Galliford Try Share Discussion Threads

[cascudi] 12/9/2019 09:16

Volume seems very low. Are they desperate for shares? Any big buy on level 2?

[lord gnome] 12/9/2019 08:40

I'm out as of this morning. Happy to take a decent profit and turn my intended LTBH dividend play into a quick trade. I don't want to be around when this deal is done. Good luck all.

[marksp2011] 12/9/2019 06:39

Nori

Anyone investing in a company with a 2% margin in an industry that has massive execution risk and is also at risk from the weather etc needs to have their head examined.

VWRD - The vanguard global ETF has grown at 12% compound over the last 5 years. If a stock cant beat that why hold it? Lindsell Train Global has managed 20%+ as has Fundsmith. FGT has managed 19% for the last 10 years. All of these other options have lower or virtually no stock specific risk.

There are two elements here. Trading the stock and investing in it. I don't believe that the fundamentals in UK construction make a sane investment. the attraction in GFRD for me was Linden. Without Linden it is a question of time before they take a bad contract and they will be in trouble again ALL the builders do this.

i will let this BVS thing play out and get what I can from it after that.......this sector won't see any of my money.

I am also trading kier - a fine example of being better to travel than arrive. i will ride the slightly less disastrous news stories and then exit.I have a significant profit but it is also a very high risk play

[sleepy] 11/9/2019 12:39

Nori - many UK construction companies aspire to 2% margin. How many actually make it? Over the last 10 years has Gallifords construction arm made an overall profit or loss?

[nori_wasabi] 11/9/2019 11:48

After the split, with ~ 2% profit margin (typical for a UK construction company),. there will be very little room for error and the company will need to be run very well run, has a strong balance sheet plus good cash flow and banking facility. If it makes the same mistakes as it did in the last few years, it will die within 2 years.

[dr_smith] 11/9/2019 11:03

I note from todays results:
"STRATEGY
The Group's three-part strategy comprises:
(1) Operating efficiencies to increase margins and develop stronger foundations for sustainable growth. We have streamlined operations across the group creating a leaner and more resilient business to support ability to grow.
(2) Maintain capital discipline. We continue to manage capital prudently and continue to pay dividends while reinvesting appropriately in a growing business.
(3) Operate sustainably to create longer-term value. We enhance our policies and procedures, embedding them in leadership and culture, implement programmes to improve employee and subcontractor safety behaviours and engage with employees to identify training and development needs.
The Group intends to publish revised medium term targets in Spring 2020."

The above is repeated on their investor overview webpage:


Re the last line:
"The Group intends to publish revised medium term targets in Spring 2020."

No!
Given the post CRLN changes, they have time and medium targets should be stated now!
Without this, no overture from BVS can be put into context and assessed.
It reads as if they haven't bothered planning a non BVS deal future.
Further, the 3 bullet points are not targets but directional aspirations.
Targets are quantifiable figures.

" subject to a shareholder vote by both sets of shareholders."
For GFRD to vote, those targets, the non BVS planned future, has to be stated now, and indeed, how could BOD reccomend a vote without it?

It would be nice to have some comment from major shareholders and I have no clue on the mix, of PI's, BOD, & various institutions.

Around 30% of them are listed here:


Possibly the weekend papers will contain major shareholder responses.

IMO
Dave

[patmike] 11/9/2019 10:36

The dividend yield is over 10% at the current share price with, according to the rns, a cover of 2x.
That would seem rather attractive to many investors wouldn’t it? Or am I missing something?

[scburbs] 11/9/2019 10:23

Thanks Sleepy. Yes I think there is some double counting there so I have edited back to just what is in the presentation as it bears no resemblance to what they stated as Linden NAV previously (presumably having been reduced by loans from the centre).

[sleepy] 11/9/2019 10:21

scburbs - are you double counting if you add in £6 for the Bovis shares?

[scburbs] 11/9/2019 10:06

FY presentation appears to show Investment in sale group at £991.4m vs sale at £1075m.

[gabsterx] 11/9/2019 09:55

@nori more insight in the link below. There seems to be pressure on Scottish ministers to settle as they are racking up large legal bills on fighting the case. Might just be a matter of time before they buckle.





It is understood the legal costs are also related to an ongoing compensation claim from construction firms Galliford Try and Balfour Beatty, the remaining members of the Aberdeen Roads Ltd (ARL) consortium which built the AWPR.

Last night, north-east Labour MSP Lewis Macdonald said he hoped the spending did not represent a “waste of public money”.

He said: “Scottish ministers are obliged to resist any unfounded or unreasonable claims by the builders of the AWPR, and that costs money to do.

“They are equally obliged not to waste public money on court cases which they cannot win, and deciding which is which is a matter of professional judgement by the government’s own legal advisers.

“We know the builders of the AWPR reckon they are out of pocket by hundreds of millions of pounds.

“Taxpayers are entitled to know if the government cannot resist those claims, and ministers must be open and transparent about the cost of any legal action or fees to the public purse.”

[nori_wasabi] 11/9/2019 09:51

After the split, GFRD is supposed to have an revenue of 1,4B , at 1.5 % pre-exceptional profit margin => ~21 millions profit .This will give an annual div of ~10 pence (based on div cover 2) and a yield of 10% (based on the post split share price of £1)

[nori_wasabi] 11/9/2019 09:16

“Consultants have advised an expected recovery of around £100m to Galliford Try” plus Separately, the Group has submitted claims of £54m, and recognised significant value, in respect of three contracts with entities owned by a major infrastructure fund of a blue-chip listed company”

Let’s say they manage to claim 50% of £154m, i.e £77m - enough to pay dividends to GFRD shareholders (after the split) for a few years

[rat attack] 11/9/2019 08:57

I don't see the the construction side being an independent entity for long. Consolidation will see it partnered with another to achieve critical mass, but I dont see much if any premium payable when it is acquired given the nature of the contracts!

[scburbs] 11/9/2019 08:42

Construction is a division of the group. The net assets include central net assets which were £410m at half year. Therefore, you can’t just split out construction and add £300m to calculate the post deal net assets. I don’t think they have provided enough detail to do the calculation as to exactly what is being sold compared to how they present the net assets split.

[eezymunny] 11/9/2019 08:40

I don't think anybody thinks low margin construction is a great business marksp.

All that matters is whether GFRD shares are priced right here.

They look cheap to me but only if BVS shares remain stable. The UK housing market is a total nonsense and I guess BVS etc all crash heavily in many scenarios. Alternatively they could do well if future govs decided to prop the whole nonsense market up...

[the anteater] 11/9/2019 08:28

Construction should see improved profit performance due to previous cost cutting and to focus on smaller contracts.

[marksp2011] 11/9/2019 08:27

I agree.

The BVS shares and the FY Divi = £6.29 at the price today
that values GFRD rump at 25p or so which is pretty mean.

I don't think UK construction is an "investment" at all. I will let this oplay out but I had hoped GFRD would go the other way. Keep Linden and offload the construction business.

[eezymunny] 11/9/2019 08:24

Err then there's the value of the BVS shares. If deal goes ahead of course.

And this year's numbers in construction are somewhat irrelevant in the grand scheme. We know it was an annus horriblis etc. Don't suppose construction worth much but total value must be BVS shares + other tangible + a little for construction.

Whatever that turns out to be....

[profitaker] 11/9/2019 08:18

"is it an investment on these numbers?"

GFRD post Bovis deal - Not for me as it stands, no. But as I said, it depends what they intend to do with the £300m.

[marksp2011] 11/9/2019 08:16

Profitaker

OK that is the tangible asset value

My interest is what the ROA/ROCE is on the "investment". pre-exceptional margin is negative. They make a loss on the underlying business and that loss is amplified by the "exceptional" losses.

is it an investment on these numbers?

[profitaker] 11/9/2019 07:58

I suppose how the market see's it value will depend on what they do with the £300m.

[mattcookson] 11/9/2019 07:57

Good results!! No nasties, let’s see how market reacts. This is a good buy in my book.

[profitaker] 11/9/2019 07:56

”So what is GFRD minus Linden worth?”

Extracting construction is as follows:

Income

REVENUE
Building 858.3
Infrastructure 524.2
JV 1.5
Exceptional 2.8
Total REVENUE 1386.8

Pre-exceptional loss (15.0)

Exceptional Items (46.5)

Profit / Loss (61.5)
Before finance

Finance Costs (8.4)
Amort Intangibles (1.0)

Profit / Loss (70.9)
For the year

BALANCE SHEET

Goodwill 81.8
Working Capital (19.0)
Net Debt (15.8)

Net Assets 47.0

Strip out the goodwill and add back the Bovis £300m and you get net tangible assets of £265.2m or £2.39/share.