SIAC in financial trouble

Gryire · 23-10-2013 8:23am #1

Strange to see SIAC Construction in financial trouble after surviving the recession. They seemed to be trading through the period with profits every year.

Peterdalkey · 23-10-2013 9:50am

They are in big trouble with major roads contracts in Poland. Their offices at Monastry Road Clondalking are being blockaded by sub-contractor creditors since yesterday morning. The Gardai were there too as I passed to and from the office, yesterday and this morning.

Gryire · 23-10-2013 9:54am

Peterdalkey wrote: »

They are in big trouble with major roads contracts in Poland. Their offices at Monastry Road Clondalking are being blockaded by sub-contractor creditors since yesterday morning. The Gardai were there too as I passed to and from the office, yesterday and this morning.

I think they pulled out of Poland a couple of year ago. They have been trading away since then. Just finished a few bridges in Tullamore. Where is the money gone!

Graham · 23-10-2013 10:00am

Gryire wrote: »

I think they pulled out of Poland a couple of year ago. They have been trading away since then. Just finished a few bridges in Tullamore. Where is the money gone!

Losses from a Polish €400 million roadbuilding project, which it was forced to cancel earlier this year, are threatening the 100-year-old group’s survival.

Gryire · 23-10-2013 10:04am

Graham wrote: »

Losses from a Polish €400 million roadbuilding project, which it was forced to cancel earlier this year, are threatening the 100-year-old group’s survival.

http://www.independent.ie/business/irish/siacs-400m-polish-road-project-goes-nowhere-28827240.html

Graham · 23-10-2013 10:10am

http://www.irishtimes.com/business/sectors/commercial-property/siac-to-seek-court-protection-today-1.1569841

Perhaps the financial losses were only realised in the accounts this year. From the link you posted it looks like SIAC weren't the only ones to get stung.

It's very unfortunate for the many many staff and subcontractors who aren't likely to see outstanding debts settled in full. My heart goes out to them, it's an absolutely rotten position they find themselves in through no fault of their own.

Gryire · 23-10-2013 10:15am

Graham wrote: »

http://www.irishtimes.com/business/sectors/commercial-property/siac-to-seek-court-protection-today-1.1569841

Perhaps the financial losses were only realised in the accounts this year. From the link you posted it looks like SIAC weren't the only ones to get stung.

It's very unfortunate for the many many staff and subcontractors who aren't likely to see outstanding debts settled in full, my heart goes out to them.

On this article it says that they reported profits of €5million for 2012.

http://www.irishbuildingmagazine.ie/2013/10/22/siac-may-face-examinership-following-polish-losses/

You are right about staff and subcontractors having to take the hit.

Graham · 23-10-2013 10:19am

Gryire wrote: »

On this article it says that they reported profits of €5million for 2012.

http://www.irishbuildingmagazine.ie/2013/10/22/siac-may-face-examinership-following-polish-losses/.

Makes it even more likely that the losses from the Polish operation are only just hitting the Irish books.

Gryire · 23-10-2013 10:24am

Graham wrote: »

Makes it even more likely that the losses from the Polish operation are only just hitting the Irish books.

Any anticipated losses should have been accounted for in the year they occurred!!!!!!

Is it just the construction arm of the company is affected or will the specialist subcontractors also be affected also.

Graham · 23-10-2013 10:34am

Gryire wrote: »

Any anticipated losses should have been accounted for in the year they occurred!!!!!!

Not being an accountant I'm not in a position to confirm that. Other than a note in the Annual Report how would you account for as-yet unknown losses?

Gryire wrote: »

Is it just the construction arm of the company is affected or will the specialist subcontractors also be affected also.

I haven't been privy to any information other than that made available through the media. I think the High Court petition is planned for today, there might be more information available after that.

Peterdalkey · 23-10-2013 10:47am

In most examinership cases, much work has been done by accountants to prepare a case to show that the business has a fair chance of surviving, provided certain targets can be achieved. Their submissions normally outline a set of proposals for dealing with secured lenders, creditors etc. There will be much more real infomation later in the day.

dbran · 23-10-2013 1:44pm

Gryire wrote: »

Any anticipated losses should have been accounted for in the year they occurred!!!!!!

Is it just the construction arm of the company is affected or will the specialist subcontractors also be affected also.

I believe Gryire is correct. Under Irish GAAP, if a long term project is expected to result in an overall loss then the entire expected loss should be provided for immediately and not spread out over the remaining life of the project. A large company like SIAC should have been able to anticipate this loss well in advance.

I wonder who the auditors were?

dbran

Graham · 23-10-2013 2:07pm

dbran wrote: »

I believe Gryire is correct. Under Irish GAAP, if a long term project is expected to result in an overall loss then the entire expected loss should be provided for immediately and not spread out over the remaining life of the project. A large company like SIAC should have been able to anticipate this loss well in advance.

I wonder who the auditors were?

dbran

KPMG according to the Irish Times Top 1000 unless they changed in 2012.

At what point does a potential loss cross over the line to being an expected loss?

23-10-2013 5:08pm

Yes this point occurred to me also about 2012's accounts. Obviously it comes down to the FD convincing the auditors about whether or not the loss was definitely going to happen or not in a particular year. The semantics of accounting standards can be "open to interpretation" as many cases have shown.

This would affect remunerations in the organisation also so definitely in the interest of the recipient of those remunerations to have it recognised later rather than sooner.

Graham · 23-10-2013 5:18pm

glasso wrote: »

This would affect remunerations in the organisation also so definitely in the interest of the recipient of those remunerations to have it recognised later rather than sooner.

It could also be buying time to try and save the company from examinership/receivership which can't ultimately be anyones preferred outcome.

Gryire · 23-10-2013 5:42pm

Graham wrote: »

It could also be buying time to try and save the company from examinership/receivership which can't ultimately be anyones preferred outcome.

I wondor is their pension fund paid up! Could the creditors be trying to get acces to those funds.

Graham · 23-10-2013 5:54pm

How would the creditors access a pension fund? Surely if there is money in the pension fund, it stays there?

Gryire · 23-10-2013 5:57pm

Graham wrote: »

How would the creditors access a pension fund? Surely if there is money in the pension fund, it stays there?

I think it is an asset that would be lumped with all other assets in the event of liquidation.

23-10-2013 6:07pm

Gryire wrote: »

I think it is an asset that would be lumped with all other assets in the event of liquidation.

afaik defined contribution plans are pretty safe but defined benefit plans are different and the people already retired take precedence and it depends on the current state of the fund for defined benefit (i.e. in deficit or not).

Graham · 23-10-2013 6:07pm

Gryire wrote: »

I think it is an asset that would be lumped with all other assets in the event of liquidation.

That's some fairly heavy duty scaremongering for something you think might be.

The assets of your pension plan are totally separate from the assets of the company. In most cases, if a company goes into liquidation, the company pension plan will be 'wound up'. The trustees of the pension plan are responsible for winding up the pension plan, according to the rules of the plan and current law.
http://www.irishlife.ie/faq/is-my-pension-protected-if-my-company-goes-into-liquidation.html

That's not to say pensioners (current or future) won't be effected but it does appear to indicate that creditors have no call over the existing pension fund.

Gryire · 23-10-2013 7:02pm

Examinership secured.

Debts of €100Million.

Atlantic Dawn · 23-10-2013 8:40pm

Sad to see, they completed some major projects across this country and beyond...

http://www.siac.ie/siac/index.jsp?b=0&pID=93&nID=101

onedmc · 23-10-2013 9:12pm

Gryire wrote: »

I wondor is their pension fund paid up! Could the creditors be trying to get acces to those funds.

It's been know for some time that siac was in trouble and that the pension is also underfunded.

Gryire · 23-10-2013 9:13pm

Atlantic Dawn wrote: »

Sad to see, they completed some major projects across this country and beyond...

http://www.siac.ie/siac/index.jsp?b=0&pID=93&nID=101

There is no reason why they can't get over this and move on.

23-10-2013 11:58pm

Gryire wrote: »

There is no reason why they can't get over this and move on.

yes most likely the company will survive but at a heavy or fatal cost to several other companies in Ireland who had the misfortune to be subcontractors of Siac.

Gryire · 24-10-2013 8:30am

glasso wrote: »

yes most likely the company will survive but at a heavy or fatal cost to several other companies in Ireland who had the misfortune to be subcontractors of Siac.

Papers say that the banks are taking a neutral position. This is a change from what the times said on Tuesday when it said the banks were supporting the company's case. SIAC need some creditors to support them.

Peterdalkey · 24-10-2013 11:37am

The appointment of the examiner is only an interim measure by the courts, they have to come back to court on November 6th to seek to have it confirmed or it could be rejected. It appears that at least some of the trade creditors intend opposing the examinership. As the banks are most likely secured, they can afford to see what emerges and then choose the option that offers them the best outcome. With €100M in debts, it is hard to see a good outcome either way for the unsecured creditors, unless there is a huge collectable cash pot in the company's own debtors ledger.

24-10-2013 4:51pm

see that Siac has removed list of directors from it's website.

http://www.siac.ie/siac/index.jsp?b=0-93&pID=98&nID=107

Gryire · 24-10-2013 5:04pm

glasso wrote: »

see that Siac has removed list of directors from it's website.

http://www.siac.ie/siac/index.jsp?b=0-93&pID=98&nID=107

There has been a few changes in these in the last 12 months.

24-10-2013 6:44pm

Gryire wrote: »

There has been a few changes in these in the last 12 months.

that doesn't make any difference. It's deliberate that nothing is up there for a list of directors. it would take 5 mins to update a list with changes.

Graham · 24-10-2013 6:51pm

glasso wrote: »

that doesn't make any difference. It's deliberate that nothing is up there for a list of directors. it would take 5 mins to update a list with changes.

In fairness, I'd imagine updating the website is fairly low on the list of priorities at the moment.

24-10-2013 7:03pm

Graham wrote: »

In fairness, I'd imagine updating the website is fairly low on the list of priorities at the moment.

it was updated to remove them - that's my point...

Graham · 24-10-2013 7:09pm

glasso wrote: »

it was updated to remove them - that's my point...

Call IT guy, remove that page it's out of date. No thinking/planning/discussion just job done. That's my point.

There may be things about the cause of the SIAC examinership to get outraged about. In my opinion this isn't one of them.

Peterdalkey · 24-10-2013 7:46pm

They have no obligation, whatsoever, to state their directors on a website. It is no issue in finding a list of current directors, just buy the CRO listing. These guys are obviously under severe pressure at this point, the last thing they need is contact or faffing about from randomers.
They are real people, with real families and real worries for their futures and their ability to provide for their families into the future. Who is at any loss that their details have been removed, only the nosey hurlers on the ditch!

Gryire · 25-10-2013 9:35am

http://www.irishtimes.com/business/sectors/transport-and-tourism/state-paid-siac-millions-ahead-of-examinership-1.1572578

Where is all the money going!!!!!

Graham · 25-10-2013 11:01am

Where do you think it's going, you are aware the company is still trading aren't you?

My guess would be to continue to pay suppliers/contractors/staff for the existing ongoing projects with the oversight of the examiner.

Gryire · 25-10-2013 11:06am

Graham wrote: »

Where do you think it's going, you are aware the company is still trading aren't you?

My guess would be to continue to pay suppliers/contractors/staff for the existing ongoing projects with the oversight of the examiner.

From what I have heard, they are not paying any of the above only wages. Heard they owe some ex-staff redundancy money for over a year!

Graham · 25-10-2013 11:12am

Gryire wrote: »

From what I have heard, they are not paying any of the above only wages. Heard they owe some ex-staff redundancy money for over a year!

They will continue to pay existing staff while in examinership and they will continue to pay suppliers/contractors for whatever is necessary to continue their existing workload. Without this the company would stop and the examinership process would be pointless.

Sadly anyone thats owed money for work completed is unlikely to see much (if anything) for a while.

Where do you think the money is going?

Gryire · 25-10-2013 11:25am

Graham wrote: »

They will continue to pay existing staff while in examinership and they will continue to pay suppliers/contractors for whatever is necessary to continue their existing workload. Without this the company would stop and the examinership process would be pointless.

Sadly anyone thats owed money for work completed is unlikely to see much (if anything) for a while.

Where do you think the money is going?

Difficult to say. From what I know, it was a well run company. But am surprised with the amount of money it owes creditors etc when they posted profits every year through the recession (€5million in 2012). Most of their clients are government bodies and it seems these have paid the monies owed. Basically, if you make profits every year and collect the money you are owed then how can you not pay your suppliers and contractors!

Graham · 25-10-2013 11:31am

I'd imagine it's quite easy when a contract worth tens/hundreds of millions of Euro goes bad. The previous years €5million profit isn't going to stretch very far.

Peterdalkey · 25-10-2013 11:31am

Gryire wrote: »

Difficult to say. From what I know, it was a well run company. But am surprised with the amount of money it owes creditors etc when they posted profits every year through the recession (€5million in 2012). Most of their clients are government bodies and it seems these have paid the monies owed. Basically, if you make profits every year and collect the money you are owed then how can you not pay your suppliers and contractors!

If you get stiffed for say €20 million in Poland, that would pretty much do it!!

Gryire · 25-10-2013 11:37am

Graham wrote: »

I'd imagine it's quite easy when a contract worth tens/hundreds of millions of Euro goes bad. The previous years €5million profit isn't going to stretch very far.

They pulled out of Poland in November 2012 and still declared a profit of €5 Million.

Gryire · 25-10-2013 11:38am

Peterdalkey wrote: »

If you get stiffed for say €20 million in Poland, that would pretty much do it!!

If they got stifffed for €20 Million how did they make a profit of €5 Million in 2012.

Graham · 25-10-2013 11:41am

Gryire wrote: »

If they got stifffed for €20 Million how did they make a profit of €5 Million in 2012.

Without reviewing their accounts, my guess would be the loss was only realised on the books this year.

Peterdalkey · 25-10-2013 11:43am

Gryire wrote: »

If they got stifffed for €20 Million how did they make a profit of €5 Million in 2012.

At this stage it is unknown how much they will ultimately be able to recover from Poland. The issue is not profits made which are only paper figures, it is about cashflow. You can trade indefinitely with no profits after depreciation etc, but if you have no cash...game over!

Gryire · 25-10-2013 11:46am

Graham wrote: »

Without reviewing their accounts, my guess would be the loss was only realised on the books this year.

That does not make since. SIAC surely knew what the story in Poland was prior to declaring any profits. Maybe they are owed money from Poland, but I have not seen this mentioned on any media so far.

Peterdalkey · 25-10-2013 11:53am

From the Irish Times

On Wednesday, the Siac group secured interim examinership in the High Court. Directors said their difficulties stemmed from the Irish downturn and outstanding payments of about €113 million from its Polish activities.

Graham · 25-10-2013 11:54am

Gryire wrote: »

That does not make since. SIAC surely knew what the story in Poland was prior to declaring any profits. Maybe they are owed money from Poland, but I have not seen this mentioned on any media so far.

The company is seeking damages of €22million and is making a complaint to the European commission as a result of it's Polish operation. http://www.irishtimes.com/business/sectors/transport-and-tourism/siac-faces-examinership-after-polish-losses-1.1568640

Gryire · 25-10-2013 12:01pm

Peterdalkey wrote: »

From the Irish Times

On Wednesday, the Siac group secured interim examinership in the High Court. Directors said their difficulties stemmed from the Irish downturn and outstanding payments of about €113 million from its Polish activities.

http://www.irishexaminer.com/business/siac-secures-protection-of-court-247332.html

Since 2008, the turnover of SIAC Construction Ltd (SCL) has fallen from €265m to €113m, the directors said in their petition. SCL also has trade creditors of €26.1m, additional current liabilities of €4.5m and other sums totalling €24.7m due in contract and rectification provision and intercompany liabilities. Polish creditors also had outstanding claims of some €7.4m.

The directors said SCL is under significant pressure from its trade creditors and any petition for its winding up would have a “catastrophic domino effect” on the group as a whole.

SIAC has, with others, taken legal action in Poland arising from involvement in road contracts and said the value of its share of those claims was about €113m.

They are making a claim of €113m. That is alot different to being owed €113m.

Also, there are 9 parts of the group involved, most of whom were not in Poland!

The affected companies are SIAC Construction Ltd; SIAC Holdings Ltd; SIAC Holdings (Ireland) Ltd; SIAC Bituminous Products Ltd; SIAC Butlers Steel Ltd; Lilymount Ltd; SIAC (Clondalkin) Ltd; SIAC Baldonnell Ltd and SIAC Property Retailers Ltd.

Graham · 25-10-2013 12:12pm

The company is currently seeking damages of €22million.

As an aside, Sisk currently have something like €90million still owing to them from their Polish operations. This doesn't appear to be a problem that's unique to SIAC.

Peterdalkey · 25-10-2013 12:13pm

They are making a claim of €113m. That is alot different to being owed €113m. ???
Bottom line is that they have run out of cash......... thus insolvent! Insolvency and profitability are not the same thing, it is quite possible to be profitable but insolvent. It is also illegal to trade while insolvent but not so while merely unprofitable.

SIAC in financial trouble

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