Carillion warns on profits again as it breaches banking covenants

Grant Prior 1 year ago
Share

Carillion will breach its banking covenants next month as the debt-stricken contractor announced another profit warning this morning.

Carillion has been forced to ask for extra time from its lenders while it fights to restore its balance sheet as full year debts are forecast to rise to up to £925m.

The company has been desperately trying to reduce costs and collect cash on contracts since the summer.

A disposals programme has also started with the £50m sale of its healthcare business.

But the moves have not proved sufficient and a major recapitalisation programme will take place in the first quarter of next year.

Carillion said: “In its interim results on 29 September 2017, Carillion confirmed that it was forecast to be in compliance with its financial covenants as at 31 December 2017. 

“As then indicated, compliance with its financial covenants was dependent on achieving its underlying forecasts, which assume that the normal pattern of receipts and payments continue alongside the completion of a number of PPP disposals and settlement receipts on contracts. 

” The Group now expects that a combination of delays to certain PPP disposals, a slippage in the commencement date of a significant project in the Middle East and lower than expected margin improvements across a small number of UK Support Services contracts will lead to profits for the year to 31 December 2017 being materially lower than current market expectations. 

“Given the impact of delays in receipts and disposals, the Group now expects full year average net borrowing in 2017 to be between £875m and £925m.

“Based on its latest forecasts, reflecting the items mentioned above, the Board now expects a covenant breach as at 31 December 2017. 

“Following discussions with its principal lenders and with their support, the Board has concluded that it is necessary to amend the relevant agreements to defer the test date for both its financial covenants from 31 December 2017 to 30 April 2018 by which time it expects to be implementing its recapitalisation plan.”

Wates chief executive Andrew Davies is set to take over at Carillion as its new chief executive from April.

Veteran turnaround specialist Alan Lovell has also been drafted in as a non-exective director.

Interim Chief Executive, Keith Cochrane said: “Whilst we continue to target cash collections, reduce costs, execute disposals and focus on delivering for our customers, it is clear that significant challenges remain and more needs to be done to reduce net debt and rebuild the balance sheet. 

“Constructive dialogue is continuing with our financial stakeholders, and I am grateful for their support. 

“I remain focused on addressing this issue before my successor, Andrew Davies, takes up the role on 2 April 2018.”

Carillion’s share price crashed more than 50% in early trading to just 18p – valuing the business at £73m.

Latest news

Balfour Beatty delivers 2-3% construction margin goal

Leo Quinn hits phase two target of Build to Last turnaround plan
2 days ago

Firms admit price-fixing of concrete drainage products

Precast firms took part in cartel for seven years
2 days ago

£300m Edgbaston mixed-use scheme advances

Phase one office project edges closer at New Garden Square regen scheme
2 days ago

All JCB staff get £1000 Christmas bonus

Over 7,000 staff earn biggest Christmas bonus in a decade
2 days ago

Robertson appoints Morgan Sindall director

Scott Wilson is now Robertson's business development director
2 days ago

Beeston leisure centre out to bid

Bidding starts on cinema project in £30m shops and 130 homes scheme
2 days ago

Scape MD to head Perfect Circle consortium

Victoria Bambini to lead AECOM, Pick Everard and Gleeds joint venture
2 days ago

EastEnders set rebuild soars £27m over budget

NAO slams BBC for planning failures and procurement delays
3 days ago

Spurs stadium delays continue into New Year

Man Utd match will be played at Wembley next month as contractors work through Christmas
3 days ago

Speedy buys construction training business for £9m

Plant hirer buys Glasgow-based Geason in construction training push
3 days ago

Summer start for £25m Carlisle flood defence plan

Flood defence plan to be revealed three years after storm Desmond hit
3 days ago

Amco wins Dunbar railway station upgrade

Work to start next summer on new platform and footbridge
3 days ago

Architects win post-Brexit talent deal

Designers win concessions but construction still in skills turmoil
3 days ago

Boost your online presence – join the Enquirer Directory

New site for suppliers and buyers showcases products, services and latest stories
8 months ago

Essex contractor collapses after posting record results

Bolt and Heeks Ltd in administratron with 55 job losses
4 days ago

Science park starts contractor hunt for £12m office scheme

Construction work up for grabs on trio of buildings near Liverpool
4 days ago

Hitachi to pull out of £14bn Anglesey nuclear power plant

Hitachi plans for Anglesey nuclear power plant now in doubt
4 days ago

M&E specialist Ameon replaces Imtech on Graham site

Subcontractor steps in to keep project on track
4 days ago

Marshalls to buy rival concrete brick maker

Marshalls to buy Edenhall for up to £17m
4 days ago

Argent gets go-ahead for major Tottenham Hale revamp

Contractor hunt to start soon with construction set to start next summer
4 days ago

Drylining boss banned for tax dodging

Insolvency Service investigators uncover huge CIS and VAT payment discrepancies
4 days ago

£2bn Elephant & Castle shopping centre scheme final go-ahead

Demolition to start after London mayor nods through vast scheme
5 days ago

Modular building specialist goes into administration

Timber accommodation pod maker Carbon Dynamic runs out of cash on major contract
5 days ago

Structural engineer crushed under scaffold tubes

Housing giant and scaffold contractor fined a total of £180,000
5 days ago

Consultant MHBC merges with Cumming

City of London based firm now part of global giant
5 days ago

Crossrail delayed again as costs rise by another £2bn

Mayor attacks previous management team who insisted project was "on time and on budget"
5 days ago

Top housing association hires Lendlease resi chief

Richard Cook will lead Clarion Group's ambitious development plans
5 days ago

UK’s tallest Premier Inn plan in Docklands

Premier Inn books in at 30-storey mixed resi and hotel scheme
5 days ago

Kier wins £45m Cambridge schools campus phase one

Northstowe education campus includes a new 1,800 pupil secondary
5 days ago

Ian Lawson to advise McLaren on growth plans

Former Severfield and Kier boss becomes consultant at expanding contractor
5 days ago

Contractor services