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(Alliance News) - Galliford Try Holdings PLC on Thursday recorded a swing to profit in interim following a disposal of its housebuilding business during the period.
The stock was trading 12% lower at 124.08p each on Thursday morning in London.
For the six months to the end of December, the FTSE 250-listed construction company reported a pretax profit of GBP16.6 million, swinging from a loss of GBP24.7 million for the same period the year prior.
Revenue however, was 8.2% lower at GBP668.2 million from GBP728.0 million.
In early January, Galliford completed the disposal of its Linden Homes and Partnerships & Regeneration divisions to Bovis Homes PLC, which changed its name to Vistry Group PLC after the deal.
The deal saw Bovis issue 63.8 million new shares to Galliford, valued at GBP675 million, pay GBP300 million in cash, and take over Galliford's GBP100 million 10-year private debt placement.
"This has been a period of significant change with the successful strategic disposal of the group's housebuilding divisions transforming Galliford Try into a well-capitalised, UK construction-focused business. The restructured group is performing well with a number of recent significant project wins," said Chief Executive Bill Hocking.
During the period, the Building division won contracts and positions on frameworks worth GBP450 million while Infrastructure won contracts worth GBP540 million.
An interim dividend of 1.0 pence each was declared, down from 23p a year ago.
Separately, Galliford said it believes it has overstated revenue by GBP8.0 million and understated costs by GBP1.4 million as at the end of financial 2018, the first half of financial 2019 and the end of financial 2019. It noted that it has now corrected the errors by making adjustments.
The corrections came after the Financial Reporting Council raised some issues in relation to the company's results for its financial year to the end of June 2018. The regulator questioned the recognition of revenue on construction contracts and the classification of certain cash flows in the company's cash flow statement.
Following Galliford's correction in the half-year report published Thursday, FRC said it has concluded its enquiries into the company's results for financial 2018.
"The FRC found that Galliford Try overstated its revenue in 2018, which the company has now corrected. We will continue to hold companies to account when they do not comply with the requirements of relevant financial reporting standards," said FRC's Executive Director of Supervision David Rule.
As at the end of the period, the company had an order book of GBP3.2 billion with 12% in the regulated sector, 71% in the public sector and 17% in the private sector.
"We are encouraged by the demand in our sectors and look to further enhance this position through the continued disciplined approach to project selection and rigorous risk management. I am confident that our clear strategy will deliver sustainable results, said Hocking.
By Ife Taiwo; ifetaiwo@alliancenews.com
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