Daily Management Review

Public And Private Projects Being Delayed Due To Brexit: Galliford Try


02/15/2019




Public And Private Projects Being Delayed Due To Brexit: Galliford Try
Private companies are not delaying investment in the United Kingdom while the government remains busy preparing for the exit of the UK form the European Union, said the construction firm Galliford Try which means that investments in the private sector are already being significantly put off because of Brexit. 
 
If there in a no-deal Brexit it can result in “a potential severe decline in consumer confidence and economic activity in general” said the company while announcing its strong half-year results.
 
For private businesses, it would be much easier to manage UK’s exit from the EU if it is more predictable and takes place in a more controlled manner guided by the terms of a negotiated withdrawal agreement, the company said and added that there would not be much significant impact on the business in such a scenario.
 
However, there is already a drag on the construction sector because4 of the und\certainty that currently surrounds the exit of the UK from the EU and the terms and conditions of that exit irrespective of the ultimate outcome of Brexit, said the company’s chief executive, Peter Truscott.
 
 “The government is distracted with other things and in the private sector some clients are just holding off the decision to commence until such time as they know what [Brexit] is all going to look like,” he said.
 
“It’s taking people longer to make those decisions to buy homes for instance. In construction it’s anecdotal and it’s hard to be specific about individual clients but some of those public sector projects we’d expect to have started seem to have been delayed. Government departments are busy with other things and that has delayed getting started on some sites,” he added.
 
Companies have been asked by the Financial Reporting Council, which is the UK’s accounting watchdog, to bring out any possible impact on their business which could happen because of Brexit. 
 
Apart from the warning on Brexit, the company also pointed out a few other headwinds while taking announcing the strong half yearly results which pushed the shares of the company by more than 7 per cent.
 
Galliford Try reported a 4 per cent drop in its first-half pre-tax profit at £53.8m. The company had taken a hit of £45m last year when it decided to be a part of the Aberdeen bypass road project after the collapse of the outsourced company Carillion.
 
Delays in works on a bridge over the River Don also resulted in the company taking a charge of another £26m in the Aberdeen project during the first half of the year.
 
A record pre-tax profit of £84.2m was posted by the company when exceptional charges – which mostly raised because of the road project, were kept out of the results. The company also managed to reduce its net debt to £40.1m from £84.9m to £40.1m.
 
A £150m rights issue launched by the company last year also helped to boost the financial position of the group. The rights issue was launched to help the group to garner funding for growth while it took the charges because of the failure of Carillion as it had to shoulder some of the burden of the firm’s collapse.
 
(Adapted from TheGuardian.com)






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