Galliford Try not out of the woods yet

Sentiment was further undermined by news that £150m is to be raised through a fully underwritten capital placing. At the same time, it has brought forward plans to restore a two times dividend cover on pre-exceptional earnings, which means that the half-year dividend has been cut by 13 per cent to 28p a share.

Taking on fixed-price contracts works well until rising costs lead to eroding margins, and Galliford has already booked an exceptional charge of £98.3m to cover these contracts taken out in 2014 and earlier, with the last due for completion in mid-2018.

On a brighter note, Linden Homes, which accounts for just under a third of group revenue, benefited from further strong demand for new-build houses, and its operating profits were lifted by 9 per cent to £80.9m, with margins up by 18.5 per cent and completions up by 6 per cent. And average selling prices, which include affordable housing, rose from £287,000 to £309,000.

Galliford also increased its exposure to the affordable, private rented and mixed tenure side, increasing the order book by 41 per cent to £1.3bn. Work secured included a new joint venture with Trafford Housing Trust to deliver a £100m, 600-home regeneration scheme in Manchester.

In the construction division, pre-exceptional operating margins grew from a wafer thin 0.4 per cent to 0.9 per cent, but uncertainty remains over the amount that will be recovered relating to final settlement of legacy contracts. However, the order book edged up to £3.5bn, and 99 per cent of projected revenue for the year to June has already been secured and 61 per cent for the following financial year.