The UK construction and services company today announced some big changes at the top, including the departure of finance director Zafar Khan and chief operating officer, Richard Howson, who stood down as chief executive in July.
Other resignations at the top include the managing director of the construction services arm, Adam Green, managing director of Carillion Services, Nigel Taylor, and group strategy director, Shaun Carter.
The move comes as the company undertakes a strategic review to help turnaround the business after warning in July that it had suspended its dividend and expects full year revenue to be lower than previously anticipated after booking a £845mln provision related to the deterioration in cash flows on some construction contracts.
Carillion sparks worries about services business
UBS raised concerns about the departures within the services management team as the company has only previously highlighted troubles within construction.
“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,” UBS said in a note to investors.
"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, which repeated a ‘sell’ rating and target price of 47p, said the outcome for shareholders of the restructuring and recapitalisation exercise is “highly uncertain”. The bank thinks the value to equity holders hinges on whether the support services business also has problems.
'Too little, too late'
Neil Wilson, senior market analyst at ETX Capital, said while the decision to restructure the board seems like a positive move, it may be a case of “too little, too late”.
He believes a capital raise “looks likely” and may come when the company reports its interim results on 29 September.
Shares fell 2.07% to 43.00p in afternoon trading.