Royal Imtech NV is cutting 1,300 jobs and carrying out an £68 million restructure as its German write-off rises to £188m.
The Dutch company’s full-year 2012 annual accounts have also been further delayed from April until early June.
In a trading statement today, the group said its UK & Ireland business have had a good quarter with a well-filled order book.
The group said it will continue to employ a decentralised management model at the core of the organisation, but “will considerably strengthen the quality and effectiveness of our business controls”.
The restructure is mainly focused in the Netherlands and Germany, but “various smaller efficiency programme” will be implemented in parts of several other Imtech companies, it added, depending on the market and company conditions.
Construction News revealed in February that Imtech UK already plans to streamline its business this year, which chief executive Paul Kavanagh said was unrelated to the wider group’s problems.
Its parent company’s difficulties follow “possible irregularities” in Poland, leading to a suspension of management and a forensic investigation after problems with its Adventure World Warsaw project and other Polish projects.
The group said the investigations into the Polish and German projects are making “steady progress” and reaching the final stages.
The Polish write-off remains around £130m, while the German bill has risen by £58m to £188m.
It said today: “The write-off in Germany appears to be larger than originally anticipated.
“Imtech is announcing a reorganisation in order to improve its competitiveness bringing its business capacity in line with market conditions.
“The announced rights issue is expected to close in the summer.”
Once the investigation is complete, the group will decide whether to press charges for actions “that could be qualified as fraudulent and misleading”.
It will also look at any claims for insurance compensation.
The “tightened” measures on the group’s companies include the approval procedure for larger projects, which has been “reinforced” as of 20 March; functional reporting lines have been introduced for the financial and legal disciplines; and external expertise will be used to further strengthen business controls.
An Ernst & Young review also found that the development of risk management “did not stay on an equal footing with the size and complexity of the organisation”.
New measures are aimed at the “reduction of Imtech’s inherent risk profile, increasing its financial robustness, and strengthening business controls”.
Royal Imtech said today that the additional reorganisation and savings programme, which also follow a tough quarter in the Netherlands unit, “will strengthen the results of 2013 and the years that follow”.
Its order book was flat at £5.46 billion at the end of Q1 2013.
The company said the first operational priority has been managing uncertainties arising among customers, suppliers, employees and financiers, adding that “sufficient liquidity and financial stability are essential to this”.
It has secured a bridge facility and a continuation agreement with the most important financiers. The company had already announced a £434m right issue to cut its debts.
The German and Polish investigation results and full-year 2012 figures will be discussed during the AGM on June 28.
There will also be an EGM in July for shareholders to adopt the 2012 annual accounts.
Royal Imtech chief executive Gerard van de Aast said the last quarter was “a turbulent and difficult one for Imtech” but that its operational position is stable.
“The ongoing investigations in Germany and Poland are being carried out with the utmost precision,” he said.
“Imtech has worked to restore the situation in serving our markets as quickly as possible and it is positive that our order book remains on level.
Mr van de Aast added: “Some of our markets remain difficult to some extent. For that reason, and also to improve Imtech’s competitiveness, Imtech is announcing a reorganisation today.
“This involves a headcount reduction, which is extremely regrettable, but is unfortunately unavoidable.”