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Carillion has earmarked another 拢200m-worth of provisions to the 拢845m it announced in July, issued its second profits warning in a matter of months, and admitted it will take between three to five years to turn the business around.

Since July, when it revealed an 拢845m hit on a number of construction contracts, the troubled contractor has seen its shares collapse, a boardroom shake-up that has resulted in its chief executive and finance chief resigning, and been booted off the FTSE 100 share index.

Today it revealed a further 拢200m provision relating to a number of support services contracts, although it said this would have a 鈥渕inimal impact on cash鈥�. Carillion also said it would be recognising a 拢134m impairment charge relating to its UK and Canadian construction operations.

Shares in the firm fell 12% in early trading today to 57p, after mounting a moderate rally earlier in the week following reports of a possible takeover bid.

In a statement covering its interim results 鈥� an announcement which had been delayed by a number of weeks 鈥� Carillion said turnover for the six months to the end of June had been flat at 拢2.5bn, while underlying operating profit fell by 27% to 拢88m and underlying pre-tax profit fell 41% to 拢50m.

Taking into account 拢1.2bn-worth of provisions and restructuring costs, the group posted a first-half pre-tax loss of 拢1.15bn.

It also warned that total revenue for the year was expected to be between 拢4.6bn and 拢4.8bn, versus previous forecasts of between 拢4.8bn to 拢5bn.

Net debt at the end of the first half nearly doubled to 拢571m, with average net debt throughout the period of 拢694m. Full year net debt is expected to be between 拢825m and 拢850m.

Carillion also revealed it had agreed an additional 拢140m in new bank facilities, although City analysts said while this gave the firm some breathing space, perhaps to the middle of next year, overall its balance sheet still looked in trouble.

The group鈥檚 strategic review, which kicked off in the summer, has earmarked a further 拢70m to 拢100m of restructuring costs in the second half.

Carillion said the review process had enabled the new leadership team 鈥渢o fully understand the group鈥檚 challenges, and to identify a route map to significantly improving the balance sheet, risk profile and performance of the business鈥�.

鈥淎 number of actions are being undertaken urgently to address liquidity and rebuild the balance sheet, with which progress to date is positive,鈥� it added.

But it warned that it would be at least until 2020, possibly 2022, before the business was 鈥渢ransformed鈥�.

From the beginning of next month the group is to be restructured into four core UK divisions: infrastructure; central government; corporate and regions, and building. There will also be an international operation, it said, focusing on its Middle East activities.

The findings of the strategic review, conducted by consultants EY, will see a new group executive lead the group from the start of October, comprising of a chief executive, a chief financial officer, chief operating officer, chief transformation officer, legal director and company secretary and chief human resources officer.

Carillion said the new model would creat 鈥渟horter, direct lines of authority, with increased transparency and line-of-sight accountability. In addition, reward will be aligned to performance鈥�.

It said the new structure would enable significant cost reduction. Carillion鈥檚 current total addressable overhead is 拢336m, of which 拢267m is in the UK, 鈥渨hich as a percentage of revenue greatly exceeds industry benchmarks provided by EY鈥�, it said.

鈥淭he new operating model will generate savings through removal of layers and duplication of management, optimisation of contract delivery and reporting systems, increased professionalisation and efficiency of shared services. There are also significant opportunities to reduce third-party and discretionary expenditure,鈥� it added.

The business needed a 鈥渟tronger commercial aptitude, better line-of-sight accountability and an overhead structure that the business can afford, in order to create a lower risk, higher-quality business that generates sustainable cash-backed earnings鈥�, it said, although it claimed 鈥渁 good start has been made鈥�. 

As part of efforts to focus the business, Carillion said talks were underway regarding the sale of its Canadian operation, which last year turned over nearly 拢600m, and UK healthcare arm, deals it hoped would raise 拢300m by the end of next year.

Describing the interim numbers as 鈥渄isappointing鈥�, interim chief executive Keith Cochrane said he was confident the business 鈥渃ould change鈥�.

In a statement he added: 鈥淭he strategic review that we launched in July has enabled us to get a firm handle on the group鈥檚 problems and we have implemented a clear plan to address them.

鈥淥ur objective is to be a lower risk, lower cost, higher quality business generating sustainable cash backed earnings.

鈥淚n the immediate short term, our focus is to complete the disposal programme, accelerate our action to take cost out of the business and get our balance sheet back to a place where it can support Carillion going forward.

鈥淣o one is in any doubt of the challenge that lies ahead. We have made an encouraging start and the ambition is there to build on that progress.鈥�