Carillion announces EY review

Infrastructure giant Carillion has drafted in accountant EY to help carry out a review of the business as it fights for its survival.

However, it has also been named one of the firms awarded contracts to build phase one of the HS2 rail line.

EY and Carillion will focus on “cost reduction and cash collection” following a torrid seven days for the plc.

Last week it suffered a dramatic share price collapse after issuing a profit warning which saw almost £600 million wiped from its value.

Interim chief executive Keith Cochrane said: “Alongside our own efforts, EY will provide support across the business and bring an external perspective to our cost reduction and cash collection challenge. My priorities are to reduce the group’s net debt and create a balance sheet that will support Carillion going forward.

“We need to simplify the business and demonstrate that value can again be created for shareholders by focusing the group on its core markets, including infrastructure and property services, in which it has good strengths and leading positions.”

Carillion’s market capitalisation has gone into freefall, falling from £826 million to around £241m in just days after it warned over earnings and revealed an £845m writeoff on construction contracts.

Chief executive Richard Howson stepped down with immediate effect a week ago as the group said it would need to bolster its balance sheet and was struggling to stay in its borrowing limits. He has been replaced by Cochrane on an interim basis while a permanent boss is sought.

The HS2 deals are worth £6.6 billion and will see tunnels, embankments and viaducts built between London and Birmingham.