Galliford Try has delivered “strong financial and operational performance” in the six months to the end of 2017, but have been hit by an exceptional charge of £25 million following the collapse of Carillion.
The company said it’s underlying construction business is performing well, as the “margin drags of legacy contracts” are reducing.
However, the compulsory liquidation of Carillion, which has affected employees, contracts and small businesses, has also hit the British construction company because of the joint venture the organisation had with the stricken contractor on the Aberdeen Western Peripheral Route (AWPR).
It has led to an exceptional charge of £25 million and Galliford Try has announced its intention to raise money to cover the rising costs of the road project in Scotland, which Balfour Beatty has also committed to, following Carillion’s demise.
Peter Truscott, Chief Executive of Galliford Try, said: “We have reviewed the impact on our business from the compulsory liquidation of Carillion, which has resulted in a further reassessment of the likely out-turn from our participation in the AWPR joint venture, leading to an exceptional charge of £25 million.
“Reflecting the additional financial obligations arising from this contract, we have announced our plans for a capital raise of £150 million.”
This exceptional cost of £25 million is in stark contrast to the fact that Galliford Try incurred no exceptional costs in the first half of the last financial year – the six months to the end of 2016.
It means that the cash balance for the six months to the end of 2017 was £44.5 million, down from £110.8 million at the corresponding time of last year. This reflects the cash flow constraints on legacy projects, though the estimate of additional cash contribution to the joint venture in respect of Carillion is unchanged.
However, Peter Truscott, added: “We have delivered a strong financial and operational performance in the first half, with revenue growth across all three businesses and excellent progress against our 2021 strategy.”