A £26m write-off related to Galliford Try’s now-completed Aberdeen Western Peripheral Route (AWPR) has dented the group’s profit, its half-year report for the six months to 31 December has revealed.
Galliford Try recorded revenue of £1.42bn for first half of its 2018/19 financial year, down 5% on the same period the year before.
Pre-exceptional profit before tax rose by 4% to £84.2m but after the hit the company took in relation to delays on the AWPR project, statutory pre-tax profit fell 4% to £53.8m.
Revenue in Galliford Try’s construction division slid 13% during the period to £718.4m, while it made an operating loss after exceptional items of £19.7m for the period, down 11% in the £17.8m loss it made in the first half of 2018. The company said the performance reflected more cautious bidding and project deferrals “owing to clients’ macro uncertainty”.
It maintained pre-exception operating margin at 0.9% for the period, and has an order book of £3.2bn, down slightly from £3.5bn in the first half of 2018.
The group’s Linden Homes arm saw revenue fall 10% to £392.1m, with operating profit down 5% to £76.8m. It built 1,505 homes during the period. The average selling price on private sales was £352,000, down from £370,000 in the first half of 2018.
Regeneration boost
Meanwhile, revenue at its partnerships and regeneration arm increased 27% to £284.9m, with operating profit up 34% to £14.5m. Galliford Try said the division grew in all three of its business streams – contracting, land-led solutions and mixed-tenure developments – with strong demand from registered providers, local authorities, extra care specialists and private investors.
The group’s net debt reduced to £40m (H1 2018: £85m), with average net debt decreasing to £126m (H1 2018: £203m).
Commenting on the results, chief executive Peter Truscott said: “We were delighted to achieve completion of the AWPR with final handover in progress, successfully delivering a vital and major piece of infrastructure to the local community. We continue constructive dialogue with our client regarding important and recognised claims.
“Linden Homes delivered a strong performance in the first half, despite the continuing political uncertainty and its impact on confidence. The business continues to pursue its successful strategy of product standardisation and improved process efficiency, resulting in continued margin growth. We are seeing good demand, in particular for smaller and mid-range family houses, supported by Help-to-Buy and a strong mortgage market. We have seen a positive start to the Spring selling season, despite the headwinds to consumer confidence arising from political uncertainty, which is key to the strength of the market over the coming months.
“Partnerships & Regeneration is performing very strongly, both at revenue and margin levels. Opportunities for the business continue to grow, underpinned by our strong relationships with providers and funders, our growing geographical footprint and by cross-party political support for affordable housing. The business has been encouraged by the successes it has seen in the first half of the year, with new projects commenced across both contracting and mixed-tenure resulting in strong levels of sales reserved, contracted or completed as well as a solid contracting order book.
“Construction’s performance continues to be encouraging, particularly on newer contracts, reflecting the business’s careful approach to project selection and risk management. We continue to prioritise the quality of each opportunity over volume. We are seeing projects deferred as a result of macro uncertainty, but with 96% of revenue secured for the current financial year and 66% secured for the following year the business has confidence in its prospects.”
