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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I think they've been conning everybody for the last 30 years.

The Alfred McApine merger got them out of a hole

Then they bought Mowlem at what is now agreed too high a price and raped and pillaged that.

Then to keep the ponzi going they even tried to buy Balfour Beatty, except even the lenders weren't stupid enough to go for that one.

After they got so large they couldn't hide the losses by constant expansion the game was always going to be up.

Where were the backhanders going?

Where were the regulators?

derek hatton would assuredly have put a stop to all this very early on

I took that as a tongue in cheek comment from cynic

Perhaps he means Bernard Jenkins skill at moving money!

no, i meant derek hatton the former militant who is now a property developer

I hope he is successful rather than being embittered by his success as some would appear to be.

But Manuel you should know when you have everything there is nothing else to have.

why should i worry if DH makes a mint
it's the irony of his hypocrisy that amuses greatly

i wonder if DH also took professional advice on minimising his tax liabilities
all sorts of interesting schemes on offer apparently

The thing is, what were the non execs doing for their grand a week other than turning up now and again for a decent lunch and to nod through anything the the main board wanted?

From the blurb, they've all been around the block, and half of them are accountant types...how could they not pick up on the waiting disaster?

and one must always ask why the gov't (and i guess the previous one too) turned a blind eye to the sword of damocles overhanging CLLN

Your all missing the bloody obvious ... how the hell did they get their accounts signed off as a going concern ?

First year A level accounting student wouldn't have signed that mess off.

this is far from the first time that dodgy accounts have been signed off by the supposed Big 4

Isn't one of the directors head of the Institute of Chartered Accountants in Scotland ?

Start the investigation with him and his relationship with KPMG I think.

cynic , there are many grey areas where things can be hidden but only for so long and not on this scale.

there are a great many instances where the auditors have failed in their jobs - though still charging massive fees of course
did not the sale of BHS fall into this category, and several banks, the maxwell empire and others?

I see this sort of thing all the time, but with smaller companies. Under quoting to get the business, intending to charge more "one day" when things improve, but of course it never does, because someone else comes along and does the same! Eventually they go out of business.

http://www.constructionenquirer.com/2018/02/20/carillion-directors-contemptuous-of-pension-funding/

Carillion directors ‘contemptuous’ of pension funding.

They need to jail some of these directors

Three contractors are bidding to refurbish the fence at the 10 Downing street. One is from London, another is from Liverpool, and the third is an ex matelot. All three go with a Downing Street official to examine the fence. The London contractor takes out a tape measure and does some measuring, then works some figures with a pencil.
"Well," he says, "I figure the job will run about £900. £400 for materials, £400 for my crew, and £100 profit for me." The Liverpool contractor also does some measuring and figuring, then says, "I can do this job for £700. £300 for materials, £200 for my crew, and £200 profit for me." The ex matelot doesn't measure or figure, but leans over to the Downing Street official and whispers, "£2,900." The official, incredulous, says,
"You didn't even measure like the others! How did you come up with such a high figure?" The ex matelot whispers back, £1000 for me, £1000 for you, and we hire the guy from London to do the job."
"Done!" replies the government official.
And that is what Carillion did!!!!!