Galliford Try plc (LON:GFRD), the housebuilding, regeneration and construction group, announced that it is undertaking a strategic review of its Construction business.
The review will reduce the size of the Construction business, focusing on its key strengths in markets and sectors with sustainable prospects for profitability and growth, where we have a track record of success.
The review includes an assessment of operational progress and contract positions throughout the Construction business. The Board anticipates that this review will result in reduced profitability in the current year reflecting a reassessment of positions in legacy and some current contracts and the effect of some recent adverse settlements, as well as the costs of the restructure. The single largest element relates to the Queensferry Crossing joint venture, which has recently increased its estimated final costs on the project. With regard to the claim in respect of the completed Aberdeen Western Peripheral Route, and the previously disclosed £38m work in progress balance in respect of three contracts for a single client, our position is unchanged.
The Board expects that the outcome of this assessment will reduce the Group’s full year post-exceptional profit before tax by £30m-£40m below the current consensus analysts’ forecast1. The majority of our construction businesses continue to perform well, and these adjustments are not expected to have a significant impact on the Group’s previous guidance on average net debt for the year.
The Board anticipates finalising its conclusions in the next few weeks and will share the detail of the review of the Construction business along with a further update on Group trading in its scheduled statement on 21 May 2019.