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Carillion finance director and other top executives step down in the wake of profit warning

Carillion is shaking up its management team as it undergoes a strategic review to turnaround the struggling business
Carillion has been undertaking a review of the business and its capital structure

Carillion PLC (LON:CLLN) has announced the resignation of its finance director along with a slew of top executives just two months after the chief executive stepped down following a profit warning.

Shares fell 5.05% to 41.98p in morning trading.

The struggling UK construction and support services firm is shaking up its management team after saying in July that it had launched a strategic review to turnaround the business.

Finance director Zafar Khan has left with immediate effect and the company has appointed Emma Mercer, the finance director the UK construction business, as chief financial officer of the group.  

Mercer was previously chief financial officer and senior vice president of Carillion Canada.

Former CEO leaves company

Richard Howson, who stepped down as chief exeutive in July and was later appointed chief operating officer, will leave the company. Andy Jones, currently president and chief executive of Carillion Canada, will begin as the new chief operating officer on 1 October.

Keith Cochrane was appointed as Carillion’s new chief executive after Howson stood down.

Adding to the list of resignations at the top are: Managing director of the construction services arm, Adam Green; managing director of Carillion Services, Nigel Taylor; and group strategy director, Shaun Carter. They will leave on 30 September. 

The group has also appointed Lee Watson as chief transformation officer of accounting firm Ernst & Young (EY), which has been brought in to support its strategic review to avoid collapse.

The changes at the top come in the wake of July's shock announcement of the departure of its chief executive, the suspension of its dividend and a warning that full year revenue would be lower than expected. Carillion has lost almost £800mln from its market capitalisation in recent weeks.

READ: Carillion shares plunge as it warns on full year revenue and chief executive departs

Management changes raises further questions, says UBS

Analysts at UBS said: "While we think a credible re-capitalisation and turn-around requires a new management team, the changes raise some questions: Timing is somewhat odd with first half results due to be reported on 29 September.

"Furthermore, Richard Howson had stepped down as CEO in July and was later appointed COO, only to leave the company now. Finally, the change in the services management could raise questions given the July write-down only related to construction with the services business portrayed as in good shape."

UBS added that the outcome for shareholders from the restructuring and recapitalisation is "highly uncertain".

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