Galliford Try's exceptional construction costs

Costs of £26 million (€29.7 million) from completion delays have been posted in UK-based contactor Galliford Try’s half-year results, which it said was a result of problems with the Aberdeen Western Peripheral road (AWPR) in Scotland.

The bypass it had been constructing with joint venture partner Balfour Beatty is now finished according to the firm, although completion was delayed by more than a year. The collapse of British contractor Carillion in early 2018 left the two partners covering exceptional costs.

The road has already cost Galliford Try around £150 million (€171 million) and the company has said it is expecting to recover some of these costs through its open dialogues with Transport Scotland. However, such a recovery is likely to be challenging after Scottish Transport Secretary Michael Matheson said, “We are not prepared to pick up the tab for mistakes made by construction companies.”

Despite these exceptional costs, Galliford Try has a construction order book worth £3.2 billion (€3.65 billion), but this is £300 million (€342.09 million) less than the same report reflected last year.

Galliford Try also claimed to be taking a more precautionary approach to bidding, resulting in construction revenue falling over £100 million (€114.02 million) to £718 million (€818 million) in the last six months of 2018.

Meanwhile the companies’ Lindon Homes sector saw operating margins increase to 19.6% from 18.5%, but profit fell 5% to £77 million (€87.7 million) with revenue of £392.1 million (€446.9 million).

Despite the political uncertainty that the UK faces and its impact on the construction market, Galliford Try has posted that its net debt has been reduced by £40 million (€45.61 million), with its average net debt lowered to £126 million (€143.6 million).

Peter Truscott, CEO, claimed all was well, saying, “The group is well capitalised and average net debt is below previous guidance, driven by focused working capital management over the period.

“We were delighted to achieve completion of the AWPR with final handover in progress, and we continue constructive dialogue with our client regarding important and recognised claims.”