May Gurney’s chief executive Philip Fellowes-Prynne has left the company by mutual consent after the firm announced a profit warning.
Non-executive director of the group, Willie MacDiarmid will take on the role of chief executive officer on an interim basis as it searches for a permanent replacement.
The firm’s share price dropped 44 per cent today, to 124p, as it announced a £10 million hit to profits on the back of the run-down of its facilities division.
In its trading update this morning, the firm said: “As we stated in March and July, the group has faced some serious operational issues within two long-term MaGos (May Gurney Optimised Solutions) contracts and the planned run-down of our facility services division.
“These factors, combined with the on-going difficulties within our Scottish utilities business, have led the board to the conclusion that the group will significantly under-perform its original expectations for the current year.
“However, the adverse impact of the run-down of our Facilities Services division, in respect of which the board has today decided to provide a one-off exceptional charge in the order of £10 million at the year end, relates to discontinued activities.”
As CN reported in June, May Gurney made more than 100 people redundant as it restructured last year, with the majority going at senior management level.
Its trading update today included a warning that its utilities business in Scotland is facing challenges including Scotia Gas Networks plans to reduce its outsourcing.
Commenting on the update, chairman Baroness Ford said: “In taking this action today, the board has moved swiftly to deal with the specific operational problems that have emerged over the last few months.
“We are fortunate to have secured the services of Willie MacDiarmid to lead the business on an interim basis. His depth of operational experience will be invaluable over the next period as we move to secure a permanent CEO.”
The company confirmed in June that the facilities division - which represented 7 per cent of the company’s £695m turnover, or £50m - was set to close down once existing contracts are fulfilled. The firm said the division had a “disappointing performance”.
Staff are were being transferred to other parts of the business during the 18-month wind-down period, the firm said.
Last year, the company restructured from six divisions into two core divisions of public sector (including highways and environment and providing £419m of revenue and a £17.8m operating profit), and regulated (providing £279m of revenue and £12.3m of operating profit).
It came despite a 17 per cent increase in underlying profits. Sixty per cent of the firm’s revenue and earnings last year came from the public sector.