Carillion shares tumble 40 per cent after chief executive quits

 
Oliver Gill
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Carillion drafted in consultants from KPMG to review how it was managing key contracts (Source: Carillion)

Carillion shares were in freefall on Monday morning, plummeting 40 per cent and wiping £340m off its market capitalisation, after it unveiled a slew of bad news.

Chief executive Richard Howson has stepped down with immediate effect, profits took a £845m hit and the FTSE 250 firm was forced to admit it was struggling to stay within its borrowing limits.

The fall in profit followed a review of contracts in the UK, the Middle East and Canada by consultants from KPMG.

Read more: Carillion joint venture bags a £200m contract with the MoD

But Carillon also used the results to unveil a series of mitigating cash management actions to help put a lid on its borrowing.

As a result of the "enhanced contracts review" and "strategic actions" to reduce its lending, the firm issued revised full-year guidance, with revenue expected to be between £4.8bn and £5bn.

"Overall performance (is) expected to be below management’s previous expectations," the firm said in a statement.

Non-executive chairman Philip Green said concern about not being able to stay within borrowing limits led to the conclusion the "firm must take immediate action to accelerate the reduction in average net borrowing and are announcing a comprehensive programme of measures to address that, aimed at generating significant cash flow in the short-term".

Green added: “Richard Howson has stepped down as group chief executive and from the board with immediate effect and Keith Cochrane, previously our senior independent non-executive director, will take over as interim group chief executive, while a search is underway for a new group chief executive."

Read more: Carillion's share price is tumbling after it revealed profit fell in 2016

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