Gal­li­ford Try to stop bid­ding for large in­fra­struc­ture projects

The Daily Telegraph - Business - - Business - By

Is­abelle Fraser THE de­vel­oper and con­struc­tion com­pany Gal­li­ford Try has said it will no longer bid for large fixed-price in­fra­struc­ture con­tracts af­ter its an­nual prof­its were hit by a charge on legacy con­tracts.

Pre-tax prof­its fell nearly 60pc to £59m due to the £98m charge it an­nounced in May, re­lat­ing to prob­lem legacy con­tracts for the Queens­ferry Cross­ing and part of a road in Aberdeen. How­ever, the com­pany posted a 7pc rise in rev­enues to £2.7bn in the 12 months to June 30, and a 9pc in­crease in un­der­ly­ing prof­its ex­clud­ing ex­cep­tional items.

Gal­li­ford added that this amount set aside was un­changed, and it was mak­ing “good progress” on its tar­get to in­crease prof­its by 60pc by 2021.

Its house­build­ing arm, Lin­den Homes, and the re­gen­er­a­tion divi­sion both re­ported stronger re­sults, with op­er­at­ing prof­its up 16pc and 27pc re­spec­tively, but the con­struc­tion side suf­fered, record­ing a £0.9m un­der­ly­ing loss for the year.

Com­pared with other house­builders and con­struc­tion gi­ants, th­ese re­sults are on the lower end of the scale, al­though they were in line with mar­ket ex­pec­ta­tions.

Shares in Gal­li­ford slipped 1.7pc to £13.40 yes­ter­day. Peter Tr­us­cott, the chief ex­ec­u­tive, said: “To­day, we are fo­cus­ing on lower-risk pub­lic and reg­u­lated sec­tors and two-stage ne­go­ti­ated work, rather than large in­fra­struc­ture projects on fixed-price, all-risk con­tracts, which th­ese legacy projects were.”

He added that the com­pany was re­main­ing “cau­tious” about the im­pact of po­lit­i­cal un­cer­tainty and the out­look for the macro econ­omy.

He added: “The way we are mit­i­gat­ing against it is with a strong bal­ance sheet and or­der book, and work­ing in the right sec­tors, such as hous­ing.

“We want to be lead­ers in re­gen­er­a­tion and part­ner­ships, build­ing af­ford­able hous­ing.”

Lin­den Homes built 3,296 prop­er­ties in 2017 and the com­pany said it was aim­ing to com­plete around 5,000 a year by 2021. By the same date, Gal­li­ford is also aim­ing to dou­ble its part­ner­ships arm, which builds af­ford­able homes, while it plans to keep the con­struc­tion side at the same size it is now.

Ear­lier this year, the com­pany tabled a takeover bid for be­lea­guered house­builder Bo­vis Homes, but was re­jected.

Anthony Codling, an an­a­lyst at Jef­feries, said: “Trad­ing re­mains ro­bust in the hous­ing-re­lated divi­sion and the re­cov­ery in con­struc­tion is on track. There are more risks here than with a pure play house­builder.”

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