Carillion collapse latest: Construction giant won £1.3bn of contracts after profit warning that kick-started demise

Days after its first profit warning Carillion was awarded a major contract to design and build a 50-mile section of the HS2 railway

Josie Co
Business Editor
Monday 15 January 2018 15:27
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Cabinet minister David Lidington says Carillion workers will get paid

Collapsed construction company Carillion won a total of 10 separate contracts worth over £1.3bn after issuing last July’s profit warning that kick-started the chain of events leading to its ultimate demise.

On 10 July 2017, Carillion’s shares tumbled after the company’s chief executive announced his departure on the back of the group warning that full-year profit would be lower than previously projected.

The company said at the time that it was pulling out of three construction markets in the Middle East, and that payment problems on four construction contracts nearing or reaching completion had forced it take a provision of £845m.

Nonetheless, research conducted by market intelligence company Tussell shows that in the months following that profit warning, Carillion was awarded £1.3bn of contracts, including to design and build a 50-mile section of the High Speed Two railway. Its portion of that contract has been valued at over £1bn.

Tussell found that two contracts, with a total value of £137m, were awarded after Carillion’s second profit warning on 29 September, at which point the beleaguered company said that it might have to sell shares to bolster the health of its balance sheet.

Also at the end of July, a Carillion joint-venture won contracts worth £158m to supply catering and other services for British military sites. The following month the company was named as the main contractor on a £300m Manchester property development, and in November it won two key contracts with Network Rail.

Following several days of crunch talks with its lenders, Carillion announced on Monday morning that it had collapsed into administration.

Carillion employs some 46,000 people worldwide, of which 20,000 are in the UK.

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