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.

.

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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It seems to me than virtually every share cannot hold onto modest gains at the moment. Well that's how it feels to me. Symptoms of a uncertain and bearish market.

If it's of any comfort I think we are getting close to the point of max pain. By close I'm thinking 3 months rather than next week. Eventually company results will overcome this sentiment

StockMarketWire.com
A Carillion joint venture, The Hospital Company (Sandwell) Limited, has achieved financial close on the Midland Metropolitan Hospital public private partnership project in Birmingham.

This follows an announcement on 11 August that the JV had been selected by the Sandwell and West Birmingham Hospitals NHS Trust as the preferred bidder to deliver this project.

The new state-of-the-art hospital, which will have around 683 beds and 13 operating theatre suites, has been designed to meet the best international standards to make it truly patient focussed and to support the efficient delivery of high-quality clinical services and also the highest standards of sustainability.

The 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 secure environment for patients and staff, and full separation of clinical activities and journeys from the public and non-clinical services.

Carillion will invest £13 million of equity in the project, which Carillion will build at a capital cost of £297 million. Construction will start in early 2016 and completion is scheduled for mid-2018, with the hospital opening in late 2018.

Carillion will also deliver hard facilities management and life cycle maintenance that is expected to generate approximately £140 million of revenue over the 30-year life of the concession contract.

As a leading provider of apprenticeships and training, Carillion will use this project as a further opportunity to provide training and apprenticeship opportunities for local people as well as maximising the use of local suppliers.

StockMarketWire.com
Carillion reports a full year performance for the year to the end of December in line with expectations.

Revenues rose by 13% to GBP4,586.9m with underlying profit from operations up 8% at £234.4m. Net borrowing reduced was to £169.8 million at 31 December (2014: £177.3 million).

New orders and probable orders totalled £3.7 billion (2014: £5.1 billion), reflecting the expected impact in the first half of the UK General Election, with £2.7 billion secured in the second half of the year.

Proposed full-year dividend increased by 3% to 18.25p (2014: 17.75p).

Chairman Philip Green commented: "Our performance in 2015 reflects the benefits of our consistent and successful strategy, which enabled us to rescale and reposition our business during the economic downturn in order to take advantage of opportunities for growth as market conditions improve. Growth in revenue, underlying profit before taxation and earnings per share was primarily organic, following the successful mobilisation of a number of major new contracts, supplemented by two bolt-on acquisitions, the Rokstad Corporation and the Outland Group, which have significantly enhanced our support services business in Canada. With a strong, high-quality order book, a large and growing pipeline of contract opportunities and the financial strength to support our strategy for growth, the Group is well positioned to make further progress in 2016."

JP Morgan Cazenove today downgrades its investment rating on Carillion PLC (LON:CLLN) to neutral (from overweight) and cut its price target to 309p (from 347p).

StockMarketWire.com
Carillion has clinched new contracts worth £600m and says it remains on track to make further progress in 2016.

In a trading update Carillion says it continue to expect its first-half performance to be led by revenue and margin growth in support services, with this segment of its business moving towards two thirds of the group's total underlying operating profit.

It adds: "The Group's total first-half revenue is expected to increase and offset the effect on first-half profit of a slight reduction in underlying operating margin, because, as previously indicated, the quantum of equity sales in Public Private Partnership projects was lower than in the first half of 2015 and the one-off contribution to profit from the reorganisation of our Middle East labour facilities in the first half of 2015 was not repeated in 2016.

"We expect average net borrowing to be in line with the full-year average in 2015 of some £539 million. As previously indicated, net borrowing at 30 June 2016 will increase and is expected to be in the region of £295 million, which reflects a number of temporary factors, including the effect of paying the final dividend for 2015 in June 2016, coupled with the effect of the recent adverse movement in the US$ exchange rate on the Group's US private placement borrowing. However, we expect net borrowing to reduce by the year end and our full-year expectations for cash flow and net borrowing remain unchanged."

Looking ahead, the group says it continues to expect its full-year performance to be led by revenue and margin growth in support services, with Public Private Partnership projects, Middle East construction services and construction services excluding the Middle East also performing in line with expectations. And it says with revenue visibility for the full year of 97 per cent and a strong pipeline of further contract opportunities, the group remains on track to make further progress in 2016.

It says the referendum vote in favour of the UK leaving the European Union has obviously created uncertainty for the UK economy as a whole and therefore for businesses generally, including Carillion, and it is clearly too early to predict the extent to which businesses will be affected by this result. Carillion says it has no significant operations in Mainland Europe and prior to the referendum it undertook extensive work to assess the possible impact on its business of a vote to leave and it has put in place robust plans to manage this outcome.

The group separately announced that its market leading business in Oman, Carillion Alawi, has signed a 4.5-year contract extension for Petroleum Development Oman to continue the provision of integrated facilities management services at 12 locations across Oman, worth £240 million.

Carillion has also been awarded two contracts by the Northern Ireland Housing Executive to deliver maintenance services for its housing stock, worth up to £366 million over a period of up to 10 years, of which some £60 million was included in the Group's order book at 30 June. We expect the balance of the £366 million to be added to the order book during the life of these contracts.

These latest contracts take the total value of new orders and probable orders won by Carillion in the first six months of 2016 to approximately £2.5 billion.

StockMarketWire.com
Carillion reports a first half performance in line with expectations led by strong growth in support services.

Revenues were up 10% at £2,487.1m with underlying profit from operations flat at £112.7m (H1 2015: £112.5m). Underlying profit before taxation was also flat at £84.5m.

Underlying earnings per share rose by 1% to 16.0p and pre-tax profits were up 24% at £83.9m.

Basic earnings per share rose buy 24% to 15.8p and the interim dividend is up 2% at 5.8p per share.

Chairman Philip Green said: "I am pleased to report that the Group's first-half results are in line with our expectations, led by a strong performance in our support services business, which accounted for nearly two thirds of the Group's underlying operating profit. New order intake in the first half of the year has been strong and continues to reflect the success of our strategy and strength of our business model. Overall, we remain on track to make further progress in 2016."

StockMarketWire.com
Carillion has been selected by Centrica as preferred partner to deliver facilities management and project services for an initial period of five years, which can be extended to seven years.

The contract has an estimated value to Carillion of some £90 million over five years with service delivery scheduled to start in December 2016.

Carillion has worked in close partnership with Centrica for over a decade as managing agent, helping to deliver significant value to Centrica's British Gas business. The new contract builds on this successful relationship with an extension of scope to a Total Facilities Management service.

Under the new contract Carillion will provide a wide range of hard and soft facilities management services, including asset surveys and planning, planned and reactive maintenance, cleaning, security and catering for Centrica's 115 locations in the UK and Republic of Ireland, together with the delivery of certain construction projects for Centrica.

Carillion chief executive, Richard Howson, said: "We have worked closely with Centrica since 2005 and built a strong partnership. We are delighted to be extending this relationship, which is based on a one-team approach in which Carillion and Centrica work together to deliver award-winning standards of facilities management and customer service across all Centrica and British Gas sites."

Carillion Joint Ventures awarded construction and support services contract by UK Ministry of Defence worth over £1.1 billion

Joint Ventures between Carillion and KBR (50:50) have been awarded construction and facilities management support services contracts to support the Army Basing Programme (a series of unit moves and re-roles within the UK, and the return and resettlement of troops from Germany by 2019) - with delivery across Salisbury Plain Training Area and at Aldershot - in total worth over £1.1 billion.

The Aspire Defence Capital Works Joint Venture will design and construct 130 new buildings, together with extensions and alterations to existing buildings and associated infrastructure. The construction works have an estimated value of £680 million, of which Carillion's share will be 50 per cent or some £340 million. Work is expected to start immediately with completion scheduled for 2020.

StockMarketWire.com
Carillion says its performance is meeting forecasts and it expects strong growth in total revenue and increased operating profit.

The group says trading performance in 2016 continues to be led by revenue growth and a strong margin in support services and it expects net borrowing to reduce from the half year level.

Highlights:
- New orders plus probable orders in 2016 expected to reach £4.5 billion, with total orders plus probable orders of approximately £16 billion (December 2015: £17.4 billion) by the year end - Visibility of revenue from framework contracts expected to be approximately £1.5 billion - Revenue visibility for 2017 of around 70% (December 2015: 84%) - Pipeline of specific contract opportunities broadly unchanged at over £41 billion

Carillion also said its Canada subsidiary, Rokstad, has been selected by Manitoba Hydro as the preferred provider for the next phase of its Bipole lll high-voltage transmission line project, which has an estimated revenue value of £120 million.

The project involves clearing rights of way, the installation of access roads, foundations and anchors, the assembly of towers and the stringing of cables for three packages of the Bipole lll project, which includes 1,384 km of transmission lines and two converter stations, starting at Keewatinohk in Northern Manitoba and ending at Sandy Bay Ojiway First Nation in Southern Manitoba. When the whole Bipole lll project is completed, it will deliver renewable energy to Southern Manitoba and to the United States.

Date Broker New target Recomm.

7 Dec Peel Hunt 275.00 Hold

1 Nov Jefferies... 360.00 Buy

StockMarketWire.com
Carillion telent, a 60:40 joint venture, has signed a three-year extension (extendable to 5 years) to its framework agreement with BT's Openreach.

Carillion telent will provide a wide range of services including the maintenance, extension and repair of the telephone and data network in the North East, Midlands & Wales, South West and London & North Home Counties of England.

The extension also includes the delivery of asset assurance works, notably poling and related activities, for England and Wales.

The initial 3-year period runs until the end of 2021.

Carillion chief executive Richard Howson said: "We are delighted to have agreed this extension to our framework agreement with Openreach that reflects the strong partnership we have built with Openreach over the last eight years as its main delivery partner for the management, maintenance and upgrading of its broadband network.

"We look forward to continuing this relationship and to supporting Openreach in delivering its objectives for further enhancing the services it provides for its customers."

Has a nice forecast yield, if paid!

sp wise this has been abysmal.
2517

One to watch. The pension deficit and debt looks pretty scary thus the continued fall in price despite 9% dividend.

Inflation would help the pension deficit but then the interest on debt rises.

23% short interest.

I see no reason to buy yet given much safer dividends on PSN and TW. I will re-assess if the share price goes sub 200.

Results soon...

You have made me put my money back in my pocket.


ummning and aaaahing on CLLN or CARD?

Don't let me put you off Fred. I haven't fully done my research yet as it isn't close enough to my buy price.

According to the guys and girls over on advfn, the annual interest payment is around £50m, which is pretty steep for a company with a profit of £139m last year. I need to check the interest payment.

As far as i read it if interest rates goes up that helps solve their pension deficit but then they are still screwed with interest payments.

Risk and reward and all that. I think there's a trade here at the right entry as once the shorts start reversing that's alot of stock to be bought. Just not sure where the entry point is!

CC.

I use Sharescope and Sharepad.

I have been watching CLLN and CARD for months

I already hold some of CLLN and was thinking of increasing hold a little.

But revised my "guesswork" and bought CARD.

Have a look at CARD.

Check forecast yields. There are conflicting "guesses" but TPs are good and I can't see any holes in the financing, but I am not the brightest on "Accounts".



+

Someone just bought 531,000 of these at 16 35 pm .

That's probably Fred just adding to his holding.

Sorry about that!

But I tried to help.