- Employee Share Trust update.
- Briefing from the HR Director on remuneration and other considerations for the wider workforce.

Terry Miller
Remuneration Committee Chair

Remuneration Policy and framework

Our approach to remuneration and our Policy are set out on pages 87 to 94 of this report. The elements of executive directors’ remuneration are:

Fixed element: comprises base salary, taxable benefits (such as a company car or cash equivalent allowance, private medical and permanent health insurance, and life assurance), and contribution to a pension.
Variable element: annual bonus, which incentivises and rewards the achievement of stretching annual targets (both financial and non-financial) that support the Group’s annual and strategic objectives, with two-thirds of any bonus earned in excess of 50% of salary required to be deferred into restricted shares.
Long-term element: the LTIP incentivises the achievement of sustained long-term financial and operational performance over a three-year performance period. Any share awards that vest are subject to a two-year holding period.

Actual remuneration in 2021/22

The following table summarises the executive directors’ remuneration in 2021/22:

Director	Role	Fixed remuneration £000	Variable remuneration £000	Total remuneration £000
Bill Hocking	Chief Executive	502	1,455	1,957
Andrew Duxbury	Finance Director	401	1,107	1,508

Comprises base salary, taxable benefits and pension contributions. See page 95 for further information.
Comprises annual bonus awarded and LTIP vesting with reference to performance during the financial year. See page 96 for further information.

Variable pay outcomes

Annual Bonus payments for 2021/22

The annual bonus payments made to the Executive Directors are summarised in the table below.

Director	Maximum bonus (% of salary)	Cash £000	Shares £000
Bill Hocking	120%	£337	£214
Andrew Duxbury	100%	£249	£124

See page 95 for further information.

LTIP outcomes

Vesting relating to 2021/22 performance

The LTIP awards granted to Bill Hocking and Andrew Duxbury on 13 March 2020 were based on underlying EPS performance over the three years to 30 June 2022. The estimated March 2023 vesting is summarised below:

Director	Stretch condition (100% vesting)	Actual performance	% Vesting	Value of award vesting
Bill Hocking	16.5p	16.0p	89%	£903,827
Andrew Duxbury	16.5p	16.0p	89%	£734,409

Estimated based on the average share price over the three months to 30 June 2022.

Proposed application of the Policy in 2022/2023

| Element | Bill Hocking The m ain objec tive s of the G roup’s Remunerati on Polic y are to: Ensure th at remun eration pa ckage s are app ropriately p osition ed an d str uct ured to pro mote the lo ng-term succe ss of the G roup, t aking into ac count pay and c onditio ns acro ss the G roup. Engen der a p er forma nce culture , which w ill position G alliford T r y as an emp loyer of ch oice and d eliver share holde r value . De liver a signi cant prop or tion of total Exe cutive pay through per form ance -related remune ration and in sha res. Position p er form ance -related elem ent s of remun eration s o that the se are c apabl e of app ropriately rew arding the d eliver y of out st anding re sult s and peer sector outperformance. Ensure th at failure is not re warde d. Th e Polic y is shape d by environ menta l, so cial and govern ance f ac tors, w hich he lp to determine t he desig n of incenti ve stru ctu res to enco urage re spon sible beh aviour . Furt herm ore, re cognising th at even well-de signe d incenti ves ca nnot c ater for all eventualitie s, should any unfores een issues arise that would make any paymen ts unjusti able, the Commi ttee can use its discretion to address such o utcome s by sca ling back p ayment s. A ny use of su ch discretio n would b e fully disc lose d in the An nual rep or t on remu neratio n. The c lawback p rovisions a re contain ed within b oth the A BP an d L TIP , an d facilita te the retrieval of p aymen ts ma de to Direc tors a nd Exe cutive man ageme nt in circums tan ces of erro r , ma terial misstate ment , miscon duc t, re puta tional dama ge or corp orate fail ure as a result of poor risk m anagement.

How the Remunerat ion Policy aligns wi th the 2018 UK Corporat e Governance Code

The 2 018 Code s ets o ut princ iples a gainst w hich th e Commit tee sh ould de termine th e Policy f or Exe cutive s, as fo llows:

Principle	Commi ttee appro ach
Clarit y	Remun eration a rrangem ent s shoul d be tra nsparen t and p romote ef fec tive en gagem ent with sha rehol ders a nd the w ork force. The C ommit tee has co ntinue d to operate a co nsistent a pproa ch whic h is well und ersto od intern ally and by inve stors . Cons ultation wit h shareh olde rs on th e revisions to th e Policy wa s unde rt aken befo re shareh olde r approva l was so ught at the 2 020 AG M.
Simplicit y	Remun eration s truc ture s shoul d avoid compl exit y and th eir rationa le and o perati on sho uld be ea sy to und erst and . The C ommit tee has co ntinue d to focus o n ensurin g that pay arran gemen ts are ba lance d, simple in t heir de sign with a small n umbe r of relevant p er form ance m easures , an d clearly linked to s trateg y.
Risk	Remun eration a rrangem ent s shoul d ensure re putatio nal an d other risks fro m excessive rew ards, a nd be havioura l risks that c an arise from target-based incenti ve plan s, are identie d and mitigated. Incenti ve target s have be en set w hich the C ommit tee be lieves are stretch ing and a chievab le within th e risk app etite set b y th e Board . Und er the Polic y, the Commit tee has dis cretion to overr ide form ulaic incenti ve ou tcome s if they do not a ccurately or fairly reec t the und erlying p er forma nce of th e Grou p. The in centive s chem e recover y prov isions inclu de rep utationa l damage or corporate failure arising from poor risk management, which e nsures t hat malus an d clawba ck provision s are consid ered to be suf cientl y wi de-ra nging .
Predic ta bility	The r ange of p ossible val ues of rewa rds to indivi dual direc tors an d any other limits or disc retions shoul d be ide ntie d an d explaine d at the tim e of app roving the p olic y . The C ommit tee has co ntinue d to maintain clea r annual c aps o n incenti ve opp or tunitie s and will us e its disc retion whe re ne cessa ry.
Proportionality	The lin k bet ween in dividua l awards , the delive ry o f strateg y an d the long-term p er forma nce of the c ompany s hould b e clear . O utcome s sho uld not rewa rd po or per fo rmanc e. The C ommit tee ens ures pe rf orman ce metric s con tinue to be cl early aligne d with th e Group’s strateg y e ach year , maint aining an ap prop riate balan ce bet ween b ase pay, shor t - and lo ng-term incenti ve opp or tunities . The C ommit tee has dis cretion to rewa rd for excepti onal indi vidual contrib utions w ithin the limit s set o ut in the p olicy. Whe n doing so , the Co mmit tee will have regard to gover nance b est p rac tice an d views expre sse d to the Com mittee p reviou sly by shareh olde rs.
Align ment to cu lture	Incenti ve sche mes sh ould dri ve behavio urs con sistent with c ompany purpo se, values and s trategy. Bon us and in centive sc hem es are revie wed by th e Commit tee to ens ure consis tenc y with th e Group’s purp ose , value s and s trateg y.

Directors ’ Remuner ation P olicy repor t 90 Ga llifo rd T r y Hol ding s plc

The f ull Remun eration Polic y is det ailed in th e table b elow:

Com pon ent a nd link to s trate g y	Operati on	Frame work to a sses s per f orma nce an d maximum oppor tunity
Salar y	T o provide a co mpe titive and a ppro priate level of basic xed pay , suf cien t to attra ct , motivate a nd retain e xecutive direc tors of hig h calibre , able to develo p a nd exec ute the Group’s strategy .	Nor mally Reviewe d annua lly , with any c hange s ty pically t aking ef fe ct from 1 A pril. The C ommit tee set s salari es at comp etitive rate s, tak ing into consid eration pay and e mploy ment co nditions a cross th e Gro up, the e cono mic environ ment , the re spon sibilities and a ccoun tabilities of e ach role , the ex perie nce of each in dividua l, his or h er marketab ility an d the G roup’s k ey de pen denc ies on the in divid ual. Referen ce is also ma de to salar y levels a mong re levant con stru ctio n pe ers and ot her com panie s of broadl y similar size and comp lexit y . Th e Comm ittee rese rve s the right to re duce sa lar y levels (and has do ne so in th e pas t) if the circums tan ces war rant it . Wh en reviewin g salarie s, bot h Gro up and in dividual p er form ance are con sidered . While th ere is no p rescr ibed maxim um, th e Comm ittee’s polic y on salar y in crease s for exe cutive direc tors is fo r increas es to be broa dly in line with th e average acros s the wor kfo rce, unl ess the re is a prom otion or mater ial change in role or b usines s circums tanc es in which c ase in crease s may be hig her . Salaries for th e year ah ead are set o ut in the A nnual re por t on remu neratio n.
Ben ets	T o provide co st -e f fec tive and market -co mpe titive benet s.	Ben et s provided to exe cutive directo rs may inclu de entitleme nts to a Gro up car o r cash e quivale nt allowan ce, pri vate medic al and p erma nent healt h insuran ce, an d life assur ance . The be net s provided may be subjec t to minor amen dment from time to time by th e Commit tee. W here a n Exec utive direc tor is asked to relo cate , reloc ation (or related a llowance s) may be provid ed. Exe cutives m ay also be reim burs ed for a ny reasona ble exp ens es (and any incom e tax p ayable th ereon) in curred in p er form ance of th eir dutie s. Direc tors may becom e eligible fo r any new ben et s introduce d fo r th e wider workforce on comparable t erms. The cos t of ben et provision varies from yea r to yea r , depe nding on th e co st to the G roup, a nd the re is no pre scrib ed max imum limit . Ben et cost s are mo nitored and controlle d to ensure th at they remain ap prop riate and rep resent a small elem ent of total remun eration co st s.
Pens ion	T o provide a co ntributio n towards retire ment .	The e xecutive dire ctor s may each re ceive cont ribution s to a mon ey purch ase pe nsion sc heme o r salar y sup plem ent in lieu of G roup p ension contrib utions (or a co mbination of b oth). The r ate off ered of 8% f or the Chief E xecutive and 6% (incre asing to 8% at age 5 0) for th e Finan ce Direc tor is un change d and in lin e with that of f ered ac ross the empl oyee po pulation . Any n ew Exe cutive Dire ctor w ould also receive a p ension c ontribu tion in line with th e wide r work force .
Ann ual Bo nus Plan ( “ A BP ”)	Rewards th e achieve ment of stretch ing ann ual goals that suppo rt the Gro up’ s annual and s trategic o bjec tives . Comp ulsor y de ferral of par t of the b onu s into share s provide s alignm ent with sha rehold ers .	Exe cutive direc tors a nd sel ec ted seni or manage ment , subje ct to invit ation and a pproval by t he Com mittee , may par ticipate in th e Ann ual Bon us Plan . For exec utive direc tors , two t hirds of any bo nus ear ned in exce ss of 50 % of salar y is req uired to be defer red into res tric ted shares. Alth ough ben ecially held b y t he par ticipa nts , the re stric ted sha res are leg ally retain ed by th e trus tee of the G alliford T r y Employee S hare T rus t (“E S T” ) for thre e year s, and a re subjec t to for feit ure provision s, unle ss othe rw ise agre ed by th e Commi ttee . Subje ct to co ntinue d employ ment , the re stric ted sha res are legall y trans ferre d to par ticipant s on the t hird annive rsar y of allo catio n. The C ommit tee op erates re cover y and w ithhol ding provision s within th e Ann ual Bon us Plan , which f acilitate the re trieval of paym ent s made to Direc tors a nd E xecutive ma nagem ent in circum stan ces of er ror , material misst atement , misco nduc t , reput ational dam age or cor porate f ailure as a result of p oor ris k managem ent . Any b onus pay ment may b e ‘ clawed b ack ’ within a pe riod of th ree year s af ter the pay ment date sh ould: i. Th e Comp any discover that t here was a m aterial misst atement of th e nan cial res ults or an erro r in the calc ulation of any per form ance conditio n, which re sulted in exce ss annua l bon us being re ceived b y t he emp loyee. ii.

Governance

Strategic Report

Directors’ Remuneration Policy report continued

Component and link to strategy	Operation Framework to assess performance and maximum opportunity
Long Term Incentive Plan (“LTIP”) Rewards the achievement of sustained long-term financial and operational performance and is therefore aligned with the delivery of value to shareholders. Facilitates share ownership to provide further alignment with shareholders. Making of annual awards aids retention. Executive directors may be granted awards under the rules of the LTIP. The LTIP provides for awards in the form of nil or nominal cost options or conditional awards, which vest dependent on the achievement of performance conditions and continued service. Any share awards that vest (after allowing for the sale to cover any tax liabilities) are subject to a two-year holding period during which time they cannot be sold (unless exceptional circumstances apply). The LTIP provides clawback and malus powers to the Committee, which can facilitate the retrieval of payments made to Directors and Executive management in circumstances of error, material misstatement, misconduct, reputational damage or corporate failure as a result of poor risk management. Dividends may accrue on LTIP awards over the vesting and holding periods and, subject to the discretion of the Committee, be paid out either as cash or shares on vesting, in respect of the number of shares that have vested. Performance metrics for FY21 were 75% based on earnings per share and 25% on a cash performance metric based on average month-end cash as a percentage of revenue. The Committee may vary the measures and targets that are included in the plan and the weightings between them from year to year. Any material changes to the choice of measures would be subject to consultation with the Group’s major shareholders. The Committee may, at its discretion, acting fairly and reasonably, adjust LTIP vesting outcomes if it considers the payout is inconsistent with the Group’s underlying performance over the performance period, taking into account factors including safety and ESG. For the avoidance of doubt, this can be to zero and vesting may not exceed the maximum levels detailed below. Any use of discretion will be detailed in the Annual report on remuneration. Under the LTIP rules, the maximum value that may be granted in any financial year to any individual is 150% of salary. Up to 25% of the relevant part of the award may vest for achieving threshold performance.	Not applicable.

Component and link to strategy

Operation Framework to assess performance and maximum opportunity

Long Term Incentive Plan (“LTIP”) Rewards the achievement of sustained long-term financial and operational performance and is therefore aligned with the delivery of value to shareholders. Facilitates share ownership to provide further alignment with shareholders. Making of annual awards aids retention. Executive directors may be granted awards under the rules of the LTIP. The LTIP provides for awards in the form of nil or nominal cost options or conditional awards, which vest dependent on the achievement of performance conditions and continued service. Any share awards that vest (after allowing for the sale to cover any tax liabilities) are subject to a two-year holding period during which time they cannot be sold (unless exceptional circumstances apply). The LTIP provides clawback and malus powers to the Committee, which can facilitate the retrieval of payments made to Directors and Executive management in circumstances of error, material misstatement, misconduct, reputational damage or corporate failure as a result of poor risk management. Dividends may accrue on LTIP awards over the vesting and holding periods and, subject to the discretion of the Committee, be paid out either as cash or shares on vesting, in respect of the number of shares that have vested. Performance metrics for FY21 were 75% based on earnings per share and 25% on a cash performance metric based on average month-end cash as a percentage of revenue. The Committee may vary the measures and targets that are included in the plan and the weightings between them from year to year. Any material changes to the choice of measures would be subject to consultation with the Group’s major shareholders. The Committee may, at its discretion, acting fairly and reasonably, adjust LTIP vesting outcomes if it considers the payout is inconsistent with the Group’s underlying performance over the performance period, taking into account factors including safety and ESG. For the avoidance of doubt, this can be to zero and vesting may not exceed the maximum levels detailed below. Any use of discretion will be detailed in the Annual report on remuneration. Under the LTIP rules, the maximum value that may be granted in any financial year to any individual is 150% of salary. Up to 25% of the relevant part of the award may vest for achieving threshold performance.

Not applicable.

| All-employee schemes To encourage employee share participation. The Group may from time to time operate tax-approved share plans (such as an approved Save As You Earn scheme for the benefit of all staff) for which executive directors could be eligible on the same terms as other staff. A SAYE invitation was launched in March 2022 following the announcement of the Group’s half-year results. The schemes are subject to the limits set by HM Revenue & Customs (HMRC) and may be further limited at the Committee’s discretion. | Not applicable. |

| Shareholding guidelines To ensure the interests of the executive directors are aligned to those of shareholders. The Group’s share retention policy requires executive directors to build and maintain a shareholding equivalent in value to at least 200% of basic salary. Executive directors are required to retain a minimum of half the after-tax number of vested share awards (deferred bonus and LTIP) until the guideline is met. On leaving the Group, executive directors are required to retain the lesser of their in-post shareholding guideline and their actual shareholding on departure for two years. This requirement applies to share awards granted to executive directors following the approval of the Policy at the 2020 AGM. The Committee will assess the guideline annually and take into account vesting levels and personal circumstances when assessing progress against the guideline. | Not applicable. |

| Non-executive fees To provide a competitive and appropriate level of fees sufficient to attract, motivate and retain a Chairman and non-executive directors of high calibre. The Chairman is paid a single fixed fee. The remaining non-executive directors are paid a basic fee. Non-executives chairing a Board Committee and the Senior Independent Director are paid an additional fee to reflect their extra responsibilities. The level of these fees is reviewed periodically by the Committee and Chief Executive for the Chairman, and by the Chairman and executive directors for the non-executive directors. Fees are set taking into consideration market levels in comparably sized FTSE companies and relevant sector peers, the time commitment and responsibilities of the role and the experience and expertise required. Non-executive directors, including the Chairman, are entitled to reimbursement of business expenses reasonably incurred in performing their duties (and any personal tax that may become payable). Non-executive directors cannot participate in any of the Group’s annual bonus or share plans and are not eligible for any pension entitlements from the Group. The Chairman is eligible to participate in the Group’s medical assurance plan. The Committee and the executive directors are guided by the general pay increase for the broader employee population, but on occasions may need to recognise, for example, changes in responsibility or time commitments. Current fee levels are disclosed on page 99. | Not applicable. |

Notes to the policy table

Performance measure selection and approach to target setting

Measures used under the ABP and LTIP are reviewed annually to reflect the Group’s main short- and long-term objectives and reflect both financial and non-financial priorities, as appropriate. Targets applying to the ABP and LTIP are also reviewed annually, based on a number of internal and external reference points. Performance targets are set to be stretching but achievable, with regard to the particular strategic priorities and economic environment in a given year.

Discretions retained by the Committee in operating incentive plans

The Committee may make minor amendments to the Policy for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation, without obtaining shareholder approval. The Committee will operate the ABP and LTIP according to their respective rules, the Policy set out above and in accordance with the Listing Rules and HM RC rules where relevant. The Committee, consistent with market practice, retains discretion over a number of areas relating to the operation and administration of these plans, subject to any limitations set out in the rules of the applicable plan or, in the case of executive directors, in the Policy set out above. These include (but are not limited to) the following:

Who participates in the plans.
The timing of grant of an award and/or a payment.
The size of an award and/or a payment.
The choice of (and adjustment of) performance measures, weightings and targets for each incentive plan, in accordance with the Policy set out above and the rules of each plan.
Discretion relating to the measurement of performance in the event of a change of control or reconstruction.

The Company became aware of any material wrongdoing on the part of an employee that would have entitled the Company to terminate the employment summarily. In these scenarios, the Committee shall be entitled to recover the balance of the overpayment from future bonus payments, unvested share awards (if any), or if all of these possibilities have been exhausted, by cash payment from the employee via deduction(s) from their salary or via bank transfer/cheque from ex-employees. Both scenarios shall repay the sum on demand. The application and extent of the claw back provision shall operate at the sole discretion of the Committee. The maximum opportunity is 120% of salary for the Chief Executive and 100% of salary for other executive directors. No more than half of the maximum opportunity is earned for target performance. For financial elements, bonuses start to be earned from 0% of salary for achieving threshold performance. Payments are dependent on achieving specified financial (no less than 50% of the bonus) and strategic or non-financial targets. The Committee may, at its discretion, acting fairly and reasonably, adjust bonus outcomes if it considers the payout is inconsistent with the Group’s underlying performance during the year, taking into account factors including safety and ESG. For the avoidance of doubt, this can be to zero and bonuses may not exceed the maximum levels detailed above. Any use of such discretion, if to the benefit of the Executive management, will be detailed in the Annual report on remuneration.

92
Galliard Try Holdings plcDetermination of a good leaver (in addition to any specified categories) for incentive plan purposes, based on the rules of each plan and the appropriate treatment under the plan rules. Adjustments required in certain circumstances (e.g. rights issues, corporate restructuring, on a change of control and special dividends). Any use of the above discretions would, where relevant, be explained in the Annual report on remuneration and may, as appropriate, be the subject of consultation with the Group’s major shareholders.

Executive Director remuneration scenarios

The individualised potential Executive reward charts have been prepared using the following assumptions:

For minimum remuneration: only fixed salary, benefits and pensions payments have been included.
For on-target remuneration: fixed salary, benefits and pension plus 50% payout of the ABP and 50% of the LTIP (face value) awards have been included.
For maximum remuneration: fixed salary, benefits and pension plus full payout under the ABP and full vesting of the LTIP (face value) awards have been included.
For maximum plus share price growth: same values as the maximum scenario plus a 50% increase in the value of the LTIP (face value) awards have been included.

Salary levels are based on those applying on 1 April 2022 and the value of taxable benefits is estimated based on the cost of supplying those benefits (as disclosed) for the year ended 30 June 2022.

Executive directors can participate in all employee share schemes on the same basis as other employees but, for simplicity, the value that may be received from participating in these schemes has been excluded.

Remuneration (£000s)	Fixed pay	Annual bonus	Long-term incentives
Bill Hocking	£514	100%
Maximum Target Minimum		40%	31%
Max + 50% share price		50%	26%
Maximum		32%	24%
Target		25%	32%
Minimum		29%	25%
Max + 50% share price		44%
Andrew Duxbury	£414	100%
Maximum Target Minimum		42%	28%
Max + 50% share price		52%	23%
Maximum		30%	25%
Target		22%	32%
Minimum		32%	46%
Max + 50% share price

Illustration of application of Remuneration Policy

Policy on recruitment

In cases where the Group recruits a new Executive Director, the Committee will align the new Executive’s remuneration with the approved Remuneration Policy. In arriving at a value for individual remuneration, the Committee will take into account the skills and experience of the candidate, the market rate for a candidate of that experience and the importance of securing the preferred candidate. The Committee also has the discretion to meet certain other incidental expenses (for example, relocation costs and travel and subsistence payments) to secure recruitment of preferred candidates. Further details of the Recruitment Policy are set out in the table below.

| Element | General policy | Specifics .
| |
| 100% |
| 50% |
| 0% |
| 100% |
| 50% |
| 0% |

Policy on recruitment

| Element | General policy | Specifics GRI A,
The determination of a good leaver (in addition to any specified categories) for incentive plan purposes, based on the rules of each plan and the appropriate treatment under the plan rules. Adjustments required in certain circumstances (e.g. rights issues, corporate restructuring, on a change of control and special dividends). Any use of the above discretions would, where relevant, be explained in the Annual report on remuneration and may, as appropriate, be the subject of consultation with the Group’s major shareholders.

Executive Director remuneration scenarios

The individualised potential Executive reward charts have been prepared using the following assumptions:

For minimum remuneration: only fixed salary, benefits and pensions payments have been included.
For on-target remuneration: fixed salary, benefits and pension plus 50% payout of the ABP and 50% of the LTIP (face value) awards have been included.
For maximum remuneration: fixed salary, benefits and pension plus full payout under the ABP and full vesting of the LTIP (face value) awards have been included.
For maximum plus share price growth: same values as the maximum scenario plus a 50% increase in the value of the LTIP (face value) awards have been included.

Salary levels are based on those applying on 1 April 2022 and the value of taxable benefits is estimated based on the cost of supplying those benefits (as disclosed) for the year ended 30 June 2022.

Remuneration (£000s)	Fixed pay	Annual bonus	Long-term incentives
Bill Hocking	£514	100%
Maximum Target Minimum		40%	31%
Max + 50% share price		50%	26%
Maximum		32%	24%
Target		25%	32%
Minimum		29%	25%
Max + 50% share price		44%
Andrew Duxbury	£414	100%
Maximum Target Minimum		42%	28%
Max + 50% share price		52%	23%
Maximum		30%	25%
Target		22%	32%
Minimum		32%	46%
Max + 50% share price

Illustration of application of Remuneration Policy

Policy on recruitment

| Element | General policy | Specifics # Directors’ Remuneration Policy report continued

94 Galliford Try Holdings plc Annual Report on Remuneration

This part of the Directors’ Remuneration report sets out how the Policy was implemented over the year ended 30 June 2022. It will be put to an advisory vote at the 2022 AGM. Certain sections of the Annual report on remuneration have been subject to audit.

The Directors’ Remuneration report has been prepared in accordance with The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 (applying to financial years starting on or after 10 June 2019), the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations (Amended) 2013 and the Financial Conduct Authority’s Listing Rules. The auditor is required to report on the remuneration data disclosed in the Directors’ Remuneration report section and state whether, in its opinion, that part of the report has been properly prepared in accordance with relevant provisions of the Companies Act 2006 (as amended).

Directors’ remuneration and single-figure annual remuneration (audited)

The remuneration of the directors serving during the financial year, together with 2021 comparative figures, was as follows:

Salary and fees £000	Taxable benefits 1 £000	Pensions 2 £000	Total fixed remuneration £000	Annual bonus £000	LTIP £000	Sharesave £000	Total variable remuneration £000	Total remuneration £000
2022	2021	2022	2021	2022	2021	2022	2021	2022
Executive directors
Bill Hocking	463	450	2	1	37	36	502	487
Andrew Duxbury	376	367	2	5	23	22	401	394
Non-executive directors
Terry Miller	67	63	–	–	–	–	67	63
Gavin Slark	45	44	–	–	–	–	45	44
Peter Ventress	206	202	1	1	–	–	207	203
Marisa Cassoni	54	52	–	–	–	–	54	52
Alison Wood	12	–	–	–	–	–	12	–
Sally Boyle	8	–	–	–	–	–	8	–
Former directors
Jeremy Townsend	–	13	–	–	–	–	–	13

Includes the value of benefits such as car allowance and medical insurance.
This is a salary supplement paid to the directors in lieu of direct pension contributions.
In line with average salary increase of 4.4% across the workforce, salaries for non-executive directors (excluding the Chairman) increased by 4.5% with effect from 1 April 2022. Bill Hocking and Andrew Duxbury received a salary increase of 3.5% with effect from 1 April 2022.

2022 Annual bonus outcome (audited)

For the financial year ended 30 June 2022, the annual bonus measures, targets, weightings and performance are set out in the table below. Senior management was subject to similar targets, which were applied to their respective business performance.

Measure	Performance target	Weighting	Threshold (% of maximum bonus)	On-target (% of maximum bonus)	Maximum (% of maximum bonus)	Actual performance	Payout % of bonus maximum
Pre-exceptional full year Group profit before tax	47.5%	£15.2m (0%)	£16.0m (23.75%)	£18.4m (47.5%)	£19.1m	47.5%
Pre-exceptional half year Group profit before tax	15.0%	£4.5m (0%)	£5.0m (7.5%)	£5.75m (15%)	£7.1m	15%
Group cash management	25.0%	95% of budget (12.5%)	100% of budget (12.5%)	110% of budget (25%)		25.0%	25%
Construction order book	12.5%	83.0% secured (0%)	85.0% secured (6.25%)	87.0% secured (12.5%)	90% secured	12.5%
Total payout (% of maximum bonus)		100.0%		12.5%	50.0%		100.0%

The Group achieved a strong performance against targets set at the start of the financial year. Taking into account the Group’s profitability and enhanced dividends to shareholders, the Committee determined that the bonus level produced by the scorecard of 100% is an appropriate reward given the Group’s operational and financial performance. This treatment is consistent with that applied for all participants of the ABP.

Under the approved Policy, the Committee may, at its discretion, acting fairly and reasonably, adjust bonus outcomes if it considers the payout is inconsistent with the Group’s performance during the year, taking into account factors including safety and ESG. In considering bonus awards the Committee took the Group’s health and safety performance and ESG initiatives into consideration. The Group achieved an overall Accident Frequency Rate (“AFR”) of 0.06 for 2021/22, with eight business units achieving an AFR of zero during the year (AFR for 2020/21: 0.08).

The Committee determined that, in respect of the year to 30 June 2022, the resulting annual bonus awards were as follows:

	On-target bonus (% of salary)	Maximum bonus (% of salary)	Actual bonus payable for 2021/22 (£000)	Cash (£000)	Shares (£000)
Bill Hocking	60%	120%	551	337	214
Andrew Duxbury	50%	100%	373	249	124

Two-thirds of the bonus earned in excess of the 50% of salary threshold is required to be deferred into restricted shares. Although beneficially held by the participants, the allocated restricted shares are legally retained by the Employee Share Trust and are subject to forfeiture provisions, unless otherwise agreed by the Committee. Subject to continued employment, the restricted shares are legally transferred to participants on the third anniversary of allocation. Recovery provisions apply at any time within the three-year period post-vesting or payment of cash bonuses in circumstances of error, material misstatement, misconduct, reputational damage or corporate failure as a result of poor risk management.

95 Annual Report and Financial Statements 2022

Financial information

Governance

Strategic report

LTIP awards vesting in March 2023 (audited)

The LTIP awards granted to Bill Hocking and Andrew Duxbury on 13 March 2020 were based on underlying EPS performance over the three years to 30 June 2022. In total, 89% of the maximum award will vest as a result of the performance achieved. The Committee was satisfied that this outcome reflected the true performance of the Group and no discretion was applied.

The level of vested awards will be reduced pro rata, based on the period of time after the grant date and ending on the date employment ceased relative to the three-year performance period, unless the Committee, acting fairly and reasonably, decides that such a scaling back is inappropriate in any particular case. Deferred bonus shares of ‘good leavers’ vest on cessation of employment. The overriding principle will be to honour contractual remuneration entitlements and determine on an equitable basis the appropriate treatment of deferred and performance-related elements of remuneration, taking into account the circumstances. Failure will not be rewarded.

External directorships

Any additional external appointments can only be undertaken with the Board’s written approval and if time and commitments allow. Executive directors require the Board’s approval to accept external appointments as non-executive directors and retain any associated fees.

Shareholder consultation

Where appropriate, the Committee will consult relevant institutional shareholders in advance of substantial changes to the Policy or individual executive director remuneration packages. Relevant institutional shareholders were consulted ahead of the introduction of the current Remuneration Policy, which was approved at the 2020 AGM.

Wider workforce remuneration and how the views of employees have been taken into account

When setting pay for the executive directors, the Committee considers remuneration structures elsewhere in the Group, including the overall salary increase budget and incentive structures. The Committee also takes into account available market sector data obtained through benchmarking, as well as Government policies and advice from the Executive management team. The total package on offer remains competitive at all levels of the Group. The comprehensive range of benefits include flexible working arrangements, a minimum of 28 days holiday and the opportunity to purchase further days, as well as a pension plan, a regular SAYE scheme and health insurance plan.

The Board does not consult employees on Executive remuneration but does ensure it understands employee views on matters including rewards and benefits, which are an agenda item for the Employee Forum. The Forum is chaired by Terry Miller, Senior Independent Director and Remuneration Committee Chair, and it also discusses business updates and feedback from Employee Representatives on key topics such as people and engagement initiatives, communication and wellbeing, as well as reward and benefits. The Employee Forum ensures employees have a voice in the Boardroom, strengthens internal communications, enables employees to offer ideas, champions change and supports good governance. It can also act as a representative body for communicating with employees and obtaining feedback about matters that may affect their employment.The awards will be subject to a two-year post vesting holding period in accordance with the existing Remuneration Policy. More details on each of the performance conditions are set out below.

Threshold condition (25% vesting)	Stretch condition (100% vesting)	Actual performance	% of award vesting	Value of award vesting
Element of value attributable to share growth
Bill Hocking
1	3.0p	16.5p	16.0p	89%
Andrew Duxbury
1	3.0p	16.5p	16.0p	89%

1 Estimated based on the average share price over the three months to 30 June 2022. Actual value at vesting will be shown in the 2023 Remuneration Report.

Director's share plan interests (audited)

Outstanding awards held by Bill Hocking and Andrew Duxbury are detailed in the table below.

Director	Plan	Grant Date	Share price at grant	Number of awards outstanding at 1 July 2021	Granted	Vested	Lapsed	Number of awards outstanding at 30 June 2022	Value of awards vested during financial year £000	Actual or anticipated vesting date
Bill Hocking	LTIP 1	13.03.20	£1.155	458,421	–	–	–	458,421	–	13.03.23
	LTIP 2	3.09.20	£0.80	843,750	–	–	–	843,750	–	23.09.23
	LTIP 2	3.09.21	£1.788	–	385,067	–	–	385,067	–	23.09.24
	ABP 3	23.09.21	£1.769	4	–	118,684	–	–	118,684	–
Andrew Duxbury	LTIP 1	13.03.20	£1.155	4474,705	–	–	–	474,705	–	13.03.23
	ABP 2	23.09.20	£0.84	4252,969	–	–	–	52,969	–	23.09.23
	LTIP 2	3.09.20	£0.80	685,593	–	–	–	685,593	–	23.09.23
	LTIP 2	3.09.21	£1.788	–	312,919	–	–	312,919	–	23.09.24
	ABP 3	23.09.21	£1.769	4	–	69,015	–	–	69,015	–

1 Awards are based on a maximum percentage of salary. The number of shares shown in the table represents the maximum number of shares, ie 150% of salary.
2 In accordance with the rules of the Annual Bonus Plan, the average of the Company’s closing share price for the five business days following (and including) the announcement of the annual results on 16 September 2020 was 84.42 pence.
3 In accordance with the rules of the Annual Bonus Plan, the average of the Company’s closing share price for the five business days following (and including) the announcement of the annual results on 16 September 2021 was 176.94 pence.

Awards granted during the year (audited)

On 23 September 2021, the following conditional LTIP awards were made to Bill Hocking and Andrew Duxbury.

Director	Date of grant	Number of shares awarded	Basis of award	Share price used to determine level of award	Face value £
Bill Hocking	23 September 2021	385,067	150% of base salary	£1.788	688,500
Andrew Duxbury	23 September 2021	312,919	150% of base salary	£1.788	559,500

The performance conditions attached to these awards made in September 2021 are as follows:

Date of grant

Performance conditions

September 2021

Vesting of up to 75% of the award is based on underlying EPS. 25% of the element will vest for 15.9p, increasing to 100% vesting on a straight-line basis if 19.5p underlying EPS is achieved during the final year of the three-year performance period (1 July 2023 to 30 June 2024). Vesting of up to 25% of the award is based on average month-end cash as a percentage of annual turnover in the year ending 30 June 2024. 8% would generate 25% of the element vesting and 10% would generate 100% vesting on a straight-line basis. Any shares which vest will be subject to a two-year post-vesting holding period, in accordance with the Remuneration Policy. Malus and clawback apply at any time within a three-year period post-vesting, in the case of material misstatement, misconduct, reputational damage or corporate failure as a result of poor risk management.

Directors’ Remuneration Policy report continued

96 Galliford Try Holdings plc

Directors’ share interests (audited)

As at 30 June 2022, the Directors held the following beneficial, legal and unvested ABP interests in the Group’s ordinary share capital.

Measure	Legally owned	LTIP (unvested)	Deferred bonus awards (unvested)	Total	% of salary held under share ownership guidelines
	30.6.22	30.6.21	30.6.22		2
Executive directors
Bill Hocking	119,778	119,778	1,813,030	118,684	2,051,492
Andrew Duxbury	24,955	24,955	1,473,217	121,984	1,620,156
Non-executive directors
Terry Miller	2,066	2,066	–	–	2,066
Gavin Slark	1,600	1,600	–	–	1,600
Marisa Cassoni	–	–	–	–	–
Peter Ventress	14,098	14,098	–	–	14,098
Alison Wood	–	–	–	–	–
Sally Boyle	–	–	–	–	–

1 Either held by the individual or connected persons.
2 Under the current Remuneration Policy, the share ownership guideline for executive directors is 200% of base salary. Bill Hocking and Andrew Duxbury were appointed as Chief Executive and Finance Director on 3 January 2020 and 26 March 2019 respectively, and are still building up to the guideline level. Alison Wood joined the Board on 1 April 2022 and Sally Boyle joined the Board on 1 May 2022.
The were no changes in the directors’ interests from 30 June 2022 to the date of this Annual Report.

Performance graph

The graph shows the total shareholder return (“TSR”) for Galliford Try shares over the past 10 financial years. It shows the value to 30 June 2022 of £100 invested in Galliford Try on 30 June 2012, assuming dividends are reinvested in the Company’s shares, compared with the value of £100 invested in the FTSE All-Share Index, this being a broad-market index of which the Company has been a constituent over the full period shown. The closing mid-market quotation for the Company’s shares on 30 June 2022 was £1.70. The high and low during the year were £2.06 and £1.38. The total gross remuneration of the Chief Executive and the percentage achieved of the maximum ABP and LTIP awards are shown in the table below for the past 10 financial years.

	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Chairman
Chief Executive
Total remuneration (£000)	4,114	3,212	2,811	1,262	1,461	1,043	1,448	824	660	1,027
Annual bonus (% of maximum)	94%	97%	79%	74%	74%	46.3%	86.5%	57.0%	36.7%	100.0%
LTIP (% of maximum)	87%	63%	63%	47%	–	16.5%	36.6%	16.5%	–	–
										89%

1 Peter Truscott was appointed Chief Executive on 1 October 2015. His predecessor, Greg Fitzgerald, was Chief Executive until 21 October 2014, and Executive Chairman until 31 December 2015. Peter Truscott stepped down as Chief Executive and from the Board on 26 March 2019.
2 Graham Prothero was appointed Chief Executive on 26 March 2019, succeeding Peter Truscott. He stepped down from the Board and as Chief Executive following the successful completion of the sale of the housebuilding divisions to Vistry Group plc on 3 January 2020.
3 Bill Hocking was appointed Chief Executive on 3 January 2020. A full-year remuneration figure based on the aggregate paid to Bill and Graham is shown here to aid comparison.

Source: Datastream from Refinitiv

Total Shareholder Return graph

97 Annual Report and Financial Statements 2022

Financial information

Governance

Strategic report

CEO pay ratios

Under Option B (gender pay data), three employees have been identified as the best equivalents to represent the lower, median and upper quartiles. Option B provides a clear methodology involving fewer adjustments to calculate full-time equivalent earnings.

Year	Method	CEO single figure	All UK employees	Lower quartile
2019/20	Option B	£660,587
	Ratio	24:1	15:1	9:1
	Total pay £	27,407	43,165	74,351
	Salary £	25,500	35,249	61,057
2020/21	Option B	£1,026,671
	Ratio	27:1	19:1	14:1
	Total pay £	37,399	54,374	73,385
	Salary £	36,134	43,781	66,927
2021/22	Option B	£1,956,702
	Ratio	63:1	36:1	26:1
	Total pay £	31,128	53,976	73,920
	Salary £	27,875	44,720	62,275

Unlike last year, the CEO figure includes earnings from the Long-Term Incentive Plan (last year, there were no long-term incentives due to vest). Long-term incentives are operated for the most senior Group employees only, namely, those responsible for strategy development and execution. The payouts from such plans are expected to be volatile from cycle to cycle. Compared to 2020/21, there were increases in all three ratios, reflecting the fact that a greater proportion of the Chief Executive’s total reward is linked to annual performance through a higher annual bonus opportunity than that of the average employee. The Committee is comfortable that the resulting calculations are representative of pay levels at the respective quartiles and that the applicable relativities are appropriate given the profile of the workforce.# Percent age c hange in rem uner ation of execu tive direc tor s an d n on- execu tive direc to rs

The tab le below shows the percent age change in sa lar y or fee , ta xable be net s and annual bon us of each indiv idual directo r in respe ct of the nancial years e nde d 30 J une 20 21 and 3 0 June 2 022:

	Year e nde d 3 0 Jun e 2022			2021
	Salary change¹	Benets change²	Bonus change⁴	Salar y chang e⁴	Ben et s chan ge	Bonus change⁴
Executive direc tors
Bill Hoc king	2.9 %	203. 3%	2.0%	1 19. 5 %	(85. 5)%	4 4 9. 8 %
An drew Du xbur y	2. 6%	( 70.0 )%	1 .9 %	4 .9 %	( 7 0 .9) %	4 6 . 5%
Non-executiv e directors
Peter Ventress	1 .9 %	n /a	n /a	5. 0%	n /a	n /a
T erry Miller	7. 5 %	n /a	n /a	15.3%	n /a	n /a
Gavin Slar k	3 .0%	n /a	n /a	5.0%	n /a	n /a
Marisa Cassoni	3.0%	n /a	n /a	(1 .1 ) %	n /a	n /a
A lis o n Wo o d³	n /a	n /a	n /a	n /a	n /a	n /a
Sally Boyle³	n /a	n /a	n /a	n /a	n /a	n /a
Former di rectors
Jeremy T ownsend	–	–	–	( 7 3 .9) %	–	–
P50 median employ ee	2 .1 %	(11 .1 ) %	4 0.0%	24 . 2 %	4 . 5%	50. 0%

¹ S alari es fo r the exe cuti ve direc tor s were in crea sed b y 3. 5% wit h eff ec t fro m 1 Ap ril 202 2. Fe es f or the n on- exe cutiv e direc tor s (excludin g the C hairma n) were in creas ed by 4. 5% wit h ef fec t fro m 1 Ap ril 202 2 . Fees f or th e Chairm an rema ined u nch ange d.
² Ben et s receiv ed inclu de pensio n contrib ution s ( or ca sh equival ent), comp any car (or e quiva lent cash allow anc e), an d p rivate med ical insu ranc e. Exec utive direc tor s and sen ior man agem ent , subj ec t to invita tion a nd ap prova l by the C ommi ttee , may pa rti cipate in t he A BP an d L TIP .
³ T he p ercen tage c hang e is not sh own f or Alis on Woo d or Sa lly Boy le as th ey were a pp ointe d to th e B oard on 1 A pr il 202 2 and 1 M ay 202 2 resp ec tivel y and th ere i s no pri or year re mun erati on to com pare a gains t .
⁴ Pl eas e see p age 83 in o ur 20 21 Ann ual Rep or t for f ur the r infor mation . T o allow for co mpariso n, th e Commit tee ha s elec ted to com pare the tot al remun eration of th e P50 me dian empl oyee (median) from t his year (2021 /22) to th at use d last year. The Commit tee co ntinue s to ensure that th e wide r total pac kage on of fer to e mployee s remains co mpe titive at all levels.

Rel ative i mpo rtance of spend on pay

	2020/2 1	2021 /2 2	Chan ge
T otal overall sp end o n pay (£m)	165. 3	213 .0	4 7. 7
Dividends (£m)	5.2	6.3	21 . 2 %
Share b uyb ack (£ m)	–	–	–
Gro up corp oration t ax (charge) (£m)¹	(1 . 0 )	(1 . 7 )	£(0.7)m
Eff ec tive tax rate (%)	8.8	8 .9	0 .1 p p t s

¹ P re- except ional to tal ta x. The equi valent total overall sp end on pay in 2021/2 2 is disclos ed in note 5 to the nancial statem ents . The total overall spe nd on pay equate s t o average remun eration p er st af f memb er of £65, 5 0 0 per a nnum as at 3 0 Ju ne 202 2 (2021: £62,10 0).

Directors ’ Remuner ation P olicy repor t cont inued

Composition o f the Remuneration Committee and attendanc e

In additi on to the Chair , T err y Miller , th e other Commi ttee m embe rs were Ma risa Cas soni, G avin Slark , Peter Ventress , Alison Woo d (from 1 Ap ril 202 2) and S ally Boyle (fro m 1 May 2022). T he Gen eral Co unsel & C ompa ny Secre tar y ac t s as Se cretar y to th e Commit tee . The Chie f Exec utive has a st andin g invitation to at tend all Co mmit tee mee tings , altho ugh ea ch mee ting comm ence s with th e non- execu tive direc tors m eeting witho ut E xecutive ma nagem ent pre sent . The H R Direc tor at tends ce rt ain meetin gs at th e invitation o f the Com mitte e. No dire ctor n or the G ene ral Coun sel & Com pany Se creta ry is pres ent wh en his or he r own rem uneratio n is bein g conside red. At tenda nce at Com mitte e mee tings is sh own in th e table o n page 73 . The C ommit tee is govern ed by for mal terms of refere nce agre ed by th e Board a nd is comp ose d solel y of non- execu tive direc tors . The te rms of refere nce were rev iewed du ring the yea r and are availab le on th e Group’s website ( w w w.gallifordtry.co.uk).

Remuneration a dvice and advisers

The C ommit tee is infor med of key devel opme nts and bes t prac tice in the eld of remun eration and o btains a dvice f rom inde pen dent ex ternal consult ant s, wh en require d. M ercer Limite d (“ Mercer ”) wa s the Co mmitte e’ s rem uneratio n consult ant thro ugho ut the yea r . Fees paid to Merce r durin g th e na ncial year were £1 6 , 250 (202 1: £26,250). Merce r doe s not provi de any othe r ser vices to the G roup, alt houg h Mercer is p ar t of Marsh & McLennan Compani es , a s ubsidi ar y of wh ich Marsh J L T Spe cialty L imited, p rovide s insuran ce brokin g ser vice s to the Gro up. T he Commit tee is satise d that th e se ser vices do not impinge on Mercer’s indepen dence. Furthermore, Mercer is a signator y to the Re muner ation Con sultant s’ Cod e of Cond uc t, wh ich require s that it s advic e be ob jec tive and im par tial. The G en eral Cou nsel & Co mpany S ecret ar y also a dvise s the Com mitte e as nec essar y a nd, where appropri ate, mak es arrangements for the Co mmit tee to receive in dep ende nt legal adv ice at th e re ques t of the Cha ir .

Employ ee Share T rust an d di lution

The Em ployee S hare T rus t (“E S T”) is t he prima r y mec hanism by wh ich share s require d to satisf y the E xecuti ve incentive p lans are p rovided . Following t he ann oun cement of t he 2021 full-year re sults in S eptem ber 20 21, the E S T entered into a six-mont h trading p lan with th e Company from September 202 1 to Marc h 202 2. T he ES T ins truc ted Pe el Hunt L LP to acq uire ordinar y share s of 50 p ence ea ch in the Comp any for th e T r ust . Purcha ses were m ade at the b est p rice an d limited to 260 ,0 0 0 sha res in any single c alen dar mon th. T he share s are to be us ed to satis f y potential fu ture ves ting(s) to be ma de to empl oyees un der th e various Exe cutive sha re incentive s chem es. A s at 30 J une 20 22 , the E ST h eld 3 ,5 4 1 ,6 03 ordinar y sha res in the c apit al of th e Co mpany (3.1 9% ) (2021: 1,721, 60 3 shares). Und er the terms of th e T rust D eed , the T rus t may only hold u p to a maximum o f 5% of the issue d share s in the Com pany. Durin g the na ncial year , 739 new sha res were issu ed arising f rom share s chem e-related ac tivitie s unde r the SAYE share optio n sch eme. A s at 30 J une 20 22 , the total n umbe r of shares out sta nding un der th e SA YE s hare optio n sch eme was 2 ,789 , 5 23 . The G roup ha s complie d with th e dilution gui delines o f the Inves tment A ss ocia tion (“G ui deli ne s”). Ap plying t he Gui delines , the G roup ha s 7 .49% hea droom a gains t the 10% in 10 year s’ rule and , on the b asis th at the G roup’s prac tice is that a ll awards gr anted p ursuant to disc retionar y p lans are satise d using sha res purchas ed in the market, 5% h eadro om again st th e ‘5% in 10 years’ rule fo r discretio nar y plans .

Shareb older voting on the Dire c to rs’ Re mu ne ratio n Re po r t

The C ommit tee takes a ccount o f annual shareh olde r voting trend s in conne c tion with the Dire ctor s’ Remun eration rep or t. Votes cas t in supp or t of the a nnual a dviso ry re solutio n to app rove the Dire ctor s’ Remune ration rep or t during the past ve AGMs are included in the char t below.

Votes cast (%)	AGM Year
2021	2020	2019	2018	2017
Votes For	2.15	13.97	14.27	35.57	0.11
Votes Against	97.85	86.03	85.73	64.43	99.89

The B oard will co ntinue to eng age with shareh olde rs to ensure th eir view s are fully und ersto od an d consid ered an d can b e taken into acco unt by th e Co mmit tee in the f uture. The C ommit tee an d Board a re grateful to shareholders for the strong su ppor t provided. The c urrent Polic y was a pprove d by 99 . 89% of shareh olde rs who vote d at th e 20 20 AGM .

Forward-looki ng implementati on of Polic y

Base s alarie s

The 2 022 /23 salar y rev iew was com pleted in Ap ril 2022 . Th e Commit tee c arefull y scrutinis ed pay and c onditio ns acro ss the G roup. T aking into acco unt market con ditions , pe er group comparisons and the Group’ s ov erall per fo rmanc e, the over all pay bud get increa sed by 4. 5% . With e ff ec t fro m 1 A pril 202 2, B ill Ho cking’s ann ual salar y inc rease d from £45 9 ,0 0 0 to £47 5, 0 0 0, a n increa se of 3 .5% . With e ff ec t fro m 1 A pril 202 2, A ndrew D uxb ur y was also a warded a n annua l salar y incre ase of 3. 5% , tak ing his ann ual salar y fro m £373,0 0 0 to £3 86, 0 0 0 . The se incre ases we re below t he average pay in crease a cross th e work force .

ABP

For the nancial year to 30 Jun e 20 23, the Commi ttee ha s determin ed that th e existin g bon us str uc ture remains a ppro priately align ed to corp orate stra teg y . It will there fore remain in its c urrent fo rm, wit h an opp or tunit y of 120 % of salar y fo r the Chief E xecu tive, an d 100 % for other e xecutive dire ctor s. Bon us outcom es will b e subjec t to overall Commi ttee dis cretion , taking in to account fac tors in cludin g health a nd safe ty an d the und erlying p er forma nce of th e Grou p. T he Commi ttee inten ds to introd uce ES G ann ual bon us mea sures in 20 22 /23 aligne d to the Gro up’ s s trateg y on E SG , wit h an E SG t arget in total of 12 % . T he E SG m easure s will comp rise order book, employ ees , carbon, community and supp ly chain .

L ITP

Any awa rd granted to th e execu tive direc tors in 202 2 will be within t he curre nt app roved Remun eration Polic y an d base d on per fo rmanc e metric s, w ith 75 % bas ed on earnin gs p er share an d 25% on averag e mont h-en d cas h as a perce ntage of reven ue. Per forma nce me asures a pplie d over a three -year per fo rmanc e perio d to 30 J une 20 25 are: 25% of th e EPS elem ent will ves t if und erlying EPS is 13. 0 p, increa sing to 100 % ves ting on a straig ht -line basis if 16 . 5p is achieve d.25% of the cash element will vest if average month-end cash is 8% of revenue, increasing to 100% vesting on a straight-line basis if 10% is achieved. Awards will vest on a straight-line basis between the above threshold and maximum vesting levels.

Chairman and Non-executive fees

The Committee determined that the Chairman’s fee for 2022 would be unchanged. In addition, and following a review of the NEDs’ fees by the Board, it was agreed that the NEDs’ fees would increase by 4.5% from 1 April 2022. Accordingly, the annual fees effective from 1 April 2022 are as follows:

	2022	2021	Increase %
Chairman¹	£206,128	£206,128	0%
Non-executive directors
Base fee	£46,701	£44,690	4.5%
Additional fees:
Senior Independent Director	£4,660	£4,459	4.5%
Chairs of Board Committees	£8,783	£8,405	4.5%
Chair of Employee Forum and Stakeholder Steering Committee	£8,783	£8,405	4.5%

¹ Peter Ventress received no benefits in connection with his position as Chairman, other than membership of the Group’s medical insurance plan.
² Alison Wood will become the new Chair on 21 September 2022 after Peter Ventress has stepped down. At that point the Chair’s basic fee will be £175,000.

For and on behalf of the Board

Terry Miller
Remuneration Committee Chair
21 September 2022

Annual Report and Financial Statements 2022

Financial information

Governance

Strategic report

Principal activities

Galliford Try is a trading name of Galliford Try Holdings plc, a leading UK construction group which has a premium listing and whose shares are traded on the Main Market of the London Stock Exchange. The Group operates as Galliford Try and Morrison Construction, and carries out building and infrastructure projects with clients in the public, private and regulated sectors across the UK. Galliford Try Holdings plc, registered in England and Wales with company number 12216008, is the Parent Company of the Group. More detailed information regarding the Group’s activities is provided on pages 2 to 64. The Group’s principal subsidiaries and joint ventures are shown in note 33 to the financial statements.

Strategic report

The Strategic report can be found on pages 1 to 65. It contains an indication of the directors’ view on likely future developments in the Group’s business. In addition, and in accordance with the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, the Strategic report contains information on employees, social and environmental matters, human rights and anti-corruption and anti-bribery matters, as well as a description of the Group’s policies and where these are located. In accordance with section 414CZA of the Companies Act 2006, the Strategic report contains a section 172 (1) statement describing how directors have had regard to the matters set out in section 172 (1) (a) to (f) of the Companies Act 2006 when performing their duty under section 172. Please refer to pages 62 to 63. The Annual Report and financial statements use financial and non-financial key performance indicators wherever possible and appropriate.

Corporate governance report

The Corporate governance report on pages 76 to 78 is the corporate governance statement for the purposes of Disclosure Guidance and Transparency Rule 7.2.1.

Results, dividends and capital

The pre-exceptional profit for the year before income tax was £19.1m, as shown in the consolidated income statement on page 110. On 3 March 2022, the Board declared an interim dividend of 2.2p per share, which was paid to shareholders on 8 April 2022. The Board has proposed a final dividend of 5.8p per share. Subject to approval by shareholders, this will be paid on 9 December 2022 to shareholders on the register at 11 November 2022, resulting in a total dividend in 2022 of 8.0p per share. Dividend cover is expected to be 2.0 times earnings.

On 21 September 2022, we announced an initial share buyback programme to repurchase up to £15m of ordinary shares. Please refer to page 56 for an overview of the Group’s capital structure and funding.

Share capital, authorities and restrictions

The Company has one class of ordinary share capital, with a nominal value of 50p. The ordinary shares rank pari passu in respect of voting and participation and are traded on the Main Market of the London Stock Exchange. At 30 June 2022, the Company had 111,054,228 ordinary shares in issue. Votes may be exercised at general meetings of the Company by members in person, by proxy or by corporate representatives (in relation to corporate members). The Company’s Articles of Association (the “Articles”) set a deadline for submitting proxy forms (electronically or by paper) of not less than 48 hours, taking no account of any part of a day that is not a working day, before the time appointed for holding the general meeting or the adjourned meeting (as the case may be). The directors are authorised at the AGM each year to issue shares, to allot a limited number of shares in the Company for cash other than to existing shareholders, and to make market purchases of shares within prescribed limits. The current authorities will expire at the AGM in November 2022. Resolutions to be proposed at the AGM will renew these authorities, which are explained in the Notice of 2022 AGM sent separately to shareholders.

On 12 May 2022, the Company issued 739 shares following the exercise of options under the Company’s 2021 Sharesave Scheme. No further shares were issued or purchased by the Company during the financial year or to the date of this Annual Report.

There are no restrictions on transferring the Company’s shares, except for certain shares held by the Employee Share Trust (“EST”), which are restricted during the performance periods of relevant Group share plans. Directors and persons discharging managerial responsibilities are also periodically restricted in dealing in the Company’s shares under the Group’s share dealing policy, reflecting the requirements of the Market Abuse Regulation. In certain specific circumstances, the directors are permitted to decline to register a transfer in accordance with the Articles. There are no other limitations on holdings of securities, and no requirements to obtain the approval of the Company, or other holders of shares in the Company, prior to the share transfer. The Company is not aware of any agreements between holders of shares that may restrict the transfer of shares or voting rights. There are no shares carrying specific rights relating to control of the Company. The EST holds shares in the Company in connection with Group share plans which have rights relating to control of the Company that are not exercisable directly by the employee. The EST abstains from voting in respect of these shares. The EST currently holds 3.19% of the issued share capital of the Company for the purposes of satisfying employee share options or share awards.

Articles of Association

The Articles, adopted pursuant to a resolution passed on 5 November 2019, set out the Company’s internal regulations and define various aspects of its constitution, including the rights of shareholders, procedures for appointing and removing directors, and the conduct of directors and general meetings. In accordance with the Articles, directors can be appointed or removed either by the Board or shareholders in general meeting. Amendments to the Articles require shareholder approval by passing a special resolution in a general meeting. Copies of the Articles are available by contacting the General Counsel & Company Secretary at the registered office.

The directors present their Annual Report and audited financial statements for the Group for the financial year ended 30 June 2022.

100

Galliford Try Holdings plc

Significant direct and indirect holdings

As at 30 June 2022, being the date of this Annual Report, the Group had been made aware of the following beneficial interests in 3% or more of the Company’s ordinary share capital:

Shareholder	Interest	% capital
Premier Mliton Group plc	13,478,603	12.14
Standard Life Aberdeen plc	6,436,890	5.80
Aberforth Partners LLP	5,857,304	5.27
J O Hambro Capital Management Limited	5,738,929	5.17
Dimensional Fund Advisors LP	5,552,697	4.97
Ameriprise Financial Inc.	5,496,847	4.95
Brewin Dolphin Ltd	5,169,266	4.66

Between 30 June 2022 and 21 September 2022, no further notifications were received under Rule 5 of the Disclosure and Transparency Rules.

Change of control provisions

All the Group’s share plans contain provisions relating to a change of control. The respective plan rules permit outstanding awards to vest on a proportional basis and then become exercisable in the event of a change of control, subject to the satisfaction of any performance conditions and Remuneration Committee approval.# Directors' report continued

Other than in relation to share schemes as described above, the Group has not entered into any agreements with its directors or employees which provide for compensation for loss of office or employment in the event of a takeover or change of control of the Group. The agreements governing the Group’s joint ventures all have appropriate change of control provisions, none of which is significant in the context of the wider Group.

Directors' interests and indemnities

Summary biographies of the directors of the Company as at 30 June 2022 are on pages 68 to 69. The directors’ interests in the Company’s share capital are set out on page 97 and details of executive directors’ service contracts and non-executive directors’ letters of appointment can be found on page 94.

The Group operates a formal procedure for disclosing, reviewing and authorising directors’ actual and potential conflicts of interest, in accordance with the Companies Act 2006. In addition, the Board reviews and authorises conflicts of interest, as necessary, on an annual basis.

The Group maintained Directors’ and Officers’ Liability insurance on behalf of the directors and General Counsel & Company Secretary throughout the financial year. In addition, individual qualifying third-party indemnities are provided to the directors and General Counsel & Company Secretary, which comply with the provisions of section 234 of the Companies Act 2006, and were in force throughout the year and up to the date of signing this Annual Report.

Employees

The Group is committed to best-practice employment policies, which promote equal opportunities for all employees. We value everyone as an individual, recognising that everyone is different and has different needs at work. We respect people’s differences and treat everyone with dignity and respect. We aim to create a culture in which everyone feels valued and is motivated to give their best.

The Group gives full and fair consideration to applications for employment from disabled persons, taking into account their aptitudes and abilities. The Group has signed up to the Government’s Disability Confident scheme. We carry out regular workplace assessments and provide occupational health checks and advice to support both employees and line managers. Appropriate arrangements are made for the continued training and employment, career development and promotion of disabled persons. If existing members of staff become disabled, the Group endeavours to continue employment, either in the same or an alternative position, with appropriate retraining and occupational assistance being given if necessary.

Employee engagement and consultation is encouraged through the Employee Forum (see page 67), as well as regular informal discussions and feedback, formal annual appraisals, business unit staff forums and periodic employee surveys.

Details of where to find information regarding the Group’s employees, remuneration policies, employment practices and employee involvement are provided in the Strategic report on pages 2 to 65 and the Remuneration Policy and Report on pages 90-99. Details of where to find information on other matters of importance to stakeholders such as environmental, social and community matters, human rights and anti-corruption, related policies and their impact can also be found in the Strategic report.

Significant agreements

There are no persons with which the Group has contractual or other arrangements which are essential to its business.

Charitable and political donations

For information regarding charitable donations made through employees’ volunteering or donation of materials, please refer to the Strategic report on page 33. The Group’s policy is to avoid making political donations of any nature and none were made during the financial year. The Group notes the wide application of Part 14 of the Companies Act 2006, but does not consider the construction industry bodies of which it is a member to be political organisations for the purposes of the Act.

Emissions

Details of the Group’s greenhouse gas emissions for the financial year can be found on page 29 and are included by reference in this report.

Creditor payment policy

The Group’s policy is to agree payment terms contractually with suppliers and sub-contractors, ensure the relevant terms of payment are included in contracts, and to abide by those terms when satisfied that goods, services or assets have been provided in accordance with the agreed contractual terms. The Group remained a signatory to the Prompt Payment Code throughout the financial year which contains, among other things, commitments to pay suppliers within agreed contract terms.

Financial instruments

Further information regarding the Group’s financial instruments, including interest rate hedges, related policies and a consideration of its liquidity and other financing risks, can be found in the Financial review from page 55 and in note 23 to the financial statements.

Important developments during the year

In October 2021, the Group acquired the water business of nmcn plc (in administration).

Post Balance Sheet Events

On 8 July 2022, the Group acquired MCS Controls Systems Limited, a leading systems integrator to the industrial and utilities sectors, for a consideration of £1. For more details see Note 31 to the financial statements.

Going concern

In accordance with the Financial Reporting Council’s Guidance on Risk Management, Internal Control and Related Financial and Business Reporting published in 2014, the requirements of the 2018 UK Corporate Governance Code (2018 Code) and Listing Rule 9.8.6(3), the directors have conducted a rigorous and proportionate assessment of the Group’s ability to continue in existence for the foreseeable future. This has been reviewed during the financial year and the directors have concluded that there are no material uncertainties that may cast significant doubt on the Group’s ability to continue as a going concern. Furthermore, the Group has adequate resources and visibility as to its future workload, as explained in this Annual Report. As a result, the Directors are satisfied that the Group has adequate resources to meet its obligations as they fall due for a period of at least 12 months from the date of approving these financial statements and, accordingly, is able to adopt the going concern basis in preparing these financial statements.

101 Annual Report and Financial Statements 2022

Financial information
Governance
Strategic report

Directors’ report continued

Independent auditor

Each of the directors at the date of approval of this Annual Report confirms that:
* so far as the director is aware, there is no relevant audit information of which the auditor is unaware; and
* the director has taken all steps that he/she ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the Group’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with section 418 of the Companies Act 2006.

AGM

The 2022 AGM will be held at Peel Hunt LLP, 7th Floor, 100 Liverpool Street, London, EC2M 2AT on Friday 11 November 2022 at 11:30 am. The Notice convening the AGM, sent to shareholders separately, explains the items of business which are not of a routine nature. Further information on arrangements for the AGM and voting instructions will be set out fully in the Notice of AGM and Form of Proxy.

Fair, balanced and understandable

In accordance with the principles of the 2018 Code and as further described on page 103, the Group has arrangements in place to ensure that the information presented in this Annual Report is fair, balanced and understandable. The directors consider, on the advice of the Audit Committee, that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s performance, position, business model and strategy.

Approval of report

This Directors’ report, the Strategic report, and the Corporate Governance report and Directors’ Remuneration report were approved by the Board of Directors on 21 September 2022.

For and on behalf of the Board

Kevin Corbett
General Counsel & Company Secretary
21 September 2022

102 Galliford Try Holdings plc

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 UK adopted International Accounting Standards.Und er 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 they have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006; 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 68 and 69, confirms that to the best of their knowledge: the Parent Company financial statements, which have been prepared in accordance with UK adopted International Accounting Standards, 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 UK adopted International Accounting Standards, 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 61 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 and on behalf of the Board

Bill Hocking
Chief Executive
21 September 2022

Forward-looking statements

Forward-looking statements have been made by the directors in good faith using information up until the date on which they approved this Annual Report. Forward-looking statements should be regarded with caution due to uncertainties in economic trends and business risks. The Group’s businesses are generally not affected by seasonality.

103

Annual Report and Financial Statements 2022

Financial information
Governance
Strategic report
104

Galliford Try Holdings plc

Opinion on the financial statements

In our opinion:
* the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30 June 2022 and of the Group’s profit for the year then ended;
* the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
* the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
* the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Galliford Try Holdings plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 30 June 2022 which comprise the consolidated income statement, consolidated statement of comprehensive income, balance sheets, consolidated and company statement of changes in equity, statements of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the Audit Committee.

Independence

Following the recommendation of the Audit Committee, we were appointed by the members on 4 November 2019 to audit the financial statements for the year ending 30 June 2020 and subsequent financial periods. The period of total uninterrupted engagement including retenders and reappointments is three years, covering the years ending 30 June 2020 to 30 June 2022. We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Group or the Parent Company.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included:

We assessed the appropriateness of the Group’s cash flow forecasts in the context of the Group’s secured ongoing contracts, the secured new work and forecast potential work which were agreed to the Board approved forecasts.
We evaluated the Directors’ downside sensitivities including delays to construction resulting in reduced volume of work and impact of materials and labour price inflation.
We assessed the actual cash performance against forecasts for the current financial year and post year end to evaluate the Directors’ accuracy and achievability of the forecasts prepared.
We evaluated the adequacy of the disclosures within the Directors’ report in relation to the specific risks posed, the scenarios the Directors have considered and conclusions made.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue.

In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Overview

	2022	2021
Coverage	94%	92%
Group profit before tax	99%	97%
Group revenue	92%	99%
Group total assets

Key audit matters

	2022	2021
Revenue and profit recognition for construction contracts	Recognition and recoverability of claims and variations	Accounting for acquisition of NMCN
Materiality	Group financial statements as a whole £1.9m (2021: £1.5m) based on 0.15% (2019: 0.14%) of revenue.

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements.We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Group financial statements as a whole, taking into account the geographic structure of the Group, the accounting processes and controls, and the industry in which the Group operates. In establishing the overall approach to the Group audit, we assessed the audit significance of each reporting unit in the Group by reference to both its financial significance and other indicators of audit risk, such as the complexity of operations and the degree of estimation and judgment in the financial results. All of the Group’s five significant components were subjected to full scope audits for Group purposes. For insignificant components, we carried out specified audit procedures. All components are located in the UK and were audited by the Group audit team.

Independent auditor's report
Independent auditor's report to the members of Galliford Try Holdings plc
105
Annual Report and Financial Statements 2022
Strategic report
Governance
Financial information
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

| Key audit matter | How the scope of our audit addressed the key audit matter "We also addressed the risk of management override of internal controls, including assessing whether there was evidence of . . . bias by the Directors that may have represented a risk of material misstatement. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Group financial statements as a whole, taking into account the geographic structure of the Group, the accounting processes and controls, and the industry in which the Group operates. In establishing the overall approach to the Group audit, we assessed the audit significance of each reporting unit in the Group by reference to both its financial significance and other indicators of audit risk, such as the complexity of operations and the degree of estimation and judgment in the financial results. All of the Group’s five significant components were subjected to full scope audits for Group purposes. For insignificant components, we carried out specified audit procedures. All components are located in the UK and were audited by the Group audit team. Independent auditor's report Independent auditor's report to the members of Galliford Try Holdings plc 105 Annual Report and Financial Statements 2022 Strategic report Governance Financial information Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How the scope of our audit addressed the key audit matter Revenue and profit recognition for construction contracts Note 1 on page 116 to the financial statements gives further detail regarding the estimates and judgments made by the Group in this regard. Note 1 on page 117 to the financial statements provides the accounting policy for construction services. For the majority of long term contracts, the Group recognises revenue over time and measures progress based on the input method by considering the costs incurred to date, relative to the total estimated forecast costs applied to the estimated forecast revenue. This is considered a significant risk as the stage of completion, forecast revenue and forecast costs on contracts are areas of significant judgment. These judgments have a consequential impact on a number of contract balances, including trade receivables, contract assets, trade payables, accruals and contract liabilities within the financial statements including the related judgments and estimates disclosures. There is also a risk that the accounting policies are not in accordance with – IFRS 15 Revenue from contracts with customer ('IFRS 15'). Having considered the above we determined that contract revenue and other related contract balances have an inherent high degree of estimation uncertainty with a range of possible outcomes and hence we have treated these areas as a KAM. We obtained an understanding of and evaluated management’s processes and controls for ensuring contracts meet the requirements of IFRS 15. We have tested the operating effectiveness of the following controls: Review and approval of tender submissions and contracts. Approval of new suppliers within the system and restrictions in place to amend supplier details. Prevention of procurement fraud and automated approval process for purchase orders. We focused our work on those contracts with the greatest estimation uncertainty, based on the information included in the contract schedule (eg significant movement from tender/prior year or large unagreed variations or claims) and challenged the judgments made with the project teams as well as senior operational, legal, commercial and financial management. On each contract selected, we specifically challenged and critically assessed the explanations provided by management and carried out the following detailed testing: Obtaining an understanding of the contract and its particulars by obtaining the initial contract with the customer and holding discussions with commercial teams and management. Agreeing forecast revenue to contractual agreements, supplemental agreements and agreed variations. The procedures to test the judgments in forecast revenue are included in the key audit matter on recognition and recovery of claims and variations. Reconciling revenue recognised with amounts applied for and amounts certified by clients, agreeing the amounts received to bank. Where the balance has not been received into bank, we have considered recoverability of the balance by reviewing correspondence with the customer. Re-performing the key calculations behind the margin applied, the profit taken and the stage of completion, as well contract assets and liabilities. Testing a sample of accrued costs to the year-end subcontractor application. Corroborated a sample of forecast costs for significant subcontractor packages to documentary evidence and where the subcontractor projected final accounts significantly differed from the amount included in the contract forecast we Challenged management and obtained supporting evidence as applicable. Performed a review of forecast costs by type included within the CVR and performed a flux analysis for the stage of completion of each cost type to determine where costs are progressing in line with the overall stage of completion. We challenged management where costs were not in line with our expectations and obtained supporting documentation as applicable. Remained alert for any contradictory evidence or indicators of understatement of forecast costs while carrying out testing, including site visits, cost testing and payments testing. Performed a stand back review on the key judgments and estimates on each contract to ensure that sufficient assurance has been obtained and that we have sufficient coverage over the costs to complete. Challenged commercial Directors on variances between the stage of completion (internal) with external certified completion, judgments made in determining forecast costs and the remaining contingency on a project for the possibility of a material misstatement. Compared the percentage procured to the forecast costs and challenged management where there are substantial costs yet to procure as this presents a greater risk. We corroborated a sample of un-procured subcontractor costs to documentary evidence. Assessed the recoverability of balance sheet items by comparing to the post year end external certification of the value of work performed, and the receipt of post year end funds. Held discussions with management to understand and challenge other areas of judgment taken including anticipated completion date and impact of any delays, whether there are any disputes with third parties on the contract and the reason for any movements in forecasts from tender to 30 June 2022. We obtained corroborating evidence for the explanations provided. Where appropriate, reviewed legal correspondence and expert advice obtained in respect of the judgments and where necessary spoke directly with management’s experts who had provided this advice. We carried out targeted testing on the remaining contracts which includes comparing the revenue recognised to amounts certified or final accounts where applicable. From the specific contract information reviewed for these contracts, we considered whether there was an indication of risks within the contract such as delays and un-procured costs for which we then performed additional procedures to address the risk. We visited a sample of sites across the business. We inspected the physical progress of the sites and discussed progress with personnel working on the specific sites. We assessed the reliability of management’s estimates by reviewing the fluctuations in budgeted end of life margin from 30 June 2021 to 30 June 2022 for projects that are substantially completed at the year-end as well as from tender to the 30 June 2022 for all contracts. We considered the adequacy of the disclosures in the financial statements in relation to specific contracts and also the disclosures in respect of significant judgments and estimates. Key observations: We consider that the estimates and judgments made by management in respect of revenue recognition and the associated disclosures are appropriate. 106 Galliford Try Holdings plc Key audit matter How the scope of our audit addressed the key audit matter Recognition and recoverability of claims and variations Note 1 on page 116 to the financial statements gives further detail regarding the estimates and judgments made by the Group in this regard. Note 1 on page 117 to the financial statements provides the accounting policy for construction services. |In a number of the Group’s projects there are assumptions of amounts contractually due from customers, and contract assets can include variations and claims which are not yet certified or formally agreed but have been assessed as highly probable of not reversing under IFRS 15. The Group has submitted claims of £95m and recognised significant recoveries in respect of three contracts with entities owned by a major infrastructure fund of a blue-chip listed company. The Group has been successful in adjudications on these projects and has assumed recoveries from these claims. The parties have agreed that the claim will be resolved through an arbitration process that is currently under way. The assessment of revenue that is highly probable that there will not be a significant reversal requires judgment. Similarly, the assessment of the expected credit loss as regards contract assets is judgmental. There also is a risk these significant judgments and estimates are not adequately disclosed. In addition, there are some downstream claims against third parties other than customers which are only recognised once they are considered to be ‘virtually certain’ of recoverability, in accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets. These assumptions impact revenue recognised on these contracts, as well as contract assets balances and hence is considered to be a key audit matter.

We challenged management’s assessment of forecast revenue, in particular the key assumptions, which included the expected recovery of variations, claims and compensation events from clients, to determine the basis on which the associated revenue was considered to be ‘highly probable of not reversing’. In respect of the three contracts with entities owned by a major infrastructure fund, we have obtained the adjudication findings and discussed the results and implications with the Group’s in house counsel and external legal advisors. We have also reviewed evidence of the recovery on instructed variations previously agreed on those contracts. We reviewed the reconciliation between management’s assessment of the claim and the contract asset recorded in the financial statements as highly probable of not reversing and obtained explanations for the difference between these positions. We challenged management’s assessment of the revenue constraint on the basis of this analysis and the recoveries from previous adjudications and agreed variations on these contracts. We considered the adequacy of provisions held and challenged movements since the prior year based on our understanding of the contracts, meetings with in-house counsel and review of key project correspondence. We assessed the evidence supporting the claims submitted including meeting with management’s internal and external legal and other experts regarding the claims. This followed a review of the correspondence to date, including the most recent correspondence as regards the ongoing arbitration. We obtained management’s previous legal advice regarding the basis of the contract terminations and the financial and ownership status of the parties with whom the Group was contracted. We met with management’s external legal counsel numerous times throughout the year in order to understand the progress on any ongoing legal claims/disputes. We challenged whether management’s assessment of the revenue constraint remained appropriate, also considering the passage of time. We obtained and challenged management’s assessment of IFRS 9 expected credit loss in respect of these contract assets. We challenged this assessment based on the most recently filed annual report of the immediate parent and investor in these entities. We assessed the disclosures included in the financial statements in respect of these infrastructure contracts, including whether they convey the estimates involved and judgments taken by management. In relation to other claims we also challenged those assumptions in respect of estimated recoveries from subcontractors, designers, and insurers included in the forecast, to determine whether these could be considered ‘virtually certain’ of recoverability. In relation to other claims we assessed the evidence provided by management regarding recovery of these amounts to evidence of agreement with customers or insurance reserves provided by the insurers.

Key observations:
We consider that the estimates and judgments and associated disclosures made by management in respect of revenue recognition and downstream claims are reasonable.

Independent auditors’ report continued
107 Annual Report and Financial Statements 2022
Strategic report
Governance
Financial information

Key audit matter

How the scope of our audit addressed the key audit matter

Accounting for the acquisition of nmcn

Note 30 on page 141 to the financial statements gives further detail regarding the acquisition of the water business from nmcn plc. Note 1 on page 116 to the financial statements describes management’s significant judgments. In the current period, the Group acquired certain contracts that are part of the water business of nmcn, in addition to the company Lintott Environmental Technologies Limited. Management has accounted for this as a business combination under IFRS 3. Significant judgment is exercised in the measurement of the fair value of the assets and liabilities acquired, the associated goodwill, and the disclosure of exceptional items in the consolidated income statement, as a result of the business combination and is therefore considered a KAM.

We have reviewed management’s paper outlining the significant judgments/estimates involved in accounting for the acquisition. We have considered the fair value of the assets and liabilities acquired based on the review performed by external experts engaged by management and calculations prepared by management. We have corroborated schedules prepared by management to underlying supporting documentation and have also tested the underlying models/schedules provided by management’s external experts as the basis of their valuation. We have obtained management’s analysis of the consideration of the acquisition and have agreed this to the Share Purchase Agreement. We have reviewed the goodwill calculation provided by management, which is underpinned by the valuation performed by management’s external experts and calculations of favourable and unfavourable contracts. We have also used our internal valuation experts to review the models that were prepared by management’s external experts. We have reviewed the forecasts that underpin the management’s external experts’ model and have agreed a sample of contracts to supporting documentation. We have agreed the total exceptional costs to underlying supporting schedules. These schedules have been agreed to supporting documentation, including challenge of the basis of movement for the employees from productive to unproductive. We have also challenged management on the presentation of the items as exceptional items and the associated disclosures.

Key observations:
We consider that the estimates and judgments and associated disclosures made by management in respect of the acquisition of nmcn are reasonable.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgment, we determined materiality for the financial statements as a whole and performance materiality as follows:

	Group financial statements	Parent Company financial statements
	2022 £m	2021 £m
Materiality	1.9	1.5
Basis for determining materiality	0.15% of revenue	0.14% of revenue

Rationale for the benchmark applied

On an ongoing basis and in previous years an adjusted measure of profit before tax has been the basis which users of the financial statements would be interested in as the basis of materiality. We adjusted this basis in the prior and current year due to previous losses incurred by the continuing businesses. As the Group continues to return to profitability, we have considered what would be a stable basis of operations and have benchmarked to other peers materiality as a proportion of revenue. Based on this we have set Group materiality at 0.15% (2021: 0.14%) of Group revenue. Materiality for the Parent company was capped at 85% of Group materiality.# Performance materiality

1.2 0.9 1.1 0.9

Basis for determining performance materiality

On the basis of our risk assessment, together with our assessment of the Group’s overall control environment and history of adjustments, our judgment was that overall performance materiality of the Group and Parent company should be 65% of materiality.

108 Galliford Try Holdings plc

Component materiality

We set materiality for each component of the Group based on a percentage of between 5% and 95% (2021: 5% and 95%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £0.1m to £1.8m (2021: £0.1m to £1.35m).

In the audit of each component, we further applied performance materiality levels of 65% (2021: 65%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £38,000 (2021: £30,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the Annual Report and Financial Statements 2022 other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Corporate governance statement

The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Parent company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.

Going concern and longer-term viability

The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 101 and

The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 54.

Other Code provisions

Directors’ statement on fair, balanced and understandable set out on page 102;
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 43;
The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 43; and
The section describing the work of the Audit Committee set out on page 84.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report and Directors’ report

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report.

Directors’ remuneration

In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Independent auditors’ report continued

109 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates, and considered the risk of acts by the Group that were contrary to applicable laws and regulations, including fraud. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

We focused on laws and regulations that could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006, the UK Listing Rules and tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, review of board and committee meeting minutes, enquiries with management, enquiries of in-house legal counsel as to whether there was any known or suspected non-compliance with laws and regulations or fraud.

We tested operating effectiveness of controls around procurement and tendering process. We addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the Directors within the significant judgments and estimates that represented a risk of material misstatement due to fraud.# Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Thomas Edward Goodworth (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
21 September 2022

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

110 Galliford Try Holdings plc

Notes

2022

Exceptional items £m	Pre- Exceptional items (note 4) £m	Total £m	Total £m
Revenue	1,237.2	–	1,237.2
Cost of sales	(1,151.5)	(5.8)	(1,157.3)
Gross profit/(loss)	85.7	(5.8)	79.9
Administrative expenses	(69.9)	(7.9)	(77.8)
Operating profit/(loss)	15.8	(13.7)	2.1
Share of post tax profits from joint ventures	0.4	–	0.4
Finance income	4.3	–	4.3
Finance costs	(1.4)	–	(1.4)
Profit/(loss) before income tax	19.1	(13.7)	5.4
Income tax (expense)/credit	(1.7)	2.6	0.9
Profit/(loss) from continuing operations for the year	17.4	(11.1)	6.3
Loss from discontinued operations, net of income tax for the year	–	–	–
Profit/(loss) for the year	17.4	(11.1)	6.3
Earnings per share Basic
— Profit from continuing operations attributable to ordinary shareholders	16.0	5.8	9.5p
— Profit attributable to ordinary shareholders	16.0	5.8	7.0p
Diluted
— Profit from continuing operations attributable to ordinary shareholders	15.0	5.5	9.1p
— Profit attributable to ordinary shareholders	15.0	5.5	6.8p

The were no exceptional items in the prior year. The notes are an integral part of the consolidated financial statements.

Consolidated income statement for the year ended 30 June 2022

111 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Notes

	2022 £m	2021 £m
Profit for the year	6.3	7.7
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Movement in fair value of PPP and other investments – continuing operations	(0.9)	7.3
Total items that may be reclassified subsequently to profit or loss	(0.9)	7.3
Other comprehensive (expense)/income for the year net of tax	(0.9)	7.3
Total comprehensive income for the year	5.4	15.0

The notes are an integral part of the consolidated financial statements.

Consolidated statement of comprehensive income for the year ended 30 June 2022

112 Galliford Try Holdings plc

Notes

Group Company

	30 June 2022 £m	30 June 2021 (restated – note 35 £m	30 June 2022 £m	30 June 2021 £m
Assets
Non-current assets
Intangible assets	8.8	5.7	–	–
Goodwill	88.2	77.2	–	–
Property, plant and equipment	7.1	4.4	–	–
Right-of-use assets	24.5	19.5	–	–
Investments in subsidiaries	–	–	188.0	173.9
Investments in joint ventures	0.3	0.2	–	–
PPP and other investments	47.5	49.1	–	–
Deferred income tax assets	14.0	14.3	–	–
Total non-current assets	190.4	170.4	188.0	173.9
Current assets
Trade and other receivables	243.0	241.4	–	–
Current income tax assets	3.1	4.3	–	–
Cash and cash equivalents	218.9	216.2	109.4	100.7
Total current assets	465.0	461.9	109.4	100.7
Total assets	655.4	632.3	297.4	274.6
Liabilities
Current liabilities
Trade and other payables	(471.1)	(454.0)	–	–
Lease liabilities	(9.9)	(7.3)	–	–
Provisions for other liabilities and charges	(27.4)	(25.0)
Total current liabilities	(508.4)	(486.3)	–	–
Non-current liabilities
Lease liabilities	(14.9)	(11.9)	–	–
Total non-current liabilities	(14.9)	(11.9)	–	–
Total liabilities	(523.3)	(498.2)	–	–
Net assets	132.1	134.1	297.4	274.6
Equity
Ordinary shares	55.5	55.5	55.5	55.5
Other reserves	132.2	118.4	132.2	118.4
Retained earnings	(55.6)	(39.8)	109.7	100.7
Total equity attributable to owners of the Company	132.1	134.1	297.4	274.6

The profit for the Parent Company for the year was £28.8m (2021: profit of £34.7m). The notes are an integral part of the consolidated financial statements.

113 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

Notes

Consolidated and Company statements of changes in equity for the year ended 30 June 2022

	Ordinary shares £m	Share premium £m	Other reserves £m	Retained earnings £m	Total shareholders’ equity £m
Consolidated statement
At 30 June 2020	55.5	–	85.7	(20.7)	120.5
Profit for the year	–	–	–	7.7	7.7
Other comprehensive income	–	–	–	7.3	7.3
Total comprehensive income for the year	–	–	–	15.0	15.0
Transactions with owners:
Dividends	–	–	–	(1.3)	(1.3)
Purchase of shares	–	–	–	(1.1)	(1.1)
Share-based payments – continuing operations	–	–	–	1.0	1.0
Recycling of retained earnings to merger reserve on reversal of impairment of investment in Galliford Try Limited	–	–	32.7	(32.7)	–
At 30 June 2021	55.5	–	118.4	(39.8)	134.1
Profit for the year	–	–	–	6.3	6.3
Other comprehensive income	–	–	–	(0.9)	(0.9)
Total comprehensive income for the year	–	–	–	5.4	5.4
Transactions with owners:
Dividends	–	–	–	(6.3)	(6.3)
Purchase of shares	–	–	–	(3.4)	(3.4)
Share-based payments	–	–	–	2.3	2.3
Recycling of retained earnings to merger reserve on reversal of impairment of investment in Galliford Try Limited	–	–	13.8	(13.8)	–
At 30 June 2022	55.5	–	132.2	(55.6)	132.1
Company statement
At 30 June 2020	55.5	–	85.7	100.0	241.2
Profit for the year	–	–	–	34.7	34.7
Total comprehensive expense	–	–	–	34.7	34.7
Transactions with owners:
Dividends	–	–	–	(1.3)	(1.3)
Recycling of retained earnings to merger reserve on reversal of impairment of investment in Galliford Try Limited	–	–	32.7	(32.7)	–
At 30 June 2021	55.5	–	118.4	100.7	274.6
Profit for the year	–	–	–	28.8	28.8
Total comprehensive expense	–	–	–	28.8	28.8
Transactions with owners:
Dividends	–	–	–	(6.3)	(6.3)
Share-based payments	–	–	–	0.3	0.3
Recycling of retained earnings to merger reserve on reversal of impairment of investment in Galliford Try Limited	–	–	13.8	(13.8)	–
At 30 June 2022	55.5	–	132.2	109.7	297.4

114 Galliford Try Holdings plc

Notes

Group Company

	2022 £m	2021 (restated – note 35 £m	2022 £m	2021 £m
Cash flows from operating activities
Profit for the year	6.3	7.7	28.8	34.7
Adjustments for:
Loss for the year from discontinued operations	–	2.7	–	–
Income tax (credit)/expense – continuing operations	(0.9)	1.0	–	–
Net finance income – continuing operations	(2.9)	(2.9)	–	–
Profit before finance costs for continuing operations	2.5	8.5	28.8	34.7
Adjustments for continuing operations:
Depreciation and amortisation	14.5	13.3	–	–
Reversal of impairment of investment in subsidiary undertaking	–	–	(13.8)	(32.7)
Dividends received from subsidiary undertakings	–	–	(15.0)	(2.0)
Share-based payments	2.3	1.0	–	–
Share of post-tax (profits)/losses from joint ventures	(0.4)	(0.5)	–	–
Net cash generated from operations before changes in working capital	18.9	22.3	–	–
Decrease in trade and other receivables	1.2	15.8	–	–
Increase in trade and other payables	6.7	11.3	–	–
(Decrease)/increase in provisions	(11.3)	9.4
Net cash generated from operations	15.5	58.8	–	–
Interest received	4.3	4.1	–	–
Interest paid	(1.4)	(1.2)	–	–
Net surplus returned on wind up of defined benefit pension scheme	–	1.0	–	–
Income tax received	4.4	4.5	–	–
Net cash generated from operating activities from continuing operations	22.8	67.2	–	–
Net cash used in operating activities from discontinued operations	–	(3.6)	–	–
Net cash generated from operating activities	22.8	63.6	–	–
Cash flows from investing activities
Dividends received from joint ventures and associates	0.3	0.5	–	–
Increase in amounts due from joint ventures	–	(5.2)	–	–
Decrease in amounts due from joint ventures	5.0	–
Acquisition of PPP and other investments	–	(1.9)	–	–
Proceeds from disposal of PPP and other investments and loan repayments	0.7	0.7	–	–
Acquisition of business combinations, net of cash acquired	(0.3)	–	–	–
Dividends received from subsidiary undertakings	–	–	15.0	2.0
Proceeds from disposal of property, plant and equipment	0.1	–	–	–
Acquisition of property, plant and equipment	(5.0)	(2.1)	–	–
Net cash generated from/(used in) investing activities from continuing operations	0.8	(8.0)	15.0	2.0
Net cash (used in) from investing activities from discontinued operations	–	(23.7)	–	–
Net cash generated from/(used in) investing activities	0.8


Cash Flows from Financing Activities
Repayment of lease liabilities	14	(11.2)	(10.5)
Purchase of own shares		(3.4)	(1.1)
Dividends paid to Company shareholders	9	(6.3)	(1.3)
Net cash used in financing activities from continuing operations		(20.9)	(12.9)
Net cash used in financing activities from discontinued operations		–	–
Net cash used in financing activities		(20.9)	(12.9)
Net increase in cash and cash equivalents		2.7	19.0
Cash and cash equivalents at 1 July	18	216.2	197.2
Cash and cash equivalents at 30 June		218.9	216.2

Annual Report and Financial Statements 2022

Strategic Report

Governance

Financial Information

Accounting Policies

General Information

Galliford Try Holdings plc (the Company) is a public limited company incorporated, listed and domiciled in the UK, and registered under the laws of England and Wales. The address of the registered office is 3 Frayswater Place, Cowley, Uxbridge, UB8 2AD. The Company has its listing on the London Stock Exchange. The financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. The amounts stated are denominated in millions (£m).

Basis of Accounting

For the year to 30 June 2022, the Group consolidated financial statements and the Company financial statements have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006, following the UK’s exit from the European Union on 31 January 2020, and ending of the transition period on 31 December 2020. There was no impact or changes in accounting policies from the transition, which reflects a change in accounting framework.

The consolidated financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of PPP and other investments and financial assets and liabilities (including derivative financial instruments) at fair value through other comprehensive income.

The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Viability Statement (on page 54) and the Strategic Report (from page 1). As at 30 June 2022, the Group had substantial cash balances, no debt, and a strong forward secured order book. The directors regularly review the working capital requirements of the Group while considering downside sensitivities.

The Group’s forecasts have been prepared in the context of the current economic conditions and additionally, the directors have considered a range of downside sensitivities (as discussed in detail in the Viability Statement on page 54). Even in the worst-case scenario, the Group is forecast to continue to meet its obligations and remain cash positive for a period of at least 12 months from the date the financial statements are authorised for issue.

After making enquiries and considering the factors and sensitivities outlined above for a range of scenarios, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the Parent Company income statement and statement of comprehensive income.

New standards impacting the Group that have been adopted for the first time in this set of financial statements are listed below:
* Amendment to IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2
* Amendment to IFRS 16 – Covid-19-Related Rent Concessions Extension of the practical expedient
* Amendment to IFRS 4 – deferral of IFRS 9

These standards have been assessed to have no significant impact on the Group as they are either not relevant to the Group’s activities or require accounting which is consistent with the Group’s previous accounting policies.

The following are new standards, interpretations and amendments, that are not yet effective or have not been endorsed. The Group has chosen not to adopt these early. These may however have an effect on the Group’s future financial statements:
* Narrow scope amendments to IFRS 3, IAS 16, IAS 37
* Annual improvements to IFRS 1, IFRS 9, IAS 41 and IFRS 16
* Amendments to IAS 1, ‘Presentation of financial statements’ on classification of liabilities
* Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8
* IFRS 17 ‘Insurance Contracts’, including amendments
* Amendment to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’

The Group has yet to assess the full outcome of these new standards, amendments, and annual improvements. It is not expected that these will significantly impact the financial statements of the Group.

Basis of Consolidation

The Group financial statements incorporate the results of Galliford Try Holdings plc, its subsidiary undertakings and the Group’s share of the results of joint arrangements. Subsidiaries are all entities over which the Group has control. The exposure or right to variable returns from its involvement with an investee, and the ability to influence those returns, are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group, until the date that control ceases.

The acquisition method of accounting is used to account for the acquisition of a business by the Group. The cost of an acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are expensed to the income statement. The identifiable assets acquired and liabilities and contingent liabilities assumed in the business combination are measured initially at their fair values at the acquisition date, irrespective of any non-controlling interest.

The excess of cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the fair value of the Group’s share of the identifiable net assets is in excess of the cost of the acquisition, the gain on bargain purchase is recognised as a credit through the income statement. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of acquired subsidiaries are changed where necessary, to ensure consistency with policies adopted by the Group.

In addition to total performance measures, the Group discloses additional information including performance before exceptional items and earnings per share before exceptional items. The Group believes that this additional information provides useful information on underlying trends. This additional information is not defined under international accounting standards and may therefore not be comparable with similarly titled profit measures reported by other companies. It is not intended to be a substitute for, or superior to, international accounting standards measures of profit.

Critical Accounting Estimates and Judgements

The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Critical judgements are those management has made when applying its significant accounting policies, whereas critical estimates are assumptions and estimates made at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

The estimates, judgments and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making estimates and judgments about the carrying value of assets and liabilities which are not readily apparent from other sources. Actual results may differ from these estimates and judgments. The estimates, judgments and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates and judgments are recognised in the period in which the estimate or judgment is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.# Notes to the consolidated financial statements

116 Galliford Try Holdings plc

1 Accounting policies (continued)

Critical accounting estimates and judgments (continued)

Material estimates, judgments and assumptions are made in particular with regards to establishing the following policies:

(i) Impairment of goodwill and intangible assets (judgment and estimate)

The determination of the value of any impairment of goodwill and intangible assets requires an estimation of the value in use of the Cash Generating Units (CGUs) to which goodwill has been allocated. The value in use calculation requires an estimate of the future cash flows expected from these CGUs, including the anticipated growth rate of revenue and costs as well as resulting operating margin and requires the determination of a suitable discount rate to calculate the present value of the cash flows. Details of the goodwill impairment review calculations and associated sensitivity analysis performed are included in note 12.

(ii) Revenue and profit recognition for long term contract accounting (judgment and estimate)

In order to determine the profit and loss that the Group is able to recognise on its construction contracts in a specific period, the Group has to estimate the outcome of both the total costs to complete the contract as well as the final contract value. The Group has to allocate total costs of the construction contracts between the amount incurred on the contract to the end of the reporting period and the proportion to complete in a future period. The assessment of the total costs to be incurred and final contract value requires a degree of estimation. Contract modifications are recognised when the Group considers they have been approved (which also includes consideration of whether enforceable rights exist in the contract). The estimation of final contract value includes the assessment of the recovery of variations, claims and compensation events (contract modifications). The estimate made is constrained in accordance with IFRS 15 so that it is highly probable not to result in a significant reversal of revenue in the future. Where the change in scope results to an increase to the work to be performed that is distinct and reflects the stand-alone selling price of the distinct good/service, it is treated as a separate contract. This is assessed on a contract specific basis. The Group recognises recoveries of claims from clients as revenue where clear entitlement has been established, such as through dispute-resolution processes. This includes the recovery of costs (such as delays to the contract programme) to the extent it is highly probable not to result in a significant reversal of revenue in the future. The estimation of costs to complete is based on all available relevant information such as procured packages and management experience and includes estimation of final accounts and any potential maintenance and defect liabilities. Recoveries resulting from actual or potential claims against subcontractors are accounted for in accordance with IAS 37 and are recognised only when they meet the virtually certain threshold. Group management has established internal controls to review and ensure the appropriateness of estimates made on an individual contract basis, including any necessary contract provisions. As with most large, complex construction projects, there is an element of estimation uncertainty over costs to complete and final account settlements. This is, however, reduced by the experience of the management team and the controls that we have in place. The settlement of these final accounts may give rise to an over or under-recognition of profit or loss and associated cash flows, which could be material. As at 30 June 2022, the Group’s contract assets, contract liabilities and contract provisions amounted to £173.4m, £104.4m and £27.4m respectively as set out in Notes 17, 19 and 20. The Group has considered the nature of the estimates involved in deriving these balances and concluded that it is possible, on the basis of existing knowledge, that outcomes within the next financial year may be different from the Group’s assumptions applied as at 30 June 2022 and could require a material adjustment to the carrying amounts of these assets and liabilities in the next financial year. However, due to the level of uncertainty, combination of cost and income variables and timing across the Group’s large portfolio of contracts at different stages of their contract life, it is impracticable to provide a quantitative analysis of the aggregated judgments that are applied at a portfolio level. The Group’s five largest unagreed variations and claims positions at the year end are summarised in aggregate below, the most significant of which relates to three contracts with entities owned by a major infrastructure fund of a blue-chip listed company (as detailed further below).

	£m
Overall contract value (including total estimated end of contract variations and claims after IFRS 15 constraints)	569.5
Revenue in the year	101.9
Total estimated end of contract variations and claims before IFRS 15 constraints	136.0
Total estimated end of contract variations after IFRS 15 constraints	65.4

These five positions represent the most significant estimates of revenue. The aggregate unagreed variations and claims constrained revenue recognised at year end of the subsequent five largest unagreed variations and claims is £5.9m. These items include estimation uncertainty, with a range of reasonably possible outcome of £nil to £136.0m. In respect of contract assets of £173.4m (30 June 2021 (restated, see note 35): £156.0m) and in assessing receivable provisions calculated on an expected loss basis, the Group has recorded a provision of £14.0m (2021: £14.0m). The directors’ estimate represents a reasonably possible outcome within an estimated reasonable range of outcomes of nil to £nil to £24m (2021: nil to £24m). It is unclear whether the outstanding uncertainties will be resolved within the next 12 months. There is one significant estimated claim recovery in our Infrastructure business in respect of three contracts with entities owned by a major infrastructure fund of a blue-chip listed company. Included in contract assets of £173.4m is an assessment of the recovery to be made in respect of the outstanding claims on these contracts, which are still being assessed with customers and recoveries have been assumed as highly probable. Our claims, supported by third-party advice, exceed the amounts recognised. However, there is a range of possible outcomes when these claims are finally settled. Further details are included in the Financial review on page 56 and note 17.

(iii) Taxation (judgment and estimate)

Deferred tax liabilities are generally provided for in full and deferred tax assets are recognised to the extent that it is probable that future taxable profit will arise against which the temporary differences will be utilised. Management judgment is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits (note 22). The Group has assessed that an asset equal to the value of unutilised tax credits expected to be utilised over the next three financial years is appropriate, as, based on the already secured work for that timeframe, management has assessed it is probable that the Group will have sufficient taxable profits to enable the deferred tax asset to be recovered. Any remaining unutilised tax credits have not been recognised.

(iv) Exceptional items (judgment)

Exceptional items are items of financial performance which the Group believes should be presented separately on the face of the income statement, to assist in understanding the underlying financial performance achieved by the Group. Determining whether an item is part of underlying items or non-underlying items requires judgment. Details of exceptional items included in the financial statements are included in note 4.

(v) PPP and other investments measured at fair value through other comprehensive income (estimate)

At 30 June 2022, £47.5m (2021: £49.1m) of PPP and other investments were classified as financial assets measured at fair value through other comprehensive income. In the operational phase, the fair value of these financial assets is measured at each reporting date by discounting the future value of the cash flows allocated to the financial asset. Individual discount rates have been used which equate to an overall blended discount rate of 7.0% (2021: 7.0%), which reflects the rates typically experienced in the marketplace. A 1.0% reduction in the discount rate would result in an increase in the value of the investments recorded in the balance sheet of approximately £4.0m (2021: £4.3m) (note 16).# Notes to the consolidated financial statements

1 Accounting policies (continued)

Critical accounting estimates and judgments (continued)

(vi) Impairment of investments in subsidiaries (judgment and estimate)

During the prior years, the value of the investment held by Galliford Try Holdings plc in Galliford Try Limited was impaired, following an assessment of the impact of Covid-19 on the company. This impairment required an estimation of the value in use of this entity and its assets, using the same key assumptions used in reviewing the goodwill and intangible assets balances. The Company has subsequently recognised a reversal in the impairment. Further details of this impairment are included in note 15.

(vii) Business combinations (judgment and estimate)

The acquisition of the nmc n Water Business during the year, represented a material business combination. This required the application of both estimates and judgments to be made by management in determining the allocation of the purchase price against the identifiable assets and liabilities and any residual goodwill.

Exceptional items

Exceptional items are material or significant irregular items of income and expense which the Group believes should be disclosed in the income statement, to assist in understanding the underlying financial performance achieved by the Group, by virtue of their nature or size. Examples of items which may give rise to disclosure as exceptional items include gains and losses on the disposal of businesses and property, plant and equipment, significant unanticipated losses on contracts, cost of restructuring and reorganisation of businesses, acquisition costs and asset impairments.

Segmental reporting

Segmental reporting is presented in the consolidated financial statements in respect of the Group’s business segments, which are the primary basis of segmental reporting. The business segmental reporting reflects the Group’s management and internal reporting structure. Segmental results include items directly attributable to the segment, as well as those that can be allocated on a reasonable basis.

Revenue and profit

Revenue is recognised when the Group transfers control of goods or services to customers. Revenue comprises the fair value of the consideration received or receivable net of rebates, discounts and value-added tax. Where consideration is subject to variability, the Group estimates the amount receivable. Revenue recognised is constrained to the amount which is highly probable not to result in a significant reversal in future periods. Sales within the Group are eliminated. Revenue also includes the Group’s proportion of work carried out under joint operations. Where a modification to an existing contract occurs, the Group assesses the nature of the modification and whether it represents a separate performance obligation required to be satisfied or whether it is a modification to the existing performance obligation.

Revenue for the Group’s continuing operations is recognised as follows:

Construction services

Revenue comprises the value of construction services transferred to a customer during the period. The results for the period include adjustments for the outcome of contracts, including jointly controlled operations, executed in both the current and preceding years.

Fixed price contracts – the amount of revenue recognised is calculated based on total costs incurred as a proportion of total estimated costs to complete and is recognised over time. The estimated final value includes variations, compensation events and certain claims (contract modifications) where it is highly probable that there will not be a significant reversal. Provision will be made against any expected loss as soon as it is identified.
Cost-reimbursable contracts – revenue is recognised based upon costs incurred to date plus any agreed fee and is recognised over time. Where contracts include a target price, consideration is given to the impact on revenue of the mechanism for distributing any savings or additional costs compared to the target price. Any revenue over and above the target price is recognised once it is highly probable that there will not be a significant reversal. Revenue includes any variations and compensation events where it is highly probable that there will not be a significant reversal.

Facilities management – management services and facilities management contracts typically represent a single performance obligation. Revenue is recognised over time as control passes to the customer and is typically measured on a straight-line basis as this is considered to be a reliable estimate of the pattern of transfer to the customer.

Recoveries from claims against third parties

The recognition of expected reimbursements resulting from certain third-party claims is accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. This requires recovery to be ‘virtually certain’ before an asset can be recognised.

Government funding

Grants (including research and development expenditure credits) are recognised when there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. The grants are recognised in the income statement over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis.

Contract costs

Incremental costs to obtain a contract are capitalised to the extent the contract is expected to be sufficiently profitable for them to be recovered. All other costs to obtain a contract are expensed as incurred. Incremental costs to fulfil a contract are expensed unless they relate directly to an existing contract or specific anticipated contract, generate or enhance resources that will be used to satisfy the obligations under the contract and are expected to be recovered. These costs are amortised over the shorter of the duration of the contract or the period for which revenue and profit can be forecast with reasonable certainty. Where a contract becomes loss making, capitalised costs in relation to that contract are expensed immediately.

Rent receivable

Rental income represents income obtained from the rental of properties and is credited to revenue within the income statement on a straight-line basis, over the period of the operating lease.

Interest income and expense

Interest income and expense is recognised on a time proportion basis, using the effective interest method.

Income tax

Current income tax is based on the taxable profit for the year. Taxable profit differs from profit before taxation recorded in the income statement because it excludes items of income or expense that are taxable or deductible in other years or that are never taxable or deductible. The liability for current tax is calculated using rates that have been enacted, or substantively enacted, by the balance sheet date.

Deferred income tax is provided using the balance sheet liability method, providing for all temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, with the exception of the initial recognition of goodwill arising on an acquisition. Deferred tax is measured at the tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on rates and laws that have been enacted or substantively enacted by the balance sheet date. A deferred tax asset is only recognised when it is more likely than not that the asset will be recoverable in the foreseeable future out of suitable taxable profits from which the underlying temporary differences can be deducted.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when there is an intention to settle the balances on a net basis. Deferred income tax is charged or credited through the income statement, except when it relates to items charged or credited through the statement of comprehensive income or to equity, when it is charged or credited there.

Goodwill

Goodwill arising on consolidation represents the excess of the fair value of the consideration given over the fair value of the net assets acquired. It is recognised as an asset and reviewed for impairment at least annually or when there is a triggering event, by considering the net present value of future cash flows. For purposes of testing for impairment, the carrying value of goodwill is compared to its recoverable amount, which is the higher of the value in use and the fair value less costs to sell. Any impairment is charged immediately to the income statement.# Accounting policies (continued)

Goodwill

Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts following impairment tests. Goodwill written off to reserves under UK GAAP prior to 1998 has not been restated. Goodwill is allocated to Cash Generating Units (CGUs) for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose.

Intangible assets

Intangible assets can include brands, customer contracts and customer relationships acquired on acquisition of subsidiary companies, and computer software developed by the Group. The intangible assets are reviewed for impairment at least annually or when there is a triggering event. Intangible assets are stated at cost less accumulated amortisation and impairment. Cost is determined at the time of acquisition as being directly attributable costs or, where relevant, by using an appropriate valuation methodology. Intangible assets are being amortised over the following periods:

(a) Customer contracts and relationships – on a straight-line basis over up to 10 years.
(b) Computer software – once the software is fully operational, amortisation is on a straight-line basis over up to 10 years.

Property, plant and equipment

All property, plant and equipment is stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the items. Land and buildings comprise mainly of offices. Depreciation is calculated to write off the cost of each asset to its estimated residual value over its expected useful life. Freehold land is not depreciated. The annual rates of depreciation on cost, applied on a straight-line basis, are as follows:


Freehold buildings	2%
Plant and machinery	15% to 33%
Fixtures and fittings	10% to 33%

In addition to systematic depreciation, the book value of property, plant and equipment is written down to estimated recoverable amounts should any impairment in the respective carrying values be identified. The asset residual values, carrying values and useful lives are reviewed on an annual basis and adjusted if appropriate at each balance sheet date. Repairs and maintenance expenditure is expensed as incurred, on an accruals basis.

Joint arrangements

The Group applies IFRS 11 to all joint arrangements. Investments in joint arrangements are classified as either joint ventures or joint operations, depending on the contractual rights and obligations of each investor. A joint venture is an entity over which the Group has joint control and rights to the net assets of the entity. The Group’s interest in joint ventures is accounted for using the equity method. Under this method the Group’s share of profits less losses after taxation of joint ventures is included in the consolidated income statement and its interest in their net assets is included in investments in the consolidated balance sheet. Where the share of losses exceeds the Group’s interest in the entity and there is no obligation to fund these losses, the carrying amount is reduced to nil and recognition of further losses is discontinued. Future profits are not recognised until unrecognised losses are extinguished. Unrealised gains on transactions with the Group’s joint ventures are eliminated to the extent of the Group’s interest in the joint venture. Accounting policies of joint ventures have been changed on consolidation where necessary, to ensure consistency with policies adopted by the Group. Where joint ventures do not adopt accounting periods that are coterminous with the Group’s, results and net assets are based on unaudited accounts drawn up to the Group’s accounting reference date. A joint operation is a joint arrangement that the Group undertakes with third parties, whereby those parties have rights to the assets and obligations of the arrangement. The Group accounts for joint operations by recognising its share of profits and losses in the consolidated income statement. The Group recognises its share of associated assets and liabilities in the consolidated balance sheet.

PPP and other investments

PPP and other investments are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the assets within 12 months of the balance sheet date. On initial recognition, the asset is recognised at cost. The Group applies equity accounting for its investments in PPP/PFI entities. These investments are treated as associates as the Group has significant influence over them. On initial recognition, the investments in these entities are recognised at cost, and the carrying amounts are increased or decreased to recognise the Group’s share of the profit or loss of the PPP/PFI entities after the date of acquisition. The Group’s share of the investments’ profits or losses is recognised in the profit or loss net of any impairment losses. Distributions received reduce the carrying amount of the investments. The debt element of the Group’s PPP/PFI entities is accounted for under IFRS 9 ‘Financial Instruments’ with fair value movements recorded in other comprehensive income and with recycling of gains and losses through the income statement. We recognise tax on the movements in other comprehensive income, where we expect the recycling to attract a tax charge/credit to the income statement. This reflects the fact that the Group has a demonstrable track record of investing in PFI assets as part of an overall construction procurement strategy, with a view to churning these investments on a regular basis. Management has reviewed the classification of PPP investments and considers that the business model continues to be hold to collect and sell. The investments therefore continue to be held at fair value through other comprehensive income.

Leases

The Group has applied the principles of IFRS 16 to all accounting periods beginning on or after 1 July 2019. In accordance with IFRS 16, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease term at a constant periodic rate of interest on the remaining balance of the liability. The right-of-use asset is depreciated over the lease term on a straight-line basis, unless the useful life of the asset is shorter than the lease term.

Notes to the consolidated financial statements continued
119
Annual Report and Financial Statements 2022
Strategic report
Governance
Financial information
1 Accounting policies (continued)

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established based on an expected credit loss model (general or simplified approach, as detailed under impairment of financial assets). The amount of the loss is recognised in the income statement. When a trade receivable is uncollectible, it is written off against the impairment provision for trade receivables. Subsequent recoveries of amounts previously written off are credited against costs in the income statement. Short-term trade receivables do not carry any interest and are stated at their amortised cost, as reduced by appropriate allowances for estimated irrecoverable amounts.

Impairment of financial assets

IFRS 9 establishes a model for recognition and measurement of impairment in financial assets. Loans and receivables and contract assets apply the ‘Expected Credit Losses’ (ECL) model. All other assets are classified and measured at fair value, with movements going through the income statement or other comprehensive income. Expected credit losses are recognised and measured according to one of three approaches – a general approach (12 months ECL), a simplified approach (lifetime ECL) or the ‘credit adjusted approach’. The Group has taken the practical expedient to apply a simplified ‘provision matrix’ for calculating expected losses. The provision matrix is based on an entity’s historical default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. For large one-off balances where there is no historic experience, analysis is completed in respect of a number of reasonably possible scenarios.

Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at nominal value. For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand, including bank deposits with original maturities of three months or less. Bank overdrafts are included for purposes of cash flow movements and the cash flow statement. Bank deposits with an original term of more than three months are classified as short-term deposits where the cash can be withdrawn on demand and the penalty for early withdrawal is not significant.# Notes to the Consolidated Financial Statements

Significant accounting policies

Cash held in escrow accounts is classified as a short-term deposit where the escrow agreement allows the balance to be converted to cash, if replaced by a bond repayable on demand.

Trade payables

Trade payables on normal terms are not interest bearing and are stated at their nominal value. Trade payables on extended terms are recorded at their fair value at the date of acquisition of the asset to which they relate and subsequently held at amortised cost. The discount to nominal value is amortised over the period of the credit term and charged to finance costs using the effective interest rate.

Provisions for liabilities and charges

Provisions for liabilities and charges are recognised when, as a result of past events, the Group has a present legal or constructive obligation, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation, using the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense.

Foreign currency

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All differences are taken to the income statement.

Retirement benefit obligations

For defined contribution schemes operated by the Group, amounts payable are charged to the income statement as they accrue.

Accounting for Employee Share Ownership Plan

Own shares held by the Galliford Try Employee Share Trust (the ‘Trust’) are included in the Group financial Statements as a deduction from retained earnings. The charge made to the income statement for employee share awards and options is based on the fair value of the award at the date of grant, spread over the performance period. Where such shares subsequently vest to the employees under the terms of the Group’s share option schemes or are sold, any consideration received is included in equity.

Share-based payments

The Group operates a number of equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense over the vesting period. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions such as growth in earnings per share. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the Group revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution.

Dividend policy

Final dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders. Interim dividends are recognised when paid.

Equity instruments

Equity instruments, such as ordinary share capital, issued by the Company are recorded at the proceeds received net of directly attributable incremental issue costs. Consideration paid for shares in the Company held by the Trust are deducted from total equity.

Investments in subsidiaries

The Company’s investments in subsidiaries are recorded in the Company’s balance sheet at cost less any impairment. The directors review the investments for impairment annually.

120 Galliford Try Holdings plc

2 Segmental reporting

The Chief Operating Decision Makers (CODM) have been identified as the Group’s Chief Executive and Finance Director. The CODM review the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments of the Group to be Building, Infrastructure, PPP Investments and Central (primarily representing central overheads).

The CODM assess the performance of the operating segments based on a measure of adjusted earnings before finance costs, amortisation, exceptional items and taxation. This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such as restructuring costs and impairments when the impairment is the result of an isolated, non-recurring event.

Interest income and expenditure are included in the result for each operating segment that is reviewed by the CODM. Other information provided to them is measured in a manner consistent with that in the financial statements.

Income statement

Year-ended 30 June 2022	Building £m	Infrastructure £m	PPP Investments £m	Central £m	Total £m
Revenue	789.1	441.9	6.2	–	1,237.2
Pre-exceptional operating profit/(loss) before amortisation of intangible assets	18.9	10.8	(0.9)	(10.3)	18.5
Share of post tax profits from joint ventures	–	–	0.4	–	0.4
Finance income	–	–	3.9	0.4	4.3
Finance costs	(0.3)	(0.7)	–	(0.4)	(1.4)
Pre-exceptional profit/(loss) before amortisation and taxation	18.6	10.1	3.4	(10.3)	21.8
Exceptional items	–	(7.7)	–	(6.0)	(13.7)
Amortisation of intangible assets	(1.0)	(0.7)	–	(1.0)	(2.7)
Profit/(loss) before taxation	17.6	1.7	3.4	(17.3)	5.4
Income tax credit	0.9
Profit for the year	6.3

Year-ended 30 June 2021	Building £m	Infrastructure £m	PPP Investments £m	Central £m	Total £m
Revenue	789.2	329.2	6.4	–	1,124.8
Operating (loss)/profit before amortisation and taxation	15.9	6.0	(1.8)	(10.0)	10.1
Share of post tax profits from joint ventures	–	–	0.5	–	0.5
Finance income	–	0.1	3.9	0.1	4.1
Finance costs	(0.3)	(0.6)	–	(0.3)	(1.2)
Profit/(loss) before amortisation and taxation	15.6	5.5	2.6	(10.2)	13.5
Amortisation of intangible assets	(1.0)	–	–	(1.1)	(2.1)
Profit/(loss) before taxation	14.6	5.5	2.6	(11.3)	11.4
Income tax expense	(1.0)
Profit for the year	10.4

Inter-segment revenue is eliminated from revenue above. In the year to 30 June 2022, this amounted to £38.8m (2021: £39.4m) for continuing operations, of which £nil (2021: £nil) was in Building, £21.7m (2021: £24.7m) was in Infrastructure and £17.1m (2021: £14.7m) was in central costs.

Notes to the consolidated financial statements continued

121 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

2 Segmental reporting (continued)

Balance sheet

30 June 2022	Building £m	Infrastructure £m	PPP Investments £m	Central £m	Total £m
Goodwill and intangible assets	42.0	53.3	–	1.7	97.0
Working capital employed	(92.8)	(139.5)	41.9	6.6	(183.8)
Net cash 18	154.9	(1.4)	(9.6)	75.0	218.9
Net assets	104.1	(87.6)	32.3	83.3	132.1
Total Group liabilities	(523.3)
Total Group assets	655.4

30 June 2021	Building £m	Infrastructure £m	PPP Investments £m	Central £m	Total £m
Goodwill and intangible assets	42.9	37.2	–	2.8	82.9
Working capital employed	(82.3)	(132.0)	40.0	9.3	(165.0)
Net cash 18	87.0	44.6	(10.0)	94.6	216.2
Net assets	47.6	(50.2)	30.0	106.7	134.1
Total Group liabilities (restated – note 35)	(498.2)
Total Group assets (restated – note 35)	632.3

Other segmental information

Year ended 30 June 2022	Building £m	Infrastructure £m	PPP Investments £m	Central £m	Total £m
Investment in joint ventures	–	–	0.3	–	0.3
Contracting revenue	789.1	441.9	–	–	1,231.0
Capital expenditure – property, plant and equipment 13	0.9	3.8	–	0.4	5.1
Total depreciation 13 & 14	4.5	5.8	0.1	1.4	11.8
Share-based payments 25	0.6	0.1	0.3	1.3	2.3
Acquisition of intangible assets 1	30	–	5.8	–	–
Amortisation of intangible assets 11	1.0	0.7	–	1.0	2.7

1 Acquired as part of the business combination note 30.# Consolidated Statement of Comprehensive Income

Year ended 30 June 2021

Notes	Building £m	Infrastructure £m	PPP Investments £m	Central £m	Total £m
Investment in joint ventures	–	–	0.2	–	0.2
Contracting revenue	789.2	329.2	–	–	1,118.4
Capital expenditure – property, plant and equipment	13	0.3	0.4	–	1.5
Total depreciation	13 & 14	4.5	4.5	–	2.2
Decrease in provision for receivables	17	–	–	–	(1.5)
Share-based payments	25	0.2	0.1	0.1	0.6
Amortisation of intangible assets	11	1.0	–	–	1.1

122 Galliford Try Holdings plc

3 Revenue

Nature of revenue streams

(i) Building and Infrastructure segments

Our Construction business operates nationwide, working with clients predominantly in the public and regulated sectors, such as health, education and defence markets within the Building segment and road, and water markets within the Infrastructure segment (as well as private commercial clients). Projects include the construction of assets (with services including design and build, construction only and refurbishment) in addition to the maintenance, renewal, upgrading and managing of services across utility and infrastructure assets.

Revenue stream Nature, timing of satisfaction of performance obligations and significant payment terms

Fixed price
A number of projects within these segments are undertaken using fixed-price contracts. Contracts are typically accounted for as a single performance obligation. Even when a contract (or multiple combined contracts) includes both design and build elements, they are considered to form a single performance obligation as the two elements are not distinct in the context of the contract, given that each is highly dependent on the other. The Group typically receives payments from the customer based on a contractual schedule of value that reflects the timing and performance of service delivery. Revenue is therefore recognised over time (the period of construction) based on an input model (reference to costs incurred to date). Uninvoiced amounts are presented as contract assets. Management does not expect a financing component to exist.

Cost-reimbursable
A number of projects within these segments are undertaken using open-book/cost-reimbursable (possibly with a pain/gain share mechanism) contracts. Contracts are typically accounted for as a single performance obligation, with the majority of these contracts including a build phase only. The Group typically receives payments from the customer based on actual costs incurred. Revenue is therefore recognised over time (the period of construction) based on an input model (reference to costs incurred to date). Uninvoiced amounts are presented as contract assets. Management does not expect a financing component to exist.

Facilities management
* Contracts undertaken within the Building segment that provide full life-cycle solutions to clients, are accounted for as a single performance obligation, with revenue recognised over time and typically on a straight-line basis.
* Facilities management represents around 5% of the total Building segment turnover.

(ii) Investments segment

Our Investments business specialises in managing construction through to operations for major building projects through public private partnerships and co-development opportunities. The business leads bid consortia and arranges finance, as well as making debt and equity investments (which are recycled).

Revenue stream Nature, timing of satisfaction of performance obligations and significant payment terms

PPP Investments
The Group has investments in a number of PPP Special Purpose Vehicles (SPVs), delivering major building and infrastructure projects. The business additionally provides management services to the SPVs under Management Service Agreements (MSA). Revenue for these services is typically recognised over time as and when the service is delivered to the customer. Revenue for reaching project financial close (such as success fees) is recognised at a point in time, at financial close (when control is deemed to pass to the customer).

Disaggregation of revenue

The Group considers the split of revenue by operating segment to be the most appropriate disgregation. All revenue has been derived from performance obligations settled over time. Revenue on existing contracts, where performance obligations are unsatisfied or partially unsatisfied at the balance sheet date, is expected to be recognised as follows:

Revenue – year ended 30 June 2022

	2023 £m	2024 £m	2025 onwards £m	Total £m
Building	526.4	111.6	33.2	671.2
Infrastructure	295.2	134.5	142.4	572.1
Total Construction	821.6	246.1	175.6	1,243.3
PPP Investments	2.8	2.7	25.7	31.2
Total transaction price allocated to performance obligations yet to be satisfied	824.4	248.8	201.3	1,274.5

Notes to the consolidated financial statements continued 123
Annual Report and Financial Statements 2022 Strategic report Governance Financial information

3 Revenue (continued)

Disaggregation of revenue (continued)

Revenue – year ended 30 June 2021

	2022 £m	2023 £m	2024 onwards £m	Total £m
Building	550.5	117.1	4.7	672.3
Infrastructure	239.3	72.8	14.4	326.5
Total Construction	789.8	189.9	19.1	998.8
PPP Investments	1.8	1.8	24.4	28.0
Total transaction price allocated to performance obligations yet to be satisfied	791.6	191.7	43.5	1,026.8

Any element of variable consideration is estimated at a value that is highly probable not to result in a significant reversal in the cumulative revenue recognised.

4 Exceptional items

	2022 £m	2021 £m
Acquisition and integration related costs 1 – cost of sales	5.8	–
Acquisition and integration related costs 1 – administrative expenses	1.9	–
Implementation costs of cloud based arrangements 2 – administrative expenses	6.0	–
Total	13.7	–

There were no exceptional items in the prior year. The items in respect of the current year are as follows:

1 The Group acquired the Water business of nmcn plc (in administration) on 7 October 2021 and incurred acquisition and integration related costs of £7.7m. This is predominantly made up of legal and professional fees, integration and restructuring costs recognised in administrative expenses, and specific staff costs incurred during the period of site closures following nmcn plc entering administration that are recognised in cost of sales.

2 The Group incurred £6.0m ofCustomisation and configuration costs associated with the move to Oracle Fusion, a cloud-based computing arrangement, during the period. Taking into account the IFRIC Agenda Decision issued by the IFRS IC in March 2021, the Group has analysed the costs and concluded that these costs should be expensed in the period. In accordance with the Group’s existing accounting policy, management considers that the costs should be separately disclosed as exceptional because they are significant and irregular. An associated tax credit of £2.6m has been recognised.

5 Employees and directors

Employee benefit expense during the year	Notes	Group	Company
		2022 £m	2021 £m
Wages and salaries		171.5	133.5
Social security costs		21.3	15.0
Other pension costs		17.7	14.3
Share-based payments	25	2.3	1.0
Restructure costs		0.2	1.5
Total		213.0	165.3

All employees are entitled to join the Galliford Try Pension Scheme, a defined contribution scheme established as a stakeholder plan, with a Company contribution based on a scale dependent on the employee’s age and the amount they choose to contribute. Since 1 July 2013, all non-participating and newly-employed staff have been auto-enrolled into the separate stakeholder plan and are entitled to increase their contribution rates in line with existing members. Since 1 April 2009, the Group has operated a pension salary sacrifice scheme, which means that all employee pension contributions are paid as employer contributions on their behalf. All pension costs in the current and prior years were in respect of the Group’s defined contribution schemes. Of the total charge, £8.3m (2021: £7.6m) and £9.4m (2021: £6.7m) were included, respectively, within cost of sales and administrative expenses.

124 Galliford Try Holdings plc

5 Employees and directors (continued)

Average monthly number of people (including Executive and non-executive directors) employed

	Group	Company
	2022 Number	2021 Number
By business:
– Building	1,265	1,356
– Infrastructure	1,751	1,060
Construction	3,016	2,416
PPP Investments	73	79
Central	165	167
Total	3,254	2,662

Remuneration of key management personnel

The key management personnel comprise the Executive Board and non-executive directors. The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24, Related Party Disclosures. Further information about the remuneration of individual directors, including any interests in the Company’s shares, is provided in the audited part of the Directors’ remuneration report.## 6 Net finance income

Group
| | 2022 £m | 2021 £m |
| :---- | :------ | :------ |
| Interest receivable on bank deposits | 0.4 | 0.1 |
| Interest receivable from PPP Investments and joint ventures | 3.9 | 3.9 |
| Other interest receivable | – | 0.1 |
| Finance income | 4.3 | 4.1 |
| Other (including interest on lease liabilities) | (1.4) | (1.2) |
| Finance costs | (1.4) | (1.2) |
| Net finance income | 2.9 | 2.9 |

7 Profit before income tax

The following items have been included in arriving at profit before income tax:

Notes	2022 £m	2021 £m
Employee benefit expense	5	213.0
Total depreciation	13 & 14	11.8
Amortisation of intangible assets	11	2.7
Repairs and maintenance expenditure on property, plant and equipment		0.7
Decrease in provision for receivables	17	–
Exceptional items	4	(13.7)

In addition to the above, the Group incurs other costs classified as cost of sales relating to labour, materials and subcontractors’ costs.

Notes to the consolidated financial statements continued
125 Annual Report and Financial Statements 2022
Strategic report Governance Financial information

7 Profit before income tax (continued)

Services provided by the Group’s auditor and network firms

During the year, the Group obtained the following services from the Group’s auditor at costs as detailed below:

	2022 £m	2021 £m
Fees payable to the Company’s auditor for the audit of Parent Company and consolidated financial statements	0.2	0.2
Fees payable to the Company’s auditor for other services:
The audit of financial statements of the Company’s subsidiaries	0.8	0.5
Audit-related assurance services	0.1	0.1
Total other services	0.9	0.6
Total	1.1	0.8

A description of the work of the Audit Committee in respect of the auditor’s independence is set out in the Governance report.

8 Income tax charge

Group
| Notes | 2022 £m | 2021 £m |
| :---- | :------ | :------ |
| Analysis of expense in year | | |
| Current year’s income tax | | |
| Current tax | (1.6) | 0.5 |
| Deferred tax | 22 | 0.5 | 5.0 |
| Adjustments in respect of prior years | | |
| Current tax | 0.8 | (4.8) |
| Deferred tax | 22 | (0.6) | 0.3 |
| Income tax (credit)/expense | (0.9) | 1.0 |
| Tax on items recognised in other comprehensive income | | |
| Tax recognised in other comprehensive income | – | – |
| Total taxation | (0.9) | 1.0 |

1 Includes impact of change in rate of tax.

The total income tax credit for the year of £0.9m (2021: £1.0m) is lower (2021: lower) than the blended standard rate of corporation tax in the UK of 19.0% (2021: 19.0%). The differences are explained below:

	2022 £m	2021 £m
Profit before income tax	5.4	11.4
Profit before income tax multiplied by the blended standard corporation tax rate in the UK of 19.0% (2021: 19.0%)	1.0	2.2
Effects of:
Expenses not deductible for tax purposes	0.4	0.7
Non-taxable income	(0.1)	(1.1)
Adjustments in respect of prior years	1	0.2
Change in tax rates	(0.4)	(2.1)
Net (recognition and utilisation)/restriction of tax losses	2	(2.1)
Other	0.1	–
Income tax (credit)/charge	(0.9)	1.0

1 The adjustments in respect of prior years’ £0.2m (2021: £(4.5)m) reflect changes to the estimates made in the previous years’ Annual Report and Accounts and the finalised tax computations submitted to HM RC. The June 2021 adjustment of £(4.5)m incorporates, and principally relates to, the finalisation of certain tax estimates made following the demerger of the Group’s house building divisions in January 2020.

2 The net recognition and utilisation of tax losses of £2.1m (2021: restriction £5.8m) reflect the utilisation of £nil (2021: £1.5m) tax losses in the year and the recognition of £2.1m (2021: restriction of £7.3m) tax losses in line with the Group’s accounting policy (note 22). The restriction of tax losses in 2021 resulted from changes to the estimated tax relief on historic loss-making contracts. The Group had assumed a level of recovery on these contracts in prior years and paid the associated corporation tax. On finalisation of the contracts, an overall loss was made, and the Group sought to recover the associated corporation tax in the form of a refund (as at 30 June 2020), and subsequently in the form of tax losses (as at 30 June 2021) restricted in accordance with the Group’s accounting policy.

In the Spring Budget 2021, the UK Government announced that from 1 April 2023, the corporation tax rate would increase from 19% to 25%. This new law was substantively enacted in the Finance Bill 2021 and received Royal Assent on 10 June 2021. Where appropriate, deferred taxes at the balance sheet date have been measured using the appropriate tax rates (based on when the underlying balance is expected to crystallise) and reflected in these financial statements. The Group has assessed that a deferred tax asset equal to the value of unutilised tax credits expected to be utilised over the next three financial years is appropriate, as, based on the already secured work for that timeframe, management have assessed it is probable that the Group will have sufficient taxable profits to enable the deferred tax asset to be recovered. Any remaining unutilised tax credits have not been recognised (note 22).

126 Galliford Try Holdings plc

9 Dividends

Group and Company
| | 2022 £m | pence per share | 2021 £m | pence per share |
| :---- | :------ | :-------------- | :------ | :-------------- |
| Previous year final | 3.9 | 3.5 | – | – |
| Current year interim | 2.4 | 2.2 | 1.3 | 1.2 |
| Dividend recognised in the year | 6.3 | 5.7 | 1.3 | 1.2 |

The following dividends were declared by the Company in respect of each accounting period presented:

	2022 £m	pence per share	2021 £m	pence per share
Interim	2.4	2.2	1.3	1.2
Final	6.4	5.8	3.9	3.5
Dividend relating to the year	8.8	8.0	5.2	4.7

The directors are proposing a final dividend in respect of the financial year ended 30 June 2022 of 5.8 pence per share (2021: 3.5 pence per share), bringing the total dividend in respect of 2022 to 8.0 pence per share (2021: 4.7 pence per share). The final dividend will absorb approximately £6.4m of equity. Subject to shareholders’ approval at the AGM to be held on 11 November 2022, the dividend will be paid on 9 December 2022 to shareholders who are on the register of members at the close of business on 11 November 2022.

10 Earnings per share

Basic and diluted earnings/(losses) per share (EPS)

Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held by the Trust, which are treated as cancelled. Under normal circumstances, the average number of shares is diluted by reference to the average number of potential ordinary shares held under option in the year. The dilutive effect amounts to the number of ordinary shares which would be purchased using the aggregate difference in value between the market value of shares and the share option price. Only shares that have met their cumulative performance criteria are included in the dilution calculation. The Group has two classes of potentially dilutive ordinary shares: those share options granted to employees where the exercise price is less than the average market price of the Company’s ordinary shares during the year and the contingently issuable shares under the Group’s long-term incentive plans. A loss per share cannot be reduced through dilution, hence this dilution is only applied where the Group has reported a profit. The earnings and weighted average number of shares used in the calculations are set out below.

	2022	2021
	Earnings £m	Weighted average number of shares
Continuing operations
Basic EPS – pre-exceptional
Earnings attributable to ordinary shareholders pre-exceptional items	17.4	109,016,667
Basic EPS
Earnings attributable to ordinary shareholders post-exceptional items	6.3	109,016,667
Effect of dilutive securities:
Options	n/a	6,627,132
Diluted EPS – pre-exceptional	17.4	115,643,799
Diluted EPS	6.3	115,643,799
Total operations
Basic EPS – pre-exceptional
Earnings attributable to ordinary shareholders pre-exceptional items	17.4	109,016,667
Basic EPS
Earnings attributable to ordinary shareholders post-exceptional items	6.3	109,016,667
Effect of dilutive securities:
Options	n/a	6,627,132
Diluted EPS – pre-exceptional	17.4	115,643,799
Diluted EPS	6.3	115,643,799

The discontinued operations earnings per share for the year was nil (2021: loss per share of 2.5 pence per share) and the discontinued operations diluted earnings per share for the year was nil (2021: loss per share of 2.3p).

Notes to the consolidated financial statements continued
127 Annual Report and Financial Statements 2022
Strategic report Governance Financial information

11 Intangible assets

Group
| | Customer contracts and relationships £m | Computer software £m | Total £m |
| :---- | :---------------------------------------- | :------------------- | :------- |
| Cost | | | |
| At 1 July 2020 and 30 June 2021 | 12.2 | 10.9 | 23.1 |
| Additions | 30 | 5.2 | 0.6 | 5.8 |
| At 30 June 2022 | 17.4 | 11.5 | 28.9 |
| Accumulated amortisation | | | |
| At 1 July 2020 | (8.2) | (7.1) | (15.3) |
| Amortisation in year | (1.0) | (1.1) | (2.1) |
| At 1 July 2021 | (9.2) | (8.2) | (17.4) |
| Amortisation in year | (1.5) | (1.2) | (2.7) |
| At 30 June 2022 | (10.7) | (9.4) | (20.1) |
| Net book amount | | | |
| At 30 June 2022 | 6.7 | 2.1 | 8.8 |
| At 30 June 2021 | 3.0 | 2.7 | 5.7 |
| At 30 June 2020 | 4.0 | 3.8 | 7.8 |

All amortisation charges in the year have been included in administrative expenses.Computer software relates to the Group’s reporting systems. The remaining period of amortisation on computer software ranges from one year and six months to two years and three months. The remaining period of amortisation on customer contracts and relationships ranges between two and nine years.

12 Goodwill

Group

	£m	Cost
		At 30 June 2020 and 30 June 2021	77.2
		Addition	30 11.0
		Disposal	–
		At 30 June 2022	88.2
		Aggregate impairment at 30 June 2020 and 30 June 2021	–
		At 30 June 2020 and 30 June 2022	–
		Net book amount
		At 30 June 2022	88.2
		At 30 June 2021	77.2
		At 30 June 2020	77.2

Goodwill is allocated to the Group’s CGUs identified according to business segment. The goodwill is attributable to the following business segments:

	2022 £m	2021 £m
Building	40.0	40.0
Infrastructure	48.2	37.2
	88.2	77.2

Impairment review of goodwill and key assumptions

Goodwill is tested for impairment at least annually. The recoverable amount of a CGU is determined based on value in use calculations. These calculations use pre-tax cash flow projections based on future financial budgets approved by the Board, based on past performance and its expectation of market developments. The key assumptions within these budgets relate to revenue and the future profit margin achievable, in line with our strategy and targets as set out in the Strategic report. Future budgeted revenue is based on management’s knowledge of actual results from prior years and latest forecasts for the current year, along with the existing secured works and management’s expectation of the future level of work available within the market sector. In establishing future profit margins, the margins currently being achieved are considered in conjunction with expected inflation rates in each revenue and cost category. In Building and Infrastructure, the margins currently being achieved are expected to increase in line with the strategy set out in the Strategic report. Cash is monitored very closely on a daily, weekly and monthly basis for the purposes of managing both treasury and the business as a whole. Details of the Group’s treasury management are included within the Financial review in the Strategic report of the Annual Report. The assumptions used are reviewed regularly and differences between forecast and actual results are closely monitored, with variances being investigated fully. The knowledge gained from this past experience is used to ensure that the future assumptions used are consistent with past actual outcomes and are management’s best estimate of the future cash flows of each business unit.

Cash flows beyond the budgeted three-year period are extrapolated using an estimated growth rate within each segment. The growth rate used is the Group’s estimate of the average long-term growth rate for the market sectors in which the CGU operates. Furthermore, sensitivity analysis has been undertaken on each goodwill impairment review, by changing the discount rates, profit margins, growth rates and other variables applicable to each CGU, and the results are noted below. The pre-tax discount rates for each CGU are noted below.

Building CGU

A pre-tax discount rate of 13.1% (2021: 15.8%) in Building has been applied to the future cash flows, based on an estimate of the weighted average cost of capital (WACC) of that division. A long-term growth rate of 2.0% per annum has been applied to the budgeted cash flows (reflecting the Board-approved budget operating margins and working capital cash flows) into perpetuity and these assumptions result in the recoverable value of this CGU being significantly in excess of the carrying value of the CGU assets. The Building CGU is not sensitive to changes in key assumptions and management does not consider that any reasonable possible change in any single assumption would give rise to an impairment of the carrying value of goodwill and intangibles.

Infrastructure CGU

A pre-tax discount rate of 12.7% (2021: 15.7%) in Infrastructure has been applied to the future cash flows, based on an estimate of the weighted average cost of capital of that division. A long-term growth rate of 2.0% per annum has been applied to the budgeted cash flows (reflecting the Board-approved budget operating margins and working capital cash flows) into perpetuity and these assumptions result in the recoverable value of this CGU being significantly in excess of the carrying value of the CGU assets. The Infrastructure CGU is not sensitive to changes in key assumptions and management does not consider that any reasonable possible change in any single assumption would give rise to an impairment of the carrying value of goodwill and intangibles.

13 Property, plant and equipment

Group

Cost	Land and buildings £m	Plant and machinery £m	Fixtures and fittings £m	Total £m
At 1 July 2020	0.5	2.1	13.4	16.0
Additions	0.6	1.1	0.5	2.2
Disposals	–	(0.1)	(4.5)	(4.6)
At 1 July 2021	1.1	3.1	9.4	13.6
Additions	1.7	1.9	1.5	5.1
Disposals	–	(1.8)	(0.4)	(2.2)
At 30 June 2022	2.8	3.2	10.5	16.5
Accumulated depreciation
At 1 July 2020	(0.3)	(1.0)	(10.9)	(12.2)
Charge for the year	(0.1)	(0.2)	(1.3)	(1.6)
Disposals	–	0.1	4.5	4.6
At 1 July 2021	(0.4)	(1.1)	(7.7)	(9.2)
Charge for the year	(0.1)	(0.2)	(1.1)	(1.4)
Disposals	–	0.8	0.4	1.2
At 30 June 2022	(0.5)	(0.5)	(8.4)	(9.4)
Net book amount
At 30 June 2022	2.3	2.7	2.1	7.1
At 30 June 2021	0.7	2.0	1.7	4.4
At 30 June 2020	0.2	1.1	2.5	3.8

There has been no impairment of property, plant and equipment during the year (2021: £nil). The Company has no property, plant or equipment.

Notes to the consolidated financial statements continued
129
Annual Report and Financial Statements 2022
Strategic report Governance Financial information

14 Leases

This note provides information for leases where the Group is a lessee. The Company holds no leases.

Right-of-use assets

Cost	Land and buildings £m	Plant and machinery £m	Motor vehicles £m	Total £m
At 1 July 2020	11.0	7.8	12.5	31.3
Additions	0.2	2.4	5.4	8.0
Disposals	(1.2)	(3.1)	(1.5)	(5.8)
At 1 July 2021	10.0	7.1	16.4	33.5
Additions	5.3	2.7	7.4	15.4
Disposals	(2.7)	(1.1)	(2.2)	(6.0)
At 30 June 2022	12.6	8.7	21.6	42.9
Accumulated depreciation
At 1 July 2020	(2.6)	(2.1)	(3.8)	(8.5)
Charge for the year	(2.4)	(2.5)	(4.7)	(9.6)
Disposals	0.8	1.9	1.4	4.1
At 1 July 2021	(4.2)	(2.7)	(7.1)	(14.0)
Charge for the year	(2.2)	(2.8)	(5.4)	(10.4)
Disposals	2.7	1.1	2.2	6.0
At 30 June 2022	(3.7)	(4.4)	(10.3)	(18.4)
Net book amount
At 30 June 2022	8.9	4.3	11.3	24.5
At 30 June 2021	5.8	4.4	9.3	19.5
At 30 June 2020	8.4	5.7	8.7	22.8

Lease liabilities

	2022 £m	2021 £m
Current	9.9	7.3
Non-current	14.9	11.9
Total lease liabilities	24.8	19.2

The statement of profit or loss shows the following amounts relating to leases for continuing operations:

	2022 £m	2021 £m
Depreciation of right-of-use assets	10.4	9.6
Interest expense (included in finance cost)	1.0	0.9
Expense relating to short-term leases (included in cost of goods sold and administrative expenses)	9.6	7.9
Expense relating to leases of low-value assets that are not shown above as short-term leases (included in administrative expenses)	0.1	0.5
Total expenses	21.1	18.9

The total cash outflow for leases in the year to 30 June 2022 was £11.2m, of which £1.0m was included in net interest expense – note 6 (2021: £11.4m and £0.9m respectively).

Lease liabilities (continued)

Maturity of contractual undiscounted future lease payments:

As at 30 June 2022

	Land and buildings £m	Plant and machinery £m	Motor vehicles £m	Total £m
Less than 1 year	2.3	2.5	5.2	10.0
Between 1 and 5 years	6.4	1.3	7.0	14.7
More than 5 years	7.8	–	–	7.8
Total	16.5	3.8	12.2	32.5

As at 30 June 2021

	Land and buildings £m	Plant and machinery £m	Motor vehicles £m	Total £m
Less than 1 year	1.7	2.0	4.3	8.0
Between 1 and 5 years	2.9	1.8	5.8	10.5
More than 5 years	5.4	–	–	5.4
Total	10.0	3.8	10.1	23.9

15 Investments in subsidiaries

Company

	2022 £m	2021 £m
Cost
As at 1 July 2021 and 2020	287.7	287.7
Additions	0.3	–
At 30 June	288.0	287.7
Aggregate impairment
As at 1 July 2021 and 2020	(113.8)	(146.5)
Reversal of impairment/(impairment)	13.8	32.7
At 30 June	100.0	(113.8)
Net book value
At 30 June	188.0	173.9

The carrying value of investments was reviewed and a partial reversal of £13.8m (2021: £32.7m) was recorded, determined from value in use calculations based on the same assumptions as those disclosed in note 12.

The subsidiary undertakings that principally affected profits and net assets of the Group were:

Galliford Try Construction Limited
Galliford Try Infrastructure Limited
Galliford Try Investments Limited
Galliford Try Services Limited
Galliford Try Limited 2

1 Incorporated in Scotland.
2 Shares of these subsidiary companies are owned directly by the Company. Unless otherwise stated, each subsidiary has a 30 June year-end, operates as a construction company, is incorporated in England & Wales and 100% of ordinary shares and voting rights are held by the Group. Galliford Try Services Limited operates as central administration company to the Group. A full list of the Group’s undertakings is set out in note 33.# Notes to the consolidated financial statements continued

131 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

16 PPP and other investments

Group	2022 £m	2021 £m
At 1 July	49.1	40.7
Additions	–	1.9
Disposals and subordinated loan repayments	(0.7)	(1.0)
Movement in fair value	(0.9)	7.5
At 30 June	47.5	49.1

These comprise PPP/PFI investments and investments in other listed securities. None of the financial assets are past their due dates (2021: £nil), and the directors expect an average maturity profile of around 10 years. Further disclosures relating to financial assets are set out in note 23. The expected credit loss (ECL) was assessed to be minimal and accordingly no ECL recognised.

During the year, there were no additions (2021: £1.9m) to the Group’s PPP/PFI investments, subordinated loans of £0.5m (2021: £0.5m) were repaid and the Group disposed of interests held at £0.2m (2021: £0.5m), generating a profit on disposal of £nil (2021: £nil). Of the total fair value movement in the year of £0.9m, all of it relates to the movement in the fair value of the PPP investments (2021: total of £7.5m, of which £7.3m relates to PPP investments and has been recorded in equity whilst £0.2m relates to the residual Vistry Group plc shares held and has been recorded in the income statement).

The Group has commitments of £nil (2021: £nil) to provide further subordinated debt to its investments. This portfolio equates to a blended discount rate of 7.0% (2021: 7.0%). A reduction of 1.0% would result in an increase in the fair value of approximately £4.0m (2021: £4.3m).

Our share of PPP and other investments’ external bank funding was £257.2m at 30 June 2022 (2021: £267.7m). Our share of these entities’ other external funding consists of £64.1m (2021: £64.1m) of listed bonds. These balances are non-recourse to the Group.

The information disclosed reflects the amounts presented in the financial statements or management accounts of the relevant joint ventures and associates and not the Group’s share of those amounts.

The Group holds investments in both debt and equity within a number of entities over which it has significant influence. Predominantly all of the value that the Group recognises relates to the debt instruments (representing over 99% of the PPP and other investments portfolio) which have been fair valued within the PPP and other investments portfolio. Consequently, the material 1 joint ventures (in which the Group also holds debt investments either directly or indirectly) are disclosed within this note.

Income statement – extracts

	Aberdeen Roads (Finance) Plc	Aberdeen Roads Limited
	2022 £m	2021 £m
Revenue	–	–
Depreciation and amortisation	–	–
Finance income	24.7	25.4
Finance expense	(24.7)	(25.4)
Income tax expense	–	–
Profit (100%)	–	–
Other comprehensive income	4.6	2.4
Total comprehensive income (100%)	4.6	2.4
Group’s share of profit and total comprehensive income	1.5	0.8
Dividends received by the Group during the year	–	–

Balance sheet – extracts


	2022 £m	2021 £m	2022 £m	2021 £m
Cash and cash equivalents	0.2	0.2	29.9	28.0
Other current assets	–	–	3.8	5.1
Current assets	0.2	0.2	33.7	33.1
Non-current assets	548.4	562.7	544.5	556.2
Current external borrowings – bank/listed bonds	(19.1)	(18.6)	–	–
Other current liabilities	(6.5)	(5.5)	(30.6)	(26.6)
Current liabilities	(25.6)	(24.1)	(30.6)	(26.6)
Non-current external borrowings – bank/listed bonds	(474.8)	(489.0)	–	–
Other non-current liabilities	(47.2)	(53.4)	(547.6)	(562.7)
Non-current liabilities	(522.0)	(542.4)	(547.6)	(562.7)
Net assets/(liabilities) (100%)	1.0	(3.6)	–	–

1 Material due to their holdings and/or issuing listed debt. Details of related party transactions with joint ventures are given in note 29. The Group’s shareholding in each joint venture can be seen in note 33.

132 Galliford Try Holdings plc

17 Trade and other receivables

Notes	Group
	2022 £m	2021 (restated – note 35) £m
Amounts falling due within one year:
Trade receivables	46.0	48.5
Less: provision for impairment of receivables	(0.1)	(0.1)
Trade receivables – net	45.9	48.4
Contract assets 1	173.4	156.0
Amounts due from joint ventures	1.1	6.1
Research and development expenditure credits	4.5	4.5
Other receivables	4.7	12.8
Prepayments	13.4	13.6
	243.0	241.4

1 Contract assets of £173.4m at 30 June 2022 (2021: £156.0m) is stated net of a life-time expected credit loss allowance of £14.0m (2021: £14.0m).

The Company has no trade and other receivables. Retentions will be collected in the normal operating cycle of the Group and are therefore shown as a current asset. It is expected that £33.6m (2021: £30.6m) will be collected within 12 months from the balance sheet date. The Group has no significant capitalised contract costs.

As previously disclosed, the Group provided services in respect of three contracts with entities owned by a major infrastructure fund of a blue-chip listed company. Costs were significantly impacted by client-driven scope changes and the Group has submitted claims to the value of £95m in respect of these costs. Our work on these contracts formally ceased on their termination in August 2018. The Group has taken extensive advice on our entitlement and we have been successful in two adjudications supporting the validity of the Group’s position. The claim is progressing in line with the original expected timetable. Taking into account the requirements of IFRS 15, the Group had constrained the revenue recognised in prior periods to the extent that it was highly probable not to result in a significant reversal in the future. While the Group has submitted a total claim value of £95m in respect of these costs within the Statement of Case, revenue has been constrained. We have constrained the revenue to a percentage recoverable that is lower than that successfully recovered from the adjudications and variations previously agreed on this contract. The underlying principle supporting the validity and recovery of the claims and variations is not considered to be impacted by the passage of time, which is driven by the nature of dispute resolution in this sector. Given the progress, in line with expectations during the year, this is unchanged. It is possible that the process of the arbitration may not be concluded within the coming financial year.

Whilst the entities are owned by a major infrastructure fund of a blue-chip listed company, and we expect that the amounts will be repaid, we have assessed any expected credit loss provision in accordance with IFRS 9 to take into account their investment structure. Our assessment of the credit worthiness of the underlying contracting entities includes reviewing their latest audited financial statements to 31 December 2020 (as well as their immediate parent and investor whose latest filed financial statements are to 31 December 2021), for which the audit opinion includes a disclaimer of opinion in relation to material uncertainties in respect of claims and the potential impact on going concern. The Group does not consider there to be a change in credit risk over the course of the year to 30 June 2022 and consequently, there has been no material change to the expected credit loss provision since the prior year. The expected credit loss provision (among our overall portfolio of contracts) is discussed further in note 1. Critical accounting estimates and judgments.

There has been no change to our assessment of the constrained revenue under IFRS 15 or the expected credit loss under IFRS 9 in the year to 30 June 2022. The Group continues to vigorously defend the counterclaims made by the counterparty, that we consider are without merit, and as such no amounts have been provided on the basis the Group considers the possibility of an outflow of resources to be remote.

Movements on the Group provision for impairment of trade receivable were as follows:

	2022 £m	2021 £m
At 1 July	(0.1)	(1.6)
Decrease in provision for receivables impairment	–	1.5
At 30 June	(0.1)	(0.1)

Provisions for impaired receivable have been included in cost of sales and administrative expenses in the income statement. Amounts charged to the impairment provision are generally written off when there is no expectation of recovering additional cash. The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the book value of each class of receivable mentioned above, along with the Group’s cash and cash equivalents. The Group does not hold any collateral as security.

Management believes that the concentration of credit risk with respect to trade receivables is limited, due to the Group’s customer base being large, unrelated and predominantly within the public sector. Major water industry customers accounted for in total 15% (2021: 8%) of Group revenue in the year. However, the customers involved comprise a variety of entities, including those both in the public and commercial sectors. In addition, within the commercial sector each customer has an unrelated ultimate parent company.

As of 30 June 2022, trade receivables of £13.7m (2021: £15.2m) were past due but not impaired.# Notes to the consolidated financial statements continued

17 Trade and other receivables (continued)

These relate to a number of independent customers for whom there is no recent history of default and there are no indications that they will not meet their payment obligations in respect of the trade receivables recognised in the balance sheet that are past due and unprovided. The ageing analysis of these trade receivables is as follows:

Number of days past due date	2022 £m	2021 £m
Less than 30 days	4.4	1.5
Between 30 and 60 days	1.3	3.7
Between 60 and 90 days	0.9	0.7
Between 90 and 120 days	1.3	0.3
Greater than 120 days	5.8	9.0
Total	13.7	15.2

As of 30 June 2022, trade receivables were considered for impairment based on management’s judgment and review of the trade receivables listings. The amount provided for these balances was £0.1m (2021: £0.1m). The allocation of the provision is as follows:

Number of days past due date:	2022 £m	2021 £m
Greater than 120 days	0.1	0.1
Total	0.1	0.1

18 Cash and cash equivalents

	Group		Company
	2022 £m	2021 £m	2022 £m	2021 £m
Cash at bank and in hand and per the statement of cash flows	218.9	216.2	109.4	100.7

Cash at bank above includes £22.7m (2021: £16.9m), being the Group’s share of cash held by jointly controlled operations. The effective interest rate received on cash balances is 0.3% (2021: 0.1%). The Group has no bank borrowings or loans. Net cash excludes IFRS 16 lease liabilities (note 14). Cash and cash equivalents and bank overdrafts are presented on a net (off)set basis. In 2016, the IFRS Interpretations Committee released an update in respect of IAS 32 ‘Financial instruments: presentation’ specifically in relation to offsetting and cash pooling. This clarified that in order to offset bank account balances, an entity must have both a legally enforceable right and an intention to do so. The Group’s bank arrangements and facilities with both HSBC Bank plc and Barclays Bank plc provide the legally enforceable right to offset and the Group demonstrated its intention to offset by formally sweeping the balances. Consequently, the balances have been offset in the financial statements.

19 Trade and other payables

	Group
	2022 £m	2021 (restated – note 35) £m
Trade payables	102.3	90.9
Contract liabilities	104.4	92.7
Other taxation and social security payable	29.9	30.5
Other payables	1.6	1.2
Accruals	232.9	238.7
Total	471.1	454.0

The Company has no trade and other payables. All payables are unsecured. Retentions will be paid in the normal operating cycle of the Group and are therefore shown as a current liability. The undiscounted future cash flows of non-derivative financial liabilities are £336.8m (2021: £330.8m) and these are expected to be settled within one year of the balance sheet date.

20 Provisions for other liabilities and charges

	Discontinued operations	Onerous contracts	Rectification	Total
£m
At 1 July 2020 (as previously reported)	(24.0)	–	–	(24.0)
At 1 July 2020 (restated)¹	(24.0)	(1.0)	(14.3)	(39.3)
Utilised	24.0	1.0	3.1	28.1
Additions	–	(0.8)	(13.0)	(13.8)
At 30 June 2021 (restated)¹	–	(0.8)	(24.2)	(25.0)
Utilised	–	10.2	3.7	13.9
Additions²	–	(14.0)	(2.3)	(16.3)
At 30 June 2022	–	(4.6)	(22.8)	(27.4)

¹ The provisions balance has been restated, reflecting a reclassification between accruals and provisions of £25.0m as at 30 June 2021 (1 July 2020: £15.3m), with no impact to any other balance reported at the balance sheet date. Onerous contract and rectification provisions were previously reported within accruals but should have been presented as provisions (see note 35).

² Additions include £13.7m acquired as part of business combinations (note 30).

Onerous contract provisions are made on loss-making contracts the Group is obliged to complete. Rectification provisions are made for potential claims and defects for remedial works against works completed by the Group. The discontinued operations resulted from the working capital adjustment agreed in respect of the disposal of the housebuilding divisions. This was fully settled in the year to 30 June 2021. As at 30 June 2022 £21.6m of provision related to three loss making contracts. Management’s best estimate of the range of outcomes on these two contracts is between £10.7m and £24m. The remaining £5.8m of the provision for loss making contracts relates to a high number of immaterial balances. Due to the level of uncertainty, combination of cost and income variables and timing across the remaining portfolio of contracts, it is impracticable to provide a quantitative analysis of the aggregated judgements that are applied at a portfolio level and therefore management have not given a range of expected outcomes. Due to the nature of the provisions, the timing of any potential future outflows is uncertain, however they are expected to be utilised within the Group’s normal operating cycle, and accordingly are classified as current liabilities. Of the total provisions, £18.8m (2021: £17.8m) is likely to be utilised in 1-3 years with the remainder utilised within 12 months. The Company does not hold any provisions.

21 Contract balances

Contract assets and liabilities are included within “trade and other receivables” and “trade and other payables” respectively on the face of the balance sheet. Where there is a corresponding contract asset and liability in relation to the same contract, the balance shown is the net position. The timing of work performed (and thus revenue recognised), billing profiles and cash collection results in trade receivables (amounts billed to date and unpaid), contract assets (unbilled amounts where revenue has been recognised) and customer advances and deposits (contract liabilities), where no corresponding work has yet to be performed, being recognised on the Group’s balance sheet. The reconciliation of the Group opening to closing contract balances is shown below:

	Contract asset £m	Contract liability £m	Contract asset £m	Contract liability £m
	2022	2021 (restated – note 35)	2022	2021 (restated – note 35)
At 30 June 2021	156.0	(92.7)	172.0	(112.3)
Revenue recognised in the year (continuing operations)	1,183.2	54.0	1,073.5	51.3
Net cash received in advance of performance obligations being fully satisfied¹	–	(65.7)	–	(31.7)
Transfers in the year from contract assets to trade receivables²	(1,165.8)	–	(1,089.5)	–
30 June 2022	173.4	(104.4)	156.0	(92.7)

¹ Net cash received in advance of performance obligations being fully satisfied was previously reported as £(38.1)m in the prior period.

² Transfers in the year from contract assets to trade receivables was previously reported as £(1,086.4)m in the prior period.

Revenue allocated to performance obligations that are unsatisfied at 30 June, are expected to be recognised as disclosed in note 3. The Company has no contract balances. The amount of revenue recognised in the year from performance obligations satisfied in previous periods amounts to £3.0m (2021: £7.3m).

22 Deferred income tax

Deferred income tax is calculated in full on temporary differences under the liability method and is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities. The net deferred tax position at 30 June was:

	Group
	2022 £m	2021 £m
Deferred income tax assets – non-current	15.6	15.0
Deferred income tax assets	15.6	15.0
Deferred income tax liabilities – non-current	(1.6)	(0.7)
Deferred income tax liabilities	(1.6)	(0.7)
Net deferred income tax	14.0	14.3

The movement for the year in the net deferred income tax account is as shown below:

	Group
	2022 £m	2021 £m
At 1 July	14.3	4.3
Current year’s deferred income tax	(0.9)	(8.9)
Adjustment in respect of prior years	0.6	(0.3)
Transfer from current tax assets and change in rates of deferred income tax¹	0.3	19.2
Acquisition of subsidiaries	(0.3)	–
At 30 June	14.0	14.3

¹ The Group had previously recorded a deferred tax asset in respect of unutilised tax credits resulting from historic trading contract losses. This asset was initially recorded within current tax assets and was transferred during the previous year. The Group has assessed that an asset equal to the value of unutilised tax credits expected to be utilised over the next three financial years is appropriate, as, based on the already secured work for that timeframe and the approved Group budgets, management have assessed it is probable that the Group will have sufficient taxable profits to enable the deferred tax asset to be recovered. These losses can be carried forward indefinitely and have no expiry date. Any remaining unutilised tax credits have not been recognised and the Group has approximately £53m (2021: £95m) of unrecognised trading losses, although these are subject to agreement with HMRC.

Movements in deferred income tax assets and liabilities during the year are shown below:

The Company has no deferred tax balances.# Deferred income tax (continued)

Deferred tax assets

Group

Accelerated tax depreciation £m	Share-based payments £m	Tax losses £m	Other ¹ £m	Total £m
At 30 June 2020	0.4	–	–	4.9
Expense taken to income statement	(0.4)	–	(9.3)	0.5
Adjustment in respect of prior years ²	–	–	(0.3)	–
Transfer from current tax assets and change in rates of deferred income tax	–	–	19.2	–
At 30 June 2021	–	–	9.6	5.4
(Expense)/credit taken to income statement	(0.4)	0.2	–	(0.4)
Adjustment in respect of prior years ²	(0.2)	–	2.4	(1.6)
Transfer to deferred income tax liabilities	0.6	–	–	–
At 30 June 2022	–	0.2	12.0	3.4

¹ Deferred tax assets included in the ‘Other’ category relate to future income tax deductions available from IFRS transition adjustments in respect of IFRS 15, IFRS 9 and IFRS 16 which will be utilised over the next 3-6 years in line with the requirements of tax legislation.

² The adjustment in respect of prior years of £0.6m (2021: £0.3m) arises predominantly due to the recognition of previously restricted tax interest expense deductions due to the corporate interest restriction provisions. This deferred tax asset will be utilised over the next three financial years in the form of reactivated tax interest expense deductions against tax interest income from Group investment assets. This is offset by other adjustments that reflect changes to the estimates made in the previous years’ Annual Report and Accounts and the finalised tax computations submitted to HMRC.

The Company has no deferred tax balances.

136 Galliford Try Holdings plc

22 Deferred income tax (continued)

Deferred income tax liabilities

Group

Accelerated tax depreciation £m	Retirement benefit obligations £m	Intangible assets acquired £m	Total £m
At 30 June 2020	–	(0.2)	(0.8)
Income taken to income statement	–	0.2	0.1
At 30 June 2021	–	–	(0.7)
Transfer from deferred income tax assets	(0.6)	–	–
Acquisition of subsidiaries	–	–	(0.3)
At 30 June 2022	(0.6)	–	(1.0)

23 Financial instruments

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

Financial assets and liabilities are offset and the net amount reported when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

The Group and Company operate within financial risk policies and procedures approved by the Board. It is, and has been throughout the year, the Group’s policy that no trading in financial instruments shall be undertaken. The Board provides written principles for overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

The Group’s and Company’s financial instruments principally comprise cash and cash equivalents, receivables, payables and PPP and other investments that arise directly from its operations and its acquisitions.

Capital risk management

The Group is funded by ordinary shares, retained profits and its strong net cash position. The Group’s and Company’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. The Group has no borrowing or debt facilities and hence no gearing targets.

Financial risk factors

(a) Market risk

(i) Foreign exchange risk

All material activities of the Group take place within the UK and consequently there is little direct exchange risk, other than payments to overseas suppliers who require settlement in their currency. If there is any material foreign exchange exposure, the Group’s policy is to enter into forward foreign currency contracts. The Group and Company have no material currency exposure at 30 June 2022 (2021: nil).

(ii) Price risk

Other than a residual interest in equity securities, the Group and Company are not exposed to equity or commodity price risk.

(iii) Interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest rate risk arises from movement in cash and cash equivalents given that it is well capitalised with no debt or net overdraft facilities.

(b) Credit risk

Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, deposits and borrowings with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. The Group does not hold any debt facilities. Further details of credit risk relating to trade and other receivables are disclosed in note 17. No credit limits were exceeded during the reporting period, and management does not expect any material losses from non-performance of any counterparties, including in respect of receivables not yet due.

The Group’s maximum exposure to credit risk at the end of the reporting period is the carrying amount (book value) of each class of financial asset set out on the following page.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. The Group finances its operations through its cash reserves and ongoing retained profits. Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flow. This is generally carried out at local level in the operating companies of the Group, in accordance with practices and limits set by the Group. These limits vary by location to take into account the liquidity of the market in which the entity operates.

On a daily basis throughout the year, the bank balances or gross overdrafts in all the Group’s operating companies are aggregated into a total cash figure, in order that the Group can obtain the most advantageous interest rate.

In accordance with IFRS 9 ‘Financial Instruments’, the Group has reviewed all contracts for embedded derivatives that are required to be separately accounted for if they do not meet certain requirements set out in the standard. No such embedded derivatives have been identified.

Notes to the consolidated financial statements continued

137 Annual Report and Financial Statements 2022

Strategic report

Governance

Financial information

23 Financial instruments (continued)

Fair value of other financial assets and financial liabilities

Where market values are not available, fair values of financial assets and financial liabilities have been calculated by discounting expected future cash flows at the prevailing interest rate.

Primary financial instruments held or issued to finance the Group’s operations:

| Financial liabilities: | Notes | 2022 | | 2021 |
| :------------------------------------- | :---- | :---: | :---: | :---: | :---: |
| | | Book value £m | Fair value £m | Book value £m | Fair value £m |
| Current financial liabilities measured at amortised cost | 1 | 336.8 | 336.8 | 330.8 | 330.8 |
| Financial assets: | | | | | |
| PPP and other investments | 16 | 47.5 | 47.5 | 49.1 | 49.1 |
| Current assets measured at amortised cost | 17 | 229.6 | 229.6 | 227.8 | 227.8 |
| Cash and cash equivalents | 18 | 218.9 | 218.9 | 216.2 | 216.2 |

¹ The prior year balance has been restated to reflect a reclassification between accruals and provisions as detailed in note 20 and 35. Prepayments are excluded from the financial assets measured at amortised cost; and statutory liabilities and contract liabilities are excluded from financial liabilities measured at amortised cost.

A maturity analysis of the Group’s non-derivative financial liabilities is given in note 19.

There is no difference between the book value and the fair value of the Company’s financial assets and financial liabilities.

Borrowing facilities

The Group had no committed borrowing facilities available at 30 June 2022 or 2021.

Fair value estimation

Specific valuation techniques used to value financial instruments are defined as:

Level 1 – Quoted market prices or dealer quotes in active markets for similar instruments.
Level 2 – The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows, based on observable yield curves.
Level 3 – Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

The fair value of other investments is set out in note 16.

The following table presents the Group’s assets and liabilities that are measured at fair value at 30 June:

| | 2022 | | 2021 |
| :------------------------------------------------ | :---: | :---: | :---: | :---: |
| | Level 3 £m | Total £m | Level 3 £m | Total £m |
| Assets | | | | |
| Fair value through other comprehensive income | | | | |
| PPP and other investments | 47.5 | 47.5 | 49.1 | 49.1 |
| Total | 47.5 | 47.5 | 49.1 | 49.1 |

There were no transfers between levels during the year.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates.If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Fair value measurements using significant unobservable inputs (Level 3)

	2022 £m	2021 £m
At 1 July	49.1	40.7
Additions	–	1.9
Movement in fair value	(0.9)	7.5
Disposals and subordinated loan repayments	(0.7)	(1.0)
Closing balance	47.5	49.1

The key assumptions used in Level 3 valuations include the expected timing of receipts, credit risk and discount rates. The typical repayment period is 10–15 years and the timing of receipts is based on historical data. The fair value of the portfolio reflects a blended discount rate of 7.0% (2021: 7.0%) and is based on current market conditions. The sensitivity to discount rates is set out in note 16. If receipts were to occur earlier than expected, the fair value would increase.

138 Galliford Try Holdings plc

24 Ordinary shares and share premium

Group

Number of shares	Ordinary shares £m	Share premium £m	Total £m
At 30 June 2020 and 30 June 2021	111,053,489	55.5	–
Allotted under share option schemes	739	–	–
At 30 June 2022	111,054,228	55.5	–

Company

Number of shares	Ordinary shares £m	Share premium £m	Total £m
At 30 June 2020 and 30 June 2021	111,053,489	55.5	–
Allotted under share option schemes	739	–	–
At 30 June 2022	111,054,228	55.5	–

Number of shares refers to 50p ordinary shares, which are authorised, issued and fully paid. There are no shares authorised and issued but not fully paid.

At 30 June 2022, the total number of shares outstanding under the SAYE share option scheme was 2,589,973 (2021: 1,989,993) and under the LTIPs was 6,986,213 (2021: 5,496,703) as detailed in note 25.

25 Share-based payments

The Group operates performance-related share incentive plans for Executives, details of which are set out in the Directors’ Remuneration report. The Group also operates share save schemes.

The total charge for the year relating to employee share-based payment plans was £2.3m (2021: £1.0m), all of which related to equity-settled share-based payment transactions. After deferred tax, the total charge was £2.1m (2021: £1.0m).

Saving related share options

The Company operates an HMRC approved sharesave scheme, under which employees are granted an option to purchase ordinary shares in the Company at up to 20% less than the market price at grant, in three years’ time, dependent on their entering into a contract to make monthly contributions into a savings account over the relevant period. These funds are used to fund the option exercise. This scheme is open to all employees meeting the minimum employment period. No performance criteria are applied to the exercise of sharesave options.

The options were valued using the binomial option-pricing model. The fair value per option granted and the assumptions used in the calculation are as follows:

Grant date	Shares under option	Share price at grant date	Exercise price	Contract date	Expected volatility	Option life (years)	Risk free rate	Dividend yield	Employee turnover before vesting	Fair value per option
07.04.21	1,989,993	130p	112p	01.06.21	60%	3	0.2%	3.1%	10%	50p
13.04.22	999,819	174p	143p	01.06.22	58%	3	1.5%	3.3%	10%	70p

The expected volatility is based on historical volatility in the movement in the share price over the past three years up to the date of grant (or since incorporation of the Company in January 2020). The expected life is the average expected period to exercise. The risk free rate is the yield on zero-coupon UK Government bonds of a term consistent with the assumed option life.

A reconciliation of savings related share awards over the year to 30 June 2022 is shown below:

	2022		2021
	Number	Weighted average exercise price	Number	Weighted average exercise price
Outstanding at 1 July	1,989,993	112p	–	–
Awards	999,819	143p	1,998,476	112p
Forfeited	(120,096)	112p	(5,141)	112p
Cancelled	(79,454)	113p	(3,342)	112p
Expired	(199,550)	113p	–	–
Exercised	(739)	112p	–	–
Outstanding at 30 June	2,589,973	123p	1,989,993	112p
Exercisable at 30 June	–	–	–	–

The weighted average fair value of awards granted during the year was 70p (2021: 50p). There were 739 share options exercised during the year ended 30 June 2022 (2021: nil) and the weighted average share price at the date of exercise was 171 pence (2021: nil).

The weighted average remaining contractual life is 2 years and 3 months (2021: 2 years and 11 months).

Notes to the consolidated financial statements continued

139 Annual Report and Financial Statements 2022 Strategic report Governance Financial information

25 Share-based payments (continued)

Performance-related long-term incentive plans

The Company operates performance-related share incentive plans for Executives, details of which are set out in the Directors’ Remuneration report. The awards that vest are satisfied by the transfer of shares for no consideration.

The outstanding options were valued using a Black-Scholes model. The fair value per option granted and the assumptions used in the calculation are as follows:

Grant date	Shares under option	Share price at grant date	Vesting period/option life (months)	Risk free rate	Dividend yield	Fair value per option
13.03.20	2,248,829	123p	36	0.3%	3.1%	112p
23.09.20	3,247,874	78p	36	(0.1)%	3.1%	71p
23.09.21	1,489,510	177p	36	0.4%	2.5%	164p

The expected volatility is based on historical volatility in the movement in the share price of the Company and its comparator group and the correlations between them over the past three years. The expected life is the average expected period to exercise. The risk free rate is the yield on zero-coupon UK Government bonds of a term consistent with the assumed option life.

A reconciliation of performance-related share awards over the year to 30 June is shown below:

	2022	2021
	Number	Number
Outstanding at 1 July	5,496,703	2,248,829
Exercised	1,489,510	3,247,874
Outstanding at 30 June	6,986,213	5,496,703
Exercisable at 30 June	–	–

The weighted average fair value of awards granted during the year was 164p (2021: 71p). There were nil options exercised during the year ended 30 June 2022 (2021: nil). The weighted average remaining contractual life is nil as the shares are exercised on the day that they vest (2021: nil).

26 Other reserves and retained earnings

Group

	Other reserves £m	Retained earnings £m
At 30 June 2020	85.7	(20.7)
Profit for the year	–	7.7
Dividends paid	9 –	(1.3)
Share-based payments	25 –	1.0
Movement in fair value of PPP and other investments	16 –	7.3
Purchase of own shares	–	(1.1)
Reversal of impairment of investment in Galliford Try Limited and associated recycling of retained earnings to merger reserve	15 32.7	(32.7)
At 30 June 2021	118.4	(39.8)
Profit for the year	–	6.3
Dividends paid	9 –	(6.3)
Share-based payments	25 –	2.3
Movement in fair value of PPP and other investments	16 –	(0.9)
Purchase of own shares	–	(3.4)
Reversal of impairment of investment in Galliford Try Limited and associated recycling of retained earnings to merger reserve	15 13.8	(13.8)
At 30 June 2022	132.2	(55.6)

140 Galliford Try Holdings plc

26 Other reserves and retained earnings (continued)

The Group’s other reserves relates to a merger reserve amounting to £132.2m (2021: £118.4m).

Company

	Other reserves £m	Retained earnings £m
At 30 June 2020	85.7	100.0
Profit for the year	–	34.7
Dividends paid	9 –	(1.3)
Reversal of impairment of investment in Galliford Try Limited and associated recycling of retained earnings to merger reserve	15 32.7	(32.7)
At 30 June 2021	118.4	100.7
Profit for the year	–	28.8
Dividends paid	9 –	(6.3)
Share-based payments	–	0.3
Reversal of impairment of investment in Galliford Try Limited and associated recycling of retained earnings to merger reserve	15 13.8	(13.8)
At 30 June 2022	132.2	109.7

The cumulative amount of goodwill arising on acquisition and written off directly against reserves is £9.5m (2020: £9.5m).

At 30 June 2022, the Galliford Try Employee Share Trust (the Trust) held 3,541,603 (2021: 1,721,603) Galliford Try Holdings plc shares. The nominal value of the shares held is £1.8m (2021: £0.9m). 1,820,000 shares were acquired during the year (2021: 1,500,000) at a net cost of £3.4m (2021: £1.1m) and a further £nil (2021: £nil) was paid in relation to other share related transactions. Nil (2021: nil) shares were transferred during the year. The cost of funding and administering the Trust is charged to the income statement of the Company in the period to which it relates. The market value of the shares at 30 June 2022 was £6.0m (2021: £2.4m).

No shareholders (2021: none) have waived their rights to dividends.

As part of and as a result of the disposal of the housebuilding operations to Vistry Group plc on 3 January 2020 and the associated scheme of arrangement completed under Part 26 of the Companies Act 2006, shares held in Galliford Try Limited (formerly Galliford Try plc) as at 3 January 2020 (221,603) were exchanged for an equivalent number of shares in Galliford Try Holdings plc and 127,189 shares in Vistry Group plc (at a rate of 0.57406 Vistry Group plc shares for each Galliford Try Limited share).## 27 Financial and capital commitments

The Group had no commitments for subordinated debt to joint ventures or other investments at 30 June 2022 (2021: £nil), nor any commitment for other capital expenditure.

28 Guarantees and contingent liabilities

Galliford Try Holdings plc has entered into financial guarantees and counter indemnities in respect of bank and performance bonds issued in the normal course of business on behalf of Group undertakings, amounting to £127.1m (2021: £146.8m).

Disputes arise in the normal course of business, some of which lead to litigation or arbitration procedures. The directors make proper provision in the financial statements when they believe a liability exists. While the outcome of disputes and arbitration is never certain, the directors believe that the resolution of all existing actions will not have a material adverse effect on the Group’s financial position.

29 Related party transactions

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

	2022 £m	2021 £m	2022 £m	2021 £m
Trading transactions
Related parties	97.3	110.5	38.4	42.2
Interest and dividend income from related parties
Non-trading transactions
Related parties	4.6	4.4

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 26 years (2021: 27 years). These receivables are unsecured, with interest rates varying between a range of 9% and 12%. Payables are due within one year (2021: one year) and are interest free.

29 Related party transactions (continued)

Company

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

	2022 £m	2021 £m
Interest and dividend income from related parties
Non-trading transactions
Subsidiary undertakings	15.0	2.0

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

30 Business combinations

On 7 October 2021, the Group acquired the water business of nmcn plc (which had been placed into administration) for £1.0m settled in cash. This expanded the Group’s geographical presence on key frameworks across the UK, and its capabilities in the water sector, in line with the Group’s strategy. The acquisition comprised of significantly all of the water business contracts and orderbook and the entire share capital and control of Lintott Environmental Technologies Limited and its trading subsidiary Lintott Control Systems Limited.

nmcn Water delivers water and wastewater projects for clients across the UK, including design and MEICA capabilities which will further allow growth across our Environment business. The goodwill of £11.0m arising from the acquisition is significantly attributable to the acquired workforce, consisting of 967 employees. None of the goodwill recognised is expected to be deductible for income tax purposes.

The following table summarises the consideration paid and the provisional fair value of the assets acquired and liabilities assumed (which are deemed to represent one cash generating unit).

£m
Recognised amounts of identifiable assets acquired and liabilities assumed
Net cash and cash equivalents
Property plant and equipment
Intangible assets
Right-of-use assets
Trade and other receivables
Trade and other payables
Provisions and other liabilities
Lease liabilities
Net deferred tax liabilities
Total identifiable net liabilities
Goodwill
Total
Consideration
Cash
Total

1 Intangible assets of £5.8m comprise customer relationships and contracts (£5.2m) and technology (£0.6m) that will be amortised over 3-10 years.
2 Trade and other receivables include £4.4m relating to favourable contracts acquired.
3 Trade and other payables include £6.4m relating to unfavourable contracts acquired.
4 Provisions and other liabilities relate to onerous contracts.
5 The favourable and unfavourable contracts have been valued after assessing the margins in the underlying contracts novated.
6 Deferred tax has been recognised where temporary differences arise on the fair value adjustments.

The acquisition contributed £74.1m of revenue and £1.8m of pre-exceptional profit before tax and amortisation (on the acquired intangibles) in the period to 30 June 2022. The performance of the business preceding the acquisition was impacted by nmcn plc entering administration, and accordingly it is impracticable to assess the contribution it would have made to the Group if acquired at the start of reporting period.

Acquisition related costs of £7.7m include legal and professional fees, integration, and staff costs, have been treated as exceptional, being material and non-recurring / irregular items in accordance with our accounting policies and detailed further in note 4.

31 Post balance sheet events

On 8 July, the Group acquired 100% of the share capital of MCS Controls Systems Limited (“MCS”), a leading systems integrator to the industrial and utilities sectors for a consideration of £1 settled in cash. The addition of MCS’s capabilities is complementary to the operations of Galliford Try’s expanding Environment business. In particular, MCS provides additional competencies that complement those acquired in October 2021 with nmcn’s water business and Lintott Control Systems and will accelerate the growth of Galliford Try Environment’s asset optimisation and capital maintenance strategy.

For the year ended 31 December 2020, being the last year for which MCS has published audited results, MCS generated revenue of £10.1 million, incurred a pre-tax loss of £0.5 million and had net assets of £2.0 million.

In addition to the purchase consideration of £1, Galliford Try expects to fund certain contractual liabilities incurred prior to the completion date of the acquisition to strengthen MCS’s balance sheet and provide additional operational stability.

As the acquisition was made after the reporting date, it has made no contribution to Group results for the year ended 30 June 2022.

The provisional Balance Sheet at the date of acquisition is shown below.

£
Property, plant and equipment
Trade and other receivables
Trade and other payables
Borrowings
Deferred tax liabilities
Net liabilities acquired

At the date of this report, it is impracticable to disclose the provisional fair values of the acquired assets, liabilities, contingent liabilities and goodwill, including those expected to be deductible for tax purposes as the initial accounting for the business combination is not complete.

32 Alternative performance measures

Throughout the Annual Report and Accounts, the Group has presented financial performance measures which are used to manage the Group’s performance. These financial performance measures are chosen to provide a balanced view of the Group’s operations and are considered useful to investors as they provide relevant information on the Group’s performance. They are also aligned to measures used internally to assess business performance in the Group’s budgeting process and when determining compensation.

An explanation of the Group’s financial performance measures and appropriate reconciliations to its statutory measures are provided below.

Providing clarity on the Group’s alternative performance measures

The Group has included this note and the enclosed explanations and reconciliations with the aim of providing transparency and clarity on the measures adopted internally to assess performance. The APMs adopted by the Group are also commonly used in the sectors it operates in. The Board believes that disclosing these performance measures enhances investors’ ability to evaluate and assess the underlying financial performance of the Group’s operations and the related key business drivers. These financial performance measures are also aligned to measures used internally to assess business performance in the Group’s budgeting process and when determining compensation.# Meas uring the Group’s performance

The following measures are referred to in this report:

Statutory measures

Statutory measures are derived from the Group’s financial statements, which are prepared in accordance with UK adopted International Accounting Standards and in line with the Group’s accounting policies, that can be found in note 1. The Group’s statutory measures take into account all of the factors, including exceptional items which do not reflect the ongoing underlying performance of the Group.

Alternative Performance Measures

In assessing its performance, the Group has adopted certain non-statutory measures that more appropriately reflect the underlying performance of the Group. These typically cannot be directly extracted from its financial statements but are reconciled to statutory measures below:

a) Pre-exceptional performance

The Group adjusts for certain material one-off (exceptional) items which the Board believes assist in understanding the performance achieved by the Group as this better reflects the underlying and ongoing performance of the business.

b) Operating profit before amortisation

The Group adjusts operating profit to exclude the amortisation of intangible assets as this better reflects the ongoing performance of the business. Operating margin reflects the ratio of operating profit before amortisation of intangible assets and revenue. This differs from the statutory measure of operating profit which includes the amortisation of intangible assets. Divisional operating margin is the combined operating margin of Building and Infrastructure.

Notes to the consolidated financial statements continued
143 Annual Report and Financial Statements 2022
Strategic report
Governance
Financial information
32
Alternative performance measures (continued)

A reconciliation of the statutory measure to the Group’s performance measure is shown below, based on continuing operations:

	Building £m	Infrastructure £m	PPP Investments £m	Central £m	Total £m
Year ended 30 June 2022
Statutory operating profit/(loss)	17.9	2.4	(0.9)	(17.3)	2.1
add: amortisation of intangible assets (note 11)	1.0	0.7	–	1.0	2.7
exclude: exceptional items (note 4)	–	7.7	–	6.0	13.7
Pre-exceptional operating profit before amortisation	18.9	10.8	(0.9)	(10.3)	18.5
Revenue	789.1	441.9	6.2	–	1,237.2
Pre-exceptional operating margin	2.4%	2.4%	n/a	n/a	1.5%
Year ended 30 June 2021
Statutory operating profit/(loss)	14.9	6.0	(1.8)	(11.1)	8.0
add: amortisation of intangible assets (note 11)	1.0	–	–	1.1	2.1
Operating profit before amortisation	15.9	6.0	(1.8)	(10.0)	10.1
Revenue	789.2	329.2	6.4	–	1,124.8
Operating margin	2.0%	1.8%	n/a	n/a	0.9%

c) Pre-exceptional profit before tax

The Group uses a profit before tax measure which excludes exceptional items as noted above. This differs from the statutory measure of profit before income tax, which includes exceptional items.

A reconciliation of the statutory measure to the Group’s performance measure is shown below, based on continuing operations:

	2022 £m	2021 £m
Statutory profit/(loss) before tax	5.4	11.4
add: exceptional items (note 4)	13.7	–
Pre-exceptional profit before tax	19.1	11.4

d) Pre-exceptional earnings per share

In line with the Group’s measurement of pre-exceptional performance, the Group also presents its earnings per share on a pre-exceptional basis for its continuing operations. This differs from the statutory measure of earnings per share, which includes exceptional items.

A reconciliation of the statutory measure to the Group’s performance measure is shown below, based on continuing operations:

	2022	2021
	Earnings £m Ave number of shares EPS pence	Earnings £m Ave number of shares EPS pence
Statutory results	6.3 109,016,667 5.8	10.4 109,976,145 9.5
add: exceptional items (note 4)	11.1 n/a n/a	– n/a n/a
Pre-exceptional earnings per share	17.4 109,016,667 16.0	10.4 109,976,145 9.5

144 Galliford Try Holdings plc
33
Strategic report
Governance
Financial information

Group undertakings

In accordance with section 409 of the Companies Act, the following is a list of all of the Group’s undertakings as at 30 June 2022.

(i) Subsidiary undertakings

Entity name	Registered office or principal place of business	Shareholding (direct or indirect)
Chancery Court Business Centre Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Charles Grip Surfacing Limited	Miller House, Pontefract Road, Normanton, WF6 1RN	100%
Construction Holdco 1 Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Construction Holdco 2 Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Brick Factors Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Asset Intelligence Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Building 2014 Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
Galliford Try Construction Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Construction & Investments Holdings Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Corporate Holdings Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
Galliford Try Employment Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Estates Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Facilities Management Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try HPS Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Infrastructure Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
Galliford Try Investments Consultancy Services Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Investments Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Investments NEPS Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Plant Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Properties Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Qatar Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Secretariat Services Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Services Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try Telecommunications Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Galliford Try (Water) Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT (Buidheann) Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
GT (Leeds) Lift Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT (Leicester) Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT (North Hub) Investments Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
GT (North Tyneside) Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT (Scotland) Construction Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
GT Camberwell (Holdings) Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT Camberwell Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT Car Parks Leicester (Holdings) Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT Car Parks Leicester Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT Guildford Crescent Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
GT Inverness Investments Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
GT Telford (Holdings) Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
GT TMGL Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
GTFM (Cavalry) Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Kingseat Development 1 Limited	Morrison House, Kingseat Business Park, Kingseat, Newmachar, Aberdeenshire, AB21 0AZ	100%
Leicester GT Education Company Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Lintott Control Systems Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Lintott Environmental Technologies Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Morrison Construction Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	100%
Morrison Highway Maintenance Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Oak Dry Lining Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Oak Fire Protection Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%

Notes to the consolidated financial statements continued
145 Annual Report and Financial Statements 2022
Strategic report
Governance
Financial information

Entity name	Registered office or principal place of business	Shareholding (direct or indirect)
Regeneco (Services) Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Regeneco Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Rock & Alluvium Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Try Accord Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%
Try Construction Limited	3 Frayswater Place, Uxbridge, UB8 2AD	100%

All subsidiary undertakings are incorporated in the UK unless otherwise specified and are included in the consolidated financial statements of the Group, as a majority of voting rights are held in each case.## 33 Group undertakings (continued)

(ii) Joint venture undertakings

Entity name	Registered office or principal place of business	Proportion of capital held	Financial year-end
Aberdeen Roads (Finance) PLC	Maxim 7, Maxim Office Park, Parklands Avenue, Eurocentral, Holytown, Scotland, ML1 4WQ	33%	31-Dec
Aberdeen Roads Holdings Limited	Maxim 7, Maxim Office Park, Parklands Avenue, Eurocentral, Holytown, Scotland, ML1 4WQ	33%	31-Dec
Aberdeen Roads Limited	Maxim 7, Maxim Office Park, Parklands Avenue, Eurocentral, Holytown, Scotland, ML1 4WQ	33%	31-Dec
ACP: North Hub Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%	31-Dec
Community Ventures (Management) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	60%	30-Sep
Community Ventures Investments Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	60%	30-Sep
Community Ventures Partnerships Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	60%	30-Sep
Community Ventures Primary Care Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	60%	30-Sep
GBV JV Limited	3 Frayswater Place, Uxbridge, UB8 2AD	50%	30-Jun
GT Equitix Inverness Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%	31-Mar
GT Equitix Inverness Holdings Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%	31-Mar
Hub South East Scotland Limited	8 Melville Street, Edinburgh, EH3 7NS	50%	31-Mar
Kingseat Development 2 Limited	Morrison House, Kingseat Business Park, Kingseat, Newmachar, Aberdeenshire AB21 0AZ	50%	30-Jun
Space Scotland Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	83%	31-Mar
Urban Vision Partnership Limited	65 Gresham St, London, EC2V 7NQ	30%	31-Dec

The above entities are all incorporated in the UK and considered to be joint ventures, based on the shareholding agreements in place.

(iii) Associated and other significant undertakings

Entity name	Registered office or principal place of business	Proportion of capital held by class
Aberdeen Community Health Care Village Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	30%
Alliance Community Partnership Limited	Avondale House, Suites 1l – 1o Phoenix Crescent Strathclyde Business Park, Bellshill, North Lanarkshire, Scotland, ML4 3NJ	10%
Galliford Try Qatar LLC	PO Box 11726 Doha, State of Qatar (incorporated in Qatar)	49%
Hub North Scotland (Alford) Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	30%
Hub North Scotland (FWT) Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	30%
Hub North Scotland (O&C) Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	30%
Hub North Scotland (O&C) Holdings Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	30%
Hub North Scotland Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	30%
James Gillespie’s Campus Subhub Holdings Limited	8 Melville Street, Edinburgh, EH3 7NS	50%
James Gillespie’s Campus Subhub Limited	8 Melville Street, Edinburgh, EH3 7NS	50%
LBP DBFM Holdco Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
LBP DBFMco Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
ELCH DBFMCo Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
ELCH DBFM Holdco Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
WCHS DBFMCo Ltd	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
WCHS DBFM Holdco Ltd	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
JICC DBFMCo Ltd	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
JICC DBFM Holdco Ltd	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
QHS DBFMCo Ltd	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
QHS DBFM Holdco Ltd	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
REH Phase 1 Subhub Holdings Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
REH Phase 1 Subhub Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
REH Phase 2 DBFM HoldCo Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
REH Phase 2 DBFMCo Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	50%
Durham & Tees Community Ventures Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures Primary Care Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures HoldCo (No.1) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures FundCo (No.1) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures HoldCo (No.2) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures FundCo (No.2) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures HoldCo (No.3) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures FundCo (No.3) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures HoldCo (No.4) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures FundCo (No.4) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Durham & Tees Community Ventures HoldCo (No.5) Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	18%
Hub North Scotland (I&F) Holdings Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	30%
Tees & Durham (LIFT) Investments Limited	4340 Park Approach, Thorpe Park, Leeds, LS15 8GB	30%
Hub North Scotland (I&F) Limited	PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB	30%
Hub South West Scotland Limited	Avondale House, Suites 1l – 1o Phoenix Crescent Strathclyde Business Park, Bellshill, North Lanarkshire, ML4 3NJ	6%
Hub SW Cumbernauld DBFMCo Limited	Avondale House, Suites 1l – 1o Phoenix Crescent Strathclyde Business Park, Bellshill, North Lanarkshire, ML4 3NJ	6%
Hub SW Cumbernauld Holdco Limited	Avondale House, Suites 1l – 1o Phoenix Crescent Strathclyde Business Park, Bellshill, North Lanarkshire, ML4 3NJ	6%

The above entities are all incorporated in the UK except Galliford Try Qatar LLC, which is incorporated in Qatar. Entities listed above with 50% ownership percentage are treated as associates, as indicated by their ownership agreements.

34 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), following 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.

As a result of this disposal, the Linden Homes and Partnerships & Regeneration segments were classified as discontinued operations. The Group has not recognised any discontinued operations in the current year. The result of these discontinued operations in the previous year were as follows:

	Central £m	Total £m
Revenue	–	–
Operating loss and loss before taxation	(2.7)	(2.7)
Income tax expense	–	–
Loss after tax of discontinued operations	(2.7)	(2.7)

These costs were primarily residual professional fees and other costs relating to the transaction and discontinued operations.

35 Prior year adjustments

The Group has identified the need to make a correction to the 2021 and 2020 balance sheets.

i) The balance sheet at 30 June 2021 has been restated due to the incorrect presentation of trade receivables, contract assets and contract liabilities in relation to one combined contract. At 30 June 2021, no trade receivable should have been recognised as there was not an unconditional right to payment; the amount should have instead been recognised as a contract asset. Additionally, the contract position across different performance obligations within the combined contract should have been presented as one net balance whereas it was previously presented on a gross basis.

ii) The provisions and accruals balance have been restated, reflecting a reclassification between the two line items. Onerous contract and rectification provision were previously reported within accruals but should have been presented as provisions. See note 20 for additional information on provisions.

iii) Other receivables and current income tax assets have been restated reflecting a reclassification of research and development expenditure credits from current income tax assets to other receivables.

To correct the presentation of these balances in the prior year, the Group has restated the balance sheet and associated note disclosures as at 30 June 2021 and statement of cash flows for the year then ended as outlined below. There is no overall effect of the restatements on net assets at 30 June 2021 nor profit for the year then ending.# Balance Sheet

Group 2021

	originally reported £m	Adjustment i)	Adjustment ii)	Adjustment iii)	2021 restated £m
Assets
Non-current assets
Intangible assets	5.7	–	–	–	5.7
Goodwill	77.2	–	–	–	77.2
Property, plant and equipment	4.4	–	–	–	4.4
Right-of-use assets	19.5	–	–	–	19.5
Investments in subsidiaries	–	–	–	–	–
Investments in joint ventures	0.2	–	–	–	0.2
PPP and other investments	49.1	–	–	–	49.1
Deferred income tax assets	14.3	–	–	–	14.3
Total non-current assets	170.4	–	–	–	170.4
Current assets
Trade and other receivables	243.3	(6.4)	–	4.5	241.4
Current income tax assets	8.8	–	–	(4.5)	4.3
Cash and cash equivalents	216.2	–	–	–	216.2
Total current assets	468.3	(6.4)	–	–	461.9
Total assets	638.7	(6.4)	–	–	632.3
Liabilities
Current liabilities
Trade and other payables	(485.4)	6.4	25.0	–	(454.0)
Lease liabilities	(7.3)	–	–	–	(7.3)
Provisions for other liabilities and charges	–	–	(25.0)	–	(25.0)
Total current liabilities	(492.7)	6.4	–	–	(486.3)
Non-current liabilities
Lease liabilities	(11.9)	–	–	–	(11.9)
Total non-current liabilities	(11.9)	–	–	–	(11.9)
Total liabilities	(504.6)	6.4	–	–	(498.2)
Net assets	134.1	–	–	–	134.1
Equity
Ordinary shares	55.5	–	–	–	55.5
Other reserves	118.4	–	–	–	118.4
Retained earnings	(39.8)	–	–	–	(39.8)
Total equity attributable to owners of the Company	134.1	–	–	–	134.1

The only material impact on the 30 June 2020 balance sheet is a reclassification to increase other receivables by £4.5m, reduce current income tax assets by £4.5m, increase provisions for other liabilities and charges by £15.3m and reduce accruals by £15.3m. There is no impact on net assets or reserves.

Notes to the consolidated financial statements continued 149 Annual Report and Financial Statements 2022 Strategic report Governance Financial information

35 Prior year adjustments (continued)

Statements of cash flows

As a result of the restatements to the balance sheet, the following working capital movements have also been restated, with no other impact to the statement of cash flows.

	Group 2021 originally reported £m	Adjustment i)	Adjustment ii)	Adjustment iii)	Impact of 30 June 2020 restatement¹	2021 restated £m
Net cash generated from operations before changes in working capital	22.3	–	–	–	–	22.3
(Increase)/decrease in trade and other receivables	9.4	6.4	–	–	–	15.8
Increase/(decrease) in trade and other payables	27.4	(6.4)	(25.0)	–	15.3	11.3
(Decrease)/increase in provisions	(0.3)	–	25.0	–	(15.3)	9.4
Net cash generated from operations	58.8	–	–	–	–	58.8

¹ Refer to note 20 for the impact on 30 June 2020.

Trade and other receivables

	Group 2021 originally reported £m	Adjustment i)	Adjustment ii)	Adjustment iii)	2021 restated £m
Trade receivables	51.8	(3.3)	–	–	48.5
Less: provision for impairment of receivables	(0.1)	–	–	–	(0.1)
Trade receivables – net	51.7	(3.3)	–	–	48.4
Contract assets	159.1	(3.1)	–	–	156.0
Amounts due from joint ventures	6.1	–	–	–	6.1
Research and development expenditure credits	4.5	–	–	–	4.5
Other receivables	12.8	–	–	–	12.8
Prepayments	13.6	–	–	–	13.6
	243.3	(6.4)	–	4.5	241.4

Trade and other payables

	Group 2021 originally reported £m	Adjustment i)	Adjustment ii)	Adjustment iii)	2021 restated £m
Trade payables	90.9	–	–	–	90.9
Contract liabilities	99.1	(6.4)	–	–	92.7
Other taxation and social security payable	30.5	–	–	–	30.5
Other payables	1.2	–	–	–	1.2
Accruals	263.7	–	(25.0)	–	238.7
	485.4	(6.4)	(25.0)	–	454.0

The impact on provisions for other liabilities and charges is stated in note 20.

150 Galliford Try Holdings plc

Five-year record (unaudited)

	2018 £m	2019 ¹ £m	2020 ¹ £m	2021 ¹ £m	2022 ¹ £m
Revenue	2,931.6	1,400.1	1,121.6	1,124.8	1,237.2
Profit/(loss) before exceptional items	188.7	(17.2)	(59.7)	11.4	19.1
Exceptional items	(45.0)	(47.3)	25.1	–	(13.7)
Profit/(loss) before taxation	143.7	(64.5)	(34.6)	11.4	5.4
Tax	(25.4)	15.0	2.0	(1.0)	0.9
Profit/(loss) after taxation attributable to shareholders	118.3	(49.5)	(32.6)	10.4	6.3
Fixed assets (including IFRS 16 right-of-use assets), investments in joint ventures, PPP and other investments	93.4	124.8	67.5	73.2	79.4
Intangible assets and goodwill	174.9	171.4	85.0	82.9	97.0
Net current assets/(liabilities)	579.8	340.2	(14.4)	(24.4)	(43.4)
Other long term assets	155.9	246.7	5.3	14.3	14.0
Long-term payables and provisions	(321.8)	(203.8)	(22.9)	(11.9)	(14.9)
Net assets	682.2	679.3	120.5	134.1	132.1
Share capital	55.5	55.5	55.5	55.5	55.5
Reserves	626.7	623.8	65.0	78.6	76.6
Shareholders’ funds	682.2	679.3	120.5	134.1	132.1
Dividends per share (pence)	77.0	58.0	–	4.7	8.0
Basic earnings per share (pence)²	121.1	(10.7)	(47.7)	9.5	16.0
Diluted earnings per share (pence)²	120.6	(10.6)	(47.7)	9.1	15.0

¹ 2019, 2020, 2021 and 2022 Income Statement and earnings per share balances reflect continuing operations only, accounted for in accordance with IFRS 5 (2018 reflects the total Group in those years, including housebuilding). The 2018 and 2019 balance sheets reflect the whole Group, including housebuilding, in those years.
² Pre-exceptional.

Notes to the consolidated financial statements continued 151 Annual Report and Financial Statements 2022 Strategic report Governance Financial information

Financial calendar

2022
- Half year results announced 3 March
- Full year results announced 21 September
- Ex dividend date 10 November
- Final dividend record date 11 November
- Annual General Meeting 11 November
- Final dividend payment 9 December

Shareholder enquiries

The Company’s registrars are Equiniti Limited. They will be pleased to deal with any questions regarding your shareholding or dividend payments. Please notify them if you change your address or other personal information. Call the shareholder contact centre on 0371 384 2202. Lines open from 8.30 am to 5.30 pm, Monday to Friday; overseas shareholders should call +44 371 384 2202 or, alternatively, write to them at:

Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA

You can find a number of shareholder services online via their website at www.shareview.co.uk, including the portfolio service which gives you access to more information on your investments such as balance movements, indicative share prices and information on recent dividends. You can also register your email address to receive shareholder information and Annual Report and Accounts electronically.

Share dealing service

A telephone and internet dealing service is available through Equiniti which provides a simple way of buying and selling Galliford Try shares. Commission is currently 1.5% with a minimum charge of £60 for telephone dealing and a minimum charge of £45 for internet dealing. For telephone sales call 0345 603 7037 between 8.00am and 4.30pm, Monday to Friday, and for internet sales log on to www.shareview.co.uk/dealing. You will need your shareholder reference number as shown on your share certificate. Share dealing services are also widely provided by other organisations.

The Company is listed on the London Stock Exchange under the code GFRD and the SEDOL and ISIN references are BKY40Q3 and GB00BKY40Q38.

Group website

You can find out more about the Group on our website www.gallifordtry.co.uk which includes a section specifically prepared for investors. In this section you can check the Company’s share price, find the latest Company news, look at the financial reports and presentations as well as search frequently asked questions and answers on shareholding matters. There is also further advice for shareholders regarding unsolicited boiler room frauds.

Company contact

Contact with existing and prospective shareholders is welcomed by the Company. If you have any questions please contact the General Counsel & Company Secretary, either at the registered office or via email ([email protected]).

Analysis of shareholdings at 30 June 2022

Size of shareholding	% of holders	Number of holders	% of shares	Number of shares
1 – 10,000	92.08%	2,941	2.70%	3,005,929
10,001 – 50,000	4.00%	128	2.64%	2,929,843
50,001 – 500,000	2.82%	90	14.15%	15,710,665
500,001 – highest	1.10%	35	80.15%	89,407,791
Total	100.00%	3,194	100.00%	111,054,228

Registered office

Galliford Try Holdings plc
Blake House
3 Fray's water Place
Cowley
Uxbridge
Middlesex UB8 2AD

Stockbrokers

Peel Hunt LLP
HSBC Bank plc

Bankers

Barclays Bank PLC
HSBC Bank PLC

Registration England and Wales

12216008

Independent auditor

BDO LLP

Shareholder information

152 Galliford Try Holdings plc

Notes

Printed on Galerie Art Satin, an FSC® Mixed Sources paper manufactured using pulp from well managed forests at a mill accredited with EMAS and ISO 14001 environmental standards. Printed by Pureprint Group. Pureprint are ISO 14001 certified, CarbonNeutral® and FSC® chain of custody certified. The inks used are vegetable oil based. Designed and produced by Friend. www.friendstudio.com.

Galliford Try Holdings plc Annual Report and Financial Statements 2022

Galliford Try Holdings plc Blake House 3 Frayswater Place Cowley Uxbridge Middlesex UB8 2AD T: 01895 855 001 W: gallifordtry.co.uk

AI assistant

Galliford Try Holdings PLC — Annual Report 2022

5154_10-k_2022-10-10_b3227c68-83fc-412e-a836-a48d43f530c5.html

Galliford Try Holdings PLC

Strategic Report

Our business model

Chairman’s statement

Chief Executive’s review

Our values

Our vision

Our purpose

Strategic report

Operating sustainably

Health, safety and wellbeing

Our people

Environment and climate change

Communities

Clients

Supply chain

Human rights and modern slavery

Risk management

Task Force on Climate-related Financial Disclosures

Financial review

Operating review

Stakeholder engagement and s172(1) statement

Governance

Chairman's review

Directors and Executive Board

Governance review

Nomination Committee report

Audit Committee report

Remuneration Committee report

Directors’ Remuneration Policy report

Annual report on remuneration

Directors’ report

Statement of directors’ responsibilities

Financial information

Independent auditor's report

Consolidated income statement

Consolidated statement of comprehensive income

Balance sheets

Consolidated and Company statements of changes in equity

Statements of cash ows

Notes to the consolidated nancial statements

Five-year record (unaudited)

Key sections of our report

Who we work with

How we do it

Stages of a typical construction project

Identifying and bidding opportunities

Early engagement

Assembling a team and procuring products and services

Construction

Handover

How we make money

Our investment case

A compelling investment

High-quality revenue

Good capital management

Strong balance sheet

High-quality order book and good visibility of pipeline

Governance

Financial information

Read more p 17 and 43

Enhancing shareholder returns

Chairman’s statement

A strong culture driven by our purpose:

Developing our capabilities in adjacent and complementary markets:

Progress on carbon:

Highlights of the year

Market review

Market opportunity

Investment in the UK’s social and economic infrastructure

A strong culture of discipline and risk awareness

Our response

Our strategy responds to our markets

Market drivers

How our alignment positions us to benefit

THE CONSTRUCTION PLAYBOOK

10 Galliford Try Holdings plc

Galliford Try Holdings PLC Annual Report 2022