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Galliford hints Aberdeen bypass could face further delays

The £745m Aberdeen bypass could miss its revised summer completion deadline, according to an update from Galliford Try.

In May the company had said the troubled Aberdeen Western Peripheral Route (AWPR) would achieve “practical completion” by the end of the summer.

In a trading update this morning, Galliford Try said the road – which it is building in joint venture with Balfour Beatty – would now be “substantially complete” by the end of the summer.

However, chief executive Peter Truscott told analysts: “The odd bit might tick over a little bit beyond that.”

Transport Scotland said in March that the road would not open to the public until the autumn.

Mr Truscott said progress to complete the road was otherwise positive and that some sections were now open to traffic.

However, the company said it would incur an exceptional charge on the scheme for the second half of its financial year covering January to June 2018.

This will be lower than the £25m charge it took in the first half of its financial year from July to December 2017.

Mr Truscott also reiterated that it would be making a “significant claim” on the project.

Galliford Try raised £157.6m in equity in March, primarily to cover losses on the AWPR job.

The company’s liability on the project increased when the JV’s third partner, Carillion, collapsed in January.

Underlying performance for Galliford’s construction arm, excluding the AWPR, was described as good in its trading update for the year to 30 June.

“As always it’s a tale of the new and the old,” Mr Truscott said, with new work taken on since 2015 said to be “much better quality” with improved terms and conditions compared with older jobs, which he said the company was “working though”.

The firm attributed a decline in its construction order book from £3.5bn to £3.3bn to a greater focus on quality.

“We’re looking for quality of work in the construction business, not quantity, so that’s a good-quality order book,” Mr Truscott said.

The company still faced challenges relating to demands from certain clients, he added.

“It would be great to say that post-Carillion everything’s changed, but it hasn’t really – it’s pretty much the same as it always is,” Mr Truscott said.

“You’ve got some clients still looking for single-stage, all-risk tenders, but that’s not the sort of work we’re interested in.”

In Galliford Try’s core markets of the public and regulated sectors, Mr Truscott said clients were “behaving appropriately”.

Around 86 per cent of the company’s future work is within these markets.

Performance in the firm’s Partnership and Regeneration arm was described as “strong” for the financial year, with both revenue and profit increasing.

Galliford Try said its Linden Homes business had enjoyed a “significant improvement in margin” for the year, with sales and prices both up.

House price growth was expected to be limited over the next 12 months, however, but the company said it hoped to achieve better efficiency and increased margin through greater standardisation of its homes.

The firm’s finance director Graham Prothero said its net debt at year-end was expected to be lower than the £227m previously forecast.

Galliford Try’s shares were up 4 per cent by mid-morning.

Transport Scotland has been contacted for comment.

Balfour Beatty and Galliford Try said that, due to the partnering nature of the AWPR project, they were unable to comment.

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