Galliford Try expects “strong financial year” despite more Aberdeen bypass woes

Construction group and housebuilder Galliford Try saw a 5% rise in shares and boasted “significant growth in both revenue and profit” despite anticipating to take a further hit on the troubled Aberdeen Western Peripheral Route (AWPR) project.

The firm has provided a trading update in which it shows that its construction arm report debt of less than £30m for the 12 months to 30 June, compared to a positive cash position of £127m in 2017. The division has an order book of £3.3bn which is slightly down from the £3.5bn recorded in the previous year.

But the AWPR project continues to sting the group with bosses revealing another expected loss is on the way. However, it is thought to be less than the £25m figure it suffered in the first half of the year. It comes after the company announced earlier in the year its plan to raise £150m from investors to pay for cost overruns on the joint venture on the project and to cover the impact of Carillion’s collapse on the business.

The massive road project has faced many delays and is already a year late. Poor weather and the collapse of Carillon at the start of the year have led to the bypass becoming massively over budget and delayed. Galliford is part of the Aberdeen Roads Ltd (ARL) consortium, alongside Balfour Beatty and originally Carillion before its demise. 

Peter Truscott, Galliford Try chief executive, said the JV project continued “to make progress on site” and “substantial completion” was expected to be achieved this summer. Last month the first main four-mile section of the £745m Aberdeen bypass finally opened to motorists.

Commenting on the AWPR, Truscott added: “We continue to anticipate a further exceptional charge in the second half, in line with previous guidance (i.e. expected to be lower than the charge of £25m taken in the first half), and the final out-turn remains dependent upon the result of several significant claims. Construction's underlying performance is good with current and new projects expected to deliver improved margins, operating on multiple secured frameworks and in our chosen sectors.”

Galliford is set to release its full results for the year to 30 June on 12 September and the firm claims to have achieved a strong underlying performance in the financial year and good progress against its growth plans to 2021 across all three businesses with its Partnerships & Regeneration business recording significant growth with a £1.2bn contracting order book.

“Linden Homes has delivered sales growth in line with expectations and at a further significantly improved operating margin, and enters the new financial year with sales exchanged and reserved of £366m,” Truscott said. “Partnerships & Regeneration continues to make excellent progress against the stretching growth and margin targets set for the business, significantly increasing revenue and profit.  The business has a strong order book, benefiting from growing demand and opportunities in both contracting and mixed tenure.”