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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That's probably Fred just adding to his holding.

Sorry about that!

But I tried to help.

Ps. also have held some SBs for a while.

Always thought he was a closet millionaire you know .

Inherited money on my 4 wife's side.


That is why I married her.

The 535k was the closing auction. It was over a million the day before.

It looks like it's consolidating here to me and trying to bounce.

However, I'm waiting. With the FTSE and Dow so high I would like to get see what happens on a bad day on FTSE.

I guess I'm pretty indifferent to this trade atm. Got my eye at BP. too if it retraces some more

Results today , seem ok on the surface but ? .

But... why did the sp drop to 207p???

Pension deficit probably , and it's heavily shorted apparently .

Apart from Richard Tapp who owns 157K shares (not a lot really) it looks like the rest of the board own next to nothing of their own company, seeing that the sp is so low compared to the past, I would be very wary of putting my money into CLLN.

There that should give a boost to the sp.

The market is jumpy.

Possibly due to concentration on Basic earnings per share 28.9p 30.9p -6%.

Possibly, drop to 205 or 198p, before hopefully a rebound.

If you can trust "trades" buys up on sells.

W/s for proposed yield which is good at 8 +%.

You are probably right Vic.

From ii

I didn't see any mention of the pension deficit until the penultimate line of the report, which shows that the deficit has more than doubled from £317m to £663m.
To put into context, the current market cap is about £900m.

Some wise words I read today - Issue is competing demands on cash for pension deficit, bond holders and dividend payments. Something has to give...

I also read they intend to focus more heavily on UK and Middle East margins are slimming (drop in oil price???)

Now I love my country and think Brexit is overdone more than most but if the best strategy to deal with your debt is to expand in UK I'm not sure what that says about the other parts of their business.

I remain convinced their is big money to be made here once the shorts start closing but it's nowhere near low enough yet. I'm looking for 150 say.

StockMarketWire.com
Al Futtaim Carillion has won a £490m contract for Expo 2020 Dubai which will host around 180 nations and have an international audience of millions.

The Carillion JV has been awarded the contract to deliver the theme districts and public realm works at the World Expo site in Dubai South.

The JV has been appointed to construct a bespoke and unique phase of the World Expo development, which consists of 147,000 square metres of single storey basements and 98 pavilion buildings of up to storeys high, totalling a gross area of 220,000 square metres, together with 99,000 square metres of external works.

The contract will begin this month and is scheduled for full completion in mid-2019.

The theme districts of Expo 2020 Dubai are being designed to best-in-class quality standards and this development will achieve LEED Gold certification, as well as ensuring that worker welfare standards for all involved are exemplary and will set new industry benchmark standards.

Carillion chief executive Richard Howson, said: "We are delighted to have been selected for this flagship project and to be supporting Expo 2020 Dubai in its ambition to demonstrate to the world, Dubai's desire to lead economic growth and excellence internationally, in line with the vision of vice-president and prime minister of the UAE and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum.

"This award further enhances our position as a recognised market leader and we continue to see good opportunities coming to market for which our capabilities and reputation for delivering to high standards of quality, safety and reliability are important to customers.

"We look forward to continuing the development our close relationship with Expo 2020 Dubai to deliver this important development."

Every little bit helps!

For the great unwashed, £490m is quite a wad of money, but of course some live on a higher plain! ;o)

Ah you mean freebe Alf.

Another bit of help!



Carillion wins £90m contract in Cyprus

StockMarketWire.com

The Defence Infrastructure Organisation has awarded Carillion a contract to design and build a new communications facility in Cyprus, which will be a single storey building, approximately 10,000 square metres in area, with temperature and humidity controlled environments.

Carillion said construction would start in April and was scheduled to be completed by the end of January 2019.

Chief Executive Richard Howson said: "We are delighted to have been selected by the Defence Infrastructure Organisation to design and build this project and we look forward to building on the strong relationship we have with the DIO as we work closely together to deliver this important new facility."


Story provided by StockMarketWire.com.


One to watch with stop loss of approx 205.

Projected yield of 8.5+%.

Jefferies International today downgrades its investment rating on Carillion PLC (LON:CLLN) to hold (from buy) and cut its price target to 230p (from 360p).

clln, x-Div 11/5/17

12.65p per share!

Bookies target prices share price 200-300p!