Formation Group revenue growth decelerated to 4.4% in FY2018 vs. 25.8% a year earliner
31 Jan 2019 • About Formation Group (
$FRM) • By InTwits
Formation Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -1.0%
- Formation Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.1%.
- The company has unprofitable business model: ROIC is -4.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 4.4%. Having stable revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 25.2 pp from -416% to -390% in FY2018.
Gross Margin decreased on 3.4 pp from 5.9% to 2.5% in FY2018. SG&A as a % of Revenue decreased on 2.6 pp from 6.2% to 3.5% in FY2018.
Net Income margin showed almost no change in FY2018. During the last 5 years Net Income margin topped in FY2016 at 9.5% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 0.018%. Formation Group showed almost no change in CAPEX/Revenue from FY2015 to FY2018. It's average CAPEX/Revenue for the last three years was 0.037%. CAPEX as a % of Revenue was relatively stable in the last 5 years.
Return on investment
The company operates at negative ROIC (-4.1%) and ROE (-2.8%). ROIC decreased on 3.2 pp from -0.89% to -4.1% in FY2018. ROE decreased slightly on 1.3 pp from -1.5% to -2.8% in FY2018. During FY2014-FY2018 ROE topped in FY2016 at 31.0% and was declining since that time.
Leverage (Debt)
The company has no debt. Cash dropped on 82.4%.
Financial and operational results
FY ended 31 Aug 2018
Formation Group ($FRM) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 7.941 | 23.764 | 29.410 | 37.011 | 38.629 | 4.4% |
| Gross Profit | 0.792 | 1.498 | 2.922 | 2.176 | 0.955 | -56.1% |
| SG&A | | 1.716 | 2.189 | 2.283 | 1.371 | -39.9% |
| EBITDA | -0.060 | -0.193 | 0.748 | -0.085 | -0.402 | |
| Net Income | -0.520 | 1.814 | 2.785 | -0.152 | -0.284 | |
Balance Sheet
|
|---|
| Cash | 0.328 | 1.633 | 0.330 | 4.229 | 0.746 | -82.4% |
| Short Term Debt | 4.321 | 9.963 | 3.314 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.016 | 0.025 | 0.011 | 0.021 | 0.007 | -66.7% |
Ratios
|
|---|
| Revenue growth | 35.8% | 199.3% | 23.8% | 25.8% | 4.4% | |
| EBITDA growth | -74.6% | 221.7% | -487.6% | -111.4% | 372.9% | |
|
|---|
| Gross Margin | 10.0% | 6.3% | 9.9% | 5.9% | 2.5% | -3.4% |
| EBITDA Margin | -0.8% | -0.8% | 2.5% | -0.2% | -1.0% | -0.8% |
| SG&A, % of revenue | | 7.2% | 7.4% | 6.2% | 3.5% | -2.6% |
| Net Income Margin | -6.5% | 7.6% | 9.5% | -0.4% | -0.7% | -0.3% |
| CAPEX, % of revenue | 0.2% | 0.1% | 0.0% | 0.1% | 0.0% | -0.0% |
|
|---|
| ROIC | -0.7% | -1.5% | 4.7% | -0.9% | -4.1% | -3.2% |
| ROE | -8.8% | 27.1% | 31.0% | -1.5% | -2.8% | -1.3% |
| Net Debt/EBITDA | | | 4.0x | | |
Peers in Real Estate Investment & Services
Below you can find Formation Group benchmarking vs. other companies in Real Estate Investment & Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Plaza Centers Nv ($PLAZ) | 131.0% | -13.4% | -53.3% | 664.4% | |
| PIK Group OJSC ($PIK) | -2.1% | -16.5% | 17.5% | 191.5% | |
| London & Associated Properties ($LAS) | -22.6% | -2.6% | -9.1% | 51.4% | |
| Etalon Group Ltd ($ETLN) | 29.0% | -17.6% | 15.6% | 44.1% | |
| HALS-Development JSC ($HALS) | 1,135.4% | -80.1% | 221.9% | 21.7% | |
| |
|---|
| Median (20 companies) | -0.1% | 5.5% | 7.6% | 8.3% | 24.2% |
|---|
| Formation Group ($FRM) | | 199.3% | 23.8% | 25.8% | 4.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Arricano Real Estate ($ARO) | 96.5% | 96.1% | 96.4% | 96.5% | |
| Summit Germany Ltd ($SMTG) | | 92.3% | 92.2% | 92.2% | |
| Caledonian Trust ($CNN) | 43.2% | | 50.4% | 80.5% | 74.8% |
| Panther Securities ($PNS) | 68.0% | 73.5% | 75.2% | 70.8% | |
| Songbird Estates ($SBD) | 70.7% | 72.5% | 72.8% | 68.6% | |
| |
|---|
| Median (14 companies) | 39.3% | 46.6% | 42.8% | 33.4% | 42.7% |
|---|
| Formation Group ($FRM) | 10.0% | 6.3% | 9.9% | 5.9% | 2.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Summit Germany Ltd ($SMTG) | 89.3% | 75.5% | 129.4% | 241.4% | |
| Arricano Real Estate ($ARO) | -138.3% | 12.7% | 190.4% | 238.1% | |
| Caledonian Trust ($CNN) | -59.1% | | 17.4% | 191.0% | 316.6% |
| Safestore Hldgs ($SAFE) | 77.7% | 128.4% | 95.1% | 84.8% | 137.7% |
| Raven Russia Ltd ($RUS) | 4.7% | -52.3% | 40.4% | 75.8% | |
| |
|---|
| Median (19 companies) | 20.4% | 26.7% | 32.8% | 28.6% | 94.0% |
|---|
| Formation Group ($FRM) | -0.8% | -0.8% | 2.5% | -0.2% | -1.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Panther Securities ($PNS) | 26.0% | 15.7% | 3.7% | 68.6% | |
| Taliesin Property Fund Ltd ($TPFZ) | 45.2% | 43.7% | 37.2% | 40.5% | |
| Hagl JSC ($HAG) | 145.6% | 127.1% | 55.5% | 30.0% | |
| St.Modwen Properties ($SMP) | 36.7% | 55.8% | 31.3% | 19.3% | |
| Safestore Hldgs ($SAFE) | 6.3% | 7.2% | 24.5% | 16.7% | 19.2% |
| |
|---|
| Median (20 companies) | 6.3% | 8.1% | 1.5% | 1.8% | 1.5% |
|---|
| Formation Group ($FRM) | 0.2% | 0.1% | 0.0% | 0.1% | 0.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Arricano Real Estate ($ARO) | -12.3% | 1.7% | 34.2% | 43.8% | |
| Damac Real Estate Development Ltd ($DMC) | 31.3% | 41.5% | 24.5% | 16.0% | |
| Summit Germany Ltd ($SMTG) | 7.1% | 5.6% | 9.2% | 15.8% | |
| Taliesin Property Fund Ltd ($TPFZ) | 0.3% | -3.0% | 15.3% | 15.1% | |
| Etalon Group Ltd ($ETLN) | 14.3% | 10.2% | 6.6% | 12.6% | |
| |
|---|
| Median (20 companies) | 3.7% | 5.3% | 6.9% | 7.1% | 9.1% |
|---|
| Formation Group ($FRM) | -0.7% | -1.5% | 4.7% | -0.9% | -4.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Development Securities ($DSC) | 10.3x | 3.5x | 5.7x | 70.8x | 3.9x |
| Hagl JSC ($HAG) | 14.2x | 14.8x | 30.8x | 11.7x | |
| Songbird Estates ($SBD) | | 12.3x | 12.4x | 11.3x | |
| Farglory Land Development Co Ltd ($FLDS) | 5.7x | 4.4x | 4.8x | 8.9x | |
| Panther Securities ($PNS) | 11.8x | 9.7x | 9.4x | 8.5x | |
| |
|---|
| Median (18 companies) | 9.7x | 4.4x | 5.2x | 3.7x | 2.1x |
|---|
