Carrilion in trouble
Discussion
ClaphamGT3 said:
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
I'm sorry, but this is utter bks. Construction seems like an absolute shambles if intelligent people deem this worthy business practice. We're worried about "the race to the bottom" in my industry, looks like construction is in the middle of a triathlon...ClaphamGT3 said:
crankedup said:
It’s true that tender contracting large scale is not / was not my professional area. Your saying that the margins are so slim, I did elude to that, that the balance sheet is not strong enough to withstand a bad contract, easy enough to understand and one that is recognised by just about all of us.
What I do not understand, and you do not elude to and it is the critical question in this mess, what were the company directors thinking and doing taking on huge contracts when the business clearly could not service its existing debts? Small margins do not create a 2 billion debt book overnight, not a 2 billion hole in the pensions fund. the directors low balling appears to be simply gambling that work would come good. Why did the directors shaft the SME businesses by extending thier own terms of payment.
Not familiar with the Laing failure, did they fail in with such a massive debt pile, did that have such an e tended time frame to put the company back on track, failure due to one contract suggests not.
I understand the tendering processes and the result of errors in the tender price, however it is clear that this is not the situation which brought down carillion. Too much debt without decent asset value is a classic shell company failure.
At a share price of £3.50/£4 per share, Carillion wasn't massively over-geared by the standards of the industry. What I do not understand, and you do not elude to and it is the critical question in this mess, what were the company directors thinking and doing taking on huge contracts when the business clearly could not service its existing debts? Small margins do not create a 2 billion debt book overnight, not a 2 billion hole in the pensions fund. the directors low balling appears to be simply gambling that work would come good. Why did the directors shaft the SME businesses by extending thier own terms of payment.
Not familiar with the Laing failure, did they fail in with such a massive debt pile, did that have such an e tended time frame to put the company back on track, failure due to one contract suggests not.
I understand the tendering processes and the result of errors in the tender price, however it is clear that this is not the situation which brought down carillion. Too much debt without decent asset value is a classic shell company failure.
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
What does appear to be inept on the part of the Carillion board was to handle the announcement of performance issues in a very cack-handed way, which in turn caused the share price collapse that decimated their market cap and breached their banking covenants
ClaphamGT3 said:
At a share price of £3.50/£4 per share, Carillion wasn't massively over-geared by the standards of the industry.
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
What does appear to be inept on the part of the Carillion board was to handle the announcement of performance issues in a very cack-handed way, which in turn caused the share price collapse that decimated their market cap and breached their banking covenants
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
What does appear to be inept on the part of the Carillion board was to handle the announcement of performance issues in a very cack-handed way, which in turn caused the share price collapse that decimated their market cap and breached their banking covenants
ClaphamGT3 said:
At a share price of £3.50/£4 per share, Carillion wasn't massively over-geared by the standards of the industry.
2007-2011 the share price yoyoed; I bought in several times at low-mid 200s & sold later when it hit mid-high 300s, managing a house deposit from the proceeds.BrabusMog said:
ClaphamGT3 said:
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
I'm sorry, but this is utter bks. Construction seems like an absolute shambles if intelligent people deem this worthy business practice. We're worried about "the race to the bottom" in my industry, looks like construction is in the middle of a triathlon...I've worked for the best in the business & still walked onto projects, identifying unrealised exposures in 100s of millions.
Construction is not manufacturing or consultancy or designing duff software. It's low margin high
risk. It's not easy.
When the CEO of one of the biggest & best performing global companies tells you he'd sell up & put the money in the bank if it was't for his family name being on the company you know it's tough.
GT03ROB said:
BrabusMog said:
ClaphamGT3 said:
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
I'm sorry, but this is utter bks. Construction seems like an absolute shambles if intelligent people deem this worthy business practice. We're worried about "the race to the bottom" in my industry, looks like construction is in the middle of a triathlon...I've worked for the best in the business & still walked onto projects, identifying unrealised exposures in 100s of millions.
Construction is not manufacturing or consultancy or designing duff software. It's low margin high
risk. It's not easy.
When the CEO of one of the biggest & best performing companies tells you he'd sell up & put the money in the bank if it was't for his family name being on the company you know it's tough.
GT03ROB said:
BrabusMog said:
ClaphamGT3 said:
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
I'm sorry, but this is utter bks. Construction seems like an absolute shambles if intelligent people deem this worthy business practice. We're worried about "the race to the bottom" in my industry, looks like construction is in the middle of a triathlon...I've worked for the best in the business & still walked onto projects, identifying unrealised exposures in 100s of millions.
Construction is not manufacturing or consultancy or designing duff software. It's low margin high
risk. It's not easy.
When the CEO of one of the biggest & best performing global companies tells you he'd sell up & put the money in the bank if it was't for his family name being on the company you know it's tough.
BrabusMog said:
I'm not disputing his understanding of the industry he works in, he's clearly worth his salt and is a respected poster here, to boot. I'm just amazed that sensible people such as yourselves seem to be happy to work in an industry which, essentially, seems to be a Crap shoot. I guess it's a risk/reward ideology which I could accept if there was no collateral damage but, as we know...
Maybe it's just an ego thing!When I graduated from university a long long time ago it was from a school of construction that was light years ahead of the industry. I was strongly advised to get a job with a certain selection of companies. None were British & our faculty at the time was heavily funded by British contractors. Since graduating I've worked for 2 contractors, neither British.
Both have repeatedly picked up profitable work against British contractors in the UK. I'm afraid I have a low opinion of British contractors, they methods & their business models. It simply is not fit for purpose. They are too small & lack the capital base to compete. Why? As I've said before The Uk construction market has been inwardly focussed on easy (corrupt) government/LA contracts & housebuilding. This goes back decades & we may be past the point of no return.
crankedup said:
2 sMoKiN bArReLs said:
crankedup said:
How can a well performing healthy Company paying dividends and bonuses one year be on the brink of disaster 12 months later?
You've obviously never worked in the construction industry. You estimate profits on long term contacts as you go along. The truth though is that you don't know the real score until you get towards the end.Get your forecasts wrong and a catastrophe can appear virtually overnight.
GT03ROB said:
BrabusMog said:
ClaphamGT3 said:
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
I'm sorry, but this is utter bks. Construction seems like an absolute shambles if intelligent people deem this worthy business practice. We're worried about "the race to the bottom" in my industry, looks like construction is in the middle of a triathlon...I've worked for the best in the business & still walked onto projects, identifying unrealised exposures in 100s of millions.
Construction is not manufacturing or consultancy or designing duff software. It's low margin high
risk. It's not easy.
When the CEO of one of the biggest & best performing global companies tells you he'd sell up & put the money in the bank if it was't for his family name being on the company you know it's tough.
crankedup said:
None of which explains the enormous debt pile and huge pensions deficiet. It’s not easy so perhaps the wrong people were at the helm, in fact that seems obvious now. Next one to go looks like it could be interserve, will they be dragging thousands of good businesses down as well, I suspect so. These directors are paid very handsomely for expertise which seems sadly inadequate for the task at hand. Not so bad when it’s only carillion to go. use but dragging thousands of people and god knows how many sub contractor companies. awful company like the other types of service companies, for example G4.
I don;t disagree....see my previous post.But it does remain very easy even with the best controls in the business to walk into a fked up contract. Without the capital base 1 screw up will take a contractor down. And I'm not saying this is the case for Carillon.
History is littered with contractors with decades of good performance who made one mistake & disappeared
Edited by GT03ROB on Sunday 21st January 17:09
Edited by GT03ROB on Sunday 21st January 17:10
Rovinghawk said:
ClaphamGT3 said:
At a share price of £3.50/£4 per share, Carillion wasn't massively over-geared by the standards of the industry.
2007-2011 the share price yoyoed; I bought in several times at low-mid 200s & sold later when it hit mid-high 300s, managing a house deposit from the proceeds.GT03ROB said:
BrabusMog said:
ClaphamGT3 said:
The directors weren't 'low balling' they were pricing at the levels necessary to win contracts. They didn't 'shaft' SMEs any more than other tier 1 contractors; cash flow management is critical in contracting - it may not be nice or moral but it is the way it is.
I'm sorry, but this is utter bks. Construction seems like an absolute shambles if intelligent people deem this worthy business practice. We're worried about "the race to the bottom" in my industry, looks like construction is in the middle of a triathlon...I've worked for the best in the business & still walked onto projects, identifying unrealised exposures in 100s of millions.
Construction is not manufacturing or consultancy or designing duff software. It's low margin high
risk. It's not easy.
When the CEO of one of the biggest & best performing global companies tells you he'd sell up & put the money in the bank if it was't for his family name being on the company you know it's tough.
Whatever happened to self preservation?
2 sMoKiN bArReLs said:
crankedup said:
2 sMoKiN bArReLs said:
crankedup said:
How can a well performing healthy Company paying dividends and bonuses one year be on the brink of disaster 12 months later?
You've obviously never worked in the construction industry. You estimate profits on long term contacts as you go along. The truth though is that you don't know the real score until you get towards the end.Get your forecasts wrong and a catastrophe can appear virtually overnight.
crankedup said:
I was referring to carillion, that is the thread subject.
as i said before, it appears the industry operates on the basis of what shareholders (or more correctly those acting for them) and senior management can screw out of the company for as long as possible until it goes tits up. move on, rinse and repeat. can be the only way when people in the industry admit the margins are not there to run a proper business.i wonder who the fault of the low margins is ?
GT03ROB said:
crankedup said:
None of which explains the enormous debt pile and huge pensions deficiet. It’s not easy so perhaps the wrong people were at the helm, in fact that seems obvious now. Next one to go looks like it could be interserve, will they be dragging thousands of good businesses down as well, I suspect so. These directors are paid very handsomely for expertise which seems sadly inadequate for the task at hand. Not so bad when it’s only carillion to go. use but dragging thousands of people and god knows how many sub contractor companies. awful company like the other types of service companies, for example G4.
I don;t disagree....see my previous post.But it does remain very easy even with the best controls in the business to walk into a fked up contract. Without the capital base 1 screw up will take a contractor down. And I'm not saying this is the case for Carillon.
History is littered with contractors with decades of good performance who made one mistake & disappeared
Edited by GT03ROB on Sunday 21st January 17:09
Edited by GT03ROB on Sunday 21st January 17:10
wc98 said:
crankedup said:
I was referring to carillion, that is the thread subject.
as i said before, it appears the industry operates on the basis of what shareholders (or more correctly those acting for them) and senior management can screw out of the company for as long as possible until it goes tits up. move on, rinse and repeat. can be the only way when people in the industry admit the margins are not there to run a proper business.i wonder who the fault of the low margins is ?
crankedup said:
wc98 said:
crankedup said:
I was referring to carillion, that is the thread subject.
as i said before, it appears the industry operates on the basis of what shareholders (or more correctly those acting for them) and senior management can screw out of the company for as long as possible until it goes tits up. move on, rinse and repeat. can be the only way when people in the industry admit the margins are not there to run a proper business.i wonder who the fault of the low margins is ?
Brave Fart said:
Yipper said:
Doubt it. They'll sweep it under the carpet.
The top directors and top auditors should really be charged with fraud (or similar) and have their day in court for financial terrorism.
What? What exactly is a "top" director, or auditor? If you mean KPMG (the auditor of Carillion), what on earth makes you think they have been fraudulent? What does "or similar" even mean? "Financial terrorism", WTF?The top directors and top auditors should really be charged with fraud (or similar) and have their day in court for financial terrorism.
Honestly, Yipper, you don't half post some weird stuff.
Have a close look at the published accounts for 2016 (the last available) and tell me why you think KPMG are guilty of "fraud or similar".
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