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Galliford Try pushed to raise £150m after taking hit on Aberdeen bypass

Construction group and housebuilder Galliford Try has today announced its plan to raise £150m from investors to pay for cost overruns on the joint venture Aberdeen Western Peripheral Route (AWPR) project and to cover the impact of Carillion’s collapse on the business. 

Former directors of Carillion confirmed last week when called before MPs that the AWPR was one of the major projects that contributed to the firm’s demise after it fell behind schedule and became over budget. The road development in Aberdeen was one of the legacy contracts Galliford ran with Carillion which also included Balfour Beatty. 

The former industry giant’s liquidation has compounded problems and resulted in commitments to the project increasing by more than £150m. Despite today’s announcement, Galliford have emphasised they “continue to maintain strict control over net debt, which is consequently better than our guided level.”

Commenting on the AWPR, Peter Truscott, chief executive, said: “We have reviewed the impact on our business from the compulsory liquidation of Carillion, which has resulted in a further reassessment of the likely out-turn from our participation in the Aberdeen Western Peripheral Route (AWPR) joint venture, leading to an exceptional charge of £25m. Reflecting the additional financial obligations arising from this contract, we have today announced our plans for a capital raise of £150m.”

Despite taking the hit on Carillion’s collapse, the UK construction group attempted to provide some confidence to the industry by saying "we have delivered a strong financial and operational performance in the first half, with revenue growth across all three businesses and excellent progress against our 2021 strategy”. The losses suffered through the AWPR are offset by from its Linden Homes business which has delivered a very strong first half and would provide a means to divert capital from. The group has also declared a dividend of 28 pence per share for the six months ending Dec. 31, 2017, versus 32 pence a year ago.

Truscott added: “Within partnerships and regeneration, we have delivered an excellent first half performance and continue to be very encouraged by the opportunities in the market, which give us confidence that this growing business will continue to deliver sustained returns over the strategy period and beyond. Our underlying construction business is performing well with the margin drag of legacy contracts reducing.”