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CLLN Carillion Plc

14.20
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Carillion Plc LSE:CLLN London Ordinary Share GB0007365546 ORD 50P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 14.20 - 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Carillion Share Discussion Threads

Showing 4451 to 4475 of 12450 messages
Chat Pages: Latest  186  185  184  183  182  181  180  179  178  177  176  175  Older
DateSubjectAuthorDiscuss
17/2/2017
13:23
Carillion plc is providing this update on trading in 2016 ahead of announcing its preliminary results on 1 March 2017.Highlights -- Performance meeting expectations -- Expect strong growth in total revenue and increased operating profit -- Performance continues to be led by revenue growth and a strong margin in support services -- Expect net borrowing to reduce from the half year level The above is just a reminder. Try to imagine when all the above are to be confirmed in the coming announcement on 1st of March........
kcsham
17/2/2017
11:37
kiwihope - Yes, objective was contained within the last TU. It would be unusual for a detailed strategy (such as that for reducing net debt) to be contained within a TU. However, in view of the share price performance over the past couple of years, one would hope that detailing a strategy for reducing their debt would be prioritised with the upcoming Final Results on 1/3. We don't have long to wait & find out.
speedsgh
17/2/2017
10:51
Hi Candid...

I would also feel more comfortable if the nett debt was lower. Regarding their strategy, or as you say lack of, they did make this statement in the last trading update:

"...Delivering strong cash flow remains a key objective and our ambition over the medium term is to reduce net borrowing, while continuing to invest to support the development of the business..."

OK, they haven't laid out a detailed strategy but they have stated an objective, which is surely the next best thing?

Although I'm a bit nervous about the debt I don't agree with you that it's inevitable that they will hit problems or need a rights issue. Of course this MAY happen but equally they may be able to slowly reduce the debt over a few years. They have shifted the business away from volatile construction and towards (hopefully) more predictable services. This is a good thing as the high debt makes them vulnerable to an outside event (eg. rising interest rates, lower pound, etc), as well as a self-induced mistake.

You say the dividend is only £80M per annum, implying this is a bad thing because they cannot cancel it and use the money to quickly pay off debt. I prefer to look at it the other way, they can maintain a good dividend cheaply and use the 'spare' earnings to tackle the debt. Remember they make about £230M underlying profit from operations. OK I know 'underlying' isn't real profits but it does give an indication of potential.

What the company needs is a few years without any nasty surprises. How likely that is with Brexit, likely future interest rate increases or something we don't even know about, I just don't know. But this is the risk we take and why we can buy a business with £200M+ underlying profits for less than £1Bn.

kiwihope
17/2/2017
08:47
Okay! May be 217 to be more realistic.
kcsham
17/2/2017
08:45
220 today!
kcsham
17/2/2017
08:23
210 today anyone?!
spoole5
17/2/2017
00:22
Not quite. The price spiked down to 196.35 on B-Day.
fabius1
16/2/2017
21:33
Yet still the share price goes down, making a new low, which is at least a 5 year low.
rcturner2
16/2/2017
20:45
It could be an interesting piece for somebody to read. Extract from an eight months old document is shown as follows:Regulators must relax restrictions on pension funds wishing to diversify investments, according to Robin Ellison, the chairman of trustees at UK construction company Carillion.Ellison, who in addition to chairing the £2bn (€2.5bn) Carillion pension scheme is a lawyer at Pinsent Masons and a former chairman of the UK's National Association of Pension Funds, said that the UK's pensions regulator lived "in the 19th century", pushing funds towards an excessively prudent investment approach which constrains their ability to meet their liabilities. However, speaking at last week's IPE 360 conference on risk & asset allocation at the London Stock Exchange, he added that accountants and actuaries shared the blame for Carillion's pension fund having "ridiculous investments"."Historically they [the investments] have been considered the right thing to do," he said.The UK construction company's closed defined benefit scheme's investments are split nearly evenly between fixed income – mostly government bonds – and equities.......Ellison nonetheless bemoaned the pressure that it exerted on UK schemes to invest in government bonds to de-risk. .......The European Insurance and Occupational Pensions Authority (EIOPA) and the OECD are also part of the problem, according to Ellison, noting that the latter had published a guidance note saying it is wrong for pension scheme trustees to seek higher yielding investments."The regulatory pressures are intense to do the conventional thing, and we think this is a mistake," he said. "At the moment we think the conventional way of de-risking for us is an foolish and expensive thing to do.".......the Carillion scheme was therefore moving to what Ellison branded alternative de-risking, which involves diversifying by investing in higher yielding assets such as infrastructure, mezzanine debt, and forestry assets."It's not a perfect solution, but if we have sufficient diversification we think we'll be in a better position," he said.Carillion has adopted a philosophy of avoiding "reckless prudence".......said Ellison. "In other words being prudent to an excessive degree, so prudent that you damage the pensions you are trying to pay."Other panellists also took aim at regulators, including ERAFP chief executive Philippe Desfossés."Regulators don't get it," said the head of the €23bn French scheme for civil servants, in a reference to the low yield environment and the pressures facing pension funds.He has previously warned of the dangers for pension funds from the European Central Banks's monetary policy...... and re-iterated his concerns that pension funds will not be able to survive unless rates increase.To the extent that pension funds are considered as a sort of pass-through, he said, collecting money today to transfer it far into the future, the sector should be "authorised to invest massively in what contributes to growth, basically productive capital and infrastructure".Instead, however, his scheme was "encouraged" to invest in government bonds, he said."The timing could not be more awful," he said. "They are encouraging us to de-risk our balance sheet by investing in things that don't pay anything."We should try to convince the regulators just to change the regulatory framework to make it possible to invest much more in alternative de-risking." 
kcsham
16/2/2017
20:18
Val

I agree with your opinion. As far as I know the business is run conservatively. They tend to stick to their tried and tested business model.
In recent weeks there has been negative comment on a few contracts that have not performed as well as you might expect. As ever, there are two sides to the argument. Certainly, in Liverpool one cannot discount a political bias, for whatever reasons. In all cases, Carillion is seen as the villain of the piece, but that is journalism.
As a percentage of the total business it is small beer, and hopefully the mud will not stick.
Agreed, they will have matched loan maturity to completion of the relevant contracts. The Convertibles mature in 2019 and amount to some £190 millions. As they are well out of the money, they will not be converted and can be bought back at par on maturity. The company is well capable of dealing with this issue.
there is much comment about the pension fund deficit, but this is a long term liability and can be handled over time.

redartbmud
16/2/2017
19:16
red

"Clln generates more than half of its revenues from service contracts that pay regularly."

Even better - it's now two-thirds according to the December trading update. And as the strategy is to continue to expand support services Clln expect the proportion to increase further this year.

The visibility in terms of the revenue/profit stream from these multi-year contracts and framework agreements in some way matches the maturity profile of the loans, so I do not see the presence of debt on the balance sheet as such a big issue that some think it is.

valhamos
16/2/2017
18:29
30 January 2017

Carillion successfully refinances maturing debt facilities

Carillion plc is pleased to announce that it has successfully refinanced existing funding arrangements that are due to mature during 2017 and 2018. The replacement financing has been secured from the German Schuldschein Market and the £112 million of loans received exceeded our target of £100 million, further evidencing the strong support Carillion continues to receive in the debt capital markets.

The loans have an average maturity of approximately five years and a blended interest rate of sub-three per cent, including fees. This further diversifies the Group's sources of funding, provides long-term debt on attractive terms and maintains the Group's strong liquidity position with access to over £1.4 billion of funding to support its strategic objectives and development.

I don't believe that would have put out that statement if they were going to give a profits warning two months later.
Clln generates more than half of it's revenues from service contracts that pay regularly. Construction is a different matter and large chunks of income expenditure can be lumpy.

redartbmud
16/2/2017
18:23
They do say that they expect debt to reduce this time around. And the dividend is well covered, so exceptional exceptionals or acquisitions aside (I am not expecting the pension deficit to deteriorate) I would expect some paying down of debt in the results and in the outlook. The fact that they mentioned it in the last update shows they realise it is an issue.

My only querstion is: how much debt reduction? For me, 5%+ annualised would be handy, 2% would be pretty meagre as interest rates are not going to stay low forever... but at the current price I think all this is priced in (and a bit), which is why I am invested.

edmundshaw
16/2/2017
17:44
Hi m4rtinu...to answer your question it is a gamble albeit a calculated one...Laird shares rose quickly and Carillion shares fell rather quickly...maybe more rises to come from Laird and further falls to come from Carillion..but Carillion is paying a hefty dividend which Laird isn't so on balance opted for the dividend paying stock and take advantage of the recent share price movements in both. Like Jaf1948 said..their trading update was positive with no mention of curtailing the dividend so that gives me some leeway for future falls. Have also noticed that Carillion subscribes to the no surprises formula is their communications indicating that it will carry on as usual regardless of current market sentiment...and carrying on as usual is muddling on financially and recycling the debt ...but that can't continue forever...my hope is that I am in and out before that happens.
candid investor
16/2/2017
17:28
Candid - interesting to read your comments. Can I ask why you bought now, rather than wait for results? Is that part of your "gamble"?

On debt, IMO CLLN strategy is to try to roll over maturing debt; so as you say, kind of muddling through on that.

I am no expert so am trying to learn from my mistakes. My recent mistakes have been buying income shares, which I thought had a solid share price

m4rtinu
16/2/2017
17:27
Thank you for the quick reply. I take your points but I think I would have initially stated that 'their strategy is unknown at the moment' rather than there is no strategy but that's a matter of style ! Accountants are taught to anticipate a loss rather than a profit, if I remember from my accountancy training nearly 50 years ago.

I believe that we would have been informed by CLLN if the results on March 1st were to be significantly different to what is expected so, as I have said on here many times before, I believe the shorters are just gambling. We will know in two weeks time.

jaf1948
16/2/2017
17:18
Hi Jaf1948...well as an investor I would want to and be entitled to know what their strategy for paying off the debt was . Why wouldn't they want to tell us ? It isn't exactly a secret..as an example take a look at Laird...their share price halved because of their problems with one of their divisions...they acknowledged them and said that they were working on a strategy...they have now said they are looking at possibility of selling it...share price is rising again...I then exited Laird after the rise and am now backing Carillion but would like to see some action on their part otherwise the share price will fall further.
candid investor
16/2/2017
17:09
candid investor,

Thank you for your comments. My only question is your no.3 point 'No company strategy of how and when to pay off this debt'. How do you know they have no strategy ? Just because they haven't made that strategy explicit to you or the market does not mean that they do not have one.

jaf1948
16/2/2017
16:57
Hi guys what are chances of a take-over? At this price and if the Company is sound and pension deficits are likely to be eroded as inflation takes off, it may be a steal.

Take-over would surely burn the 'Shorters' long before they could close their shorts.

utyinv
16/2/2017
16:54
Hello all. I am new to this site but have just made a substantial investment in these shares and I am a qualified accountant so know what to look for in a company's Balance sheet.
The problems Carillion has that trouble me are as follows:
1. Short term cash only sufficient to cover excess of short term creditors over debtors so residual liquidity is debt of approx £600k on top of net pension deficit of £300k. Not very healthy with such low margins on long term contracts
2. Dividend payments amount to only c £85 million per annum so would take over 10 years of nil dividends to pay off this debt...
3. No company strategy of how and when to.pay off this debt doesn't inspire confidence in the company's long term prospects which is why the shorters are out in force.
But....
Looking back over past Balance Sheets it is no different now to the past several years when share prices were in excess of £4.00 per share but the company has muddled through with increasing dividends because cash flow is sufficient to pay interest on the debt and make extra contributions to pension fund.
So I am gambling on them continuing to do so until sentiment changes and the share price goes up and I will then exit the share before the inevitable happens...in the meantime I will bank the dividends because all things equal and in all probability the company will continue to make an increase in the final dividend pay out in June to ...and I am guessing..12.7 pence per share.

What I am saying is that at some point the company will need to act ...maybe a rights issue on the back of another takeover but for now happy to buy in now and sell when it bounces back up to £3 which I think it will within the next 12 months.

candid investor
16/2/2017
16:18
Yes, kcs - 11th May this year.
m4rtinu
16/2/2017
15:25
Final result out on 1st of March, but the ex-dividend day will be sometime in May.
kcsham
16/2/2017
14:14
Given the proximity of results, I'd be surprised if some of the shorters wouldn't want to take some profit at this level, even if only for a trading profit.
edmundshaw
16/2/2017
13:28
Final Results out 1st March so I'll wait and see what it looks like after that. If they maintain the divi I might just dip a toe in as they would be in my long term portfolio anyway and I can certainly last longer than the shorters!!
warranty
16/2/2017
13:19
Lost 220p support
ny boy
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