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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Predictably awful results.

Financial results for the six months ended 30 June 2017
Strategic and operational review update
Carillion plc ("Carillion", the "Group" or the "Company") announces its H1 results and an update on its strategic review.

H1 financial performance weaker
· Total revenue flat at £2.5bn
· Underlying pre-tax profit down 40% due to:
- The phasing of PPP equity disposals; and
- The trading of contracts with H1 provisions at zero margin
· Contracts review finalised:
- No change to previously announced provision of £845m for construction contracts
- Further £200m provision for support services contracts, but minimal impact on cash
· Goodwill impairment charge of £134m in respect of UK and Canadian construction businesses
· Average net debt in H1 £694m
· New H1 orders plus probable orders of £2.6bn, with total orders plus probables stable at £16bn

Strategic review and balance sheet update
· Business refocused on core strengths and markets - support services, infrastructure and building
· New leadership team and operating model - delayered structure, greater accountability and transparency
· Initial cost reduction target of £75m by mid-2019
· Actions underway to improve cash flow and strengthen balance sheet
· Expected proceeds from non-core business disposals increased to £300m from £125m
· Discussions ongoing regarding sales of Carillion's business in Canada and the UK Healthcare business
· Pension deficit reduction of £80m, potential to reduce further by £120m
· Agreed further £140m committed facility with a number of banks
Revised full-year outlook
· Full-year results to be lower than current market expectations
· Total revenue expected to be between £4.6bn and £4.8bn (previously £4.8bn to £5.0bn)
· 2017 H1/H2 profit split similar to recent years, before £10m of cost savings and business disposals
· Full-year average net debt expected to be between £825m and £850m
· Estimated further restructuring costs of £75m to £100m in H2.
Commenting Keith Cochrane, Interim Chief Executive, said:
"This is a disappointing set of results which reflects the issues we flagged in July and the additional £200m provision for our Support Services business that we have announced today. We now expect results for the full year to be lower than current market expectations.

"The Strategic Review that we launched in July has enabled us to get a firm handle on the Group's problems and we have implemented a clear plan to address them. Our objective is to be a lower risk, lower cost, higher quality business generating sustainable cash backed earnings. In the immediate short term, our focus is to complete the disposal programme, accelerate our action to take cost out of the business and get our balance sheet back to a place where it can support Carillion going forward.

"No one is in any doubt of the challenge that lies ahead. We have made an encouraging start and the ambition is there to build on that progress. At the heart of this company, there is a strong core. Supported by an operating model that manages risk much more effectively and led by a fresh management team with a mandate to drive cultural change, I am confident that a strong business can emerge."

Is the clever coaks reporter ( Oliver Gill - middle-east-suitor-plots-takeover-attempt ) another fools report in order for some to get out late yesterday ahead of today's yet again of another profit warning ?

It sound like this so far ( paid for it ),
I am glad not in anymore and only for the - cat bounce earlier -

i do not hold either, but of course any predator might be very happy to wait until the crap results were published thus making a low bid more attractive


btw, TCM had a very odd rns yesterday, and though again this is not one i hold, i'ld have thought short was a much better bet than long

Peel Hunt today reaffirms its reduce investment rating on Carillion PLC (LON:CLLN) and cut its price target to 40p (from 50p).

StockMarketWire.com
Carillion has agreed new facilities and deferrals which had improved group committed headroom throughout 2018 by between approximately £170m and £190m.

The group said it continued to assess a broad range of options for optimising its capital structure and to this end is fully engaged in constructive dialogue with stakeholders.

An update said: 'Carillion announced on 29 September 2017 that a term sheet for further committed credit facilities of £140m had been agreed with five of the Group's core lenders.

'Further to this, the Group is pleased to announce the signing of two committed facilities, totalling £140 million, as contemplated by this term sheet.

'This additional liquidity is fully available to draw down now.

'It comprises a £40m senior secured revolving facility maturing on 27 April 2018, secured over shares in certain of the Group's subsidiaries and over certain of the Group's assets, and a £100m senior unsecured revolving facility maturing on 1 January 2019.

'In addition, the Group has agreed new committed bonding facilities, together with the deferral of certain pension contributions and the deferral of repayment of private placement notes due in November 2017 and September 2018.

'These deferrals will be until the earlier of five business days following, (i) the repayment of the new committed facilities, and (ii) 1 January 2019.'

Carillion also said it had signed heads of terms with Serco Group Plc for the disposal of a large part of its UK healthcare facilities management business for an agreed price of £50.1m, subject to a limited working capital adjustment.

Carillion said it had agreed to give Serco a period of exclusivity to provide the parties with time to finalise a business purchase agreement, which Carillion and Serco are aiming to sign in the next few weeks.

It said: 'The transfers of contracts pursuant to this disposal are each subject to receipt of third party consents, and, if required, shareholder approval.

'It is intended for the contract transfers to take place on a phased basis, with the aim of receiving the bulk of the proceeds during the first half of 2018. Further details will be published once the business purchase agreement is signed.'

Carillion said it intended to dispose of the remaining contracts in its UK healthcare facilities management portfolio during 2018.

The uodate added: 'While Carillion is continuing to pursue the disposal of the Group's Canadian businesses, it is also evaluating whether a better result for the Group would be achieved by retaining for now certain of those businesses.

'The Group continues to target non-core disposals with aggregate consideration anticipated of over £300m by the end of 2018 and further announcements will be made in due course.'

It said that recent wins included:

- Gigaclear - £200m contract. Carillion telent, a 60:40 Joint venture with telent, has signed a contract with Gigaclear, the ultrafast pure fibre broadband company, to build a broadband network in Devon and Somerset. The contract is expected to generate revenue of up to £200m for the Joint Venture between 2018 and 2020, and will commence immediately.

- Dubai Creek Harbour - £105m contract. Following a pre-construction period, Emaar Properties has awarded Al Futtaim Carillion (AFC: a 50:50 Joint Venture) the contract to deliver Creek Horizon, a collection of premium residential apartments located at the Island District in Dubai Creek Harbour. The contract is expected to generate revenues of approximately £105m for AFC and work is underway, with completion scheduled for early 2020.

- Fallowfield - £71m contract. Following Carillion's appointment as preferred bidder (announced on 12 April), Carillion has signed a contract with the University of Manchester to design and build Phase 1 of its Fallowfield Student Residences project. The project has an estimated construction cost of £71m and work is underway.

The group said there was no change to 2017 guidance as set out in the interim results announcement on 29 Sep.

Interim chief executive Keith Cochrane said: 'Today we are announcing progress on a number of fronts and whilst our customers and creditors continue to be supportive, much remains to be done.

'We remain focused on executing our disposals and cost savings programmes while continuing our discussions with our lenders and other stakeholders to explore further ways of strengthening Carillion's balance sheet.'

UBS still don't seem very impressed:
Carillion announced it has signed heads of terms for the sales of parts of its UK Healthcare facilities management business to Serco for £50.1m. The two parties will now finalise a business purchase agreement and transfer the relevant contracts in a phased manner. Carillion expects most of the cash proceeds to be received in H118. The business generated £90m of annual sales. Assuming approximately 5.5-6% average support services margins implies EBITA of £5-5.5m so an implied multiple of 9- 10x EV/EBITA, broadly in line with our overall valuation of the support services business in our SOP.
The previously announced additional £140m of facilities have now been signed. In addition, the group has agreed deferral of £16m of private placement payment due in November 2017 and the option to defer £49m of PP's maturing in September 2018 until January 2019. The group is also deferring cash contributions into the pension scheme of around £24m, which would have been due between August 2017 and March 2018. The outcome of the triennial valuation remains due which could re-calibrate pension payments going forward. The cost of these new facilities / deferrals is between LIBOR + 8% and LIBOR + 12% so is relatively high.
As part of the £300m disposal target, the largest part was expected to come from the disposal of the Canadian services business. It is now communicating it may retain elements of this business, suggesting forthcoming bids for the entire operation either do not exist or valuation is below expectations.
Valuation: Sell, 1p price target
Our PT is based on SOP. While facility extension and other liquidity measures provide breathing space, they do not fundamentally solve Carillion's debt problems. The disposal programme has got some traction although it appears buyers are cherry picking assets which raises a question of the quality of the remaining business. We ultimately expect significant dilution to existing shareholders and see no material equity value left for current shareholders.

Thanks

1p price target!

I'm wondering why pension trustees would agree to deferral of payments. Even if the tax situation on the pension has gone CLLN's way, I'm not sure even then why a trustee would agree to no payments given the perilous state of the company.

Libor +8/10%. Just can't see how anything other happens than the banks bleed them to death.

http://www.cityam.com/274666/carillion-locked-gbp200m-row-over-contract-prepare-qatar

StockMarketWire.com
Carillion has sold its 66.67% shareholding in Ask Real Estate and a shareholder loan made by Carillion Construction to AREL's subsidiary, Ask Central Limited and its 50% interest in Ask Carillion Developments to one or more wholly-owned subsidiaries of Dukehill fpr £13.8m.

It said £1m of the cash consideration was contingent on the sale of 100 Embankment and would be paid by Dukehill within five business days of signing of the sale documentation in relation to this.

AREL and ACD (through their wholly-owned subsidiaries and other associated entities) carry out commercial property development activities, together with various partners, in the North of the UK, including Manchester, Liverpool and Leeds.

Carillion interim chief executive Keith Cochrane said: 'We are pleased to be able to announce further progress.

'Much remains to be done, and we are continuing to execute our plans to refocus the business, reduce cost and strengthen our balance sheet.'

StockMarketWire.com
Carillion has won two contract awards for Network Rail's Midland Mainline improvement programme.

Carillion has signed a contract with Network Rail to upgrade the existing track and infrastructure on the route from London to Corby.

The contract is expected to generate revenues for the Group of £62m over the next two and a half years.

And Carillion Powerlines, a 50:50 joint venture with Powerlines Group, has signed a contract with Network Rail in respect of the Midland Mainline Electrification programme.

Under the contract, Carillion Powerlines will undertake work to complete the electrification of the route from London to Corby.

The contract is expected to generate revenue for the JV of c£260m over the next three years and work will commence shortly.

"generate revenue" is a far call from "generate profit"
no wonder the market is unimpressed

StockMarketWire.com
Carillion Alawi - Carillion's 50:50 joint venture with the Zawawi family - has signed a letter of award with the Oman ministry of health as the preferred bidder in respect of the design and build of the New Sultan Qaboos Hospital in Salalah.

The contract - which has an estimated value of c£240 million to the JV - will consist of a two-stage design and build process.

The initial design and mobilisation phase, which will be directly funded by the customer, will commence immediately.

The second phase would commence in 2018 once the design has been completed, the contract executed and funding finalised.

A further letter of award is due to be signed shortly by Carillion Alawi, also with the Oman ministry of health, in respect of a hospital in Khasab.

The contract is on similar terms to those for the Salalah award and, if it were to go ahead, would have an estimated value of c£120m to the JV.

StockMarketWire.com
Carillion intends to seek to defer the testing of its financial covenants and warned that full-year profits would be materially lower than current market expectations.

The group said that since July it had been focused on reducing costs, collecting cash, executing its disposals programme and implementing its new operating model.

It said these self-help measures would serve to reduce the group's average net debt over time, but they would not be sufficient to enable it to achieve its target net debt to EBITDA ratio of between 1.0 to 1.5 times by the end of 2018.

Carillion said the board was in discussions with stakeholders regarding a broad range of options to further reduce net debt and repair and strengthen the group's balance sheet.

It said this would require some form of recapitalisation, which could involve a restructuring of the balance sheet.

It said the board expected to start steps to implement the chosen option during the first quarter of 2018.

Carillion said that based on its latest forecasts, the board now expected a covenant breach as at 31 Dec.

It said: 'Following discussions with its principal lenders and with their support, the board has concluded that it is necessary to amend the relevant agreements to defer the test date for both its financial covenants from 31 Dec 17 to 30 Apr 2018 (based on EBITDA for the 12 months to that date), by which time it expects to be implementing its recapitalisation plan.'

Carillion said it had now commenced a process to seek the consents necessary to make this amendment.

The group also said that a combination of delays to certain PPP disposals, a slippage in the commencement date of a significant project in the Middle East and lower than expected margin improvements across a small number of UK Support Services contracts, partially offset by cost savings initiatives realised in the fourth quarter, would lead to profits for the year to 31 Dec being materially lower than current market expectations.

Given the impact of delays in receipts and disposals, the group now expects full year average net borrowing in 2017 to be between £875m and £925m.

Interim chief executive Keith Cochrane said: 'Whilst we continue to target cash collections, reduce costs, execute disposals and focus on delivering for our customers, it is clear that significant challenges remain and more needs to be done to reduce net debt and rebuild the balance sheet.

'Constructive dialogue is continuing with our financial stakeholders, and I am grateful for their support.

'I remain focused on addressing this issue before my successor, Andrew Davies, takes up the role on 2 April 2018.'

Liberum Capital today reaffirms its sell investment rating on Carillion PLC (LON:CLLN) and set its price target at 5p.

my comment on #329 was clearly not so dumb

It's done for imho. They need to get the debt for equity swap done as every day this drags on the supply chain will be trying to claw in money owed to them and minimise any credit given.

and still possible to short, though that's always a bit scary .... perhaps to do with a guaranteed stop

Apparently not cynic. I've been watching it all day and it's beginning to look really weak into the last hour and there's a 25k sell bot running at 26.25 plus there were some 250k sells went through a little higher about half an hour ago, plus someone has loaded a 500k buy at 25.0 which I reckon is fake.

Tried to short it with intention of closing today regardless of success or failure and my broker has disabled all shorting on it even at 100% margin.

edit: and the sell bot has already moved down a quarter of a point to 26. It's getting multiple fills. Reckon it's shifted a million already.

it looks that i can short with IG CFD's with 25% margin