Contractor says it has suffered problems on two infrastructure projects
Galliford Try has been hit by £98m of costs on problem jobs, the firm admitted in a trading update.
The contractor said it had reappraised costs on two undisclosed legacy infrastructure joint venture projects contracted in or before 2014 and found both were performing worse than expected.
The firm said 80% of the £98m writedown related to the two undisclosed projects – one will finish on site this summer, while the other is scheduled to complete midway through 2018.
Peter Truscott, chief executive at Galliford Try, said the impact of the two legacy infrastructure projects was “regrettable”, but he said the firm was “no longer undertaking large infrastructure jobs on fixed price contracts”.
He added: “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.”
Galliford Try shares fell 10% to £13.11 on the day of the announcement (3 May), down from the previous day’s close of £14.59.
The firm said its underlying construction business was otherwise “performing well”, while its Linden Homes and Partnerships divisions were making “strong progress”.
At housebuilding division Linden Homes, sales since the start of the year were up on 2016, while its landbank reduced to 11,300 plots, down from 12,400, as part of a strategy to “hold a shorter landbank” equivalent to 3.5 years of supply.
At regeneration arm Partnerships, the order book was up 6% to £980m, boosted by large contracts including the division’s biggest ever win, £128m Great Eastern Quays in London’s Docklands.
Galliford Try hit the headlines in recent weeks with its £1.2bn bid for troubled housebuilder Bovis Homes - however this was rejected at the start of April, with Bovis instead opting for independence under its suitor’s former chairman and chief executive Greg Fitzgerald.