Last month, the venerable NSW construction company Kell & Rigby collapsed after a century in business.
There are two obvious points to draw from this: one, things are tough in the east coast building industry and, two, it’s a disaster for the company’s staff and creditors who are owed some $4 million and $16 million respectively.
Those who have lost can rightly ask why Kell & Rigby hadn’t filed its financial reports since 2009. Even then it was eight months late.
It’s entirely academic now but had creditors had the chance to see public information that indicated financial stress they might also have had the chance to bail out early – to call in a debt or look for another job.
Kell & Rigby is not peculiar in failing to file its accounts in line with the Corporations Act. The laws have not been enforced by the Australian Securities & Investments Commission (ASIC). And frankly, if the laws are not being policed they may as well not exist.
Look no further than revelations earlier this month about the failure of mining billionaires Clive Palmer and Gina Rinehart to comply. Then there was the raft of multinational companies with big government contracts which were either chronic late filers or who failed to file at all. Many of these operate in sensitive industries such as gambling, water, prisons, transport and health.
Today, in the accompanying table, we take a look at east coast construction companies, big private operators in Melbourne and Sydney.
Interestingly, their performance on disclosure is better than both the billionaires and the local divisions of multinationals where non-compliance is rampant.
Looking at 26 big players in the Australian construction industry, some 18 of the companies lodged their annual accounts within four months of year end, in compliance with the law.
There appears to be a nexus between delays in reporting and financial stress however. This is evinced by Kell & Rigby and Reed Constructions. According to the ASIC database the latest accounts for Kell & Rigby Holdings Pty Ltd (Under External Administration since Feb 2012) are for the 2009 year. Years 2008, 2010 and 2011 don’t appear to have been lodged at all.
Another construction company McConnell Dowell has just lodged late and York Civil is yet to file for the last June year. Five other companies J Hutchison, Laing O’Rourke, Reed, St Hilliers and Thiess) filed their 2011 reports later than the statutory deadline.
It is heartening though that 18 complied with the laws – at 69 per cent a far better strike rate than those with large government contracts.
As reported earlier, Reed Constructions Australia Pty Ltd is both – a later filer and a beneficiary of large government contracts via the schools program. Earlier this month It lodged its June 2011 accounts four months late.
Incidentally, Reed recorded a profit in the year but operating cash flow was heavily negative which suggested a poor quality result.
As an aside, Keane Australia Pty Ltd, a related company of Keane Australia Micropayment Consortium Pty Ltd (KAMCO) which operates Melbourne’s new Myki smartcard transport ticketing system has just lodged six years (2005 through 2010 years) of financial reports on the same day, all of which were well overdue and one six years overdue!