Network Rail regulation and performance

03.01.18

Top Network Rail supplier under investigation by the FCA

Carillion PLC, one of Network Rail’s biggest suppliers and a key HS2 contractor, is under investigation by the UK’s Financial Conduct Authority.

The independent financial watchdog is looking into the “timeliness and content” of announcements made by Carillion in a period between 7 December 2016 and 10 July 2017.

The company said that it was “cooperating fully with the FCA” on the investigation.

The construction giant is involved in a variety of deals with NR, most recently winning two contracts expected to be worth a combined £300m involving track maintenance and electrification. It is also ranked as the infrastructure owner’s second biggest supplier in its 2016-17 Top 20 list, receiving more than 5% of Network Rail’s total expenditure.

Today’s news comes after a difficult year for Carillion, with its former chief executive stepping down in July and future CEO Andrew Davies set to take over on 22 January.

In November 2017, Carillion issued its third profit warning in five months and its shares crashed 60% when the stock market opened – their lowest-ever levels. It has been reported that the struggling firm also has debts of £1.6bn.

In July last year, its shares plunged 39% as bosses warned that annual results would be “below management’s previous expectations” and wrote off £845m.

Early in the year, in April, the firm was mired in controversy when the RMT union vowed to fight against job cuts that were warned as a result of Network Rail’s shrunken renewals portfolio.

Despite the financial controversies, Carillion remains a major player in the rail industry. It is set to be involved in two of the JVs which won slices of the £6.6bn HS2 construction contracts awarded in July last year, as well as to deliver a major part of the Midland Main Line improvement programme.

Top image: PA Wire

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Comments

Jak Jaye   04/01/2018 at 14:31

It beggers belief that any Government gives contracts to a shambolic company that is 1.6 billion in debt,no wonder we are the laughing stock of the railway world. And all to build that vanity project line ,HS2 ,the one that no ones heard off and goes from somewhere to nowhere thats if it ever gets built wasting how much40-50 billion? priceless!

David   04/01/2018 at 18:32

What the devil are you on about? Birmingham and Manchester are "nowhere"???

Nick   04/01/2018 at 21:23

I support the suggestion that Birmingham Curzon St is "nowhere". Not only is there a significant distance to New St for onward local travel, but as Euston & CS are both termini, passengers will effectively need to walk the complete length of the train as well, adding at least a further 5 minutes. So any gains from the "High Speed" will be significantly eroded.

David Walker   05/01/2018 at 21:13

Carillion are also notable as being a "rogue customer". Their refusal/delay to pay subcontractors (usually for very trivial reasons) is notably bad bully boy behaviour that they can only get away with because they are so big. I know that on a recent road bypass scheme that a good mid sized earthworks contractor has gone bust, with the loss of 250 jobs, solely due to cash flow problems because of Carillion not paying the bills.

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