Galliford Try Share Discussion Threads

[dr_smith] 17/1/2018 13:33

Accepting JV as joint and severally liable to principal/govt does not stop JV members having agreement between themselves on R&R and split of monies received.

Also, whilst govt can play hard ball with tenders, if they are too bloody minded, the job isn't picked up. To get big jobs done they need big co's, it is a two way street. If the big co's have no commercial interest, the roads and hospitals aren't built. The sh*t storm of fall out is all over the BBC, no cleaners for prisons, hospitals on hold, essential services screwed. It is no-ones best interest.
Govt saying "accept inequitable terms or don't get the work" is as bad as CRLN delaying payments to sub-contractors, playing bully boy.
Free enterprise works on balance of risk and reward for all - all cogs in big machine turning together.
Yes GFRD made rod for own back in not placing safety valves it contract and/or phasing of project stages.
IMO :-)

[marksp2011] 17/1/2018 12:54

UK Govt is keen on contracts under JV that makes the consortium members jointly and severally liable - they do the same with IT etc. If you don't accept the terms you aren't playing on the pitch.

I dont have an issue with this. GFRD and BBY could see what CLLN was....... I sold my shares - they should have taken action to protect themselves and move the cost over run funding to escrow when it was visible

My view is that GFRD management are at fault here

[eeza] 17/1/2018 12:46

That was a Gov. imposed condition. So desperation to get the contract required acceptance.

It has more to do with Management bonus's than work for the workforce.

[dr_smith] 17/1/2018 12:41

I half agree with you eeza.
Yes, mega co's are desperate for work to justify workforce/operating costs, so that is a driver to co-operate in JV, but that said, no reason for JV members to act as surety for each other.

[marksp2011] 17/1/2018 12:20

Doing some more reading

This is Fixed Price at £745M and it is a year late so far. The budget will have been spent so this will be a straight loss to GFRD as their share of the overspend will increase. Depends what the Official Receiver will have in the pot but this will rank after the secured lenders so............ say goodbye to that cash. GFRD will either have to cut the dividend, increase borrowings or some combination thereof.

[dr_smith] 17/1/2018 11:16

careful:
"GFRD claim a rigorous risk analysis procedure."
That was a claim predating CRLN collapse.
Saying they may well have to pick up tab for CRLN JV failure shows this statement is more lip service than substance.

Said as p*ssed off LTH.
It is all so unnecessary - I am sure none of the co's in JV at outset would want to carry can for others, and statement of such in contract is bread and butter standard stuff. Its apparent ommission smacks of incompetence.
IMO :-)

[careful] 17/1/2018 10:58

GFRD could do well out of the CLLN situation.
Always assuming their £3bn+ of contracts going forward have been correctly costed.
GFRD claim a rigorous risk analysis procedure.

In future the financial strength of a company could become a factor rather than the cost only criteria of the current bidding process.
Will companies be made to demonstrate a healthy cash position in future before being allowed to bid?

The banks as we know must meet stringent stress tests with regard to cash reserves.

This could be a big opportunity for GFRD.
Maybe big is not so beautiful after all.
keep it simple, financially strong and manageable.

[beaubleep] 17/1/2018 10:57

Looks like common sense is prevailing

[mrthomas] 17/1/2018 10:42

Just brought in again after a two year gap like this co as hardly any debt and a PE of about 8/9 with a yield of eight percent. Given what happened recently to another company could pick up more work.

given the market height if it holds the dividend which I expect and I think this is good protection going forward

[mdbucky] 16/1/2018 20:54

16 Jan 18 Liberum Capital
Recommend Buy
Target 1,550.00

[dr_smith] 16/1/2018 16:52

ken298.
Hard to say without knowing the terms of the contract, specifically if
the JV is paid as one party and the 3 members then split accordingly or..
if each member paid separately for their part, in which case receiver/administrator will have a long list of creditors, with a legally bound pecking orer, from secured creditors (banks), taxes, wages and salaries having priority over unsecured creditors.
Though GFRD will have counter claim. I can foresee conflicting legal opinion as to how monies received are split.
Given the words of the rns it is evident the faced scenerio is not catered for in the contract, so legal position will require court action to resolve who gets what for monies received..and before that, who is responsible to conclude the contract in first place.
IMO :-)

[fizzypop] 16/1/2018 13:01

It seems the bottom is now in at 1160p.

[ken298] 16/1/2018 12:36

Presumably we now get Carillions share of the remaining revenue for this - you do not get paid in advance for these contracts.

[micos] 16/1/2018 10:46

Not filled with Scots nowadays. Many other nationalities have found it an agreeable place

[careful] 16/1/2018 09:44

King Edward 1st of England (Edward Longshanks), said in the film Braveheart,
'The trouble with Scotland is that it is filled with Scots'.

[cwa1] 16/1/2018 08:14

Having said that, it is Scotland.....

Is there something different that happens there that means your comments aren't supportable?

[randomwalker] 16/1/2018 07:58

The hole in the funding of the Aberdeen by-pass is £60-£80m.....shared with Balfour Beatty. That does not mean a £30-£40m hit to GFRD's P&L.
Depending on how the project performs, it might even mean a profit increase! Having said that, it is Scotland.....

[spudders] 15/1/2018 20:14

I've held here from 2006, so been through a lot with GFRD. I'm sure the management have issues covered and when the dust settles we will benefit. Good luck all holders

[eeza] 15/1/2018 17:35

Galliford Try said Carillion's collapse has left a £60 million to £80 million hole in the funding of the Aberdeen Western Peripheral Route road project in Scotland.
Galliford and remaining joint venture partner Balfour Beatty will now complete the £550 million contract and pick up the shortfall.

Balfour Beatty, meanwhile, is predicting a £35 million to £45 million cash hit from the saga, linked to three joint ventures: the Aberdeen Western Peripheral Route, the A14 in Cambridgeshire and the M60 Junction 8 to M62 Junction 20 scheme.
However, it pledged to work customers to meet its contractual commitments.

Rival Kier Group said it has contingency plans in place for its joint ventures with Carillion, adding that it does not expect to take a financial hit.

Kier currently operates joint ventures involving Carillion on HS2 and the Highways England smart motorways programme.

Construction firm Morgan Sindall, which is working on a number of projects and joint ventures with Carillion, is 'committed to completing these projects as planned'. The group added the impact is 'not expected to be material'.

[careful] 15/1/2018 16:58

Maybe worried about the remainder of the order book.
a terrible day here.
We shall have to wait until feb 14th.

[eeza] 15/1/2018 16:52

Market seems to be taking the view that GFRD will be the patsy standing for most losses. BBY the third partner only off 3%, less than half the fall for GFRD.

[eeza] 15/1/2018 16:40

Finished on the low for the day, so further to fall tomorrow.

[dr_smith] 15/1/2018 16:31

I believe a provision in accounting is for something unknown yet reasoably expected or anticipated but not crystalised, for example a provsion for bad debts. Once any debt is known to be bad, it moves from "provision" to actual "bad debt". IME :-)

I hate to say it, but if part of the risk of loss was already factored in, they would likely have said so in todays RNS.

Looking back I note:



On risks/mitigations it says:

Commercial


A failure to agree appropriate commercial terms or to manage fixed-price contracts correctly can result in reduced profits or, in some cases, losses on projects.


We are carefully managing our existing fixed-price contracts and closely review bids for contracts of this kind. We enhanced our risk management procedures, bringing greater rigour around contract selection.


Construction continues to maintain an excellent order book of £3.6 billion (2016: £3.4 billion) based on robust bid selection criteria. The underlying business continues to perform well and progress on the resolution of legacy contracts is in line with the position indicated in September 2017. 94% of projected revenue for the financial year to 30 June 2018 is secured with 51% of projected revenue for the financial year to 30 June 2019 secured (2016: 90% and 52% respectively).

[essentialinvestor] 15/1/2018 16:20

Careful, it's very easy to understand, read today's statement.

GFRD have got a great HB side, it further underlines why they should get
out of construction, in my view.