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Carillion in Crisis

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Saw this in tonight's Evening Standard - sounds like the situation for the property developments around Battersea is going from bad to worse...

http://www.standard.co.uk/business/carillion-in-crisis-as-contract-bungles-deal-845-million-blow-a3584146.html

I'd rather they went bust after they'd finished the development - so at least there's be the possibility of the apartments being sold off cheap. I can see a lot of building sites being mothballed soon.

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' Three major public-private partnership contracts — the Midland Metropolitan Hospital in Smethwick, Merseyside’s Royal Liverpool Hospital, and an Aberdeen road project — are understood to be behind the bulk of the UK’s £375 million losses. Its £470 million writedowns in overseas markets are driven by losses on a major project in Doha, Qatar. '

 

Anyone buying the dip?

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I'm not being rude,if you can't make money building hospitals and roads,then you definitely shouldn't be playing roulette in Londinium

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Carillon should have been bust years ago. They've been kept afloat by continuously extending their payment terms to suppliers and sub contractors. Generally they will be paid monthly by the Client after 30 days and they are now procuring sub contractors on 120 day terms,and still missing payment dates

Ultimately this tactic will backfire as there are a lot of companies who won't, or who can't afford to, work for Carillion. 

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https://www.constructionnews.co.uk/companies/contractors/carillion-and-kier-dubai-jobs-secure-490m-government-backing/10021432.article

In light of the massive crater in Carillions finances revealed today ending up in a 40% slump in the share price, this report is particularly galling... between this and HTB what else are the government on the hook for? 

Whether it's Brexit - or just money running out all over the country - the construction industry is not a pretty place to be at the moment 

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2 hours ago, A third of everything said:

https://www.constructionnews.co.uk/companies/contractors/carillion-and-kier-dubai-jobs-secure-490m-government-backing/10021432.article

In light of the massive crater in Carillions finances revealed today ending up in a 40% slump in the share price, this report is particularly galling... between this and HTB what else are the government on the hook for? 

Whether it's Brexit - or just money running out all over the country - the construction industry is not a pretty place to be at the moment 

Why is taxpayer's money being used to secure contracts and so profits for private firms, that isn't even in the UK?

Quote

 

The government has provided more than $635m (£490m) in guarantees to Carillion and Kier to support the delivery of three major infrastructure projects in Dubai.

International trade secretary Liam Fox revealed that the UK’s export credit agency UK Export Finance had provided the two companies with the lending guarantees to support the delivery of the three major contracts in the emirate.

The UKEF will be guaranteeing finance of $455m to help Kier to design and build the Dubai Arena, a 17,000-seater entertainment and sports venue, and two high-end residential buildings for property developer NSHAMA.

Carillion will receive a $180m (£139m) guarantee to design and build the third phase of One Central, Dubai World Trade Centre’s new mixed-use development in the city’s central business district.

This is the second tranche of government financing received by Carillion for the One Central project after the government provided a $285m (£220m) guarantee for the construction of the first two phases.

 

 

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5 hours ago, Democorruptcy said:

Why is taxpayer's money being used to secure contracts and so profits for private firms, that isn't even in the UK?

 

Export credits.

Nornally attached to compnaies expotting good.

Does not really work for a service company under bidding for contracts.

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5 hours ago, Democorruptcy said:

Why is taxpayer's money being used to secure contracts and so profits for private firms, that isn't even in the UK?

I'm thinking there is a golden opportunity for some in-depth investigative journalism on links between UK politicians and construction companies (and related financing) in general.

I get the feeling (with no evidence, currently) that if someone pulls the lid off, we will discover an entire sewerage system down there.

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37% yesterday and just the 12% today !!!!

 

102.30GBX14.80 (12.64%)

 

circa 50% plunge in total !!!

Edited by TheCountOfNowhere
added a word

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11 hours ago, Sancho Panza said:

' Three major public-private partnership contracts — the Midland Metropolitan Hospital in Smethwick, Merseyside’s Royal Liverpool Hospital, and an Aberdeen road project — are understood to be behind the bulk of the UK’s £375 million losses. Its £470 million writedowns in overseas markets are driven by losses on a major project in Doha, Qatar. '

 

Anyone buying the dip?

Anyone loosing their shirt ?

 

:lol: :lol: :lol: :lol: :lol: 

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5 hours ago, Toast said:

I'm thinking there is a golden opportunity for some in-depth investigative journalism on links between UK politicians and construction companies (and related financing) in general.

I get the feeling (with no evidence, currently) that if someone pulls the lid off, we will discover an entire sewerage system down there.

Is there any quarter of the UK economy that isn't bent? Hercules cleaning out the Augean stables comes to mind as a metaphor. I think the revelations that have come out of Grenfell already are grounds for expecting the worst. Plus, like the financial criminals in the City of London, the construction industry has always enjoyed a warm armpit relationship with the Tory Party, both in and out of govt.

 

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15 hours ago, Sancho Panza said:

I'm not being rude,if you can't make money building hospitals and roads,then you definitely shouldn't be playing roulette in Londinium

Wondering around Paddington, Central London and even North London - you can't help but see endless "Luxury Apartments Coming Soon" signage on boarded off large or small building zones. Last time I looked up, even the cranes in the sky economic indicator seemed to be up.  Am I missing something here? These people still building even though hope of high sales are stalling? Is it once they are commitment there is no way out? Is it the cheap money is still there and best to get it built now.? Or can they still make a profit/rent out despite a HPC? Do they know something we don't know, despite the bear populist press. Can anyone explain how on the ground it looks like the building is still at pace?

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26 minutes ago, zugzwang said:

Is there any quarter of the UK economy that isn't bent? Hercules cleaning out the Augean stables comes to mind as a metaphor. I think the revelations that have come out of Grenfell already are grounds for expecting the worst. Plus, like the financial criminals in the City of London, the construction industry has always enjoyed a warm armpit relationship with the Tory Party, both in and out of govt.

 

What part of....tories funded by house builders....tories come to power....tories introduce HTB and FLS to fund purchases of massive over priced new builds....isn't corrupt ?

Persimmon took a £600M payout to top level staff about 12 months, I'd wager, off the backl of the tory HTB scheme and free BoE QE cash.

 

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Overly competitive tendering by firms that  specialise in public sector infrastructure projects and losing their shirts in the process. Civil engineering firms work on an operating margin of  about 3%, leaving no margin for error. No good having fat order books if you lose money on that order book.

The house builders (Taylor Wimpey etc), meanwhile, work on an operating  margin as high as 25%;  of course that would blow up in smoke if we had a house price correction.

Edited by crashmonitor

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Carillion fundamentals here.  A price to earnings of 4 and a yield of 15% based on 2016. Of course, that yield isn't going to exist going forward for a while. Always troubling when the bottom line is a tiny fraction of the turnover, in Carillion's case that was 130 million on a 4.3 billion turnover in 2016.

 

http://shares.telegraph.co.uk/fundamentals/?epic=CLLN

Edited by crashmonitor

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1 hour ago, crashmonitor said:

Overly competitive tendering by firms that  specialise in public sector infrastructure projects and losing their shirts in the process. Civil engineering firms work on an operating margin of  about 3%, leaving no margin for error. No good having fat order books if you lose money on that order book.

The house builders (Taylor Wimpey etc), meanwhile, work on an operating  margin as high as 25%;  of course that would blow up in smoke if we had a house price correction.

The financials of a house builder and a building (or civils) contractor are very different.

Main difference is cash flow.

The house builder has to buy the site, get an architect, get it through planning, install infrastructure (roads, sewers, services etc) and then get their sales dept on it. Can be a process of years before they start to get any return. OK, I'm not talking about 'off plan' sales here.

Meanwhile the contractor arrives on site on the 1st of the month and on the last day of this and every month he issues a valuation of work done to the client (including materials purchased but not yet installed). This is then paid within, for example, 21 days (dependant on terms of the contract).

 

Edited by frankief

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2 hours ago, advicewelcome said:

Wondering around Paddington, Central London and even North London - you can't help but see endless "Luxury Apartments Coming Soon" signage on boarded off large or small building zones. Last time I looked up, even the cranes in the sky economic indicator seemed to be up.  Am I missing something here? These people still building even though hope of high sales are stalling? Is it once they are commitment there is no way out? Is it the cheap money is still there and best to get it built now.? Or can they still make a profit/rent out despite a HPC? Do they know something we don't know, despite the bear populist press. Can anyone explain how on the ground it looks like the building is still at pace?

My experience of high level corporate types is that quite often,delusion runs deep in a river in Egypt.

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Ref above,I remember talking to a very high up Alliance & Leicester bod back in 2007 and I asked him if he thought house prices would ever moderate.

His answer was both complex and wrong.

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HOLY ****

 

Please tell me no one bought these shares ?

 

Carillion plc
LON: CLLN - Jul 11, 4:38 PM GMT+1
77.90GBX39.20 (33.48%)
 
This is carnage !!!!!
 
Could the company must be close to collapse ?

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1 hour ago, frankief said:

The financials of a house builder and a building (or civils) contractor are very different.

Main difference is cash flow.

The house builder has to buy the site, get an architect, get it through planning, install infrastructure (roads, sewers, services etc) and then get their sales dept on it. Can be a process of years before they start to get any return. OK, I'm not talking about 'off plan' sales here.

Meanwhile the contractor arrives on site on the 1st of the month and on the last day of this and every month he issues a valuation of work done to the client (including materials purchased but not yet installed). This is then paid within, for example, 21 days (dependant on terms of the contract).

 

A lot of it is competitive fixed priced tendering too. Then you have the uncertainty of call backs to fix unsatisfactory work. Seems to me this sector is fraught with risks when the profit margin is wafer thin at less than 3%.

Market seems sanguine on Kier at £12.00, so obviously they see Carillion's problems in isolation.

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