More than £130million was wiped off the value of the parent of one of Scotland’s leading construction firms after the collapse of Carillion forced it to strengthen its balance sheet yesterday.
Galliford Try, owner of Scottish company Morrison Construction, aims to raise £150million of extra capital to help it absorb extra costs of up to £40million it expects to have to fork out on the Aberdeen city bypass project.
The group booked an exceptional charge of £25million towards its additional financial commitment in first half results.
Galliford Try assured that it was making “good progress” on the Aberdeen Western Peripheral Route, which is expected to be completed this summer, as well as other legacy contracts and was otherwise in good financial standing.
It insisted it continued to operate well within its banking covenants. But nervy investors were unimpressed, with the resulting sell-off of shares wiping nearly 20% off the company’s share price and market value.
Morrison Construction’s recent projects include an extension to Kemnay Academy in Aberdeenshire and 10 new schools in the biggest building programme ever to be undertaken by a local authority in the Highlands. The company is now one of only two partners in the Aberdeen Roads bypass consortium, alongside Balfour Beatty.
They were previously joined in the project by Carillion, which crashed last month following a string of profit warnings and despite it securing key UK Government contracts.
The first of these was last July, when the Wolverhampton-based firm said a large chunk of an £845million write-down was for three UK projects, one of which was understood to be the bypass.
Yesterday’s results from Galliford Try showed an 11% drop in pre-tax profits, to £56.3million in the six months to December 31, despite revenue jumping by 14% to £1.5billion.
“The group has sufficient financial resources to meet its obligations, including the estimated impact of Carillion’s liquidation,” the Middlesex-based company said in its trading statement.