![]() # Delivering # Sustainable # Growth #### Galliford Try Holdings plc #### Annual Report and Financial Statements 2022 Galliford Try Holdings plc Annual Report and Financial Statements 2022 ![]() Visit: www.gallifordtry.comfor more information. Contact us We welcome queries from all our stakeholders and would like to hear from you View contacts ! Group websites Morrison Construction " # $% SitemapCookiesPrivacy NoticeAccessibilityModern Slavery Statement© Galliford Try Holdings plc 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 ' AboutWhy usSectorsSustainabilityCareersInvestorsNews Strategic report 2Our business model 6Our investment case 8Chairman’s statement 10Market review 12Our strategy 16Chief Executive’s review 20Operating sustainably 21Health, safety and wellbeing 24Our people 28Environment and climate change 32 Communities 35 Clients 38Supply chain 41Human rights and modern slavery 43Risk management 48Task Force on Climate-related Financial Disclosures 55Financial review 58Operating review 61Stakeholder engagementand s172(1) statement Governance 66Chairman’s review 68Directors and Executive Board 70Governance review 82Nomination Committee report 84Audit Committee report 87Remuneration Committee report 90Directors’ Remuneration Policy report 95Annual report on remuneration 100Directors’ report 103Statement of directors’ responsibilities Financial information 104Independent auditor’s report 110Consolidated income statement 111Consolidated statement of comprehensive income 112Balance sheets 113Consolidated and Company statements of changes in equity 114Statementsofcashows 115Notestotheconsolidatednancialstatements 150Five-year record (unaudited) 151Shareholder information #### Contents Pre-exceptional earnings per share 1 16.0p (2021: 9.5p and 2022 statutory earnings per share 5.8p) Dividend per share 8.0p (2021:4.7p) Average month-end cash £174m (2021: £164m) Order book £3.4bn (2021: £3.3bn) Revenue £1,237.2m (2021: £1,124.8m) Pre-exceptional protbeforetax 1 £19.1m (2021:£11.4mand2022statutoryprot before tax £5.4m) Divisional operating margin 1 2.4% (2021: 2.0%) Pre-exceptional operating protbefore amortisation 1 £18.5m (2021: £10.1m) 1See note 32 for our alternative performance measures. Focused risk management Our establishedapproach torisk 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benet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 efcient,winworkandengagewithour employeesandsupplychain,whilebeneting the community and environment. Read more p20 #### Key sections of our report #### Financial performance ![]() 1 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ## A dening purpose ## leading us forward “We have made an excellent start to our SustainableGrowthStrategy,deliveringrisk 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 potentialof digitalisation to driveefciency, and workinginpartnership with our supply chain to deliver for our clients and communities. “With our passionate teams, strong balance sheet, market-leading sector positions, excellent client andsupplier relationships and high-quality order book, we are excitedabout thefuture andlook forwardwithcondence.” Bill Hocking Chief Executive ChiefExecutive’sreviewp16 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 values #### 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. ![]() 2 GallifordTryHoldingsplc #### 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. Whatwedo We are a major construction group, operating as Galliford Try in England and Wales, and Morrison Construction in Scotland. Our network of regional ofcesisakeyadvantage,offeringclientsthebenet 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 wehave provenexpertise and signicant 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 nance todevise and secure the rightsolution on an individual basis makes us attractive to clients. FacilitiesManagement works with Building, with an emphasis on the education and health sectors. Our capabilities include delivering high-quality,full life-cycle solutions toour clients, including green retrot. Operatingreviewp58 ![]() 3 Annual Report and Financial Statements 2022 Strategic report Governance Financial information Whoweworkwith 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,themarketandriskprole.Wefocus 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. Frameworksare a multi-year procurement vehicle used by public and regulated sector clientswhich providegreater opportunitiesfordeeper,collaborative working and support the achievement of wider strategic and social goals, better understanding between parties, early mitigation of risks andultimatelyrepeat business. 91% ofourorderbookisinthe publicandregulatedsectors. 94% ofourorderbookiswith repeatclients. 90% ofourorderbookis inframeworks. ![]() #### Our business model continued #### How we do it #### Stages of a typical construction project Identifyingand biddingopportunities We seek opportunities within our chosen markets and only pursue those where we have the expertise and resources to successfully complete the work safely, protably and to ahigh 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 ltered 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 specied risk parameters, require Executive Board approval. Risk managementp43 Earlyengagement 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. Assemblingateamand procuringproducts andservices 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, tocarry outspecic 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. Peopleandculturep24 Supplychainmanagementp38 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 tout, 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 inthe nal 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. 4 GallifordTryHoldingsplc ![]() #### High-quality revenue We target lower-risk contracts with clients that typically comprise: Targetcost/cost reimbursable where an overall target contract value is agreed with the client, includingmargin, risk and ination 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 nal priceand programme isnegotiatedon a sole basis following early involvement, resulting in axed-price for a dened scopeat point of nalcontract award. In addition toconstruction projects, weearn revenue and protfrom 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 astrong balance sheet thatbenets from arobust cash position and a PPPasset portfolio, givingclients and our supply chain condence in our ability to partner with them. Our business does not require signicant investment inxed 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 retrot projects. Our capital allocation and dividend policy is set out in the Financial review (page 55). Howwemakemoney We aim to generate a return for shareholdersbyoperatingaprotable andsustainablebusiness.Wemakeaprot by carefully selecting the work we take on and executing it well. Handover Before completion of a project, nal inspections aremade. The project is then approved by the client and anal completion certicateis issued, conrming the project has been handed over in a satisfactory manner. In some instances, we may also take on the maintenance of the asset. 5 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() #### 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 orderbook ## Our people Goodvisibility ofpipeline Strong balancesheet Strongculture ofdiscipline andrisk awareness 6 GallifordTryHoldingsplc ![]() #### 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 itprovides further condence 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 proles. This leads to work we can execute with a high degree of condencein additionto 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. #### Strong culture ofdisciplineand #### 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 managementand 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 arepredicated on prot, cash and Environmental, Social and Governance (ESG) measures. 7 Annual Report and Financial Statements 2022 Strategic report Governance Financial information Read more p17and 43Read more p59 Read more p55 ![]() #### This is my last report to you as ChairmanofGallifordTryand #### I am pleased to be handing over #### to Alison Wood with the Group #### in a strong position. #### During the year, we beneted #### from the successful #### implementation of our SustainableGrowthStrategy, #### achieving further controlled #### growth, and remaining rmly #### on track to meet our nancial #### targets to 2026. Asa result,pre-exceptional prot before tax was up 68% to £19.1m (2021: £11.4m). The Group hasmaintained its nancialstrength, with a net cash balance at the year-end of £219m (30 June 2021: £216m) and an average month-end cash balance during the year of £174m (2021: £164m). In these times, the strength of our balance sheet continues to differentiate us in our markets. Enhancing shareholder returns In my report to you last year, I said that our policy was to target a dividend cover range of 2.0-2.5 times. At the interim results in March 2022, we announced an improved policy, with the aim of annual earnings covering the dividend by 2.0 times. Having paid an interim dividend of 2.2p per share, up 83% on the 1.2p per share paid in the prior year, the Board has proposed anal dividend of5.8p per share (2021: 3.5p per share). The total dividend for the year is therefore 8.0p, up 70% and in line with the 2.0 times cover policy. The enhancement to the dividend policy reects the Board’scondence inthe Group’s performance and outlook, and its strong balance sheet. The Board previously committed to monitor the Group’s cash position, and consider, where appropriate, additional capital returns. On 21 September 2022, we announced an initial share buyback programme to repurchase up to £15m of ordinary shares. #### Chairman’s statement ## Condent in our strategy 8 GallifordTryHoldingsplc ![]() A successful and sustainable strategy The strategy we set out last year is delivering as we expected. In conjunction with management, the Board has reviewed the strategy and our progress against it throughout the year and this has reafrmed ourviewthat the strategy is the right one for Galliford Try. In the rst half ofthe year,we strengthened our Environment business with the acquisition of nmcn water, which has been successfully integrated within our Group. The purchase was in a space where we had been looking to grow and we are now one of the largest players in this sector. On 8 July 2022, we acquired MCS Control Systems, a leading systems integrator to the industrial and utilities sectors, based in Coventry, West Midlands, which again demonstrates the excellent position of the Group and good progress towards our strategic goals. Environment, Social and Governance (ESG) issues are a core part of the Board’s strategic focus, with Board-level working groups as described on page 70. While ESG continues to rise up the agenda for all businesses and their stakeholders, we believe this is an area where Galliford Try has always been strong, such as in our long-standing approach to using environmentally sound processes and materials. We continue to up our game, for example in setting net zero carbon targets for our own operations by 2030 and for all activities by 2045. Decarbonisation is also a growth driver for us, as we look to help clients to meet their own carbon reduction targets. A truly sustainable business needs to work for all its stakeholders and the Board continues to ensure it is well informed on their views. Our Senior Independent Director Terry Miller plays a key role here, as chair of both our Stakeholder Steering Committee and our Employee Forum. Our Finance Director, Andrew Duxbury, chairs our Carbon Reduction and Social Value Forum on a quarterly basis. The Board discusses feedback from these groups. This in turn allows the Group to successfully and sustainably deliverfor all stakeholders. People and culture Maintaining a positive culture is a major focus, and Bill Hocking continues to lead initiatives which have signicantly enhanced our approach, including rstand foremost, an improvement in our Accident Frequency Rate. Our progressive culture has helped to empower our people, givingthem the exibility tomake decisions within a solid framework and with a clear understanding of the Group’s approach to managing risk, which is embedded at every level of the business. There is also a strong emphasison personal development, encouraging our people to learn new skills and put themselves forward for opportunities. On behalf of the Board, I want to thank everyone at Galliford Try for their hard work and dedication, which isreectedin the results we have achieved this year. Management and the Board There were two additions to the Board during the year. Alison Wood joined us as a Non-executive Director on 1 April 2022 and will succeed me as Chair when I step down from the Board on 21 September 2022. We were also pleased to welcome Sally Boyle as a Non-executive Director from 1 May 2022. Both Alison and Sally have further strengthened the Board’s independence and experience and have already made valuable contributions to our work. Looking forward The last few years have been a time of huge change for Galliford Try and, as I prepare to step down as Chairman, I am pleased to be leaving the business in great shape and in very good hands. The Group has a robust order book, is performing strongly and has a clear strategy for further growth. The Board looks forward to the future with condence. Peter Ventress Chairman A strong culture driven by ourpurpose: the results ofour employee survey conrmed we have embedded a strong culture which will fuel our ambitions, ensuring we grow our business the right way. As an example: 99% of people respondedfavourably to the statement that wegive health and safety a high priority. 96% of people respondedfavourably to the statement that our commitment to social responsibility is genuine. 94% of people respondedfavourably to the statement that they aremotivated by our vision. Developingour capabilities inadjacent and complementarymarkets: the acquisitions of nmcn’s water business (including Lintott Control Systems) in October 2021, and MCS in July 2022, have advanced our strategy of growth in existing and adjacent markets by increasing our geographic coverage through established frameworks, complementing our order book, enhancing our capabilities in maintenance, off-site build and asset optimisation, and adding highly sought-after talent to our business. Progress on carbon: during the year we made signicant strides inour carbon journey, maintaining a downward trend in our own emissions and also developing our own capabilities. In the year, we launched our Net Zero Partners initiative to collaborate with our supply chain and help the industry work together to deliver lower carbon projects. We have also been involved in several low and net zero carbon schemes, including pilots for public sector clients such as the Department for Education (pages 30 and 37). #### Highlights of the year 9 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() #### Market review ## Market opportunity Our chosen markets remain favourable. The construction sector is expected to benetfromsustainedinvestmentasameanstodrivetheUK’srecoveryfromthe challenges of the pandemic, and to address global factors and the issue of climate change.Wehaveamajorroletoplayacrosstheseareas,drivingefciencythrough digitalisation and off-site build and delivering wider societal value. While we remain vigilantaboutthemacro-economicbackdropofcostination,resourcescarcity and geopolitical challenges resulting from the war in Ukraine, these challenges are less pronounced across our areas of operation. Marketopportunity #### 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. 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 1 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 ConstructionPlaybook 2 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; standardiseddesigns, components, and interfaces; and innovation and MMC. Ourresponse 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 signicant 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 arewell-placed toretrot 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/966138/Levelling\_Up\_prospectus.pdf 2 https://assets.publishing.service.gov.uk/ government/uploads/system/uploads/attachment\_ data/le/941536/The\_Construction\_Playbook.pdf Ourstrategyrespondstoourmarkets Market drivers How our alignment positions us tobenet 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 crisisNet 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 GallifordTryHoldingsplc ![]() Marketopportunity Drivefor #### decarbonisation #### and action on #### climate change The UK’s Ten Point Plan 3 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 tobuilding retrots. Keyinitiatives 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. Ourresponse 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% 4 of buildings that will exist in 2050 have already been built and many of these will not meet the energyefciency standards ofthe buildings we are designing today. Our capabilities inretrot and asset optimisation enable our clients to reduce carbon emissions and increase the lifespan of their facilities. Overall, our clients’ ambitions to tackledecarbonisation 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 carbonnow. 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 off-site manufacture helps to minimise waste and use materials more efciently. Marketchallenge Managingination, andlabourand #### supply shortages In the last year, we have been operating in an inationary environment, whichis 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. Ourresponse 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 ourAdvantage through Alignment scheme, ourbehaviouralsafety programme, membershipof theSupply Chain Sustainability School and our newly launched Net Zero Partners initiative. This leadsto mutual benetsand 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 isalso 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 ininationand building ina 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 4UK 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 Greenhead 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 proles 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 haverisk proles 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 £1.1bn Divisional operatingmargin 2.0% Adjacent markets Existing markets Revenue £1.6bn Divisionaloperatingmargin 3.0% 12 GallifordTryHoldingsplc ![]() Strategyin action Wecontinueto #### 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 inuence 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 ProCure 23; 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 +. 13 Annual Report and Financial Statements 2022 Strategic report Governance Financial information 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-settinginnovation, environmental stewardship and workforce best practice. WaterIndustry Awards Judges 2022 ![]() #### Our strategy continued Strategyin action Developingcomplementaryand #### adjacent market opportunities Private Rented Sector (PRS) We already build PRS schemes for private sector clients. By co-developing ordeveloping our own schemes, we can benet from development margins as well as construction margins, which will augment the overall prot margin. We haveextensive experience and knowledge of this sector and understand the opportunities and challenges well. Greenretrot 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 efciency standards of the buildings we are designing today. The combined skills of our Facilities Management and construction businesses positions us wellto retrot 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 signicant marketopportunity,again representing higher margin work for our business. Environmentbusiness 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. 10 We deliver design and build work for 10 out of the 11 major water and sewage companies 14 GallifordTryHoldingsplc ![]() #### Delivering sustainable growth A progressive culture Socially responsible delivery Qualityand innovation Strategy Deliver high-quality buildings and infrastructure in asocially responsible wayand provide asustainable return forour shareholders. Sustainable nancial returns Apeople-orientated, progressiveculturedriven byourvalues. Health and safety: prioritising health, safety and wellbeing and ensuring no harm to anyone linked with our operations. p21 Our people: creating an inclusive environmentand progressive culture that enables all individuals to reach their potential. p24 Deliverexcellence forourclients. Clients: delivering 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. p35 Supply chain: aligning our supply chain with our culture and creating collaborative relationships that deliver best practice, innovation and sustainable outcomes for clients, communities and the environment. p38 Protecttheenvironment andcreategreatersocial valueforcommunities. Environmentand climatechange: adopting sustainable resourcing and consumption practices and taking measures to mitigate carbonproduction and climate change to protect our environment and biodiversity. p28 Communities: making a positive impact in communities where we operate by delivering greater social value and improving lives. p32 Earnasustainablereturn onthevaluewedeliver. Taking a disciplined approach to selecting the work we take on and carefully managing risk at every stage of the project. Delivering strong, predictable cash owsand margin improvement. Generating increasing shareholder returns. p55 Objective KPI FY21 FY22 2026 target Sustainablenancialreturns Earning asustainable return on the value wedeliver. Focus on bottom line margin growth Divisional operating margin 2.0% Divisional operating margin 2.4% Divisional operating margin growth to 3.0% Disciplined contract selection and sustainable revenue growth Revenue £1,125m Revenue £1,237m Revenue growth towards £1.6bn Maintain strong balance sheet Average month-end cash £164m Average month-end cash £174m Operating cash generation Sustainable dividends Dividend cover of 2.0x Dividend cover of 2.0x Dividend cover of 2.0x OurnancialKPIsforourstrategyperiodto2026. Thenon-nancialtargetsofourSustainableGrowthStrategyareincludedintheSustainabilitysectionfrompages20to42. 15 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() #### Our full year results #### demonstrate excellent progress #### towards our Sustainable Growth #### Strategy, delivering risk #### managed controlled growth on a #### strong foundation of discipline andriskmanagement.Wehave #### made progress in all our target #### areas and are well-positioned #### to build on that momentum. Performance on track with revenue and margin growth We have made an excellent start to our strategy thanks to our solid foundation of excellent people, a strong balance sheet, market-leading positions in our chosen sectors, collaborative client and supplier relationships and a high-quality order book. We are making progress across our key performance indicators (page 55) and we have momentum in the business which is reectedin our results. Margin progression from 2.0% to 2.4% from the same period last year demonstrates the quality of our order book and our business practices. The increased dividend of 8.0p, up from 4.7p last year, is a clear measure of our improved performance. Our order book of £3.4bn remains selective, focused on our strengths and aligned to our risk appetite (page 44). Itdoes not yet reect the addition of MCS Control Systems, which was acquired in July 2022. #### Chief Executive’s review ## A strong start ## to our strategy 16 Galliford TryHoldings 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 PPPassets,no debt and no dened benet pension fund. The strength of our position gives condenceto our clients,who can be assured of our ability to deliver. It is also important to our suppliers and subcontractors, 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 ination onmaterials 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 uscondenceas we gointo the new nancialyear and I thank allour 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. Financialreviewp55 Operatingreviewp58 Delivering SustainableGrowth In order todeliver sustainable nancialreturns, our strategy focuses on a progressive culture, socially responsible delivery, and quality and innovation todeliver sustainable nancial returns, as detailed on pages 20 to 42: A people-orientated, progressiveculture Health& Safety The health, safety and wellbeing of our staff, subcontractors, 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 itsafely. This was reected inour 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 conrms 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, exible working, an inclusive environment, technology and a comprehensive benets 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 ofthe 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 werealso nalists for ‘Digitalisation Project of the Year’, ‘Partnership of the Year’ and ‘Customer Initiative of the Year’. Leading the industryfor 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 theUKBIMFramework. #### Highlights of the year 17 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() In our rst yearof 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 climatechange 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 bya further 6.3% which reects a number of ongoing initiatives including early connections to mains electricity supply, the transition to mandating electric and hybrid vehicles inour eet, more energy efcient siteofces and welfare,and atransition 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 andinnovation 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 signicant strides inour 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 exchangescheme, COBie. The value we bring isreected inthe 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 SEN School in Queens Park, London fromBuilding Southern Managing Director Gavin Bridge. 18 GallifordTryHoldingsplc ![]() 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 providesselected 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nancialreturns All of the aspects described above make us more efcient, deliver ahigher-quality product and make usmore protable. This enables us to deliver a good return to our shareholders, which we have produced again this year and look forward to building onin the new nancial year. Outlook We are pleased with the progress we have made in the rst year ofour SustainableGrowth 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. Weare condent 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 broughtefciencies through purchasing processes. Collating such meaningful data has enabled more productive planning of work, driving efciencies 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, veriable data has enabled an agile approach to on-site operations to be taken, reduced risk and identied immediateopportunities to lower carbon. Using AI and blockchain to reduce time and cost, and improve carbon tracking Wehave deployed innovativeArticial 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 Beingsustainablehelpsustowinwork,engagesouremployees,benets communitiesandtheenvironment,andmakesusmoreefcient.Thisiswhy our ESG commitments are an integral part of our strategy, residing at the coreofhowwedeliverstakeholdervalue. How our sustainability pillars align to the UN Sustainable Development Goals #### Ourpillars 3 6 13 5 8 10 12 4 7 9 11 C o m m u n i t i e s H e a l t h & s a f e t y c l i m a t e c h a n g e O u r p e o p l e c h a i n S u p p l y E n v i r o n m e n t & #### Our six fundamental pillars #### Mapped to the UN SustainableDevelopment Goals. Clients 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 andensurenoharmtoanyonelinkedwithouroperations. We achieve this through our renowned Challenging Beliefs, AffectingBehaviourandBeWellprogrammes. 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. Leadingfromthe 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 reafrm positivebehaviour. Weincreased 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 nancial wellbeing. Our approach covered online resources, face-to-face briengs, 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 of 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). #### Operating sustainably continued #### People and culture #### Health, safety and wellbeing (continued) Key commitments KPI FY20 FY21 FY22 Ambition Link to UN SDGs Accident Frequency Rate 0.070.08 0.06 No harm Lost Time Incident Rate 0.260.26 0.26 No harm 22 Galliford Try Holdings plc ![]() Looking forward BMS refresh – moving safety ‘to the left’ We have refreshed our Business Management System (BMS), with the primary objective of ensuring that health and safety issues are considered from the very beginning of the project lifecycle. Some of the key changes include consulting with the Health, Safety and Environmental Advisors earlier in the bidding process and updating the safety guidance and expectations we share with the supply chain when we tender subcontract packages. In addition, some of the key areas of focus over the next year include: Reviewing our induction process to make it more impactful. Reviewing our plant minimum standards to enhance in-built safety features and ensure equipment supports our carbon targets. Education about environmental management to ensure our standards and approach are fully understood and applied. Focusing on proactive occupational health controls over and above PPE. Visible leadership through site safety tours and an open dialogue with our site teams is a powerful way for management to promote and maintain safe behaviours. In August 2021, our Health, Safety and Environment (HS&E) Forum identied the need to continue with a focus on prevention of falling objects.We commissioned alm to use as a ‘Toolbox Talk’ or training session based on recent high potential incidents. An interactive training package was developed to meet the following objectives: Raise awareness of the actions needed for the prevention of falling objects. Include the relevance of behaviours and impact of personal decisions with reference to the Challenging Beliefs, Affecting Behaviours Programme. Provide engaging and interactive media for the HS&E team to deliver. Provide a fresh and innovative approach for delivering critical health and safety messagesacrossprojects. The new training solution ‘Choose the Safe Path’ was introduced to sites in January 2022. These interactive sessions allow the audience to determine the outcome of the lm bydebating and choosing to dothe right thing, thereby preventing an incident. The workshops go on to show the outcome of not choosing the safe path. From January to June 2022, 245 people have been through this training, including both Galliford Try staff and members of our supply chain. The early feedback from the attendees has been very positive. Headline feedback includes: 96% of attendees would recommend the ‘Choose the Safe Path – Prevention of Falling Objects’ session to others. 81% of attendees rated the session as excellent or very good. Strategyin action #### Choose the Safe Path 23 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() ## Our people People and culture Our objective is to create an inclusive environment and progressive culturethatenablesallindividualstoreachtheirpotential. 85% employee advocacyscore #### Operating sustainably continued 24 Galliford Try Holdings plc ![]() Performance in the year Employee advocacy Employee advocacy of our business is a powerful indicator as it measures employee connection and commitment to ourcompany and its culture and goals, with higher scores promoting better performance, innovation, retention and attraction of talent. During the year, we undertook our rst employee engagement survey since Galliford Try became a standalone construction group. We had a response rate of 74%, which provides a representative view from employees, and we achieved an employee advocacy score of 85% compared to a sector average of 80%. This gure represents how likely employees are to recommend us as an employer, which helps us benchmark our progress towards becoming a destination company where people aspire to work. Our overall employee engagement score, which is made up of a number of factors including motivation, commitment to our vision and pride in the company, was also above the sector average at 72%. Early careers as a % of total employees Early careers are the focus of many of our recruitment activities, as they allow us to grow our own talent and additionallygive us inuence over the diversity of our future workforce. Our graduate and apprentice programmes remain popular, with 6.1% of our population in these positions. Our commitment to early careers led to us becoming one of just 58 companies out of a participating 600, representing 1.2 million employees, to be recognised with a Gold Award through The 5% Club’s 2021 Employer Audit Scheme. The audit validates employers’ activities by exploring their plans and commitments to ‘earn and learn’ schemes, the quality of training and developmentschemes and approach to social mobility, diversity and inclusion. We are pleased to have been consistently recognised as a ‘Top Graduate & Apprentice Employer’ by TheJobCrowd, a league table based on feedback from employees, which placed us second in their league table for our sector and 17th best employer for graduates and trainees inthe UK, conrming our position as a destination employer for early careers. Notes: 1Employee advocacy is measured through regular employee surveys. As employee advocacy was previously unmeasured, through our insights, we have updated our target to greater than 80%. 2We have updated our target from a year-on-year increase to more than 8% to give a clearer signal of our ambition. Key commitments KPI FY20 FY21 FY22 Ambition Link to UN SDGs Employee advocacy 1 Not reportedNot reported 85% >80% Early careers as a % of total employees 8.0% 7.2% 6.1% >8% 2 Women as a % of total employees 22% 23.0% 21.2% YoY increase 25 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() This included encouraging our teams to speak up about any potential non-compliance with our policies to line managers, senior management, our HR or Legal teams or through ourindependent, anonymous whistleblowing facility. Skills and development Our business is committed to supporting employees atall levels tofull their potential. All employees are encouraged to participate in our Performance and Development Review process, which takes place once a year, and is supported by ongoing developmentdiscussions and training. Our approach takes the shape of Career Paths, which provide a range of options to support employees to develop the skills they need to build their career with us at their own pace. Career paths are designed to support succession planning and link to our Leadership Frameworkwhich denesthe capabilities and behaviours that are important to us. Complementing this is our GT Academy, an online platform of learning and development tools and resources, and our Lunch & Learns, which are short, impactful webinars open to everyone, covering topics from personal skills development to business-specic subjects all hosted by subject matter experts. Women as a % of total employees Attracting more women into our business is key to accessing the skills we need and promoting a more diverse culture, so for our strategy period, we are targeting year-on- year increase for women as a percentage of total employees. For the reported year, the proportion of females across Galliford Try was 24.3% compared to 23.0% last year excluding nmcn water, and 21.2% including the acquisition of nmcn water. We continued to promote our agile working practices, which remain a cornerstone of our approach, offering exibility tosuit individual needs. It goes beyond remote working and offers our people the ability to take advantage of a blended approach to work, including staggered start and nish times, job shares, compressed hours, sabbaticals and return to work programmes. Underpinning all of these areas, is our Retain and Gain approach which focuses on culture, engagement and learning and development of our people. Our culture The results from the employee engagement survey demonstrated we have the right culture. Our highest scoring area across the survey was health, safety and ethics, where we rated 93% and 99% of people responded favourably to the statement that we give health and safety high priority. The highest scores compared to the industry were our commitment to social responsibility at 96%, having a vision that motivates our people at 94%, and their ability to have a say in matters that involve them at 93%. These highlights mirror the importance we place across these areas. Developing and maintaining the right culture is a fundamental strength of our business and so we continue to place a focus on it, leading from the top. During the year, we restructured our inductions for new starters, so that from the very start of their career with us, they learn what our business represents and what we prioritise. Our inductions are comprehensive and comprise three sessions, the rst of which is led by a member of the Executive Board. They cover our business, culture, health and safety, our business processes, strategy and technical approach. We refreshed our Code of Conduct which sets out what doing the right thing means to us by outlining our strong ethical standards and providing a framework to ensure we behave in away thatreects our purpose, vision and values including our environmental, social and governance responsibilities. #### People and culture #### Our people continued The acquisition of nmcn water brought with it a team of 967 people to our business following a period of instability at their previous employer. Our objective was to quickly and effectively communicate with the incoming employee base to ensure business continuity and improve employee sentiment. Actions we took included: Holding an initial brieng chaired bythe CEOfor all staff within the rst hour of the acquisition being completed, with follow-up calls over the next two days. Paying staff on day two of the acquisition. Setting up a daily integration meeting with members from key disciplines from the joining and existing businesses with the objective of developing and delivering an integration plan. Developinga communications plan designed to introduce employees to our business and communicate with them as processes transitioned to Galliford Try’s. Carrying out comprehensive inductions to our business. Making our Senior Leadership Team available for questions and updates at regular intervals. Creating a designated platform for questions and answers for employees joining the business. The actions demonstrateour approach to inclusion and ensuring individuals are welcomed to our Group from day one. 967 people integrated into our business Strategyin action #### Successfully integrating employees #### from nmcn water #### Operating sustainably continued 26 Galliford Try Holdings plc ![]() We delivered a total of 10,588 training days during the year (2021: 6,353), equivalent to 3.3 days per employee (2021: 2.5). The increase was partly a result of postponed courses due to lockdown and being able to resume delivery of in-person training. New mandatory programmes for commercialand project teams also contributed to the increase. Gender Pay Reporting From April 2018, companies have been required to disclose anumber of specic gender pay and bonus comparisonson an annualbasis. Our last report provided our data as at 5 April 2021, which therefore excludes our acquired companies in the year. For the reported year, the proportion of males and females across Galliford Try remained stable with 23% of our employees being female and 77% being male. Our mean gender pay gap remained stable at 28.8% as did our median gender pay gap at 33.8% (2020: 32.2%). Our mean and median gender pay gaps for our early years population are both negative, standing at -10.8% and -7.8% respectively, which reects the gender split oftalent joining our business at an entry level, with the ambition of developing this talent into senior roles over time. Our mean and median gender bonus gaps both reduced, from 65.5% to 49.1% and 49.9% to 38.2%, respectively. 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. Looking forward We recognise there is a resourcing challenge across the nation and industry and have engaged in various activities to curb the impact of those challenges within our business. Our approach includes asignicant investmentin resourcing activities. As well as hiring a new Head of Resourcing, we have partnered with aspecialist consultant tohelp todene and communicate our value proposition to different employee groups to support our approach to retaining and gaining the talent we need to succeed in our ambitions. This approach segments our audiences and offers greater insight into what key demographics or candidate types are seeking within their employment, what makes them stay with an employer and why they move. It also considers the language we use to be more inclusive, how we present our business to target hires, and where we advertise. For example, we continue to develop how we use social media platforms to promote our business to potential employees across different demographics. Our plans also include adding support to hiring managers in identifying and recruiting talent into the business. In addition, in July 2022, we formed a partnership with Clear Assured, a company which specialises in the provision of inclusive talent management. Working together, we aim to use the Clear Assured framework to identify and remove barriers from recruitment and retention practices which have the potential to exclude under-represented groups including disabled, BAMEand LGBTQ+ candidates across the employee lifecycle. Initially our focus will be on retaining talent, nding talent,assessing talent and reviewing our policies and procedures, but will move to other areas of focus as our journey progresses. We are proud to have been accredited as a Disability Condent Employer for anumber of years, conrming our commitment toremoving barriers to disabled people and those with long-term health conditions in employment. As part of our commitment to promoting inclusion, we started a new series which puts a spotlight on different communities across the UK through blogs and interviews. The series aims to break down barriers by educating people about the experiences of individuals, sharing commonalities and celebrating differences. So far, it has included religious festivals such as Eid, Easter and Vaisakhi, experiences of gay men in the construction industry as well as blogs for women in construction. Our posts were viewed by 71,000+ people 1,800+ people directly engaged with these posts Strategyin action #### Promoting #### inclusion by sharing #### experiences Proportion of males and females across our business at 30 June 2022 Gender 1 Female Male plc Board 44 Senior grades (A-D) 2 56 508 Total company including plc Board 737 2,740 1Genderguresare based on employee numbers atyear-end. 2Senior grades are dened as jobgrades A–D which encompasses senior managers anddirectors, excluding Board directors. 27 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() ## Environment and climate change Socially responsible delivery Our objective is to adopt sustainable resourcing and consumption practices and take measures to mitigate carbon production and climatechangetoprotectourenvironmentandbiodiversity. 96% of our people say our commitment to social responsibility is genuine #### Operating sustainably continued 28 Galliford Try Holdings plc ![]() Performance in the year We saw a further 6.3% reduction in our scope 1 and 2 emissions in 2021 and remain on track to achieve our target of achieving net zero by 2030. The biggest contributor to this fall was our reduction in the amount of diesel used to power plant and equipment on our sites. Our overall performance reects anumber of ongoing initiatives including early connections to mains electricity supply, more energy efcient site ofce and welfare cabins, and a transition to alternative fuels. In September 2021, we committed to providing only electric or plug-in hybrid vehicles in our company car eet. Asat 30 June2022, 51% of the 1,122 vehiclesin our company car eet were electric or plug-in hybrid and the average emissions per vehicle reduced to 60.1g/km (as at 30 June 2021: 77.9g/km). Our waste intensity increased in the year, reectingtheproject mix, witha greater proportion of higher waste intensity projects. However, waste continues to be an area of focus, with increased use of MMC, especially off-site manufacture, reducing the volumes of waste produced. We also manage our waste streams to maximise recycling and minimise waste to landll and haveincreased the proportion ofwaste diverted from landll to 96.3% (2021: 94.5%). Education is a large part of awareness, and during the year, we delivered 251 training days covering environment (2021: 304). Carbon Reduction and Social Value Forum We have established a Carbon Reduction and Social Value Forum, which reports into the Director of Risk and Sustainability and is chaired by our Finance Director on a quarterly basis. Its purpose is to oversee the initiatives being developed and delivered across the different areas of our journey 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 efciencyof the asset in useor reducethe 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. 1Carbon dioxide equivalent emissions are reported by calendar year, therefore the emissions reported for FY22 relate tothe calendar year 2021. Since 2014, our reported emissions havebeen externallyveried to the ISO 14064-3 assurance standard. 2In 2020 and prior years, the emissions associated with business use of company cars where the employee purchased the fuel and was reimbursed through anexpenses 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 (CO 2 e tonnes) 18,732 11,525 10,795 Net zero by 2030 Scope 3 carbon emissions (CO 2 e tonnes) Not reportedNot 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 StreamlinedEnergy & 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 reects the various initiatives we have taken tobecome more energy efcient 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 ispart oftherst 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 energyefcient net zerocarbon in operationaccommodation. Our design for Greenhead College removes the use of fossil fuels and adopts a fabric- rstapproach toimprovingthe 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 74kWh/sqm per year. This has been achieved by reducing the amount of energy consumed in the operation of the building with the aim of ensuring thebuilding ishighlyefcient. 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 adaptions 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 alsomaximised the benets ofthe existing vegetation and microclimate. Maximum energy use ofintensity per year of ### 74kWh/sqm Strategyin action #### Net zero in operation at Greenhead College #### Operating sustainably continued Credit: Ryder 30 Galliford Try Holdings plc ![]() Methodology Carbon dioxide equivalent emissions (tCO 2 e) 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 toexternal verication. Emissions cover allthose arising from oureet, gas and electricity inall ofces and sites and allother 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 energyusereects the inclusion of certain scope 3 emissions 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 reductiontargetsveried by theSBTi (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 CO 2 e 2021 2020 2019 Emissions from combustion of gas tCO 2 e (Scope 1) 383 100 672 Emissions from combustion of fuel for transport purposes (Scope 1) 1 3,482 3,742 6,485 Emissions from fuel oil supplies ie diesel consumed (Scope 1) 4,556 5,683 9,997 Fugitive emissions from ofce facilities ie airconditioning systems (Scope 1) 212 59 Emissions from use of LPG (Scope 1) 0 01 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 reportedNot reported Emissions from business travel (Scope 3) 1 429 141 264 Emissions from employee commuting (Scope 3) 2,874 Not reportedNot reported Galliford Try’s operations are wholly within the UK and as such this is where reported emissions arise. 1In 2020 and 2019, emissions from business travel only included emissions related to the business use of privately owned vehicles. From 2021, business travel also includes emissions related to air travel, rail travel and hotel stays. In June 2021, we committed to achieving averiablescience-based target validated by the Science Based Targets initiative(SBTi)and joined the Business Ambition for1.5°C tolimit globalwarming to 1.5 degrees, and the UN-backedcampaignRace to Zero. 31 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 operatebydeliveringgreatersocialvalueandimprovinglives. #### Operating sustainably continued Credit: 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 helpsorganisations 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 (SLEV) of £306m. Now that we have more data from our use of the SVP, we have a better understanding of the drivers of the SLEV metric. The local economic value element is calculated by applying a multiplier to spend with the local supply chain which varies signicantly depending on location. In a relatively small population of projects, this can have a distorting impact on the average SLEV as a percentage of contract value, making it a volatile and unreliable metric. Therefore,we haveredened our KPI to be the percentage of our completed projects over £5m that achieve greater than 25% SLEV as a percentage of project value. The threshold of 25% has been selected based on the SVPs 2021 Social Value Benchmarking Report. The SVP’s analysis of 1,480 UK construction projects identied thatthe average SLEV as a percentage of project value was 24.67%. During this nancial year, 14 projects (50%) delivered a SLEV 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 KPI FY20 FY21 FY22 Ambition Link to UN SDGs % of completed projects delivering >25% SLEV 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 ave39.0) >38 and above industry average In2022, GallifordTry markedits 15-yearanniversary ofbeing a Considerate Constructors Scheme Partner.Thisisa signicant 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 dene, agree, planand report onthe 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 identies 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. Educationalsupport 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 workingin 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 Qualityandinnovation Our objective is to deliver lower carbon, superior buildings and infrastructure with a better social footprint for clients in our chosen marketsthroughafocusoninnovation,digitalisationandquality. 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 clientsis reected 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. To achieve this we are deploying the latest technology and innovation and debunking many of the myths that exist around reducing carbon emissions. The key tools we use across our business to reduce the carbon footprint of the schemes we deliver for our clients include: Carbon literacy training for the business to ensure we identify and maximise the carbon savings across the entire life cycle of the project. Whole-life carbon tools to assess and measure the carbon performance of components and materials to provide our clients with a clear understanding and informed decisions to maximise the reduction in carbon. Digital technology to assess, capture and record decisions that inform future projects and provide a baseline for comparing the performance of the asset in operation. Leveraging Modern Methods of Construction Long-term relationships with clients allow our teams to provideearly contractor engagement, to de-risk projects and provide innovative methods to reduce carbon, and improve productivity and efciency.The proactive nature of our relationships brings a shared commitment to outcomes, rather than scope, that unlocks innovation. MMC are helping to achieve these outcomes across the company, with examples including: Eastern Command and CustodyUnit – we won a Constructing Excellence Off-site Manufacturing Award by using MMC to reduce the required workforce from 50 to 12 operatives, shortening the programme by 10 weeks and eliminating work at height. We had a zero AFR and zero defects. A52 Meadow Lane Footbridge –as part of the A52 improvement works, we installed an 81m pedestrian bridge. The bridge was manufactured off-site, assembled adjacent to its nallocation and then lifted intoplace in one night. This demonstratedthebenets of component-based standardisation to minimise disruption and guarantee quality. Goddards Green wastewater treatment works– amodularised plant room wasbuilt and tested off-site, facilitating modular construction of the building and plant within two days. Industry leading BIM and information modelling capabilities To support our clients achieve their objectives, we haveinvested signicant resources towards identifying and acquiring innovative technologies to improve our ability in providing our clients exceptional services, products and value. We are leading the industry with our whole team approach to BIM, assimilating it into our business processes, and working towards an entirely digitised approach to project delivery using the latest technologies and industry standards to get there. Our knowledge on the subject is well regarded and has enabled us to author part of ISO 19650 as well as being active contributors to free industry guidance development via the UKBIM Framework. Together with standards such as ISO 16739 and our BIM and technical services policies, these form the foundation of our BIM strategy, which is updated regularly to keep abreast ofadvancements inthe eld. #### Quality and innovation #### Clients continued Key commitments KPI FY20 FY21 FY22 Ambition Link to UN SDGs % of repeat business in our order book 91% 92% 94% >80% % of full year planned revenue secured at the start of the nancial year 90%90% 90% >85% #### Operating sustainably continued 36 Galliford Try Holdings plc ![]() Looking forward Some of the key areas of focus over the next year include: Continuing the external assessment of the maturity of our relationships building on the collaborative successes across the business. Further embedding carbon assessments through our pre-construction processes to provide clients with data to make informed decisions. Contributing to the adoption of the Construction Playbook to drive forward collaborative procurement models to improve efciency andproductivity. Marjorie McClure School is a new build Special Educational Needs and Disabilities school in the London Borough of Bromley for students with a range of different complex needs which include physical, medical and/or learning difculties and disabilities. The project to re-build the school was awarded to Galliford Try as part of a Sustainability Pilot by the Department for Education in response to the UK Government target to achieve net-zero ‘greenhouse gas’ emissions by 2050. Reducing energy demand Marjorie McClure School is designed to reduce the need for energy use. Our daylighting strategy includes a window design which balances daylight and overheating by the use of external shading but also a careful consideration of natural light and ventilation to reduce energy use. Heating and hot water generation is fossil fuel free by means of an air source heat pump and photovoltaics on the roof generate energy to be offset against the overall usage. The building is constructed from timber Structural Insulated Panels (SIPs) which have the benets ofenhancedfabric performance. The SIPs system allows the building to be manufactured offsite which benets the programme, quality and the overall sustainability performance of the project by reducing embodied carbon. Enhancing biodiversity The scheme enhances the external environment and increases biodiversity. The plan is punctuated by two courtyards, which allow daylight and air to penetrate the circulation spaces. The courtyards have been carefully detailed to include sensory gardens, an animal care area, storytelling and performance spaces, outdoor dining, fruit trees and growing areas. The scheme provides anaccessibleoutdoor classroom using the existing mature oak tree as a centrepiece and also includes growing areas which are accessible and will enhance the curriculum by including planting to complement subject areas such as food technology, history, science and English. Strategyin action A sustainability pilot for the #### Department of Education 37 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() ## Supply chain Qualityandinnovation Our objective is to align our supply chain with our culture and create collaborativerelationshipsthatdeliverbestpractice,innovationand sustainableoutcomesforclients,communitiesandtheenvironment. #### Operating sustainably continued 38 Galliford Try Holdings plc ![]() Performance in the year We continue to focus on developing collaborative, long-term relationships with our supply chain partners through our Advantage through Alignment (AtA) programme, with 60% of our core Aligned trades spend now with Aligned subcontractors. AtA is a programme devised by our business which goes beyond pure collaboration with our supply chain, into a much deeper relationship. Aligned subcontractors are appointed a dedicated point of contact within our business for improved communication. Through support, training and education, we align our suppliers and subcontractors with our working practices, our values and our vision. This includes access to our award-winning behavioural safety programme, Challenging Beliefs, Affecting Behaviour; BIM training and access to Continuing Professional Development. This deeper understanding creates an aligned healthand safety approach, greater efciencies and opportunities for innovation, as well as upskilling workforces and allowing the small and medium subcontractors we work with to develop. A healthy cash ow isthe lifeblood ofany business and late payment of invoices can be problematic for suppliers of goods and services. As a signatory of the Prompt Payment Code, we have committed to paying 95% of supply chain invoices within 60 days, and paying 95% of invoices from suppliers with fewer than 50 employees within 30 days. We have made further improvements in how quickly we pay our suppliers, with 98% now paid within 60 days and the average days to pay reduced to 25 days. We continue to retain Gold status from the Supply Chain Sustainability School, an award-winning collaboration designed to upskill its members through free training and resources covering sustainability, off-site manufacturing, BIM, Lean and Management. Performance highlights Subcontractor spend analysisdashboards In order to support our businesses in managing engagement with their supply chain, we have developed and implemented subcontractor dashboards. The dashboards allow our teams to manage subcontractor spend more effectively, for exampleby monitoring the proportion of business we are doing with our Aligned subcontractors and SMEs and making sure that we are not overexposed to any individual subcontractors. We will continue to develop the dashboard by integrating it with other systems to provide information to help us monitor supply chain performance and, where necessary, identify subcontractors who need more support. Key commitments KPI FY20 FY21 FY22 Ambition Link to UN SDGs % 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 ![]() Strategyin 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 rst generational net zerocarbonsupply 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 instruction, 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 ourbusiness with the exibility 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 a non-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. Its 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 aworking ofce, two separate WCs and full welfare facilities including appliances such as kettles and microwaves. Four units deployed over three months generated savings of: c1,220kg in CO 2 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 isno slavery ortrafcking intheir supply chain. Our widely available whistleblowing procedure allows any employee or third party to condentially raise aconcern. 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 identied through our audits. #### Human rights and modern slavery ## Ensuring human rights We are committed to upholding human rights for our people and those whoworkwithus,andwetakestepstopreventslaveryandhumantrafcking fromtakingplaceinourbusinessandsupplychain. We comply with all UK legislation for human rights, recognising modern slaveryandhumantrafckingtobethemostsignicanthumanrightsrisks toUKconstructionbusinesses. 41 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() #### Non-nancial information statement and non-nancial key performance indicators Theinformationrequiredtobeincludedinournon-nancialinformation 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 Pages21–27 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 Pages28–31 Environmental Policy Statement Responsible Sourcing Policy Sustainability Policy Biodiversity Policy Human rights Modern Slavery Statement Page41 Socialmatters Code of Conduct – Doing the Right Thing Page 26 Anti-bribery and corruption Policy and Guidance on the Prevention of Corruption and Fraud Page41 Businessmodel n/a Pages2–3 Principal risks Risk Management Policy Pages44–47 42 GallifordTryHoldingsplc ![]() #### 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 macroeconomic challenges ofthe last nancial year, such asrising ination. Italso 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 uscondence incommercial 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 pages44-47. 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. ExecutiveBoard 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. BusinessunitBoards 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 lifecycle of the project. Review the risk and opportunities at key checkpoints and as part of the monthly contract review meetings. Project teams Facilitates the identication, 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 managementprocesses 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 protabilitytargets. 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 reecting 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 wherewe are condent 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 ofrisk A signicant 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 procurementframeworks. Failure to meet the increasing sustainability expectations of our clients. Poor quality bid submissions. Failure to maintain discipline in project selection. Currentrisk 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-efcient refurbishments and retrots. Ination ismaking 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 ination and are more receptive to amore 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 construction 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 riskprole. We concentrate on sectors where we have core strengths and clients with long-term growth and protability 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 ourtarget markets in a risk-managed way. Keyrisk indicators Percentage of planned revenue secured. Percentage of pipeline in frameworks. Order book by client type. Percentage of repeat business with existing clients. Our principalrisks 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 signicant risksand the actions being taken to manage them. At an individual business unit level, our risk managementprocess 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 thatare specic tothe regions and sectors in which they operate. #### Work-winning #### Risk management continued 44 GallifordTryHoldingsplc ![]() 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 marginsidentied and addressed before they materialise. Potential causes ofrisk Changingregulations. Non-compliance with health andsafety 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, ination estimates, outcomes of disputes and nal value included in project forecasts. Currentrisk environment Our Accident Frequency Rate improved from 0.08 to 0.06 in the year. Covid outbreaks are no longer asignicant 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 modications toworking practices. Continue to drive initiatives to improve quality through training, tools, quality alerts. Emerging risks PI cover for construction contractors and/or insurance cover becomes prohibitively expensive. We fail to adapt our processes to meet the requirements of our clients to have better and more reliable data about the assets we design and build for them. The country fails to learn from Covid-19 and any potential new global pandemic has asignicant/similar impact onthe construction industry that it had with Covid-19. Building designs and construction methodologies fail to adapt to the physical effects of climate change, including more regular and more extreme weather events, leading to reduced productivity, programme delays and cost overruns. Mitigations Continued reinforcement of our behavioural safety programme Challenging Beliefs, Affecting Behaviour, and the introduction of Lead Indicators which target no harm. A values-driven approach to project delivery focusing on close collaboration and client satisfaction to enable achievement of end goals for both parties. Robust review and approval of contractual terms, pre-contract to ensure we do not sign up to contracts with onerous terms. This includes the employment of margin thresholds and escalation to the Board of any contracts that do not meet our criteria. Rigorous quality control in our business management system policies and procedures and digitalisation to improve data,quality and efciency. Due diligence to select competent designers and subcontractors to work with and use specialist consultants at key review stages. Comprehensive commercial training. We have introduced standardised formats (value cost analysis and cost and value reconciliation) for monitoring and reporting project performance and forecasts. Monthly cross-disciplinary contract review meetings on all projects enable a robust assessment of programme status, risks and commercial forecasts and are investing in upgrading our existing ERP systems. A programme of commercial ‘health checks’ to provide an independent assessment of the project team’s reported project performance and forecast outturn. Operational controls including health and safety site risk assessments, which are monitored through a regular audit process. Introduction of Technical and Business Support Forums that drive process improvements across health and safety, digitalisation, carbon reduction, procurement, design management, mechanical and electrical, and commercial activities. Escalation processes to respond promptly and appropriately to incidents. Keyrisk indicators RIDDOR and AFR scores. Forecast project margins. #### Project delivery Link toour strategic priorities Progressive culture Socially responsible delivery Quality and innovation Sustainable nancial returns 45 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() Risk description We fail to secure the right people and other resources necessary to deliver our projects and manage our business. Risk appetite We aim to recruit employees from a diverse talent pool who are aligned to our values and behaviours. Weseek to work with nancially resilient subcontractors, suppliers and joint venture partners who share our values in relation to safety, quality and sustainability. Potential causes We are unable to attract, retain and/or develop the right staff to meet our future needs, we mismatch ourstafng levels to peaks and troughs in activity or lack diversity. Lack of capacity in the supply chain due to high levels of activity in the construction sector. Subcontractor and/or client insolvency. Failure to comply with fair payment practices. Lack of geographical coverage. Currentrisk environment Material cost ination is being driven by short term supply/demand imbalances and high energy prices, exacerbated by the conict inUkraine. However we take measures to manage material cost ination (early procurement, supply chain engagement, risk allowances in tenders etc). Long lead times for bulk items like steel and bricks are now factored into our programmes and procurement planning. However, we are seeing more short-notice delays, cancellations or incomplete deliveries. Subcontractor insolvency is an increasing risk, but we manage by being selective in who we work with, monitoring our exposure and ensuring we pay our suppliers promptly. It remains a competitive market for talent. Large infrastructure schemes and a mismatch between skilled worker supply and demand is driving salaries up and increases the risk of employees leaving for higher reward packages. We are working hard on developing our employee value proposition as part of the broader ‘retain and gain’ people strategy. We continue to develop our own people and provide them with the opportunities for progression. The results of our staff survey indicate that we have high levels of engagement and satisfaction within our staff and we continue to improve the way we promote the business and develop our employee offering. Continued focus on wellbeing. Strong balance sheet and net cash position gives condenceto clients and allows us to continually improve our prompt payment performance. Emerging risks There is a generational shortage of skills as more experienced staff retire and are not replaced insufcient numbers because the construction sector cannot compete with other sectors in attracting talent. Innovations in the use of technology will require us to attract a workforce with a different set of skills. Depletion or increased scarcity of non-renewable materials may lead to greater volatility in prices and more regular disruption to supply. The drive towards net zero construction may lead to an increased risk of defects and quality issues as we start to use new, low carbon materials whose long-term performance is unproven. Mitigations The Group has an established HR strategy based on best practice principles and relevant legislation which, among other things, includes the regular review of remuneration and benets packagesto ensure we remain competitive. Our succession planning and talent management processes enable continuity and identication offutureleaders. We operate graduate and trainee programmes to develop our own pipeline of talent. We develop long-term relationships with key suppliers and subcontractors to ensure that we remain a priority customer when resources and materials are in short supply. Our Advantage through Alignment programme facilitates greater engagement with our key supply chain members and provides them with greater visibility of our pipeline of projects. We are committed to paying 95% of supply chain invoices within 60 days, and achieving the new standards of the Prompt Payment Code. Wemonitor subcontractor nancial strength using a credit tracker on the Dun & Bradstreet portal. Each business unit reviews its cash forecast weekly and monthly, and the Group prepares a detailed daily cash book forecast for the following eight-week period to highlight any risk of intra-month uctuations. These forecasts are reviewed at business unit, division and Group level. Keyrisk indicators Material and trade shortages. Voluntary staff churn rate. Prompt Payment Code performance statistics. Average month-end cash. #### Resources #### Risk management continued 46 GallifordTryHoldingsplc ![]() Risk description We fail to comply with requirements of the various legal and regulatory regimes in which we operate,resulting ina high-prole breach and regulatory censure. Our risk appetite Wehave zero tolerance for non-compliance with regulations. We expect all employees and subcontractors to be aware of all regulations relevant to their role and to comply at all times. We also expect our people to speak up if they observe or suspect non-compliance. Potential causes Failureto update our procedures toreect changes to key legislation and regulations. Failureto provide sufcient and effective training to all staff. Failure to implement effective compliance monitoring processes. Currentrisk environment Building Safety Act – while we welcome the drive for greater quality and consistency, the Act has the potential for signicant consequences inrelation to extended liabilities. Continue to invest in cyber security surveillance tools, recognising the potential risk ofcyber-attackslinked totheconict in Ukraine. Seeking recognition of our information security standards and procedures through ISO 27001 accreditation. The regulatory landscape in relation to ESG reporting is evolving quickly and will require us to monitor and publish more information and comply with new standards (ie ISSB). Emerging risks Greater devolution or even full independence may lead to very different regulatory regimes in Scotland and the rest of the UK. Climate-change/carbon related legislation eg a ban on diesel. Mitigations Galliford Try has comprehensive policies and guidance at every level including our Code of Conduct, mandatory regulatory and cyber security e-learning for all employees, an anonymous and independent whistleblowing helpline, regular legalupdates and briengs, six-monthlycompliancedeclarations, and conict ofinterest 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. Keyrisk indicators Number of external enforcement cases. #### Regulatory compliance Link toour strategic priorities Progressive culture Socially responsible delivery Quality and innovation Sustainable nancial 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 specic 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 developmetrics and targets that are more closely aligned to the climate-related risks and opportunities we haveidentied. 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-relatedrisks 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, ie their useful economic life being curtailed due to the transition to a low carbon economy. The need to decarbonise the built environment providesa 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 GallifordTryHoldingsplc ![]() 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 nancialimpact, the time horizon, likelihood and magnitude of each of the risks and opportunities identied. 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 signicant risksand 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 followingdenitions: Short term (0 –3 years): aligns to our current pipeline of opportunities and projects and reects issues and trends that are already having some impact. Medium term (3 –10years): issues or trends that are already visible, but are not yet having a signicant impact. Longterm(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 Managingclimate-relatedrisks The climate-related risks we face are managed through our existing strategic and operational managementprocesses. 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 extreme 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 1.5ºC 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 identied 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 andrene thisanalysis further, and evaluate the potential implications on our strategy and business model. TCFD Pillar Recommended disclosures How addressed Governance Disclose the organisation’s governancearound 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. During the year, the plc and Executive Boards have reviewed the detailed assessments of climate-related risks and opportunities performed by the Executive Risk Committee. For further information and details as to management’s role to assess as risk, please refer to our Governance framework outlined on page 70. b.Describe management’s role in assessing and managing climate-related risks and opportunities. Strategy Disclose the actual and potentialimpacts of climate-related risks and opportunities onthe organisation’s businesses, strategy,and nancial planning where such information is material. a.Describe the climate-related risks and opportunitiesthe organisationhas identied 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 nancial 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. 49 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 thebusiness 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 retrotting. Planning policies and building regulations may also move towards ensuringthat 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 generatereduced levels ofrevenue and prots. 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 RiskManagement Disclose how the organisation identies, assesses, andmanages climate-related risks. a.Describe the organisation’s processes for identifying and assessing climate-related risks. The identication, assessmentand management ofclimate- related risks and opportunities is embedded within our broader risk management structure and processes. For further information on our risk management process, please refer to the Principal Risks section on page 43. b.Describe the organisation’s processes for managing climate-related risks. See ‘Managing climate-related risks’ on page 49. c.Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall riskmanagement. Climate-related risks are considered as cross-cutting risks that can have an impact on a number of the principal risk themes we monitor at a business unit and Group level, such as work- winning or project delivery. This is the same approach we have taken to other cross-cutting risks including Brexit and Covid. MetricsandTargets Disclose the metrics and targets usedto assess and manage relevant climate-related risks and opportunities where such information is material. a.Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. We have existing metrics and targets in relation to our GHG emissions and these are included in the Environment and Climate Change section on page 28. Over the coming year we will be developing additional metrics and targets that are more closely aligned to the climate-related risks and opportunities we haveidentied. b.Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. In 2021, we achieved a 6.3% reduction in our scope 1 and 2 GHG emissions compared to 2020. We also expanded our scope 3reporting and forthe rst timereported the emissions associated with business travel, employee commuting, and fuel and energy related activities. Our Scope 1, 2 and 3 GHG emissions are reported in our Streamlined Energy and Carbon Reporting (SECR) disclosure on page 31. c.Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. We have existing metrics and targets in relation to our GHG emissions and these are included in the Environment and Climate Change section on page 28. Over the coming year we will be developing additional metrics and targets that are more closely aligned to the climate-related risks and opportunities we haveidentied. Timehorizon Short term Potential impact on nancial performance Decreased revenues due to reduced demand for products and services Link toourprincipalrisks Work-winning Resources 50 GallifordTryHoldingsplc ![]() #### More regular extreme weather events Risk description and potential impact on thebusiness A signicant amount of construction activity happens outside and therefore isexposed to the weather. The latest Met OfceUK Climate Projections (UKCP July 2021) predict warmer, wetter winters and hotter, drier summers, along with an increase in the frequency and intensity of extremes weather events including heatwaves, intense rainfall and ooding.Such events could lead to disruption toour construction activities in a number of ways: Prolonged, extreme temperatures, such as in heatwave conditions, may require modications to working practices to maintainworker welfare which may increase costs and reduce productivity. Intense storm events, including intense rainfall and high winds may cause damage to works under construction and curtail certain activities, such as crane lifts or earthworks, which could result in project delays and additional costs. Damage to transport and utilities infrastructure caused by severe weather maymake itmore difcult for staff and deliveries to get to sites. Extreme drought conditions could result in restrictions on water usage which may make it impossible to maintain site welfare or restrict certain activities, eg concrete pouring and dust suppression. Extreme weather events in other parts of the world could lead to supply chain disruption (unavailability, longer lead times and increased costs). Changes in temperature extremes can also have an impact on the resilience of building materials and therefore determine the materials we are able to specify and use. Similarly, changes in climate may inuence the heating and cooling systems that wespecify which may increase the costs of the buildings and infrastructure we build. Risk mitigation As was demonstrated during the pandemic, we are experienced in developing and amending site operating procedures in response to specic health and safety risks. Examples ofadaptations we could make include: Increased provision of welfare facilities, including access to shade, water and sun cream. Flexible working patterns to limit work in the hottest part of theday. Increased use of off-site and other MMC to shorten programmes and reduce the number of people on site. Similarly, we are experienced in managing the impact of unexpected events on construction programmes and have a number of operational and contractual mechanisms to mitigate the risks, including: Resequencing of activities. Staggering of shifts to extend the working day. Securing extensions of time. Insurance cover for damage to property. Timehorizon Short term Potential impact on nancial performance Increased direct costs Link toourprincipalrisks Work-winning Resources 51 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() #### Task Force on Climate-related Financial Disclosures (TCFD) continued #### Failure to manage the adoption of new technology Risk description and potential impact on thebusiness As the focus on embedded carbon increases, we expect to increasingly be required to use lower carbon alternatives for construction materials, especially carbon-intensive materials such as steel, concrete and glass. There is a risk associated with the adoption of new materials and using manufacturers and suppliers we have no experience of working with previously. Without effective product and design evaluation and robust quality assurance procedures, there is a risk of increased defects, which in turn could result in the professional indemnity insurance market responding through further increases in premiums or restrictions/limitations in cover. Similarly, to achieve our scope 1 and 2 net zero by 2030 target, we willhave tosignicantly reduce (ifnot eliminate)our use of diesel-powered plant and equipment. The non-diesel alternatives, such as HVO, electric and hydrogen, may not be available in the volumes werequire, atan equivalent cost, or deliver sufcient safety and/or operationalperformance. Risk mitigation Response includes: Development and implementation of digital tools to drive quality such as Fieldview, BIM and Dalux. Investment in employee training including enhanced PMDF modules. Using our Technical and Quality, Research and Development and Supply Chain teams to evaluate new materials, plant and equipment and other new technology and support their adoption across the business. Quality alerts to share learning and information where potential issues withparticularproducts havebeen identied. Risk description and potential impact on thebusiness There are a number of climate-related drivers that may result in sustained increases in materials costs in the construction sector. This is driven through a combination of the market dynamics of supply and demand imbalances, as well as Government policy to incentivise carbon reduction. Our bidding disciplines and contractual protections largely insulate us from the direct impact of cost increases. However, the indirect consequence of rising construction costs could be potential projects becoming unaffordable for our clients, leading to a reduction in opportunities and revenue. Manufacturers are developing innovative, lower-carbon materials all the time and this is vital if we are to reduce the embodied carbon of the buildings and infrastructure we construct. However, as new products come on to the market and establish credibility, demand for these materials could grow more quickly than the production capacity, resulting in higher material costs. In the short to medium term, the supply and demand imbalances in global energy markets are likely to be sustained as countries manage the twin challenge of decarbonising electricity generation and increasing security of supply. High energy prices will continue to increase the cost of materials that have energy intensive manufacturing processes, such as steel, concrete, and glass. In addition to the market imbalances, regulatory moves to use carbon pricing to incentivise carbon reduction may add further upwards pressure on the price of carbon-intensive materials. It is also possible that the UK-Energy Trading Scheme is extended to other sectors considered to be carbon intensive, including construction. Risk mitigation Maintain bidding and contracting discipline to protect ourselves from short-term cost ination and maximise cost recovery. Use of BIM and carbon calculators to optimise designs and reduce the amount of carbon-intensive materials. Increase the adoption of off-site manufacture and other MMC to reduce costs through minimising waste and shortening construction programmes. Work with clients to support design solutions that minimise the material requirements eg. transitioning from new build to retro-tting and refurbishment. #### Increased material costs make projects unaffordable Timehorizon Short term Potential impact on nancial performance Decreased revenues due to reduced demand for products and services Link toourprincipalrisks Work-winning Resources Timehorizon Medium term Potential impact on nancial performance Increased direct costs Link toourprincipalrisks Work-winning Resources 52 GallifordTryHoldingsplc ![]() Opportunity #### Development and/or expansion of low carbon construction Opportunity description and potential impact onthe business In order to decarbonise the built environment in the UK, there is a need for our clients to ensure that existing assets are either replaced with new,more energy-efcient assets, or increasingly, ensure that they are modied toextend their life and improvetheir energy efciency. Demand forboth newbuild and retrot ofexisting assets with low embodied and operational carbon performance is likely to create a pipeline of opportunities within our target markets. Opportunity realisation The actions we are taking to realise the opportunities are the same as the actions we are taking to mitigate the risk of failing to develop our low carbon construction capability, ie: 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. Timehorizon Short term Potential impact on nancial performance Increased revenues resulting from increased demand for products and services Link toourprincipalrisks Work-winning Resources 53 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() As required by provision 31 of the UK Corporate Governance Code, the Board has assessed the prospects and nancial viability of the Group, taking account of the Group’s current position and the potential impact of the principal risks to the Group’s ability to deliver its business plan. The assessment of prospects has been madeusing a period of veyears, which is just beyond our strategic plan period. The assessment of viability has been made using a period of three years, which aligns with our budget period and provides reasonable visibility of future revenue from the existing order book. Since the sale of the housebuilding businesses and the recapitalisation of the business in January 2020, the Group no longer has any debt facilities and associated covenants, therefore viability has been assessed in terms of the headroom against available cash reserves. Assessment of prospects As outlined in our Strategic report, the long-term prospects of the business are supported by a strategy which builds on our existing strengths and the growth opportunities in our target markets. Our alignment to the UK’s continued investment in social and economic infrastructure is a fundamental driver of demand for our services and plays to our strengths in the health, education, defence, highways and environment markets. Our ability to achieve sustainable growth within these markets is underpinned by our position on the most signicant procurement frameworks, our commitmentto supporting the decarbonisation of the built environment and our investment in digital technologies to drive continuous improvement in quality and productivity. Our people remain the key to our success and our focus on attracting and retaining a more diverse workforce as well as increasing the proportion of apprentices and graduates help us access the skills and expertise required to deliver on our sustainable growth strategy. Assessment of viability The base case forthe cash owprojections modelled inourassessment ofviability isthe budget for the three years from 1 July 2022 which incorporates appropriate contingencies against plausible day-to-day downside risks, primarily the Group’s principal risks as disclosed previously. The base case shows strong levels of average month-end net cash and assumes that the Group continues to operate without debt facilities. Against thisbase case, wehave stress-tested the forecasts and modelled theimpact oncashow and liquidity of a number of downside scenarios related to our principal risks, including a combined downside scenario that includes a number of these sensitivities occurring together. The scenarios modelled, and their link to the underlying principal risks, are described in the table below. Although we have not included a further national lockdown scenario in our stress testing, the business and our cash performance has shown a high degree of resilience throughout the Covid-19 pandemic. Our sites largely remained open and the adherence to stringent risk mitigation measures in our sites and ofces, together with good engagementwithourclients and supplychain, minimised the disruption to project delivery. Scenario modelled Link to principal risks Scenario 1 Reductionin construction volumes Our cash performance is correlated with earnings growth and therefore reliant on construction activity being in line with our assumptions. We have modelled a reduction in construction volumes that would equate to a 10% reduction in monthly cash receipts offset by a proportionate reduction in payments, relative to our base case forecast. Work-winning Scenario 2 Deterioration in working capital We have modelled the impact of a deterioration in our working capital, which could be caused by delays in receiving payments from clients and/or earlier payments to our supply chain. Resources Scenario 3 Irrecoverable cost increases There isa riskof aprolonged period ofmaterials cost ination and therefore we have modelled the impact of failing to fully mitigate these cost increases on our projects. Resources Project delivery Scenario 4 ‘Perfect storm’ We also tested the unlikely but plausible scenario where all of scenarios 1–3 combine at the same time. Work-winning Resources Project delivery As part of the viability assessment, the Board also considered the mitigations and interventions available to manage the impact of one or more of the downside scenarios occurring. The base case already includessignicantcash contingencies and the Board has consideredfurther mitigating actions that are available to it. Based on the results of this analysis, the Board has concluded that it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period of its assessment. #### Viability Statement 54 Galliford TryHoldings plc ![]() #### Financial review ## Delivering sustainable growth Performance 1,2 Wehave delivered an increase in prot and dividends.Our prot margin has increased, showing excellent progress against our margin improvement targets. Revenue Our revenue for the year was up 10% at £1,237.2m (2021:£1,124.8m),reecting disciplined growth in Infrastructure. As expected, Infrastructure’s revenue increased as the AMP7 programme in the water sector gathered momentum, and this was supplemented by our acquisition of the water business of nmcn plc (in administration). Of the total, Building contributed revenue of £789.1m (2021: £789.2m), broadly in line with 2021 as a result of some delays to new contract starts towards the end ofthe nancial year as expected given the increased length of client procurement inresponse torising ination. Infrastructure recorded revenue of £441.9m (2021: £329.2m), including £74.1m from the nmcn acquisition. PPP Investments’ revenue was £6.2m (2021: £6.4m). Our resultsreectthe strong foundationsof the business and excellent performance of our people. Andrew Duxbury Finance Director We have delivered growth in line with our strategy and expectations, resulting in increased shareholder returns. The continued improvement in our operating performance,alongsideourstrongnancialpositionandhigh-qualityorderbook, providecondenceinourabilitytomeetoursustainablegrowthtargets. 1See note 32 for a reconciliation of statutory numbers to Alternative Performance Measures. 2Pre-exceptional items from continuing operations, unless otherwise stated. 55 Annual Report and Financial Statements 2022 Strategic report Governance Financial information Financial performance 1 Revenue £1,237.2m (2021: £1,124.8m) Divisional operatingmargin 2 2.4% (2021: 2.0%) Operatingprot beforeamortisation 2 £18.5m (2021: £10.1m) Protbeforetax 2 £19.1m (2021: £11.4m) Dividend pershare 8.0p (2021:4.7p) Averagemonth-end cash £174m (2021: £164m) PPP portfolio £47.5m (2021:£49.1m) ![]() Operating prot beforeamortisation Our pre-exceptional operatingprot before amortisation was £18.5m (2021: £10.1m). Of this, Buildinggenerated prot of £18.9m (2021: £15.9m), representing a margin of 2.4% (2021: 2.0%), and Infrastructure generated prot of £10.8m (2021: £6.0m), representing a margin of 2.4% (2021: 1.8%). The combined divisional operating margin of 2.4% (2021: 2.0%) has been achieved in line with our margin improvement targets, with further details of divisional performance set out on pages 58 to 60. There was an £11.2m net loss in PPP Investments and Central Costs (2021: £(11.8)m), with Central Costs being in line with their 2021 level. Exceptional items Exceptional items of £13.7m were incurred in the period, as set outin note 4to thenancial statements. £7.7m related to the acquisition and integration of the nmcn water businesses, acquired in October 2021. The remaining £6.0m relates to our investment in cloud-based EnterpriseResource Planning (ERP)nance and commercial systems scheduled to continue into Spring 2023, part of our investment in our digital and data capabilities, which under updated accounting guidance, is not allowed to be capitalised. There were no exceptional items in 2021. Net interestincome Net interest income of £2.9m is in line with 2021, reectingthe stable portfolio ofPPP sub-debt investments. Prot before tax Pre-exceptional prot before tax for the year was £19.1m (2021: £11.4m). Pre-exceptional prot before income tax is analternative performance measure and a key metric we use to monitor our performance in years with exceptional items, such as 2022. Post-exceptional prot before tax was £5.4m (2021: £11.4m). Taxation The pre-exceptional tax charge for the year is £1.7m (2021: £1.0m), which equates to an effective tax rate of 8.9% (2021: 8.8%), lower than the standard UK rate of corporation tax due to the recognition of previously unrecognised brought forward tax losses and corporate interest restrictions. The post-exceptional tax credit is £0.9m (2021: charge of £1.0m). We have a constructive and open relationship with HMRC, and look to comply with both the letter and spirit of relevant regulations and to pay our fair share of tax. Our tax strategy is available from our website at www.gallifordtry.co.uk. Earnings and dividends per share We recorded pre-exceptional earnings per share for the year of 16.0p (2021: 9.5p). The post-exceptional earnings per share in 2022 was 5.8p. The Board declared an interim dividend of 2.2p per share (2021: 1.2p), which was paid to shareholders on 8 April 2022, and has declared anal dividend of5.8p per share (2021: 3.5p), bringing the total dividend for the nancial year to8.0p per share (2021: 4.7p). The full year dividend in 2022 is covered 2.0 times (2021: 2.0 times) by pre-exceptional earnings, in line with the Board’s stated policy. At 30 June 2022, the Company had distributable reserves of £109.7m (2021: £100.7m). Criticalaccountingpolicies and assumptions Our principal accounting policies are set out in note1 tothe nancialstatements, together with a description of the key estimates and judgments affecting the application of those policies and amounts reported in the nancialstatements. Weuse alternative nancialperformance indicators to monitor our performance, alongside standard measures, which are designed to be useful to investors by providing a balanced view of our operations. An explanation of these measures and reconciliations to the corresponding statutory measures are included in note 32. Financial position Our strong balance sheet, supported by a robust cash performance and valuable PPP assets, is important for our clients; provides condenceto our supply chain; and continues to provide a strong underpin for our future plans. Cashand investments Wehave no debt ordened benet pension obligations, and at 30 June 2022 had a cash balance of £218.9m (2021: £216.2m). The average month-end cash balance in the year was £174m (2021: £164m) and our daily minimum cash balance was above £100m, which shows continued strong cash performance throughout the year. Our operating cash generation in the year, reects very strong cash performance across the business. We are committed to pursuing a collaborative and open approach with all our supply chain and our performance under the Prompt Payment Code improved again, with 98% of invoices paid within 60 days (2021: 93%) and average days to pay invoices reduced to 25 days (2021: 36 days). At 30 June 2022, we had a PPP portfolio of £47.5m (2021: £49.1m), reecting ablended 7% discount rate (2021: 7%). This portfolio contributes to our balance sheet strength and generated interest income of £3.9m (2021: £3.9m) in the year. 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 reecting the net contract liabilities acquired with nmcn. The Group has restated the balance sheet classication 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.Costswere signicantly 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 toresultin asignicant reversal inthe 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 provision 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: Supportingoperationalrequirementsand strategicopportunities 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 providescondence toour 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. #### Financial review continued 56 GallifordTryHoldingsplc ![]() Mitigatingthe effectof futuremarket 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 inationarypressuresclearly demonstrate the value and importance of the Group’s risk managementframework and focus. Payingsustainabledividendstoshareholders The Board understands the importance of dividends to shareholders, and in setting its dividend considers the Group’sprotability, 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 sufcient fundsto 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 nancialtargetsto 2026. For the yearended 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 areappropriately assessed, documentedand 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 on bottom line margin growth. 2026 target Divisional operating margin growth to 3.0%. Divisionaloperatingmargin 1 2.4% Actual 2022 2.0% Actual 2021 Objective Disciplined contract selection and sustainable revenue growth. 2026 target Revenue growth towards £1.6bn. Revenue £1,237.2m Actual 2022 £1,124.8m Actual 2021 Objective Maintain strong balance sheet. 2026 target Operating cash generation. Averagemonth-endcash £174m Actual 2022 £164m Actual 2021 Objective Sustainable dividends. 2026 target Dividend cover 2.0x. Dividendpershare 8.0p Actual 2022 4.7p Actual 2021 1This is dened asthe pre-exceptional operating prot before amortisation as apercentage ofrevenue for the total of the Building and Infrastructure segments (note 2). This measure represents the trading performance of the Group’s primary operations. 2026 target20222021 2.0% 2.4% 3.0% 20222021 4.7p 8.0p 2026 target20222021 £1.1m £1.2m £1.6m 20222021 £164m £174m 57 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() Performance – Building 2022 2021 Revenue (£m) 789.1 789.2 Operating prot (£m) 18.9 15.9 Operating prot 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 anoperating protbefore 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 ofthe nancial year, reecting increased length of client procurement in response to rising ination. The improved prot reects 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 ofthis operation,witha specic focus on decarbonising existing buildings through retrot and other interventions. This ‘green retrot’ capability will growover 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). Signicant appointments and wins for Building included: The new four-year £1.6bn 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 Hudderseld. 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 nancialyear,withimprovedmarginandprotgrowth across our corebusinesses comprising Building, InfrastructureandPPPInvestments. We secured £1.4bn of work, contributing to an overall order book at 30 June 2022 of £3.4bn (2021: £3.3bn). 58 GallifordTryHoldingsplc ![]() #### Building a high-quality order book Our order book underpins our future plans and gives us excellent medium term visibility of pipeline, meaning that no part of the business needs to take on inappropriate levels of risk. Its composition is therefore pivotal, which is why we seek to build a high-quality order book. Our condencein the quality of the order book comes fromkey features of its composition: Our focus on our core sectors increases our understanding of contract risk, our ability to put appropriate mitigations in place, and our ability to successfully deliver quality projects. We actively target and maintain places on public sector frameworks in the UK as they help mitigate risk by enabling us to work within established and well-understood terms and conditions and provide consistent pipelines of work (page 13). At 30 June 2022, 90% of our order book was in frameworks (2021: 87%). Similarly, our focus on the public and regulated sectors helps mitigate risk by working with repeat clients on a relationship basis, and provides a strong pipeline of future opportunities. At 30 June 2022, 91% of our order book was in the public and regulated sectors (2021: 91%), and 9% in the private sector (2021: 9%) with carefully selected blue-chip clients. High visibilityof the following year’s revenue gives us further condence to bid with the appropriate discipline and selectivity. At 30 June 2022, 90% ofplanned revenue for the 2023 nancial year was secured (2021: 90%). Although value of contract is only one factor of risk, it is a useful indication of the size of risk being accepted. At 30 June 2022, the average contract size in Building’s order book is less than £20m. Strong visibility of workloadStrong visibility of workload A B C D E Bu il din g £2.0 bn £m A Education 640 B Defence & custodial476 C Facilities management362 D Health 228 E Commercial & other341 £m A Highways 622 B Environment 774 A B Infrastructure £1.4b n F Y22FY21FY20 £3.2bn£3.3bn Order book by client type 81 %9 1% 9% 19 % £3.4b n 9% 91% Public and re g ulatedPrivate 59 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() Performance – Infrastructure 2022 2021 Revenue (£m) 441.9 329.2 Operating prot/(loss) (£m) 10.8 6.0 Operating prot margin (%) 2.4 1.8 Order book (£m) 1,396 1,348 Infrastructure’s revenue was £441.9m (2021: £329.2m). As expected, revenue increased due to the higher level of activity from the AMP7 programme in the water sector. Additionally, the acquired water operations of nmcn plc (in administration) contributed £74.1m revenue in the year. Infrastructure generated anoperating protbefore amortisation of £10.8m (2021: £6.0m) which represents a margin of 2.4% (2021: 1.8%). The improved prot performance isin line with our expectations, and includes thebenetof new contract frameworks. Following the acquisition of nmcn’s water businesses in October 2021, we have restructured our Environment business to provide enhanced service delivery across UK operations including water, engineering, off-site build and asset optimisation, and asset security. The acquisition has provided the Group with additional geographic scale and increased capabilities in the water sector, further supplemented by the acquisition of MCS Control Systems Limited in July 2021 (note 31). Infrastructure won contracts and positions on frameworks worth £466m (2021: £590m). These included: Appointment to the Procure Partnerships (PP) North West Framework valued at £1.8bn in the North West of England, in conjunction with the Building business. A share of the £3.5bn Scheme Delivery Framework for National Highways. Infrastructure had an order book of £1,396m, compared to £1,348m last year, including £622m in Highways and £774m in Environment. Performance– PPP Investments 2022 2021 Revenue (£m) 6.2 6.4 Operating loss (0.9) (1.8) Net interest income 3.9 3.9 Directors’ valuation (£m) 47.5 49.1 With the reduction in traditional PPP/PFI bidding opportunities, PPP Investments has continued to move its focus towards co-development of Private Rented Sector (PRS) projects. During the year, its rst scheme, in Cardiff, obtained planning consent and the business is working towards reaching nancialclose with anoperator which willallow construction to commence during the next nancialyear.Atthe yearend itwas the preferred bidder on two further PRS schemes with a gross development value of c£200m and anticipates further opportunities in the future. At the year-end, the directors’ valuation of our PPP portfolio was £47.5m (2021: £49.1m), which is the fair value included in the balance sheet reecting ablended discount rateof 7% (2021: 7%). The valuation compared with a value invested of £35.7m (2021: £36.2m). There is an active secondary market for these assets, which generated an annuity interest income of £3.9m (2021: £3.9m) and contributes to our balance sheet strength. #### Operating review continued 60 GallifordTryHoldingsplc ![]() #### Stakeholder engagement Consideration of stakeholders is ingrained in the way we conduct business and our Board remains committed to considering the consequences of our decisions on different stakeholders and acting in a way that promotes the long-term success of the business. How the Board engages with our stakeholders The directors are committed to the long-term success of the Group and play an active role in understanding, considering and addressing stakeholder interests. Engagement takes place both directly and indirectly and is rooted in the principles of our Code of Conduct which is signed by the Board and outlines our duties to our colleagues, clients, suppliers, communities, the environment and governance. Details of how we engaged with key stakeholders and how their interestsinuenced Boarddecisions during the nancial year are set out on the following pages. In 2019, we established a Board-level Committee chaired by Senior Independent Director Terry Miller, to review and oversee the Group’s relationships with key stakeholders. This Stakeholder Steering Committee identies ways to create two-way communication between stakeholders and the Board, and ensures their views are considered in Board discussions and decisions. The Committee met twice during the year, as discussed on page 67. This information complements regular updates to the Board which include key interests of our stakeholders such as Health and Safety, which is the rst agenda item ofevery meeting; people matters; sustainability and changing market dynamics with regard to client and supplier priorities. The Board additionally receive presentations on these matters throughout the year, which provide in-depth updates from each stakeholder group. Directors gain arst-hand insightinto our culture in action through site visits, presentations from our businesses on operational matters and information in monthly Board packs. These enable discussion around managing the interests of our people, clients, suppliers and communities. Direct engagement with investors also takes place through investor presentations and the Annual General Meeting. ## s172(1) statement #### The Board remains committed to carrying out its obligations under #### the Companies Act. 61 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() Who and why Key business and sustainability stakeholder interests identied in our Stakeholder Materiality Matrix How weengage Actions in the year Outcomes #### Our people We are reliant on our people to achieve our purpose Peopleandculture p24 andHealth andsafety p21 Health,safety and wellbeing. Purpose and culture. Inclusion. Investmentin learningand development. Career progression. Rewards and benets. Embedding and reinforcing our culture is a continuous process. We ensure employees understand our culture and purpose from the recruitment stage. On joining, all employees take part in an induction with members of our Executive Board, outlining our purpose, strategy, values and business processes and giving the opportunity to ask their questions. Graduates attend a bespoke welcome event. New starter and refresher training ensure our culture and processes are embedded. Our Employee Engagement Group seeks the views of employees on strategic decisions and provides updates from the business. Engagement also takes the form of a roadshow from our Chief Executive, emails from him to all staff, e-bulletins, an employee magazine, PDRs and toolbox talks. Access to our Employee Assistance Programme offers support to our people while our whistleblowing hotline enables them tocondentially report suspicion of wrongdoing. Boardengagement Chaired by the Senior Independent Director, the Employee Forum meets twice a year to discuss matters important to employees. Added to our behavioural safety programme. Carried out an all staff Employee Engagement Survey to gauge employee sentiment on key areas. Deliveredour second all staff virtual roadshow with national and local information for our staff. Restructuredour induction sessions. Started a series focused on spotlighting different communities to promote inclusion through awareness. Continuedand expanded our Wellbeing Wednesdays programme. Ensured key priorities continue to be addressed by our updated strategy. 0.06AFR. 99% of our people believe we give Health & Safety a high priority. 15.5% churn rate. 85%employee advocacy score. 94% of employees are motivated by our vision. #### Clients Satised clients are essential for a sustainable and protable business Clients p35 Financial stability and ability todeliver. Time,cost and quality. Meeting carbon and sustainability objectives. Creatinggreater social value. 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. On appointment, we carry out a Customer Start Meeting which identies outcomesforthe end of the project discussions and are retained for record purposes. Dedicated quality managers conduct regular audits, complemented by our internal audit department and external audits of our ISO 9001 certiedmanagement system. Frameworks allow us to deepen our relationships with our client and stakeholder groups which leads to greater innovation and better public infrastructure. Engaged insector and client discussions on areas of challenges and opportunity such as service delivery, supply chain disruption from Brexit and learnings from Covid-19, the economic environment and the drive for sustainability. Invested in our low carbon and digital capabilities to help achieve client objectives. Continued to target and win places on frameworks with new and existing clients. 90% of our order book is in frameworks. 94%repeat business. #### Stakeholder engagement continued 62 GallifordTryHoldingsplc ![]() Who and why Key business and sustainability stakeholder interests identied in our Stakeholder Materiality Matrix How weengage Actions in the year Outcomes #### Suppliers The majority of our work is delivered in partnership with our supply chain so they must be alignedto our values and objectives Supplychain p38 Health,safety and wellbeing. Fairtreatment and prompt payment. Pipeline of work. Collaborative relationships. Accessto training, educational resources and learning opportunities. We seek to build long-term relationships with key suppliers and contractors who share our principles. Robust contracts set the terms for both parties in our relationships, and regular meetings, workshops and working groups ensure two-way communication. Through our Advantage throughAlignment programme of support, training and education, we align our suppliers and subcontractors with our working practices, our values and our vision. Continued to support key subcontractors through ourAdvantage through Alignment programme. Launched NetZero Partners Programme to support supply chain with their carbon upskilling. Continued to promote the Supply Chain Sustainability School. Ensured key priorities continue to be addressed by our updated strategy. 60% of business unit core trades spend with Aligned subcontractors. 98% of invoices paid within 60days. Goldmember of Supply Chain Sustainability School. #### Communities We want to be welcomed in the communities we operate in and create greater social value where we operate Communities p32 Health, safety and environment. Highquality buildings and infrastructure. Useof local labour, resources and employment opportunities, educational opportunities and wider investment in their community. We engage with local communities through town halls, newsletters, project websites, social media, press releases and planning meetings. As a dedicated Partner of the Considerate Constructors Scheme, we strive to continuously improve the image of the industry, focusing on the key areas of safety, community, environment, workforce and appearance. Through events such as Build UK’s Open Doors, recruitment fairs, school visits and site tours, we showcase our industry and invite communities to learn more about our industry, business, projects and careers on offer. Continued to add to the social value of our work by supporting local business, providing employment and training, charitable donationsand volunteering for localcauses. Extended the scope of our partnership with the Social Value Portal. Developedour capability to report our Social and Local Economic Value (SLEV). 41.8average CCS score. Reported50% of projects delivering more than 25%of percentage of contract value. £268,000of charitable donations. #### Shareholders We want our shareholders to have condence in the long-term success of our business Asustainable business model and strategy. Financial performance and dividend policy. Corporate governance. Risks to the business. We engage directly with our shareholders through investor roadshows; face-to-face, video or telephone communications; Capital Markets Days, results presentations and webcasts;analyst briengs; AGMs; our Annual Report; consultations; and Regulatory News Service announcements. Indirect engagement includes an up-to-date website, press coverage, engaging in social media, trading updates; corporate and nancialvideos; and contributions to investor decision-making resources. Held a business brieng forinvestors and provided a recording on ourwebsite. AGM. Ensured key priorities continue to be addressed by our updated strategy. 8.0pdividend per share. Policies relating to each of these stakeholder groups can be found in the pages on our website. Risks are detailed from page 43 and further information is contained in the Sustainability section from page 20. 63 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() #### Stakeholder engagement continued #### Considering stakeholder interests #### when acquiring nmcn water Overview Soon after the launch of the Group’s Sustainable Group Strategy, nmcn plc announced that it had entered into administration after aplanned renancing ofthe business collapsed. When deciding to acquire part of the business, the Board carefully considered the following factors: Whether the acquisition twith the strategy togrow in adjacent and complementary markets. The nmcnwater business’geographic coverage, customer relationships and technical capabilities in relation to how complementary they were to Galliford Try’s existing operations or whether it would create duplication. The audited revenue of the businesses being acquired and prots prior tosubsequent re-statements. The purchase price, transaction and restructuring costs, contractual liabilities and commercial and legal terms. The following stakeholder interests were considered: The management resource taken to lead integration of the businesses and the impact on the existing people within the business. Potential impact on existing clients and whether time would need to be diverted from those operations. The future of the employees within the nmcn business. Our ability to successfully deliver for our new clients. Supply chain considerations. Potential shareholder returns. Broadening capabilities to serve clients and communities nationwide as a result of the acquisition. Who did the Board engage in making its decision? The Board liaised with a cross-section of stakeholder groups including the Managing Director of the Environment business, the General Counsel & Company Secretary, HR Director and external specialist advisors to consider all aspects of the transaction, including the interests of existing employees, clients and shareholders. The result Galliford Try completed the acquisition of the nmcn water businesses on 8 October 2021. The transaction protected the jobs of more than 900 directly employed staff as well as ensuring continuity for the clients and communities served by the nmcn business, protecting the vital water operations the business carries out. Setting up a dedicated integration team to combine the two businesses also meant that existing operations were not impacted for existing staff and clients. 64 GallifordTryHoldingsplc ![]() #### Informing and engaging #### our investors As the lockdown measures eased, we took the decision to hold a face-to-face Business Brieng with the purpose of giving detailed insights into parts of the business, introduce investors and analysts to some of the management team to demonstrate the culture of our business and expertise of our team, to provide a deeper understanding of where the controlled revenue and margin growth targeted through our strategy would come from, and to provide a channel for people to directly question our Board and managementon keytopics. The presentation is available at www.gallifordtry.co.uk/investors 65 Annual Report and Financial Statements 2022 Strategic report Governance Financial information ![]() Among the key events of the year, we oversaw the Group’s strong response to the Covid-19 pandemic and support to staff, continued to monitor the successful execution of the strategy, including the acquisition of nmcn’s water business, and appointed Alison Wood and Sally Boyle to the Board as non-executive directors. As Chair-designate, Alison will succeed me as I retire from the Board on 21 September 2022, ensuring a smooth transition of the role. More information on strategy and Board appointments can be found in my statement in the Strategic report. Sustainable value for all stakeholders The Group’s strategy is designed to create sustainable value for all of our stakeholders. In particular, we are a highly people-orientated business, and we continue to listen carefully to employees through both surveys and the Employee Forum. Our Stakeholder Steering Committee also plays an important function, ensuring effectivestakeholder engagement. Sustainability is also integral to our strategy and the Board will carefully monitor the Group’s progress towards its net zero goals. #### Chairman’s review #### Governance overview ## Maintaining high standards ## of corporate governance On behalf of the Board I am pleased to present the Company’s corporate governance report for the year ended 30 June 2022. A robust corporate governance structure supports the decision-making needed to implement our strategy, helping us to deliver sustainable performance and long-term stakeholder value. Board leadership and company purpose p76 Division ofresponsibilities p77 Composition, succession and evaluation p77 Audit, risk and internal control p78 Remuneration p78 #### Corporate governance Considering our stakeholders in the decisions we make is not only the right thing to do, but building meaningful relationships with key parties is critical to achieving both our day-to-day objectives and long-term ambitions. 66 Galliford Try Holdings plc ![]() Employee voice and stakeholder engagement During the year we carried out an employee survey. We were delighted to achieve a participation rate of 74% of those invited and an above average engagement rate (page 25). While overall responses were positive, there are also some areas where we can use the feedback provided as a spur to do better, such as improved articulation of career paths, and we will address feedback from the survey in the coming year. The Board takes a keen interest in the Group’s culture, as I discuss in my statement in the strategic report. Please see our People section on pages 24 to 27 for further information. The Employee Forum, introduced in 2019, meets three times a year and gives employees another route, outside of line management structures, to provide suggestions and ideas about working practices. These are communicated to the Board by the Employee Forum chair, enabling the Board to consider employees’ feedback and opinions when it makes decisions about the Group’s operations. Focus areas during the year have included the employee engagement survey, our wellbeing approach, the introduction of Total Reward Statements, exible and agile working, and our approach to returning tothe Group’s ofces post-Covid. Engagement withour wider stakeholders is vital to the success of the business and the Board factors their interests into its discussions and strategic decision-making. Our Stakeholder Steering Committee met twice during the year, to review the ways we engage with key stakeholders and ensure that these evolve and remain appropriate to the Group’s strategic priorities. Our key stakeholders are detailed on pages 61 to 65. Our strategy We are making good progress towards our Sustainable Growth Strategy and our target of 3% divisional and operating margins across our Building and Infrastructure divisions. The acquisition of nmcn’s water business during the year is fully aligned with our strategy and enhances our capabilities. The Board thoroughly reviewed the strategy at our annual strategy meeting and weare satised that it remains appropriate and aligned to the Group’s purpose. This also led to the acquisition of MCS Control Systems in July 2022. Please see pages 1 to 65 for further information. Carbon We recognise the critical importance of climate change and the impact of our business operations on the environment. We manage and mitigate our environmental impacts through our ISO 14001 certied management system and will continue to work towards reducing our carbon footprint, focusing on our ofces, siteaccommodation, eet and site waste. In June 2021, we published our commitment to achieve net zero across the Group’s own operations by 2030 and across our whole value chain by 2045, validated by Science Based Targets. Investments in this area include appointing a Director of Sustainability, recruiting a Low Carbon Manager, establishing a Carbon Reduction Group, dedicated carbon e-learning for all employees and the launch of our Net Zero Partners programme. Please see our Environment and climate change section on pages 28 to 31 for further information, and pages 48 to 53 our reporting under the Task Force on Climate-Related Financial Disclosures. Communicating effectively with shareholders and investors During the year, we have continued to engage positively with our shareholders, prospective investors and major institutions, combining face-to-face meetings, technology and virtual platforms to good effect. We have updated investors on key activities, our response to the pandemic and cost ination and areas of focus for the Board, as well as our strategic plans for the Group. In May 2022 we wrote to major shareholders offering the opportunity to meet the Chair-designate, Alison Wood. Further detail can be found on page 81. The Board and Audit Committee continue to monitor the Government’s proposals for restoring trust in audit and corporate governance, with a view to implementation and compliance. Board performance evaluation The 2018 UK Corporate Governance Code (the “Code”) requires the Board to have an externally facilitated evaluation at least every three years, and this took place in February and March 2022. Overall, the outcome was positive, nding that the Board benetsfrom ahighly experienced group of non-executive directors, with skillsets appropriate to the Group’s strategy, and operates in an environment of healthy challenge and an appreciation of the Group’s stakeholders. The integration of the new non-executive directors wasidentied as an area of focus, to ensure that the Board continues to perform well as its membership evolves. Further details about the process can be found on page 79. Looking forward This is my last year as your Chairman and I would like to close by thanking shareholders, Board colleagues and the Company’s employees for their support during my seven years in ofce. Ihave thoroughly enjoyed my time at Galliford Try and leave the business with a capable Board and management team, strong balance sheet, market-leading position and good progress towards its Sustainable Growth Strategy. I am delighted to welcome Alison to Galliford Try as a Non-executive Director and my successor. She has a wealth of experience and her appointment will further strengthen the independence and the experience of the Board. On behalf of the Board Peter Ventress Chairman 67 Annual Report and Financial Statements 2022 Financial information Governance Strategic report ![]() Peter Ventress Chairman Appointment date: Peter joined the Board on 30 April 2015 and was appointed Chairman on 11 November 2016. Board experience: External appointments: Peter joined the Board of Howdens Joinery Group Plc on 1 July 2022 as Chairman Designate and Non-executive Director and assumes the role of Chairman with effect from 21 September 2022. Peter is also Chairman of Bunzl plc, the FTSE 100 specialist international distribution and services group. Skills and experience: Peter has signicant experience of chairing boards and of being a Non-executive Director of both public and private companies. He brings a wealth of commercial, nancial and high-level management experience, including being former Chief Executive Ofcer of European textile service business Berendsen plc from 2010 to 2016. He has also held several senior executive roles, including International President of Staples Inc and Chief ExecutiveOfcerof Corporate Express N.V. In 2008, he was appointed head of all Staples’ activities outside the United States and Canada. Peter was formerly a Non- executive Director of Softcat plc, Premier Farnell plc, Staples Solutions BV and Signature Aviation plc. #### 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nances 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 anumber of operational nance roles, including Finance Director of Linden Homes. Prior to joining Galliford Try, Andrew worked forPwC. NEE R 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 isa 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-executiveDirector 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 Ofcer 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 Ofcer 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. NNN AAA RRR 68 Galliford Try Holdings plc ![]() #### 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 signicant corporatelaw, risk management, insurance, nance, 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. VikkiSkene 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 inJuly 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 Chair Board Experience Business ethics and integrity Construction Commercial Finance Governance Human resources Strategy and risk Marisa Cassoni Non-executiveDirector Appointment date: Marisa was appointed to the Board on 1September 2018. Board experience: Skills and experience: Marisa is a chartered accountant with more than 40 years’ experience as anance professional. She hasstrong leadership and commercial experience gained through her various executiveand non-executive roles. Her early career was initially in audit but she progressed into advisory services including corporate nance, 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. External appointments: Marisa is currently a Non-executiveDirector and SeniorIndependent Director of AO World plc, a leading European online electrical retailer. Sally Boyle Non-executiveDirector Appointment date: Sally was appointed to the Board on 1 May 2022. Board experience: Skills and experience: Sally qualied asa 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 6 Executive 2 Diversity Male 4 Female 4 plc Board composition Length of appointment 0–2 years2 2–5 years3 5–10 years3 As at 30 June 2022 A N R AEE N R EE 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. The plc Board Board Board Committees Executive Committees Our governance framework Executive Board and Committees ExecutiveBoard Oversees the Group’s operational management and implements its strategy and policies, including the Health, Safety & Sustainability, nancial, HRand riskpolicies, as agreedby 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 nancial 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 andcontractors. Please see Audit Committee report in 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. Pleasesee NominationCommittee 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 inuence across these ESG areas. The forum has been established to co- ordinate 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 the 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 Galliford Try Holdings plc ![]() The role of the Board and its Committees Asat 30 June2022,the Board comprised the Chairman, ve 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 ashortperiod until September 2023.Thislimited extension totheterm of ofce isconsidered 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.gallifordtry.co.uk/about/ governance-and-policies/ Role Summary of responsibilities Chairman The Chairman’s responsibilities include: leading the Board, ensuring it is effective, determining agendas, promoting integrity, openness and debate, and ensuring all directors contribute; ensuring the Board has the right balance of diversity, skills, experience and independence, and that non-executive directors have appropriate inductions and development; ensuring a clear relationship between remuneration and the Company’s long-term success; with the Chief Executive and the Finance Director, representing the Company inthe industry and nancial community,ensuring effective shareholder communication; leading reviews of the performance of the Board and directors; and ensuring the highest standards of corporate governance and full compliance with the Code. Chief Executive The Chief Executive’s responsibilities include: developing the Group’s objectives and strategies, taking into account the Group’s responsibilities to its stakeholders, achieving objectives and executing the strategy approved by the Board; preparing and meeting the budget and strategic nancial plan, closely monitoring performance across the Group and taking action where necessary; examining all investment and major projects, executing acquisitions and disposals, approving major proposals or bids, and identifying new business opportunities; managing risk, including health and safety performance; ensuring effective communication with shareholders and other stakeholders; and effective leadership of the senior executive team, including development and succession planning. Senior Independent Director The Senior Independent Director’s responsibilities include: acting as a valued adviser and sounding board to the Board and Chairman, and beingavailableforcondentialdiscussions with the NEDs on anymatter relating to the Board, performance or strategy; evaluating the Chairman’s performance and chairing meetings of the Nomination Committee when considering succession for the Chair (unless the Senior Independent Director is a candidate for the role); being an alternative point of contact for shareholders and attending sufcient meetings withshareholders tounderstandtheir views; and acting as an alternative point of contact for the executive directors and senior executive team. 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 rolesand responsibilities ofthe non-executive directors arespecied intheir letters of appointment. The letters of appointment are available for inspection on request at the Group’s registered ofce and willbe available immediately priorto 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. Directorappointments 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 hasbeen made with rening 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 BoardMatters 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 Groupshare capital Group borrowing facilities Approval of circulars and nancialreports #### Delegated authorities The Boardcontinuestooperate anestablished frameworkofnancial,commercialand operational mattersdelegated 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 Committee Nomination Committee Remuneration Committee Peter Ventress Chairman 8/8 by invitation 2/2 3/3 Bill Hocking Chief Executive 8/8 by invitationby invitationby invitation Andrew Duxbury Finance Director 8/8 by invitation n/an/a Terry Miller Senior Independent Director 8/8 3/3 2/2 3/3 Gavin Slark Non-executive Director 8/8 3/3 2/2 3/3 Marisa Cassoni Non-executive Director 8/8 3/3 2/2 3/3 Alison Wood Non-executive Director 1/2 0/10/1 n/a Sally Boyle Non-executive Director 0/10/11/1 n/a Kevin Corbett General Counsel & Company Secretary 8/8 3/3 2/2 3/3 AlisonWoodwas unable to attend thenal Board, Nominationand Audit committee meetingsof the year,in May2022, dueto apre-existing commitment to attend the AGM of Capricorn Energy PLC. Sally Boyle was unable toattend the nal Board and Audit Committee meetings due toillness. #### 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 nancial performance ofthe 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, helpingBoard members tostay up-to-date withspecic 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 skillsand perspectives, from which the Group can benet. 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 Acquisition 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 Operationalperformance 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. Reviewed 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 Sharesave 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 Committees’ Terms of Reference. Board evaluation Considered the output from the 2021internal Board evaluationprocess, identied areas for improvement and agreed actions to be taken. Approved the scope and programme for the 2022 externally facilitated Board evaluation process and considered the resulting report and recommendations. Stakeholder engagement Sought shareholder and institutional feedback at the half and full year results presentations and in connection with the AGM. Held the 2021 AGM as a physical meeting in London. Shareholders were also invited to submit questions ahead of the meeting, but none did so. Received reports from the Stakeholder Steering Committee Chair following each Committee meeting and considered the feedback from Committee members. Financial oversight Financial resources Approved the 2022 budget. Reviewed nancial performance against halfand fullyear forecasts and cash forecasts. Declared an interim dividend of 2.2p, paid to shareholders in April 2022. Reporting Reviewed and approved the Group’s half year and full year results, following advice from the AuditCommittee. Reviewed and approved the trading statement issued in January 2022. Reviewed and approved the Annual Report. Risk Received regular reports from the Head of Internal Audit and Assurance on the status of the internal audit programme. Received and considered reports on the Group’s risk management approach and reviewed proposed updates to the Group risk register. Received reports from the Executive Risk Committee following each committee meeting. Received reports from the Director of Sustainability and Risk on the Group’s principal and emerging risks. #### Board Strategy Meeting Collaborating with the Executive team to review our progress and strategic priorities to 2026. The Board held its annual strategy meeting in April 2022, with the Executive Board and managing directors of Highways and Environment. The agenda for the meeting was agreed between the Executive Board and non-executive directors. The Group set out its strategy to 2026 in September 2021 and the strategy meeting provided an opportunity to focus on progress in the rst sixmonths ofthe plan, aswell as review the Group’s businesses. The meeting also considered the integration of the nmcn water businesses acquired in October 2021 and plans for growth. During its discussions, the Board ensured it considered the interests of all stakeholders. The meeting covered key areas and Group initiatives, including health, safety and wellbeing, ESG and people matters, and the Finance Director also provided an update on nancialperformance and investor relations. As a result of the meeting, the Board concluded that the strategy remained appropriate and alignedto the Group’s culture, and that the Group was making good progress towards its goals for 2026. 75 Annual Report and Financial Statements 2022 Financial information Governance Strategic report ![]() #### Governance review continued UK CorporateGovernance 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 Further information 1. Board leadership and company purpose A. The Board’s role A successful company is led by an effective and entrepreneurial Board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society. The Board is collectively responsible for the long-term success of the Company, including its relationships and engagement with shareholders and other stakeholders, and operates via a formal schedule of matters reserved for its decision. See page 70 for further information and list of matters reserved for the Board. B. Setting purpose, values and strategy The Board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote the desired culture. The schedule of matters reserved for the Board, which is reviewed by the Board annually, provides that the Board is responsible for establishing the values and strategy of the Company. The Employee Forum chaired by Terry Miller, Senior Independent Director, remains a key element in the Board’s oversight of culture. Our Code of Conduct also denes the behaviours we expect of our people and the ethical standards to which we adhere. See our People and Culture section on pages 24 to 27 for further information. C. Risk management The Board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The Board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed. The Board reviews and agrees the annual budget in July each year. In addition, mature risk management and governance processes are in place to identify, report and manage risk. These are kept under review to ensure they remain robust and appropriate. The Executive Risk Committee assists the Board and Audit Committee in monitoring and updating the Group’s principal and emerging risks and regularly reports to the Board on its work. See our Principal risks section on pages 44 to 47 for further information. More information can also be found in the Executive Board report on page 81 and the Audit Committee Report (pages 84 to 86). D. Stakeholder engagement In order for the company to meet its responsibilities to shareholders and stakeholders, the Board should ensure effective engagement with, and encourage participation from, these parties. The Stakeholder Steering Committee, chaired by Terry Miller, Senior Independent Director, continued to meet during the year. The Committee oversees relationships with the business’s key stakeholders, including collating stakeholder views and reporting these to the Board. See the Managing our stakeholder relationships section on pages 61 to 65 for further information. E. Workforce policies The Board should ensure that workforce policies and practices are consistent with the company’s values and support its long-term sustainable success. The workforce should be able to raise any matters of concern. The Code of Conduct ‘Doing the right thing’ sets out our organisational policies and procedures and denes expected behaviours. Group policiesdene our approach tomanaging health, safety, environmental and social matters affecting our employees. These policies are regularly reviewed, published on our website and described in our Annual Report. There is an independent and anonymous whistleblowing procedure allowing any employee or third party tocondentially raise concerns. The Audit Committee ensures the whistleblowing procedure remains effective and that any matters reported are appropriately investigated and resolved. See our People and Culture section on pages 24 to 27 for further information. 76 Galliford Try Holdings plc ![]() Principle How we apply the Principle Further information 2. Division of responsibilities F. Chair leadership The Chair leads the Board and is responsible for its overall effectiveness in directing the company. They should demonstrate objective judgment throughout their tenure and promote a culture of openness and debate. In addition, the Chair facilitates constructive board relations and the effective contribution of all non- executive directors, and ensures that directors receive accurate, timely and clear information. The Chairman is responsible for leading the Board, setting the Group’s purpose, direction and values and ensuring the highest standards of corporate governance are adhered to. In addition, the Chairman facilitates constructive Board relations and the effective contribution of all non-executive directors and, in conjunction with the General Counsel & Company Secretary, ensures that directors receive accurate, timely and clear information. The Chairman’s performance is assessed through the annual Board evaluation process and through a separate annual meeting of the non-executive directors, led by the Senior Independent Director without the Chairman present. See our Governance review section on page 70 for further information. G. Balance of the Board The Board should include an appropriate combination of Executive and non-executive (and in particular, independent non-executive) directors, such that no one individual or small group of individuals dominates the Board’s decision-making. There should be a clear division of responsibilities between the leadership of the Board and the Executive leadership of the company’s business. The Board comprises the Chairman (who was independent on appointment), Chief Executive, Finance Director and ve other independent non-executive directors. The roles of the Chairman and Chief Executive are separate with distinct accountabilities setout in their roleproles. The ChiefExecutive is responsible for the day-to-day executive leadership and management of the business through deneddelegated authority limits. The non-executive directors provide an independent view on the running of our business, governance and boardroom best practice. They oversee and, where necessary, constructively challenge management in its implementation of strategy and Group performance. See pages 68 to 69 for further information. H. NEDs’ role and time commitment Non-executive directors should havesufcient time to meet their Board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold management to account. The annual Board evaluation process continues to assess the performance and effectiveness of all directors and their commitment to meeting their Board responsibilities. See the section on Board Evaluation on page 79 for further information. I. 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 efciently. 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 sufcient time isdevotedto 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 performanceand the performanceof 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 satisfyitself on the integrity of nancial 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 processconrmed 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 positionand prospects. The Audit Committee reviewed the 2022 Annual Report and Accounts in September 2022 and was satised thatit presents a fair, balanced and understandable assessment of the Group’s position and prospects. The Audit Committee reported its ndings tothe Board. See the Financial Review section on pages 55 to 57 for further information. O. Risk managementand 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 performancemetrics that reect shareholders’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 RemunerationReport. TheRemuneration 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 identied and agreedas 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. Presentations frommanagement: Consider expanding current participation of management in plc Board meetings. Stakeholders: greater consideration of views from management and Stakeholder Steering Committee. Competitoranalysis: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 Q. A. ### with Alison Wood, Non-executive ### Director and Chair-designate #### Governance review continued What attracted you to Galliford Try? 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 aleader inits eld, with fantastic opportunities and a great vision which have been captured in its Sustainable Growth Strategy.What I ndpersonally 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. Whatareyourrstimpressions of Galliford Try? Galliford Try has an impressive reputation and portfolio of projects nationwide and I have been fortunate to have already beneted 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 processesmore efcient, improvequality and reduce health and safety risks as well as to help decarbonise the environment. What are you most looking forward to in Galliford Try’s future? Galliford Try is making asignicant 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. Thismeans the Company has achance tobe hugely inuential 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 benetedfromtheopportunity 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 September2022 Q. Q. Q. A. A. A. 80 Galliford Try Holdings plc ![]() ExecutiveBoard 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 considersregular 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 convenedto consider and authorise specic 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 ofces and visiting ofce 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 nancial 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 nancialyear, including those with arisk 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 ination. A Business Brieng foranalysts 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 marketthemes. Specic 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 anysignicant 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 11November 2022 at theofces ofPeel Hunt LLP,7th oor, 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-nancial 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 duringthe nancial 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 nancial 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 nancial 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nancial 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 Successionplanning. 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 Successionplanning. Non-executivedirectors’ 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 identication, assessment and selection of candidates for appointment to the Board. During thenancial year there weretwo appointments to the Board. Russell Reynolds Associates, an executive search consultancy, was appointed to assist the Committee with the search process. Russel 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-executiveDirectors 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 inexcellent 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 understandingof 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 Committeerecommended 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’sterm ofofceis appropriate and Terry will remain independent in character and judgement. Inclusion anddiversity 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 culture 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 workingarrangements, with aexibleculture 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 Condent 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 tofull 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. Peter Ventress Nomination Committee Chair 83 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 fullling its corporategovernance responsibilities, including monitoring and reviewing developments in corporate governance, overseeing the internal audit process, and assessing the integrity of the nancialstatements 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 hassufcient 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 satised that, as awhole, 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 Ofcer 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 CapitalManagement forEMEA. 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 nancial 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 keyactivities during the nancial 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 toraise in condence. #### Audit Committee report The Committee supported the Board infulllingits corporate governance responsibilities,includingoverseeingthe internaland external audit processes. 84 Galliford Try Holdings plc ![]() The Committee’s terms of reference are available from the Group’s website (www.gallifordtry.co.uk). Calendar of 2021/22 Committee activities and areas of focus September 2021 Contractaccounting judgments. Committee review of 2020/21 full-year results, including external auditor presentation, going concern review and approval of ‘fair, balanced and understandable’process. Review of draft 2021 annual results statement Risk, internal audit and whistleblowing reports. BEIS white paper on corporatereform was considered. February 2022 Contractaccounting judgments. Committee review of 2021/22 half-year results, including external auditor presentation and going concern review. Review of draft half-year 2022 results statement. Risk, internal audit and whistleblowing reports. May 2022 Review and approval of the Internal Audit Plan 2021/22. Approval of the external audit plan. Anti-moneylaundering update. Risk, internal audit and whistleblowing reports. Review of Terms of Reference and Non-Audit fee policy. Updated BEIS white paper on corporate reform was considered. Financial ReportingCouncil 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 satised 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nancial statements in FY2018and FY2019. These ndings hadno 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 satised thatthe external audit relationship is effective and that BDO LLP remained sufciently 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nancial year,the Internal Audit team continued to deliver its agreed internal audits annualplan and provided commercial and risk management support across the Group, at the request of the Committee, the Executive Board and senior management. Biannual 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 performanceand 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 havea signicant impact onour 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 materialcontrols, including nancial, 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 inforce throughout thenancial year. The policy species: the typesof 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 forwhich specic 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nancial 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 dened percentage of the total Group audit fee for the previous nancialyear, the Committee shall consider and give specic 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 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 signicant elements ofthe 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 planningframework: a detailed annual budget isprepared for each nancial year, which is approved by the Board. Operational and nancial reporting: an exacting prot and cash reporting and forecasting regime is in place across the Group. This emphasises cash ow,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 specic risk areas and reviews ofsignicant 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. Signicantissuesandother accounting judgements The Committee reviewed the integrity of the Group’s nancial statementsand all formal announcements relating to the Group’s nancial performance. This included an assessment of each critical accounting policy, as set outin note 1to the nancial statements, as well as review and debate on the following areas of signicance: 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, inrelationto certain signicant long-term constructioncontracts. 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 ndings. Goodwill impairment review: during the year, the Committee considered the judgments made in relation to the valuation methodology adopted bymanagement and the model inputs used, as well as the sensitivities used by management and the related disclosures. Signicanttransactions: the Committee has given particular consideration to the accounting for and presentation of individually signicant transactions, and areas where alternative performance measures are required to ensure that the nancial statements give afair, balanced and understandable view of the Group’s performance, and that statutory measures are equally clear and prominent. This specically includedthepresentation 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 nancial statements are fair, balanced and understandable, in terms of the form and content of the strategic, governance and nancialinformation 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 forthenancial 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 ofimproved operational and nancial 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 nancialyear ended 30 June 2022, 89% ofthe 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 developmentof appropriateESG performance metrics, aligned to the Group’s strategy, which will be incorporated into the Executive team’s ABP from 1 July 2022. The Remuneration Committee has continued to apply the recommendations of the UK CorporateGovernance 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 21September 2022, when he willstep down from the Board, with Alison assuming the role of Chair of the Board. RemunerationPolicy 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, benets, annualbonus and LTIP remains appropriate and no changes are proposed at this time. The Policy is set out in full on pages 88 to 89. #### Remuneration Committee report Reectingstakeholderinterests andthe 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. 87 Annual Report and Financial Statements 2022 Financial information Governance Strategic report ![]() 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’ RemunerationReport. 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 activitiesduring2021/22 The Committee met three times during the year. The key activities during the year are summarised below: Committee activitiesduring2021/22 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) 2021proposal. 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. Brieng from the HRDirector on remuneration and other considerations for the wider workforce. Terry Miller Remuneration Committee Chair 88 Galliford Try Holdings plc ![]() RemunerationPolicy 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: comprisesbase salary, taxable benets (such as acompany car or cash equivalent allowance, privatemedical and permanent health insurance, and life assurance), and contribution to a pension. Variableelement: annualbonus, which incentivises and rewards the achievement of stretching annualtargets (both nancial and non-nancial) 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 nancialand 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 1 £000 Variable remuneration 2 £000 Total remuneration £000 Bill Hocking Chief Executive 502 1,455 1,957 Andrew Duxbury Finance Director 401 1,107 1,508 1Comprises base salary,taxable benets andpension contributions. Seepage 95for further information. 2Comprises annualbonusawardedand LTIP vestingwith reference toperformance duringthe nancialyear. 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) 1 Cash £000 Shares £000 Bill Hocking 120% £337 £214 Andrew Duxbury 100% £249£124 1See page 95 for further information. LTIP outcomes Vestings 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: Stretch condition (100% vesting) Actual performance % Vesting Value of award vesting 1 Bill Hocking 16.5p16.0p 89%903,827 Andrew Duxbury 16.5p16.0p 89% 734,409 1Estimated 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 Andrew Duxbury Base salary £475,000£386,000 Pension 8% 6% ABP Maximum bonus opportunity of 120% of salary for the Chief Executive and 100% of salary for other executive directors. LTIP Award of up to 150% of salary, with three quarters based on earnings per share and one quarter on a cash performance metric, based on average month-end cash as a percentage of revenue. Performance targets EPS: The target EPS tobe achieved inthe nal year ofthe performanceperiod (1 July 2024 to 30 June 2025) is 25.8p. Achieving 23.2p would generate 25% vesting and 28.4p would generate 100% vesting on a straight-line basis. Cash: Thetarget isaverage month-end cash inthe nal year ofthe performance period of 9% of annual turnover. Achieving 8% would generate 25% vesting and 10% would generate 100% vesting on a straight-line basis. Holding period Any vested LTIP shares must be held for two years after vesting (after payment of tax). Malus and clawback Malus and clawback apply in circumstances of error, material misstatement, misconduct, reputational damage or corporate failure as a result of poor risk management. #### Remuneration at a glance The following is a summary of the Executive Directors’ remuneration in 2021/2022 and proposed application of the approved RemunerationPolicy (“Policy”). 89 Annual Report and Financial Statements 2022 Financial information Governance Strategic report ![]() This report sets out the Remuneration Policy that was approved by shareholders at the 2020 AGM, describing the framework within which the Group remunerates its directors. The main objectives of the Group’s Remuneration Policy are to: Ensure that remuneration packages are appropriately positioned and structured to promote the long-term success of the Group, taking into account pay and conditions across the Group. Engender a performance culture, which will position Galliford Try as an employer of choice and deliver shareholder value. Deliver asignicant proportion oftotal Executive pay through performance-related remuneration and inshares. Position performance-related elements of remuneration so that these are capable of appropriately rewarding the delivery of outstanding results and peer sector outperformance. Ensure that failure is not rewarded. The Policy is shaped by environmental, social and governance factors, which help to determine the design of incentive structures to encourage responsible behaviour. Furthermore, recognising that even well-designed incentives cannot cater for all eventualities, should any unforeseen issues arise that would makeany payments unjustiable, the Committee can use its discretion to address such outcomes by scaling back payments. Any use of such discretion would be fully disclosed in the Annual report on remuneration. The clawback provisions are contained within both the ABP and LTIP, and 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. How the Remuneration Policy aligns with the 2018 UK Corporate Governance Code The 2018 Code sets out principles against which the Committee should determine the Policy for Executives, as follows: Principle Committee approach Clarity Remuneration arrangements should be transparent and promote effective engagement with shareholders and the workforce. The Committee has continued to operate a consistent approach which is well understood internally and by investors. Consultation with shareholders on the revisions to the Policy was undertaken before shareholder approval was sought at the 2020 AGM. Simplicity Remuneration structures should avoid complexity and their rationale and operation should be easy to understand. The Committee has continued to focus on ensuring that pay arrangements are balanced, simple in their design with a small number of relevant performance measures, and clearly linked to strategy. Risk Remuneration arrangements should ensure reputational and other risks from excessive rewards, and behavioural risks that can arise from target-based incentiveplans, are identied and mitigated. Incentive targets have been set which the Committee believes are stretching and achievable within the risk appetite set by the Board. Under the Policy, the Committee has discretion to override formulaic incentiveoutcomesif they do notaccurately or fairly reect the underlying performance of the Group. The incentive scheme recovery provisions include reputational damageor corporatefailurearisingfrom poor riskmanagement, which ensures that malus and clawback provisions are considered to besufcientlywide-ranging. Predictability The range of possible values of rewards to individual directors and any other limits ordiscretions should beidentiedand explainedat the time of approving the policy. The Committee has continued to maintain clear annual caps on incentive opportunities and will use its discretion where necessary. Proportionality The link between individual awards, the delivery of strategy and the long-term performance of the company should be clear. Outcomes should not reward poor performance. The Committee ensures performance metrics continue to be clearly aligned with the Group’s strategy each year, maintaining an appropriate balance between base pay, short- and long-term incentive opportunities. The Committee has discretion to reward for exceptional individual contributions within the limits set out in the policy. When doing so, the Committee will have regard to governance best practice and views expressed to the Committee previously by shareholders. Alignment to culture Incentive schemes should drive behaviours consistent with company purpose, values and strategy. Bonus and incentive schemes are reviewed by the Committee to ensure consistency with the Group’s purpose, values and strategy. #### Directors’ Remuneration Policy report 90 Galliford Try Holdings plc ![]() The full Remuneration Policy is detailed in the table below: Component and link to strategy Operation Framework to assess performance and maximum opportunity Salary To provide a competitive and appropriate level of basic xed pay, sufcientto attract, motivate and retain executive directors of high calibre, able to develop and execute the Group’s strategy. Normally reviewed annually, with any changes typically taking effect from 1 April. The Committee sets salaries at competitive rates, taking into consideration pay and employment conditions across the Group, the economic environment, the responsibilities and accountabilities of each role, the experience of each individual, his or her marketability and the Group’s key dependencies on the individual. Reference is also made to salary levels among relevant construction peers and other companies of broadly similar size and complexity. The Committee reserves the right to reduce salary levels (and has done so in the past) if the circumstances warrant it. When reviewing salaries, both Group and individual performance are considered. While there is no prescribed maximum, the Committee’s policy on salary increases for executive directors is for increases to be broadly in line with the average across the workforce, unless there is a promotion or material change in role or business circumstances in which case increases may be higher. Salaries for the year ahead are set out in the Annual report on remuneration. Benets To provide cost-effective and market-competitive benets. Benets provided toexecutive directors mayinclude entitlements toa Group car or cash equivalent allowance, private medical and permanent health insurance, and life assurance. The benets provided may be subjectto minor amendment from time to time by the Committee. Where an Executive director is asked to relocate, relocation (or related allowances) may be provided. Executives may also be reimbursed for any reasonable expenses (and any income tax payable thereon) incurred in performance of their duties. Directors may become eligibleforany new benets introducedforthe wider workforceon comparable terms. The costof benet provision varies from year to year, depending on the cost to the Group, and there is no prescribed maximum limit. Benet costs aremonitored and controlled to ensure that they remain appropriate and represent a small element of total remuneration costs. Pension To provide a contribution towards retirement. The executive directors may each receive contributions to a money purchase pension scheme or salary supplement in lieu of Group pension contributions (or a combination of both). The rate offered of 8% for the Chief Executive and 6% (increasing to 8% at age 50) for the Finance Director is unchanged and in line with that offered across the employee population. Any new Executive Director would also receive a pension contribution in line with the wider workforce. Annual Bonus Plan (“ABP”) Rewards the achievement of stretching annual goals that support the Group’s annual and strategic objectives. Compulsory deferral of part of the bonus into shares provides alignment with shareholders. Executive directors and selected senior management, subject to invitation and approval by the Committee, may participate in the Annual Bonus Plan. For executive directors, two thirds of any bonus earned in excess of 50% of salary isrequired tobe deferred intorestricted shares. Although benecially held by the participants, the restricted shares are legally retained by the trustee of the Galliford Try Employee Share Trust (“EST”) for three years, 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. The Committee operates recovery and withholding provisions within the Annual Bonus Plan, which 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. Any bonus payment may be ‘clawed back’ within a period of three years after the payment date should: i. The Company discover that there was a material misstatement of the nancialresults or anerror inthe calculation ofany performance condition, which resulted in excess annual bonus being received by the employee. ii. The Company become 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 clawback 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 isearned for target performance. Fornancial elements, bonuses start to be earned from 0% of salary for achieving threshold performance. Payments are dependent on achieving specied nancial (no less than 50% of the bonus) and strategic ornon-nancialtargets. 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 benet oftheExecutive management, will be detailed in the Annual report on remuneration. 91 Annual Report and Financial Statements 2022 Financial information 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nancial 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 nancialyear to anyindividual is 150% of salary. Up to 25% of the relevant part of the award may vest for achieving threshold performance. All-employee schemes To encourage employee share participation. The Group may from time to time operate tax-approved share plans (such as anapproved Save As You Earn scheme for the benet ofall 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. Shareholdingguidelines 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 sufcient toattract, motivate and retain a Chairman and non-executive directors of high calibre. The Chairmanis paid asingle xed fee.The remaining non-executivedirectors are paid a basic fee. Non-executives chairing a Board Committee and the Senior Independent Director are paid anadditional fee toreect 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. 92 Galliford Try Holdings plc ![]() Notes to the policy table Performance measure selection and approach to target setting Measures used under the ABP and LTIP are reviewed annuallyto reect the Group’s main short- and long-term objectives and reect both nancialand non-nancial 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 HMRC 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. Determination of a good leaver (in addition to anyspecied 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. ExecutiveDirector remuneration scenarios The individualised potential Executive reward charts have been prepared using the following assumptions: For minimum remuneration: only xed salary,benets and pensionspayments have been included. For on-targetremuneration: xed salary,benets and pension plus50% payout oftheABP and 50% of the LTIP (face value) awards have been included. For maximum remuneration: xedsalary,benets and pension plus fullpayout 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 arebased on those applying on1 April 2022and the valueof taxable benets is estimated basedon the cost of supplying those benets(as disclosed)forthe yearended 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. Max + 50% share price MaximumTargetMinimum Max + 50% share price MaximumTargetMinimum Fixed payAnnual bonusLong-term incentives £514 100% Illustration of application of Remuneration Policy Remuneration (£000s) £1,155 Bill Hocking 31% £1,797 £2,153 40% 50% 26% 24% 32% 29% 25% 44% £414 100% £897 Andrew Duxbury £1,379 £1,669 28% 42% 52% 23% 25%30% 22% 32% 46% Policy onrecruitment 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 Specics Salary At a level required to attract the most appropriate candidate. Discretion to pay lower base salary with incremental increases (potentially above the average increase across the Group), as the new appointee becomes established in the role. Pension and benets In line with the policy for existing executive directors. In line with the Policy, pension contribution rates are aligned with those offered across our employee population. Relocation expenses or allowance, legal fees and other costs relating to recruitment may be paid as appropriate. ABP In line with existing schemes. Where a director is appointed part way through a nancialyear, different performance measures could be introduced toreect thechange inrole and responsibilities. The annual bonus limit remains at 120% of base salary for a Chief Executive and 100% for other directors. Pro-rating applies as appropriate for intra-year joiners. Where an individual is appointed to the Board, different performance measures to those for continuing directors may be set for the period of time remaining in that performanceyear. LTIP In line with Group policies and LTIP rules. An award of up to 150% of salary may be made in accordance with the Remuneration Policy table. An award may be made in the year of joining or can be delayed until the following year. Targets would normally be the same as for awards to other directors. Other share awards The Committee may make an incentive award to replace deferred pay forfeited by an Executive leaving a previous employer. Awards would, where possible, be consistent with the awards forfeited in terms of structure, value, vesting periods and performance conditions. 93 Annual Report and Financial Statements 2022 Financial information Governance Strategic report ![]() The Committee reserves the right to award additional remuneration in excess of the Remuneration Policy at appointment, exclusively to replace lost rewards or benets. In determining the appropriate form and amount of any such award, the Committee will consider various factors, including the type and quantum of award, the length of performance period, and the performance and vesting conditions attached to each forfeited incentive award. The maximum payment (which may be in addition to the normal variable remuneration) should be no more than the Committee considers is required to provide reasonable compensation to the incoming director. The Committee may makeuse oftheexibility provided in both the Listing Rules and the approved Remuneration Policy, to make awards outside the existing parameters of the LTIP. For internal promotions to Executive Director positions, the Committee’s policy is for legacy awards or incentives to be capable of vesting on their original terms (which may involve participation in schemes that operate exclusively for below Board employees) or, at the discretion of the Committee, they may be amended to bring them into line with the policy for executive directors. For a new Non-executive Chairman or Non-executive Director, the fee arrangement would be set in accordance with the approved Remuneration Policy. Directors’ service contracts and policy for payments to departing executive directors The service contracts and letters of appointment for the Board directors serving as at 30 June 2022 are detailed below: Contract date 1 Notice period 2,3 (months) Non-executive directors Peter Ventress 3 January 2020 6 Terry Miller 3 January 2020 6 Gavin Slark 3 January 2020 6 Marisa Cassoni 3 January 2020 6 Alison Wood 1 April 2022 6 Sally Boyle 1 May 2022 6 Executive directors Bill Hocking 3January 2020 12 Andrew Duxbury 3 January 2020 12 1Date shown is the director’s contract as an Executive or non-executive director of the Group. Executive directors have a rolling notice period as stated. Non-executive appointments are reviewed after three years and their appointments are subject to a rolling notice period as stated. All Directors will stand for election or re-election at the 2022 AGM. 2There are no contractual provisions requiring payments todirectors onloss ofofceor termination, other than payment of notice periods. The Committee may seek to mitigate such payments where appropriate. 3Subject to the Nomination Committee’s recommendation, the Group’s practice is to agree notice periods of no more than six months for non-executive directors and no more than 12 months for executive directors. Executive directors’ service contracts are available at theGroup’sregistered ofce and will be available for inspection at the 2022 AGM. For executive directors, at the Group’s discretion, a sum equivalent to 12 months’ salary and benetsmay be paid inlieu of notice. The contracts include mitigation provisions to pay any such lump sum in monthly instalments, subject to offset against earnings elsewhere. This will also be the case for any future appointments. An Executive director’s service contract may be terminated summarily without notice and without any further payment or compensation, except for sums accrued up to the date of termination, if they are deemed to be guilty of gross misconduct or for any other material breach of the obligations under their employment contract. The Group may suspend executive directors or put them on a period of gardening leave during which they will beentitled tosalary,benets and pension. For ‘good leavers’, bonuses may be payable pro rata for theproportionof the nancial year worked, at the Committee’s discretion. Depending on the circumstances, the Committee may consider additional payments in respect of an unfair dismissal award, outplacement support and assistance with legal fees. Any share-based entitlements granted to an executive director under the Group’s share plans will be determined based on the relevant plan rules. The default treatment is that any outstanding awards lapse on cessation of employment. However, ‘good leaver’ status can be applied at the Committee’s discretion, taking into account the individual’s performance and the reasons for their departure. For ‘good leavers’, LTIP awards may vest at the normal time (other than by exception) to the extent that the performance conditions have been satised. The level ofvested 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 managementteam. The total package on offer remains competitive at all levels of the Group. The comprehensive range of benets include exible 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 benets, 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 wellas reward and benets. The Employee Forum ensures employees have a voice in the Boardroom, strengthens internal communications, enables employees to offer ideas, championschange 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. #### 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nancial years starting onor after 10 June 2019), theLarge 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’remunerationandsingle-gureannualremuneration(audited) The remunerationof the directors serving during the nancial year,together with 2021comparative gures, was asfollows: Salary and fees £000 Taxable benets 1 £000 Pensions 2 £000 Total xed remuneration £000 Annual bonus £000 LTIP £000 Sharesave £000 Totalvariable remuneration £000 Total remuneration £000 2022 3 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Executive directors Bill Hocking 463 450 2 1 37 36 502 487 551 540 904 – – – 1,455 540 1,957 1,027 Andrew Duxbury 376 367 2 5 23 22 401 394 373 366 734 – – – 1,107 366 1,508 760 Non-executive directors Terry Miller 67 63 – – – – 67 63 – – – – – – – – 67 63 Gavin Slark 45 44 – – – – 45 44 – – – – – – – – 45 44 Peter Ventress 206 202 1 1 – – 207 203 – – – – – – – – 207 203 Marisa Cassoni 54 52 – – – – 54 52 – – – – – – – – 54 52 Alison Wood 12 – – – – – 12 – – – – – – – – – 12 – Sally Boyle 8 – – – – – 8 – – – – – – – – – 8 – Former directors Jeremy Townsend – 13 – – – – – 13 – – – – – – – – – 13 1Includes the value ofbenets suchas carallowance and medical insurance. 2This is a salary supplement paid to the directors in lieu of direct pension contributions. 3In 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 nancial year ended 30June 2022, the annual bonus measures,targets, weightingsand performance are setoutin 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 fullyear Group prot before tax 47.5% £15.2m (0%) £16.0m (23.75%) £18.4m (47.5%) £19.1m 47.5% Pre-exceptional halfyear Groupprot 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%100%100% The Group achieved astrong performance against targets setat the start ofthenancial year.Taking intoaccount the Group’sprotability 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 nancial performance. This treatment isconsistent withthat applied for allparticipants oftheABP. 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-targetbonus (% 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 249124 Two-thirds ofthe bonus earnedin excess of the50% ofsalary threshold is required tobe deferred intorestricted shares. Although benecially 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 or 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 30June 2022. Intotal, 89% of themaximum award willvest asa result ofthe performance achieved. The Committee was satised that thisoutcome reectedthetrue performance oftheGroup and no discretion was applied. The awards willbe subject toa 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 1 Element of value attributable to share growth 1 Bill Hocking 13.0p 16.5p16.0p 89%903,827303,827 Andrew Duxbury 13.0p 16.5p16.0p 89% 734,409 246,267 1Estimated 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. Directors’ shareplan 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 nancial year £000 Actual or anticipated vesting date Bill Hocking LTIP 1 13.03.20 £1.1554 584,213 ––– 584,213 – 13.03.23 LTIP 23.09.20 £0.80 843,750 ––– 843,750 – 23.09.23 LTIP 23.09.21 £1.788 – 385,067 –– 385,067 – 23.09.24 ABP 3 23.09.21 £1.7694 – 118,684 –– 118,684 – 23.09.24 Andrew Duxbury LTIP 1 13.03.20 £1.1554 474,705 ––– 474,705 – 13.03.23 ABP 2 23.09.20 £0.8442 52,969 ––– 52,969 – 23.09.23 LTIP 23.09.20 £0.80 685,593 ––– 685,593 – 23.09.23 LTIP 23.09.21 £1.788 – 312,919 –– 312,919 – 23.09.24 ABP 3 23.09.21 £1.7694 – 69,015 –– 69,015 – 23.09.24 1Awards 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. 2In accordance with the rules oftheAnnualBonus Plan, the average of the Company’s closing shareprice for the vebusiness days following (and including) the announcement of the annual results on 16 September 2020 was 84.42 pence. 3In accordance with the rules oftheAnnualBonus Plan, the average of the Company’s closing shareprice for the vebusiness 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 1 £ 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 astraight-line basis if19.5p underlying EPS isachieved during the nalyear of the three-year performanceperiod (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’ shareinterests(audited) Asat 30 June2022,the Directors held the following benecial, legal and unvested ABP interests inthe Group’s ordinarysharecapital. Measure Legally owned 1 LTIP (unvested) Deferred bonus awards (unvested) Total % of salary held under share ownership guidelines 2 30.6.22 30.6.21 30.6.22 Executive directors Bill Hocking 119,778119,778 1,813,030 118,684 2,051,492 88% Andrew Duxbury 24,95524,9551,473,217121,984 1,620,156 66% Non-executive directors Terry Miller 2,0662,066 –– 2,066 n/a Gavin Slark 1,6001,600 –– 1,600 n/a Marisa Cassoni ––––– n/a Peter Ventress 14,09814,098 –– 14,098 n/a Alison Wood ––––– n/a Sally Boyle ––––– n/a 1Either held by the individual or connected persons. 2Under 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. There were no changes in the directors’ interests from 30 June 2022 to the date of this Annual Report. Performance graph The graph shows the totalshareholder return (“TSR”) forGalliford Try shares overthepast 10nancialyears. Itshows the value to30 June2022 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nancial years. 2013 2014 2015 1 2016 2017 2018 2019 2 2020 3 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 1,957 Annual bonus (% of maximum) 94% 97% 79% 74%74% 46.3% 86.5% 57.0% 36.7% 100.0% 100% LTIP (% of maximum) 87% 63%63% 47% – 16.5% 36.6% 16.5% –– 89% 1Peter 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. 2Graham 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. 3Bill Hocking was appointed Chief Executive on3 January 2020. Afull-yearremunerationgure based ontheaggregate paid toBill andGrahamis shown here to aid comparison. Source: Datastreamfrom Refinitiv Total Shareholder Return Value (£) (rebased) 0 100 200 300 500 400 Galliford TryFTSEAll Share Jun 21 Jun 22 Jun 20 Jun 19 Jun 18 Jun 17 Jun 16 Jun 15 Jun 14 Jun 13 Jun 12 97 Annual Report and Financial Statements 2022 Financial information Governance Strategic report ![]() CEO pay ratios Under Option B(gender paydata), three employeeshave beenidentiedas the best equivalents torepresent 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 gure All UK employees Lower quartile Median Upper quartile 2019/20 Option B £660,587 Ratio 24:115:19:1 Total pay £27,407 £43,165 £74,351 Salary £25,500 £35,249 £61,057 2020/21 Option B £1,026,671 Ratio 27:119:114:1 Total pay £37,399 £54,374 £73,385 Salary £36,134 £43,781 £66,927 2021/22 Option B £1,956,702 Ratio 63:136:126:1 Total pay £31,128 £53,976 £73,920 Salary £27,875 £44,720 £62,275 Unlikelast year, the CEOgure includes earnings from the Long-Term Incentive Plan(lastyear, there were no long-termincentives due tovest). 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 to2020/21, there were increases inall three ratios, reecting the fact thata greater proportion ofthe Chief Executive’stotal 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 paylevels attherespective quartiles and that the applicable relativities are appropriategiventhe prole of the workforce. Percentage changein remuneration ofexecutive directors and non-executive directors The table below shows the percentage change insalaryor fee,taxable benets and annual bonus ofeach individual directorin respect of the nancial years ended 30 June 2021 and 30 June 2022: Year ended 30 June 2022 2021 Salary change 1 Benetschange 2 Bonus change Salary change 4 Benets change Bonus change 4 Executive directors Bill Hocking 2.9% 203.3% 2.0% 119.5% (85.5)% 449.8% Andrew Duxbury 2.6% (70.0)% 1.9% 4.9%(70.9)% 46.5% Non-executive directors Peter Ventress 1.9% n/an/a 5.0% n/an/a Terry Miller 7.5% n/an/a 15.3% n/an/a Gavin Slark 3.0% n/an/a 5.0% n/an/a Marisa Cassoni 3.0% n/an/a (1.1)% n/an/a Alison Wood 3 n/an/an/a n/an/an/a Sally Boyle 3 n/an/an/a n/an/an/a Former directors Jeremy Townsend ––– (73.9)% –– P50median employee 2.1% (11.1)% 40.0% 24.2% 4.5% 50.0% 1Salaries for the executive directors were increased by 3.5% with effect from 1 April 2022. Fees for the non-executive directors (excluding the Chairman) were increased by 4.5% with effect from 1 April 2022. Fees for the Chairman remained unchanged. 2Benets received include pension contributions (or cash equivalent), company car (orequivalent cash allowance),andprivate medical insurance. Executive directors and senior management, subject to invitation and approval by the Committee, may participate in the ABP and LTIP. 3The percentage change is not shown for Alison Wood or Sally Boyle as they were appointed to the Board on 1 April 2022 and 1 May 2022 respectively and there is no prior year remuneration to compare against. 4Please see page 83 in our 2021 Annual Report for further information. To allow for comparison, the Committee has elected to compare the total remuneration of the P50 median employee (median) from this year (2021/22) to that used last year. The Committee continues to ensure that the wider total package on offer to employees remains competitive at all levels. Relative importance of spend on pay 2020/21 2021/22 Change Total overall spend on pay (£m) 165.3 213.0 47.7 Dividends (£m) 5.2 6.3 21.2% Share buyback (£m) – – – Group corporation tax (charge) (£m) 1 (1.0) (1.7) £(0.7)m Effective tax rate (%) 8.8 8.9 0.1 ppts 1Pre-exceptional total tax. The equivalent total overallspend on payin 2021/22is disclosed innote 5to the nancial statements. The total overallspend on payequates to average remuneration per staff member of £65,500 per annum as at 30 June 2022 (2021: £62,100). #### Directors’ Remuneration Policy report continued 98 Galliford Try Holdings plc ![]() Composition of the Remuneration Committee and attendance In addition to the Chair, Terry Miller, the other Committee members were Marisa Cassoni, Gavin Slark, Peter Ventress, Alison Wood (from 1 April 2022) and Sally Boyle (from 1 May 2022). The General Counsel & Company Secretary acts as Secretary to the Committee. The Chief Executive has a standing invitation to attend all Committee meetings, although each meeting commences with the non-executive directors meeting without Executive management present. The HR Director attends certain meetings at the invitation of the Committee. No director nor the General Counsel & Company Secretary is present when his or her own remuneration is being considered. Attendance at Committee meetings is shown in the table on page 73. The Committee is governed by formal terms of reference agreed by the Board and is composed solely of non-executive directors. The terms of reference were reviewed during the year and are available on the Group’s website (www.gallifordtry.co.uk). Remuneration advice and advisers The Committee is informed of key developments and best practice inthe eld ofremuneration and obtains advice from independent external consultants, when required. Mercer Limited (“Mercer”) was the Committee’s remuneration consultant throughout the year. Fees paid to Mercerduringthenancial yearwere £16,250 (2021: £26,250). Mercer does not provide any other services to the Group, although Mercer is part of Marsh & McLennan Companies, a subsidiary of which Marsh JLT Specialty Limited, provides insurance broking services to the Group. The Committee is satised thatthese services do not impinge on Mercer’sindependence. Furthermore, Mercer is a signatory to the Remuneration Consultants’ Code of Conduct, which requires that its advice be objective and impartial. The General Counsel & Company Secretary also advises the Committee as necessary and, where appropriate, makes arrangements for the Committee to receive independent legal advice at the request of the Chair. Employee Share Trust and dilution The Employee Share Trust (“EST”) is the primary mechanism by which shares required to satisfy the Executive incentive plans are provided. Following the announcement of the 2021 full-year results in September 2021, the EST entered into a six-month trading plan with the Company from September 2021 to March 2022. The EST instructed Peel Hunt LLP to acquire ordinary shares of 50 pence each in the Company for the Trust. Purchases were made at the best price and limited to 260,000 shares in any single calendar month. The shares are to be used to satisfy potential future vesting(s) to be made to employees under the various Executive share incentive schemes. As at 30 June 2022, the EST held 3,541,603 ordinary shares in the capital of the Company (3.19%) (2021: 1,721,603 shares). Under the terms of the Trust Deed, the Trust may only hold up to a maximum of 5% of the issued shares in the Company. During thenancial year,739 newshares were issued arising from share scheme-related activities under the SAYE share option scheme. As at 30 June 2022, the total number of shares outstanding under the SAYE share option scheme was 2,789,523. The Group has complied with the dilution guidelines of the Investment Association(“Guidelines”). Applying the Guidelines, the Group has 7.49% headroom against the 10% in 10 years’ rule and, on the basis that the Group’s practice is that all awards granted pursuant to discretionary plans are satised usingshares purchased inthe market, 5% headroom against the ‘5% in 10 years’ rule for discretionary plans. Shareholdervoting onthe Directors’ Remuneration Report The Committee takes account of annual shareholder voting trends in connection with the Directors’ Remuneration report. Votes cast in support of the annual advisory resolution to approve the Directors’ Remuneration report during the past ve AGMs are included in the chart below. 20212020201920182017 Votes ForVotes Against 2.1513.9714.2735.570.11 97.8586.0385.7364.4399.89 Votes cast (%) AGM Year The Board will continue to engage with shareholders to ensure their views are fully understood and considered and can be taken into account by the Committee in the future. The Committee and Board are grateful to shareholdersfor the strong support provided. The current Policy was approved by 99.89% of shareholders who voted at the 2020 AGM. Forward-looking implementation of Policy Base salaries The 2022/23 salary review was completed in April 2022. The Committee carefully scrutinised pay and conditions across the Group. Taking into account market conditions, peer group comparisonsand the Group’s overall performance, the overall pay budget increased by 4.5%. With effect from 1 April 2022, Bill Hocking’s annual salary increased from £459,000 to £475,000, an increase of 3.5%. With effect from 1 April 2022, Andrew Duxbury was also awarded an annual salary increase of 3.5%, taking his annual salary from £373,000 to £386,000. These increases were below the average pay increase across the workforce. ABP For the nancial year to30 June2023, the Committee has determined that the existing bonus structure remains appropriately aligned to corporate strategy. It will therefore remain in its current form, with an opportunity of 120% of salary for the Chief Executive, and 100% for other executive directors. Bonus outcomes will be subject to overall Committee discretion, taking into account factors including health and safety and the underlying performance of the Group. The Committee intends to introduce ESG annual bonus measures in 2022/23 aligned to the Group’s strategy on ESG, with an ESG target in total of 12%. The ESG measures will comprise order book, employees, carbon, community and supply chain. LTIP Any award granted to the executive directors in 2022 will be within the current approved Remuneration Policy and based on performance metrics, with 75% based on earnings per share and 25% on average month-end cash as a percentage of revenue. Performance measures applied over a three-year performance period to 30 June 2025 are: 25% of the EPS element will vest if underlying EPS is 13.0p, increasing to 100% vesting on a straight-line basis if 16.5p is achieved. 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 % Chairman 1,2 £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% 1Peter Ventressreceivednobenetsin connection with his position as Chairman, other than membership of the Group’s medical insurance plan. 2Alison 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 21September 2022 99 Annual Report and Financial Statements 2022 Financial information Governance Strategic report ![]() #### Directors’ 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 StockExchange. 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 nancialstatements. Strategicreport 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 nancial statements use nancial and non-nancial keyperformance 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 prot 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 hasproposed anal 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 nancial 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,reecting the requirements of the Market AbuseRegulation. In certainspecic 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 areno shares carrying specic 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. Articlesof Association The Articles, adopted pursuant to a resolution passed on 5 November 2019, set out the Company’s internal regulations and dene 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 theregistered ofce. The directors present their Annual Report and auditednancialstatementsfortheGroupfor thenancialyearended30June2022. 100 Galliford Try Holdings plc ![]() Signicantdirectandindirectholdings As at 30 June 2022, being the date of this Annual Report, the Group had been made aware of thefollowing benecial interests in 3% or more of the Company’s ordinary share capital: Shareholder Interest % capital Premier Miton 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. 5,496,8474.95 Brewin Dolphin Ltd 5,169,266 4.66 Between 30 June 2022 and 21September 2022, no further noticationswere received under Rule 5 of the Disclosure and Transparency Rules. Change of controlprovisions 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. 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 ofofceor employmentin 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 issignicant 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 director’s 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 conicts of interest, in accordance with the Companies Act 2006. In addition, the Board reviews and authorises conicts ofinterest, as necessary, onan annual basis. The Group maintained Directors’ and Ofcers’ Liability insurance on behalf of the directors and General Counsel & Company Secretary throughout thenancial 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’sDisability Condent 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 consultationis 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. Detailsof whereto nd 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. Detailsof whereto nd 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. Signicantagreements 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 nancial 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 nancial year can be found on page 29 and are included by reference in this report. Creditorpayment 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 bythose termswhen satised that goods, services or assets have been provided in accordance with the agreed contractual terms. The Group remained a signatory to the PromptPayment Code throughoutthe nancial year which contains, among other things, commitments to pay suppliers within agreed contract terms. Financial instruments Further information regarding the Group’s nancialinstruments, including interest rate hedges, related policies and a consideration of its liquidity and other nancing risks, can be found in the Financial review from page 55 and in note23 tothe nancialstatements. 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 nancialstatements. Goingconcern 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 nancial year and the directors have concluded that there are no material uncertainties that maycast signicantdoubt 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 satised thattheGroup has adequate resources to meet its obligations as they fall due for a period of at least 12 months from the dateof approving these nancial statements and, accordingly, is able to adopt the going concern basis in preparing these nancialstatements. 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 conrms 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 conrmation isgiven 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 oor, 100 Liverpool Street, London, EC2M 2AT on Friday 11 November 2022 at 11.30am. 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 21September 2022. For and on behalf of the Board Kevin Corbett General Counsel & Company Secretary 21September 2022 102 Galliford Try Holdings plc ![]() #### Statement of directors’ responsibilities Statementof ## directors’ responsibilities The directors are responsible for preparing the Annual Report and the nancial statements in accordance with applicable law and regulations. Company law requires the directors to prepare nancialstatements for each nancial year. Under company law the directors have prepared the Group and Parent Company nancialstatements inaccordancewithUK adopted International accounting standards. Under company law, the directors must not approvethe nancial statements, unless they are satised thatthey givea true and fair view of the state of affairs of the Group and Parent Company and ofthe prot or loss oftheGroup and Parent Company for that period. In preparing the nancialstatements,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 nancial 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 accountingrecords that aresufcient to show and explain the Group and Parent Company’s transactions and disclose with reasonable accuracy atany timethe nancial position of the Group and Parent Company and enable them toensure that the nancial statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, asregards the Group nancial 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nancial 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 ParentCompany’s performance, position, business model and strategy. Each of the directors, whose names and functions are listed on pages 68 and 69, conrms thatto the best of their knowledge: theParent Company nancial statements, which have been prepared in accordance with UK adopted International Accounting Standards, give a true and fair view of the assets, liabilities,nancial position and prot of the Parent Company; theGroup nancial statements, which have been prepared in accordance with UK adopted International Accounting Standards, give a true and fair view of the assets, liabilities, nancial position and prot of the Group; and the Strategic report contained on pages 1 to 61 includes a fair review of the developmentand 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 ofeach director in ofce 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 21September 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 Opiniononthe nancialstatements In our opinion: thenancial statements give atrueand fairviewof the state ofthe Group’s and of theParent Company’saffairs as at30 June 2022 and of the Group’sprotforthe yearthen ended; theGroup nancial statementshave beenproperlypreparedin accordance with UK adopted international accounting standards; theParent Company nancial statements havebeenproperly prepared in accordancewithUK adopted internationalaccounting standards and as appliedin accordance with theprovisions ofthe Companies Act 2006; and thenancial statements have been prepared inaccordance with the requirements ofthe Companies Act2006. Wehave audited the nancial statementsof Galliford Try Holdings plc (the ‘Parent Company’) andits subsidiaries (the‘Group’) for the year ended 30 June 2022 whichcomprise the consolidated income statement, consolidated statement ofcomprehensive income,balance sheets, consolidated and company statement of changes inequity,statements of cash ows andnotes to the nancial statements, includinga summary of signicant accounting policies. The nancial reportingframework that has been applied intheirpreparationis applicable law and UKadopted international accounting standards and as regards the Parent Company nancialstatements,as applied inaccordance with the provisions of the Companies Act 2006. Basis foropinion Weconducted our audit inaccordance with InternationalStandards on Auditing(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards arefurther described intheAuditor’s responsibilities for the audit of thenancial statements section of our report. Webelieve that the audit evidence we haveobtained is sufcient and appropriate to providea basis for ouropinion. Ouraudit opinion isconsistent with the additional report tothe Audit Committee. Independence Following the recommendation ofthe Audit Committee, wewere appointed by themembers on4 November 2019to audit the nancial statements fortheyearending 30 June 2020 andsubsequent nancial periods.The periodof total uninterruptedengagement including retenders and reappointments isthree years, covering the years ending 30June 2020 to30 June 2022. We remain independentof the Group and the Parent Company inaccordance with the ethical requirements that are relevant to ouraudit ofthe nancialstatements intheUK, including the FRC’sEthicalStandard as applied to listed public interest entities, and we have fullled our other ethical responsibilities in accordance withthese requirements. The non-audit services prohibited bythat standard were not provided to the Group or the Parent Company. Conclusions relating to goingconcern In auditing the nancial statements, wehave concluded that the Directors’ use ofthegoing concern basis ofaccounting inthe preparation of the nancial statements is appropriate. Our evaluation ofthe Directors’ assessmentof the Group and the Parent Company’s ability tocontinue to adopt the going concern basis ofaccounting included: Weassessed the appropriateness of the Group’scash owforecasts in the context ofthe Group’ssecured ongoing contracts,thesecured new work and forecast potential work which were agreed to the Board approved forecasts. Weevaluated the Directors’downside sensitivities including delays to construction resulting inreduced volume ofwork and impactof materials and labour price ination. Weassessed the actual cashperformance againstforecasts for the currentnancial year and post year end toevaluate the Directors’ accuracy and achievability ofthe forecasts prepared. Weevaluated the adequacy of the disclosureswithinthe Directors’ report in relationto the specic risks posed, the scenarios the Directors have consideredand conclusions made. Based onthe work we haveperformed, wehave not identiedany material uncertaintiesrelatingto events or conditionsthat, individually or collectively,may cast signicant doubt on the Group and the Parent Company’s ability tocontinue asa going concern for aperiod of atleast 12 months from when thenancial statements are authorised for issue. In relationto the Parent Company’sreporting onhow ithas applied the UK Corporate Governance Code, we havenothing materialto add or draw attention to inrelation tothe Directors’statement in the nancial statements about whether the Directors considered itappropriate to adopt the going concern basis ofaccounting. Our responsibilities and the responsibilities of the Directors withrespect to goingconcern are described inthe relevant sections ofthis report. Overview Coverage 94% (2021:92%) ofGroup prot before tax 99%(2021:97%) of Group revenue 92% (2021: 99%) of Group totalassets Key audit matters 2022 2021 Revenue and protrecognition for construction contracts Recognition and recoverability of claimsand variations Accounting for acquisition of NMCN Materiality Group nancial statements asa whole £1.9m(2021: £1.5m)based on 0.15% (2019: 0.14%) of revenue. An overviewofthescope ofouraudit Our Group audit wasscoped by obtaining an understanding ofthe Group and its environment, including the Group’s system ofinternal control, and assessing the risks ofmaterial misstatement inthe nancial statements. Wealso addressedthe riskof management override ofinternal controls, including assessing whether there was evidence ofbias bythe Directors that mayhave represented arisk ofmaterial misstatement. Wetailored the scope of our audit to ensure that weperformed enough work tobeable to give anopinion ontheGroup nancial statements as awhole, takinginto accountthegeographic structure of theGroup, the accounting processes and controls, and the industry inwhich the Group operates. In establishing the overallapproachto the Group audit, weassessedthe audit signicance ofeach reporting unitin the Group byreference toboth its nancialsignicance and other indicators ofauditrisk, such asthe complexity ofoperations and the degree ofestimation and judgment in the nancialresults. All oftheGroup’sve signicant components were subjected tofull scope audits for Group purposes. For insignicant components, we carried out specied audit procedures. Allcomponentsare located in the UK and were audited bythe Group audit team. #### Independent auditor’s report ## Independent auditor’s report tothemembersofGallifordTry Holdings plc ![]() 105 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information Key audit matters Keyaudit matters are those mattersthat, inour professional judgment,were of most signicancein our audit ofthenancial statements of the current period and includethemost signicant assessed risks ofmaterial misstatement (whether ornotdue to fraud)that we identied, including those which had the greatesteffect on: the overall audit strategy, the allocation ofresources intheaudit, and directing the efforts ofthe engagement team. These matters wereaddressed inthe context ofour audit of the nancial statements as awhole, and in forming our opinion thereon, and we donot provide a separate opinion onthese matters. Key audit matterHow the scope of our audit addressed the key audit matter Revenue and prot recognition for construction contracts Note 1on page 116 tothe nancial statements gives further detail regarding theestimates and judgments made bythe Group in this regard. Note 1on page 117 to thenancial statements provides the accountingpolicy for construction services. For the majorityof long term contracts, the Group recognises revenue over time and measures progress based on the input method by considering the costs incurred todate, relative to the total estimated forecast costs appliedto the estimated forecastrevenue. This isconsidereda signicant risk asthestage ofcompletion, forecastrevenue and forecast costs on contracts are areas of signicant judgment. These judgments have a consequentialimpact ona number of contract balances, including tradereceivables, contract assets, tradepayables, accruals and contract liabilities within the nancialstatements includingthe related judgments and estimates disclosures. There isalso arisk that the accounting policies are not in accordance with –IFRS 15 Revenue from contracts with customers (‘IFRS 15’). Having considered the above we determined that contract revenue and other related contract balances have aninherent high degree of estimation uncertainty with arange of possible outcomes and hencewe have treated these areas as aKAM. Weobtained an understanding ofand evaluated management’s processes and controls for ensuring contracts meetthe requirements ofIFRS15. Wehave tested the operating effectivenessof the following controls: Review and approval oftender submissions and contracts. Approval of new suppliers within the systemand restrictions in place toamend supplier details. Prevention ofprocurement fraud and automated approval process for purchase orders. Wefocused our work on those contracts withthe greatest estimation uncertainty, based on the information included inthe contract schedule (eg signicant movement from tender/prior year orlarge unagreed variations or claims)and challenged the judgments made with the project teams aswell as senior operational, legal, commercial and nancial management. Oneach contract selected, we specically challenged and critically assessed the explanations provided bymanagement and carried out the following detailed testing: Obtaining an understanding ofthecontract and its particulars byobtaining the initialcontract withthe customer and holding discussions with commercial teams and management. Agreeing forecast revenue tocontractual agreements, supplementalagreements and agreed variations. The procedures to test the judgments in forecast revenue are includedin the keyaudit matter on recognition and recovery of claimsandvariations. Reconciling revenue recognised with amounts appliedforand amounts certied byclients, agreeing the amounts received tobank. Where the balance has not been receivedinto bank,we have considered recoverability of thebalance byreviewing correspondence with the customer. Re-performing the key calculations behind the margin applied, the prot taken and the stage ofcompletion, as wellcontract assets and liabilities. Testing asample ofaccrued costs totheyear-end subcontractor application. Corroborated asample offorecast costs for signicant subcontractor packages todocumentaryevidence and where thesubcontractorprojected nal accounts signicantly differed from the amount included inthe contract forecastwe Challenged management and obtained supporting evidence asapplicable. Performed a reviewof forecast costs bytypeincluded withintheCVR and performed a uxanalysis forthe stage ofcompletion of each cost type to determine where costs areprogressing in line with the overall stage of completion. We challenged managementwhere costs werenot in linewith our expectations and obtained supporting documentation asapplicable. Remained alert forany contradictory evidence orindicators of understatement offorecast costs while carrying out testing, including sitevisits, cost testing and payments testing. Performed a stand back review on the key judgments and estimates oneach contract toensure that sufcient assurance has been obtained and that wehave sufcient coverage over the costs to complete. Challenged commercial Directors onvariances between the stage ofcompletion (internal) with external certiedcompletion, judgments made indetermining forecast costs andtheremaining contingency on a project for the possibility ofa materialmisstatement. Compared the percentage procured tothe forecast costs and challenged management where there are substantial costs yetto procure as thispresents agreater risk. Wecorroborateda sample ofun-procured subcontractor costs todocumentary evidence. Assessed the recoverability ofbalance sheet items bycomparing tothe post year end externalcertication of the value of workperformed, and the receipt of post year end funds. Held discussions with management tounderstand and challenge other areas ofjudgment taken including anticipated completion date and impact ofany delays, whether there are anydisputes withthird parties on the contract and the reason for any movements inforecasts from tender to 30 June 2022. We obtained corroborating evidence for the explanations provided. Where appropriate, reviewed legal correspondence and expert advice obtained inrespect ofthe judgments and where necessary spokedirectly with management’s experts who had provided this advice. Wecarried out targetedtesting on theremaining contracts whichincludescomparing the revenue recognised to amounts certied ornal accounts whereapplicable. Fromthe speciccontract information reviewedforthese contracts, we considered whetherthere was anindication ofrisks withinthecontract such asdelays and un-procured costs for which we then performed additional procedures toaddress the risk. Wevisited a sample of sites across thebusiness. We inspectedthe physical progress ofthe sites and discussed progress with personnel working on the specic sites. Weassessedthe reliability ofmanagement’sestimates byreviewing the uctuations inbudgeted end of life margin from 30 June2021to 30 June 2022 for projects thatare substantially completed atthe year-end as well as from tender tothe30 June 2022 for allcontracts. Weconsidered the adequacy ofthe disclosures inthenancial statements in relationto specic contracts and also the disclosures inrespect ofsignicant judgmentsand estimates. Keyobservations: Weconsider that theestimates and judgmentsmade bymanagement in respect of revenue recognition andthe associated disclosuresare appropriate. ![]() 106 Galliford Try Holdings plc Key audit matterHow the scope of our audit addressed the key audit matter Recognition and recoverability of claims and variations Note 1on page 116 tothe nancial statements gives further detail regarding theestimates and judgments made bythe Group in this regard. Note 1on page 117 to the nancialstatements provides the accounting policy for construction services. In anumber oftheGroup’sprojects there are assumptions ofamounts contractually duefrom customers, and contract assets can include variations andclaims which are not yetcertied or formally agreed but havebeen assessed as highly probable ofnot reversing under IFRS 15. The Group hassubmitted claims of £95mand recognised signicant recoveries inrespect ofthree contracts with entities owned by amajor infrastructure fund of ablue-chip listed company. The Group hasbeen successful in adjudications onthese projects and has assumed recoveries from these claims.The parties haveagreed that the claim willbe resolved through an arbitration process that is currently underway. The assessment ofrevenue that ishighly probable that there will notbea signicant reversal requires judgment.Similarly, the assessment of the expected credit loss as regards contract assets isjudgmental. There also is arisk these signicant judgments and estimates are not adequatelydisclosed. In addition, there aresome downstreamclaims against third parties other than customers which are only recognised once they are considered tobe ‘virtually certain’ of recoverability, inaccordance with IAS37 –Provisions, Contingent Liabilities and Contingent Assets. These assumptions impact revenue recognised on these contracts, as well ascontracts assets balances and hence isconsidered tobe a key audit matter. Wechallenged management’sassessment of forecast revenue,in particular the keyassumptions, which included the expected recoveryof variations, claimsand compensation events from clients, todetermine the basison which the associated revenue was consideredto be ‘highly probable of notreversing’. In respect ofthe three contracts with entities owned bya major infrastructure fund, we haveobtained the adjudication ndings and discussed the results and implications with the Group’sin house counsel and external legal advisors. We havealso reviewed evidence of the recovery on instructed variations previouslyagreed on those contracts. Wereviewed the reconciliation betweenmanagement’sassessment ofthe claim and the contract assetrecorded in the nancial statements as highly probableof not reversing and obtained explanations for the difference between these positions. Wechallenged management’sassessment of the revenue constraint onthe basis ofthis analysis and the recoveries from previous adjudications and agreed variations on these contracts. Weconsidered the adequacy ofprovisions held and challengedmovements sincethe prior yearbased on our understanding of the contracts, meetings within-house counsel and review ofkey project correspondence. Weassessedthe evidence supporting the claimssubmittedincluding meeting withmanagement’sinternal and external legal and other experts regarding the claims. This followed a review ofthe correspondenceto date, including the most recent correspondence as regards the ongoing arbitration. Weobtained management’sprevious legal advice regarding thebasisof the contract terminations and the nancialand ownership status oftheparties withwhom the Group was contracted.We metwithmanagement’s external legal counsel numerous timesthroughout the year inorder to understandthe progress on anyongoing legal claims/disputes. We challenged whether management’sassessment ofthe revenue constraint remained appropriate, also considering the passage of time. Weobtained and challenged management’s assessment of IFRS 9expected credit loss inrespect ofthese contract assets.We challenged this assessment based on the most recently ledannual report ofthe immediate parent and investor inthese entities. Weassessed the disclosures included inthe nancialstatements inrespect of these infrastructure contracts, including whether they conveythe estimates involved and judgments taken by management. In relationto other claims wealso challenged those assumptions in respect ofestimated recoveries from subcontractors, designers, and insurersincludedin the forecast,to determine whether these could beconsidered ‘virtually certain’of recoverability. In relationto other claims weassessed theevidence provided bymanagement regarding recoveryof these amounts to evidence of agreement withcustomers orinsurance reserves provided by theinsurers. Keyobservations: Weconsider that theestimates and judgementsand associated disclosures made by managementin respectof revenue recognition and downstream claims are reasonable. #### Independent auditors’ report continued ![]() 107 AnnualReportandFinancial Statements2022 Strategic report Governance Financial information Key audit matterHow the scope of our audit addressed the key audit matter Accounting for the acquisition of nmcn Note 30 on page 141 tothe nancialstatements gives further detail regarding theacquisition of the water business fromnmcn plc. Note 1on page 116 tothe nancialstatements describes managements signicant judgments. In the current period, the Group acquired certain contracts that are part ofthe water business ofnmcn, in addition tothecompany Lintott Environmental Technologies Limited. Management has accounted for thisas a business combination under IFRS 3. Signicantjudgment is exercised in the measurement of the fairvalue of the assets and liabilities acquired, the associated goodwill, and the disclosure ofexceptional itemsin theconsolidatedincome statement, as aresult of the business combination and istherefore considered aKAM. Wehave reviewed managements paper outlining the signicant judgments/estimates involved inaccounting for the acquisition. Wehave considered thefairvalue ofthe assets and liabilitiesacquired based onthe review performed by external experts engaged by management and calculations preparedby management. Wehave corroborated schedules prepared bymanagementto underlying supporting documentation and have alsotested the underlying models/schedules providedby management’sexternal experts asthe basis of their valuation. Wehave obtained managements analysis of the considerationof the acquisitionand haveagreed thisto the Share Purchase Agreement. Wehave reviewed the goodwill calculation provided bymanagement, which isunderpinned by thevaluation performed by management’s external experts and calculations offavourable and unfavourable contracts. Wehave also used our internal valuation experts to reviewthemodels that were prepared by management’s external experts. Wehave reviewed the forecasts thatunderpin the management’s external experts’ model and have agreed a sample of contracts tosupporting documentation. Wehave agreed the total exceptional costs tounderlying supporting schedules. These schedules havebeen agreed tosupporting documentation, including challenge ofthebasisof movementforthe employees from productive tounproductive. Wehave also challenged management on the presentation oftheitemsas exceptional itemsand the associated disclosures. Keyobservations: Weconsider that theestimates and judgmentsand associated disclosures made by managementin respect of the acquisition ofnmcnare reasonable. Our applicationofmateriality Weapply the concept of materiality both inplanning and performing our audit, and in evaluating theeffect of misstatements. We consider materiality to be the magnitude bywhichmisstatements, including omissions, could inuence the economicdecisions of reasonableusers that aretaken on the basis of the nancial statements. In order toreduce to an appropriately lowlevel the probability that anymisstatements exceed materiality,we use alowermateriality level, performance materiality, todetermine the extent oftesting needed. Importantly,misstatements below these levelswill not necessarily be evaluated asimmaterial as we also takeaccount ofthe nature ofidentied misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the nancialstatements as awhole. Based onour professional judgment,we determined materiality for the nancial statements as awhole and performance materialityas follows: Group nancial statements ParentCompanynancial statements 2022 £m 2021 £m 2022 £m 2021 £m Materiality 1.9 1.51.8 1.4 Basis for determining materiality 0.15% ofrevenue0.14% of revenue95%of Groupmateriality95% ofGroup materiality Rationale for the benchmark applied On an ongoing basis and inprevious years anadjusted measure ofprot before tax hasbeen the basis which usersof the nancial statements would beinterested in as the basisof materiality. Weadjusted this basisin the prior and current year due to previous losses incurred bythecontinuing businesses. Asthe Group continuesto return toprotability, wehave considered what would be astable basis ofoperations and have benchmarked tootherpeers materialityas a proportion of revenue. Based onthis wehave set Group materiality at 0.15% (2021:0.14%)of Group revenue. Materialityforthe Parent company was capped at85% of Group materiality. Performance materiality 1.2 0.9 1.1 0.9 Basis for determining performance materiality On the basis ofour risk assessment, together withourassessment ofthe Group’s overall control environment and history of adjustments, our judgment was that overallperformance materiality oftheGroup and Parent company should be65% ofmateriality. ![]() 108 Galliford Try Holdings plc Component materiality Weset materialityforeach component ofthe Group based on a percentage of between 5%and 95%(2021: 5%and 95%) ofGroup materialitydependent on the size and our assessment ofthe risk of materialmisstatement ofthat component. Component materiality ranged from £0.1mto£1.8m (2021: £0.1mto £1.35m). Inthe audit of each component, wefurther applied performance materiality levels of 65% (2021: 65%) ofthecomponent materiality toourtesting to ensure that the riskof errors exceeding component materiality was appropriatelymitigated. Reporting threshold Weagreed with the Audit Committee thatwe would report tothem all individual audit differences inexcess of£38,000 (2021:£30,000). Wealso agreed toreport differences below this threshold that, inour view, warranted reportingon qualitative grounds. Other information The Directorsare responsible for the other information. The other information comprises the information included intheAnnual Report and Financial Statements 2022 other than the nancial statements and our auditor’sreport thereon. Our opinion on thenancial statements does notcover the other information and, except tothe extent otherwise explicitly stated inour report, wedo not express anyform of assurance conclusion thereon. Our responsibilityis toreadthe other information and, indoing so, consider whethertheother information is materially inconsistent with the nancial statements or our knowledge obtained in the course ofthe audit, or otherwise appears tobe materially misstated. If weidentifysuch materialinconsistencies or apparent material misstatements, weare required to determinewhether this gives rise toa materialmisstatement inthe nancial statements themselves. If, based on the work wehave performed, we conclude that there isa material misstatement ofthis other information, weare required to report that fact. Wehave nothing toreport inthis regard. Corporate governance statement The Listing Rulesrequire usto reviewthe Directors’statement in relation togoing concern, longer-term viabilityand thatpart of the Corporate Governance Statement relating totheParent company’s compliance with theprovisions ofthe UKCorporate Governance Codespecied for our review. Based onthe work undertakenas part ofour audit, wehave concluded that each ofthe following elements oftheCorporateGovernance Statement ismaterially consistent with the nancial statementsor our knowledge obtained during the audit. Going concern and longer-term viability The Directors’statementwithregards tothe appropriateness ofadopting the going concern basis of accountingand anymaterial uncertainties identied set out onpage 101 and The Directors’explanation as totheir assessment of the Group’s prospects, theperiod this assessment covers and why the period is appropriateset out on page 54. Other Code provisions Directors’statement on fair,balanced and understandable setout onpage 102; Board’sconrmation that ithas carried out arobust assessmentof the emerging and principal risks set out on page 43; The section ofthe annualreport thatdescribes the review of effectiveness of riskmanagementand internal control systems set out onpage 43; and The section describingthework ofthe Audit Committee set out onpage 84. Other Companies Act 2006reporting Based onthe responsibilities describedbelow and our work performed during the course ofthe audit, weare required by the Companies Act 2006and ISAs (UK) toreport on certain opinions and matters as describedbelow. Strategic report and Directors’ report In our opinion, based onthe work undertaken inthe course ofthe audit: theinformation given intheStrategic report and the Directors’ report for the nancial year forwhich the nancialstatements are prepared is consistent with the nancial statements; and theStrategic report and theDirectors’ report have been prepared inaccordance with applicable legal requirements. In the light of the knowledge and understanding ofthe Group and Parent Company and its environment obtained inthe course ofthe audit, we havenot identied material misstatements in the strategic report or the Directors’ report. Directors’ remuneration In our opinion, the part ofthe Directors’ remuneration report to beaudited has been properly preparedin accordance with the Companies Act 2006. Matters on which we are required to report by exception Wehave nothing toreport inrespectof the following matters inrelation towhich the CompaniesAct 2006 requires usto report to you if, inouropinion: adequate accounting records havenot been kept by the Parent Company, orreturns adequatefor our audit have notbeen received from branchesnot visited byus; or theParent Company nancial statements and the part ofthe Directors’ remuneration report to be auditedare not inagreement withthe accounting recordsand returns; or certain disclosures ofDirectors’remuneration speciedby law arenot made; or we havenot received allthe information and explanations we require forouraudit. Responsibilities of directors Asexplained more fully in the Statement ofDirectors’responsibilities, the Directors are responsible for the preparation of the nancial statements and forbeing satised thattheygive a true and fair view, and for such internal control as the Directors determine isnecessary to enable the preparation ofnancialstatements that arefreefrom material misstatement, whether due tofraud or error. In preparing the nancialstatements,the Directors areresponsiblefor assessing the Group’sand theParent Company’sability to continue as a going concern, disclosing, as applicable, matters relatedto going concern and using the going concern basis ofaccounting unlessthe Directors eitherintend to liquidate the Group or theParent Company or tocease operations, orhave no realistic alternative but todo so. Auditor’sresponsibilities fortheauditofthe nancialstatements Our objectives areto obtain reasonable assuranceabout whether the nancialstatements as awhole arefreefrom materialmisstatement, whether due tofraud orerror,and to issue an auditor’s report that includes our opinion. Reasonable assurance is ahigh level ofassurance, but is nota guarantee thatan audit conducted inaccordance with ISAs (UK) will always detect a materialmisstatement when itexists. Misstatements can arise from fraud or error and areconsidered material if,individually or inthe aggregate,they could reasonably beexpected to inuence the economic decisions of users taken onthe basis ofthese nancialstatements. #### Independent auditors’ report continued ![]() 109 AnnualReportandFinancial Statements2022 Strategic report Governance Financial information Extent to which the audit was capable of detecting irregularities, including fraud Irregularities,including fraud, areinstances ofnon-compliancewith laws and regulations. Wedesign procedures inline with our responsibilities, outlined above, todetect material misstatements in respect of irregularities,including fraud. The extent to which our procedures are capable of detectingirregularities, including fraud isdetailed below: Wegained anunderstanding ofthe legaland regulatory framework applicableto the Group and the industry inwhich it operates, and considered the riskof acts by theGroup that werecontrary to applicable laws and regulations, including fraud. Wealso communicated relevant identied laws and regulations and potential fraud risks to allengagement team members and remainedalert to anyindications of fraud or non-compliance with lawsand regulations throughout theaudit. Wefocused on laws and regulations that could give riseto amaterial misstatement in the nancial statements, including, but notlimited to, the Companies Act2006,the UKListing Rulesand tax legislation. Our tests included agreeing the nancial statement disclosures to underlying supporting documentation, review ofboard and committee meeting minutes, enquiries with management, enquiries ofin-house legal counsel asto whether there was anyknown orsuspected non-compliance with laws and regulations or fraud. We tested operating effectiveness of controls around procurement and tendering process. Weaddressed the riskof management override ofinternal controls, including testing journals and evaluating whether there was evidence of bias bythe Directors within the signicant judgments and estimates that represented a riskof materialmisstatement dueto fraud. Our audit procedureswere designed to respondto risks ofmaterial misstatement in the nancial statements, recognising that the riskof not detecting a materialmisstatement due to fraud ishigher than the riskof not detecting one resulting from error, asfraud mayinvolve deliberate concealment by, for example, forgery, misrepresentations orthrough collusion. There are inherent limitationsin the audit procedures performed andthe further removed non-compliance with lawsand regulations isfrom the events and transactions reected in the nancialstatements,the less likely weare to becomeaware ofit. A further description ofourresponsibilities isavailable on the Financial ReportingCouncil’swebsiteat: www.frc.org.uk/auditorsresponsibilities. This description forms part ofour auditor’sreport. Useofour report This report ismade solely totheParent Company’smembers, asa body, in accordancewithChapter 3of Part 16of the Companies Act 2006. Our audit work has been undertaken sothat we mightstate to the Parent Company’s members those matters weare required to state to them inan auditor’sreportand for noother purpose. To the fullest extent permitted by law, wedo not accept or assume responsibility to anyone other than the Parent Company and theParent Company’smembers as abody, for our audit work, for this report, or for the opinions wehave formed. Thomas Edward Goodworth (Senior Statutory Auditor) For and on behalf ofBDO LLP, Statutory Auditor London, UK 21September 2022 BDOLLPis alimited liability partnership registeredin England and Wales (with registered number OC305127). ![]() 110 Galliford Try Holdings plc Notes 2022 2021 Pre- Exceptional items £m Exceptional items (note 4) £m Total £m Total £m Revenue 3 1,237.2–1,237.2 1,124.8 Cost of sales (1,151.5)(5.8)(1,157.3) (1,049.7) Gross prot/(loss) 85.7(5.8)79.9 75.1 Administrative expenses (69.9)(7.9)(77.8) (67.1) Operating prot/(loss) 15.8(13.7)2.1 8.0 Share of post tax prots from joint ventures 0.4–0.4 0.5 Finance income6 4.3–4.3 4.1 Finance costs6 (1.4)–(1.4) (1.2) Prot/(loss) before income tax 7 19.1(13.7)5.4 11.4 Income tax (expense)/credit8 (1.7)2.60.9 (1.0) Prot/(loss) from continuing operations for the year 17.4(11.1)6.3 10.4 Loss from discontinued operations, net of income tax for the year 34 ––– (2.7) Prot/(loss) for the year 17.4(11.1)6.3 7.7 Earnings per share Basic — Prot from continuing operations attributable to ordinary shareholders 10 16.05.8 9.5p — Prot attributable to ordinary shareholders 10 16.05.8 7.0p Diluted — Prot from continuing operations attributable to ordinary shareholders 10 15.05.5 9.1p — Prot attributable to ordinary shareholders 10 15.05.5 6.8p There wereno exceptional itemsin the prior year. The notes are an integral part of theconsolidated nancial statements. ## Consolidated income statement for the year ended 30 June 2022 ![]() 111 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information Notes 2022 £m 2021 £m Prot for the year 6.3 7.7 Other comprehensive income: Items that may be reclassied subsequently to prot or loss Movement in fair value of PPP and other investments – continuing operations 16 (0.9) 7.3 Total items that may be reclassied subsequently to prot 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 theconsolidated nancial statements. Consolidatedstatementof ## comprehensive income for the year ended 30 June 2022 ![]() 112 Galliford Try Holdings plc Notes GroupCompany 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 11 8.8 5.7 – – Goodwill12 88.2 77.2 – – Property, plant and equipment 13 7.1 4.4 – – Right-of-use assets 14 24.5 19.5 – – Investments in subsidiaries 15 – – 188.0 173.9 Investments in joint ventures 0.3 0.2 – – PPP and other investments16 47.5 49.1 – – Deferred income tax assets22 14.0 14.3 – – Total non-current assets 190.4 170.4 188.0 173.9 Current assets Trade and other receivables 17 243.0 241.4 – – Current income tax assets 3.1 4.3 – – Cash and cash equivalents 18 218.9 216.2 109.4 100.7 Total current assets 465.0 461.9 109.4 100.7 Total assets655.4 632.3 297.4 274.6 Liabilities Current liabilities Trade and other payables 19 (471.1) (454.0) – – Lease liabilities 14 (9.9) (7.3) – – Provisions for other liabilities and charges 20 (27.4) (25.0) Total current liabilities (508.4) (486.3) – – Non-current liabilities Lease liabilities 14 (14.9) (11.9) – – Total non-current liabilities (14.9) (11.9) – – Total liabilities (523.3) (498.2) – – Net assets132.1 134.1 297.4 274.6 Equity Ordinary shares 24 55.5 55.5 55.5 55.5 Other reserves26 132.2 118.4 132.2 118.4 Retained earnings 26 (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 protforthe Parent Company for the yearwas £28.8m (2021: prot of£34.7m). The notes are an integral part of theconsolidated nancial statements. The nancial statements on pages 110to 149were approved and authorised for issue bythe Boardon 21September 2022 and signed on its behalf by: Bill HockingAndrew DuxburyGalliford Try Holdings plc Chief ExecutiveFinance DirectorRegistered number: 12216008 ## Balance sheets ![]() 113 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information Notes 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 Prot for the year––– 7.77.7 Other comprehensive income ––– 7.37.3 Total comprehensive income for the year––– 15.015.0 Transactions with owners: Dividends9 ––– (1.3)(1.3) Purchase of shares––– (1.1)(1.1) Share-based payments – continuing operations––– 1.01.0 Recycling of retained earnings to merger reserve on reversal of impairment of investment in Galliford Try Limited 26 –– 32.7(32.7) – At 30 June 2021 55.5–118.4(39.8)134.1 Prot for the year –––6.36.3 Other comprehensive income –––(0.9)(0.9) Total comprehensive income for the year –––5.45.4 Transactions with owners: Dividends9 –––(6.3)(6.3) Purchase of shares –––(3.4)(3.4) Share-based payments –––2.32.3 Recycling of retained earnings to merger reserve on reversal of impairment of investment in Galliford Try Limited 26 ––13.8(13.8)– At 30 June 202255.5–132.2(55.6)132.1 Company statement At 30 June 2020 55.5 – 85.7100.0241.2 Prot for the year––– 34.734.7 Total comprehensive expense ––– 34.734.7 Transactions with owners: Dividends9 ––– (1.3)(1.3) Recycling of retained earnings to merger reserve on reversal of impairment of investment in Galliford Try Limited 26 –– 32.7(32.7) – At 30 June 2021 55.5–118.4100.7274.6 Prot for the year –––28.828.8 Total comprehensive expense –––28.828.8 Transactions with owners: Dividends9 –––(6.3)(6.3) Share-based payments –––0.30.3 Recycling of retained earnings to merger reserve on reversal of impairment of investment in Galliford Try Limited 26 ––13.8(13.8)– At 30 June 202255.5–132.2109.7297.4 Consolidated and Company statements of ## changes in equity for the year ended 30 June 2022 ![]() 114 Galliford Try Holdings plc Notes GroupCompany 2022 £m 2021 (restated – note 35 £m 2022 £m 2021 £m Cash ows from operating activities Prot for the year 6.3 7.7 28.8 34.7 Adjustments for: Loss for the year from discontinued operations 34 – 2.7 – – Income tax (credit)/expense – continuing operations 8 (0.9) 1.0 – – Net nance income – continuing operations 6 (2.9) (2.9) – – Prot before nance costs for continuing operations 2.5 8.5 28.8 34.7 Adjustments for continuing operations: Depreciation and amortisation11, 13 & 14 14.5 13.3 – – Reversal of impairment of investment in subsidiary undertaking 15 – – (13.8) (32.7) Dividends received from subsidiary undertakings – – (15.0) (2.0) Share-based payments 2.3 1.0 – – Share of post-tax (prots)/losses from joint ventures (0.4) (0.5) – – Net cashgeneratedfrom operationsbefore changesinworking 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 provisions20 (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 dened benet 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 ows 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 16 – (1.9) – – Proceeds from disposal of PPP and other investments and loan repayments 16 0.7 0.7 – – Acquisition of business combinations, net of cash acquired 30 (0.3) – – – Dividends received from subsidiary undertakings – – 15.0 2.0 Proceeds from disposal of property, plant and equipment 13 0.1 – – – Acquisition of property, plant and equipment 13 (5.0) (2.1) – – Netcash generatedfrom/(usedin) investingactivitiesfrom continuingoperations 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 (31.7) 15.0 2.0 Cash ows from nancing 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) (6.3) (1.3) Net cash used in nancing activities from continuing operations (20.9) (12.9) (6.3) (1.3) Net cash used in nancing activities from discontinued operations – – – – Net cash used in nancing activities (20.9) (12.9) (6.3) (1.3) Net increase in cash and cash equivalents 2.7 19.0 8.7 0.7 Cash and cash equivalents at 1 July 18 216.2 197.2 100.7 100.0 Cash and cash equivalents at 30 June 18 218.9 216.2 109.4 100.7 ## Statements of cash ows for the year ended 30 June 2022 ![]() 115 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 1Accountingpolicies General information Galliford Try Holdings plc (the Company) isa public limitedcompany incorporated, listed and domiciledin the UK, and registered under the laws ofEngland and Wales. The address ofthe registered ofce is 3Frayswater Place, Cowley,Uxbridge, UB8 2AD. The Company has its listing on the LondonStock Exchange. The nancial statements are presented in pounds sterling because that isthe currency ofthe primary economic environment inwhich the Group operates. The amounts stated are denominated inmillions (£m). Basis ofaccounting For the yearto 30 June 2022, the Group consolidated nancial statements and the Company nancial statementshave beenprepared in accordancewithUK-adopted International Accounting Standards and with the requirements of the Companies Act 2006, following the UK’s exit from the European Union on 31January 2020, and ending ofthe transition period on 31 December 2020. There was no impact orchanges in accounting policies from the transition,which reects a change in accounting framework. The consolidated nancial statements havebeen prepared on agoing concern basisunder the historicalcost convention, asmodied by the revaluation of PPPand otherinvestments and nancial assets and liabilities (including derivative nancial instruments)at fairvalue through other comprehensive income. The Group’sbusiness activities, together with the factors likely toaffect its futuredevelopment, performanceand position are setout inthe Viability Statement (onpage 54)and theStrategic Report (frompage 1). Asat 30 June2022,the Group had substantial cash balances, nodebt, and a strong forward secured order book. The directors regularly review the working capital requirements of the Group while considering downside sensitivities. The Group’sforecasts havebeen prepared inthe context ofthe current economic conditions and additionally, the directors have considered a range of downside sensitivities (asdiscussed indetail inthe Viability Statement onpage 54). Even in the worst-case scenario, the Group is forecastto continue to meet its obligations and remain cash positive for aperiod of atleast 12months from the datethe nancialstatements are authorised for issue. After making enquiries and considering the factors and sensitivities outlined above fora range of scenarios, the directors have areasonable expectation that the Group has adequate resources tocontinue in operational existence for theforeseeable future. Thus, they continue to adopt the going concern basis ofaccounting in preparing the annual nancialstatements. The Company haselected to take theexemption under section 408 of the Companies Act 2006 tonot present the Parent Company income statement and statement of comprehensive income. New standards impacting the Groupthat have been adopted for the rsttime in thisset of nancial statements are listed below: Amendments toIFRS 7, IFRS 4andIFRS 16 Interest Rate Benchmark Reform – Phase 2 Amendment toIFRS16 –Covid-19-Related RentConcessions Extension of the practical expedient Amendment toIFRS4 –deferral of IFRS 9 These standards havebeen assessed tohave no signicant impact on the Group as they areeither notrelevant to the Group’s activities or require accounting which isconsistent withtheGroup’sprevious accounting policies. The following arenewstandards, interpretations and amendments, that are notyet effective orhave not been endorsed. The Group has chosen not toadopt these early.These may however havean effect on the Group’sfuture nancial statements: Narrow scope amendments toIFRS 3, IAS 16, IAS 37 Annual improvements to IFRS 1,IFRS 9, IAS41and IFRS 16 Amendments toIAS 1,‘Presentation ofnancial statements’ on classication ofliabilities Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8 IFRS17 ‘Insurance Contracts’, including amendments Amendment toIAS 12 ‘Deferred Tax related toAssets and Liabilities arising from aSingle Transaction’ The Group hasyet toassess the full outcome ofthese new standards, amendments, and annual improvements. Itis notexpected that these will signicantly impact thenancial statements of the Group. Basis of consolidation The Group nancial statements incorporate the results ofGalliford Try Holdings plc, its subsidiaryundertakings and the Group’sshareof the results ofjoint arrangements. Subsidiaries are allentities over which the Group hascontrol. The exposure orright to variable returns from its involvement withan investee, and the ability toinuence those returns, are considered when assessing whetherthe Group controls another entity. Subsidiaries arefully consolidated from the dateon which control is transferred totheGroup, until thedate that control ceases. The acquisition method ofaccounting isused toaccount for the acquisition ofa businessby the Group. The cost ofan acquisitionis measured atthefairvalue ofthe assets transferred, equity instruments issued and liabilitiesincurred or assumed atthe dateof exchange. Costs directly attributable totheacquisition are expensed totheincome statement. The identiable assets acquired and liabilitiesand contingent liabilities assumed inthe business combination are measured initiallyat their fair values at the acquisition date, irrespective of anynon-controlling interest. The excess of cost ofacquisition overthefairvalue ofthe Group’s share of theidentiablenet assets acquired isrecorded as goodwill.If the fair value ofthe Group’sshare of theidentiable netassets is inexcess of the cost of the acquisition, thegain on bargain purchase isrecognisedas a credit through the income statement. Inter-company transactions, balances and unrealised gains on transactions betweenGroup companies areeliminated. Unrealised losses arealsoeliminatedbut consideredan impairment indicator of the asset transferred. Accounting policies of acquired subsidiariesare changed where necessary,to ensure consistency with policies adopted by the Group. In addition tototal performancemeasures, the Group discloses additional information including performancebefore exceptionalitems and earnings per share before exceptional items. The Group believesthat this additionalinformation provides useful information onunderlying trends. This additional information isnot dened under international accounting standards and maytherefore not be comparable with similarly titled prot measures reported by other companies. Itis not intended to be asubstitute for, orsuperior to, international accounting standards measures ofprot. Criticalaccounting estimatesand judgments The preparation of the consolidated nancialstatements requires management tomake judgments, estimates and assumptions that affect the application of policies and reported amountsof assets, liabilities, income and expenses.Critical judgments are those management has made when applying its signicant accounting policies, whereas critical estimates areassumptions and estimates made at the end ofthe reporting period that havea signicant riskof resulting ina material adjustment to the carrying amounts ofassets and liabilities within thenext nancialyear. The estimates, judgments and associated assumptions are based on historical experience and variousother factors thatare believed to be reasonable under thecircumstances, the results of which form thebasis of making estimates and judgments about the carrying valueof assets and liabilities which are notreadily apparent from other sources. Actual results maydiffer from theseestimates and judgments. The estimates, judgments and underlying assumptions arereviewed onan ongoing basis. Revisions toaccounting estimates and judgments are recognised inthe period inwhich theestimate orjudgment is revised ifthe revisionaffects only that period, or inthe period ofrevision and future periods if the revision affects both currentand future periods. #### Notes to the consolidated nancial statements ![]() 116 Galliford Try Holdings plc 1Accountingpolicies (continued) Criticalaccounting estimatesand judgments (continued) Material estimates, judgments and assumptions are made inparticular with regards toestablishing the following policies: (i) Impairment of goodwill and intangible assets (judgment and estimate) The determination ofthevalue ofany impairmentof goodwill and intangible assets requires anestimation of the value inuse ofthe Cash Generating Units (CGUs) towhichgoodwill has been allocated. Thevalue in usecalculation requires anestimate ofthe future cashows expected from these CGUs, including the anticipated growth rate ofrevenueand costs as wellas resulting operating margin and requires the determination of asuitable discount rateto calculate the present value ofthe cash ows. Detailsof the goodwill impairment review calculations and associated sensitivity analysisperformed areincludedin note 12. (ii)Revenue andprotrecognition forlongterm contract accounting (judgment and estimate) In order todetermine the prot and loss thattheGroup isableto recognise onits construction contracts in aspecic period, the Group has toestimate theoutcome of both thetotal costs tocomplete the contract as wellas the nal contract value. The Group hasto allocate total costs ofthe construction contracts between the amountincurred on the contract tothe end of the reporting periodand the proportion to complete ina future period. The assessmentof the total costs to be incurred and nal contract value requires adegree ofestimation. Contract modications are recognised when the Group considers they have been approved (which alsoincludesconsideration ofwhether enforceable rightsexist inthe contract). The estimation ofnal contract value includes the assessment of therecoveryof variations, claimsand compensation events (contract modications). The estimate made is constrained inaccordance with IFRS 15so that itis highly probable notto result in asignicant reversal of revenue inthe future. Where the change in scope results to an increase to theworkto be performed that isdistinct and reects the stand-alone selling price ofthe distinct good/service, it is treated as aseparate contract. This isassessed ona contract specic basis. The Group recognises recoveries ofclaims from clientsas revenue where clear entitlement has been established, such as through dispute-resolution processes. Thisincludesthe recovery of costs (such as delaysto the contract programme) to the extent it ishighly probable not toresult ina signicant reversal of revenue inthe future. The estimation ofcosts to complete isbased on allavailable relevant information such asprocured packages and management experience and includes estimation ofnal accounts and any potential maintenance and defect liabilities. Recoveries resulting from actual or potential claims against subcontractors are accounted for inaccordance withIAS 37 and are recognised only when they meet the virtually certainthreshold. Group managementhas established internal controls toreview and ensure the appropriateness ofestimates made on an individual contract basis, including anynecessary contract provisions. As withmost large, complex construction projects, there isan element ofestimation uncertainty over costs to complete and nal account settlements. Thisis, however,reduced bythe experienceof the management team and the controls that wehave inplace. The settlementof these nalaccounts may give rise to an overor under-recognition of prot or loss and associated cash ows, which could be material. Asat 30 June2022,the Group’scontract assets, contract liabilitiesand contract provisions amounted to £173.4m, £104.4m and £27.4m respectively as setoutin Notes 17,19and20. The Group has considered the nature oftheestimates involved inderiving these balances and concludedthat it ispossible, on the basisof existing knowledge, that outcomes within the next nancial yearmay be different from the Group’s assumptions applied asat 30 June 2022 and could require amaterial adjustmentto the carrying amounts of these assets and liabilities inthe next nancial year. However,dueto the levelof uncertainty,combination of cost and income variables and timing across the Group’slarge portfolio of contracts at different stagesof their contract life, it isimpracticable to providea quantitativeanalysis ofthe aggregatedjudgements that are applied at a portfolio level. The Group’sve largest unagreed variations and claims positions at the yearendare summarised in aggregatebelow,themost signicant of which relatesto three contracts withentities owned by amajor infrastructure fund ofa blue-chip listed company (asdetailed 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 ve positions represent the most signicant estimates ofrevenue. The aggregate unagreed variations and claims constrained revenue recognised at yearend ofthe subsequent ve largest unagreed variations and claims is £5.9m. These items include estimation uncertainty, with arange of reasonably possible outcome of £nilto £136.0m. In respect ofcontract assetsof £173.4m (30 June 2021(restated, see note 35):£156.0m)andin assessing receivableprovisions calculated on an expected loss basis, the Group has recorded aprovision of £14.0m (2021: £14.0m). The directors’estimate represents areasonably possible outcome within anestimated reasonable range ofoutcomes of nilto £nil to £24m(2021: nil to £24m). It isunclear whether theoutstanding uncertainties will beresolved within the next 12 months. There isone signicant estimated claimrecovery inour Infrastructure business inrespect ofthree contracts with entities owned bya major infrastructure fund ofa blue-chip listed company.Included in contract assets of£173.4m is anassessment ofthe recovery tobe made inrespect of the outstanding claimson these contracts, which arestill being assessed with customers and recoveries havebeen assumed as highly probable. Our claims, supported by third-party advice, exceed the amounts recognised. However, there isa range ofpossible outcomes when these claims arenally settled. Further detailsare included inthe Financial reviewon page 56 and note17. (iii) Taxation (judgment and estimate) Deferred tax liabilities aregenerally provided forin full and deferredtax assets are recognisedto the extent that itis probable thatfuture taxable prot will arise against which the temporary differences willbe utilised. Management judgment isrequired todetermine the amount of deferred tax assets that can be recognised, based on the likely timing and levelof futuretaxable prots (note22). The Group hasassessed thatan asset equal to thevalue ofunutilised tax credits expected to beutilised over the next three nancial years is appropriate, as, based onthe already securedworkforthat timeframe, management has assessed itis probable thatthe Group willhave sufcient taxableprots to enable the deferred taxasset tobe recovered. Any remaining unutilisedtax credits have notbeen recognised. (iv)Exceptional items (judgment) Exceptional items areitemsof nancial performancewhich the Group believes should be presented separatelyon the face of the income statement, toassist inunderstanding the underlying nancial performanceachieved by theGroup. Determining whether anitem is part ofunderlyingitems or non-underlying items requires judgment. Detailsof exceptional itemsincluded inthe nancial statements are included innote4. (v) PPP and other investments measured at fair value through other comprehensive income(estimate) At 30 June 2022, £47.5m (2021: £49.1m) ofPPP and other investments were classiedas nancialassets measured atfairvalue through other comprehensive income.In the operational phase, thefairvalue ofthese nancialassets is measuredat each reportingdate bydiscounting the futurevalue ofthe cash ows allocated tothe nancial asset. Individual discountrateshave been used which equateto an overallblended discountrate of 7.0% (2021:7.0%),which reects the rates typically experienced inthe marketplace. A1.0% reduction inthe discount rate would result in anincrease inthevalue ofthe investmentsrecorded in the balance sheet ofapproximately £4.0m (2021:£4.3m) (note16). #### Notes to the consolidated nancial statements continued ![]() 117 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 1Accountingpolicies (continued) Criticalaccounting estimatesand judgments (continued) (vi) Impairment of investments in subsidiaries (judgment and estimate) During theprior years, the value of theinvestment heldby Galliford Try Holdings plc inGalliford Try Limited wasimpaired, followingan assessmentof the impact ofCovid-19on the company.This impairment required anestimation ofthe valuein use ofthis entity and its assets, using the same keyassumptions used inreviewing thegoodwillandintangible assets balances. The Companyhas subsequently recognised areversalin the impairment. Further details ofthis impairment areincluded innote 15. (vii)Businesscombinations (judgment andestimate) The acquisition ofthe nmcn Water Businessduring the year, represented a materialbusiness combination. This requiredtheapplication ofboth estimates and judgments tobemade bymanagement in determining the allocation ofthe purchase price against the identiableassets and liabilities and anyresidual goodwill. Exceptional items Exceptional items arematerial or signicant irregular items ofincome and expense which the Groupbelieves should be disclosed inthe income statement, toassist inunderstanding the underlying nancial performanceachieved by theGroup, byvirtue of their nature orsize. Examples ofitems which maygive rise todisclosure asexceptional items include gains and losses on the disposal of businesses and property,plant and equipment, signicant unanticipated losses oncontracts, cost of restructuring and reorganisation ofbusinesses, acquisition costs and asset impairments. Segmentalreporting Segmental reporting ispresented in the consolidated nancialstatements in respect ofthe Group’sbusiness segments, which arethe primarybasis of segmental reporting. The business segmentalreporting reects the Group’s management and internal reporting structure. Segmental results include itemsdirectly attributable tothe segment, as wellas those that can be allocated ona reasonable basis. Revenue and prot Revenue is recognised when the Group transfers control of goods or services to customers. Revenue comprises the fair value ofthe consideration receivedor receivable net ofrebates, discounts and value-added tax. Where considerationis subject tovariability, the Group estimates the amount receivable. Revenue recognised is constrained to the amount which ishighly probable not toresult in asignicant reversal in future periods. Sales withinthe Group areeliminated. Revenue also includes theGroup’s proportion ofworkcarried out under jointoperations. Where amodication toan existing contract occurs, the Group assesses the nature ofthemodication and whether it represents aseparate performanceobligation required to besatised orwhether it isa modication tothe existingperformance obligation. Revenue for the Group’s continuing operations isrecognisedas follows: Constructionservices Revenue comprises the value of construction services transferred to acustomer during the period. The results fortheperiod include adjustments for the outcome of contracts, including jointly controlled operations, executed in boththe current and preceding years. Fixed price contracts –the amount ofrevenue recognisedis calculated based ontotal costs incurredas a proportion of totalestimated costs to complete and isrecognisedover time. Theestimated nal value includes variations, compensation events and certain claims (contract modications) where itis highly probable thattherewill not be a signicant reversal. Provision will be made against anyexpected loss as soon as itis identied. Cost-reimbursable contracts –revenue isrecognised based upon costs incurred to dateplusany agreed fee and isrecognised over time. Where contracts include atarget price, consideration isgiven tothe impact on revenue ofthemechanismfordistributing any savings or additional costs compared to thetarget price. Any revenue over and above the target price is recognised once itis highly probable that there will notbea signicant reversal.Revenue includes anyvariations and compensation events where it ishighly probable that there willnot be asignicant reversal. Facilities management –management servicesand facilities management contracts typically represent asingle performance obligation.Revenue is recognised over timeas control passes tothe customer and istypically measured on astraight-line basisas this isconsidered to bea reliable estimateof the pattern of transfer tothe customer. Recoveries fromclaims against thirdparties The recognition ofexpected reimbursements resultingfrom certain third-party claims isaccounted for inaccordance 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 (includingresearch and development expenditurecredits) are recognised whenthere isreasonable assurance that the Group will comply withtheconditions attaching to them and the grants willbe received. The grants arerecognisedin the incomestatementover the periods necessary tomatch them with the relatedcosts whichthey are intended tocompensate, ona systematic basis. Contract costs Incrementalcosts to obtain acontract are capitalised totheextent the contract is expected tobe sufciently protable for them tobe recovered. All other costs toobtain a contract areexpensed asincurred. Incremental costs tofulla contract are expensed unless they relate directly toan existing contract orspecic anticipated contract, generateor enhance resources that willbe used to satisfy the obligations under thecontract and are expectedto be recovered.These costs are amortised over the shorter of theduration ofthe contractor the period for which revenue and protcan be forecast withreasonable certainty.Where acontract becomesloss making, capitalised costs inrelationto that contract are expensed immediately. Rent receivable Rental income represents incomeobtainedfrom therental ofproperties and is credited torevenuewithin theincome statement ona straight-line basis, over the period of the operatinglease. Interest income and expense Interest income and expense isrecognisedon a time proportion basis, using the effective interest method. Incometax Current income tax isbased onthetaxable protfortheyear. Taxable prot differsfromprot before taxation recorded in the income statementbecause itexcludes items ofincome or expense that are taxable or deductible in other years orthat are never taxable or deductible. The liability for current tax iscalculated using ratesthat have been enacted, or substantively enacted, bythe balance sheet date. Deferred income tax isprovided usingthe balance sheet liability method, providingforall temporary differencesbetween the carrying amount of assets andliabilities for nancial reporting purposes and the amounts used for taxation purposes,withthe exception ofthe initial recognition of goodwillarising on an acquisition. Deferredtax ismeasured atthe tax rates that areexpected toapply intheperiods in which the timing differences are expected toreverse, basedon rates and laws thathave been enacted orsubstantively enacted bythe balancesheet date. A deferred tax assetis only recognised when it ismore likelythan not that the asset willbe recoverable inthe foreseeable future out of suitable taxable prots from which the underlying temporarydifferences can be deducted. ![]() 118 Galliford Try Holdings plc 1Accountingpolicies (continued) Income tax (continued) Deferred income tax isprovided ontemporary differences arising on investments insubsidiaries and associates, exceptwhere the timing of the reversal ofthe temporary difference is controlled by theGroup and it isprobable that the temporary difference willnot reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there isa legally enforceable rightto offset current tax assets against current tax liabilities and when there isan intention tosettle the balances ona net basis. Deferred income tax ischarged orcredited through the income statement, exceptwhen itrelates to itemscharged or credited through the statement ofcomprehensive income or toequity,when itis charged or credited there. Goodwill Goodwillarising on consolidation represents the excess ofthefairvalue of the considerationgiven over the fair value ofthe net assets acquired. It isrecognised as anasset and reviewed for impairmentat least annually or when there is atriggering event, by considering the net present value of future cash ows.For purposes oftesting forimpairment, the carrying value of goodwillis compared to its recoverable amount, which is the higherof the value inuse and the fair value less costs tosell. Any impairment ischarged immediately tothe income statement. Goodwillarising on acquisitions before the dateof transition toIFRS has been retained at the previous UK GAAP amountsfollowing impairment tests. Goodwillwritten off to reserves under UK GAAP prior to1998 has not beenrestated. Goodwillis allocated to Cash Generating Units(CGUs) for thepurpose of impairment testing. The allocation ismade tothose CGUsor groups of CGUs thatare expected to benet 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 softwaredeveloped bythe Group. The intangibleassets are reviewed forimpairment at least annually or when there is atriggering event.Intangible assets are stated atcost less accumulated amortisation and impairment. Cost isdetermined at thetime of acquisition as being directly attributable costs or,where relevant,by using anappropriate valuationmethodology. Intangible assets arebeing amortised over the following periods: (a)Customer contractsand relationships – ona straight-linebasis over upto 10 years. (b)Computer software –once thesoftware is fully operational, amortisation ison astraight-line basis overup to10 years. Property,plant and equipment All property,plant and equipment isstated atcost less accumulated depreciation and impairment. Costincludesexpenditure thatis directly attributable tothe acquisition ofthe items. Land and buildings comprise mainly ofces. Depreciation is calculated to writeoff the cost ofeach asset to its estimated residual value overits expected usefullife. Freehold land is not depreciated. The annual ratesof depreciation oncost, applied ona straight linebasis, areas follows: Freehold buildings2% Plant and machinery15%to 33% Fixturesand ttings10% to33% In addition tosystematic depreciation, thebook value of property, plant and equipment iswritten down toestimated recoverable amounts should anyimpairment inthe respective carrying values be identied. The assetresidual values, carrying values and useful livesare reviewed on an annual basisand adjusted if appropriate ateach balance sheet date. Repairs and maintenance expenditure isexpensed asincurred, onan accruals basis. Joint arrangements The Group applies IFRS 11 toall jointarrangements. Investments in joint arrangements are classied as either joint ventures or jointoperations, depending on the contractual rights and obligations of each investor. A jointventure is anentity overwhich the Group has jointcontroland rights to the net assets ofthe entity. The Group’sinterest injoint ventures is accounted for using the equitymethod. Under this method the Group’s share of prots less losses after taxation ofjoint ventures is included in the consolidated income statement and its interest in their net assets is included ininvestments intheconsolidated balance sheet.Where the share of losses exceeds the Group’s interest in the entity and there isno obligation to fundthese losses, the carryingamount is reduced tonil and recognition offurther lossesis discontinued. Future prots arenot recognised until unrecognised lossesare extinguished. Unrealised gains on transactions with theGroup’sjoint ventures are eliminated tothe extent ofthe Group’s interest in thejoint venture. Accounting policies of jointventures havebeen changed on consolidation where necessary, to ensure consistency with policies adopted bytheGroup. Where joint venturesdo not adopt accounting periods that arecoterminous with the Group’s,results and net assets arebased on unaudited accounts drawn up tothe Group’s accounting reference date. A jointoperation is ajoint arrangement that the Group undertakes with third parties, whereby those parties haverights tothe assets and obligations ofthe arrangement. The Group accounts forjoint operations by recognising its share ofprots and losses inthe consolidated income statement. The Group recognises its share ofassociated assets and liabilities inthe consolidated balance sheet. PPP and other investments PPP and other investments are non-derivatives thatare either designated inthis category or not classied in anyof the other categories. They are included innon-current assets unless management intends to dispose of the assets within 12 months of thebalance sheet date. On initial recognition, the asset isrecognised at cost. The Group applies equity accounting forits investments in PPP/PFI entities. Theseinvestments are treated asassociates asthe Group has signicant inuence overthem. On initial recognition, the investments in these entities are recognised atcost, and the carryingamounts are increased or decreased torecognise the Group’sshare of the prot or loss of the PPP/PFIentities after the dateof acquisition. The Group’s share of the investments’ prots orlosses isrecognisedin the prot or loss net of anyimpairment losses. Distributions received reduce the carrying amount ofthe investments. The debt element ofthe Group’sPPP/PFI entities is accounted for under IFRS 9 ‘Financial Instruments’ withfair value movementsrecorded in other comprehensive income and with recyclingof gains and losses through the income statement. Werecognise tax on the movements in other comprehensive income,where weexpect the recycling to attract a tax charge/credit to the incomestatement. This reects the fact that the Group hasa demonstrable track record ofinvesting inPFI assets as part of anoverall construction procurementstrategy, with aview tochurning these investments on aregular basis.Management hasreviewed the classication of PPPinvestments and considers that the businessmodel continues tobe hold to collect andsell. The investments therefore continue to be held atfairvalue through other comprehensiveincome. Leases The Group hasapplied the principles ofIFRS16 toall accountingperiods beginning on orafter 1July 2019. In accordancewith IFRS 16, leasesare recognised as aright-of-useasset and acorresponding liability atthe date at which the leased asset is availableforuseby the Group. Each lease payment isallocated between the liability and nance cost. The nance cost is charged to prot orlossover the lease term ata constant periodic rate ofinterest onthe remainingbalance oftheliability. The right-of-use asset is depreciatedover the lease term ona straight-line basis, unless the useful life of the asset isshorter than the lease term. #### Notes to the consolidated nancial statements continued ![]() 119 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 1Accountingpolicies (continued) Trade receivables Trade receivables are recognised initiallyat fair value and subsequently measured atamortised cost, usingthe effective interest method, less provision for impairment. A provision for impairment of trade receivables is established basedon an expectedcredit loss model (general or simplied approach, as detailedunder impairment ofnancial assets). The amount oftheloss isrecognised inthe income statement. When atradereceivable is uncollectible, itis written offagainst the impairment provision for trade receivables. Subsequent recoveriesof amounts previously writtenoff are credited against costs inthe income statement. Short-term trade receivables donotcarry anyinterest and are stated at their amortised cost, asreduced by appropriateallowances for estimated irrecoverable amounts. Impairment ofnancialassets IFRS 9 establishes amodel for recognition and measurement of impairment innancial assets. Loans and receivables and contract assets apply the ‘Expected Credit Losses’ (ECL)model. Allother assets are classied and measuredat fair value, with movements going through the income statement or other comprehensive income. Expected credit losses arerecognised and measured according toone of three approaches – ageneral approach (12 months ECL),a simpliedapproach (lifetime ECL) or the ‘credit adjusted approach’. TheGroup has takenthe practical expedient toapply asimplied ‘provision matrix’ for calculatingexpected losses. The provisionmatrixis based on an entity’shistorical default rates over theexpected life ofthe tradereceivables and isadjusted for forward-looking estimates.For large one-off balances where there is no historic experience, analysis iscompleted in respect ofa number of reasonably possible scenarios. Cash and cash equivalents Cash and cashequivalents are carried in the balance sheet at nominal value. Forthe purposes ofthecash ow statement, cash and cash equivalents comprise cash at bank and inhand, includingbank deposits with original maturities of three months or less.Bank overdrafts are included for purposes ofcash owmovements and the cash ow statement. Bank deposits with an original termof more than three months are classied asshort-term deposits wherethe cash can be withdrawn on demandand the penalty forearly withdrawal is notsignicant. Cash held in escrow accounts isclassied as ashort-term deposit where theescrow agreement allows the balance tobe converted to cash, ifreplaced by abond repayable on demand. Trade payables Trade payables onnormal terms arenot interestbearing and are stated at their nominal value. Trade payables onextended terms arerecorded at their fair value atthedate ofacquisition of theasset towhich they relate and subsequently held atamortised cost. The discount tonominal value is amortised overthe period ofthe creditterm and charged tonance costs using the effective interest rate. Provisions for liabilitiesand charges Provisions for liabilities and charges are recognised when, asa result of pastevents, the Grouphas a present legalor constructive obligation, it isprobable that anoutow of resources willbe requiredto settlethe obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured atthe present value ofthe expenditures expected tobe requiredto settle the obligation, using the pre-tax rate that reectscurrent marketassessments of the timevalue ofmoney and the risks specic tothe obligation. The increase inthe provisiondueto the passage oftime isrecognisedas an interest expense. Foreign currency Transactions inforeigncurrencies arerecorded at therate ruling atthe date ofthe transaction. Monetary assets and liabilities denominatedin foreigncurrencies aretranslated atthe rate ofexchangerulingat the balancesheet date. Alldifferences are taken tothe incomestatement. Retirementbenet obligations For dened contribution schemesoperated by the Group, amounts payable are chargedto the income statement as they accrue. Accounting forEmployee Share Ownership Plan Ownshares held bytheGalliford Try Employee Share Trust (the ‘Trust’) are included inthe Groupnancial Statements asa deduction from retained earnings. The charge made to the income statement for employee share awardsand options isbased on the fairvalue of the award atthedate ofgrant, spread over the performance period. Where such shares subsequently vest to theemployeesunder the terms of theGroup’sshare optionschemes orare sold, anyconsideration received isincluded inequity. Share-based payments The Group operates a number of equity-settled, share-based compensation plans. The fair value of theemployee servicesreceived in exchangeforthe grant ofthe optionsis recognised as anexpense over the vestingperiod. The total amount tobe expensed overthe vesting period isdetermined by reference to thefair value of the options granted, excluding the impact of anynon-market vesting conditions such as growth in earnings pershare. Non-marketvesting conditions areincluded in assumptions about the number of options that areexpected tovest. At each balance sheet date, the Group revises its estimates ofthe number of options that areexpected tovest. It recognises theimpactof the revision tooriginal estimates, ifany,in theincome statement, with a corresponding adjustment toequity. The proceeds received net ofany directlyattributable transaction costs are credited toshare capital (nominal value) and sharepremium when the options areexercised. The grant by theCompany of options overits equity instruments tothe employees ofsubsidiary undertakings inthe Group istreated as acapital contribution. Dividend policy Final dividend distribution to the Company’sshareholders isrecognised as aliability in the Group’snancial statements intheperiod in which the dividends are approved by the Company’sshareholders. Interim dividends arerecognisedwhen paid. Equityinstruments Equity instruments, such asordinary share capital, issued by the Company arerecorded at theproceeds received net ofdirectly attributable incremental issue costs. Consideration paid for shares in the Company held bythe Trust arededucted from totalequity. Investmentsin subsidiaries The Company’s investments in subsidiaries are recordedin the Company’s balance sheet at cost less anyimpairment. The directors review the investments for impairment annually. ![]() 120 Galliford Try Holdings plc 2Segmentalreporting Segmental reporting ispresented in the consolidated nancialstatements inrespect oftheGroup’sbusiness segments, which are theprimary basisof segmental reporting. The business segmental reporting reects the Group’smanagement and internal reporting structure. Segmental results include items directly attributable tothesegment, aswell as those that can be allocated on areasonablebasis. As the Group has no materialactivities outside the UK, segmentreporting isnot required bygeographical region. The Chief Operating Decision-Makers (CODM) havebeen identied asthe Group’s Chief Executive and Finance Director. The CODM review the Group’s internal reporting in order toassess performance and allocate resources.Management hasdetermined the operating segments of theGroup to beBuilding, Infrastructure, PPPInvestments and Central (primarily representing central overheads). The CODM assess the performance oftheoperating segments based on ameasureof adjusted earningsbefore nance costs, amortisation, exceptional items and taxation. This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such asrestructuring costs and impairments when the impairment is the result ofan isolated, non-recurring event. Interest income and expenditure areincluded inthe result for each operating segment thatis reviewed by the CODM.Other information provided to them ismeasured ina manner consistent with thatin the nancialstatements. Income statement Year-ended 30 June 2022 Building £m Infrastructure £m PPP Investments £m Central £m Total £m Revenue 789.1441.96.2–1,237.2 Pre-exceptional operating prot/(loss) before amortisation of intangible assets 18.910.8(0.9)(10.3)18.5 Share of post tax prots from joint ventures ––0.4–0.4 Finance income ––3.90.44.3 Finance costs (0.3)(0.7)–(0.4)(1.4) Pre-exceptional prot/(loss) before amortisation and taxation 18.610.13.4(10.3)21.8 Exceptional items –(7.7)–(6.0)(13.7) Amortisation of intangible assets (1.0)(0.7)–(1.0)(2.7) Prot/(loss) before taxation 17.61.73.4(17.3)5.4 Income tax credit 0.9 Prot for the year 6.3 Year-ended 30 June 2021 Building £m Infrastructure £m PPP Investments £m Central £m Total £m Revenue 789.2329.26.4 – 1,124.8 Operating (loss)/prot before amortisation and taxation 15.96.0(1.8)(10.0)10.1 Share of post tax prots from joint ventures–– 0.5 – 0.5 Finance income – 0.13.90.14.1 Finance costs(0.3)(0.6) – (0.3)(1.2) Prot/(loss) before amortisation and taxation 15.65.52.6(10.2)13.5 Amortisation of intangible assets (1.0) –– (1.1)(2.1) Prot/(loss) before taxation 14.65.52.6(11.3)11.4 Income tax expense(1.0) Prot for the year 10.4 Inter-segment revenue iseliminated fromrevenue above. In theyear to 30 June 2022, thisamountedto £38.8m (2021:£39.4m)for continuing operations, ofwhich£nil (2021: £nil)wasin Building, £21.7m(2021: £24.7m)was inInfrastructure and £17.1m(2021: £14.7m)was incentral costs. #### Notes to the consolidated nancial statements continued ![]() 121 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 2Segmentalreporting(continued) Balance sheet 30 June 2022Notes Building £m Infrastructure £m PPP Investments £m Central £m Total £m Goodwill and intangible assets 42.053.3–1.797.0 Working capital employed (92.8)(139.5)41.96.6(183.8) Net cash18 154.9(1.4)(9.6)75.0218.9 Net assets 104.1(87.6)32.383.3132.1 Total Group liabilities (523.3) Total Group assets 655.4 30 June 2021 Notes Building £m Infrastructure £m PPP Investments £m Central £m Total £m Goodwill and intangible assets 42.937.2 – 2.882.9 Working capital employed (82.3)(132.0)40.09.3(165.0) Net cash1887.044.6(10.0)94.6216.2 Net assets47.6(50.2)30.0106.7134.1 Total Group liabilities (restated – note 35) (498.2) Total Group assets (restated – note 35) 632.3 Other segmental information Year ended 30 June 2022Notes Building £m Infrastructure £m PPP Investments £m Central £m Total £m Investment in joint ventures ––0.3–0.3 Contracting revenue 789.1441.9––1,231.0 Capital expenditure – property, plant and equipment 13 0.93.8–0.45.1 Total depreciation13 & 14 4.55.80.11.411.8 Share-based payments 25 0.60.10.31.32.3 Acquisition of intangible assets 1 30 –5.8––5.8 Amortisation of intangible assets 11 1.00.7–1.02.7 1Acquired as partof the businesscombination note 30. Year ended 30 June 2021 Notes Building £m Infrastructure £m PPP Investments £m Central £m Total £m Investment injoint ventures –– 0.2 – 0.2 Contracting revenue 789.2329.2 –– 1,118.4 Capital expenditure –property, plant and equipment 130.30.4 – 1.52.2 Total depreciation 13 & 144.54.5 – 2.211.2 Decrease in provision for receivables 17 ––– (1.5)(1.5) Share-based payments 250.20.10.10.61.0 Amortisation ofintangible assets 111.0 –– 1.12.1 ![]() 122 Galliford Try Holdings plc 3Revenue Nature ofrevenue streams (i)BuildingandInfrastructuresegments 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 (aswell as private commercial clients). Projects include the construction ofassets (with services includingdesign and build, construction only and refurbishment) in addition tothe maintenance, renewal, upgrading and managing ofservices across utility and infrastructure assets. Revenue stream Nature, timing of satisfaction of performance obligations and signicant payment terms Fixed price A numberof projects withinthese segmentsare undertaken usingxed-price contracts. Contracts are typically accounted foras a single performance obligation. Even when a contract (or multiple combined contracts)includesboth design and build elements, they are considered to form asingle performance obligation as the twoelements arenot distinct in thecontext of thecontract, given that each ishighlydependent on the other. The Group typically receives payments from the customer based on acontractual schedule ofvalue that reectsthe timing and performanceof service delivery.Revenue is therefore recognised over time (the period ofconstruction)based onan inputmodel (reference to costs incurred todate).Un-invoiced amounts arepresented as contract assets. Management does notexpect anancing component to exist. Cost-reimbursable Anumber of projects within thesesegments are undertaken using open-book/cost-reimbursable (possibly witha pain/gain share mechanism) contracts. Contracts are typically accounted foras a single performance obligation, withthe majority of these contracts including a build phaseonly. The Group typically receives payments from the customer based on actual costs incurred. Revenue is therefore recognised over time (the period ofconstruction)based onan inputmodel (reference to costs incurred todate).Un-invoiced amounts are presented as contract assets. Management does notexpect anancing component to exist. Facilities management \* Contracts undertakenwithin the Building segment that provide full life-cycle solutions to clients, areaccounted for as a single performance obligation, with revenue recognised overtimeand typically on astraight-line basis. \*Facilities management represents around 5%of the total Building segment turnover. (ii) Investments segment Our Investments business specialises in managing construction throughto operations for major building projects through public private partnerships and co-development opportunities. The business leads bid consortia and arranges nance, as wellas making debt and equity investments (which arerecycled). Revenue stream Nature, timing of satisfaction of performance obligations and signicant payment terms PPP Investments The Group hasinvestments ina number ofPPP Special Purpose Vehicles (SPVs), delivering major building and infrastructure projects. The business additionally provides management services to the SPVsunder Management Service Agreements (MSA). Revenue for these services istypically recognised overtime as and when the service isdelivered tothe customer. Revenue for reaching projectnancial close (such assuccess fees) isrecognised at apoint in time, atnancial close (when control is deemed topass tothecustomer). Disaggregation ofrevenue The Group considers the split ofrevenue byoperating segment tobe the most appropriate disaggregation. All revenue has been derived from performanceobligations settled over time. Revenue on existing contracts, where performance obligations are unsatised or partiallyunsatised atthe balance sheet date, isexpected tobe recognised as follows: Revenue – year ended 30 June 2022 2023 £m 2024 £m 2025 onwards £m Total £m Building 526.4111.633.2671.2 Infrastructure 295.2134.5142.4572.1 Total Construction 821.6246.1175.61,243.3 PPP Investments 2.82.725.731.2 Total transaction price allocated to performance obligations yet to be satised 824.4248.8201.31,274.5 #### Notes to the consolidated nancial statements continued ![]() 123 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 3Revenue(continued) Disaggregation ofrevenue(continued) Revenue – year ended 30 June 2021 2022 £m 2023 £m 2024 onwards £m Total £m Building 550.5117.14.7672.3 Infrastructure 239.372.814.4326.5 Total Construction 789.8189.919.1998.8 PPP Investments1.81.824.428.0 Total transaction price allocated to performance obligations yet to be satised 791.6191.743.51,026.8 Any element ofvariable consideration is estimated at avalue that ishighlyprobable not toresultin asignicant reversal inthe 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 wereno exceptional itemsin the prior year.The items inrespectof the current year are asfollows: 1TheGroup acquired the Water business ofnmcn plc (inadministration) on7 October 2021and incurred acquisition and integration relatedcosts of£7.7m. This is predominantlymade up oflegal and professional fees,integration and restructuring costs recognised in administrative expenses, and specic staffcostsincurred during the period of siteclosuresfollowing nmcn plc enteringadministration that arerecognised in cost of sales. 2TheGroup incurred £6.0m ofcustomisationand conguration costs associated with the move toOracle Fusion, acloud-basedcomputing arrangement,during the period. Taking into account the IFRIC Agenda Decision issued bythe IFRS ICin March2021, the Grouphasanalysed the costs and concluded that these costs should be expensed in the period. In accordance with the Group’sexisting accounting policy,management considers that the costs should be separately disclosed as exceptional because they are signicant and irregular. An associated tax credit of£2.6m has been recognised. 5Employeesand directors Employeebenet expense during the year Notes GroupCompany 2022 £m 2021 £m 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 areentitled tojoin the Galliford Try Pension Scheme, a dened contribution scheme established as astakeholder plan, with aCompany contribution based on ascale dependent on the employee’s ageand theamount they choose tocontribute. Since 1 July2013,all non-participating and newly-employed staff havebeen auto-enrolled into the separate stakeholderplanand areentitled toincrease their contributionratesin line with existing members. Since 1April 2009, the Group has operated a pension salary sacrice scheme, which means that allemployee pension contributions are paid asemployer contributions ontheir behalf. All pensioncosts in the current and prior years were inrespect ofthe Group’s dened contribution schemes. Of the totalcharge, £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 5Employeesand directors (continued) Average monthly number ofpeople (includingExecutive and non-executive directors) employed GroupCompany 2022 Number 2021 Number 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 6 6 Total 3,254 2,662 6 6 Remuneration ofkey managementpersonnel The keymanagement personnel comprise the Executive Boardand non-executive directors. The remuneration ofthe keymanagementpersonnel of the Group isset out below in aggregate foreach ofthe categories specied in IAS 24,Related PartyDisclosures. Further information about the remuneration of individual directors,including any interests inthe Company’s shares, is provided in theaudited part of the Directors’ remuneration report. 2022 £m 2021 £m Salaries and short-term employee benets 3.4 3.4 Retirement benet costs 0.3 0.2 Share-based payments 2.0 0.9 Total 5.7 4.5 6Net nance 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 nance income 2.9 2.9 7Protbeforeincome tax The following itemshave been included in arriving atprot before income tax: Notes 2022 £m 2021 £m Employee benet expense 5 213.0 165.3 Total depreciation13 & 14 11.8 11.2 Amortisation of intangible assets 11 2.7 2.1 Repairs and maintenance expenditure on property, plant and equipment 0.7 0.8 Decrease in provision for receivables 17 – (1.5) Exceptional items4 (13.7) – In addition totheabove, the Group incurs other costs classied ascost ofsales relatingto labour, materials and subcontractors’costs. #### Notes to the consolidated nancial statements continued ![]() 125 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 7Protbeforeincome tax(continued) Services provided by theGroup’sauditor and network rms During theyear, the Group obtained the following services fromthe Group’sauditorat costs asdetailed below: 2022 £m 2021 £m Fees payable to the Company’s auditor for the audit of Parent Company and consolidated nancial statements 0.2 0.2 Fees payable to the Company’s auditor for other services: The audit of nancial 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 Total1.1 0.8 A description ofthe work ofthe AuditCommittee inrespect ofthe auditor’sindependenceis set out inthe Governance report. 8Income taxcharge Group Notes 2022 £m 2021 £m Analysis of expense in year Current year’s income tax Current tax (1.6) 0.5 Deferred tax 1 22 0.5 5.0 Adjustments in respect of prior years Current tax 0.8 (4.8) Deferred tax22 (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 1Includes impact ofchange inrateof tax. The total incometax credit forthe yearof £0.9m (2021:£1.0m) islower (2021:lower)than the blended standard rateof corporation tax inthe UKof 19.0% (2021: 19.0%).The differences areexplained below: 2022 £m 2021 £m Prot before income tax 5.4 11.4 Prot 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 (4.5) Change in tax rates (0.4) (2.1) Net (recognition and utilisation)/restriction of tax losses 2 (2.1) 5.8 Other 0.1 – Income tax (credit)/charge (0.9) 1.0 1Theadjustments inrespect of prior years’£0.2m (2021: £(4.5)m) reect changes tothe estimatesmade inthe previous years’ Annual Report and Accountsand the nalised tax computations submitted toHMRC. The June 2021 adjustment of£(4.5)m incorporates, and principallyrelates to, the nalisation ofcertaintax estimates made following the demergerof the Group’shousebuilding divisions inJanuary 2020. 2Thenet recognition and utilisation of tax losses of£2.1m (2021: restriction £5.8m) reects the utilisation of£nil(2021: £1.5m)tax losses inthe year andthe recognition of £2.1m (2021: restriction of£7.3m) tax losses inline with the Group’saccounting policy (note 22). The restriction of tax losses in2021 resulted from changes totheestimated tax relief on historic loss-making contracts. TheGroup had assumed a level ofrecovery on these contracts in prior years and paid the associated corporationtax. On nalisation of the contracts,an overallloss was made, andthe Group sought torecover the associated corporation taxin the form of arefund (asat 30 June 2020),and subsequently intheform oftax losses (as at 30 June 2021) restricted inaccordance with the Group’saccounting policy. In the Spring Budget2021, the UKGovernmentannounced that from 1April2023, the corporation tax ratewould increase from 19%to 25%. This new law wassubstantively enacted inthe Finance Bill2021 and received RoyalAssenton 10June 2021. Where appropriate, deferred taxes at the balance sheet date havebeen measured usingtheappropriatetax rates(based on when the underlying balance isexpected tocrystallise) and reected inthese nancialstatements. The Group hasassessed thata deferred tax asset equal tothe value ofunutilised tax credits expected tobe utilised over the next three nancial years is appropriate, as, based on the already secured workforthat timeframe, management have assessed it isprobable that theGroup willhave sufcient taxable prots to enable the deferred tax asset tobe recovered. Any remaining unutilised tax credits havenot been recognised(note 22). ![]() 126 Galliford Try Holdings plc 9 Dividends Group and Company 2022 2021 £m pence per share £m pence per share Previous year nal 3.93.5 –– Current year interim 2.42.2 1.31.2 Dividend recognised in the year 6.35.7 1.31.2 The following dividendswere declared bytheCompany inrespect ofeach accountingperiod presented: 2022 2021 £m pence per share £m pence per share Interim 2.42.2 1.31.2 Final 6.45.8 3.93.5 Dividend relating to the year 8.88.0 5.24.7 The directors are proposing anal dividend inrespect ofthe nancialyear ended 30 June 2022of 5.8pence per share (2021: 3.5 pence per share), bringing thetotal dividend inrespect of2022 to8.0 penceper share (2021:4.7p pence per share). The naldividend will absorb approximately £6.4m of equity.Subjectto shareholders’ approval atthe AGM tobe held on 11 November 2022, the dividend willbe paid on 9December 2022 toshareholders who are on theregister ofmembers atthe close of business on 11 November 2022. 10Earnings pershare Basic and dilutedearnings/(losses) per share(EPS) Basic EPS iscalculated bydividingthe earnings attributable toordinary shareholdersby the weighted average number ofordinary shares outstanding during the year, excluding those held by theTrust, which are treated ascancelled. Under normal circumstances, the average number ofsharesis diluted byreference tothe average number ofpotentialordinaryshares held under optionin the year.The dilutiveeffect amounts to thenumber of ordinary shares which would be purchased usingtheaggregatedifference in value between themarketvalue of shares and the share option price. Only shares thathave met their cumulative performance criteria areincluded in the dilution calculation. TheGroup has two classes of potentially dilutiveordinary shares: those share options granted to employeeswhere the exercise price is less thanthe average marketprice of the Company’sordinary shares during the year and the contingently issuable shares under the Group’s long-term incentive plans. Aloss persharecannot be reduced through dilution, hence this dilution isonly applied where the Group has reported a prot. The earnings and weighted average number ofshares used inthe calculations are setout below. 2022 2021 Earnings £m Weighted average number of shares Per share amount pence Earnings £m Weighted average number of shares Per share amount pence Continuing operations Basic EPS – pre-exceptional Earnings attributable to ordinary shareholders pre-exceptional items 17.4109,016,66716.0 10.4109,976,1459.5 Basic EPS Earnings attributable to ordinary shareholders post-exceptional items 6.3109,016,6675.8 10.4109,976,1459.5 Effect of dilutive securities: Options n/a 6,627,132 n/a n/a3,804,698n/a Diluted EPS – pre-exceptional 17.4115,643,79915.0 10.4113,780,8439.1 Diluted EPS 6.3115,643,7995.5 10.4113,780,8439.1 Total operations Basic EPS – pre-exceptional Earnings attributable to ordinary shareholders pre-exceptional items 17.4109,016,66716.0 7.7109,976,1457.0 Basic EPS Earnings attributable to ordinary shareholders post-exceptional items 6.3109,016,6675.8 7.7109,976,1457.0 Effect of dilutive securities: Options n/a 6,627,132 n/a n/a3,804,698n/a Diluted EPS – pre-exceptional 17.4115,643,79915.0 7.7113,780,8436.8 Diluted EPS 6.3115,643,7995.5 7.7113,780,8436.8 The discontinued operations earnings per share for the yearwas nil (2021:loss pershareof 2.5 pence per share)and the discontinued operations diluted earnings per share forthe yearwas nil (2021:lossper share of2.3p). #### Notes to the consolidated nancial statements continued ![]() 127 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 11Intangibleassets Group Notes Customer contracts and relationships £m Computer software £m Total £m Cost At 1 July 2020 and 30 June 2021 12.210.923.1 Additions30 5.20.65.8 At 30 June 202217.411.528.9 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 20226.72.18.8 At 30 June 2021 3.02.75.7 At 30 June 2020 4.03.87.8 All amortisationcharges inthe yearhave beenincludedin administrative expenses. Computer software relates to the Group’s reporting systems. The remainingperiod of amortisation on computer software ranges fromone yearand six months to two years and threemonths .The remaining period of amortisation on customer contracts andrelationships rangesbetween two and nine years. 12 Goodwill Group Notes£m Cost At 30 June 2020 and 30 June 2021 77.2 Addition3011.0 Disposal – At 30 June 202288.2 Aggregate impairment at 30 June 2020 and 30 June 2021– At 30 June 2020 and 30 June 2022– Net book amount At 30 June 202288.2 At 30 June 2021 77.2 At 30 June 2020 77.2 Goodwillis allocated to the Group’s CGUs identied according tobusiness segment. The goodwill isattributable tothe followingbusiness segments: 2022 £m 2021 £m Building 40.0 40.0 Infrastructure 48.2 37.2 88.2 77.2 Impairment review ofgoodwill andkey assumptions Goodwillis tested for impairment atleast annually.The recoverable amountof aCGU is determined based onvalue inuse calculations. These calculations use pre-tax cash ow projections based on future nancial budgets approvedby the Board, based on past performance and its expectation of marketdevelopments. The key assumptions within these budgets relate torevenue and the future protmargin achievable, inline with our strategy and targets as setout inthe Strategic report. Future budgeted revenue isbased on management’sknowledge ofactual results from prior years and latest forecasts for the current year, along withtheexisting secured works and management’s expectation ofthe future level ofwork available within the market sector.In establishing future prot margins, the margins currentlybeing achieved are considered inconjunction withexpected ination rates ineach revenue and cost category.In Building and Infrastructure,the margins currently being achieved areexpected toincrease inline with the strategy set out intheStrategic report. Cash is monitored very closely on adaily,weeklyand monthly basis for the purposes ofmanaging both treasury and the business asa whole. Details of the Group’streasury management are included within theFinancial review inthe 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 thispast experience isusedto ensure that the future assumptions used areconsistent with past actual outcomes and aremanagement’s best estimate ofthe future cash ows ofeach business unit. ![]() 128 Galliford Try Holdings plc 12Goodwill(continued) Impairment review ofgoodwill andkey assumptions(continued) Cash ows beyond the budgeted three-year period areextrapolated using anestimated growth ratewithin each segment. The growth rate used is the Group’s estimate of theaveragelong-termgrowth rate for themarketsectors inwhich the CGU operates. Furthermore, sensitivity analysis has been undertaken on each goodwillimpairment review, bychanging the discount rates, prot margins, growthratesand other variables applicableto each CGU, and the results are noted below. The pre-tax discount rates foreach CGUare noted below. Building CGU A pre-tax discount rate of13.1% (2021:15.8%)in Building has been applied tothe future cashows, basedon an estimate of theweighted average cost of capital (WACC) ofthat division. A long-termgrowth rate of2.0% per annum has been applied to the budgeted cash ows (reecting theBoard-approved budget operating margins and workingcapital cashows)into perpetuity andthese assumptions result intherecoverable value of thisCGU being signicantly in excess ofthe carrying value ofthe CGU assets. The BuildingCGU is notsensitive tochanges inkeyassumptions and management does not consider that anyreasonablepossible change in any single assumption would giverise to animpairment of thecarrying value of goodwillandintangibles. Infrastructure CGU A pre-tax discount rate of12.7% (2021: 15.7%) inInfrastructure hasbeen appliedto the future cash ows, based on anestimate ofthe weighted average cost of capital of thatdivision. A long-termgrowth rate of2.0% per annum has been applied to the budgeted cash ows (reecting theBoard-approved budget operating margins and workingcapital cashows) intoperpetuity and these assumptions resultin the recoverable valueof this CGUbeing signicantly inexcessof the carrying value ofthe CGU assets. The InfrastructureCGU is notsensitive tochanges inkeyassumptionsand management does not consider that anyreasonable possible change in any single assumption wouldgive rise toan impairment ofthe carrying value ofgoodwill and intangibles. 13Property,plantandequipment Group Land and buildings £m Plant and machinery £m Fixtures and ttings £m Total £m Cost At 1 July 2020 0.52.113.416.0 Additions0.61.10.52.2 Disposals – (0.1)(4.5)(4.6) At 1 July 2021 1.13.19.413.6 Additions 1.71.91.55.1 Disposals –(1.8)(0.4)(2.2) At 30 June 20222.83.210.516.5 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 – 0.14.54.6 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 –0.80.41.2 At 30 June 2022(0.5)(0.5)(8.4)(9.4) Net book amount At 30 June 20222.32.72.17.1 At 30 June 2021 0.72.01.74.4 At 30 June 2020 0.21.12.53.8 There hasbeen no impairment of property, plant and equipment during the year(2021:£nil). The Company hasnoproperty, plant orequipment. #### Notes to the consolidated nancial statements continued ![]() 129 AnnualReportandFinancial Statements2022 Strategic report Governance Financial information 14 Leases This note provides information for leases where the Group isa 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 11.07.812.531.3 Additions0.22.45.48.0 Disposals(1.2)(3.1)(1.5)(5.8) At 1 July 2021 10.07.116.433.5 Additions 5.32.77.415.4 Disposals (2.7)(1.1)(2.2)(6.0) At 30 June 202212.68.721.642.9 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) Disposals0.81.91.44.1 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 2.71.12.26.0 At 30 June 2022(3.7)(4.4)(10.3)(18.4) Net book amount At 30 June 20228.94.311.324.5 At 30 June 2021 5.84.49.319.5 At 30 June 2020 8.45.78.722.8 Leaseliabilities 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 prot orloss shows the following amounts relating toleases for continuing operations: 2022 £m 2021 £m Depreciation of right-of-use assets 10.4 9.6 Interest expense (included in nance 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 expenses21.1 18.9 The total cash outow for leases in the yearto 30 June 2022was £11.2m, ofwhich £1.0m wasincluded in net interest expense –note 6(2021:£11.4m and £0.9m respectively). ![]() 130 Galliford Try Holdings plc 14Leases (continued) Leaseliabilities (continued) Maturity ofcontractual undiscounted future lease payments: Asat 30 June2022 Land and buildings £m Plant and machinery £m Motor vehicles £m Total £m Less than 1 year 2.32.55.210.0 Between 1 and 5 years 6.41.37.014.7 More than 5 years 7.8––7.8 Total 16.53.812.232.5 Asat 30 June2021 Land and buildings £m Plant and machinery £m Motor vehicles £m Total £m Less than 1 year 1.72.04.38.0 Between 1 and 5 years 2.91.85.810.5 More than 5 years 5.4 –– 5.4 Total10.03.810.123.9 15Investmentsin subsidiaries Company 2022 £m 2021 £m Cost As at 1 July 2021 and 2020 287.7 287.7 Additions 0.3 – At 30 June288.0 287.7 Aggregate impairment As at 1 July 2021 and 2020 (113.8) (146.5) Reversal of impairment/(impairment) 13.8 32.7 At 30 June100.0 (113.8) Net book value At 30 June188.0 173.9 The carrying value ofinvestments was reviewed and apartial reversal of £13.8m (2021: £32.7m)was recorded, determined from value inuse calculations basedon the sameassumptions asthose disclosedin note 12. The subsidiary undertakingsthat principally affected protsand net assets of the Group were: Galliford Try Construction Limited Galliford Try Infrastructure Limited 1 Galliford Try Investments Limited Galliford Try Services Limited Galliford Try Limited 2 1Incorporated in Scotland. 2Shares of these subsidiary companies are owned directly bythe Company. Unless otherwise stated, each subsidiary hasa 30 June year-end, operates asa construction company,is incorporated in England &Wales and 100% of ordinary shares and votingrights areheld bythe Group. Galliford Try ServicesLimited operates as central administration company to theGroup. A fulllist of the Group’sundertakings isset out innote 33. #### Notes to the consolidated nancial statements continued ![]() 131 AnnualReport andFinancialStatements2022 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 June47.5 49.1 These comprise PPP/PFIinvestments and investments in other listed securities. None ofthe nancialassets are past their due dates (2021:£nil), and the directorsexpect an average maturity prole of around 10years. Further disclosures relating tonancialassets are set out innote 23. The expected credit loss (ECL)was assessedto be minimal and accordingly no ECLrecognised. During theyear, there were no additions (2021: £1.9m) totheGroup’sPPP/PFIinvestments, subordinated loans of £0.5m (2021:£0.5m) were repaid and the Groupdisposedof interests held at£0.2m (2021:£0.5m),generating aproton disposal of£nil (2021: £nil).Ofthe total fair value movement inthe year of£0.9m, allof itrelates tothemovement in thefair value of the PPPinvestments (2021:total of£7.5m, ofwhich £7.3m relates to PPP investmentsand hasbeen recorded inequity whilst £0.2m relates to the residual Vistry Group plcshares held and hasbeen recorded inthe incomestatement). The Group hascommitments of£nil (2021: £nil)to provide furthersubordinated debt to its investments. This portfolio equates toa blended discount rate of7.0% (2021: 7.0%). Areductionof 1.0% would result in anincrease inthe fair value of approximately £4.0m (2021: £4.3m). Our share of PPPand other investments’external bank funding was£257.2m at 30 June 2022 (2021: £267.7m). Our shareof these entities’other external fundingconsistsof £64.1m(2021: £64.1m)of listed bonds. Thesebalances are non-recourse tothe Group. The information disclosed reects the amounts presented inthe nancial statements or managementaccounts ofthe relevant joint ventures and associates and not theGroup’sshare of those amounts. The Group holds investments inboth debt and equity within anumber ofentities overwhich it hassignicantinuence. Predominantly allof the value thattheGroup recognises relates to the debt instruments (representing over 99% of the PPP and other investments portfolio)which havebeen fairvalued within the PPPand other investments portfolio. Consequently,thematerial 1 joint ventures(in which the Group also holds debt investments either directly or indirectly) aredisclosed within this note. Income statement – extracts Aberdeen Roads (Finance) Plc Aberdeen Roads Limited 2022 £m 2021 £m 2022 £m 2021 £m Revenue – – 9.4 64.6 Depreciation and amortisation – – – – Finance income 24.7 25.4 29.6 31.1 Finance expense (24.7) (25.4) (24.7) (25.4) Income tax expense – – – – Prot (100%) – – – – Other comprehensive income 4.6 2.4 – – Total comprehensive income (100%) 4.6 2.4 – – Group’s share of prot and total comprehensive income 1.5 0.8 – – Dividends received by the Group during the year – – – – Balance sheet – extracts 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) – – 1Material due totheir holdings and/or issuinglisted debt. Detailsof related party transactions with jointventures aregivenin note 29. The Group’s shareholding ineach jointventure canbeseen innote 33. ![]() 132 Galliford Try Holdings plc 17 Tradeand 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 21 173.4 156.0 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 1Contract assets of£173.4m at30June 2022(2021: £156.0m)is stated net ofa life-time expected credit loss allowance of£14.0m (2021: £14.0m). The Company hasnotrade and other receivables. Retentions will be collected inthe normaloperating cycle ofthe Group and are therefore shown asa current asset. Itis expectedthat £33.6m (2021: £30.6m)will be collected within 12months from the balance sheet date. The Group hasno signicant capitalised contract costs. Aspreviously disclosed, the Group provided servicesin respect of three contracts withentities owned by amajor infrastructure fundof ablue-chip listed company. Costs weresignicantly impacted byclient-driven scope changes and the Group has submitted claimsto the value of£95m inrespect of these costs. Our work on these contracts formally ceased ontheir termination inAugust 2018. The Group has taken extensive advice onour entitlement and wehave been successful intwo adjudications supporting thevalidity oftheGroup’sposition. Theclaim is progressing in linewith the original expected timetable. Taking intoaccount the requirements ofIFRS 15, theGroup had constrained the revenue recognised in prior periods to the extent that itwas highly probable not toresult ina signicant reversal in thefuture. While the Group has submitted atotal claim value of£95m inrespect ofthese costs within the Statement ofCase, revenue has been constrained. We haveconstrained the revenue toa percentage recoverable that islowerthan thatsuccessfully recovered fromthe adjudications and variations previously agreed on thiscontract. The underlying principle supporting the validity and recovery ofthe claims and variations is notconsidered to beimpacted bythe passage oftime,which isdriven by thenatureof dispute resolution inthis sector. Giventhe progress, in linewith expectationsduring the year, this isunchanged. Itis possible that the process ofthe arbitration maynot be concluded within the coming nancial year. Whilstthe entities areowned bya major infrastructure fund of ablue-chip listed company, and weexpect that theamounts willbe repaid, wehave assessed any expected credit loss provision in accordance withIFRS9 totakeinto account their investment structure. Our assessment ofthe credit worthiness ofthe underlying contracting entities includesreviewing their latest audited nancial statements to31December 2020 (as well astheir immediateparent and investor whose latest led nancialstatements are to31December 2021),for which the audit opinion includes adisclaimer of opinionin relation tomaterial uncertainties inrespect ofclaims and the potential impact ongoing concern. TheGroup does not consider there to be a changein credit riskover the course ofthe year to30June 2022 and consequently, there has been no materialchange tothe expected credit loss provision since the prior year. The expected credit loss provision (among our overall portfolio of contracts)is discussed further innote 1Critical accounting estimatesand judgments. There hasbeen no change toour assessment of the constrained revenue under IFRS15 or the expected credit loss under IFRS9 inthe yearto 30 June 2022. The Group continues to vigorously defend thecounterclaims made by the counterparty, that weconsider arewithout merit, and assuchno amounts have been provided onthe basis the Group considers the possibility ofan outow ofresources to beremote. Movements on the Group provision for impairment oftrade 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 impairedreceivables havebeen included in cost ofsales and administrative expenses intheincome statement.Amounts chargedto the impairment provision are generally written off when there is noexpectation ofrecoveringadditional cash. The otherclasses within trade and other receivables do not contain impaired assets. The maximum exposure to credit riskat the reporting date isthe bookvalue ofeach class of receivable mentioned above, along with theGroup’scash and cashequivalents. TheGroup does not hold any collateral assecurity. Management believesthat the concentration of credit riskwith respect to trade receivables islimited,due to the Group’s customer base being large, unrelated and predominantly withinthe public sector.Major water industry customersaccounted for in total15% (2021: 8%)of Group revenuein the year. However, the customers involved comprise a variety of entities, including those both inthepublic and commercial sectors. Inaddition,withinthe commercial sector each customer hasan unrelated ultimate parent company. Asof 30 June2022,trade receivables of£13.7m(2021: £15.2m)were past due but not impaired. #### Notes to the consolidated nancial statements continued ![]() 133 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 17 Tradeand other receivables(continued) These relateto anumber ofindependentcustomers for whom there isno recenthistoryof default and there areno indications that they willnot meet their payment obligations in respect ofthetrade receivables recognised inthe balance sheet that arepast dueand unprovided. The ageing analysisof these trade receivables isas follows: 2022 £m 2021 £m Number of days past due date 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 13.7 15.2 Asof 30 June2022,trade receivables were consideredforimpairment based onmanagement’sjudgment and review of thetrade receivables listings. The amount providedforthese balances was£0.1m(2021: £0.1m). The allocation oftheprovision isas follows: 2022 £m 2021 £m Number of days past due date: Greater than 120 days 0.1 0.1 0.1 0.1 18Cashand cashequivalents GroupCompany 2022 £m 2021 £m 2022 £m 2021 £m Cash at bank and in hand and per the statement of cash ows 218.9 216.2 109.4 100.7 Cash at bank above includes£22.7m(2021: £16.9m), being the Group’sshare of cash held byjointlycontrolled operations.The effective interest rate received oncash balances is 0.3% (2021: 0.1%).TheGroup has nobank borrowings orloans. Net cash excludes IFRS 16 lease liabilities (note 14). Cash and cashequivalents and bank overdrafts are presented ona net (offset) basis. In2016, the IFRS Interpretations Committee released anupdate in respect ofIAS 32‘Financial instruments: presentation’ specicallyin relation tooffsetting and cashpooling. This claried that inorderto offset bank account balances, anentity must have both alegally enforceable right and an intention to do so. The Group’sbankarrangementsand facilities with both HSBC Bank plc and BarclaysBank plcprovide the legally enforceable right tooffset and the Group demonstrated its intention tooffset byformally sweeping the balances. Consequently, the balances have been offset in the nancial statements. 19Trade andotherpayables Notes Group 2022 £m 2021 (restated – note 35) £m Trade payables 102.3 90.9 Contract liabilities 21 104.4 92.7 Other taxation and social security payable 29.9 30.5 Other payables 1.6 1.2 Accruals 232.9 238.7 471.1 454.0 The Company hasnotrade and other payables. All payables are unsecured.Retentions willbe paid inthenormal operating cycle ofthe Group and aretherefore shown asa current liability. The undiscounted future cash ows ofnon-derivative nancial liabilities are£336.8m (2021:£330.8m) and these are expected tobe settled within one year ofthe balance sheet date. ![]() 134 Galliford Try Holdings plc 20Provisionsfor other liabilitiesandcharges Group Discontinued operations Onerous contracts Rectication 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) Utilised24.01.03.1 28.1 Additions – (0.8)(13.0) (13.8) At 30 June 2021 (restated) 1 – (0.8)(24.2) (25.0) Utilised – 10.23.7 13.9 Additions 2 – (14.0)(2.3) (16.3) At 30 June 2022 – (4.6)(22.8) (27.4) 1Theprovisions balancehasbeen restated, reectinga reclassicationbetween accruals and provisionsof £25.0m as at30 June 2021 (1July 2020: £15.3m), with noimpact to anyother balance reported at the balance sheet date. Onerous contract and recticationprovisions were previously reported within accruals but should havebeen presented as provisions (see note 35). 2Additionsinclude £13.7macquired as part ofbusiness combinations (note 30). Onerous contract provisionsare madeon loss-making contractsthe Group isobliged to complete. Rectication provisions are made for potential claimsand defects for remedial works against work completed bythe Group. The discontinued operations resultedfrom theworking capitaladjustment agreed in respect of thedisposal of thehousebuilding divisions. Thiswasfully settled inthe yearto 30 June 2021. Asat 30 June2022 £21.6m ofprovision relatedto three loss making contracts. Management’sbest estimate oftherange ofoutcomes on these two contracts isbetween £10.7mand £24m. The remaining £5.8m ofthe provision for loss making contracts torelates toa high number of immaterial balances. Dueto the level ofuncertainty,combination ofcost and income variables and timingacross the remaining portfolio ofcontracts,it is impracticableto provide a quantitative analysis ofthe aggregated judgements that areapplied at aportfolio level and therefore management have not given arangeof expected outcomes. Dueto the nature ofthe provisions, the timing ofany potential future outows is uncertain, however they are expectedto be utilised within theGroup’s normal operating cycle, and accordingly areclassied as current liabilities. Of the total provisions, £18.8m (2021: £17.8m) islikelyto be utilised in1-3 years with the remainderutilised within12 months. The Company does not hold any provisions. 21 Contractbalances Contract assets and liabilities areincluded within “trade and other receivables” and “trade and other payables” respectively on the face ofthe balancesheet. Where there isa corresponding contract asset and liability inrelation to thesame contract,thebalance shown is thenet position. The timing of workperformed (andthus revenue recognised), billing proles and cash collection results in trade receivables (amounts billed to date and unpaid), contract assets (unbilled amounts where revenue hasbeen recognised) and customer advances and deposits (contract liabilities), where nocorresponding work has yetto beperformed, being recognised on the Group’sbalance sheet. The reconciliation ofthe Group opening to closing contract balances is shown below: 2022 2021 (restated – note 35) Contract asset £m Contract liability £m Contract asset £m Contract liability £m At 30 June 2021 156.0(92.7) 172.0(112.3) Revenue recognised in theyear(continuing operations) 1,183.254.0 1,073.551.3 Net cash received inadvance ofperformance obligationsbeing fully satised 1 –(65.7) – (31.7) Transfers intheyearfromcontract assetsto trade receivables 2 (1,165.8)– (1,089.5) – 30 June 2022173.4(104.4) 156.0(92.7) 1Net cash receivedin advance of performance obligations beingfully satised was previouslyreported as £(38.1)m inthe prior period. 2Transfers intheyear from contract assets to trade receivables was previously reported as£(1,086.4)m intheprior period. Revenue allocated toperformance obligations that are unsatised at30 June, are expected to berecognised asdisclosed innote 3. The Company hasnocontract balances. The amount ofrevenue recognised inthe year from performance obligationssatised inprevious periods amountsto £3.0m(2021:£7.3m). #### Notes to the consolidated nancial statements continued ![]() 135 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 22 Deferred income tax Deferred income tax iscalculated infull on temporary differences undertheliability methodand ismeasured attheaverage tax ratesthat are expected to apply intheperiods in which the timingdifferencesare expected toreverse. Deferred income tax assets and liabilities are offset when there is alegally enforceable right tooffset current income tax assets against current income tax liabilities. Thenet deferred tax position at30June 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 yearin the net deferredincome tax account isas 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 tax 1 0.3 19.2 Acquisition of subsidiaries (0.3) – At 30 June14.0 14.3 1TheGroup had previously recorded adeferredtax asset in respect of unutilised tax credits resulting from historic trading contract losses. This asset wasinitially recorded within current tax assets and was transferred during the previous year. The Grouphasassessed that an asset equal tothe valueof unutilised tax credits expected to be utilised over the next three nancialyears isappropriate,as, based on the already secured work for that timeframe andthe approved Group budgets, management have assessed itis probable that the Group willhave sufcient taxable prots to enable the deferred taxasset toberecovered. These losses can be carried forward indenitely andhave no expiry date. Any remaining unutilisedtax credits have notbeen recognised and the Group has approximately£53m (2021: £95m) ofunrecognised trading losses, although theseare subject toagreement withHMRC. Movements in deferredincome tax assets and liabilities during theyearare shown below: The Company hasnodeferred tax balances. Deferred income 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 –– 4.95.3 Expense taken to income statement (0.4) – (9.3)0.5(9.2) Adjustment in respect of prior years 2 –– (0.3) – (0.3) Transfer from current tax assets and change in rates of deferred income tax–– 19.2 – 19.2 At 30 June 2021 –– 9.65.415.0 (Expense)/credit taken to income statement (0.4)0.2–(0.4)(0.6) Adjustment in respect of prior years 2 (0.2)–2.4(1.6)0.6 Transfer to deferred income tax liabilities 0.6–––0.6 At 30 June 2022–0.212.03.415.6 1Deferred tax assets included inthe ‘Other’ category relateto futureincometax deductions available from IFRS transitions adjustments inrespect ofIFRS 15, IFRS 9and IFRS16 which will be utilised over the next 3-6 yearsin line with the requirements of tax legislation. 2Theadjustmentis respect ofprior years of £0.6m (2021: £0.3m) arises predominantly due tothe recognition ofpreviously restricted tax interest expense deductions due to the corporate interest restriction provisions. Thisdeferred tax asset will be utilised over the next three nancial years in the form ofreactivated taxinterestexpense deductions against tax interestincomefrom Group investment assets. This is offset by other adjustmentsthat reect changes tothe estimates made inthe previous years’ Annual Report andAccounts and the nalised tax computations submitted toHMRC. The Company hasnodeferred tax balances. ![]() 136 Galliford Try Holdings plc 22Deferred incometax (continued) Deferred incometaxliabilities Group Accelerated tax depreciation £m Retirement benet obligations £m Intangible assets acquired £m Total £m At 30 June 2020– (0.2)(0.8)(1.0) Income taken to income statement– 0.20.10.3 At 30 June 2021–– (0.7)(0.7) Transfer from deferred income tax assets (0.6)––(0.6) Acquisition of subsidiaries ––(0.3)(0.3) At 30 June 2022(0.6)–(1.0)(1.6) 23Financialinstruments The Group’sactivities expose it to avariety of nancial risks: marketrisk (including foreign exchange risk, price riskand interest raterisk), credit risk and liquidity risk. The Group’soverall risk management programme focuses onthe unpredictability ofnancial markets and seeks to minimise potential adverse effects on the Group’snancial performance. Financial assets and liabilities are offset and the net amount reportedwhen there is alegally enforceable right tooffset the recognised amounts and there isan intention tosettle on anet basis orrealise the asset and settle the liability simultaneously. The Group and Company operatewithinnancial riskpolicies and procedures approved bythe Board. Itis, and has beenthroughout the year, the Group’s policy thatno tradingin nancial instruments shall beundertaken. The Board provides written principles for overallrisk management, as wellas writtenpolicies covering specic areas such asforeign exchange risk, interest rate risk, credit risk, useof derivative nancialinstruments and non-derivative nancial instruments, and investment ofexcess liquidity.The Group’sand Company’s nancial instruments principally comprise cash andcash equivalents,receivables, payables and PPPand other investments thatarisedirectly from its operations and its acquisitions. Capital riskmanagement The Group isfunded by ordinary shares, retained prots and its strong net cash position. The Group’sand Company’sobjectives when managing capital are tosafeguard the Group’s ability tocontinue asa going concern, inorder to provide returns for shareholders and benets forother stakeholders, and to maintain anoptimalcapital structure toreducethe cost ofcapital. The Group hasno borrowing or debt facilities and hencenogearing targets. Financialrisk factors (a) Market risk (i)Foreign exchange risk All materialactivities oftheGroup takeplace withinthe UKandconsequently there is little direct exchangerisk, other than payments to overseas suppliers who require settlement in their currency.If there isany materialforeign exchange exposure, the Group’s policy is to enter intoforward foreigncurrency contracts. The Group and Company haveno material currency exposureat 30 June2022 (2021:nil). (ii)Price risk Other than aresidual interest inequity securities, the Group andCompany are notexposed toequity or commodity price risk. (iii) Interest rate risk The Group’sincome and operating cashows aresubstantially independent of changes inmarketinterest rates. The Group’sinterestrate risk arises from movement in cash and cash equivalents given that itis wellcapitalisedwith no debt or net overdraft facilities. (b) Credit risk Credit risk ismanaged ona Group basis. Credit risk arises from cash and cash equivalents, deposits and borrowings with banks and nancialinstitutions, as wellas credit exposures tocustomers, including outstanding receivables and committed transactions. The Group does nothold anydebtfacilities. Further details ofcreditrisk relating totrade and other receivables aredisclosed in note17. No credit limits wereexceeded during the reportingperiod, and management does notexpect anymaterial losses from non-performance ofany counterparties, including inrespect ofreceivables not yet due. The Group’smaximum exposure to credit riskat the end ofthe reporting period isthecarrying amount (book value) ofeachclassof nancial asset set out on the following page. (c)Liquidity risk Prudent liquidity risk management implies maintaining sufcient cash and marketable securities. The Group nances its operations through its cash reserves and ongoing retainedprots. Management monitors rolling forecasts ofthe Group’s liquidity reserve on the basisof expectedcash ow. This isgenerally carried out atlocal level inthe operating companies ofthe Group, inaccordance with practices and limits set bytheGroup. These limits vary bylocation totakeinto account the liquidity ofthe market inwhich the entity operates. On adaily basisthroughout the year, the bank balances orgross overdrafts inall the Group’soperating companies are aggregated intoa total cash gure, inorder thattheGroup can obtain the most advantageousinterest rate. In accordance withIFRS9 ‘Financial Instruments’,the Grouphas reviewed allcontracts for embedded derivatives thatare required to be separately accounted for iftheydo not meet certain requirements set out inthestandard. No such embedded derivatives havebeen identied. #### Notes to the consolidated nancial statements continued ![]() 137 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 23Financialinstruments (continued) Fairvalue ofothernancial assetsandnancial liabilities Where marketvalues arenot available, fairvalues ofnancial assets andnancial liabilitieshave been calculated bydiscounting expected future cash ows at the prevailing interest rate. Primary nancial instruments held or issued tonance the Group’soperations: Notes 2022 2021 (note – 35) Book value £m Fair value £m Book value £m Fair value £m Financial liabilities: Current nancial liabilities measured at amortised cost 1 19 336.8336.8 330.8330.8 Financial assets: PPP and other investments16 47.547.5 49.149.1 Current assets measured at amortised cost 17 229.6229.6 227.8227.8 Cash and cash equivalents 18 218.9218.9 216.2216.2 1Theprior year balance hasbeen restatedto reect a reclassication between accruals and provisions asdetailed innote 20 and 35. Prepayments areexcluded from the nancial assets measured at amortised cost; and statutory liabilities and contract liabilities areexcluded from nancialliabilities measured atamortised cost. Amaturity analysis of theGroup’snon-derivative nancial liabilities isgiven in note19. There isno difference between the book value and the fair value ofthe Company’s nancial assets and nancial liabilities. Borrowing facilities The Group had nocommittedborrowing facilities available at30 June 2022 or2021. Fairvalue estimation Specicvaluation techniques used tovalue nancial instruments are dened as: Level 1 –Quoted marketprices ordealer quotes inactive markets for similarinstruments. Level 2 –The fair value of interest rateswaps iscalculated as the present value of the estimated future cash ows, based on observable yield curves. Level 3 –Other techniques, such as discountedcash owanalysis, are used todetermine fair value forthe remaining nancial instruments. The fair value of other investments issetout innote 16. The following table presents the Group’s assets and liabilities that aremeasured at fairvalueat 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 47.547.5 49.149.1 Total47.547.5 49.149.1 There wereno transfersbetween levels during theyear. The fair value of nancial instrumentsthat are not traded in anactive market (forexample, over-the-counter derivatives)is determinedby using valuation techniques. These valuation techniques maximise the use ofobservable market data where itis available and relyas little as possible on entity specic estimates. If allsignicant inputs required tofair value an instrument are observable, the instrument isincluded in Level2. Ifoneor more of the signicant inputs isnot basedon observable market data, the instrument isincluded in Level 3. Fairvalue measurements usingsignicant unobservableinputs (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 keyassumptions used inLevel 3valuations includethe expected timing ofreceipts, creditrisk and discountrates. The typical repayment periodis 10–15 years and the timing ofreceipts is based onhistorical data. The fair valueof the portfolio reects a blended discount rateof 7.0% (2021: 7.0%) and is based on current marketconditions. The sensitivity todiscount ratesis set out innote 16. Ifreceipts were tooccurearlier thanexpected, thefairvalue would increase. ![]() 138 Galliford Try Holdings plc 24Ordinary shares andsharepremium Group Number of shares Ordinary shares £m Share premium £m Total £m At 30 June 2020 and 30 June 2021 111,053,48955.5 – 55.5 Allotted under share option schemes 739 ––– At 30 June 2022111,054,22855.5–55.5 Company Number of shares Ordinary shares £m Share premium £m Total £m At 30 June 2020 and 30 June 2021 111,053,48955.5 – 55.5 Allotted under share option schemes 739 ––– At 30 June 2022111,054,22855.5–55.5 Number ofshares refers to50p 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 totalnumber of shares outstanding under the SAYE share option scheme was 2,589,973 (2021:1,989,993 )andunder the LTIPs was 6,986,213 (2021:5,496,703) as detailed innote25. 25Share-based payments The Group operates performance-related share incentive plans for Executives, details ofwhich are set out inthe Directors’ Remuneration report. The Group alsooperates sharesave schemes. The total charge for the yearrelating to employee share-based payment plans was£2.3m (2021: £1.0m), all ofwhich related toequity-settled share-based paymenttransactions. After deferred tax, the totalcharge was£2.1m (2021:£1.0m). Savings relatedshare options The Company operatesan HMRC approved sharesave scheme, under which employeesare grantedan optionto purchase ordinary shares in the Company atup to20%less than themarketprice at grant, in three years’ time, dependent on their entering intoa contract tomake monthly contributions into asavings account over therelevant period. Thesefunds are used tofund the option exercise. This scheme isopen to allemployees meeting the minimum employment period. No performance criteriaare applied tothe exercise ofsharesave options. The options werevalued using the binomial option-pricing model. The fair value per option granted and the assumptions used in the calculation are asfollows: 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 07.04.211,989,993130p112p01.06.21 60% 3 0.2%3.1%10% 50p 13.04.22999,819174p143p01.06.22 58% 3 1.5%3.3%10% 70p The expected volatility isbased onhistorical volatility in the movement inthe sharepriceover the past three years up tothe date ofgrant (orsince incorporation ofthe Company inJanuary 2020).The expected life isthe average expected period to exercise. The risk free rateis theyield on zero-coupon UKGovernment bonds of aterm consistent with the assumed option life. Areconciliation ofsavings related shareawards overthe year to30 June 2022 isshown below: 2022 2021 Number Weighted average exercise price Number Weighted average exercise price Outstanding at 1 July 1,989,993112p –– Awards 999,819143p 1,998,476112p 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 2,589,973123p 1,989,993112p Exercisable at 30 June –– –– The weighted average fairvalue ofawards granted during the year was 70p (2021:50p).There were 739 share options exercisedduring the year ended 30 June 2022 (2021: nil)and theweighted average shareprice atthe dateof exercise was 171pence (2021:nil). The weighted average remaining contractual life is 2years and 3 months (2021: 2years and 11months ). #### Notes to the consolidated nancial statements continued ![]() 139 AnnualReportandFinancial Statements2022 Strategic report Governance Financial information 25Share-based payments(continued) Performance-related long-termincentive plans The Company operatesperformance-related shareincentive plans for Executives, details of which areset out in theDirectors’ Remuneration report. The awards that vest are satised bythe transfer ofshares for noconsideration. The outstanding options werevalued using aBlack-Scholes model. The fairvalue per option granted and the assumptions used inthe calculation are asfollows: Grant date Shares under option Share price at grant date Vesting period/option life (months) Risk free rate Dividend yield Fair value per option 13.03.202,248,829123p36 0.3%3.1% 112p 23.09.203,247,87478p36 (0.1)%3.1% 71p 23.09.211,489,510177p36 0.4%2.5% 164p The expected volatility isbased onhistorical volatility in the movement inthe sharepriceof the Companyand its comparator group andthecorrelations between them overthe past threeyears. The expected lifeis the average expected period toexercise. The riskfreerate istheyield onzero-coupon UK Government bonds ofa term consistent with the assumed optionlife. Areconciliation ofperformance-related share awards over theyear to 30 June is shown below: 2022 Number 2021 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 fairvalue ofawards granted during the year was 164p (2021: 71p).There werenil options exercised during the yearended 30June 2022 (2021: nil). The weighted average remaining contractual life is nilas the shares are exercised onthe day that they vest (2021:nil). 26Other reservesand retained earnings GroupNotes Other reserves £m Retained earnings £m At 30 June 2020 85.7(20.7) Prot for the year– 7.7 Dividends paid9 – (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 1532.7(32.7) At 30 June 2021 118.4(39.8) Prot for the year –6.3 Dividends paid9 –(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 2022132.2(55.6) ![]() 140 Galliford Try Holdings plc 26Other reservesand retained earnings (continued) The Group’sother reserves relatesto amerger reserve amounting to £132.2m (2021:£118.4m). CompanyNotes Other reserves £m Retained earnings £m At 30 June 2020 85.7100.0 Prot for the year– 34.7 Dividends paid9 – (1.3) Reversal of impairment of investment in Galliford Try Limited and associated recycling of retained earnings to merger reserve 1532.7(32.7) At 30 June 2021 118.4100.7 Prot for the year –28.8 Dividends paid9 –(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 2022132.2109.7 The cumulative amount of goodwill arising on acquisition and writtenoff directly against reservesis £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) ata net cost of £3.4m (2021: £1.1m) and a further £nil (2021:£nil) was paid inrelation toother sharerelated transactions. Nil(2021: nil)shares weretransferred during the year.The cost of funding and administering the Trust ischarged to the incomestatementof the Companyin the periodto which itrelates. The market valueof the shares at 30 June 2022 was £6.0m (2021: £2.4m). No shareholders (2021: none) havewaivedtheir rights todividends. Aspart of and asa result ofthe disposal ofthe housebuilding operations toVistryGroup plc on3 January 2020 and the associated scheme of arrangementcompleted under Part 26of the Companies Act 2006, shares held in Galliford Try Limited (formerly Galliford Try plc) as at3 January 2020 (221,603) wereexchanged for an equivalent number ofshares inGalliford Try Holdings plc and 127,189sharesin Vistry Group plc(at arate of0.57406 VistryGroup plc shares for each Galliford Try Limited share).As theGroup isnot a strategic investor and does notwish to formally trade inexternal shares(ie the shares held in Vistry plc),theyare beingsold ina number of tranches, with the rst three tranches of atotal of 98,924 share sold inthe prior years for £1.3m cash and 14,132shares sold inthe current yearfor£0.2m witha residual 14,132 shares held bythe Group at30June 2022. These shares are recordedat fair value with themovement being reectedin prot or loss. 27 Financial and capitalcommitments The Group had nocommitments for subordinateddebt to joint ventures or other investments at 30 June 2022 (2021: £nil),nor any commitment for other capital expenditure. 28Guaranteesand contingentliabilities Galliford Try Holdings plc has entered intonancialguaranteesand counter indemnities inrespect ofbank andperformance bondsissued inthe normal course ofbusiness on behalf of Group undertakings, amounting to £127.1m (2021:£146.8m). Disputes arise inthe normalcourse of business, some of which lead tolitigation or arbitration procedures. The directors makeproper provision inthe nancialstatements when they believe aliability exists. While the outcome ofdisputes and arbitrationis never certain, the directors believe thatthe resolution ofall existing actions will nothave amaterial adverse effect ontheGroup’snancial position. 29Relatedparty transactions Transactions between the Group and its related parties aredisclosed as follows: Group Sales to related parties Amounts owed by related parties 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 2022 £m 2021 £m Non-trading transactions Related parties 4.6 4.4 Sales to related parties arebased on terms thatwould beavailableto unrelated third parties. Amounts owed by relatedparties consist predominantly of subordinated debt within the PPPand Other Investments portfolio, thatif held tomaturity would be due overthe next 26years (2021: 27years). These receivables are unsecured, with interest rates varying between arange of9% and 12%. Payables areduewithinone year(2021:one year) and are interest free. #### Notes to the consolidated nancial statements continued ![]() 141 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 29Relatedparty transactions(continued) Company Transactions between the Company and its subsidiaries which arerelated parties, which areeliminatedon consolidation, aredisclosed as follows: Interest and dividend income from related parties 2022 £m 2021 £m Non-trading transactions Subsidiary undertakings 15.0 2.0 The Company hasprovided performanceguarantees inrespectof certain operational contractsentered intobetween jointventures and a Group undertaking. 30 Businesscombinations On 7October 2021, the Group acquired the waterbusiness of nmcn plc (which had been placed into administration)for£1.0msettled incash. This expandedthe Group’sgeographical presence onkey frameworks across the UK, and its capabilities inthe water sector,in line withtheGroup’sstrategy. The acquisition comprised ofsignicantlyall of thewater business contracts and orderbook and the entiresharecapital and controlof Lintott Environmental TechnologiesLimited and its trading subsidiary Lintott Control Systems Limited. nmcnWater delivers water and wastewater projects for clients across the UK, including designand MEICA capabilities which willfurther allowgrowth across our Environment business. The goodwill of£11.0m arising from theacquisition issignicantly attributable to theacquired workforce, consisting of967employees. None of the goodwill recognised isexpected tobe deductible forincome tax purposes. The following table summarises the considerationpaidand the provisional fair value ofthe assets acquiredand liabilities assumed (which are deemed to represent one cash generating unit). £m Recognised amounts of identiable assets acquired and liabilities assumed Net cash and cash equivalents 0.7 Property plant and equipment 0.1 Intangible assets 1 5.8 Right-of-use assets 1.4 Trade and other receivables 2,5 7.8 Trade and other payables 3,5 (10.4) Provisions and other liabilities 4 (13.7) Lease liabilities (1.4) Net deferred tax liabilities 6 (0.3) Total identiable net liabilities (10.0) Goodwill11.0 Total1.0 Consideration Cash1.0 Total1.0 1Intangible assets of£5.8m comprise customer relationships and contracts (£5.2m)and technology (£0.6m)thatwill be amortised over 3-10years, 2Trade and other receivables include £4.4m relating tofavourablecontracts acquired. 3Trade and other payables include £6.4m relating to unfavourablecontracts acquired. 4Provisions and other liabilities relate toonerous contracts. 5Thefavourable and unfavourable contracts have been valued afterassessing the margins inthe underlying contracts novated. 6Deferred tax has been recognised where temporary differences arise on the fair value adjustments. The acquisition contributed£74.1m ofrevenue and £1.8m ofpre-exceptional prot before taxand amortisation (ontheacquired intangibles) inthe period to30 June 2022. The performance ofthebusiness preceding the acquisitionwas impactedby nmcn plc entering administration, and accordingly it isimpracticableto assessthe contribution it would havemadeto the Group if acquired at the start ofreportingperiod. Acquisition relatedcosts of £7.7minclude legal and professional fees, integration, andstaff costs, havebeen treated asexceptional, beingmaterial and non-recurring/irregular items inaccordance with our accounting policies and detailed further innote4. ![]() 142 Galliford Try Holdings plc 31 Postbalancesheetevents On 8July, the Group acquired 100%of the share capitalof MCS Controls Systems Limited (“MCS”), aleading systems integrator to theindustrial and utilities sectors for aconsideration of £1 settled incash. The addition ofMCS’s capabilities iscomplementary tothe operations ofGalliford Try’s expanding Environment business. Inparticular, MCSprovides additional competencies that complement those acquired in October 2021with nmcn’s waterbusiness and LintottControl Systems and willaccelerate the growth ofGallifordTry Environment’sasset optimisation and capital maintenance strategy. For the yearended 31December 2020,being the last yearforwhich MCS has published audited results, MCSgenerated revenue of £10.1 million, incurred apre-tax loss of£0.5 million and had net assets of £2.0 million. Inaddition tothe purchase consideration of£1, Galliford Try expects to fund certain contractual liabilitiesincurred prior to the completion date ofthe acquisition tostrengthen MCS’sbalance sheet and provide additional operational stability. As the acquisition wasmade after the reporting date, ithas made no contribution toGroup results for the year ended 30 June 2022. The provisional Balance Sheet atthe dateof acquisitionis shown below. £ Property, plant and equipment 0.3 Trade and other receivables 2.8 Trade and other payables (3.6) Borrowings (1.2) Deferred tax liabilities (0.5) Net liabilities acquired (2.2) At the date ofthis report, itis impracticable todisclose the provisional fair values of theacquired assets, liabilities,contingent liabilities and goodwill,including those expected to be deductible for tax purposes as the initialaccounting for the businesscombination is notcomplete. 32Alternativeperformancemeasures Throughout the Annual Report and Accounts, theGroup has presentednancial performance measures which areused tomanage the Group’s performance. These nancial performance measures arechosen toprovide abalanced view ofthe Group’s operations and are considered useful to investors as they provide relevant informationon the Group’s performance.They arealsoaligned tomeasures used internally to assess business performancein the Group’s budgeting process and when determining compensation. Anexplanation of the Group’snancial performance measures and appropriate reconciliations toits statutorymeasures are provided below. Providing clarityon the Group’salternativeperformance measures The Group hasincluded this note and the enclosed explanationsand reconciliations with the aimof providing transparency and clarity onthe measures adopted internally toassess performance.The APMs adopted bythe Groupare also commonly used inthe sectors itoperates in. The Board believes thatdisclosing these performancemeasures enhances investors’ability toevaluate and assess theunderlying nancial performance of the Group’soperations andtherelated keybusiness drivers. These nancial performance measures are alsoaligned tomeasures used internally to assess business performance intheGroup’sbudgeting process and when determining compensation. Measuring the Group’sperformance The following measures are referred to inthis report: Statutory measures Statutory measures are derived from the Group’sreported nancial statements, which areprepared in accordance withUK adopted International Accounting Standardsand inline with the Group’saccounting policies, that can be found innote 1. The Group’sstatutorymeasures take intoaccount allof the factors, including exceptional items which do not reectthe ongoing underlying performanceof the Group. Alternativeperformance measures In assessing its performance, the Group has adoptedcertain non-statutory measuresthat more appropriately reect the underlying performance of the Group. These typically cannot be directly extracted from its nancial statements but are reconciled tostatutory measures below: a)Pre-exceptionalperformance The Group adjusts forcertain material one-off (exceptional) items which the Board believes assist inunderstanding the performance achieved by the Group asthis better reects the underlying and ongoingperformance ofthebusiness. b)Operating prot before amortisation The Group adjusts operating protto exclude the amortisationof intangible assetsas this betterreects the ongoing performanceof the business. Operating margin reects theratio of operatingprot before amortisation ofintangible assets and revenue. This differs from the statutory measure of operating prot which includes the amortisation ofintangible assets. Divisional operating margin is the combined operating margin ofBuilding and Infrastructure. #### Notes to the consolidated nancial statements continued ![]() 143 AnnualReportandFinancial Statements2022 Strategic report Governance Financial information 32Alternativeperformancemeasures(continued) A reconciliation of thestatutory measure to the Group’sperformancemeasure isshown below, based on continuing operations: Building £m Infrastructure £m PPP Investments £m Central £m Total £m Year ended 30 June 2022 Statutory operating prot/(loss) 17.92.4(0.9)(17.3)2.1 add: amortisation of intangible assets (note 11) 1.00.7–1.02.7 exclude: exceptional items (note 4) –7.7–6.013.7 Pre-exceptional operating prot before amortisation 18.910.8(0.9)(10.3)18.5 Revenue789.1441.96.2–1,237.2 Pre-exceptional operating margin2.4%2.4% n/an/a 1.5% Year ended 30 June 2021 Statutory operating prot/(loss) 14.96.0(1.8)(11.1)8.0 add: amortisation of intangible assets (note 11) 1.0 –– 1.12.1 Operating prot before amortisation 15.96.0(1.8)(10.0)10.1 Revenue 789.2329.26.4 – 1,124.8 Operating margin 2.0%1.8% n/an/a 0.9% c)Pre-exceptional prot before tax The Group uses aprotbefore tax measurewhich excludes exceptional itemsas noted above.Thisdiffers from the statutory measure of prot before income tax, which includes exceptional items. A reconciliation of thestatutory measure to the Group’sperformancemeasure isshown below, based on continuing operations: 2022 £m 2021 £m Statutory prot/(loss) before tax 5.4 11.4 add: exceptional items (note 4) 13.7 – Pre-exceptional prot before tax 19.1 11.4 d)Pre-exceptional earningspershare In linewith the Group’s measurement of pre-exceptional performance, theGroup also presents its earnings per share ona pre-exceptional basis for its continuing operations. This differs from the statutory measure ofearnings per share, which includes exceptional items. A reconciliation of thestatutory measure to the Group’sperformancemeasure isshown 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 6.3109,016,6675.8 10.4109,976,1459.5 add: exceptional items (note 4) 11.1 n/an/a – n/an/a Pre-exceptional earnings per share 17.4109,016,66716.0 10.4109,976,1459.5 ![]() 144 Galliford Try Holdings plc 33Group undertakings In accordance withsection409 of theCompanies Act,the following isa list ofall ofthe Group’s undertakings as at30 June 2022. (i) Subsidiary undertakings Entity nameRegistered ofce or principal place of business Shareholding (direct or indirect) Chancery Court Business Centre Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Charles Grip Surfacing LimitedMiller House, Pontefract Road, Normanton, WF6 1RN100% Construction Holdco 1 Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Construction Holdco 2 Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Brick Factors Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Asset Intelligence Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Building 2014 LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% Galliford Try Construction Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Construction & Investments Holdings Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Corporate Holdings LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% Galliford Try Employment Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Estates Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Facilities Management Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try HPS Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Infrastructure LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% Galliford Try Investments Consultancy Services Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Investments Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Investments NEPS Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Plant Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Properties Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Qatar Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Secretariat Services Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Services Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try Telecommunications Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Galliford Try (Water) Limited3 Frayswater Place, Uxbridge, UB8 2AD100% GT (Buidheann) LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% GT (Leeds) Lift Limited 3 Frayswater Place, Uxbridge, UB8 2AD100% GT (Leicester) Limited 3 Frayswater Place, Uxbridge, UB8 2AD100% GT (North Hub) Investments LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% GT (North Tyneside) Limited3 Frayswater Place, Uxbridge, UB8 2AD100% GT (Scotland) Construction LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% GT Camberwell (Holdings) Limited3 Frayswater Place, Uxbridge, UB8 2AD100% GT Camberwell Limited3 Frayswater Place, Uxbridge, UB8 2AD100% GT Car Parks Leicester (Holdings) Limited3 Frayswater Place, Uxbridge, UB8 2AD100% GT Car Parks Leicester Limited3 Frayswater Place, Uxbridge, UB8 2AD100% GT Guildford Crescent Limited3 Frayswater Place, Uxbridge, UB8 2AD100% GT Inverness Investments Limited PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% GT Telford (Holdings) LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% GT TMGL Limited PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% GTFM (Cavalry) Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Kingseat Development 1 LimitedMorrison House, Kingseat Business Park, Kingseat, Newmachar, Aberdeenshire, AB21 0AZ 100% Leicester GT Education Company Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Lintott Control Systems Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Lintott Environmental Technologies Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Morrison Construction LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB100% Morrison Highway Maintenance Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Oak Dry Lining Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Oak Fire Protection Limited3 Frayswater Place, Uxbridge, UB8 2AD100% #### Notes to the consolidated nancial statements continued ![]() 145 AnnualReportand FinancialStatements2022 Strategic report Governance Financial information Entity nameRegistered ofce or principal place of business Shareholding (direct or indirect) Regeneco (Services) Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Regeneco Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Rock & Alluvium Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Try Accord Limited3 Frayswater Place, Uxbridge, UB8 2AD100% Try Construction Limited3 Frayswater Place, Uxbridge, UB8 2AD100% All subsidiary undertakings are incorporated intheUK unless otherwise specied and are included inthe consolidated nancial statementsof the Group, asa majority ofvoting rights are held ineach case. (ii)Jointventureundertakings Entity nameRegistered ofce or principal place of business Proportion of capital held Financial year-end Aberdeen Roads (Finance) PLCMaxim 7, Maxim Ofce Park, Parklands Avenue, Eurocentral, Holytown, Scotland, ML1 4WQ 33%31-Dec Aberdeen Roads Holdings LimitedMaxim 7, Maxim Ofce Park, Parklands Avenue, Eurocentral, Holytown, Scotland, ML1 4WQ 33%31-Dec Aberdeen Roads LimitedMaxim 7, Maxim Ofce Park, Parklands Avenue, Eurocentral, Holytown, Scotland, ML1 4WQ 33%31-Dec ACP: North Hub LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50%31-Dec Community Ventures (Management) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB60%30-Sep Community Ventures Investments Limited4340 Park Approach, Thorpe Park, Leeds, LS15 8GB60%30-Sep Community Ventures Partnerships Limited4340 Park Approach, Thorpe Park, Leeds, LS15 8GB60%30-Sep Community Ventures Primary Care Limited4340 Park Approach, Thorpe Park, Leeds, LS15 8GB60%30-Sep GBV JV Limited 3 Frayswater Place, Uxbridge, UB8 2AD50%30-Jun GT Equitix Inverness LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50%31-Mar GT Equitix Inverness Holdings LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50%31-Mar Hub South East Scotland Limited8 Melville Street, Edinburgh, EH3 7NS50%31-Mar Kingseat Development 2 LimitedMorrison House, Kingseat Business Park, Kingseat, Newmachar, Aberdeenshire AB21 0AZ 50%30-Jun Space Scotland Limited PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB83% 1 31-Mar Urban Vision Partnership Limited65 Gresham St, London, EC2V 7NQ30%31-Dec The aboveentities areall incorporated in theUK andconsidered to be jointventures, based on the shareholding agreementsin place. 1Treatedas a joint venture as indicated byits joint venture agreement. ![]() 146 Galliford Try Holdings plc 33Group undertakings (continued) (iii)Associated and othersignicantundertakings Entity nameRegistered ofce or principal place of business Proportion of capital held by class Aberdeen Community Health Care Village LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB30% Alliance Community Partnership LimitedAvondale House, Suites 1l – 1o Phoenix Crescent Strathclyde Business Park, Bellshill, North Lanarkshire, Scotland, ML4 3NJ 10% Galliford Try Qatar LLCPO Box 11726 Doha, State of Qatar (incorporated in Qatar)49% Hub North Scotland (Alford) LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB30% Hub North Scotland (FWT) LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB30% Hub North Scotland (O&C) LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB30% Hub North Scotland (O&C) Holdings LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB30% Hub North Scotland LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB30% James Gillespie’s Campus Subhub Holdings Limited8 Melville Street, Edinburgh, EH3 7NS50% James Gillespie’s Campus Subhub Limited8 Melville Street, Edinburgh, EH3 7NS50% LBP DBFM Holdco LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% LBP DBFMco Limited PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% ELCH DBFMCo LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% ELCH DBFM Holdco LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% WCHS DBFMCo LtdPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% WCHS DBFM Holdco LtdPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% JICC DBFMCo Ltd PO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% JICC DBFM Holdco LtdPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% QHS DBFMCo LtdPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% QHS DBFM Holdco LtdPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% REH Phase 1 Subhub Holdings LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% REH Phase 1 Subhub LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% REH Phase 2 DBFM HoldCo LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% REH Phase 2 DBFMCo LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB50% Durham & Tees Community Ventures Limited4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures Primary Care Limited4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures HoldCo (No.1) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures FundCo (No.1) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures HoldCo (No.2) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures FundCo (No.2) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures HoldCo (No.3) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures FundCo (No.3) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures HoldCo (No.4) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures FundCo (No.4) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Durham & Tees Community Ventures HoldCo (No.5) Limited 4340 Park Approach, Thorpe Park, Leeds, LS15 8GB18% Hub North Scotland (I&F) Holdings LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB30% Tees & Durham (LIFT) Investments Limited4340 Park Approach, Thorpe Park, Leeds, LS15 8GB30% Hub North Scotland (I&F) LimitedPO Box 17452, 2 Lochside View, Edinburgh, EH12 1LB30% Hub South West Scotland LimitedAvondale House, Suites 1l – 1o Phoenix Crescent Strathclyde Business Park, Bellshill, North Lanarkshire, ML4 3NJ 6% Hub SW Cumbernauld DBFMCo LimitedAvondale House, Suites 1l – 1o Phoenix Crescent Strathclyde Business Park, Bellshill, North Lanarkshire, ML4 3NJ 6% Hub SW Cumbernauld Holdco LimitedAvondale House, Suites 1l – 1o Phoenix Crescent Strathclyde Business Park, Bellshill, North Lanarkshire, ML4 3NJ 6% The aboveentities areall incorporated in theUK except Galliford Try Qatar LLC,which isincorporated inQatar. Entities listed above with 50% ownership percentage aretreatedas associates, as indicatedby their ownership agreements. #### Notes to the consolidated nancial statements continued ![]() 147 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 34 Discontinued operations On 3January 2020, the Group completed the disposal ofthe LindenHomesand Partnerships &Regeneration divisions of Galliford Try plc(in addition to certain other assets and liabilities transferred toVistry Group plc as part of thistransaction),following the implementation of aGroup restructuring and scheme of arrangement under Part26 oftheCompanies Act 2006 becoming effective on2 January 2020. Additionally,with effect from 8:00 a.m. on 3January2020, 111,053,489 Galliford Try Holdings plc shares with anominal value of50p each, being theentire issued sharecapital of Galliford Try Holdings plc, wereadmitted to thepremium listing segmentof the Ofcial List of the FCA and totrading on the mainmarketfor listed securities ofthe London Stock Exchange, with acorresponding cancellation ofall shares ofGalliford Try plc. Asa result ofthis disposal, the Linden Homes and Partnerships &Regeneration segments wereclassied as discontinued operations. The Group hasnot recognised any discontinued operations inthe current year. The result of these discontinued operations in theprevious year were asfollows: Year ended 30 June 2021 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 wereprimarily residual professional fees and other costs relating to the transaction and discontinued operations. ![]() 148 Galliford Try Holdings plc 35Prioryearadjustments The Group hasidentiedtheneed tomake acorrection tothe 2021 and 2020 balance sheets. i)The balance sheet at30June 2021has been restated due totheincorrect presentation of trade receivables, contract assets and contract liabilities in relationto one combined contract. At 30 June 2021, no trade receivable should have been recognised asthere wasnotan unconditionalrightto payment, the amount should haveinstead beenrecognised asa contract asset.Additionally,the contractposition across different performance obligations within the combined contract should havebeen presented asone net balancewhereas it waspreviously presented on agross basis. ii)The provisions and accrualsbalance havebeenrestated, reecting areclassicationbetween thetwo lineitems.Onerouscontract andrectication provisionswere previously reported withinaccruals but should havebeen presented as provisions. Seenote 20 foradditional information on provisions. iii)Other receivables and currentincome tax assets havebeen restatedreecting areclassication ofresearch and development expenditure credits from current income tax assetsto other receivables. Tocorrect thepresentation ofthese balances inthe prior year, theGroup has restated the balancesheet and associated notedisclosures as at30June 2021 and statement ofcash ows for the year then endedas outlined below. There isno overall effect of the restatements on net assetsat 30 June2021nor protforthe yearthen 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 Goodwill77.2 ––– 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 investments49.1 ––– 49.1 Deferred income tax assets14.3 ––– 14.3 Total non-current assets 170.4 ––– 170.4 Current assets Trade and other receivables 243.3(6.4) – 4.5241.4 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 assets638.7(6.4) –– 632.3 Liabilities Current liabilities Trade and other payables (485.4)6.425.0 – (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 assets134.1 ––– 134.1 Equity Ordinary shares 55.5 ––– 55.5 Other reserves118.4 ––– 118.4 Retained earnings (39.8) ––– (39.8) Total equity attributable to owners of the Company 134.1 ––– 134.1 The only material impact onthe 30 June 2020 balance sheet isa reclassication toincrease other receivables by£4.5m, reduce current income tax assets by£4.5m, increase provisionsforother liabilities and charges by£15.3m and reduceaccruals by £15.3m. There is noimpacton net assets or reserves. #### Notes to the consolidated nancial statements continued ![]() 149 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information 35Prioryearadjustments (continued) Statements of cash ows Asa result oftherestatements to the balance sheet, the following working capital movements havealso beenrestated, withnoother impact to the statement ofcash ows. Group 2021 originally reported £m Adjustment i) Adjustment ii) Adjustment iii) Impact of 30 June 2020 restatement 1 2021 restated £m Net cash generated from operations before changes in working capital 22.3 –––– 22.3 (Increase)/decrease in trade and other receivables 9.46.4 ––– 15.8 Increase/(decrease) in trade and other payables 27.4(6.4)(25.0) – 15.311.3 (Decrease)/increase in provisions(0.3) – 25.0 – (15.3)9.4 Net cash generated from operations 58.8 –––– 58.8 1Referto note 20 for the impact on30 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 assets159.1(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) – 4.5241.4 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 innote 20. ![]() 150 Galliford Try Holdings plc 2018 £m 2019 1 £m 2020 1 £m 2021 1 £m 2022 1 £m Revenue 2,931.61,400.11,121.61,124.8 1,237.2 Prot/(loss) before exceptional items 188.7(17.2)(59.7)11.4 19.1 Exceptional items(45.0)(47.3)25.1 – (13.7) Prot/(loss) before taxation 143.7(64.5)(34.6)11.4 5.4 Tax(25.4)15.02.0(1.0) 0.9 Prot/(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 93.4124.867.573.2 79.4 Intangible assets and goodwill 174.9171.485.082.9 97.0 Net current assets/(liabilities) 579.8340.2(14.4)(24.4) (43.4) Other long term assets 155.9246.75.314.3 14.0 Long-term payables and provisions (321.8)(203.8)(22.9)(11.9) (14.9) Net assets682.2679.3120.5134.1 132.1 Share capital55.555.555.555.5 55.5 Reserves 626.7623.865.078.6 76.6 Shareholders’ funds 682.2679.3120.5134.1 132.1 Dividends per share (pence)77.058.0 – 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 12019, 2020,2021and 2022 Income Statement and earnings pershare balances reect continuing operations only,accounted for inaccordance with IFRS 5(2018reects the total Group inthose years, including housebuilding). The 2018 and 2019 balance sheets reect the whole Group,including housebuilding, inthose years. 2Pre-exceptional. ## Five-year record (unaudited) #### Notes to the consolidated nancial statements continued ![]() 151 AnnualReportandFinancialStatements2022 Strategic report Governance Financial information Financial calendar 2022 Half year results announced 3 March Full year results announced21 September Ex dividend date 10 November Final dividend record date 11 November Annual General Meeting11 November Final dividend payment9 December Shareholder enquiries The Company’s registrars areEquiniti Limited. They willbe pleased to dealwith any questions regarding your shareholding or dividend payments. Please notify them ifyou changeyour address or other personal information. Call the shareholder contact centre on 0371384 2202. Lines open from8.30am to5.30pm, Monday toFriday; overseas shareholders shouldcall+44371384 2202 or, alternatively, write tothemat: Equiniti Limited Aspect House Spencer Road Lancing WestSussex BN99 6DA You can nd anumber of shareholder services online viatheir website at www.shareview.co.uk, including theportfolioservice 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 emailaddress to receive shareholder information and Annual Report and Accounts electronically. Sharedealingservice A telephone and internet dealing service isavailable through Equiniti which provides asimple way ofbuying and selling Galliford Try shares. Commission is currently 1.5% witha minimum charge of £60 for telephone dealing and a minimum charge of£45 forinternet dealing. Fortelephone sales call 0345 603 7037 between 8.00am and 4.30pm, Mondayto Friday,andforinternet sales log onto www.shareview.co.uk/dealing. You will need your shareholder reference number asshown on yoursharecerticate. Share dealingservices are also widely provided byother organisations. The Company islisted on the London Stock Exchangeunder the code GFRD and the SEDOL and ISIN references are BKY40Q3 and GB00BKY40Q38. Groupwebsite You can nd out more about the Groupon our website www.gallifordtry.co.uk which includes asection specically prepared for investors. Inthis section you can check the Company’s share price, nd the latest Company news, look at the nancial reports and presentations aswell as search frequently askedquestions and answers on shareholding matters. There isalso further advice for shareholders regarding unsolicitedboiler room frauds. Companycontact Contactwith existing and prospectiveshareholders iswelcomed by the Company.If youhave any questions please contact the General Counsel &Company Secretary, either at the registered ofce or via email(kevin.corbett@gallifordtry.co.uk). Analysisofshareholdings at 30 June 2022 Size of shareholding % of holders Number of holders % of shares Number of shares 1 – 10,00092.08% 2,941 2.70% 3,005,929 10,001 – 50,0004.00% 128 2.64% 2,929,843 50,001 – 500,0002.82% 90 14.15% 15,710,665 500,001 – highest1.10% 35 80.15% 89,407,791 Total 100.00% 3,194 100.00% 111,054,228 Registeredofce Galliford Try Holdings plc Blake House 3 Frayswater Place Cowley Uxbridge Middlesex UB8 2AD Stockbrokers Peel Hunt LLP HSBC Bank plc Bankers Barclays Bank PLC HSBC Bank PLC Registration Englandand Wales12216008 Independentauditor BDO LLP ## Shareholder information ![]() 152 Galliford Try Holdings plc ## Notes ![]() Printed on GalerieArt 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certied, CarbonNeutral ® and FSC ® chain of Custody certied.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