Galliford Try exits large infrastructure projects

Aaron Morby 1 week ago
Share

Galliford Try is pulling out of bidding for large fixed-price infrastructure projects to concentrate on lower risk public, utility and two-stage tender work.

Queensferry Crossing

Galliford Try’s joint venture with Dragados, Hochtief and American Bridge International opened the Queensferry Crossing two weeks ago. The cost of delays due to high winds on the project will be met by the consortium.

The firm revealled the shift away from high-risk projects as problem contracts – the Queensferry Crossing and the Balmedie-Tipperty section on the vast Aberdeen Western Peripheral Route project – plunged the construction division into an £89m loss.

The two legacy projects, not officially identified by Galliford Try, holed group pre-tax profits, which fell nearly 60% to £59m. Strong performances at Linden Homes and Galliford’s partnerships housing business helped to off-set a one-off charge of £98m.

Over the 12-month period, ending in June, revenue was up 7% to nearly £2.7bn.

Peter Truscott, chief executive, said construction’s problems had been confined to just the two projects and said the re-focussed business was expected to return to 2% margin by 2021.

“We have put into place rigorous processes to ensure a more disciplined approach towards project selection.

“Today, we are focusing on lower-risk public and regulated sectors and two-stage negotiated work, rather than large infrastructure projects on fixed-price, all-risk contracts which these legacy projects were.

“As these challenging contracts draw closer to completion, we are encouraged by the performance of our new contracts. “

He added: “During the year, we improved our risk management process for project selection, increasing our rigour in choosing which projects to take on. This selectivity is increasingly reflected in our culture and is resulting in more projects being ruled out earlier in the selection process.

“As our legacy positions close out we expect margins to improve as we work towards our 2021 target of at least 2.0%.”

Galliford divisions at a glance
Profit 2017 Profit 2016 Revenue 2017 Revenue 2016 Margin Completions
Linden Homes £170m £147m £937m £840m 18.2% 3,296
Partnerships £14.9m £11.7m £330m £300m 4.5% 594
Construction -£89m £16m £1.57bn £1.5bn 0

 

Within the construction division, infrastructure booked a £77m loss, while building accounted for a £12m loss – the latter based on closing three completed building projects.

Going forward construction will bid for Highways England, water and energy work but avoid PFIs like the Heads of Valleys dualling in Wales and the Lower Thames Crossing.

Based on the performance of the three key divisions, Truscott also revealed Linden Homes had been targeted to raise completions from 3,296 in 2017 to around 5,000 by 2021.

The partnerships and regeneration business is also expected to show good growth, raising completions from 2,594 – including 2,000 equivalent contracting units – to 4,200 over five years, with revenue almost doubling to £650m on margins of 6%-7%.

Truscott added: “While the one-off costs relating to legacy contracts in construction have impacted the reported financial performance, we remain confident in the prospects for the business, with the underlying portfolio of newer contracts performing well, and simplified and strengthened processes proving effective.

“Reflecting our strong underlying performance we are proposing an increase in our full year dividend of 17% to 96p per share.”

Latest news

Mitie to sell property management division

Cost cutting programme continues as another 480 jobs set to go
7 hours ago

Police to quiz 336 firms in wake of Grenfell fire

Detectives comb through millions of documents and forensically examine tower in minute detail
22 hours ago

Developer buys unfinished Leeds hotel project

Unfinished GB Building hotel project to be redeveloped as student flats
6 hours ago

Profits double as Alun Griffiths revenue soars

Strong growth in rail work lifts Abergavenny contractor
6 hours ago

Robertson gets go-ahead for £23m Inverness Justice Centre

Contractor Robertson due to start work this autumn
21 hours ago

Durkan to start on £110m resi scheme in Ilford

Britannia Music Site scheme will contain 30% affordable homes
7 hours ago

Galliford Try to fit-out HSBC Birmingham HQ

Galliford lands £20m+ deal at complex where it was main contractor
7 hours ago

Arcadis to develop A66 TransPennine scheme

£1.7m contract to develop A66 Northern TransPennine proposals
6 hours ago

Lovell set for £45m Hatfield regeneration scheme

Detailed plans will be submitted early next year for homes and shops
1 day ago

McAlpine JV wins £160m London mental health project

NHS land for 800 homes to be sold to fund Springfield and Tolworth mental health schemes
1 day ago

Plans go in for £350m scheme in Beaconsfield

Inland Homes makes progress on 100 acre Wilton Park site
1 day ago

Billington ramps up steelwork capacity as orders surge

New Shafton production facility to come on stream in January
1 day ago

66 firms win places on Fusion21 £90m framework

Full list of winning consultants on latest four-year deal from procurement body
1 day ago

Osborne bags Stockport Mersey Bridge

Phase of of £41m Stockport Interchange to start in April
1 day ago

Plan for £60m Strathclyde Uni teaching hub

The BDP designed building is the University's largest single project spend to date
1 day ago

Murphy sells stake in Australian infrastructure business

Cash raised will help civils specialist hit £2.5bn turnover target by 2025
2 days ago

Eric Wright warns Manchester market overheated

Lancashire builder suffers loss for second year running
2 days ago

Developer and foreman jailed after death of carpenter

Pair found guilty on manslaughter charges after fatal fall on Brighton site
2 days ago

Teesside Uni plans £300m campus expansion

Middlesbrough and Darlington campuses to be expanded in ambitious masterplan
2 days ago

£1bn London docklands scheme developer named

London & Regional Properties to redevelop Albert Island
2 days ago

Network Rail to overhaul tunnel re-lining methods

Industry called up to design faster, more efficient way to repair Victorian tunnels
2 days ago

Balfour Beatty does U-turn over support for CITB

Contractor to back skills body just weeks after broadside from boss Leo Quinn
5 days ago

Interserve appoints new finance chief

Mark Whiteling to help turnaround contractor
2 days ago

Green light for £300m Meadowhall expansion

Developer British Land aims to start construction next year
5 days ago

Bid race begins for £3.3bn roads pavement framework

Four year deal from Highways England to cover improvements across the country
5 days ago

Diamond drilling specialists join forces

Robore and Holemasters create £16m turnover contractor
5 days ago

Contractors complete Crossrail track – video

Push on to complete mega project for December 2018 opening
5 days ago

McMullen lands £18m cladding package at Shell Centre

Specialist will use latest in offsite techniques on 30-storey tower
5 days ago

Plans unveiled for £41m Edinburgh sports complex

Meadowbank sports complex will be demolished and rebuilt
5 days ago

Bouygues UK chief leaves the company

Craig Tatton leaves to "pursue another career opportunity"
6 days ago

Contractor services