Housebuilder Galliford Try sees shares fall in wake of £98m hit
Galliford Try shares plunged more than 9% after the housebuilder said it would take a "regrettable" £98 million hit following a financial review of two major joint infrastructure projects.
The company said on Wednesday that a re-appraisal of the two projects - introduced as fixed-price contracts in 2011 and 2014 - showed it was on the hook for approximately £78 million more than previously thought.
Those two projects account for about 80% of the £98 million hit, with the remaining 20% related to normal contract provisions.
The bulk of the charge relates to the Queensferry Crossing bridge contract in Scotland - worth £790 million - and the construction of the Aberdeen Western Peripheral Route for £550 million.
Galliford Try shares plunged 9% to 1.328p following the news, languishing at the bottom of the FTSE 250.
The company said it will no longer agree to large infrastructure projects on fixed-price contracts.
Chief executive Peter Truscott said: "The impact of the legacy projects in construction, in particular the two large infrastructure projects, is regrettable.
"However, as described in our recent strategy presentation, Galliford Try is no longer undertaking large infrastructure jobs on fixed-price contracts.
"There are no other similarly-procured major projects in our current portfolio and we are encouraged by the performance of the underlying portfolio of newer work."
Aside from the one-off hit, Mr Truscott said he was still confident the company will deliver a "strong performance over the financial year.
"Whilst we remain cautious of continuing macroeconomic uncertainty, all three businesses are focused on exciting targets and clearly-defined plans to improve operating efficiency and grow both margins and revenue."
The housebuilder last month abandoned its pursuit of rival Bovis Homes, having been in a takeover tussle with fellow suitor Redrow.
Galliford Try said it was unable to secure the support of the Bovis board on terms that would have represented "the best interest of Galliford Try shareholders".