Galliford Try confident in spite of profits hit
13 September 2017
Housebuilder and construction group Galliford Try has put faith in a strategy to boost earnings despite reporting a 57% slump in annual profits and cautioning over wider political and economic worries.
The group posted pre-tax profits of £58.7 million for the year to June 30, down from £135 million a year earlier after it took a £98 million hit following a financial review of two major joint infrastructure projects.
The blow, which sent shares tumbling when it was first revealed in May, came after a re-appraisal of the two projects - introduced as fixed-price contracts in 2011 and 2014 - showed it was on the hook for around £78 million more than previously thought.
Galliford also said profits were knocked by £19 million for the cost of sales in construction and £1 million in professional fees for its £1.2 billion aborted bid for troubled rival Bovis Homes earlier this year.
But Galliford delivered on the upper end of its annual profits guidance thanks to revenues accelerating at property developer Linden Homes.
It is also eyeing a 60% boost to pre-tax profits by 2021.
Peter Truscott, chief executive of Galliford, said: “We remain cautious about the impact of the current political uncertainty and the medium-term outlook for the macro economy.
“However, all three businesses have clearly defined plans as part of our 2021 strategy, providing the group with confidence in its ability to deliver a strong performance, even in a period of lower growth in the wider economy.”
Its full-year results showed revenues rose by 7% across the group, with turnover up by 11% at Linden Homes.
Liberum analyst Charlie Campbell said the full-year profits result was 9% better than he expected.
He added: “The market should take comfort in the fact that there has been no deterioration in expected costs of completing legacy contracts.”
The bulk of the charge related to the Queensferry Crossing bridge contract in
Scotland – worth £790 million – and the construction of the Aberdeen Western Peripheral Route for £550 million.