Support services company, Carillion, which has been suffering from financial difficulties in recent months, announced that the Financial Conduct Authority (FCA) has notified the company that has commenced an investigation. This is in connection with the timeliness and content of announcements made by Carillion between 7th December 2016 and 10th July 2017.
The company issued an update on trading in 2016 on 7th December 2016 ahead of announcing its preliminary results on 1 March 2017. At that time the company said it expected its performance to meet expectations and for its net borrowing level to reduce. When it announced its full-year results the message from the company continued to be upbeat and this positive message was repeated by the then chief executive, Richard Howson, at its AGM in May.
However, the company issued a trading statement on 10th July in the company stated that debt levels had in fact risen. Carillion stated then that there had been a deterioration in cash flows on construction contracts, combined with a working capital outflow due to a higher than a normal number of construction contracts being completed without new contracts being started.
Howson resigned in July and was replaced by Keith Cochrane, previously its senior independent non-executive director. Since then Andrew Davies has been appointed and he is due to start in his post later this month. Cohrane is to remain with Carillion in an advisory capacity in order to ensure an orderly transition. Davies was previously chief executive of Wates Group and had held senior positions at BAE Systems prior to this.
Recently the company has raised cash by selling a number of its businesses including the recent disposal of its healthcare facilities management business to Serco. It has also been engaged with stakeholders over its debt. In November it announced it would have to defer the test date for both its financial covenants from 31 December 2017 to 30 April 2018, by which time it expected to be implementing its recapitalisation plan.
Carillion said it is cooperating fully with the FCA investigation.Last Updated: 5 January 2018