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Thu November 21 2019

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Galliford Try hit for £98m by legacy woes

3 May 17 A reappraisal of legacy construction contracts at Galliford Try has revealed that it will cost an unexpected £98m to complete them.

The company has taken another look at how much it is going to cost to complete its long-running projects and has not liked what it has found.

Non-recurring costs are now estimated at £98m, with 80% of this relating to its share of two major infrastructure joint venture projects in Scotland – the £790m Queensferry Crossing and the £550m Aberdeen Western Peripheral Route.

Aside from this, Galliford Try reports progress on its move towards more selective bidding, with 85% of workload now within frameworks, lower risk public and regulated sector and two-stage negotiated work. This focus is expected to deliver turnover growth by 2021 to £1.8bn, with an improvement in the operating margin to over 2.0%.

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Galliford Try's construction's order book is £3.5bn, up slightly from £3.4bn at the end of 2016. 

Chief executive Peter Truscott said: "The impact of the legacy projects in construction, in particular the two large infrastructure projects, is regrettable. However, as described in our recent strategy presentation, Galliford Try is no longer undertaking large infrastructure jobs on fixed price contracts.  There are no other similarly procured major projects in our current portfolio and we are encouraged by the performance of the underlying portfolio of newer work.

“Excluding the non-recurring charge, we remain confident in delivering a strong performance over the full year, and we plan to pay the dividend in line with previous guidance.  The group continues to make good progress on our strategy to 2021, supported by the strong leadership of our reorganised management teams.  Whilst we remain cautious of continuing macroeconomic uncertainty, all three businesses are focused on exciting targets and clearly defined plans to improve operating efficiency and grow both margins and revenue.”

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