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Galliford margin nears 5% despite construction losses

Galliford Try has posted pre-tax margin of 4.9 per cent in its latest full-year accounts off the back of a strong housing business, despite its construction division continuing to report losses.

Its results for the year to 30 June 2018 showed the group made a pre-tax profit of £143.7m on revenue of £2.93bn. These figures were up from £58.7m on £2.66bn in its previous financial year.

However, the construction business recorded an operating loss of £29.1m – though this was an improvement from a loss of £88.8m in its previous results.

A £45m charge was incurred on the AWPR scheme, £25m of which was due to costs taken on after Carillion’s collapse and the remainder due to weather delays at the start of the year.

Excluding the Aberdeen bypass project, the construction business made an operating profit of £15.9m for the period.

Asked whether the AWPR’s completion this autumn would see the construction business achieve a non-underlying profit for the current trading year, construction chief executive Bill Hocking said: “Let’s hope so. The end of the job is in sight and I’m confident our performance will continue to improve.

“It will be nice – let’s not beat around the bush – to see Aberdeen behind us.”

Mr Hocking confirmed that remedial work on the Don River Bridge was the last major hurdle, with misaligned ducts for post-tensioning cables needing to realigned, which involved breaking out some of the concrete panels.

“We’ve got the technical cure, it’s fairly straight forward stuff, but it just takes a bit of time,” he said, adding that the job will be completed by late autumn “for sure”.

Linden Homes was by far the best-performing business in the group, operating profit rising from £170.3m to £184.4m and turnover from £937.4m to £947.3m, producing an operating margin of 19.5 per cent.

Galliford Try said the division had already reached its 2021 target of a 19-20 per cent margin, with the next target being revenue of £1.25bn.

Overall Galliford Try has put its losses on the job at £123m. However, this includes claims against the client, Transport Scotland, that the company expects to receive but have not yet been settled.

The order book for the construction business fell to £3.3bn as of 30 June, down from £3.6bn a year earlier.

Galliford Try’s Partnership and Regeneration business also increased its operating profit from £14.9m to £23.6m.

Chief executive Peter Truscott (pictured) said the group had delivered “very strong underlying performance” during the year.

Construction margins are expected to improve as legacy projects are closed out and newer jobs perform better for the business, he added.

For its Linden Homes business, the company is now targeting further margin and revenue growth driven by increased standardisation of its products.

Net assets for the business increased from £575.5m to £776.6m, with a £324m fall in borrowing contributing significantly to the change.

Net cash for the business increased from £7.2m to £98.2m.

The group’s balance sheet was also strengthened by a £150m rights issue made earlier this year, which was carried out in repsonse to extra costs incurred on the AWPR job in following Carillion’s collapse.

Galliford Try’s share price was up 3.9 per cent by mid-morning off the back of the results.

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