Carillion Share Discussion Threads

[spoole5] 01/3/2017 13:32

What about the impact of potential inflation? Interest rate rise predictions in the US already being scaled back from 4 to 2. Chances of a rate rise in the UK in the next two years virtually zero. The pension deficit will almost certainly rise further this year. It already exceeds the company's market cap.

[rcturner2] 01/3/2017 13:31

It will be interesting to see how the press report these results.

[jaf1948] 01/3/2017 13:30

'If you were shorting this why would you stop now?'

One of the main reason for the shorting, the fall today and the general negative comments is the large pensions deficit. What is frequently (I would say generally) ignored is that the deficit figure is not a real figure but the result of a legally required calculation. The AA bond rate is used as the discount rate to calculate the present value of scheme liabilities and in 2016 the AA rate fell by 1.25%. A 10 basis point movement in the AA bond rate moves the deficit up or down by about £60m, so that is why the deficit increased in 2016.

With the near certainty of bond rates going up in 2017, I believe the overall financial position of CLLN is nowhere near as bad as many ascertain.

[salpara111] 01/3/2017 13:19

I guess that as an outsider the way I would put it is
"Running faster to stand still"
Unless they can at the very least stabilise margins and preferably raise them there is not a happy end game here.

[spoole5] 01/3/2017 13:16

If you were shorting this why would you stop now?

[w1ndjammer] 01/3/2017 12:34

Spoole

well done, if i had polished my crystal ball, i would have sold at 223 this morning
and be buying back now.

WJ.

[w1ndjammer] 01/3/2017 12:34

Spoole

well done, if i had polished my crystal ball, i would have sold at 223 this morning
and be buying back now.

WJ.

[spoole5] 01/3/2017 12:23

Out today at 2.15. Still think there is value here but will continue to drift down until the shorters reduce and the company takes measures to deal with the debt and pension issues. Obviously those two are linked. Pe is an irrelevance when the pension deficit is out of control, have a look at TNI on a pe of 2.8. Look to get in on a reduced holding around 1.80.

[utyinv] 01/3/2017 12:20

Wllmherk1, you wrote;

wllmherk1 Mar '17 - 11:03 - 4037 of 4050 0 0
.................................................... Brexit has been mentioned as a concern by some on these boards, however, I actually think companies like CLLN will benefit as the Gov will start splashing cash on large infrastructure projects especially as we approach the 2020 election.
--------------------------------------------------------------------------------------------------
When the Gov eventually start spending on infrastructure they will be no different to any other customers, of the opinion that Carillion are on its knees and they (Gov) would want twice as much work for half the price. So expect future contracts to be less lucrative than expected.

[kcsham] 01/3/2017 12:19

WJ - you are forgiven.

[rcturner2] 01/3/2017 12:08

is the correct answer

[rcturner2] 01/3/2017 12:04

clueless post of day

[w1ndjammer] 01/3/2017 12:04

DbD

yes agree these days no problem, no smoking, no Asbestos, no nasty toxic solvents.

was talking anyone in the 60 plus bracket, which would have been exposed to
all the toxins.

but think today all the fit guys and girls will be in a different scheme to
the legacy pensions of the old days. so should not be a drag on the company.

WJ.

[ch1ck] 01/3/2017 11:57

The results are as expected with the plus that the div was intact.It goes ex in May so expect institutions to start buying this from this point on. I think we are starting to see this already with an increase in volume over the last week.I bought another sizeable amount today. I saw the fall as the last desperate attempt for the shorters to push this lower, but the astute will be switching out into other stocks.

[death by donut] 01/3/2017 11:53

WJ , just to say that most blokes on the buildings currently seem to be reasonably fit , also smoking - as in most walks of life - is a rareish site these days on site. Also the materials and H&S are totally diffo today imho.

Just saying , still got CLLN on my watchlist tho.

DbD - Construction 28 yrs - so far :0)

[s2lowner] 01/3/2017 11:49

"Carillion Chairman, Philip Green", do you think that the shorters have just got the wrong Philip Green?



This one is also a non exec at Bakercorp a private equity owned american co owned by Permira

[w1ndjammer] 01/3/2017 11:33

KC yes its a bit morbid, but if Carillion decide to shift the pension across
to someone like legal & general, it would be taken into account.

WJ.

[kcsham] 01/3/2017 11:29

WJ - Is that assumption a bit ........

[kcsham] 01/3/2017 11:28

All companies in the stock market carry debts. Debt is not a problem as far as a company can serve it comfortably. Often the debt of a company could increase rapidly due to its expanding business, this can't be bad for the company. The reason behind Carillion's case have to be found out. Such an increase in debt could be one off expenses for business improvement of the company. Thy shall not panic!Regarding dividends, Carillion decided to increase the total dividends by 1%, not a lot but it shows the company is not in a desperate situation. The cover of the dividend payment is 1.9 times as mentioned in the result and I can't see a big problem there.Whether the company needs to cut the dividend to reduced the debt, it will become down to the management to decide.

[w1ndjammer] 01/3/2017 11:26

you are overlooking one thing re the pension, if you have worked in the construction
industry at the coal face as to speak , your life expectancy will be reduced
compared to that as a pen pusher. All the guys i worked with as an apprentce
back in the seventies are all dead most only managed average age 69/72

WJ.

[rcturner2] 01/3/2017 11:16

red's post is very interesting, I do not think Carillion is generating enough cash to juggle the pension, the debt and the dividend, when the margin is reducing faster than revenue can grow.

I am more than ever convinced I did the right thing in selling this and not buying back in.

[123trev] 01/3/2017 11:09

If the share gets shorted to £1.50 and the dividend is cut to 9p in total what would your yield be! It isn't beyond the realms of possibility and imo very likely given all the uncertainties to come.

[wllmherk] 01/3/2017 11:03

I ve been buying these a while now with an average buy price of 233p so a bit under water. However with my current holding yielding over 7% I'm happy to continue holding. Brexit has been mentioned as a concern by some on these boards, however, I actually think companies like CLLN will benefit as the Gov will start splashing cash on large infrastructure projects especially as we approach the 2020 election.

wllm

[redartbmud] 01/3/2017 11:00

I have been looking at the 2015 accounts and, In particular, the pension scheme.
There were 12,223 Pensioners, 15140 Deferred Pensioners and 787 Active Pensioners.
The benefits paid amounted to £105.8m and the assessment of payments doe in the next 5 years amounts to £569m.
Contributions from the company amounted to £54.3m (£58.5m).

I have to reason to suspect that the forward projections are not reasonably accurate.

On another tack, the total dividends declared in 2016 amounted to £79.3m. It is covered 1.6 times (1.7), which is not brilliant but maybe manageable going forward.

Can the company continue to meet these obligations out of ongoing profits/cash flow, whilst investing in the business to maintain and improve profitability? Perhaps reducing the debt is another matter.