https://www.investegate.co.uk/galliford ... 00022072S/
HALF YEAR REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
Confident outlook and strong performance
· Profit before tax up 65% to £11.7m (H1 2022: £7.1m) before exceptional costs1,4.
· Revenue up 14% to £679m (H1 2022: 594m).
· Divisional operating margin increased to 2.3% (H1 2022: 2.2%)2, making good progress against the Sustainable Growth Strategy.
· Continued strong balance sheet , with average month-end cash for the period of £154m (H1 2022: 180m) and a PPP asset portfolio of £46.1m (June 2022: £47.5m).
· Interim dividend up 36% to 3.0p per share (H1 2022: 2.2p), with established dividend cover policy of 2.0x annual earnings.
· Additional capital return of up to £15m through the Group's ongoing share buyback programme.
· Environment business further enhanced by the acquisition of the specialist businesses, MCS Control Systems and Ham Baker.
· Sustainable Growth Strategy on track to meet our carbon reduction commitments and financial targets to 2026.
· Full year profit before tax expected to be at the upper end of current analyst estimates3.
· Confident outlook with £3.5bn high quality and focused order book (H1 2022: £3.4bn) with 95% and 79% of projected FY23 and FY24 revenue secured.
and
DIVIDEND AND CAPITAL ALLOCATION
The directors have reviewed the Group's pre-exceptional results and outlook for the current financial year and have declared an interim dividend of 3.0p per share which will be paid on 14 April 2023 to shareholders on the register at the close of business on 17 March 2023.
The Group's key capital allocation objectives are:
- Supporting operational requirements and strategic opportunities
A strong balance sheet is an important element in delivering the Group's Sustainable Growth Strategy, as it provides a competitive advantage in the market, supports the Group's disciplined approach, and provides confidence to our clients and supply chain. Furthermore, and as demonstrated by the acquisitions of the water businesses of nmcn, in October 2021, and more recently MCS Control Systems and Ham Baker, a strong cash balance sheet enables the Group to react quickly to such strategic opportunities, that enhance our capabilities and increase future value.
- Mitigating the effect of future market downturns
The future outlook across our markets remains very encouraging and supports our strategy. The Group will continue to ensure that it is prepared for any adverse change in market conditions that may arise. Our strong balance sheet is particularly important for the Group to continue to operate its disciplined approach to contract selection and focus on operating margin, irrespective of any short term economic concerns. The recent inflationary pressures clearly demonstrate the value and importance of the Group's risk management framework and focus.
- Paying sustainable dividends to shareholders
The Board understands the importance of dividends to shareholders, and in setting its dividend considers the Group's profitability, its strong balance sheet, high quality order book and longer term prospects. Consistent with this approach, the Group expects dividend per share to increase in line with earnings, with a 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. Consistent with the framework set out above, in September 2022 the Group announced an initial share buyback programme to repurchase up to £15m of ordinary shares of 50 pence per share. The Board is satisfied with the progress of this buyback programme, with a total of 2,349,508 shares purchased and cancelled during the six months to 31 December 2022, at a total cost of £3.7m.