Carillion out of construction PPPs as chief resigns

10 July 2017 Strategic and operational review to take place; firm will no longer bid to deliver construction work for PPP contracts; profit warning as problem contracts uncovered; interim chief takes over

Support services group Carillion is to pull out of construction PPPs as part of a strategic review to reduce net borrowing and improve profits.

The group issued a profit warning for the first half of the financial year, highlighting lower-than-expected performance, with full-year revenue expectations of £4.8bn-5bn and net borrowing of £695m. 

In its statement, the firm said the group will “exit the business of delivering construction for PPP projects, and after the delivery of ongoing projects it will no longer bid for this type of work”.

The firm said it expects profits to be hit to the tune of £845m, of which £375m relates to UK projects – the majority of which is down to three UK PPP deals. 

Operating profits for Carillion are also expected to take a hit due to phasing of PPP equity disposals as the company prepares to quit construction markets in Qatar, Saudi Arabia and Egypt.

Philip Green, non-executive chairman said: “Despite making progress against the strategic priorities we set out in our 2016 results announcement in March, average net borrowing has increased above the level we expected, which means that we will no longer be able to meet our target of reducing leverage for the full year.”

As it announced the profit warning, Carillion also revealed that Richard Howson has stepped down as chief executive, with senior independent non-executive director Keith Cochrane replacing him as interim.

“We are fortunate to have had Keith as a non-executive member of our board as he has considerable plc CEO experience. Richard will stay with the group for up to one year to support the transition,” Green said.

This page was last updated on:
23 January 2018.

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