Shares in Galliford Try take big hit on new equity-raising

● Construction group takes provision on Carillion fallout as interim profits drop

Nearly a fifth was slashed from the stock market value of construction business Galliford Try yesterday due to an exceptional financial charge and new equity capital-raising partly linked to the collapse of building giant Carillion.

The company had been part of a joint venture with both Balfour Beatty and Carillion to construct the £745 million Aberdeen Western Peripheral Route (AWPR), but Galliford Try has indicated that its partner’s liquidation means it is likely to have to contribute an extra £30m to £40m to the project.

Alongside its latest interim results showing a doubledigit fall in profits, Galliford Try said: “The overrun costs on AWPR, compounded by the compulsory liquidation of Carillion, have increased the group’s total cash commitments on the project by in excess of £150m.”

It has now booked a £25m exceptional charge for the six months to 31 December, and said it planned to raise £150m of new capital from its shareholders “in the coming weeks” to bolster the group’s balance sheet and “ensure that the group’s businesses can continue to pursue their respective growth opportunities”.

Galliford Try said: “The group continues to make good progress in resolving both AWPR, the construction of which is expected to complete during summer 2018, and other legacy contracts.”

The group said it had it had “sufficient financial resources to meet its obligations, including the estimated impact of Carillion’s liquidation”.

However, Galliford Try added that the latter “would involve diverting capital away from the Linden Homes and Partnerships & Regeneration businesses, thereby reducing their ability to capitalise on the material growth opportunities these businesses would otherwise be well positioned to exploit”.

The news came as the company, which was also involved in the work for the new Queensferry Crossing, posted an 11 per cent slide in pre-tax profits to £56.3m for the six months to end-december, on revenues up 14 per cent at £1.5 billion.

Galliford Try’s chief executive Peter Truscott said the company had delivered a “strong financial and operating performance”. The Linden Homes division reported a 7 per cent jump in revenue to £436.8m, while the construction arm saw revenues rise to £823.6m from £742m.

The company said the UK government’s commitment to the housing market – including the Help to Buy programme and relaxation of stamp duty for first time buyers – was welcome while good mortgage availability and lower interest rates were benefiting the business.

The construction unit reported a strong order book and an “encouraging pipeline” of opportunities linked to investment in national infrastructure.

Truscott said political uncertainty in the UK still posed economic risks but said the business was on track for growth.