Economy

Galliford Try sees profits drop and books Carillion charge

Galliford Try sees profits drop and books Carillion charge

Galliford ran a number of legacy contracts with Carillion and its collapse had increased its cash commitments on an Aberdeen joint venture by more than £150m.

Galliford Try announced the plan in its half-year results, as "additional joint venture contributions arising from Carillion Plc (Carillion) failure prompt exceptional charge of £25m".

"However, this 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". In other words, the opportunity cost would be too great.

Linden, the housebuilding arm of Galliford Try, completed 1,587 units during the six months to December 31 2017 against 1,491 the year before.

At least management are able to point to the fact they no longer take on "fixed-price, all risk major projects of this nature".

Regarding the dividend, the company said it chose to accelerate raising its dividend cover to twice pre-exceptional earnings, effective from the financial year starting on 1 July 2017, to balance its aims of investing in the business and rewarding its shareholders. The losses suffered through the AWPR are offset by from its Linden Homes business which has delivered a very strong first half and would provide a means to divert capital from.

More news: Dying Teen Helped Police Officers Locate Her Killers

While the group pre-tax profit figure was down 11% on a year ago, net debt was also substantially reduced from £113.8m to £84.9m.

"The market continues to be positive, underpinned by good mortgage availability, the government's ongoing commitment to Help-to-Buy, and the recent stamp duty cut for first-time buyers", said chief executive Peter Truscot.

The housing division entered the second half of its financial year with a "solid" forward order book, and total sales now reserved, contracted and completed of £879 million against the previous year's £857 million.

"While we remain cautious of the impact of the current political uncertainty and the medium-term outlook for the macro economy, we believe our focused strategy, strong order book and disciplined approach will deliver further growth and shareholder value".

This article was published on 14 Feb 2018 (last updated on 14 Feb 2018).


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