Galliford Try takes another hit from troubled Aberdeen roads job
Galliford Try workers on the A52 in Derby, part of the Midlands Highways Alliance framework
Galliford Try’s construction arm has taken another hit on the troubled Aberdeen Western Peripheral Route (AWPR) contract, as it dealt with poor weather and the aftermath of the collapse of joint venture partner Carillion earlier this year.
The news that Galliford Try had taken another £20m hit on the project in the second half of its financial year came despite a strong group-wide performance that saw revenue rise 11% to £3.1bn for the year ended 30 June 2018.
Pre-exceptional profit before tax increased by 28% to £188.7m.
Within the construction division, Galliford Try’s pre-exceptional margin improved to 0.9% on revenue of £1.69bn (up from 0% and £1.53bn in 2017 respectively).
It said it had made “good progress” on the AWPR contract, with the vast majority of the road complete and significant sections already open. Final completion is expected in late autumn.
Nonetheless, the project has been impacted by a £45m exceptional charge, with £20m of that arising in the second half of the contractor’s financial year.
The project was originally a three-party joint venture between Balfour Beatty, Carillion and Galliford Try. Following Carillion’s collapse, the two remaining contractors have been forced to finance Carillion’s one-third share since January 2018.
Construction order book shrinks
Galliford Try’s construction order book now stands at £3.3bn, down slightly from £3.6bn in 2017. Of that, 75% of orders are in the public sector and 9% are in regulated industries, with 16% in the private sector.
Meanwhile, the group’s Linden Homes arm saw a 1% increase in revenue to £947.3m, with operating profit increasing to £184.4m (from £170.3m). The business increase completions to 3,442 units, up from 3,296 the year before.
Its partnerships and regeneration division grew revenue by 44% to £475.2m, up from £330.2m. IT completed 751 mixed-tenure units at an average selling price of £220,000 (compared to 594 units at an average price of £186,000 in 2017), and also completed the equivalent of around 2,000 contracting units.
Peter Truscott, chief executive, said: "We have delivered a very strong underlying performance during the year, driven by excellent progress towards our strategic objectives across all three businesses.
“Linden Homes continued to prioritise margin growth, benefiting from further standardisation and the robust control of overheads. This resulted in increased profitability in a year with modest house price inflation.
“Partnerships & Regeneration achieved strong growth in both revenue and margin, with excellent contributions from the new businesses in Southampton, Bristol and East Midlands. The business has a strong order book and continues to see growing demand across all regions with opportunities in both contracting and mixed-tenure.
“The underlying construction business performed well and continues to see a pipeline of suitable opportunities, with new projects delivering improved margins. We have made good progress towards completion of the AWPR contract, with significant sections of the road open to traffic and the final section expected to be open by late Autumn 2018.”