60% of builders not building. Biggest doing the poor mouth.

Reported by RTE, 17th October 2008

In the same story, Sisk’s MD, Tom Costello calls for government intervention to support the industry. His company certainly needs help, they only made profits of €82m on turnover of €1.67bn in 2006. (source) falling to only €52.1m in 2007 (source)

Poor chap, obviously he needs all the help he can get.

Blue Horseshoe

Hmmmm. A 4.9% profit margin in 2006 at the very height of the greatest property bubble in human history, and when the State was cheerfully paying 2 or 3 times cost on infrastructure projects?

Me hole.

Sounds dubious alright. The 4.6% does seem low…

Perhaps they had built mucho mucho more than they sold during the year. Builders either recognise revenue as the construction progresses (IAS 11) or when the building is competed, sold, and delivered (IAS 18).

I’d guess in Sisk’s case much of the revenue was recognised when it was sold. At the same time maybe they had a lot of construction over the year. Sisk therefore had just enough sales to cover the costs of it’s (i’d guess multiple) 2006 construction projects and operations costs. I could of course be wrong, as I don’t know enough about accounting for construction of properties (or the company)…

The only real way to know is to look at their annual accounts, how much stock was on their balance sheet in 2006 I wonder?

remember the declared profit is not necessarily the actual profit.

The trick is to (through a vast array of perfectly legal means, such as re-investment, R&D etc) reduce the declared profit to as small as possible without drawing a full audit on yourself, in order to reduce your corporation tax. Very common practice.

so yes, a margin a 4-5% on building property in '06 is pure bumph.

I have no doubt there is some tax optimisation behind that figure, but one of the characteristics of bubbles is that towards the end profit margins contract as costs rise and more competitors enter the fray. We saw the same contraction in rental yields and bank lending margins.