Contractor Carillion probed by financial watchdog

View from the first new building on the former Vaux Brewery site in Sunderland City centre.
View from the first new building on the former Vaux Brewery site in Sunderland City centre.

Britain's financial watchdog has opened an investigation into infrastructure giant Carillion as the troubled firm's woes continue.

The company, which is embroiled in an ongoing crisis that has involved a string of profits warnings, said on Wednesday that the Financial Conduct Authority (FCA) is probing the "timeliness and content" of announcements made between December 7, 2016 and July 10, 2017.

It covers a period of turmoil for the HS2 contractor, in which the firm's share price plunged and its chief executive departed following a warning over profits.

Carillion said it is co-operating fully with the FCA.

In December, the firm, which is scrambling to reduce its debt pile, struck an agreement with its lenders to defer a crucial financial covenant test, a development that will give the troubled group more breathing space.

In November, the HS2 contractor issued its latest profit warning and said it will breach its debt covenants, which resulted in another share price collapse.

The firm said at the time that annual profits are set to be "materially lower than current market expectations" as it grapples with a string of delays and smaller-than-expected improvements to margins on certain contracts.

Carillion is a partner with Sunderland City Council in Siglion, the joint venture set up to oversee redevelopment of a number of sites across Sunderland, including the former Vaux brewery.

In November, a statement from the firm said that it remained "fully committed" to its work on Wearside.

It said: "Carillion continues to be committed to business as usual with all our partners, suppliers and stakeholders.

"Earlier this month we announced progress on a number of fronts, including securing three new contracts worth more than £370million and an agreement to sell a large part of our healthcare business for £50million.

"These announcements follow recent major contract wins from HS2 for our JV worth £1.4billion and a five year-contract for a Carillion JV worth £158million, to provide Facilities Management services for Defence Infrastructure Organisation.

"Carillion remains focused on executing its disposals and cost savings programme as part of work to strengthen our balance sheet.

"We are proud to be part of the Siglion project, which will play a major role in the regeneration of Sunderland.

"Our work on the first building at the Vaux site is well underway and has created jobs for local people and supported local suppliers.”