Carillion post-mortem

[Arborbridge]

Yes I only recently bought Murray Income to replace in part London & St Lawrence (which went into voluntary liquidation!) These days nothing wrong with worthy but dull.

Dod

Some lack of excitement to look forward to!

Moderator Message:
Off topic for this board. Please desist.

TJH

[melonfool]

There was a report which suggested that Carillion had so little money that major accounting firms refused to be appointed as administrator for fear their fees wouldn't be paid. Also it was suggested that the payout to creditors might be as little as 1p in the £ 1. It's not just the remaining shareholders who lose out but also anyone or Company that has done work for or made supplies to Carillion without yet being paid.

Yes that was on R4 this morning. They couldn't go into voluntary administration as they could not pay the accountants, so they were made to go into liquidation.

Mel

[Bouleversee]

I trust the ex-CEO will not be continuing to get his pay after all. One can't help feeling sorry for the new chap who brought forward his starting date,

[ZipserSir]

This is going to look interesting on my study of "should I have sold or held?" cases

It might be more useful to look from the other end of the telescope and ask "why did I buy?". Perhaps one answer to that, as I've mused here before, is CLLN was never "big cap enough" for HYP, floating at the lower end of the FTSE350 during its dividend paying days. It's FTSE100 companies for me from here on ...

Just playing catch-up in my reading. I have not found anyone who has challenged this statement, but I don't think it it true, at least the bit about 'floating at the lower end of the FTSE350'. Moreover, I would need to be convinced that it is much less intrinsically safe investing in the FTSE 250 than in the FTSE 100. Is this really a tell for avoiding big losers?

[Arborbridge]

This is going to look interesting on my study of "should I have sold or held?" cases

It might be more useful to look from the other end of the telescope and ask "why did I buy?". Perhaps one answer to that, as I've mused here before, is CLLN was never "big cap enough" for HYP, floating at the lower end of the FTSE350 during its dividend paying days. It's FTSE100 companies for me from here on ...

Just playing catch-up in my reading. I have not found anyone who has challenged this statement, but I don't think it it true, at least the bit about 'floating at the lower end of the FTSE350'. Moreover, I would need to be convinced that it is much less intrinsically safe investing in the FTSE 250 than in the FTSE 100. Is this really a tell for avoiding big losers?

It's certainly by no means clear, but anecdotally, I've had more failures with companies lower down the league. There's a distinction here, in my view, between HYPing and other investment regimes. Look at small cap or medium cap ITs and they clearly do very well in TR terms, but they are not using HYP Doris type ideas - they have to be cared for.
For Doris or semi Doris, I do believe big cap might be overall, over time, the way to go.

Tangentially:

I've had an email from Stockopedia suggesting red flags that could have saved me from CLLN. Pity they didn't tell me a year ago! Was anyone here "saved" due to a Stockopedia subscription? I doubt it, but there marketing is timely - they must be rubbing their hands together in anticipediation.

Arb.

[GoSeigen]

I think the media and others are getting very excited over what is actually a pretty small and insignificant company failure. GS

Tell that to those directly involved such as the employees and their families. To them it's a disaster.

Ian.

Every company failure is a disaster to those people. So you're arguing the media should do all day coverage on the pet store closure last week in Market Drayton??


GS

[idpickering]

I think the media and others are getting very excited over what is actually a pretty small and insignificant company failure. GS

Tell that to those directly involved such as the employees and their families. To them it's a disaster.

Ian.

Every company failure is a disaster to those people. So you're arguing the media should do all day coverage on the pet store closure last week in Market Drayton??


GS

No I'm not. The thread was about Carillion, and that's of whom I was talking about.

Ian.

[Bouleversee]

I think the media and others are getting very excited over what is actually a pretty small and insignificant company failure. GS

Tell that to those directly involved such as the employees and their families. To them it's a disaster.

Ian.

Every company failure is a disaster to those people. So you're arguing the media should do all day coverage on the pet store closure last week in Market Drayton??


GS

Ridiculous to compare the failure of CLLN with that of a local pet store. CLLN was not a small and insignificant company and the knock on effects of its collapse will be astronomic, leaving out any personal losses.

[vrdiver]

Tell that to those directly involved such as the employees and their families. To them it's a disaster.
Ian.

Since Carillion is primarily a supplier and the customer-side demand is still there, I'd like to think this is a disruption, rather than a disaster. Certainly there will be suppliers and sub-contractors to Carillion who won't get paid, and for them this could indeed be a disaster, but if they survive then the demand that they were working on continues to exist.

Not a total disaster, but certainly a shock and a backward step to businesses that suffer losses (even if they survive). On the plus side, I think it is a wake-up call in the industry that winning work at any cost is just not sustainable.

[idpickering]

Tell that to those directly involved such as the employees and their families. To them it's a disaster.

Ian.

Every company failure is a disaster to those people. So you're arguing the media should do all day coverage on the pet store closure last week in Market Drayton??


GS

Ridiculous to compare the failure of CLLN with that of a local pet store. CLLN was not a small and insignificant company and the knock on effects of its collapse will be astronomic, leaving out any personal losses.

The term ridiculous just about sums that comment up Bouleversee. I resisted the temptation to rise to the poster's bait.

Ian.

[vrdiver]

I resisted the temptation

Almost Ian, almost...

VRD

[idpickering]

I resisted the temptation

Almost Ian, almost...

VRD

I'm only human. This thread is about Carillion

Moderator Message:
Edited text. Please keep to topics. Raptor.

Ian.

[GoSeigen]

Moderator Message:
Text removed. Not in the spirit of TLF. Keep it on topic and leave personal remarks at home. Thanks in advance. Raptor.

[Alaric]

It's now reported that the former directors who were still being paid have had their payments stopped.

https://www.theguardian.com/business/li ... d428b0a027

[Wizard]

Every company failure is a disaster to those people. So you're arguing the media should do all day coverage on the pet store closure last week in Market Drayton??


GS

Ridiculous to compare the failure of CLLN with that of a local pet store. CLLN was not a small and insignificant company and the knock on effects of its collapse will be astronomic, leaving out any personal losses.

The term ridiculous just about sums that comment up Bouleversee. I resisted the temptation to rise to the poster's bait.

Ian.

Surely the point here is that when anyone loses their job, whether from a larger listed company or a local shop, it is personally very distressing. The difference is the number of people that this may effect compared to a local shop closing, but that is a matter of the aggregate economic impact, not the individual implications*. So I think there is merit in significant reporting of Carillion, but that reason is not individual implications, but rather the aggregate impact. I think GS' point was that he felt that aggregate economic impact was not great enough to justify the amount of reporting. Others may of course agree or disagree with that position.

Terry.

* Unless of course we get very philosophical and start considering the sum of human happiness, but that is just a bit OT here.

[ursaminortaur]

From an RBS shareholder perspective, the difference between total wipeout and what we were left with was negligible.

Yep, it didn't do much for you as shareholder. But it did preserve contractual obligations - like Sir Fred's pension - in full. In sharp contrast to the era of market forces when the likes of BCCI and Barings went down.

Do you know, I had never even considered that, but you're right! (I know you know you're right ). If RBS had been left to disappear, then, had the pension scheme been transferred to the Pension Protection Fund, pension income would be limited to £34,655 (just looked it up).

Cheers, OLTB.

Fred Goodwin wasn't a member of the RBS DB scheme he had a FURBS (Funded unapproved retirement benefits scheme).
This scheme wasn't an approved scheme so he didn't need to comply with Annual allowance limits on contributions or the Lifetime allowance. An approved scheme wouldn't have allowed him to build up a pension capable of paying £700,000 per year.
Hence if RBS had collapsed his scheme wouldn't have been transferred to the PPF.
I'd suspect though that he would have been fine since his pension was almost certainly fully funded, in his own name and ring fenced from any RBS creditors.

http://www.thisismoney.co.uk/money/news/article-1670396/FURBS-Funded-unapproved-retirement-benefits-scheme.html

I'd also suspect that Carillion's directors have similar large unapproved pension schemes.

[Alaric]

I took a look at the 2016 Accounts
http://annualreport2016.carillionplc.co ... ements.pdf

There's a major asset as "goodwill" at £ 1544 million.

That's often where accounting fictions lurk. Goodwill can disappear in a flash.

[GoSeigen]

Tell that to those directly involved such as the employees and their families. To them it's a disaster.

Ian.

Every company failure is a disaster to those people. So you're arguing the media should do all day coverage on the pet store closure last week in Market Drayton??


GS

Ridiculous to compare the failure of CLLN with that of a local pet store. CLLN was not a small and insignificant company and the knock on effects of its collapse will be astronomic, leaving out any personal losses.

I didn't make the comparison, Ian did when he wrote "Tell that to those directly involved such as the employees and their families. To them it's a disaster." I was merely pointing out the ridiculousness of his argument and how it fails to negate my point that the media and others, especially shareholders, are altogether too excuted about this small company failure. In six months time it'll be completely forgotten.


GS

[idpickering]

Every company failure is a disaster to those people. So you're arguing the media should do all day coverage on the pet store closure last week in Market Drayton??


GS

Ridiculous to compare the failure of CLLN with that of a local pet store. CLLN was not a small and insignificant company and the knock on effects of its collapse will be astronomic, leaving out any personal losses.

I didn't make the comparison, Ian did when he wrote "Tell that to those directly involved such as the employees and their families. To them it's a disaster." I was merely pointing out the ridiculousness of his argument and how it fails to negate my point that the media and others, especially shareholders, are altogether too excuted about this small company failure. In six months time it'll be completely forgotten.


GS

Fair enough. Let's move on.

[tjh290633]

Moderator Message:
At 20 pages, this discussion has gone on for too long and is drifting wildly off topic.

I am locking it now.

TJH