1.0 Introduction

Just as accounting professor W. Steve Albrecht says “Financial statements tell a story, and the story should make sense.” (Albrecht, 1998), a firm’s financial statement is one of the key resources to provide general as well as insight views into its financial situation. A comprehensive firm analysis also requires a whole view of the industry which the firm belongs to.

This paper will systematically analyse of the financial statement of Galliford Try plc. And assess its performance. The company is one of the leaders of UK’s general constructions industry, which is supposed to be one of the main national economic mainstays. In order to give a general understanding of the industry and the firm, this article will firstly introduce the background information of UK’s construction industry and profile of Galliford, compared with its competitor Keller group plc. In addition, this essay will subsequently attempt to analyse the company’s financial detailed data to evaluate its performance from four perspectives: liquidity, leverage, profitability and investor-focused. For every ratio in these four groups, Galliford’s performance will be analysed jointly with the comparison of its competitor Keller group as well as the general industrial level. Moreover, within the FINSAS framework, each ratio will be interpreted specifically as well as being analysed horizontally and vertically. The horizontal analysis is based on Galliford’s financial figures in 2008. In vertical analysis, each ratio in the cash flow statement is considered in percentage of net sales while ratios in the balance sheet is analysed in total assets’ term. Finally, this article will be end by a brief conclusion combined with investment suggestions and possible improvement for financial analysis.

 

 

2.0 Industry

As a main supportive industry of country economy, construction industry plays an important role in the programme of the development for the whole country. Through decades of development, many firms become more adapted to macroeconomic environmental change (Lansley, 1987).

In order to conduct an objective and accurate analysis of the financial statement of Galliford Try plc, firstly, we need have a general consideration of this industry.

Construction industry has its unique characteristics: firstly, the liquidity of manufacture. Because of the specific of the engineering, for different engineering the whole construction team need to move to a variety of locations. Secondly, each project is singleton. Due to the particular purpose and the diversity of social economy, each project has its own particular design. Thus different project needs to do different cost accounting. Thirdly, the operating cycle is long. As a result of quantity demand of human and material resources, generally, the operating cycle of many projects need to calculate by year. So the time period between the first capital locked up in the business and the final cash realization from sales may be several years. Thus, compared with other industries, house-building and construction industry takes relatively greater financial risks.

In this industry, Galliford Try plc has three main competitors: Keller group plc, Balfour Beatty plc and Kier Group plc. Among them, Kier group has an annual revenue of £2.1bn, which is much higher than Galliford Try group(£1.5bn). Moreover, besides housebuilding, Kier group also spans activities like surface mining and PFI project investment (Kier group plc, 2013). However, Galliford is not involved in these industries. Thus, Kier group plc is not an appropriate competitor company for Galliford to compare with. Meanwhile, compared with Balfour Beatty plc, an integrated infrastructure services group with operations in over 80 countries, Galliford only lays emphasis on the projects in the UK. Therefore, Keller group plc has the most similar revenue (£1.3bn) and main business involvement. Therefore, Keller group plc is the most appropriate choice to be the comparative competitor for Galliford Try plc.

3.0Company information

As a leading house-building and construction group in the UK, Galliford was founded in 2000. Galliford Try plc’s predecessors are Try Group plc and Galliford plc, and it was set up through a merger between these two companies in 2000 (Galliford Try, 2013). Over six years Galliford Try group evolved into one of the UK’s top 10 contractors in 2006 (Galliford Try, 2013). Nowadays, Galliford has developed into a FTSE 250 house-building and construction companies with revenues of over £1.5 billion.

After several years of development, Galliford has found its own particular model-- hybrid model of house-building and construction. This hybrid model effectively enriches the company with vaster experience than its competitors.

Nowadays, Galliford has developed into a comprehensive house-building and construction group with operations of building, infrastructure, PPP investments, housebuilding, affordable housing & regeneration, Social Housing Responsive and Planned Maintenance, Facilities Management etc. (Galliford Try, 2013).

As its competitor, Keller group plc, which IPO on London Stock Exchange in 1994, is the world’s largest independent ground engineering contractor now (Keller, 2013). And their businesses are distributed in Europe, North America and Australia with a growing presence in Asia and the Middle East (Graph 1).

 

4.0Data analysis

4.1      Liquidity

A company with greater liquidity means it has greater short-term debt paying ability and fewer risks, which is the pursuit of both managers and stockholders. There is a negative relationship between current liquidity and firm’s borrowing decisions (Ozkan, 2001).Construction industry has its own particularity on this front -- it is longer operating cash cycle that makes construction industry distinguishes from other industries. Therefore, due to lower current liquidity, the firms of construction industry need more loan than other industries.

In the section, we use Days’ Sales in Receivables Index, vertical analysis of current assets, Inventory Turnover to measure the liquidity of Galliford and Keller.

Days’ sales in receivables index is a ratio measures if receivables and revenues are keep balance or not in two different accounting periods (Wells, 2001). From Graph 2, we can find that the days’ sales in receivables index of Galliford Try plc was much lower than Keller group plc during 2008 to 2012. Specifically, we can find that the indexes showed a downward trend for both Galliford Try plc and Keller group in the last two years. Moreover, the gap of this index becomes narrower between these two firms. From the above figure, it could be speculated that the liquidity of Galliford is better than Keller regarding to receivables. Standing far enough behind the numbers, compared with other industries, the OCC of industry companies was longer, so more receivables may make enterprise’s financial capabilities more stressed. Hence, construction companies should shorten the change in credit terms on receivables and limit the liberalization of the right of return privileges on receivables. By this way, firms will greatly reduce the risk of the risk of liquidity.

Additionally, the Group monitors receivables on a regular basis to ensure that they will be paid before the date of final repayment. Otherwise, the real value will be discounted as currency devaluations occur in the UK and Europe.

 

We use net sales as a percentage of a designated base to do a vertical analysis for Galliford Try plc. From Graph 3, we can find that the percentage of cash has a significant drop in 2011 and 2012. As the most liquidity asset of all assets in company, cash is the most spendable form of a current asset. Thus, cash management is a key factor for a firm’s development. If a firm’ cash flow is poor, that means it related debt-paying ability is weak (Liu, 2011). On the other hand, compared with net sales, inventories (materials and consumables) are very low for Galliford Try plc.

 

Additionally, we use Inventory Turnover as an important index to measure the liquidity of inventory. Inventory Turnover of Galliford Try in the last five years presents as Graph 4: reached the bottom at 2009 and had a surge since 2011. In addition, inventories of Galliford Try had a significant decline in the last two years, only constituted around 20% of 2008. That means the Group do not need to pay high holding cost. However, the requirement of raw materials inventory for construction industry always will be a lot, low inventories holdings also means losing flexibility among competitions. So Galliford Try needs to balance the right amount of inventories and cash in the following years.

4.2      Borrowing capacity

As Cotter & Zimmer (1995) indicated, borrowing capacity has a significant implication to company’s operation and financial performance since it potentially affects the company’s assets revaluation and most importantly, the future cash flows.

 

By using FinSAS, we reach the conclusion as depicted in Graph 6. Obviously, the gap of the Debt/Equity ratios between Galliford Try plc and Keller group plc in 2008 and 2009 was much larger than it in 2011 and 2012. In addition, both Debt/Equity ratios of these two firms had a significant decline from 2010. Compared with Keller group, the Debt/Equity ratio of Galliford Try plc was higher, which means creditors of Keller group are better protected in case of insolvency. Moreover, the total Debt/Equity ratio for general contractions industry was 104.8 in 2012, which was lower than it of both firms. Thus, both of these two firms are need to more effective management of debt in case of insolvency (Hovakimian, Opler, and Titman, 2001).

In order to adopt a more conservative method to measure the ability of the borrowing capacity between these two companies. Debt to Tangible Net Worth Ratio is used to evaluate long-term debt-paying ability without intangible assets. From graph 7, we find this ratio of Keller group plc was much higher than Galliford Try plc from 2008 to 2010, and it had a drop in 2011, so this ratio was similar between these two firms in 2012. Compared with Debt/Equity Ratio, Debt to Tangible Net Worth Ratio present a totally opposite result. Hence, we could have the conclusion that, Keller group plc had a mass of intangible assets from 2008 to 2010. Most Keller’s businesses operate in cyclical markets, so the forecast of intangible assets in a large extent expected to the challenging conditions for the foreseeable future (Keller, 2011). In 2011, the relevant countries experience a continued severe and prolonged depression, which will lead to impairments of goodwill. Thus, intangible assets of Keller group had a dramatic decrease in 2011.

From the analysis above, we can have the conclusion that if does not consider about the borrowing capacity, Galliford Try performed better than Keller group from 2008 to 2012.

 

4.3      Profitability

Profitability is one of the most essential elements for a company to operating purpose. In order to measure these two firms’ ability to meet their current obligations, we use Gross Profit Margin and Operating Income Margin to make an analysis.

From the analysis of Gross Profit Margin (Graph 8), we can recognize a significant demarcation point in 2009: before 2009 Gross Profit Margin of Galliford Try plc was lower than it of Keller group plc whereas it was opposite after 2009. The plummet of Keller group in 2010 can be the result of which made Keller had written off between £20m and £25m of goodwill on businesses in that year. This goodwill impairment was because of the troubled US residential and Spanish construction markets in 2010 (Matthews, 2010). Compared with Keller, the operate of Galliford was more favourable during these five years, so the Gross Profit Margin was gradually increased.

 

 

 

The goodwill impairment in 2010 also negatively impacted the Operating Income Margin of Keller group. In Graph 9, we can clearly find a plunge in 2010, when there was a statement that Keller faced £3m in redundancy and restructuring costs in the fourth quarter of the year. In the meantime, Operating Income Margin of Galliford Try had a steadily rise from 2009 to 2010.

 

As Ozkan (2001) said there is a positive relationship between past profitability and debt ratio. On the other hand, if a firm has raised its profitability, they may easier to make borrowing decisions (Ozkan, 2001). The reason of this change is managers will have stronger confidence of their borrowing capacity when their profitability improved. Thus, we can have the conclusion that the earning ability of Keller group plc harmed heavily by the goodwill impairment in 2010. However, depends on the steady operation, the profitability of Galliford Try plc was higher than Keller from 2010.

 

4.4      Investor-focused

As has been unanimously agreed that the shareholders’ interest and wealth should be the primary concern of a company (Jensen, 1986), the ratios of investor-focused constitute an important part for a company’s financial analysis.

From Graph 10, we can find two opposite trends of Earning per Common Share of these two firms. In 2009, the value of Keller group reached the peak at 78.80pence while Galliford reached the bottom at -34.4 pence. Nevertheless, Galliford Try had a dramatic increase while Keller had a steep drop since 2010. For Keller, the main reason of this decrease was goodwill impairment. For Galliford Try, the pre-exceptional profit fell by 66% in 2009, which mainly because the loss of exceptional items. Moreover, due to the market downturn, the whole industry suffered a recessionary time.

 

The Dividend Yield of Galliford Try in 2012 was 3.42, which was much higher than this of construction industry (1.95). In addition, Dividend Yield - 5 Year Avg. of Galliford Try is 4.27 while the number of industry is 1.04. Thus, compared with construction industry, Galliford Try managed their investments more effective than the mean lever of the whole industry. However, there is no evident demonstrate that there is a relationship between dividend yield and risk-adjusted expected return (Chen, Grundy, & Stambaugh, 1990). From the analysis, total equity of Galliford Try was 36.52% of net sales in 2012, which had a 3.7% decrease compared with 2011. Hence, compared with Keller group, Galliford Try plc is a more profitable company to have.

 

5.0Conclusion

To sum up briefly, despite that both Galliford and Keller suffered declines of liquidity and cash in the last two years, Galliford had a superior performance over its competitor.

Borrowing capacity analysis revealed that Galliford had more unfavourable large D/E ratio with higher risks compared with Keller during the last five years. However, it enjoyed lower debt to tangible net worth ratio caused by the goodwill impairment of Keller during the period.

Similar to borrowing capacity, Galliford also had superior profitability than Keller, which suffered a dramatic decline in 2009.

With regarding to investor-focused consideration, Galliford has been increasingly offering higher returns for its shareholders despite of its bottom in 2009. However, although Keller’s performance was inferior in the most recent two years, it seemed start to increase.

The overall financial performance of Galliford could be argued to be superior to its competitor Keller. However, its large amount of debt as well as the low liquidity should be sufficiently emphasized and improved in its future operation. It should also further strength its competitive advantages in profitability and investor relationships by adapting and adjusting to the inherent characteristics of the construction industry as well as its development trends.

Since there are only several critical ratios are selected, more ratios could be added into analysis for each of the four financial aspects so as to increase the plausibility, comprehensiveness as well as accuracy.

 

6.0 Appendices

Input

FinSAS Version 2008010211	Input
Company:	Galliford Try PLC
Analyst:	Ruiqing Wang
Most Recent Year Available:	2012
Years Available for:
Income Statement (1-5)	5
Balance Sheet    (1-5)	5
INCOME STATEMENT	2012	2011	2010	2009	2008
-	-	-	-	-	-
Net Sales	1504	1284	1222	1461	1832
Less: Cost of Goods Sold	1321	1150	1105	1345	1670
	-	-	-	-	-
Gross Profit	183	135	117	116	162
Other Operating Revenue	4	1	-1	-1	2
Less: Operating Expenses	116	98	87	83	93
	-	-	-	-	-
Operating Income	71	37	29	32	71
Less: Interest Expense	0	0	0	0	0
(no capitalized interest)
Other Income (Expenses)	-8	-2	-3	-7	-11
Unusual or Infreq. Item;
Gain (Loss)	0	7	-7	-36	0
Equity in Earnings of Assoc.;
Profit (Loss)	0	0	0	0	0
	-	-	-	-	-
Income before Taxes	63	42	19	-12	60
Less:Taxes Related to Operations	14	9	8	6	18
	-	-	-	-	-
N.I. before Min. Ern.	49	33	10	-18	43
Minority Share of Earnings (Loss)	0	0	0	0	0
N.I. before Nonrecurring Items	49	33	10	-18	43
Oper. of Discontinued Segment;
Income (Loss)	0	0	0	0	0
Disposal of Discont. Segment;
Gain (Loss)	0	0	0	0	0
Extraordinary Item;
Gain (Loss)	0	0	0	0	0
Cum. Effect of Acct Change;
Gain (Loss)	0	0	0	0	0
	-	-	-	-	-
Net Income (Loss)	49	33	10	-18	43
BALANCE SHEET	2012	2011	2010	2009	2008
-	-	-	-	-	-
ASSETS
Current Assets:
Cash	96	48	167	160	134
Marketable Securities	0	0	0	0	0
Gross Receivables	282	260	228	214	309
Less: Allowance for Bad Debts	0	0	0	0	0
Net Trade Receivables	282	260	228	214	309
Inventories	0	0	1	1	2
Prepaid Expenses	0	0	0	0	0
Other Current Assets	720	616	529	460	610
	-	-	-	-	-
Total Current Assets	1098	924	925	834	1055
Long-Term Assets:
Net Tangible (Fixed) Assets (other than construction in progress)	10	8	8	8	8
Construction in Progress	0	0	0	0	0
Intangible Assets	127	124	122	123	125
Investments	5	2	2	1	13
Other Nonoperating Assets	8	9	11	12	11
Other Operating Assets	62	67	54	50	27
	-	-	-	-	-
Total Long-Term Assets	212	210	197	194	184
Total Assets	1310	1134	1122	1028	1239
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	661	625	563	546	705
Short Term Loans	73	12	1	13	16
Current Maturity of L.t. Debt	0	0	0	0	0
Other Current Liabilities	10	9	15	5	13
Total Current Liabilities	743	646	579	564	734
Long-Term Liabilities:
Long-term Debt	2	0	91	115	120
Reserves	0	0	0	0	0
Deferred Liabilities	0	0	0	14	17
Minority Interest	0	0	0	0	0
Redeemable Preferred	0	0	0	0	0
Other Long-term Liabilities	86	32	29	39	42
	-	-	-	-	-
Total Long-term Liabilities	88	32	120	169	180
Total Liabilities	832	678	698	733	914
Shareholders' Equity:
Preferred Equity	0	0	0	0	0
Common Equity-incl. Ret. Ern.	478	455	423	295	325
Total Equity	478	455	423	295	325
Total Liabilities and Equity	1310	1134	1122	1028	1239
OTHER DATA	2012	2011	2010	2009	2008
-	-	-	-	-	-
Capitalized Interest	8.4	5.0	4.5	5.4	11.7
Interest Portion of Rentals	0.0	0.0	0.0	0.0	0.0
Liquidation Value of Pref. Stock	0.0	0.0	0.0	0.0	0.0
Dividends on Redeemable Pref.	0.0	0.0	0.0	0.0	0.0
Dividends on Nonredeemable Pref.	0.0	0.0	0.0	0.0	0.0
Dividends per Common Share	0.300	0.160	0.125	0.109	0.217
Total Cash Dividends	0.300	0.160	0.125	0.109	0.217
Dil. Earn. per Sh. before Nonrec. Items	59.700	39.400	14.700	-34.400	82.500
Market Price per Common Share	964.500	383.750	303.250	5150.000	4725.000
Tax Rate (0-1)	0.240	0.260	0.280	0.280	0.280
Common Shares Outstanding	81.0	81.5	73.6	51.7	372.7
Diluted Weighted Average Common Shares	0.0	0.0	0.0	0.0	0.0
Cash Flow from Operations	68.6	39.0	26.9	-25.2	64.0
Options:
Option expense	0.0	0.0	0.0	0.0	0.0
Net income bef. nonrec. items not incl. opt. exp.	0.0	0.0	0.0	0.0	0.0

 

 

Source of Input

FinSAS Version 2008010211	Source of Input
Company:	Galliford Try PLC
Analyst:	Ruiqing Wang
Most Recent Year Available:	2012
Years Available for:
Income Statement (1-5)	5
Balance Sheet    (1-5)	5
INCOME STATEMENT
-
Net Sales	Annual Report2008(p49)2010(p58)2012(p62)
Less: Cost of Goods Sold	Annual Report2008(p49)2010(p58)2012(p62)
Gross Profit
Other Operating Revenue	Annual Report2008(p49)2010(p58)2012(p62)
Less: Operating Expenses	Annual Report2008(p49)2010(p58)2012(p62)
Operating Income
Less: Interest Expense	Annual Report2008(p62)2010(p58)2012(p77)
(no capitalized interest)
Other Income (Expenses)	Annual Report2008(p49)2010(p58)2012(p62)
Unusual or Infreq. Item;
Gain (Loss)	Annual Report2008(p62)2010(p58)2012(p78)
Equity in Earnings of Assoc.;
Profit (Loss)	Annual Report2008(p49)2010(p58)2012(p62)
Income before Taxes
Less:Taxes Related to Operations	Annual Report2008(p64)2010(p58)2012(p64)
N.I. before Min. Ern.
Minority Share of Earnings (Loss)	Annual Report2008(p49)2010(p58)2012(p62)
N.I. before Nonrecurring Items
Oper. of Discontinued Segment;
Income (Loss)	Annual Report2008(p49)2010(p58)2012(p62)
Disposal of Discont. Segment;
Gain (Loss)	Annual Report2008(p49)2010(p58)2012(p62)
Extraordinary Item;
Gain (Loss)	Annual Report2008(p49)2010(p58)2012(p62)
Cum. Effect of Acct Change;
Gain (Loss)	Annual Report2008(p49)2010(p58)2012(p62)
Net Income (Loss)
=
BALANCE SHEET
-
ASSETS
Current Assets:
Cash	Annual Report2008(p63)2010(p57)2012(p63)
Marketable Securities	Annual Report2008(p63)2010(p57)2012(p63)
Gross Receivables	Annual Report2008(p63)2010(p57)2012(p63)
Less: Allowance for Bad Debts	Annual Report2008(p63)2010(p57)2012(p63)
Net Trade Receivables
Inventories	Annual Report2008(p63)2010(p57)2012(p63)
Prepaid Expenses	Annual Report2008(p63)2010(p57)2012(p63)
Other Current Assets	Annual Report2008(p63)2010(p57)2012(p63)
Total Current Assets
Long-Term Assets:	Annual Report2008(p63)2010(p57)2012(p63)
Net Tangible (Fixed) Assets (other than construction in progress)	Annual Report2008(p63)2010(p57)2012(p63)
Construction in Progress	Annual Report2008(p63)2010(p57)2012(p63)
Intangible Assets	Annual Report2008(p63)2010(p57)2012(p63)
Investments	Annual Report2008(p63)2010(p57)2012(p63)
Other Nonoperating Assets	Annual Report2008(p63)2010(p57)2012(p63)
Other Operating Assets	Annual Report2008(p63)2010(p57)2012(p63)
Total Long-Term Assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities:	Annual Report2008(p68)2010(p81)2012(p89)
Accounts Payable	Annual Report2008(p63)2010(p57)2012(p63)
Short Term Loans	Annual Report2008(p63)2010(p57)2012(p63)
Current Maturity of L.t. Debt	Annual Report2008(p63)2010(p57)2012(p63)
Other Current Liabilities	Annual Report2008(p63)2010(p57)2012(p63)
Total Current Liabilities
Long-Term Liabilities:
Long-term Debt	Annual Report2008(p63)2010(p57)2012(p63)
Reserves	Annual Report2008(p63)2010(p57)2012(p63)
Deferred Liabilities	Annual Report2008(p63)2010(p57)2012(p63)
Minority Interest	Annual Report2008(p63)2010(p57)2012(p63)
Redeemable Preferred	Annual Report2008(p63)2010(p57)2012(p63)
Other Long-term Liabilities	Annual Report2008(p63)2010(p57)2012(p63)
Total Long-term Liabilities
Total Liabilities
Shareholders' Equity:
Preferred Equity	Annual Report2008(p63)2010(p57)2012(p63)
Common Equity-incl. Ret. Ern.	Annual Report2008(p63)2010(p57)2012(p63)
Total Equity
Total Liabilities and Equity
=
OTHER DATA
-
Capitalized Interest	Annual Report 2008(p57)2010(p68)2012(p73)
Interest Portion of Rentals
Liquidation Value of Pref. Stock
Dividends on Redeemable Pref.
Dividends on Nonredeemable Pref.
Dividends per Common Share	Annual Report 2012(p51)
Total Cash Dividends	Annual Report 2012(p52)
Dil. Earn. per Sh. before nonrec. items	Annual Report 2008(p63)2010(p72)2012(p78)
Market Price per Common Share	Datasteam
Tax Rate (0-1)	Annual Report 2008(p57)2010(p68)2012(p73)
Common Shares Outstanding	Annual Report 2008(p63)2010(p72)2012(p78)
Diluted Weighted Average Common Shares	Annual Report 2008(p63)2010(p72)2012(p78)
Cash Flow from Operations	Annual Report 2008(p57)2010(p68)2012(p73)
Options:
Option expense
Net income bef. nonrec. items not incl. opt. exp.

 

 

Vertical Analysis

FinSAS Version 2008010211	Vertical Analysis
Company:	Galliford Try PLC
Analyst:	Ruiqing Wang
Most Recent Year Available:	2012
Years Available for:
Income Statement (1-5)	5
Balance Sheet    (1-5)	5
INCOME STATEMENT	2012	2011	2010	2009	2008
-	----------	----------	----------	----------	----------
Net Sales	100.00%	100.00%	100.00%	100.00%	100.00%
Less: Cost of Goods Sold	87.81%	89.53%	90.40%	92.04%	91.15%
	----------	----------	----------	----------	----------
Gross Profit	12.19%	10.47%	9.60%	7.96%	8.85%
Other Operating Revenue	0.25%	0.04%	-0.07%	-0.07%	0.11%
Less: Operating Expenses	7.70%	7.65%	7.13%	5.71%	5.08%
	----------	----------	----------	----------	----------
Operating Income	4.74%	2.87%	2.41%	2.18%	3.88%
Less: Interest Expense	0.00%	0.00%	0.00%	0.00%	0.00%
(no capitalized interest)
Other Income (Expenses)	-0.55%	-0.13%	-0.27%	-0.51%	-0.59%
Unusual or Infreq. Item;
Gain (Loss)	0.00%	0.51%	-0.60%	-2.48%	0.00%
Equity in Earnings of Assoc.;
Profit (Loss)	0.00%	0.00%	0.00%	0.00%	0.00%
	----------	----------	----------	----------	----------
Income before Taxes	4.20%	3.25%	1.54%	-0.81%	3.29%
Less:Taxes Related to Operations	0.92%	0.69%	0.69%	0.41%	0.97%
	----------	----------	----------	----------	----------
N.I. before Min. Ern.	3.28%	2.55%	0.85%	-1.22%	2.32%
Minority Share of Earnings (Loss)	0.00%	0.00%	0.00%	0.00%	0.00%
	----------	----------	----------	----------	----------
N.I. before Nonrecurring Items	3.28%	2.55%	0.85%	-1.22%	2.32%
Oper. of Discontinued Segment;
Income (Loss)	0.00%	0.00%	0.00%	0.00%	0.00%
Disposal of Discont. Segment;
Gain (Loss)	0.00%	0.00%	0.00%	0.00%	0.00%
Extraordinary Item;
Gain (Loss)	0.00%	0.00%	0.00%	0.00%	0.00%
Cum. Effect of Acct Change;
Gain (Loss)	0.00%	0.00%	0.00%	0.00%	0.00%
	----------	----------	----------	----------	----------
Net Income (Loss)	3.28%	2.55%	0.85%	-1.22%	2.32%
BALANCE SHEET	2012	2011	2010	2009	2008
-	---------	---------	---------	---------	---------
ASSETS
Current Assets:
Cash	7.31%	4.22%	14.86%	15.52%	10.85%
Marketable Securities	0.00%	0.00%	0.00%	0.00%	0.00%
Gross Receivables	21.50%	22.93%	20.30%	20.78%	24.92%
Less: Allowance for Bad Debts	0.00%	0.00%	0.00%	0.00%	0.00%
Net Trade Receivables	21.50%	22.93%	20.30%	20.78%	24.92%
Inventories	0.03%	0.02%	0.10%	0.09%	0.14%
Prepaid Expenses	0.00%	0.00%	0.00%	0.00%	0.00%
Other Current Assets	54.95%	54.31%	47.20%	44.74%	49.27%
	---------	---------	---------	---------	---------
Total Current Assets	83.79%	81.47%	82.46%	81.13%	85.17%
Long-Term Assets:
Net Tangible (Fixed) Assets (other than construction in progress)	0.76%	0.74%	0.68%	0.81%	0.65%
Construction in Progress	0.00%	0.00%	0.00%	0.00%	0.00%
Intangible Assets	9.68%	10.94%	10.87%	11.99%	10.11%
Investments	0.41%	0.17%	0.19%	0.07%	1.01%
Other Nonoperating Assets	0.59%	0.77%	1.00%	1.17%	0.86%
Other Operating Assets	4.76%	5.91%	4.81%	4.84%	2.20%
	---------	---------	---------	---------	---------
Total Long-Term Assets	16.21%	18.53%	17.54%	18.87%	14.83%
Total Assets	100.00%	100.00%	100.00%	100.00%	100.00%
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	50.43%	55.09%	50.20%	53.16%	56.90%
Short Term Loans	5.60%	1.09%	0.09%	1.27%	1.28%
Current Maturity of L.t. Debt	0.00%	0.00%	0.00%	0.00%	0.00%
Other Current Liabilities	0.73%	0.82%	1.29%	0.51%	1.03%
	---------	---------	---------	---------	---------
Total Current Liabilities	56.75%	57.00%	51.58%	54.93%	59.21%
Long-Term Liabilities:
Long-term Debt	0.12%	0.00%	8.14%	11.21%	9.71%
Reserves	0.00%	0.00%	0.00%	0.00%	0.00%
Deferred Liabilities	0.02%	0.00%	0.00%	1.39%	1.40%
Minority Interest	0.00%	0.00%	0.00%	0.00%	0.00%
Redeemable Preferred	0.00%	0.00%	0.00%	0.00%	0.00%
Other Long-term Liabilities	6.59%	2.85%	2.55%	3.80%	3.41%
	---------	---------	---------	---------	---------
Total Long-term Liabilities	6.73%	2.85%	10.69%	16.40%	14.53%
Total Liabilities	63.48%	59.85%	62.27%	71.33%	73.74%
Shareholders' Equity:
Preferred Equity	0.00%	0.00%	0.00%	0.00%	0.00%
Common Equity-incl. Ret. Ern.	36.52%	40.15%	37.73%	28.67%	26.26%
	---------	---------	---------	---------	---------
Total Equity	36.52%	40.15%	37.73%	28.67%	26.26%
Total Liabilities and Equity	100.00%	100.00%	100.00%	100.00%	100.00%

 

 

Horizontal Analysis

FinSAS Version 2008010211	Horizontal Analysis
Company:	Galliford Try PLC
Analyst:	Ruiqing Wang
Most Recent Year Available:	2012
Years Available for:
Income Statement (1-5)	5
Balance Sheet    (1-5)	5
INCOME STATEMENT	2012	2011	2010	2009	2008
-	----------	----------	----------	----------	----------
Net Sales	82.11%	70.10%	66.70%	79.76%	100.00%
Less: Cost of Goods Sold	79.10%	68.86%	66.16%	80.55%	100.00%
	----------	----------	----------	----------	----------
Gross Profit	113.07%	82.92%	72.32%	71.70%	100.00%
Other Operating Revenue	185.00%	25.00%	-40.00%	-50.00%	100.00%
Less: Operating Expenses	124.38%	105.48%	93.56%	89.58%	100.00%
	----------	----------	----------	----------	----------
Operating Income	100.28%	51.76%	41.35%	44.87%	100.00%
Less: Interest Expense
(no capitalized interest)
Other Income (Expenses)	75.93%	15.74%	30.56%	68.52%	100.00%
Unusual or Infreq. Item;
Gain (Loss)
Equity in Earnings of Assoc.;
Profit (Loss)
	----------	----------	----------	----------	----------
Income before Taxes	104.64%	69.15%	31.18%	-19.57%	100.00%
Less:Taxes Related to Operations	77.53%	50.00%	47.19%	33.71%	100.00%
	----------	----------	----------	----------	----------
N.I. before Min. Ern.	116.00%	77.18%	24.47%	-41.88%	100.00%
Minority Share of Earnings (Loss)
	----------	----------	----------	----------	----------
N.I. before Nonrecurring Items	116.00%	77.18%	24.47%	-41.88%	100.00%
Oper. of Discontinued Segment;
Income (Loss)
Disposal of Discont. Segment;
Gain (Loss)
Extraordinary Item;
Gain (Loss)
Cum. Effect of Acct Change;
Gain (Loss)
	----------	----------	----------	----------	----------
Net Income (Loss)	116.00%	77.18%	24.47%	-41.88%	100.00%
=	=	=	=	=	=
BALANCE SHEET	2012	2011	2010	2009	2008
-	----------	----------	----------	----------	----------
ASSETS
Current Assets:
Cash	71.28%	35.57%	124.03%	118.68%	100.00%
Marketable Securities
Gross Receivables	91.22%	84.19%	73.76%	69.16%	100.00%
Less: Allowance for Bad Debts
Net Trade Receivables	91.22%	84.19%	73.76%	69.16%	100.00%
Inventories	23.53%	11.76%	64.71%	52.94%	100.00%
Prepaid Expenses
Other Current Assets	117.94%	100.87%	86.74%	75.32%	100.00%
	----------	----------	----------	----------	----------
Total Current Assets	104.03%	87.53%	87.66%	79.01%	100.00%
Long-Term Assets:
Net Tangible (Fixed) Assets (other than construction in progress)	125.00%	105.00%	95.00%	103.75%	100.00%
Construction in Progress
Intangible Assets	101.28%	99.04%	97.36%	98.40%	100.00%
Investments	43.20%	15.20%	16.80%	5.60%	100.00%
Other Nonoperating Assets	71.96%	81.31%	104.67%	112.15%	100.00%
Other Operating Assets	228.57%	245.42%	197.44%	182.05%	100.00%
	----------	----------	----------	----------	----------
Total Long-Term Assets	115.57%	114.32%	107.08%	105.55%	100.00%
Total Assets	105.74%	91.50%	90.54%	82.94%	100.00%
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	93.72%	88.59%	79.87%	77.49%	100.00%
Short Term Loans	463.92%	77.85%	6.33%	82.28%	100.00%
Current Maturity of L.t. Debt
Other Current Liabilities	74.22%	72.66%	113.28%	40.63%	100.00%
	----------	----------	----------	----------	----------
Total Current Liabilities	101.35%	88.08%	78.87%	76.95%	100.00%
Long-Term Liabilities:
Long-term Debt	1.33%	0.00%	75.89%	95.76%	100.00%
Reserves
Deferred Liabilities	1.15%	0.00%	0.00%	82.18%	100.00%
Minority Interest
Redeemable Preferred
Other Long-term Liabilities	204.02%	76.36%	67.61%	92.20%	100.00%
	----------	----------	----------	----------	----------
Total Long-term Liabilities	48.94%	17.94%	66.61%	93.61%	100.00%
Total Liabilities	91.02%	74.26%	76.45%	80.23%	100.00%
Shareholders' Equity:
Preferred Equity
Common Equity-incl. Ret. Ern.	147.06%	139.90%	130.10%	90.56%	100.00%
	----------	----------	----------	----------	----------
Total Equity	147.06%	139.90%	130.10%	90.56%	100.00%
Total Liabilities and Equity	105.74%	91.50%	90.54%	82.94%	100.00%

 

 

Ratio-avg.

FinSAS Version 2008010211	Ratios - average
Company:	Galliford Try PLC
Analyst:	Ruiqing Wang
Most Recent Year Available:	2012
Years Available for:
Income Statement (1-5)	5
Balance Sheet    (1-5)	5
-	-	-	-	-	-
LIQUIDITY	2012	2011	2010	2009	2008
-	-	-	-	-	-
Days' Sales in Receivables	68.34	73.87	68.02	53.33	61.51
Accounts Receivable Turnover	5.56	5.27	5.54	5.60	11.87
A/R Turnover in Days	65.70	69.29	65.90	65.22
Days' Sales in Inventory	0.11	0.06	0.36	0.24	0.37
Inventory Turnover	4402.33	1768.77	1104.60	1034.54	1964.35
Inventory Turnover in Days	0.08	0.21	0.33	0.35
Operating Cycle	65.79	69.50	66.23	65.57
Working Capital	354	277	346	269	322
Current Ratio	1.48	1.43	1.60	1.48	1.44
Acid Test	0.51	0.48	0.68	0.66	0.60
Cash Ratio	0.13	0.07	0.29	0.28	0.18
Sales to Working Capital	4.76	4.12	3.97	4.95	11.39
Cash Flow/Cur. Mat. of Debt & NP	0.94	3.17	26.90		4.05
-	-	-	-	-	-
LONG-TERM DEBT-PAYING ABILITY	2012	2011	2010	2009	2008
-	-	-	-	-	-
Times Interest Earned	7.51	8.34	4.18		5.15
Fixed Charge Coverage	7.51	8.34	4.18		5.15
Debt Ratio	63.48%	59.85%	62.27%	71.33%	73.74%
Debt/Equity	173.81%	149.07%	165.03%	248.78%	280.82%
Debt to Tangible Net Worth	236.49%	204.89%	231.80%	427.60%	456.52%
Cash Flow/Total Debt	8.25%	5.75%	3.85%		7.01%
-	-	-	-	-	-
PROFITABILITY	2012	2011	2010	2009	2008
-	-	-	-	-	-
Net Profit Margin	3.28%	2.55%	0.85%		2.32%
Total Asset Turnover	1.23	1.14	1.14	1.29	2.96
Return on Assets	4.04%	2.91%	0.97%		6.86%
Operating Income Margin	4.74%	2.87%	2.41%	2.18%	3.88%
Operating Asset Turnover	1.39	1.29	1.30	1.47	3.36
Return on Operating Assets	6.57%	3.71%	3.13%	3.22%	13.04%
Sales to Fixed Assets	163.49	160.53	153.70	179.29	457.98
Return on Investment	9.36%	6.37%	2.07%		16.82%
Return on Total Equity	10.56%	7.47%	2.90%		26.13%
Return on Common Equity	10.56%	7.47%	2.90%		26.13%
Gross Profit Margin	12.19%	10.47%	9.60%	7.96%	8.85%
-	-	-	-	-	-
INVESTOR ANALYSIS	2012	2011	2010	2009	2008
-	-	-	-	-	-
Degree of Financial Leverage	1.00	1.00	1.00		1.00
Earnings per Share	59.70	39.40	14.70	-34.40	82.50
Price/Earnings Ratio	16.16	9.74	20.63	-149.71	57.27
Percentage of Earnings Retained	99.39%	99.51%	98.80%		99.49%
Dividend Payout
Dividend Yield
Book Value per Share	5.91	5.59	5.75	5.70	0.87
Materiality of Options
Oper. Cash Flow per Share	3379.31	1772.73			24615.38
Oper. Cash Flow/Cash Dividends	228.67	243.75	215.20		294.93
Year-end Market Price	964.50	383.75	303.25	5150.00	4725.00

 

 

Ratio-end.

FinSAS Version 2008010211	Ratios - ending
Company:	Galliford Try PLC
Analyst:	Ruiqing Wang
Most Recent Year Available:	2012
Years Available for:
Income Statement (1-5)	5
Balance Sheet    (1-5)	5
* EOY values instead of averages
-	-	-	-	-	-
LIQUIDITY	2012	2011	2010	2009	2008
-	-	-	-	-	-
Days' Sales in Receivables	68.34	73.87	68.02	53.33	61.51
* Accounts Receivable Turnover	5.34	4.94	5.37	6.84	5.93
* A/R Turnover in Days	68.34	73.87	68.02	53.33	61.51
Days' Sales in Inventory	0.11	0.06	0.36	0.24	0.37
* Inventory Turnover	3301.75	5748.50	1004.18	1494.33	982.18
* Inventory Turnover in Days	0.11	0.06	0.36	0.24	0.37
* Operating Cycle	68.45	73.93	68.38	53.58	61.88
Working Capital	354	277	346	269	322
Current Ratio	1.48	1.43	1.60	1.48	1.44
Acid Test	0.51	0.48	0.68	0.66	0.60
Cash Ratio	0.13	0.07	0.29	0.28	0.18
* Sales to Working Capital	4.25	4.63	3.53	5.43	5.70
Cash Flow/Cur. Mat. of Debt & NP	0.94	3.17	26.90		4.05
LONG-TERM DEBT-PAYING ABILITY	2012	2011	2010	2009	2008
Times Interest Earned	7.51	8.34	4.18		5.15
Fixed Charge Coverage	7.51	8.34	4.18		5.15
Debt Ratio	63.48%	59.85%	62.27%	71.33%	73.74%
Debt/Equity	173.81%	149.07%	165.03%	248.78%	280.82%
Debt to Tangible Net Worth	236.49%	204.89%	231.80%	427.60%	456.52%
Cash Flow/Total Debt	8.25%	5.75%	3.85%		7.01%
PROFITABILITY	2012	2011	2010	2009	2008
-	-	-	-	-	-
Net Profit Margin	3.28%	2.55%	0.85%		2.32%
* Total Asset Turnover	1.15	1.13	1.09	1.42	1.48
* Return on Assets	3.76%	2.89%	0.93%		3.43%
Operating Income Margin	4.74%	2.87%	2.41%	2.18%	3.88%
* Operating Asset Turnover	1.29	1.29	1.24	1.64	1.68
* Return on Operating Assets	6.09%	3.68%	2.98%	3.58%	6.52%
* Sales to Fixed Assets	150.41	152.88	160.78	176.05	228.99
* Return on Investment	8.70%	6.73%	1.91%		8.41%
* Return on Total Equity	10.31%	7.21%	2.46%		13.06%
* Return on Common Equity	10.31%	7.21%	2.46%		13.06%
Gross Profit Margin	12.19%	10.47%	9.60%	7.96%	8.85%
INVESTOR ANALYSIS	2012	2011	2010	2009	2008
-	-	-	-	-	-
Degree of Financial Leverage	1.00	1.00	1.00		1.00
Earnings per Share	59.70	39.40	14.70	(34.40)	82.50
Price/Earnings Ratio	16.16	9.74	20.63	(149.71)	57.27
Percentage of Earnings Retained	99.39%	99.51%	98.80%		99.49%
Dividend Payout
Dividend Yield
Book Value per Share	5.91	5.59	5.75	5.70	0.87
Materiality of Options
Oper. Cash Flow per Share	3,379.31	1,772.73			24,615.38
Oper. Cash Flow/Cash Dividends	228.67	243.75	215.20		294.93
Year-end Market Price	964.50	383.75	303.25	5150.00	4725.00

 

7.0 References

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Cotter, J., & Zimmer, I. (1995). Asset revaluations and assessment of borrowing capacity. Abacus, 31(2), 136-151.

Galliford Try (2008-2012), Strength in diversity-Annual Report and Financial Statemtns 2008-2012, London

Galliford Try (2013) About us [online] Available at: http://www.gallifordtry.co. uk/about-us/ company-history [12 April 2013]

Hovakimian, A., Opler, T., & Titman, S. (2001). The debt-equity choice.Journal of Financial and Quantitative analysis, 36(1), 1-24.

Jensen, M. (1986). Agency cost of free cash flow, corporate finance, and takeovers. Corporate Finance, and Takeovers. American Economic Review,76(2).

Keller Group (2008-2012), Keller Group plc Annual Report and Accounts 2008-2012, London

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Lansley, P. R. (1987). Corporate strategy and survival in the UK construction industry. Construction Management and Economics, 5(2), 141-155.

Liu, Q. (2011, August). The construction of enterprise financial risk management system. In Artificial Intelligence, Management Science and Electronic Commerce (AIMSEC), 2011 2nd International Conference on (pp. 5212-5214). IEEE.

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Ozkan, A. (2001). Determinants of capital structure and adjustment to long run target: evidence from UK company panel data. Journal of Business Finance & Accounting, 28(1‐2), 175-198.

Schilling, G. (1996). Working capital’s role in maintaining corporate liquidity.TMA journal, 16(5), 4-7.

Wells, J. T. (2001). Irrational ratios. Journal of Accountancy-New York-, 192(2), 80-83.