Galliford Try sees profits surge 145% as exceptional charges shrink
The construction firm also benefited from a strong performance in its Linden Homes division.
Galliford Try’s annual profits surged 145% as the company recovered from hefty charges linked to major infrastructure projects a year earlier.
The company released full-year results on Wednesday showing pre-tax profits jumping from £58.7 million to £143.7 million in the year to June 30.
That was despite an exceptional charge of £45 million due to additional costs taken on after one of its joint venture partners Carillion went bust in January, as well as poor weather conditions.
However, it was nearly half the exceptional charge logged in 2017, when it took an £88.9 million hit on two major joint venture infrastructure projects, both of which were contracted on fixed-price terms, in 2011 and 2014.
The bulk of the charges last year related to the Queensferry Crossing bridge contract in Scotland and the construction of the Aberdeen Western Peripheral Route (AWPR).
Revenue – including from its share in joint ventures – for the full year was up 11% at £3.1 billion.
Galliford Try shares were up 5% in morning trading.
Chief executive Peter Truscott said: “We have delivered a very strong underlying performance during the year, driven by excellent progress towards our strategic objectives across all three businesses.”
He cheered the performance of Galliford Try’s Linden Homes division, which “continued to prioritise margin growth, benefiting from further standardisation and the robust control of overheads”.
“This resulted in increased profitability in a year with modest house price inflation.
“Volumes also grew reflecting the strength of our product offering and with the sector supported by Help to Buy, good mortgage availability and the cut in stamp duty for first-time buyers.”
Mr Truscott added that the land market continues to be favourable, allowing the company to buy land at “robust margins, in the right locations for our new standardised product”.
Its Partnerships & Regenerations business – which focuses on projects like affording housing – also performed well thanks to its new operations in Southampton, Bristol and East Midlands.
“The underlying construction business performed well and continues to see a pipeline of suitable opportunities, with new projects delivering improved margins.
“We have made good progress towards completion of the AWPR contract, with significant sections of the road open to traffic and the final section expected to be open by late autumn 2018.”
Galliford Try said recent performance has left the board confident on the group’s prospects for the forthcoming year.