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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Fingers crossed LG yep.

Was looking at Broker recos last night and it seems theirs quite a bit left in it.

Mind they were a little mixed.

Do you ever get over to Sharecrazy these days?. Seems to have gone down the drain, shame as it was a brilliant site in the early 2000s. Im sure I remember you posting their.

Went ex-divi on the 4th Sept. Hardly paused for breath and up 33p since.

goldfinger - I gave up on Share Crazy years ago. Pity really as it was a good forum and there were some good posters. I used to post there as 'Pond Life'.

Hi LG and GF
I used to post on Share Crazy too. Yes it was good for information and a lot interesting people and debates. It fell apart when taken over. Just used to post as Lucas.

Re Contract Halton Peel AMC

Carillion named preferred bidder for 12-year Canada highways maintenance contract expected to be worth over £100 million

Carillion Canada has been selected by the Ministry of Transportation Ontario as the preferred bidder for the Area Maintenance Contract (AMC) Peel/Halton in Ontario that is expected to be worth over £100 million over 12 years.

Under this contract, Carillion Canada will provide routine inspection and maintenance services, including snow clearance, together with minor capital works, for over 1,000 kilometers of 2-lane equivalent highway. A Carillion joint venture was the incumbent maintenance contractor for the Halton area, which has been combined with the Peel area under this new and extended AMC.

This latest AMC further strengthens Carillion Canada's position as a leading supplier of highways maintenance services in Ontario. Carillion Canada has a similar market leading position in Alberta and we continue to look for opportunities to extend our operations to other Provinces in Canada.

Commenting, Carillion Chief Executive, Richard Howson, said: ''This latest success reinforces Carillion's position as the leading private sector provider of highways maintenance services in Ontario. Over the last eighteen months, we have won long-term highways maintenance contracts in Ontario and Alberta worth over £720 million, which is making a significant contribution to organic growth in our support services activities in Canada."

Standard Life Investments Ltd < 5%

Looks like we breaking out again on the chart.

Investec Hold 316.20 313.00 275.00 305.00 Reiterates

That's a bit mean. I prefer the Morgan Stanley 345p target.

At least they are moving in the right direction.

Bullish engulfing candle today - trading statement tomorrow!

Interim Management Statement

Trading in the third quarter of 2013 has remained in line with the guidance we gave at the time of our half-year results announcement and we expect to deliver full-year underlying(1) profit and earnings in line with market expectations.

Our order book and pipeline of contract opportunities both remain strong and continue to support our expectations for 2013 and our medium-term targets for growth, which remain unchanged. Since we announced our half-year results on 22 August, we have been awarded a number of further significant contracts. In Canada, we have won a 12-year Area Maintenance Contract in Ontario, worth over £100 million, in Oman we have signed a £90 million contract to build the Kempinski Wave Hotel, which was classified as a probable order at the half year, and in the UK we have been selected as the preferred bidder by West Sussex for a support services contract worth some £100 million over 10 years.

In our half-year results announcement, we noted the slow start to the whole of the Green Deal market, which, together with the delayed start to the Energy Company Obligation (ECO) market, is affecting our revenue expectations from energy services. The development of the Green Deal market continues to be slow and ECO may now be subject to further delays. Consequently, we will restructure this area of our business during the remainder of 2013 to ensure that it is aligned in size to the markets in which it operates. We are still assessing the extent of the restructuring required, while ensuring we maintain an effective offering and service delivery model. Currently, we expect total non-recurring operating charges of some £40 million in 2013.

Cash flow remains in line with previous guidance and we continue to expect net borrowing at the year end to be lower than the £270 million we reported at 30 June 2013, despite the expected additional costs associated with restructuring the Group's energy services activities.

West Sussex County Council selects Carillion as preferred bidder for Sussex Energy Saving Programme worth up to some £100 million

Carillion awarded £92 million contract for the Kempinski Wave Hotel in Oman

In line equates to earnings of 37p per share for a forward PE of just 8.5 and a well-covered divi of 17.35p giving a yield of 5.5% (according to Digital Look). Looks good enough to me. Very modest with lots of room for share price improvement. Some posters have expressed concerns about levels of borrowing here, but a figure of £270 millions against a market cap of £1.36 billions shouldn't cause any sleepless nights.

Re Contract

Carillion teams up with major Chinese company to deliver Manchester's £800 million
Airport City

Manchester Airports Group (MAG) has selected a consortium comprising Carillion, Beijing Construction Engineering Group (BCEG) and the Greater Manchester Pension Fund (GMPF) as its partner to deliver the Airport City development at Manchester Airport. Argent (Property Development) Services will be appointed by the joint venture as development manager for the scheme.

Airport City is one of the largest regeneration schemes in the UK since the Olympics redevelopment in East London. It will provide 5m sq ft of development, including offices, hotels, advanced manufacturing, logistics and warehousing, with an estimated value of £800m. Airport City will be the core element of the Government-designated Enterprise Zone at the heart of which is Manchester Airport, the UK's third busiest airport. A key objective of the Enterprise Zone is to help attract international businesses and to create an additional 16,000 jobs for the North West of England.

The consortium will start work immediately and the project is scheduled for completion over the next 15 years. Carillion expects to invest up to £12 million of equity in the development, as well as delivering up to £580 million of construction work.

StockMarketWire.com
Carillion has been awarded a £70 million contract to transform another section of the M6 into a smart motorway.

This contract, together with other contracts for maintenance and improvement projects, brings the total value of highway contracts won by Carillion in recent weeks to some £180 million and reflects Carillion's strategy of focusing on large contracts and contracts for long-term key customers.

StockMarketWire.com
Carillion has been selected by Sunderland City Council as the preferred bidder to form a strategic partnership to deliver a range of property services to undertake the city's regeneration programme. This innovative contract, which will initially focus on the redevelopment of key sites across the city, is worth at least £100m over the first eight years and potentially up to £800m over 20 years.

StockMarketWire.com
Carillion's trading remains broadly in line with expectations with net debt reducing as expected, with an improved working capital performance in the second half.

The group says its new order intake is strong with the total value of orders plus probable orders remaining at approximately £18bn.

And it says the pipeline of contract opportunities also continues to be strong at some £37bn.

Looking forward, Carillion says it expects market conditions to remain challenging.

But it adds: "Through 2013 we have continued to win new work in line with our selective approach and maintained a strong, high-quality order book and good revenue visibility. We believe that this, together with a healthy pipeline of contract opportunities, means that the Group continues to be well-positioned for the future."

StockMarketWire.com
Carillion has reached financial close for a £335m project at the Royal Liverpool University Hospital.

Carillion was selected as preferred bidder for the contract in May.

Carillion will invest some £15.5m of equity in the project, alongside Scottish Widows Investment Partnership who will invest a similar amount, and expects to generate approximately £200 million of revenue from its investment over the 30-year life of the concession contract.

Carillion will also build the new hospital for the Royal Liverpool and Broadgreen University Hospitals NHS Trust at a capital cost of some £335m and deliver non-clinical support services that are expected to be worth approximately £100 million over the concession period. Work on site is due to start early in 2014, with completion scheduled for 2017. The new hospital will be built next to the existing hospital, which will be demolished once services have been transferred. The new hospital will be the largest all single-bed hospital in the country with 646 beds, including a 40-bed Critical Care Unit, 18 operating theatres and one of the largest emergency departments in the North West.

Gone long on CLLN, break up today on chart.......