Shares in Galliford Try (GFRD) fell by more than 9 per cent after the construction company and housebuilder warned that it expects to take a non-recurring charge of around £98m following a reappraisal of costs relating to two legacy contracts in the construction arm.
These cover two joint venture projects, one of which will complete this summer and the other by mid-2018. Galliford is currently focused on improving its risk management process, and is working to concentrate on more selective bidding whereby new work contains sufficient leeway for risk, margin and inflation. To this end, around 85 per cent of the workload is now contained within lower-risk framework and regulated sectors.
Excluding the exceptional charge, both sides of the business are performing well. The construction order book is strong at £3.5bn, while Linden Homes has improved sales rates and grown the forward order book.
While headline profits will be lower, analysts at Peel Hunt have marginally increased forecast underlying profits for the year to June 2017 to £162m, from £160m.
