Shares in Galliford Try (GFRD) staged a comeback - rising 3 per cent - after the housebuilder sought to reassure investors about its responsibility for schools in Scotland closed indefinitely. Miller Construction, which the group acquired in 2014, has contractual responsibility for four of the 17 schools closed as a result of safety concerns. Management said remedial work was nearing completion and the associated costs would not have a material impact on Galliford.
The schools in Edinburgh were built as part of a public private partnership schools programme between 2002 and 2005. Work was subcontracted out to a number of contractors, including Miller Construction. In March Miller was notified that Oxgangs Primary School, built by the company more than 10 years ago, had lost part of one external wall during storm Gertrude.
Shares in the housebuilder fell 7 per cent after remedial work at Oxgangs discovered other serious defects earlier this month. However, there have been no earnings forecast changes as a result of the work. Howard Seymour, head of building and construction research at Numis, said since Miller has been remediating the work for some time, the costs should not be material to the wider group. "This should draw a line under this issue and we would expect some aspect of share price recovery following this statement," he said.
