Applications in Corporate Finance. Buildalot Essay

Applications in Corporate Finance. Buildalot - Essay Example Background of the company Buildalot is a 50 years old construction company of Ireland. The company was incorporated 30 years back as a group of companies. This consists of many wholly owned subsidiaries that operate in different segment of construction industry. Three segments where company’s business operates are major construction projects, house building construction and office building construction. Subsidiary that operates in major construction project is based on types of undertaken projects. Office building subsidiaries undertake projects related to office constructions. It operates in Europe and Middle East along with successful penetration in the home country of Ireland. The company House building subsidiaries also operate in internationally. The company initially used to engage in residential house building in Ireland started these constructions in these major segments after incorporation in 30 years back. . Business environment analysis Market economy The company operates maximum in domestic market i.e. Ireland. Therefore, this market has substantial influence on this business. Age of democracy and age of the company is similar. So, the company has experienced gradual growth of expenditure of people of this country over the years. Inflation rate in this economy has remained 4% annually over last few years and GDP of this country has been expected to grow 4% annually for next few years. Countries in European Union are the main trading partner of this country. Market competition The extent of competition among the firms in construction industry in this market is high. Eight large companies have been leading the construction market in Ireland. There three other companies including Buildalot who are highly involved in construction work in domestic market as well international markets. According to company’s annual financial data of 2010, it constructed 12% of total new units during this financial year. But, in case of internati onal operation, its business is very small compared to other international companies. The company has generated substantial market share in Ireland especially in office construction segment. Construction projects subsidiaries also awarded many contracts in foreign markets also. Therefore, the company has successfully developed competency and brand value in domestic as well foreign markets. Equity capital structure of the company Buildalot is public limited company which has 441.6 million shares in issue out of total 800 million shares. Issuing price of share is ?0.50. Company’s shares price rose up all time high at ?13.82 at 30th June, 2011. This is a good indicator of company’s growth and it was because of its more than expected results in 2010 financial year. Institutional shareholders have maximum stake than individual shareholders