No increases likely on provisions for Scottish projects
The financial hit on two of Galliford Try’s infrastructure projects in Scotland is not expected to rise above a previously stated figure of £98m.
There had been fears the one-off charge, which related to work the firm had done on the recently opened Queensferry Crossing (pictured, under construction) and a 58km-long stretch of road near Aberdeen, would increase as more was done on the schemes.
But in a trading announcement today, the group merely noted that “progress on the resolution of [the division’s] legacy contracts is in line with the position indicated in September 2017”.
In September it had confirmed the £98m figure as part of its annual results presentation. Galliford Try’s construction boss Bill Hocking told Building at the time that some residual work may be required, leading to speculation the figure might rise, but this now appears to have been scotched by the firm.
He had confirmed that the two schemes which blew a hole in group pre-tax profits were those to build the new Queensferry Crossing near Edinburgh and a dual carriageway around Aberdeen.
The firm carried out work on the bridge in an international joint venture which included Spanish firm Dragados and German contractor Hochtief.
But its scheme further north in Aberdeen, which it is carrying out for Transport Scotland in a joint venture with Balfour Beatty and Carillion, is not scheduled to complete until the end of next year.
Hocking said he was hoping to wrap up work on the road, called the Aberdeen Western Peripheral Route, in the first half of next year.
Speaking about the £98m figure in September he admitted: “We have taken a sensible management view [but] you can’t kitchen sink these things. There may be some residual work.”
Both projects had been blighted by weather problems, with Hocking saying that the time lost on the bridge because of high winds “was significantly more than anticipated”.
At its AGM today, Galliford Try will tell investors it was seeing “good market conditions” across its three businesses.
Its Linden Homes operation had sales reserved, contracted or completed of £652m, versus £614m in 2016, while the order book for the Partnerships & Regeneration operation had hit a record £1.3bn, up from £873m last year.
The group’s construction business saw its order book rise from £3.4bn in 2016 to £3.6bn.
The firm was recently awarded the £52.5m contract to build a near-1,000 bed student accommodation facility in Coventry, along with a £65m deal to build an office building at the Arena Central development in neighbouring Birmingham.