Fundamental Facts About Galliford Try Plc To Watch Out For (GFRD)

  • Feb 20, 2019 GMT
  • Team Kalkine
Fundamental Facts About Galliford Try Plc To Watch Out For (GFRD)

Overview 

Galliford Try PLC (Ticker Symbol: GFRD) is a British housebuilding, regeneration, and construction company, headquartered in Uxbridge, London. It was formed in the year 2000 through the merger of Galliford and Try group. Try group was founded in London by WS Try in the year 1908. Thomas Galliford started Galliford Plc group in the year 1916. With revenues of £3.1 billion, it is one of the leading construction company in the UK and is a part of the FTSE 250 index.

The company helps in meeting the demand for new homes in the private and budget homes segment, regenerates neighbourhoods. Peter Ventress holds the position of Non-executive Chairman, he joined the Board on 30th April 2015 and chaired the nomination committee as well. The current Chief Executive Officer of the company is Peter Truscott.

Product Segments

The company operates primarily through three strong businesses: Linden Homes, Partnerships & Regeneration, and Construction. The two additional business segments are Infrastructure and PPP Investment. The company, through Linden Homes, constructs houses, mostly across the south and south-east of England. The company aims to create designs and work with local management teams to meet all the needs. The company’s specialist affordable housing comes under Partnerships, operating primarily in the south-east and northeast, and is aiming to grow its presence across the country. The Construction segment provides a complete sphere of building and infrastructure services, encompassing the project’s entire life cycle. Infrastructure undertakes civil engineering projects across a wide range of markets throughout the UK. Through the PPP Investments, the company aspires to acquire projects that create investment opportunities and has financed 30 PPP projects.

Key Financial Metrics - 1H FY 2019 (£ million)

(Source: Company Filings)

(Source: Company Filings)

Financial Highlights - 1H FY 2019

  • The group’s revenue in the first half of the financial year 2019 decreased by 5 per cent to £5 million against £1,495 million reported last year (1H FY 2018).
  • Profit before exceptional items and tax increased by 4 per cent to £2 million as compared to £81.3 reported last year.
  • Reported Linden Homes operating margin in the first half of the financial year 2019 was 19.6 per cent against 18.5 per cent reported last year.
  • Partnership and Regeneration segments operating margin in the first half of the financial year 2019 were 5.1 per cent against 4.8 per cent reported last year (1H FY 2018).
  • Reported Construction operating margin was maintained at 0.9 per cent which was the same as reported last year.
  • In 1H FY 2019, profit before tax declined by 4 per cent to £8 million as compared to £56.3 reported last year (1H FY 2018).
  • Pre and post exceptional EPS dividend declined in the first half of the financial year 2019, falling by 14 per cent and 22 per cent respectively.
  • An interim dividend of 23p was announced, in line with the company’s policy.
  • Net debt reduced to £40 million in the 1st half of FY 2019, as compared to £85 million reported last year.
  • Reported pre-exceptional return on net assets in the first half of FY 2019 was 23.5 per cent against 24.7 per cent reported last year.

Key Ratios

(Source: Thomson Reuters)

Ratio Commentary

  • For the year 2018, profitability margins were higher as compared to the industry median except for gross margin metric.
  • The company liquidity position is quite stable and higher than its peers, reflecting current assets are enough to meet short term current liabilities.
  • Reported debt-equity ratio for the year 2018 was higher than its industry median, reflecting a significant portion of fundraising was initiated through debt mode.

One Year Share Price Performance

(Source: London Stock Exchange)

Share Price Commentary

  • On 19th February 2019, Galliford Try share closed at GBp 704.0, up by 2.62 per cent from its previous day closing price. Stock's 52 weeks High and Low is GBp 1,117.00/GBp 562.00. At the closing price, the stock was trading 36.97 per cent lower than its 52w High and 25.27 per cent higher than its 52w low. Stock’s average traded volume for 5 days was 676,056.80 and 30 days - 320,366.13. The average traded volume for 5 days was up significantly by 111.03 per cent as compared to 30 days average traded volume.
  • On the valuation front, the stock was trading at a trailing twelve months PE multiple of 4.9x as compared to the industry median of 9.3x.
  • The company’s stock beta was 0.98, reflecting relatively same directional movement as compared to the benchmark index.
  • Total outstanding market capitalization was around £773.24 million.

Risks Assessment and Growth Prospects

  • The company is in line to achieve its targets according to 2021 strategy regarding growth and profitability.
  • Brexit uncertainty has been delaying private and public sector projects, with private companies putting off making decisions regarding investments while the government sector is preoccupied with Brexit-related work.
  • The company has a strong order book for coming quarters, and strategic progress looks positive.
  • Linden Homes demand remains strong with an increase in smaller and mid-range family houses, assisted by Help-to-Buy scheme by the government.
  • A mix of residential development augurs well for the company.
  • The Group’s business can be adversely affected by macroeconomic and political instability, reducing demand and prices of homes, or cause a delay in construction activity.

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