Originally Posted by
pr00ne
For all those banging on about this being the end of PFi deals and public sector outsourcing, you need to look at Carillion's last published accounts. The PFO and public sector contracts are all fine, heathy and very profitable.
It is on the construction side that they have made huge losses, they are the UK's second largest construction company, and it is here that they have got it disastrously wrong.
The PFI and public sector deals will be easy for the liquidator to sell on.
I’m not entirely convinced by that, I think it will certainly intensify the debate about public/private sector outsourcing and relations. And the Tories are not in much of a position to weather another storm right now, especially if the effects spread into the extended supply chain thus exacerbating ‘contagion’ amongst the electorate. I’m politically incoherent in terms of who I support, and although my tendency is to the right in this case I think JC has raised a valid point that needs at least considering.
As for the accounts being healthy for their public sector work, that makes no odds, you have to look at the totality of the accounts to say a company is healthy. As it is, it looks as though Carillion’s finance department had been engaged in all sorts of schemes - legal I should add - to mask the dire state of their cash flow such as rising debt levels which didn’t feature in the main debt numbers on the balance sheet and mixing financing and operating cash flows. It was all there if you did the requisite due diligence, going back a good few years. Some of it apparently due to unhappy customers not paying up after bodged jobs. But in all, a very good example of why cash is king in the business world - for all their multi-billion contracts they simply didn’t have sufficient cash to keep the lights on. And when that became apparent valuations went into free fall and it was only a matter of time.
And whilst the public sector contracts will likely be sold on, it won’t be a good deal for the public purse, as I suggested right at the start, most sensible firms will see they have us over a barrel.