Register
 (photo: )
16.05.2018, 14:29

Work and Pensions Committee Report on Carillion

Industry News, Company News, EMEA
Mar Beltran, senior director and Infrastructure sector lead, EMEA, for S&P Global Ratings comments on the Work and Pensions Parliamentary Committee’s report into Carillion's collapse.

 

“In light of the findings delivered in the final report, there are lessons to be learned for the U.K.’s construction and facilities management sectors. Companies should strive to adopt more transparent accounting practices, particularly with respect to their use of reverse factoring (supply chain finance). This will be critical to ensuring that the market receives a fairer representation of a company’s health through financial statements. A further challenge comes from the subjective nature of revenue and profit recognition in long-term construction contract accounting.”

 

“Though companies are not always required to disclose their use of reverse factoring, it is important to note that reporting of such arrangements is paramount when their impact is material. We believe that Carillion's financial adjusted debt –to reflect its extensive use of reverse factoring – would have been significantly higher than its financial statements had suggested.”

 

“Under S&P Global Ratings’ criteria, poor management and governance practices are among leading causes of weakened creditworthiness. Although we did not rate Carillion, today’s report suggests that the most significant contributors to Carillion’s demise were its poor risk management practices, such as aggressive bidding. We believe these practices led to major construction project impairments and a decrease in its operating margins. Further pressure came from Carillion’s extensive use of the U.K. Government's supply chain finance (SCF) scheme as both a source of financing and an early payment facility. This kept the company’s fragile financial situation hidden for longer.”





Mar Beltran

About Mar Beltran

Mar Beltran is the senior director and Infrastructure sector lead for the Europe, Middle East and Africa (EMEA) region, with Standard and Poor Global Ratings.

Article rating:

vote data

The Xscape Yorkshire leisure centre. (photo: Savills)
Access Security  - 23.05.2018, 13:30

Savills Leisure Contracts for Axis

Savills have chosen Axis Group companies, Axis Security and Axis Cleaning and Support Services, to deliver services at the Xscape Yorkshire and Cardigan Fields leisure centres which are both in...

 (photo: Serco, Inc.)
Serco Group Plc  - 08.01.2018, 10:03

FEMA Contract Awarded to Serco

Serco Inc., has been awarded a position on the U.S. Federal Emergency Management Agency (FEMA) Public Assistance Technical Assistance Contract (PA TAC) IV.

St Thomas Hospital, London. (photo: )
Plasloc Ltd  - 03.01.2018, 19:21

Supporting a Challenging Hospital Project

A ground-breaking screening solution has helped to protect staff and patients during the construction of a Rare Diseases Centre at a major London hospital.

(Photograph courtesy of Tookapic). (photo: )
Marissa Francis  - 05.03.2018, 17:13

The Definition of 'Clever'

Marissa Francis, Heating Ventilation and Air Conditioning (HVAC) Improver with ABM UK, explains why university isn't the only route into facilities management.

New chargepoint installation at Southampton Airport. (photo: Southampton Airport)
AGS Airports  - 26.03.2018, 11:30

Southampton Airport Adds EV Chargepoints

Southampton Airport is helping power the growing number of electric vehicle (EV) drivers on UK roads with the installation of seven new Pod Point 7kW chargepoints in its short stay and priority...

By joining the Logitech Collaboration Program, Mersive delivers an integrated solution for wireless content sharing and video conferencing. (photo: Mersive Technologies, Inc.)
Mersive Technologies Inc  - 12.07.2018, 15:35

Mersive joins Logitech Collaboration Program

Wireless presentation and collaboration solutions provider, Mersive Technologies, announces it has joined the Logitech Collaboration Program (LCP) as an Integration Partner.