Carillion collapse costs construction partner an additional £25m
Construction group Galliford Try has been forced to set aside an additional £25m to invest in a joint venture project in which it partnered collapsed construction group Carillion.
In its interim results released today, the group said that in light of the compulsory liquidation of Carillion and the impact on its funding obligations in respect of the Aberdeen Western Peripheral Route (AWPR) joint venture, it had reassessed the out-turn position on the contract.
“The withdrawal of Carillion increases our participation in both costs and estimated recovery claims, and we have increased our provision accordingly, which we have shown as an exceptional item,” it said.
The company will have to invest a further £25m to cover its cost on the contract. The contribution will be put down as an exceptional charge.
To try and absorb the unexpected charge, Galliford Try said it was also planning a capital fundraising of £150m.
The move had an immediate impact on the group’s share price, plunging almost 14% in early trading.
Peter Truscott, chief executive, said: “We have reviewed the impact on our business from the compulsory liquidation of Carillion, which has resulted in a further reassessment of the likely out-turn from our participation in the Aberdeen Western Peripheral Route (AWPR) joint venture, leading to an exceptional charge of £25m.
“Reflecting the additional financial obligations arising from this contract, we have today announced our plans for a capital raise of £150m. We have also brought forward our plans to increase dividend cover to 2.0x pre-exceptional earnings, with the result that we are today declaring an interim dividend of 28.0p.”