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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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.......

well found sticky

Middle East business expected to deliver strong growth with an increasing contribution from projects in Abu Dhabi - margins expected to be at least 6%.

that's a very interesting area to be operating once more
property rental rates have been rocketing for the 6 months or so, so when i go back to Dubai in May, i expect to see lots and lots of cranes at work once more

Good luck GF - one of my favourites - although not currently holding.

sticky!!!!!!!!!!!!!!!!!! cheeky so and so. LOL.

Carillion Joint Venture selected by Network Rail as a one of four framework suppliers to deliver a £2 billion electrification programme

CarillionPowerlines, a 70:30 joint venture between Carillion and Austrian-based SPL Powerlines, has been appointed as one of four framework suppliers to deliver a £2bn programme to electrify more than two thousand miles of Britain's railway over the next seven years. This will provided faster, quieter, greener and more reliable journeys for passengers and freight users and reduce the costs of the railway.

The framework suppliers will work with Network Rail to plan and delivera range of schemes, which will see key routes in England, Wales and Scotland electrified for the first time. Six geographic framework contracts have been awarded, with each having a defined work bank of schemes. CarillionPowerlines will deliver two of these regional frameworks, Central (East Midlands Region) and Scotland and North East Region.

Once complete, these electrification schemes, which include the Great Western and Midland main lines, Liverpool to Manchester and Preston, the Valley lines in south Wales and the 'electric spine' from Southampton docks to the West Midlands and Yorkshire, more than half Britain's rail network will be electrified with electric trains accounting for three-quarters of all traffic.

Commenting, Carillion Chief Executive, Richard Howson said: "We are delighted that Network Rail has selected CarillionPowerlines as one of its framework suppliers for this major electrification programme. I believe this reflects the investment we have made, and continue to make, in creating the skills and resources necessary to deliver programmes of this kind and our absolute focus on safety and quality. We look forward to building on the strong partnership we already have with Network Rail, as we work together to deliver these vital improvements to the UK rail network.

Carillion Joint Venture awarded £110 million contract in the Middle East

Carillion's Joint Venture business in the United Arab Emirates, Al Futtaim Carillion, has been awarded a £110 million contract by Aabar Properties to build a five star Hard Rock Hotel in Abu Dhabi.

The Hard Rock Hotel, Abu Dhabi, which will be the first of its kind in the Middle East, will comprise 378 rooms and be located on the UAE capital's Corniche. The hotel will also feature an assortment of signature restaurants, entertainment and meeting facilities, including the renowned Hard Rock Café.

Other key attractions will include a Sky Lobby on the fifth floor podium, a Lobby Bar with outdoor entertainment deck and hookah lounge, as well as a 37th floor Sky Bar with swimming pool. The resort will also host the Body Rock fitness centre and signature Rock Spa.

Construction is scheduled to begin in February 2014, with completion in the first quarter of 2017.

Commenting, Carillion Chief Executive, Richard Howson, said: ''We are delighted to have been selected for this important contract, which reflects our reputation for delivering projects to high standards of quality, safety and reliability. We look forward to working with Aabar Properties to deliver this prestigious hotel."

Final Results

· Financial performance in line with expectations
- Revenue was lower as expected, primarily due to the rescaling of UK construction
- Underlying operating margin(2) maintained at 5.6%
- The reductions in underlying profit before taxation(2) and underlying earnings per share(2) reflected business rescaling and an increase in the net financial expense
- Reported profit before taxation and basic earnings per share reflected the £42.9 million charge for restructuring energy services

· Strong work-winning performance
- £4.9 billion of additional orders and probable orders in the year
- Order book plus probable orders of £18.0 billion (2012: £18.1 billion), after deducting £1.7 billion due to
selling equity investments in Public Private Partnership (PPP) projects and reduced expectations from the
Green Deal and Energy Company Obligation markets, partially offset by the addition of £0.8 billion of orders
acquired with John Laing Integrated Services
- Substantial framework contracts secured in 2013 whose value is not included in the order book
- 81% revenue visibility(3) for 2014 (2012: 75% for 2013)
- Pipeline of contract opportunities worth some £37.5 billion (2012: £35.2 billion)

· Net borrowing reduced from half-year peak
- Net borrowing of £215.2 million (2012: £155.8 million), down from £270.8 million at the half year, despite the additional second-half costs of restructuring energy services and of acquiring John Laing Integrated Services, with a significantly improved working capital performance in the second half of the year, reflecting completion of the rescaling of UK construction
- Main revolving credit facility of £770 million extended from 2016 to 2018
- Over £1.1 billion of committed borrowing facilities and private placement funding to support strategy for growth over the medium term

· Business rescaling complete with Group now well positioned for the future
- Planned rescaling of UK construction complete with revenue run-rate stabilised by the year end
- UK energy services restructured as previously announced to reflect lower expectations for Green Deal and
Energy Company Obligation markets

· Proposed full-year dividend increased by 1% to 17.50p (2012: 17.25p)

Carillion Joint Venture awarded Middle East contract worth approximately £150 million

Carillion selected for support services contracts worth over £370 million

Ex-divi wed 14th May 2014 (12p)

StockMarketWire.com

Carillion has been selected as the preferred bidder to provide facilities management and estate transformational services by the Nottingham University Hospitals NHS Trust (NUH), which includes Queen's Medical Centre and Nottingham City Hospital. NUH selected Carillion following a procurement process that focused on identifying a strategic partner with the experience and capabilities to deliver high-quality, value for money services, which will support the Trust in achieving its objective of delivering continuous improvement to the standards of service it provides for patients. The contract is expected to be worth approximately £200m to Carillion over the initial five-year contract period and there is an option to extend the contract period by a further three years, subject to satisfactory performance.

Under the contract, Carillion will provide a wide range of hard and soft services, including fabric maintenance, mechanical and electrical engineering, catering, cleaning, security, logistics, patient movements, waste management and the operation of the switchboard and helpdesk functions.

StockMarketWire.com
Cantor Fitzgerald has upgraded its recommendation on support services group Carillion (LON:CLLN) to "buy" from "hold" following a good start to the year and believing top-line pressures are showing signs of abating. The broker went on to state that the company looks in much better shape than it has in the past and is encouraged by a number of recent contract wins which provides investors with good revenue visibility. Analysts also reckon cash flow performance should start to improve during 2014 and beyond, having been negatively impacted by restructuring costs associated with its UK construction business. In terms of the stock's valuation, Cantor said: "In our view, Carillion is attractively valued compared to a blended construction / facilities management peer group (c.20% discount) and offers one of the highest dividend yields in the sector." The broker has increased its target price to 420 pence per share (from 350 pence), implying around 15 per cent potential upside.

A most welcome rise today, but it's hard to believe that one upgrade could have such an impact on the market.

Ex-divi wed 14th May (12p)

At Carillion plc's Annual General Meeting today, Chairman, Philip Rogerson, made the following comments on the Group's performance.

"Trading in the year to date is in line with our expectations and work winning has remained healthy.

"We continue to expect the Group to resume revenue growth in 2014, including the resumption of revenue growth in UK construction in the full year. As indicated when we announced our 2013 results, the Group's first-half revenue is likely to be slightly lower than in the first half of 2013, primarily because the planned rescaling of our UK construction activities continued throughout 2013, which resulted in the Group having a lower revenue run-rate at the year end.

"Being very selective in terms of the contracts for which we bid remains central to our strategy for supporting margins, which continue to be in line with our expectations. The investments we make in Public Private Partnership projects are also performing in line with our expectations. As previously indicated, the first-half and full-year contributions to Group profit from these investments will be lower than in 2013, because we plan to sell fewer investments in both periods in 2014.

"We continue to expect the Group to deliver cash-backed profit in 2014 and to return to positive net cash generation, with a consequent reduction in net borrowing at the year end. At the half year, net borrowing is expected to increase, compared with the position at 31 December 2013, primarily because payment of the final dividend in respect of 2013 will be made in June 2014. We continue to expect average net borrowing to fall in both the first half and full year.

"Work winning has continued to be healthy with £1.5 billion of new orders and probable orders in the year to date. Notable successes in support services include signing contracts for Royal Bank of Scotland, Arqiva and Canadian Natural Resources that together are worth £370 million. We have also been selected as the preferred bidder by the Nottingham University Hospitals NHS Trust for a support services contract worth approximately £200 million and as one of four framework contractors to deliver a £2 billion electrification programme for Network Rail. In the Middle East, we have signed contracts to build the Hard Rock Hotel in Abu Dhabi, Phase 1 of the Dubai World Trade Centre and Phase 2 of The Avenue Citywalk development in Dubai that together are worth £320 million. In addition, our pipeline of contract opportunities remains strong.

"In summary, although markets continue to be challenging, our expectations for 2014 remain unchanged. Furthermore, we believe the Group remains well positioned for the future as the medium-term outlook across our markets continues to improve."

StockMarketWire.com
Carillion has been selected as one of three preferred partners to deliver plain line track for Network Rail.

The regions in which Carillion will deliver renewals include the Midlands into the North West, and from Kings Cross to the North East of England.

This work is expected to be worth approximately £100m to Carillion over the five year period for which we expect to sign the contract in June.

Carillion joint ventures selected by the Defence Infrastructure Organisation for two Next Generation Estate contracts potentially worth up to £1.7 billion including additional services and extensions.

These contracts form part of the Defence Infrastructure Organisation's (DIO) Next Generation Estate Contracts programme to maintain and upgrade Defence infrastructure.

A Joint Venture between Carillion and Amey (67:33) has been awarded the National Prime Housing contract that is estimated by MoD to be worth in the order of £625 million over the initial five-year contract period, which can be extended by a further five years subject to approval.

Under this contract the Joint Venture will provide a wide range of hard facilities management services, including routine maintenance, occupancy management, furniture installation, energy efficiency services, statutory inspections and improvements for more than 49,000 military homes throughout the UK. This enlarged contract replaces the contract currently held by a Carillion and Amey Joint Venture under which it delivers similar services for military houses in England and Wales.

A Carillion and Amey (50:50) Joint Venture has been awarded the Scotland and Northern Ireland Regional Prime contract that is estimated by MoD to be worth in the order of £150 million over the initial contract period of five years, which can be extended by a further five years, subject to approval.

Under this contract, the Joint Venture will provide a wide range of hard facilities and asset management services across 30 key sites including RAF Lossiemouth, RAF Leuchars, Kinloss Barracks, HMS Caledonia and Kentigern House in Scotland, and Aldergrove Airfield, Thiepval Barracks and Kinnegar Logistics Base in Northern Ireland, together with the provision of new buildings. Hard facilities management services will include planned and reactive building fabric and mechanical and electrical engineering maintenance, together with utility efficiency services. The service delivery model has also been designed to support the UK Government's objective of encouraging the use of Small and Medium-sized Enterprises.

Both Carillion and Amey will also use these new contracts to create further opportunities to demonstrate their commitment to the Armed Forces Corporate Covenant, which helps ex-service personnel find employment and supports the provision of Reservists.

Carillion Chief Executive, Richard Howson, said: "We are delighted that our Joint Ventures have been selected for these major contracts. We look forward to building on the strong relationship we have developed with Defence Infrastructure Organisation and to working closely with DIO to deliver further improvements to the quality and energy efficiency of the Defence estate."