Carillion probed by FCA over announcements pre-profit warning

The Financial Conduct Authority notified the embattled construction and support services group that the investigation was "in connection with the timeliness and content of announcements made by Carillion between 7 December 2016 and 10 July 2017". Carillion said is was "cooperating fully" with the the City regulator.

For Carillion the period in question began with a positive December trading update where the then-250 firm said performance had met expectations and that it expected strong growth in total revenue and increased operating profit for the year. Total orders plus probable orders were expected to reach roughly £16bn by the year end, with visibility of revenue from framework contracts at around £1.5bn and the company's pipeline of specific contract opportunities said to be more than £41bn.

In the subsequent months, the company announced various contract wins and the refinancing of some maturing debt facilities before full year results in March showed a solid 14% increase in revenues and a 1% improvement in pre-tax profits.

Alongside the results, chairman Philip Green hailed the "size and quality of our order book and pipeline of contract opportunities" but that management intended to "accelerate the rebalancing of our business into markets and sectors where we can win high-quality contracts and achieve our targets for margin and cash flows, while actively managing the positions we have in challenging markets".

Debt was acknowledged as an issue, with Green outlining a plan begin reducing average net borrowing by stepping up cost reduction programmes and the focus on managing working capital.

At May's annual shareholder meeting, chief executive Richard Howson said trading conditions "remained largely unchanged" and that the focus remained on the rebalancing the business and manage "challenging contract positions, particularly in our international markets, as these are key to achieving our objective of reducing average net borrowing".

Overall he said it was "an encouraging start to the year in terms of winning new business", with new orders and probable orders worth approximately £1.3bn and over 85% full year revenue visibility.

Then in July Howson stepped down as the company warned profits would be lower and debt £100m higher than expected, shelving the dividend and promising to carry out a strategic review as cash flows dwindled due to construction contracts drying up.