Galliford Try to launch £150m rights issue after Carillion collapse

Galliford Try to launch £150m rights issue after Carillion collapse

Announcing the construction giant's half-year results to 31 December, chief executive Peter Truscott said the move reflects the "additional financial obligations" arising from the Aberdeen Western Peripheral Route joint venture with Carillion.

But without raising new capital, it said this would involve diverting capital away from the Linden Homes and Partnerships & Regeneration businesses, which would reduce their ability to capitalise on growth opportunities.

Galliford Try, Carillion and fellow construction firm Balfour Beatty were contracted to build the bypass for £550m but Carillion's demise has left the two other companies facing additional costs.

It said it would now pay £29.7m instead of £47.7m, reflecting the facts that the contracts had no working capital and came with none of the usual warranties in place as a result of Carillion's failure.

Construction group Galliford Try announced on Wednesday it was to launch a cash call on investors to raise £150m in new share issues to help prop up its balance sheet following last month's collapse of joint venture partner Carillion. In other words, the opportunity cost would be too great.

United Kingdom construction group, Galliford Try, has today announced plans to raise £150m from investors in the coming weeks and cut its dividend to support its balance sheet in the wake of Carillion's collapse.

Galliford stated that it has improved its tendering and project selection processes, which should mean that it will no longer enter into the types of contract which caused its Carillion-related losses.

It also booked a 25 million pound charge on the back of Carillion's liquidation for the six months ended December 31, 2017, with first-half earnings per share falling 9 percent to 56.3 pence per share.

While the group pre-tax profit figure was down 11% on previous year, net debt was also substantially reduced from £113.8m to £84.9m.

"We have delivered a strong financial and operational performance in the first half, with revenue growth across all three businesses and excellent progress against our 2021 strategy", Truscott said.

In 2017 Galliford-owned Linden Homes saw revenue increased by 7% and its operating margin advanced from 16.3% to 18.5%.

This article was published on 14 Feb 2018 (last updated on 14 Feb 2018).

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