Triangle Energy Completes CHRP Targeting Economic Life Extension & Higher Oil Throughput

The UK retail sales increased by 12 per cent in May, as per the data released by Office for National Statistics on 19th June 2020. The retail sales dipped by a record 18.1 per cent in the previous month (April 2020). The other vital factors that triggered the market were:

  • Office for National Statistics stated that the National debt of the UK exceeded 100 per cent of the GDP.
  • The Brent was trading at USD 42.67 per barrel and was up by 2.79 per cent (before the market close at 12:34 PM GMT+1) as the OPEC, and oil-producing nations reaffirmed the restraint oil output.
  • The British Pound lost its value against other major currencies, such as the euro and dollar.
  • The FTSE-100 was trading at 6,311.25 up by 1.40 per cent (before the market close at 12:34 PM GMT+1).

Given the developments in the market, we will discuss two FTSE All-Share listed stocks - Tyman PLC (LON: TYMN) and Galliford Try Holdings PLC (LON: GFRD). Both Companies operates in the construction and material sector. As on 19th June 2020, TYMN and GFRD were up by 1.45 per cent and 8.07 per cent, respectively (before the market close at 2.16 PM GMT+1). Let’s walk through their financial and operational performance.

Tyman PLC (LON: TYMN): Slashed proposed dividend to preserve cash

Tyman PLC is a leading international provider of hardware solutions for doors & windows and commercial access solution for the roof, wall and the floor to the construction industry. Tyman’s headquarter is in London, UK. The Company has operating facilities in 18 countries worldwide and has over 480 patents.

Trading update for four months ending 30th April 2020 as reported on 20th May

For the period January to April 2020, the Group’s revenue declined by 12 per cent year on year. The revenue alone fell 39 per cent in April 2020 year on year. The stringent lockdown severely impacted the construction and renovation activity in Europe and the UK. In the US, its largest market, the demand remained subdued. The Group reopened its facility in Italy in mid-April, and the UK facility started in a phased manner in May. All the manufacturing facilities are operational in North America except for two facilities in Juarez, Mexico.

On 3rd April 2020, the Company withdrew payout of a proposed final dividend of 8.35 pence per share for FY19. It paid a lesser interim dividend in FY19. The Company will save GBP 16 million in H1 FY20 by cancelling the final dividend payment.

On 3rd April 2020, in the UK, the Company had put 80 per cent of its workforce on furlough.

Liquidity Position

As on 30th April 2020, the Group had a cash balance of GBP 132 million with an undrawn credit facility of GBP 13 million from its GBP 240 million revolving credit facility. The Group is monitoring its cash flow very carefully. The net debt excluding leases was GBP 172 million. The nearest repayment is scheduled in November 2021, the US private placement of USD 55 million.

Tyman’s segment revenue as stated in the annual report released on 5th March 2020

It has three divisions, AmesburyTruth in North America, ERA in the UK and Ireland and SchlegelGiesse in Continental Europe and Rest of the world. In FY19, AmesburyTruth generated revenue of GBP 388.3 million whereas ERA and SchlegelGiesse added GBP 107.5 million and GBP 122.8 million, respectively, to the Group revenue, which was GBP 618.6 million.

Tyman PLC’s three divisions

(Source: Company Website)

FY19 KPIs stated in the annual report released on 5th March 2020

Like for like revenue declined 1.8 per cent year on year due to softness in demand in the North American market, adjusted operating margin declined by 40 basis points to 13.7 per cent in FY19 due to operational disruption. Leverage decreased to 1.72x in FY19 from 1.96x in FY18 due to significant acquisition and stable cash conversion. The ROCE was 12.0 per cent down by 60 basis points compared to the previous year.

Share Price Performance Analysis

Daily Chart as on 19th June 2020, before the market closed (Source: Refinitiv, Thomson Reuters)

The shares of Tyman PLC were trading at GBX 195.80 per share (before the market close at 1.09 PM GMT+1). The stock had its 52 weeks High and Low of GBX 292.00 per share and GBX 133.00 per share. The market capitalization of the Company was GBP 379.86 million.

Business Outlook

The Group withdrew its future guidance amid the current uncertainty, and it will decide on the next dividend payment when the situation normalizes. It is also carefully monitoring its working capital and future capital expenditure. It is also in the process of recruiting a new chairperson of the Board. It believes to be well prepared even in the prolonged period of uncertainty. The Company is utilizing government schemes such as employee retention and tax relief wherever available. It will release new products in 2020 and focus on their timely delivery.

Galliford Try Holdings PLC (LON: GFRD) – Securing new projects in distressing times.

Galliford Try Holdings PLC is a UK based construction company. Galliford Try is operating under three segments, namely Building, Infrastructure and PPP investment. The business caters public and commercial clients with target clients in Education, Defense and Health sectors, Infrastructure focusses on the development of Highways and Environment projects and PPP delivers buildings and infrastructure projects under the public-private partnership.

H1 FY2020 results ending 31st December 2019 as stated on 12th March 2020

The Group generated revenue of GBP 636 million in H1 FY20. As on 31st December 2019, the Group had an order book of GBP 3.2 billion. Building and Infrastructure had an order book of GBP 2.1 billion and GBP 1.1 billion, respectively.

3rd January 2020, the Group completed strategic disposal of housebuilding division, Lindon homes and Partnerships & Regenerations. It repaid bank facilities of GBP 450 million and transferred GBP 100 million private placement debt to Vistry Group PLC.

As reported on 12th March 2020, the final account of Aberdeen Western Peripheral Route was settled, and the Group received a cash payment of GBP 32 million.

Segmental Analysis - H1 FY20

(Source: Company Website)

Contract Update

17th June 2020: Argent Related, a global development company selected Galliford Try for construction of two mixed-use residential buildings at Tottenham Hale. The contract value is GBP 85 million. The site will have 1,030 new homes with retail and mixed-use space.

2nd June 2020: University of Strathclyde appointed Group’s Scottish arm Morrison Construction to design and build the National Manufacturing Institute Scotland (NMIS). The contract value is approximately GBP 42 million. It also renewed its contract for the second time on the hub South West Scotland framework. The renewed contract value GBP 200 million will employ five contractors for three years.

30th April 2020: YORbuild Major Works Contractors Framework Agreement appointed the Company on Lots 1 and 2 of the Framework. The structure will be for four years and will comprise general building works. At Lot 1, building work will be between GBP 10-30 million and Lot 2 the work is above GBP 30 million.

Healthy Balance Sheet Strength

Public and regulated sectors make 83 per cent of the order book. The Company expects average cash in H2 FY20 to be above GBP 100 million. The Group holds a PPP portfolio of GBP 39 million. It has cancelled the proposed interim dividend of 1.0 pence per share for H1 FY20.

(Source: Company Website)

Share Price Performance Analysis

Daily Chart as on 19th June 2020, before the market closed (Source: Refinitiv, Thomson Reuters)

The shares of Galliford Try Holdings PLC were trading at GBX 131.82 per share (before the market close at 2.16 PM GMT+1). The stock had its 52 weeks High and Low of GBX 887.00 per share and GBX 100.76 per share. The market capitalization of the Company was GBP 135.42 million.

Business Outlook

The Company abstained from guiding for H2 FY20 and FY21. The impact on its supply chain and scale of disruption is not yet quantified. The significant portion of the order book is from the government sector, and hence, it is believed to be secured. It will take all the necessary steps to support economic recovery by cutting capital expenditure and managing working capital. The focus will remain on timely project delivery to increase margins. The new contract wins will be vital for future growth.





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