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Defence support contractor Carillion fighting to stay afloat
The news isn’t looking particularly rosy for Carillion’s future, with potential serious implications for the MOD who have in recent years awarded the company billions in contracts for support services and estate management functions including accommodation & Messing.
https://uk.reuters.com/article/uk-ca...-idUKKBN1EV0IK There are already enough problems in Defence support without a key service provider failing with all the uncertainty of how bases and infrastructure will be maintained. It also highlights some of the issues with the thinking that it’s cheaper and better to contract out. So where do we go from here? Plough much needed funding into Carillion to keep it afloat (is this why the MOD awarded further contracts after Carillion announced profits warnings last year?) Find a replacement supplier (at what premium as we will be over a barrel) and lose already sunk costs? Or accept that contracting out of key strategic functions isn’t always the best plan, but at risk of increasing pressure on an already creaking budget. Not a good start to 2018, especially on sites heavily reliant on patching and ongoing maintenance. |
Are they too cheap
I am not sure what happens at the MOD, but down here the company had contracts based on lowest quotes;but in the end the 'claims' made it well over budget. Me-thinks things are too cozy in the contract/quotes/job/final claims dept that runs all across civil engineering, and also MOD contracts. Look at the nonsense with the ATC Glider fleet. The MOD paid for a 'service' that failed, and ended up paying again for the rectification, which is still not finished or providing the product that has already been paid for TWICE. When its PUBLIC MONEY 'watch out' no one seems to have their eye on the ball, or watertight contracts that can reclaim the waste/overspend.
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"Analysts have estimated the company has debt including provisions, pensions and accounts payable of about 1.5 billion pounds ($2.04 billion) compared with its market capitalisation of about 70 million pounds, according to Thomson Reuters data."
Also under investigation about the timing of announcements........ Not a good bet IMHO |
They provide facilities support across 360+ sites and maintain 50,000 married quarters, along with being a key provider in the Army Rebasing Programme. Not a good bet is looking like an under-statement.
But given the multi-billion size of the MOD contracts awarded in recent years you have to wonder what’s gone wrong to give such a relatively low market capitalisation. |
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Howson and the board managed to safely navigate an annual general meeting in May. But on 10 July the charade was over, after a partial review by auditors KPMG identified £845m of contract write-downs. Analysts worried further hits could be on the cards once the review was completed. They estimated shareholders would be asked for £500m. Howson was shown the door and hopes were pinned on the experienced Cochrane to steady the ship. “The balance sheet is a mess,” wrote Liberum analyst Joe Brent. Peel Hunt’s Andrew Nussey advised Carillion’s “shares are best avoided until management provides further insight”. The Carillion insider says the reaction from within the firm was one of shock. “There was disbelief from the staff generally. Nobody on my management team could believe the scale of the issues at hand.” “We all knew the accounts were questionable; it was the most shorted stock in Europe,” a leading City analyst told City A.M. “But the extent of the problems were gobsmacking.”" |
When will we learn?! :ugh:
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Sounds like a standard privatisation strategy. same old, same old.
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Originally Posted by Heathrow Harry
(Post 10012653)
"
:We all knew the accounts were questionable; it was the most shorted stock in Europe,” a leading City analyst told City A.M. “But the extent of the problems were gobsmacking.”" |
Good, I thought PriDE were bad until this lot came in. Cold in quarters and now cold at work. Pretty much every station I go to the heating is busted with no one fixing it. Sadly, no chance of taking them to the cleaners to get our money back though...
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Originally Posted by rolling20
(Post 10012709)
This has been going on for months. I hate to say it, but some Hedge Funds will have made decent profits from it.
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What were the Accountants/Auditors doing !!!!
And what were all the accountants doing whilst this was going on !!!!
Amazing how we have massive pension 'black holes' and suchlike plus all this (paid for but not delivered) services and the gravy train rolls on. |
Apparently they have serious cash flow problems due to late payments by QATAR for the World Cup work....
With the spat ongoing with the UAE & Saudi a lot of Qatar money is staying close to home and they are deferring payments on all sorts of deals - " One of the biggest problem projects was a $650m development preparing Qatar for the 2022 FIFA World Cup. The client, Qatar Foundation-backed Msheireb, had not handed over any cash for a year. Carillion believed it was owed £200m. The Qataris, concerned at the prospect of Carillion not being able to complete the works, thought they were owed money – and withheld payment. Attendees of cash conference calls, which were now happening three times a week instead of the normal two times a month, heard first-hand of the trouble involved in extracting cash from Middle East clients, saying simply that it appeared “impossible”." |
Originally Posted by Lima Juliet
(Post 10012740)
Good, I thought PriDE were bad until this lot came in. Cold in quarters and now cold at work. Pretty much every station I go to the heating is busted with no one fixing it. Sadly, no chance of taking them to the cleaners to get our money back though...
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Not MOD but I am employed by Carillion.
Site I work at has a £25k non availability clause, this has been invoked 3 times in 2 months due to lack of investment in infrastructure. Boilers/pumps/Air con all non-operational. Private contractors all owed money so trying to get anyone in to fix stuff is very difficult as most are now pricing jobs ridiculously high. They do appear to have a habit of pitching too low on contracts to get customer base but are now suffering and are rumoured to be selling on contracts to improve cash flow. |
Originally Posted by Momoe
(Post 10013165)
....................and are rumoured to be selling on contracts to improve cash flow.
Not a rumour. This is from their own web-site. Update on proposed disposal of UK healthcare facilities management business |
LJ, PRIDE delivered OK as far as I am aware, the issue appears to be the ongoing maintenance etc of the estate once responsibility was passed to Carillion.
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Originally Posted by Bing
(Post 10012771)
To be fair, that's the point of hedge funds, if they didn't exist a lot of people's pensions would be worth a lot less. They're there to minimise losses when things go wrong which has always struck me as pretty sensible.
So will hedge funds have another rough year in 2017? It’s possible that select funds will do well, though the industry as a whole has underperformed the market every year since 2008. The rising frustration among investors over high fund fees and inconsistent returns? That’s not likely to go away any time soon........2017 was not a good year for most of the hedge community. Most HNW individuals now look at Private Equity. |
like most Financial deals - they are invented, a few people make a zillion, a load of copycats pile in and the market them to the average well off and - SURPRISE - the returns drop to average (or worse)
Reversion to mean .................. |
What percentage of the liability is pension?
I think pension liabilities will become a huge concern for both private and public institutions. What percentage of your council tax is dedicated to employee pensions? |
Torygraph in November
19 November 2017 • 7:45pm Around 28,000 pensioners who used to work at Carillion could end up owning a stake in the construction company under plans to keep it afloat. The outsourcer, which is now worth just a tenth of what it was a year ago, warned last week that it expects to breach covenants by the end of this year following delays to asset sales and cost-cutting efforts. Carillion’s shares tanked by as much as 64pc on Friday as investors reeled at a third profit warning in just four months. Analysts now expect a recapitalisation of the business, which is working on the HS2 rail link, is inevitable with a highly dilutive debt for equity swap considered to be the most likely option. Carillion has said that “some form of recapitalisation” which could include a restructuring of the balance sheet, will take place during the first quarter of next year. The company’s debt pile is forecast to swell to £925m, compared to its shrunken market value of just £107m. Meanwhile, its pension deficit is also estimated to grow to £800m from its £587m in June. Earlier this year Carillion’s pension trustees were understood to favour a rights issue as a way of shoring up the retirement scheme. But the stricken company’s share price fall has now made that unlikely. |
So, fully fkd then.
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Pay peanuts, get monkey's..
I don't know why the MOD do not take on the Civilian approach, have several local contractors who do the work at airfields as required, with an office on base to oversee it, that way you can control costs as they compete for the work and ensure it is being done. From what I see, this lot were simply a middleman in a lot of the tasks, and having not paid your contractors, they are on a hiding to nothing. |
Whoever manged to sweet talk successive Govts into the idea of "Pension Fund Holidays" must have got a vastbonus
All we need is to insist pension plans are ring fenced and fully funded BEFORE any dividends or management bonuses |
Originally Posted by unmanned_droid
(Post 10014038)
What percentage of your council tax is dedicated to employee pensions?
Come the revolution...... |
but people in the public sector don't get the same wages in most cases
they don't work so hard either and the job satisfaction isn't there IMHO |
Carillion Amey in trouble?
Anyone on here business minded enough to know if the DIO main contractor Carillion Amey is protected from the parent company troubles or not?
Given the state of DIO infra across the board, I wouldn’t be surprised to see it all go wrong as there can’t be much profit in running estate for them these days. If so, I’d be surprised to find another contractor willing to pick up the pieces from that given the austerity world we find the MOD in now. Or, would the fact that they’ve got such key contracts (and not just for UK MOD but schools, prisons etc) mean they’ll be bailed out by UK PLC like happened for the banks? Interesting times ahead... |
If Carillion go, CarillionAmey go.
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Regardless of the short term chaos [and, from what I read, the support for bases, stations, Messes and MQs is not far short of chaotic anyway] they MUST NOT be bailed out.
We've been here before with the financial crisis. They must if necessary go to the wall, it's called Capitalism and, like it or not, that is the system we have. |
Originally Posted by langleybaston
(Post 10018802)
Regardless of the short term chaos [and, from what I read, the support for bases, stations, Messes and MQs is not far short of chaotic anyway] they MUST NOT be bailed out.
We've been here before with the financial crisis. They must if necessary go to the wall, it's called Capitalism and, like it or not, that is the system we have. I agree with you about the company and it's liquidation, but will the people on the stations at least in the short term be brought into the MoD workforce as there are not enough in the armed forces to fill the gaps. |
CarillionAmey (Housing Prime) Limited is a distinct legal entitiy (Company No. 5428762) from - and operates almost entirely independently from - Carillion (Company No. 3782379). So it looks like current service delivery will continue unchanged. Which is a bit of a shame.
Military Establishments | CarillionAmey |
Originally Posted by Al R
(Post 10018826)
CarillionAmey (Housing Prime) Limited is a distinct legal entitiy (Company No. 5428762) from - and operates almost entirely independently from - Carillion (Company No. 3782379). So it looks like current service delivery will continue unchanged. Which is a bit of a shame.
Military Establishments | CarillionAmey |
Looks like it.
http://company.carillionamey.co.uk/company-news/12-january-2018-update-from-carillionamey/ |
Unless the whole thing collapses, pensions not paid, jobs not completed and people on the scrap heap, then there will be no justice.
Anyone coming along to pick up what the MOD need done will now ask a small fortune, or even a large fortune, as the MOD is standing, back to the wall, in a bad spot. Why would anyone run a business properly, if all you need to do is take all the money and then ask for a bailout? All the PFI schemes should be void if the company has to go under, but were the Government lawyers smart enough for that? |
The whole theory of "taking risk off the Treasury balance sheet" must be getting close and critical examination just at the moment.
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Originally Posted by ICM
(Post 10018942)
The whole theory of "taking risk off the Treasury balance sheet" must be getting close and critical examination just at the moment.
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Originally Posted by ShyTorque
(Post 10014241)
I hate to think. But it annoys me very much that whilst I am forced by law to pay to increase the pensions of others, in line with inflation, my own pension does not increase at all. Especially when the husband of my wife's friend boasts of going to the Mercedes factory as a guest to see his new expensive saloon come off the production line - his retirement present to himself, a council accountant who was able to take early retirement. His wife has also retired early. Meanwhile, I'm informed that myself and my wife have to work an extra year and six years respectively to help pay for it. Judging by the recent performance of my pension fund it looks like I'll be keeping my little hatchback, already almost twenty years old, when I retire in a few years.
Come the revolution...... **** happens, its how you dodge it that matters. |
Originally Posted by air pig
(Post 10018814)
I agree with you about the company and it's liquidation, but will the people on the stations at least in the short term be brought into the MoD workforce as there are not enough in the armed forces to fill the gaps.
That said, part of me thinks there will be a u-turn. The political left will no doubt seize on job losses, pensions implications and impacts on infrastructure and already struggling services. The government isn’t in such a strong position either in Parliament or amongst the electorate it can be seen to be antagonising core voters when the bankers were bailed out. I know the bank bailout was under Broon’s watch, but they’ll use a lack of compassion for ordinary folk as a stick. I don’t think this is quite over just yet. |
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...the waiting for a replacement light bulb just got longer.
Shadow business sec Rebecca Long-Bailey says PFIs don’t work. No ****. ...meanwhile Middle East Peace Envoy Bliar continues to toddle off into the sun whilst stirring up a Brexit Coup. G |
More on this
Construction group Carillion gone into compulsory liquidation and expects PricewaterhouseCoopers to be appointed as special managers, to act on behalf of the Official Receiver. Carillion said it had talks with its key financial and other stakeholders, including the Government, at the weekend regarding options to reduce debt and strengthen the group's balance sheet. Carillion also asked those stakeholders for limited short term financial support, to enable it to continue to trade while longer term engagement continued. But it said that despite considerable efforts, those discussions had not been successful, and the board had concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect. It said an application was made to the High Court for a compulsory liquidation of Carillion before opening of business today and an order has been granted to appoint the Official Receiver as the liquidator of Carillion. The group said it anticipated that the Official Receiver would make an application to the High Court for PricewaterhouseCoopers LLP to be appointed as special managers, to act on behalf of the Official Receiver. Chairman Philip Green said: 'This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years. 'Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the Board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period. 'In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision. 'We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.' |
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