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Galliford Try construction firm pushed to raise further £150m after Carillion collapse | Galliford Try construction firm pushed to raise further £150m after Carillion collapse |
(about 4 hours later) | |
Financial burdens linked to Carillion’s collapse have pushed construction firm Galliford Try to raise a further £150m to strengthen its balance sheet. | |
The company had been part of a joint venture with both Balfour Beatty and Carillion to construct the Aberdeen Western Peripheral Route (AWPR), but its partner’s liquidation means Galliford Try will probably have to contribute an extra £30m to £40m to the project. | |
It has now booked a £25m exceptional charge for the six months to 31 December and announced plans to raise £150m in new equity capital in the coming weeks to “strengthen” the group’s balance sheet and “ensure that the group’s businesses can continue to pursue their respective growth opportunities”. | |
Galliford Try went on to report an 11 per cent drop in pre-tax profits for the half year to £56.3m, despite seeing revenues jump 14 per cent to £1.5bn. | Galliford Try went on to report an 11 per cent drop in pre-tax profits for the half year to £56.3m, despite seeing revenues jump 14 per cent to £1.5bn. |
But the company assured that it was making “good progress” on both AWPR – which is expected to be completed this summer – as well as other legacy contracts and was otherwise in good financial standing. | |
“The group has sufficient financial resources to meet its obligations, including the estimated impact of Carillion’s liquidation,” Galliford Try said in a statement. | |
“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.” | |
The company said it no longer takes on fixed price or “all risk major projects of this nature” and has also improved its tendering and project selection process. | |
Looking at the business as a whole, Galliford Try’s chief executive Peter Truscott said the company had delivered a “strong financial and operating performance” over its first half to 31 December. | |
Galliford Try’s Linden Homes division reported a 7 per cent jump in revenue to £436.8m over the first half, while its construction unit saw revenue rise from £742m to £823.6m. | |
The company said the Government’s commitment to the housing market – including the Help to Buy programme and relaxation of stamp duty for first-time buyers – was welcome while good mortgage availability and lower interest rates were benefiting the business. | |
The construction unit reported a strong order book and an “encouraging pipeline” of opportunities linked to current and planned investment in national infrastructure. | |
Mr Truscott said political uncertainty in the UK still poses economic risks but added the company is on track for growth. | Mr Truscott said political uncertainty in the UK still poses economic risks but added the company is on track for growth. |
He said: “We continue to maintain strict control over net debt, which is consequently better than our guided level. | |
“We enter the second half of the year with a solid foundation to build on and strong fundamentals for the housing market. | |
“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.” | |
PA | PA |
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