Mar.26
2017

Carillion’s former finance chief quits board at Firstgroup

The former finance chief of Carillion is stepping down from the board of Firstgroup after less than a year in the post, several months after receiving a fat lip from shareholders.

Richard Adam joined the board of the train and bus operator less than seven months ago but in July nearly a quarter of shareholders voted against his appointment because of his links to Carillion, which in recent months has been locked in a fight for survival.

Mr Adam, 59, was group finance director of the outsourcing group between 2007 and 2016. When he was appointed to Firstgroup, Wolfhart Hauser, its chairman, praised his “strong background and long experience in contract-based international infrastructure businesses”.

Mr Adam left Carillion in December, taking a £140,000 cash bonus for his final year. In July Carillion shed most of its value over a few days after a calamitous trading update in which it took £845 million of writedowns on a handful of problem contracts.

Investors are urging Carillion to recoup shares and cash paid to Mr Adam and to Richard Howson, who stepped down as chief executive on the day of the profit warning, The Sunday Times reported this month.

Firstgroup held its annual meeting the week after Carillion shares went into freefall, and Mr Adam’s election was opposed by 23 per cent of shareholders. The only other resolution to have a significant vote against it was on the authority to make political donations, which was opposed by 12 per cent.

Mr Adam will stay on as head of Firstgroup’s audit committee until a successor is appointed. He is also a non-executive director at Countryside, the housebuilder; Countrywide, an estate agent; and BMT, a maritime engineering company.

Mr Hauser said: “On behalf of the board I would like to thank Richard for the contribution he has made during his time with the group and for providing continuity while a successor is appointed. We wish him well.”

Carillion has lost 82 per cent of its value this year. Analysts at UBS wrote in a recent note to clients: “We struggle to see Carillion executing on a turnaround; equity value is very thin.”

Keith Cochrane, its interim chief executive, said last month that the company was considering “all options” to reduce its debt but played down the need for an emergency rights issue.

Pensions for 29,000 past and current staff are also on investors’ minds. Carillion has promised £3.38 billion, but its schemes have assets of only £2.57 billion. The shortfall after tax has doubled in the past year to £663 million because of the fall in bond yields.

Carillion is committed to deficit-filling payments of as much as £47 million a year up to 2029, but its failing strength could oblige trustees to demand faster or bigger payments. The company said in its profit warning in July that its net debts had worsened to £695 million.

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