Something hisses Brexit here; can't tell you why.

Because it doesn't

Greed, taking on far too many projects


Born from mergers/demergers

Exactly like the banks...


Not good enough in the big picture

And too much external influences...

Accounting practices are another issue - and it's significant that KPMG will be part of the forthcoming government enquiry.

For example - at the financial year end - if, say, a football stadium is half completed, a company can be quick to take half the profit into its accounts.

Even though thecproject is not finished - with many risky final factors to be overcome. Wembley was built at a loss to the Australian builder.

And if a lucrative contract to build/operate a prison is signed - it would be imprudent to take the paper profit into figures, as the early years are problematical.

Directors are not keen to wait though - because of share prices and bonuses.

Carillion will, I think, be found to have flawed accounting principles - and a propensity to taken on too many finely costed projects.

Yes Brexit has no obvious connection but something tells me there is an element here. Corbyn has been very good on areas like this; by being quite calm yet determined, many (like me) are starting to see his points. For me, Chief Executives deserve every penny - if they do good jobs. But (as with civil servants, police etc) they must be rapidly removed if they do a lousy job.

Yes, CEOs should be rewarded if successful.

But Carillion has had major problems with projects in the Middle East.

As well as at hospital sites in the Midlands and Liverpool. The Aberdeen bypass is also in serious difficulty.

Back to accounting practices - Work in Progress (WIP) is very difficult to assess. How much is a half completed hospital worth - and how much should be included in profit and/or forecasts?

Nothing - because the asset is useless. Or 50% of the completed value - or something else?

The investigation will look into WIP, and other matters - and will wonder why Carillion's previous CEO is still on the payroll, after receiving a £1.6m severance package.

I suspect overvalued WIP will have played a part - and also on the historical share price, and the government's very generous support of the company...

Spee wrote:
the government's very generous support of the company...


Notwithstanding the dire profit warnings, the government recently awarded 7 large public sector contracts to Carillion!!

This is akin to getting a painter - who had just filed for bankruptcy - to paint your house.

Beggars belief springs to mind...

Spee wrote:
Accounting practices are another issue - and it's significant that KPMG will be part of the forthcoming government enquiry.

For example - at the financial year end - if, say, a football stadium is half completed, a company can be quick to take half the profit into its accounts.

Even though thecproject is not finished - with many risky final factors to be overcome. Wembley was built at a loss to the Australian builder.

And if a lucrative contract to build/operate a prison is signed - it would be imprudent to take the paper profit into figures, as the early years are problematical.

Directors are not keen to wait though - because of share prices and bonuses.

Carillion will, I think, be found to have flawed accounting principles - and a propensity to taken on too many finely costed projects.




Sounds like Capita.

When you have people in charge no real boss as such who would be kicking your bottom when you have people running a business/trade they never ever came up through rather than looking good in the right dress shirt and tie when you have people that may have the correct paperwork telling someone that they are not doing their trade within the time factor of which truly you cannot do yourself a company is in big trouble.

Any building company that has people in charge time served brickie plasterer sparkie pipe fitter duct engineers ceiling fixers you see jobs on time on budget.

Why is the pension funds not held byou direct Govan so that these bosses cannot use the money to make the books look better

Why do they take on jobs with if lucky 1 to 2% profit just because it makes them look good?

Madness

Regulars here know I look the look, sound and attitude of Jeremy Corbyn; strikes me as a decent man and without doubt a far better PM than appalling May. I don't agree with the very left wing politics but feel they do have some good points. Example - private companies do not always work (though they sometimes do). Carillon must surely give Corbyn a real weapon to brandish. PM's QT about to start.

Spee wrote:
Spee wrote:
the government's very generous support of the company...


Notwithstanding the dire profit warnings, the government recently awarded 7 large public sector contracts to Carillion!!

This is akin to getting a painter - who had just filed for bankruptcy - to paint your house.

Beggars belief springs to mind...


This should be his first question...why!?

And indeed it was Spee; though actually I felt May's answers were quite valid.

Although, as subsequent events have clearly shown - the awarding of the contracts to Carillion was foolhardy as they are/were incapable of completing them.

A few engineering consultants think the main problem was the traditional outsourcing model and that the crisis could be a catalyst for positive change.

www.constructionnews.co.uk/analysis/cn-b...&contentID=10133
[this link opens with a subscription ad, article can be found by clicking on Companies, then Carillion]

www.ramboll.co.uk/news/ruk/carillion-vic...roken-industry-model

md wrote:
A few engineering consultants think the main problem was the traditional outsourcing model and that the crisis could be a catalyst for positive change.

www.constructionnews.co.uk/analysis/cn-b...&contentID=10133
[this link opens with a subscription ad, article can be found by clicking on Companies, then Carillion]

www.ramboll.co.uk/news/ruk/carillion-vic...roken-industry-model

Sorry, the pages on the Ist link no longer seem to open up. The article briefly discusses the same points that are covered in the Ramboll article concerning Carillion's business model.

Spee wrote:
Although, as subsequent events have clearly shown - the awarding of the contracts to Carillion was foolhardy as they are/were incapable of completing them

Foolhardy is now proven to be a major understatement!

Extremely important/major government contracts were recently given to an insolvent company - by our government.

Carillion has net liabilities of £5 billion - it is reported today...

Now - it's confirmed that Carillion owes 30,000 subcontractors.

And was making them wait the maximum term of 120 days for payment.

This payment strategy is not unusual though, for large organisations.

Nothing your supermarket sells you today is owned by them - the suppliers will be paid in 90/120 days time.

In the meantime, the supermarket has the use of the customers' money - for free.

Enhancing substantial profit margins even further.

But how our government could be unaware of Carillion's financial plight is baffling - awarding huge strategic contracts to a company close to liquidation.

Many subcontractors will fail as a result of not getting paid, or on time. And their employees made redundant - for the government to finance!

Now, the top 4 accountancy firms will be investigated.

Including their methodology in valuing a partly completed project - say, a half completed hospital which is valueless (because it's useless) or worth half the end valuation!

Carillion had a Goodwill asset of £1.6 billion in its Balance Sheet. But what is the real relevance of this intangible asset - in a breakup situation?

Answer - not a lot; but it does a great job in propping up a listing Balance Sheet...