Financial health warning given to Britain’s biggest contractors
Financial analytics firm Company Watch has put a health warning on Galliford Try, Kier and Morgan Sindall after analysing the companies published financial information and taking measurements according to profitability, net worth and funding.
According to the analysts, any score below 50 out of 100 on its H-Score indicates financial weakness and companies scoring below 25 are considered to be in the danger zone.
Galliford Try and Morgan Sindall were given an H-score of 15 this year, while Kier’s rating was just 10.
The Construction Index reports that other big names to have come out negatively include Renew, Morrison Utility Services, John Sisk, United Living Group, Vinci UK and City Building (Glasgow).
Company Watch said not all companies in the warning area will fail, but of the companies that do fail, the vast majority were in the Company Watch warning area prior to collapse.
The low ratings of Kier and Galliford Try largely reflect debt that they have taken on in recent years to fund major acquisitions; Kier has bought May Gurney and Mouchel; Galliford Try bought Miller Construction and Shepherd Homes.
Both companies have been in Company Watch’s danger zone since 2013.
Galliford Try’s rating comes despite a strong headline performance; it made a 4.9 per cent margin on turnover up 33 per cent to nearly £2.35 billion last year.
Morgan Sindall was the only one of the three to make a loss last year, losing £14.8 million before tax on £2.38bn turnover, thanks only to legacy Faslane contracts inherited from Amec.