Galliford Try's shares fell nearly 10 per cent to 1,310p this morning after the FTSE 250 housebuilder announced it expects non-recurring costs of £98m related to its legacy contracts.
The construction firm reported a "strong trading performance for the period for the period 1 January to 2 May 2017 but warned that the "overall result will be impacted by non-recurring costs in construction".
Galliford's construction order book stands at £3.5bn, up slightly from £3.4bn in 31 December 2016. A total of 73 per cent of next year's revenue has been secured, compared to 76 per cent in the prior period.
Galliford Try confirmed today that it is no longer undertaking large infrastructure jobs on fixed price contracts.
In March, Bovis Homes rejected approaches from both Redrow and Galliford Try.
What Galliford Try said
Peter Truscott, Galliford Try's chief executive, said: "The impact of the legacy projects in Construction, in particular the two large infrastructure projects, is regrettable. However, as described in our recent Strategy presentation, Galliford Try is no longer undertaking large infrastructure jobs on fixed price contracts. There are no other similarly procured major projects in our current portfolio and we are encouraged by the performance of the underlying portfolio of newer work.
"Excluding the non-recurring charge, we remain confident in delivering a strong performance over the full year, and we plan to pay the dividend in line with previous guidance. The group continues to make good progress on our strategy to 2021, supported by the strong leadership of our reorganised management teams."
While we remain cautious of continuing macroeconomic uncertainty, all three businesses are focused on exciting targets and clearly defined plans to improve operating efficiency and grow both margins and revenue.