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Galliford Try construction business hit by £62m loss

Galliford Try’s construction division suffered a £61.6m operating loss in the year ending 30 June 2019, accounts released this morning show.

Restructuring costs and further losses on the Aberdeen Western Peripheral Route (AWPR) led to another loss-making year for the division.

The previous year it had reported a £29m operating loss.

Today’s results showed almost £51m of losses listed as exceptional costs, with just over £32m of this related to completing the AWPR. Problems on that job resulted in a £45m exceptional cost in the previous year.

The company said it had been advised it could recover £100m in its claim against Transport Scotland regarding the AWPR and added the amount to its balance sheet.

Galliford Try’s own assessment of claims on the job was more than £200m, it added.

If a settlement is not reached with the client before December then the company will pursue a formal dispute resolution.

Restructuring the construction business cost £4.6m while another unnamed “legacy” project cost it £6.7m.

Galliford Try has also submitted claims worth £54m against an infrastructure investment fund, which it did not name, regarding three contracts.

Revenue for the construction arm fell £300m to £1.39bn while the value of its order book dropped from £3.3bn to £2.9bn.

Chief executive Graham Prothero said: “Construction’s result for the year has been impacted by challenges with both legacy and some current projects and by the restructure, which is now complete.

“The business continues to see good demand in its building and infrastructure divisions and is focusing on disciplined growth across its core sectors of building, water and highways, which we believe will deliver improved margins.”

Overall the group reported a pre-tax profit of £104.7m, down from £143.7m in 2018.

Its bottom line was boosted by strong performance in its Linden Homes and partnership & regeneration businesses, which reported a combined operating profit of £182.6m. They also contributed almost half of the group’s revenue of £2.71bn.

Yesterday it was announced the group had agreed “high-level” terms with Bovis to sell the two housing businesses in a deal worth £1.08bn.

This morning, Mr Prothero said the deal, which would see Galliford Try receive £300m in cash and Bovis take £100m of its debt, would allow the construction business to “continue trading as a standalone well capitalised business”.

Average net debt for the year fell to £186m from £227m the previous year.

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