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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CC doesn't this indicate that CLLN unlike BBY they haven't been putting in grossly unprofitable contract tenders and taking on loss making contracts!

Declared short interest is currently 8.3% which seems quite high.
Entry point about 300p maybe, CC?

Current dividend yield 5.5%. Tbh I had originally planned to enter at 320 but support at 330 held for far longer than I thought and once it went the trip to 320 took far less time than I expected.

I will probably hold off buying for now and see what happens as a number of the other construction companies/builders look far more attractive than they did a month ago.

Anything between 300 and 315 looks like a great entry point to me.

Ex-divi 14th May (12.15p)

Short interest in this company seems to be increasing all the time. Now 9.8% which is a bit worrying. Was tempted by the divi but assume the sp will dive ex the divi date.

I'm really struggling with this stock. I see 320 as a good price to enter based on sector and dividend but as soon as this goes XD, we get a golden cross with the 50 smacking through the 200. I will continue to wait but in an indecisive manner

Trading statement on tomorrow!

StockMarketWire.com
Carillion has reported that trading in the year to date is in line with its expectations and the steady improvement in its markets that began last year has continued in 2015.

It says that with a high-quality order book and pipeline of contract opportunities, combined with its strong balance sheet, the Group expects to deliver revenue growth in 2015, with margins and cash flow in line with the guidance given when it announced its results for 2014.

StockMarketWire.com
Integrated support services company Carillion has acquired Outland Group, a leading provider of remote-site accommodation and associated services that operates across Canada.

Outland is a privately-owned business, which started in 1985, and which provides a complete range of remote-site services including accommodation, camp management, catering, maintenance and housekeeping to public and private sector customers across a wide range of growth sectors, including mining, utilities, forestry, gas and oil, in which it has strong positions.

The existing senior management team of Simon Landy, David O'Connor and Jeff Taylor, who were also the major shareholders in Outland, will join Carillion and remain with the business.

The acquisition complements and enhances the existing skills and capabilities of Carillion's support services business in Canada, in line with our strategy of accelerating the development and growth of our services activities across Canada. Currently, Outland is delivering projects or actively bidding for contracts in 9 of Canada's 13 Provinces and Territories. The consideration will be paid in instalments from Carillion's existing cash resources, with the total dependent on the financial performance of Outland, but capped at £63m.

The first instalment of some £11m, of which approximately £5m relates to the acquisition of cash and excess working capital on Outland's balance sheet, will be paid in 2015, with further instalments in 2016 totalling approximately £25m. The balance of the consideration will be paid in 2018 and 2019 and this will be based on 4.5 times 51.5 per cent of Outland's average EBITDA in 2015, 2016 and 2017, but capped so that the total consideration does not exceed £63m.

StockMarketWire.com
Carillion saw a significant increase in first-half revenue with continuing good progress on contract mobilisations and it is on track to deliver healthy revenue growth in the full year with profit and earnings in line with expectations

And the group also announced that its market leading business in Oman, Carillion Alawi, has been awarded a contract by BP to build the operational base and accommodation complex for its Khazzan gas project.

The contract involves the construction of accommodation facilities, including an operational base, a residential complex for 250 personnel and other infrastructure buildings in the Khazzan gas field, approximately 350km South West of Muscat. Work on the contract is expected to start in September 2015 and is scheduled for completion in mid 2017.

The group said the first half performance was in line with expectations with full-year targets unchanged.

The group says its order book and pipeline of contract opportunities remain strong, despite the expected impact of the UK General Election on public sector contract awards in the first six months of the year.

Carillion says: "Overall, the group remains on track to deliver revenue growth in the full year, with margins and cash flow consistent with previous guidance. Having entered 2015 with record revenue visibility, the Group continues to be in a strong position to deal with the inevitable effects of the UK General Election on the pace of contract awards, which has slowed, as expected, in the first half of the year. Therefore, with a strong order book, a growing pipeline of contract opportunities and the prospect of market conditions continuing to improve, our expectations for 2015 and for the medium-term remain unchanged."

StockMarketWire.com
Carillion, in joint venture with Kier, has been awarded a contract by Highways England for a package of smart motorway works that have an estimated value of up to approximately £475m. This latest package involves the transformation of four sections of motorway in England into smart motorways, namely the M6 between Junctions 16 and 19 and the M6 between Junctions 13 and 15, on the M20 between Junctions 3 and 5 and on the M23 between Junctions 8 and 10.

Smart motorways use a range of innovative technologies and operating procedures, to monitor and control traffic flow actively. This includes variable mandatory speed limits and converting the hard shoulder to an extra traffic lane to reduce congestion and improve journey times and safety.

Carillion chief executive Richard Howson said: "As a leading supplier to Highways England, we are delighted to have been awarded this latest contract for the smart motorway programme. We look forward to continuing our strong relationship with Highways England to improve journey times and safety on the M6, M20 and M23 motorways".

I really don't understand why the declared short position has steadily increased over the last six months to close to 15%. Were it not for that, I would be tempted to invest here. Presumably some financial institution knows something I don't.

playtech shorted by cqs .72% gone up ever since, ? on short site, institutions
no most of the time, but ODEY lost money on plus 500 they bought just before crashing. clln looks OK. BB

StockMarketWire.com
Carillion is one of only three companies to be selected for all three 'lots'in the UK Government's new facilities management services agreement, namely, Total Facilities Management, Hard Facilities Management and Soft Facilities Management.

In total, 19 suppliers have been selected for one or more of these three service lots.

The new agreement replaces the current framework for facilities management contracts and Central Government Departments, Executive Agencies and Non-Departmental Public Bodies will be mandated to use the new agreement to purchase facilities management services. The Government expects between £1.3bn and £4.1bn of services to be outsourced using the new Agreement, which will run until July 2019.

The new agreement is intended to provide public sector customers with a simplified and more efficient procurement framework that will reduce timescales for accessing facilities management services and the Government expects this to result in over £200 million of savings to public sector customers, while providing greater transparency and improved management information.

Carillion chief executive Richard Howson commented: "We are delighted to have secured one of only three places on this framework agreement for all three service Lots. Our selection further enhances our position as a leading provider of facilities management services to the public sector and should offer new opportunities to grow our UK support services business."

StockMarketWire.com
A Carillion joint venture with The Hospital Company, has been selected as the preferred bidder by the Sandwell and West Birmingham Hospitals NHS Trust to deliver the new Midland Metropolitan Hospital as a public private partnership under a 30-year concession contract using the UK Government's PF2 model.

The new state-of the-art hospital, which will have around 670 beds and 15 operating theatre suites, has been designed to meet the best international and national standards to make it truly patient focussed and to support the efficient delivery of high-quality clinical services.

The new hospital will also have a number of innovative design features including a fully enclosed Winter Garden, car parking within the hospital building on the ground and first floors to create a secure environment for both patients and staff and full separation of clinical activities and journeys from the public and non-clinical services. In addition, the design and construction of the hospital will meet the highest standards of sustainability.

Carillion expects to invest some £16 million of equity in the project, which will be built by Carillion at a capital cost of £297 million. Hard facilities management and life-cycle maintenance services will also be delivered by Carillion and these services are expected to generate approximately £140 million of revenue over the life of the concession contract.

Financial close is expected around the end of 2015 with construction starting early in 2016. Completion is scheduled for mid-2018, with the hospital opening in late 2018.

StockMarketWire.com
Carillion's underlying pre-tax profits rose by 11% to £84.5m in first half results which were in line with forecasts.

Revenues were up up 21% at £2,258.6m and underlying profit from operations rose by 16% to £112.5m. The interim dividend of 5.7p per dshare is up 2%.

And the group says it is on track to deliver full-year revenue growth with profit and earnings in line with expectations

Chairman Philip Green said: "I am pleased to report that Carillion has continued to perform in line with expectations, which reflects the actions we took during the economic downturn to position our businesses in markets where we can now achieve revenue growth, consistent with our targets for margins and cash flow. We have also made good progress with mobilising a number of major new contracts won in 2014. Therefore, with a strong order book, a growing pipeline of contract opportunities and the prospect of market conditions continuing to improve, our expectations for 2015 and the medium term remain unchanged."

Declared short interest now just under 18%.

StockMarketWire.com
Carillion has signed contracts, secured preferred bidder positions and been awarded frameworks, worth some £1.7bn, since 30 June 2015. Within this total are a number of major contract successes. In UK infrastructure services, Carillion and Carillion joint ventures have been selected by Network Rail for a number of frameworks and Early Contractor Involvement contracts from which Carillion expects to generate over £400 million of revenue.

These include the Midland Main Line Electrification project, which was recently "unpaused" by the UK Government, the Northwest Electrification project and the electrification of the Schotts line in Scotland. In UK Construction, Carillion has secured contracts and preferred bidder positions that are expected to be worth £311 million.

These include the recently announced A14 upgrade, which is being delivered by a Carillion joint venture for Highways England and which is expected to be worth some £146 million to Carillion, together with preferred bidder positions for a £90 million contract to build the Great Arundel Court development on London's Embankment and a £75 million schools contract for Peterborough City Council.

Chief executive Richard Howson said: "As we expected, the pace of work winning in the second half of the year has started to pick up. Since the half year, we have secured contracts, preferred bidder positions and framework agreements that are expected to be worth around £1.7 billion. With cash flow remaining healthy and these recent contract successes, we remain confident of achieving this year's targets, including ending the year with strong revenue visibility for 2016."

StockMarketWire.com
Carillion has signed a contract with the Homes and Communities Agency to deliver the regeneration of Tower Works in Holbeck Urban Village on Leeds' South Bank.

The 1.17 hectare site is a former industrial location housing three listed Italianate Towers from which the site derives its name.

Carillion will deliver 90,000 square feet of commercial office space, 24,000 square feet of retail, restaurant and bar spaces alongside a mix of one, two and three bedroom apartments and town houses, transforming the site into a mixed-use, sustainable community with its own distinctive character.

The combined value of the proposed development is approximately £80 million and a site-wide masterplan will be submitted for planning approval shortly, subject to which construction work is expected to begin in Spring 2016.

This contract adds to the £1.7 billion of new business that Carillion has won since the half year, as announced on 12 October 2015.

Super day on Friday. Now at 320p, a critical support / resistance level. If we can break through here and hold on Monday then we could be off to the races.

StockMarketWire.com
JP Morgan Cazenove has upgraded its recommendation on support services group Carillion (LON:CLLN) to overweight from neutral in its note on UK contractors, today.

The broker said: "Carillion's shares have declined by 16% since their last peak in August which we see as unjustified and as they are supported by a 10% FCF yield in FY16E and a 6% dividend yield; we upgrade to Overweight."

Analysts have cut their price target to 347 pence per share from 355 pence.