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Galliford Try contract issue

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Wizard
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Galliford Try contract issue

#50790

Postby Wizard » May 3rd, 2017, 8:39 am

Shares down close to 10% on this announcement of bigger than anticipated one off cost from legacy contracts:

http://www.londonstockexchange.com/exch ... 11826.html

But:
"We have reviewed the impact of the non-recurring charge on cash and reserves, and the Group expects to pay a final dividend in line with previous guidance, subject to confirmation of the detail of this review. The Group maintains its target to deliver a five-year compound annual growth rate in the dividend of at least 5%, whilst rebuilding dividend cover to 2.0x."

Buying opportunity?

Terry.

Wizard
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Re: Galliford Try contract issue

#50808

Postby Wizard » May 3rd, 2017, 9:29 am

They look to be bouncing, so I took the plunge in case the opportunity evapourated.

Terry.

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Re: Galliford Try contract issue

#50812

Postby 77ss » May 3rd, 2017, 9:33 am

Wizard wrote:Shares down close to 10% on this announcement of bigger than anticipated one off cost from legacy contracts....:


Buying opportunity?

Terry.


I suspect so. A known issue and perhaps the market is over-reacting. Unfortunately I have no spare cash without running down my reserve, so it will take a further drop to tempt me.

monabri
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Re: Galliford Try contract issue

#50860

Postby monabri » May 3rd, 2017, 11:17 am

GFRD's pre-tax profits have ranged from £63M to £135M (June 2012 to June 2016 - source L.S.E.).

The one off cost of ~£100M must hurt! I'm actually surprised that the share price didn't tank more!

( a one off cost which is similar to your full years pre tax profit and it's a surprise - no!)

The market seemed unaware of this - hence todays reaction share price wise.

They must be expecting a bumper year to hold the dividend ...or will it be through debt increase ?

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Re: Galliford Try contract issue

#50869

Postby monabri » May 3rd, 2017, 11:39 am

Perhaps we should have bought a year ago when the sp was ~785p (July 7th 2016)?

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Re: Galliford Try contract issue

#50905

Postby kempiejon » May 3rd, 2017, 1:15 pm

I bought GFRD in February, June and October last year and I have booked a regular trading day next week to buy again, currently it is around my average price so I'm happy to again.

monabri
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Re: Galliford Try contract issue

#50994

Postby monabri » May 3rd, 2017, 6:07 pm

"A reappraisal of costs to complete and recoveries from two major infrastructure joint venture projects has substantially increased the anticipated liability to conclude the legacy contracts (contracted in 2014 and earlier) in the Group's Construction business since Galliford Try reported its half year results on 21 February 2017"

So, they've done a "cost to complete" exercise and realised that they have miscalculated by about a typical whole annual pre-tax profit level!

These are projects that have been going on for some time. So GFRD, you're telling me that all this has come to light since 21 Feb 2017?

The words that I am looking for begin with a "W", followed by a "T" followed by a ....

The shares tanked by 10%..... I'm really surprised that it was only 10%. I wouldn;t be surprised if they drift further down.

As I hold at 4% in my HYP I'm not happy!

monabri

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Re: Galliford Try contract issue

#51011

Postby Wizard » May 3rd, 2017, 7:01 pm

I seem to recall that the disclosure obligation is driven by when the board knows. If that is correct the work could have been underway, but the outcome only taken to the board recently.

Terry.

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Re: Galliford Try contract issue

#51013

Postby monabri » May 3rd, 2017, 7:10 pm

"Hi Boss, the C.T.C. review is complete and you better factor in a full years pre-tax profit into the accounts - oh, you had no idea, sorry!"

How often do they do CTC reviews?
Are they kitchen sinking it?
Do they believe and accept the numbers?
Are any of their numbers believable?
When were the directors bonuses calculated - between 21 Feb and now ?


Why did I invest my hard earned in this company? I'm surprised that the sp didn't drop 30-40%.

If the sp recovers I will definitely be cutting.

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Re: Galliford Try contract issue

#51015

Postby OLTB » May 3rd, 2017, 7:17 pm

Reading between the lines, you don't sound too impressed. ;)

monabri
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Re: Galliford Try contract issue

#51016

Postby monabri » May 3rd, 2017, 7:25 pm

Moi? Whatever gives you that idea (other than my previous rantings!!) It stinketh more than a stinky thing in a stinky pond of stink !

Surely they have monthly programme reviews?

sorry - forgot to add :cry:

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Re: Galliford Try contract issue

#51114

Postby jackdaww » May 4th, 2017, 7:31 am

this was a big surprise to me , and clearly to many others , hence the big drop.

why isnt this called a profit warning - its a lot of money.?

i am still well in profit but being in a new ball game i will be considering action.

:roll: :shock: :shock: :roll:

epo1
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Re: Galliford Try contract issue

#51179

Postby epo1 » May 4th, 2017, 11:08 am

The board are lying or incompetent. For them not to have have known about issues of this magnitude defies credulity, it should have been first agenda item on board meetings for 6 months or more. The golden rule of sound project management is don't save up bad news, let problems emerge as soon as they are known, that way they can be mitigated more quickly. Whatever else has happened, this hasn't come out of the blue.

If they are trying to say to say it has come out of the blue then what does that mean? Do they have any reporting structure? What does the FD do all day? Why should we assume they'll know how to negotiate and manage profitable contracts in the future? And why only a 10% fall? Presumably the City thinks they know things we don't or are waiting to unload their shares onto bargain hunters.

This strikes me as news management and I'll imagine there is more bad news to come.

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Re: Galliford Try contract issue

#51333

Postby midgesgalore » May 5th, 2017, 1:14 am

I don't hold this share however I am aware they bought a builder whose public private partnership (PPP) work and, allegedly, their lack of compliance to certain building standards has been the root cause of walls to fall down in schools, in and around Edinburgh. For a few buildings Galliford Try have probably been able to absorb the putting right of those problems whilst being in the receiving end of public ire - whose school children were hived off to temporary schools at the beginning of the new term starting August 2016.

I heard in recent local news there has been an extensive review of this type of work, revealing walls at further school buildings around Scotland having similar issues and also at potential danger of collapse. Somewhere someone has to put that right and GFRD's doorstep may be the place angry customers are gathering.


midgesgalore


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