Last weeks trading statement from this support/construction business proved what a strong position the company is in.

looks to be plenty of growth going forward.......

RNS Number : 8437J
Carillion PLC
10 December 2008



10 DECEMBER 2008




PRE-CLOSE UPDATE ON TRADING IN 2008

UNDERLYING EARNINGS PER SHARE TO GROW BY 15% SUPPORTED BY ROBUST BALANCE SHEET







Leading UK support services company, Carillon plc, is providing this pre-close update on trading in 2008, ahead of announcing its preliminary results on 4 March 2009.




Highlights




Continuing strong performance supported by a reduction in the Group's underlying effective tax rate to around 20% - underlying earnings per share(1) for the 12 months to 31 December 2008 expected to grow by approximately 15%, some 5% ahead of previous expectations.

Alfred McAlpine successfully integrated with integration and re-organisation cost savings increased by 10 million to a run rate of 50 million per annum by the end of 2009.

Balance sheet remains robust - cash flow remains strong with net borrowing expected to be below 275 million at the year end.

Expect strong revenue growth in support services at margins in excess of the 4.1% achieved in 2007.

Public Private Partnership projects creating significant value - 6 investments sold for 59.7 million in 2008.

Middle East business expected to deliver strong growth with an increasing contribution from projects in Abu Dhabi - margins expected to be at least 6%.

Satisfactory performance in construction services (excluding the Middle East) - operating margin expected to be in excess of the 1% achieved in 2007.

Underlying effective tax rate expected to reduce from 25% to around 20% in 2008 and to remain at this level for the foreseeable future.

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Business performance




Our results are expected to reflect the strong progress the Group has made in 2008, enhanced by the acquisition of Alfred McAlpine in February 2008. This acquisition created the UK's largest support services business and further increased the Group's resilience, in line with our strategy for growth.




Support services




Support services continues to be a major driver of earnings growth and continues to account for over half the Group's underlying operating profit (1) . Revenue is expected to increase substantially in 2008, primarily reflecting the acquisition of Alfred McAlpine. The operating margin is also expected to increase, within our target range of four to five per cent, largely due to the effect of integration cost savings.










(1) Continuing operations before intangible amortisation, impairment, restructuring costs and non-operating items.










New order intake has remained strong and we continue to have our largest ever pipeline of opportunities for new contracts.




Public Private Partnership (PPP) projects




Our investments in PPP projects continue to generate substantial value. During the year a further six investments in mature projects were sold, generating total cash proceeds of 59.7 million. As indicated in our 2008 Interim Report, this reflected a net present value for the cash flows from these investments based on an average underlying discount rate of under 5.5 per cent. Carillion has now sold a total of 23 mature investments in PPP projects over the last five years, generating cash proceeds of 179 million and a pre-tax profit of 104 million.




We expect to continue to make good progress in this segment. During 2008, we achieved financial close or preferred bidder positions on four further projects in which we expect to invest 11.2 million of equity. In addition, we have a healthy pipeline of potential new projects, including eight projects for which we are currently shortlisted.




Middle East construction services




In Middle East construction services, we expect to report further strong growth in 2008, driven by increased activity levels in Dubai and Oman, together with contributions from Abu Dhabi and Cairo, where we began operations at the beginning of the year. Going forward, we expect growth to be increasingly driven by Abu Dhabi, where we negotiated substantial new work in 2008 worth over 1 billion and also increased our pipeline of potential opportunities.




We therefore continue to expect long-term sustainable growth in this region and remain confident that we will achieve our objective of broadly doubling revenue in this segment from the 2007 level of 337 million to a run rate of over 600 million by the end of 2009, at an operating margin of some six per cent.




Construction services (excluding the Middle East)




In this segment, we remain focused on project selectivity, in line with our objective of increasing margins rather than revenue, in order to improve the combined operating margin for all our construction activities, including the Middle East, towards three per cent over the next three years. This strategy is supported by our substantial, high-quality order book and probable new orders, which provide sufficient visibility for us to be confident of achieving our expectations for 2009.




Following the acquisition in October 2008 of the Vanbots Group, a well established construction management services group in Canada, the integration of this business is progressing to plan. This acquisition has significantly enhanced our ability to provide fully integrated solutions, especially for PPP projects, further strengthening our market leadership in Canada, particularly in the health sector.




Balance sheet




The Group continues to deliver strong cash flow and net borrowing at the year end is expected to be below 275 million and below our target of 300 million.




Taxation




Carillion has been successful in agreeing with the tax authorities certain prior year tax issues and a mechanism for the use in 2008 and beyond of certain tax losses acquired with Alfred McAlpine. Consequently, the Group's effective tax rate is expected to reduce from 25 per cent in 2007 to around 20 per cent in 2008. The Group's ability to maintain its effective tax rate at this level for the foreseeable future will be further underpinned by the UK Government's proposal to exempt UK companies from taxation on foreign earnings from April 2009, announced in its 2008 Pre-Budget Report on 24 November 2008.



Acquisition and integration of Alfred McAlpine




The benefits of acquiring and successfully integrating Alfred McAlpine continue to exceed our expectations. Integration and reorganisation cost savings are now expected to reach an annual run rate of 50 million by the end of 2009, an increase of 10 million on the previously announced run rate of 40 million. Additional cost savings have been identified across most areas of our enlarged business as integration has progressed, notably through the adoption of Carillion's shared central services and the outsourcing and off-shoring of back-office processes. All savings have either been delivered, or firmly secured for delivery, with absolute savings expected to be 15 million in 2008, 35 million in 2009 and 50 million in 2010, an increase of 5 million in 2009 and 10 million in 2010. The one-off cost of delivering these savings will increase from the previously announced figure of 40 million to 55 million.










Outlook




The wider economic background will undoubtedly become increasingly difficult and make delivery of our business objectives more challenging. However, Carillion is a well-balanced and resilient business, with strong positions in its chosen market sectors in the UK, the Middle East and Canada. Therefore, with a robust balance sheet, a strong order book and continuing opportunities in our main market sectors, Carillion continues to expect to build on its strong performance in 2008 and deliver materially enhanced earnings in 2009.




Carillion Chief Executive, John McDonough and Group Finance Director, Richard Adam, will host a conference call on this statement for analysts and investors at 9:00am today, Wednesday 10 December. The telephone number to join the conference call is + 44 (0) 207 190 1232.




For further information contact:




Richard Adam, Group Finance Director + 44 (0) 1902 422431

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Odd that they should choose a good news day for a little pull back. Hopefully just a pause for breath. Looking at that chart I reckon 380 would be a good point at which to take a trading profit.

What am I missing?

As LG posted good news!

Projected EPS 2015 35.25, 2016 37.5, yields 5% and 5%

Conservatively worth 400p?

Poor choice of word "Conservatively"!

Looks like it is going down. Might get in at 300p. Seems to be a good trading stock.

do you really mean 300, because that's a hell of a drop?
340 looks a possible where sp hits 200 dma

StockMarketWire.com
Carillion has agreed to acquire a 60% interest in the trade and assets of Rokstad Power Corporation.

This will significantly enhance Carillion's skills and prospects for growth in servicing the rapidly expanding electric power transmission and distribution market.

Rokstad, which is based in British Columbia, Canada, provides a full range of transmission and distribution power line services, including specialist live line operations, and has expanded its operations in strategic locations primarily across Canada. With over 600 employees and an extensive fleet of specialist equipment, Rokstad is well positioned to meet the growing demand for electricity and the need to rebuild ageing electric power infrastructure.

Rokstad is a family owned company, which has been led very successfully by chief executive Aaron Rokstad and president Bernie Rokstad, who will continue to lead the business following this acquisition.

The total cash consideration for this acquisition of up to £33 million is dependent on the financial performance of Rokstad.

The consideration will be paid in instalments over the period to July 2017, with payments of £11 million and £10 million in 2014 and 2015, respectively. The instalments to be paid in 2016 and 2017, which are dependent on financial performance, will be capped at a combined total of £12 million.

Under the acquisition agreement, Carillion has also committed to acquire the remaining 40 per cent interest in Rokstad after five years at a multiple of 4.5 times Rokstad's 2019 EBITDA, capped at a maximum additional consideration of £42 million.

StockMarketWire.com
Carillion has been awarded support services contracts by Heathrow Airport Limited and by Barts Health NHS Trust, which together are worth approximately £80 million.

At Heathrow Airport, Carillion will provide a range of soft facilities management services together with fabric maintenance for Terminals 3 and 5, under a contract that will run until March 2019.

At Terminal 2, Carillion is providing hard facilities management services, including planned and reactive mechanical and electrical engineering maintenance, under a contract, which, including options for extensions, will run until December 2017. These contracts are in addition to the contract Carillion already has to provide a range of hard and soft facilities management services for Terminal 1.

These latest contracts extend the scale and scope of the support services that Carillion provides at Heathrow Airport for Terminals 1, 2, 3 and 5 and further consolidates the strong relationship that Carillion has established with Heathrow Airport Limited.

Carillion has also signed a 22-month contract with Barts Health NHS Trust to provide soft facilities management services to a number of the Trust's properties, including Whipps Cross and Mile End hospitals. This extends the relationship Carillion has with Barts Health for which Carillion already provides soft services at the prestigious Barts and Royal London hospitals.

Carillion chief executive Richard Howson said: "We are delighted to have been selected for these contracts, which continue our success in work-winning in 2014. We look forward to building on the strong relationships we have developed with Heathrow Airport Limited and with Barts Health and to working with them to support the delivery of an excellent experience for customers and patients."

chart (see top of page) doesn't look bad either

StockMarketWire.com
Carillion has signed a £75m contract with Liverpool Football Club to increase the main stand at Anfield.

Work on the project, which will add around 8,500 seats to the stand and increase the overall capacity of Anfield to some 54,000, is expected to start this week and is scheduled for completion in the third quarter of 2016.

Carillion was announced as preferred bidder in July.

Trading Statement

EARNINGS IN LINE WITH EXPECTATIONS

· Strong work winning performance - £4.6bn of new work won in the year to date
· Expect the Group's order book plus probable orders at the year end to be over £18.5bn
· Pipeline of contract opportunities of over £39bn
· Contract selectivity continues to underpin margin performance
· Net debt before acquisitions reducing as expected
· 85 per cent revenue visibility for 2015

Re Contract

Carillion joint venture appointed as the Selected Bidder for £190 million Public Private Partnership project to deliver the Midlands Private Finance Batch under the Priority School Building Programme (PSBP)

Carillion Convertible Bonds Offering

StockMarketWire.com
A consortium comprising Carillion, Balfour Beatty and Galliford Try has npw achieved financial close to finance, design build and operate the Aberdeen Western Peripheral Route/Balmedie to Tipperty Project.

The project, which is estimated to be worth in the region of £550 million, is being delivered in partnership with Transport Scotland, Aberdeen City Council and Aberdeenshire Council and is being procured under the Scottish Government's Non-Profit Distribution (NPD) model.

Carillion expects to invest up to £20 million of equity (one third share) in the project and to have a one third share of the construction revenue. Following the completion of construction in winter 2017, the route will be managed and maintained by Aberdeen Roads Limited for 30 years.

StockMarketWire.com
Carillion has been selected by Argent as the preferred bidder to deliver three new prestigious buildings at the King's Cross regeneration project.

This will involve the design and construction of a large commercial building and two new high-class residential buildings, all of which are in the North Zone of the development.

The combined value of the three buildings will be in excess of £100 million. Construction will commence in the later part of 2015 with completion scheduled during 2017.

Carillion chief executive Richard Howson said: "I am delighted that Carillion has been selected by Argent to design and construct these prestigious new buildings at King's Cross. This builds on the strong long-term relationship we have established with Argent that I believe reflects our reputation for high-standards of quality, value for money and sustainability."

StockMarketWire.com
Carillion has completed its acquisition of a 60% interest in the trade and assets of Rokstad Power Corporation.

The acquisition was first announced at the beginning of the month.

Rokstad, which is based in British Columbia, Canada, provides a full range of transmission and distribution power line services, including specialist live-line operations.

Carillion says that the acquisition will significantly enhance its skills and prospects for growth in servicing the rapidly expanding electric power transmission and distribution market.

Re Contract


Further to the announcement on 19 November 2014 that the UK Ministry of Justice had selected Carillion as the preferred bidder for two contracts to provide a range of hard and soft facilities management services to the National Offender Management Service for public sector prisons in two geographical areas, Carillion announces today that it has signed these contracts.

One contract will provide services in prisons in London and the East of England and the second will provide services in prisons in the South West, South Central, Kent and Sussex.

The contracts, which cover approximately 50 prisons, will be for an initial five-year period, but with the potential for two subsequent one-year extensions, subject to satisfactory performance. Mobilisation has begun with service delivery due to commence on 1 June 2015.

StockMarketWire.com
Berenberg has downgraded its recommendation on integrated support services company Carillion (LON:CLLN) to 'hold' from 'buy' in its note on construction contractors, today.

While acknowledging the stock is a solid way to play a UK construction recovery and that the company should return to revenue and earnings growth in 2015, the broker reckons consensus earnings estimates already reflect this.

Analysts left their price target unchanged at 380 pence a share, indicating around 8 per cent potential upside.

However, earnings per share estimates have been increase by 3 and 5 per cent for fiscal years 2014 and 2015, respectively.

Looking a bit groggy after a decent run. Finals due tomorrow. I just hope that nothing bad has leaked to cause this weakness.

banked my (sipp) profits here yesterday ..... there was actually a bearish note in one of the papers over w/e - probably ST


not quite the same sector, but you may want to take a peek at TPK after some excellent results today
some chunky profit-taking arguably gives good buying opportunity

StockMarketWire.com
Carillion reports full-year earnings in line with expectations on revenues stable at £4.1bn.

Underlying profit from operations rose by 1% to £216.9m on margins unchanged at 5.6%.

Underlying profit before taxation fell by 1% to £172.9m and underlying earnings per share were down 3% at 33.7p.

Profit before taxation rose by 29% to £142.6m and basic earnings per share increased by 20% to 28.0p.

Chairman Philip Green said: "In 2014, our markets remained challenging and we continued to be very selective in choosing the contracts for which we bid in order to maintain margin discipline, which continues to be a key element of our strategy. Looking forward, we expect the steady improvement in our markets that began in 2014 to continue in 2015, subject to a sustained macro-economic recovery. We have also continued to strengthen the Group's position in growth markets, notably in support services through a further bolt-on acquisition in Canada. Therefore, with strong cash flow, a high-quality order book, record revenue visibility and a growing pipeline of contract opportunities, we continue to believe the Group is well-positioned to make progress over the medium term."

Separately, Carillion announced that it has been appointed by Scape Group as the sole provider for a new facilities management framework with a value of up to £1.5 billion over a six-year period.

Scape, which is a public sector owned built environment specialist, offers a full suite of national frameworks and selected Carillion ahead of other competitors, because it offered the best quality and value for money.

This is the first framework of its kind, which is available to any public sector body in the UK, that offers a full suite of both "hard, " (including preventative and planned maintenance) and "soft" (including cleaning, catering, front of house) facilities management services. Other services that are also available through the framework include, but are not limited to, car park management, Health and Safety advice, consultancy, grounds maintenance and the management of internal office mail and messaging services. The framework is OJEU approved, which simplifies the procurement process so that users can develop and procure services within a four-week period.