Formation Group reports 53.5% Net Income growth and 23.8% Revenue growth
27 Jan 2017 • About Formation Group (
$FRM) • By InTwits
Formation Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Formation Group spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 is 0.0%. Average EBITDA Margin for the same period was -0.4%0
- Formation Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.1%.
- The company has potentially unprofitable business model: ROIC is at 4.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Formation Group ($FRM) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2.359 | 5.849 | 7.941 | 23.764 | 29.410 | 23.8% |
| Gross Profit | 0.309 | 0.565 | 0.792 | 1.498 | 2.922 | 95.1% |
| SG&A | | | | 1.716 | 2.189 | 27.6% |
| EBITDA | -0.525 | -0.236 | -0.060 | -0.193 | 0.748 | -487.6% |
| Net Income | 0.366 | -0.405 | -0.520 | 1.814 | 2.785 | 53.5% |
Balance Sheet
|
|---|
| Cash | 0.409 | 0.240 | 0.328 | 1.633 | 0.330 | -79.8% |
| Short Term Debt | 4.285 | 4.292 | 4.321 | 9.963 | 3.314 | -66.7% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.000 | 0.008 | 0.016 | 0.025 | 0.011 | -56.0% |
Ratios
|
|---|
| Revenue growth | -60.8% | 147.9% | 35.8% | 199.3% | 23.8% | |
| EBITDA growth | -44.0% | -55.0% | -74.6% | 221.7% | -487.6% | |
| Gross Margin | 13.1% | 9.7% | 10.0% | 6.3% | 9.9% | 3.6% |
| EBITDA Margin | -22.3% | -4.0% | -0.8% | -0.8% | 2.5% | 3.4% |
| Net Income Margin | 15.5% | -6.9% | -6.5% | 7.6% | 9.5% | 1.8% |
| SG&A, % of revenue | | | | 7.2% | 7.4% | 0.2% |
| CAPEX, % of revenue | 0.0% | 0.1% | 0.2% | 0.1% | 0.0% | -0.1% |
| ROIC | -5.1% | -2.2% | -0.7% | -1.5% | 4.7% | 6.2% |
| ROE | 5.9% | -6.5% | -8.8% | 27.1% | 31.0% | 3.9% |
| Net Debt/EBITDA | | | | | 4.0x | 4.0x |
Revenue and profitability
Formation Group's Revenue jumped on 23.8% in FY2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 3.7 pp from 8.0% to 11.7% in FY2016.
Gross Margin increased on 3.6 pp from 6.3% to 9.9% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign increased slightly on 1.8 pp from 7.6% to 9.5% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.037% in FY2016. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average level of CAPEX/Revenue for the last three years was 0.11%.
Return on investment
The company operates at good ROE (30.98%) while ROIC is low (4.69%). ROIC increased on 6.2 pp from -1.5% to 4.7% in FY2016. ROE increased on 3.9 pp from 27.1% to 31.0% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.0x and Debt / EBITDA is 4.4x. Net Debt / EBITDA jumped4.0x from to 4.0x in FY2016. Debt dropped on 66.7% in FY2016 while cash dropped on 79.8% in FY2016.
Appendix 1: Peers in Real Estate Investment & Services
Below we provide Formation Group benchmarking against other companies in Real Estate Investment & Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Development Securities ($DSC) | | | -20.4% | 156.8% | 18.9% |
| Damac Real Estate Development Ltd ($DMC) | 3.8% | 76.9% | -16.8% | 128.2% | |
| Hagl JSC ($HAG) | 39.5% | -36.9% | 10.2% | 104.7% | |
| Quintain Estates & Development ($QED) | -3.2% | -13.0% | -17.5% | 77.0% | |
| Farglory Land Development Co Ltd ($FLDS) | -23.9% | 63.2% | -29.0% | 52.6% | |
| |
|---|
| Median (18 companies) | 3.8% | 5.1% | -0.1% | 2.0% | 13.3% |
|---|
| Formation Group ($FRM) | | 147.9% | 35.8% | 199.3% | 23.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Arricano Real Estate ($ARO) | | 96.1% | 96.5% | 96.1% | |
| Summit Germany Ltd ($SMTG) | | | | 92.3% | |
| Taliesin Property Fund Ltd ($TPFZ) | 75.2% | 76.6% | 74.9% | 76.3% | |
| Panther Securities ($PNS) | 69.2% | 77.2% | 68.0% | 73.5% | |
| Songbird Estates ($SBD) | 71.5% | 68.3% | 70.7% | 72.5% | |
| |
|---|
| Median (14 companies) | 41.0% | 50.3% | 38.5% | 46.6% | 33.7% |
|---|
| Formation Group ($FRM) | 13.1% | 9.7% | 10.0% | 6.3% | 9.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Quintain Estates & Development ($QED) | -81.5% | -70.4% | 43.6% | 76.3% | |
| Summit Germany Ltd ($SMTG) | 78.3% | 78.7% | 89.3% | 75.5% | |
| Safeland ($SAF) | -1.5% | -1.6% | 7.0% | 65.8% | 28.0% |
| Damac Real Estate Development Ltd ($DMC) | 32.9% | 54.5% | 46.4% | 53.5% | |
| Panther Securities ($PNS) | 44.8% | 56.9% | 50.3% | 52.0% | |
| |
|---|
| Median (17 companies) | 32.9% | 20.9% | 18.5% | 24.8% | 20.2% |
|---|
| Formation Group ($FRM) | -22.3% | -4.0% | -0.8% | -0.8% | 2.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Quintain Estates & Development ($QED) | 210.6% | 162.3% | 217.2% | 173.3% | |
| Hagl JSC ($HAG) | 134.2% | 171.2% | 145.6% | 127.1% | |
| HALS-Development JSC ($HALS) | 83.2% | 347.0% | 25.0% | 47.3% | |
| Taliesin Property Fund Ltd ($TPFZ) | 14.1% | 21.3% | 45.2% | 43.7% | |
| Development Securities ($DSC) | | 2.9% | 13.5% | 24.6% | 2.9% |
| |
|---|
| Median (18 companies) | 3.1% | 1.8% | 4.9% | 6.1% | 2.2% |
|---|
| Formation Group ($FRM) | 0.0% | 0.1% | 0.2% | 0.1% | 0.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Damac Real Estate Development Ltd ($DMC) | 163.1% | 127.1% | 31.3% | 41.5% | |
| Safeland ($SAF) | -1.3% | -1.1% | 3.7% | 31.2% | 22.5% |
| PIK Group OJSC ($PIK) | 21.2% | 25.6% | 13.5% | 25.3% | |
| Hml Hldgs ($HMLH) | 8.2% | 9.9% | 12.5% | 12.5% | 11.3% |
| Etalon Group Ltd ($ETLN) | 12.1% | 14.4% | 14.3% | 10.2% | |
| |
|---|
| Median (18 companies) | 4.2% | 3.0% | 3.4% | 4.9% | 8.2% |
|---|
| Formation Group ($FRM) | -5.1% | -2.2% | -0.7% | -1.5% | 4.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Arricano Real Estate ($ARO) | | 11.3x | | 43.0x | |
| Plaza Centers Nv ($PLAZ) | 17.9x | | 41.9x | 25.4x | |
| London & Associated Properties ($LAS) | 40.8x | 11.1x | 13.0x | 20.2x | |
| Hagl JSC ($HAG) | 13.4x | 10.5x | 14.2x | 14.8x | |
| Songbird Estates ($SBD) | 13.1x | | | 12.3x | |
| |
|---|
| Median (15 companies) | 8.2x | 10.5x | 10.1x | 4.5x | 3.5x |
|---|
