Galliford Try anticipates extra exceptional charges on AWPR project

Shares at Galliford Try rose over 5% this morning after the contractor achieved significant growth in both revenue and profit across the full-year period, though another financial hit is expected due to the ongoing Aberdeen Western Peripheral Route (AWPR) project.

In a trading update, the group said it set to report strong full-year results, in line with previous guidance, and net cash at 30 June 2018 of £97 million for the year, up from £7.2m the previous year.

In construction, the order book fell to £3.3 billion from £3.5bn with 86% in the public and regulated sectors. Galliford has secured 87% of construction revenue for the new financial year. In 2017 it secured 84% of revenue.

It expects to end the year with net debt of £30m after having to spend more to build the Aberdeen bypass following the collapse of project partner Carillion in January. Last year the company had net cash of £137m.

Galliford is part of the Aberdeen Roads Ltd (ARL) consortium, alongside Balfour Beatty, that has a fixed price £745m contract for the job.

Chief executive Peter Truscott said the firm continues to anticipate an extra exceptional charge in the second half for the project, lower than the £25m charge taken the first half.

The final out-turn remains “dependent upon the result of several significant claims”, Truscott added.

He also said that “substantial completion” of the project is expected to be achieved this summer.

Outlining the trading statement, Truscott said: “Galliford Try has achieved a strong underlying performance in the financial year and continues to make good progress against its growth plans to 2021 across all three businesses.

“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.

“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.

“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. The Aberdeen Western Peripheral Route joint venture continues to make progress on site, with sections of the road already opened to traffic, and substantial completion expected to be achieved this summer. 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.”

He added: “The group expects to report strong pre-exceptional full year results, in line with previous guidance, and net cash at 30th June 2018 of £97m (2017: £7.2m), with average net debt for the year below previous guidance at £227m (excluding the benefit of the rights issue receipt of £150m net).  The outlook for the current financial year remains in line with management’s expectations.”

Galliford Try will report its financial results for the year ended 30th June 2018 in September.

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