Galliford Try Share Discussion Threads

[scrwal] 26/2/2018 12:54

If people take up their rights then the %holding and value ,all things being equal will be constant. However if the rights are too cheap the market may well push the current price downwards reducing the market value of the total holding.

The final dividend will definitely not be 64p per share for a couple of reasons A) The rights issue will have taken place so the per share gets adjusted downwards and B)It was clearly stated that the 2x dividend cover would take immediate effect whereas the cover for last years dividends was 1.6x.

So taking B first the notional EPS in 2017 was 154p giving DPS @1.6x of 96p . Using the 2x cover now in place the DPS is now 77p.
The 77p will be adjusted downwards once the number of additional shares to be issued is known.

Since 28p is being paid as the interim the final dividend may be around 40p if lucky.

[grahamburn] 26/2/2018 09:50

marksp2011.

Not sure where you get 800/850p from (assuming you're talking about the proposed rights issue).

There are just over 82m shares in circulation. The company has announced it is intending to raise £150m from the rights issue.

That equates to the equivalent of significantly less than 200p per existing share held.

[cwa1] 26/2/2018 08:14

I THINK the "deal" here is that the 92p is yours to keep once it's in your bank account and, with some luck, you can sell the remainder for whatever the market will bear at the time of selling. VERY occasionally this can even be in excess of the buying price! Of course if you time things badly, or it goes belly up, then that equation may go in to disequilibrium.....

[marksp2011] 25/2/2018 21:03

They give you 92p you give them 800/850 or whatever it turns out to be.

I struggle with the arithmetic on that one.

[mattcookson] 25/2/2018 19:51

GFRD goes ex divi on 15/03 -28p divi. That combined with the final divi of 64p is a fantastic divi yield of over 10.5%. Great BUY in my book.

Also, Galliford Try won £55m Midlands housing contract last week. Onwards and upwards!

[spudders] 25/2/2018 16:15

I don't have a problem with the capital raise. Surely it's best to bolster the balance sheet and be in a stronger position going forward. I believe management have learnt from their mistakes albeit not all of their own doing. It looks to me a new chapter starting for GFRD and I for one will remain bullish.

[eeza] 25/2/2018 14:23

What I think is irrelevant to what will happen.
What is relevant is the willingness of the BOD to ensure that the contracts they bid for are realistically costed to ensure a good margin of error. Better no job than a job that loses money, and time which would otherwise be spent on making a profit elsewhere.
Else it won't be long before they're back, cap in hand, "we got it wrong again, Dad".

Loss-making contracts were the death of CLLN. BBY also had a torrid few years once they realised that most of the work they'd bid for, and won, was loss-making.

They all bid against each other in a race to the abyss.

'I can lose more than you, so there'

[careful] 25/2/2018 13:27

CLLN margins may improve.
A bit more allowance for cost overruns should be in the bid.

[eeza] 25/2/2018 12:32

M.R.D.A.

When is an 'exceptional' not an 'exceptional'.

I would say when it happens regularly - as in each year.
Next year - another 'exceptional', if not more, added to the 'legacy' pile.


Wafer thin margin - what could possibly go wrong.

[careful] 25/2/2018 11:52

This rights issue seems a sensible move.
CLLN collapse put extra demands on GFRD cash requirements to complete the troubled contract,and eventually smaller impact to profits.
The CEO said it was not really necessary but the £150m would give them the balance sheet strength to pursue good opportunities.

Confidence will be restored, no pension deficit at GFRD either.

[eeza] 25/2/2018 10:59

Well the cost of your shares would be £24k. The value depends on the share price
Not everyone will have spare funds to take up their 'rights' and some will have the cash but still not be able to take up their rights if in an ISA which is already fully subscribed for the year.
May need to compromise with 'tail-swallow'.

Management is not doing this as a favour to s/hlders it is to rescue the Co from the BOD's negligence in taking on loss-making contracts..

[careful] 25/2/2018 09:41

If you have £20k of GFRD shares pre rights, then buy (say) £4k of discounted rights shares,
then your total holding will be worth £24k.
The company will be worth £150m more, the cash raised.
It does not matter what the rights price will be and how many shares you now have, the value of them will be £24k.

[marksp2011] 25/2/2018 05:45

Careful

And another thing issues in companies like this are always unpopular

In plain English GFRD are saying

In the last 4 years we have given you 299 in dividends
Can you now give us back that money because we overstated our profits by not taking adequate provisions and we don't have enough money left to be able to invest in the business.

Not much of a sales pitch really is it?

[marksp2011] 25/2/2018 05:34

Careful

Sorry I don't follow your logic

It is true you still have the same proportion but, the proportion has been discounted twice. What you usually see is a drop when the rights is abnnounced followed by another drop when the terms are announced as they have been based on a trailing price calculation.
The Sp has dropped for 1200 to 900 taking up a 1:10 at 8.50 and assuming you held 2k shares

Buying another 10% at 8.5
Original value = £24k New value = 19.8k assuming you take up your full offering
The market value for the holding in GFRD was 24k and it is now 19.7k

The company chose not to announce the pricing for the offer and so attracted the sell off.

Does the size of the discount make a difference? No in terms of the proportions. very much so in terms of the share price as the share price tends to move towards the rights price reducing the value of the primary holding.

If the rights is at close to market...I agree it makes no difference. In this case, noone thinks this is a zero discount offering so the incumbents lose value

[garycook] 25/2/2018 03:38

So a 5 for 1 Rights at £9 then ? 16.67 Mill new shares.There must be a discount to the current SP,or what is the point of taking up the Rights when a few weeks ago,you could have picked up GFRD under 800p.20 Million new shares at 750p sounds more like it.Maybe 18.75 Mill at £8.

[careful] 24/2/2018 10:54

Amount of discount makes no difference at all provided you take up your rights.
150m new shares @ £1 or 30m @ £5, it makes no difference.
the market value of your holding remains unchanged.
The ex. rights price per share is a simple calculation.

[marksp2011] 24/2/2018 10:39

I hope not.this price is already discounted a fair way from the price on the day the fund raising was announced

[garycook] 24/2/2018 03:43

Wanted to buy more anyway.Rights hopefully will be at a nice discount to the current share price

[dr_smith] 23/2/2018 15:35

Thank-you careful.

[careful] 23/2/2018 15:18

no dates no details yet.
seems like we will have to pay about 20% of our existing holding.

[dr_smith] 23/2/2018 14:32

Cheers careful - mine not yet showing - any mention of dates?

[careful] 23/2/2018 13:49

So it is to be a normal rights issue after all.
Just received notice from my bank.
Details to be announced, but additional rights cannot be purchased nil paid in the market, but you can sell your allocation.

Why did they not call it a rights issue in the original announcement?

[dlp6666] 23/2/2018 11:53

In other news, though:

hxxps://www.cornwalllive.com/news/cornwall-news/brand-new-200k-house-mouldy-1242548

Could 'quality control' be a problem?

[dr_smith] 23/2/2018 11:30

Cheers speedsgh. No rns...but don't know rules. £55m is say 2% of t/o as rule of thumb.

>Of the 375 houses to be built, up to 40 per cent will be affordable.
I envisage they will all be affordable! ;-)

[speedsgh] 23/2/2018 10:16

Galliford Try wins £55m Midlands housing contract -

Galliford Try Partnerships has won a £55m contract with a Solihull housing group to construct 375 homes.

The contractor’s regeneration arm, which works with housing associations and local authorities, beat three other bidders to the contract with Waterloo Housing Group.

Galliford Try Partnerships will act as development partner on the scheme in Leamington Spa, handling design, planning and construction.

Of the 375 houses to be built, up to 40 per cent will be affordable.

The West Midlands job is the division’s second big win of the year following its appointment on a £155m regeneration scheme in west London linked to Queens Park Rangers football club.

In its financial report for the six months to 31 December Galliford Try’s Partnerships arm posted the highest growth of its businesses, with revenue jumping 55 per cent to £223.5m, partly driven by its purchase of Drew Smith in May of last year. The division’s operating margin stood at 4.8 per cent.