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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interesting that neither BBY nor CLLN have moved much this morning.
i think it more than likely that a new attempt will be made between the two, so a modest flutter with guaranteed stops may be worthy of serious consideration

Hmmm.

quite :-)

First Half Financial report

· First-half financial performance in line with expectations
- As expected, first-half revenue slightly lower, but well positioned to target revenue growth in the full year
- Underlying operating margin(1) increased to 5.5% (2013: 5.1%)
- Underlying profit before taxation(1) up three per cent to £75.9 million, despite a higher net financial expense
- Underlying earnings per share(1) maintained at 14.7 pence
- Strong cash flow with underlying operating cash conversion(1) of 127% (2013: 5%)
- Net borrowing at 30 June 2014 of £203.6 million (31 December 2013: £215.2 million; 30 June 2013: £270.8 million)
- Strong balance sheet, with over £1.1 billion of committed borrowing facilities and private placement funding

· Work winning remains strong
- £3.2 billion of new orders and probable orders in the first half
- Total orders plus probable orders increased to £19.5 billion at 30 June 2014 (31 December 2013: £18.0 billion)
- Pipeline of contract opportunities increased to £38.0 billion (31 December 2013: £37.5 billion)
- 93% revenue visibility(2) for 2014 (2013: 93%)

· Interim dividend increased by 2% to 5.6p (2013: 5.5p)

· Full-year targets for revenue growth unchanged, despite markets remaining challenging

(1)
The underlying results stated above are based on the definitions included in the key financial figures on page 3.
(2)
Based on expected revenue and secure and probable orders, which exclude variable work and re-bids.

Statement by the Board of Carillion


THIS ANNOUNCEMENT IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO UNDERTAKE ANY TRANSACTION UNDER RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND THERE CAN BE NO CERTAINTY THAT ANY TRANSACTION WILL PROCEED, OR AS TO THE TERMS OF ANY SUCH TRANSACTION.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

FOR IMMEDIATE RELEASE 14 August 2014


Statement by the Board of Carillion

Carillion has, since Monday morning 11 August 2014, held meetings with a number of Balfour Beatty's major shareholders. At the request of the Panel on Takeovers and Mergers and those shareholders, Carillion is now making public all material new information given during those meetings.

Synergies

The Board of Carillion is confident that, as a direct result of the merger, the cost-base of the combined group could be reduced by at least £175 million per annum by the end of 20161 and that earnings would consequently be significantly enhanced from that year2. These cost savings would represent a capitalised value of over £1.5 billion before any re-rating3.

As required by Rule 28.1(a) of the Code, Ernst & Young LLP ("EY"), as reporting accountants to Carillion, have provided a report stating that, in their opinion, the synergy statement has been properly compiled on the basis stated. In addition, Lazard, Greenhill and HSBC, as financial advisers to Carillion, have provided a report stating that, in their opinion and subject to the terms of such report, the synergy statement, for which the directors of Carillion are solely responsible, has been prepared with due care and consideration.

Substantial synergies have been identified across the following areas:

· Businesses and Functions: back office, head office, business and support function savings as well as from applying Carillion's business operating model to Balfour Beatty's UK business;

· Supply Chain: utilising Carillion's category management and demand planning solution, and through purchasing and procurement efficiencies;

· Information and Communications Technology ("ICT"): utilising Carillion's outsourced back office solution, and through standardisation of systems and processes;

· Property: consolidation of the two groups' property portfolios in overlapping areas, including head office; and

· Other: agency labour, fleet, insurance and general overhead savings, including through the application of Carillion's lean operating structure.


The Board of Carillion expects that it would deliver these synergies progressively, anticipating that 40% of them would be achieved by the end of 2015 and the full 100% by the end of 2016 (assuming, for these purposes, that completion of the merger occurred by 31 December 2014).

It is expected that the realisation of the identified synergies would result in one-off exceptional cash costs of approximately £225 million, largely incurred in financial years 2015 and 2016.

Please refer to Appendix I for further detail on synergies.

1 Statement made on the basis of publicly available Balfour Beatty information
2 This statement is not a profit forecast
3 Calculated using weighted LTM multiple applied to cost-base reduction achieved by the end of 2016. See Appendix II

Dividend

Carillion has proposed that Balfour Beatty's shareholders receive an additional cash dividend (or equivalent) of 8.5 pence per Balfour Beatty share (£59 million in total) at the time Balfour Beatty's final 2014 dividend would have otherwise been paid in 2015. This would be in addition to the final 2014 dividend they would be entitled to receive as shareholders in the enlarged group.

Carillion also proposed that the enlarged group would maintain Carillion's progressive dividend policy.

Financing

Based on initial discussions with banks and assuming the retention of Parsons Brinckerhoff, the Board of Carillion is highly confident that £3 billion of available funding would be accessible to the combined group, providing substantial headroom above its actual borrowing requirements after transaction costs and the costs of the proposed restructuring.


more....

Great market reaction today - was it to the results or the possibility of a deal with BBY? Perhaps both.

Rejection of Carillion's Proposal

The Board of Balfour Beatty has further considered the announcement from Carillion plc ('Carillion') dated 14 August 2014. The proposal remains unchanged to that rejected on 11 August 2014. The Board reaffirms its rejection of the proposal. A more detailed analysis is set out below.

In reaching its decision on the merger proposal, the Board has considered:

· the potential for synergies;

· cost and execution risks;

· a reduced exposure to recovery in UK construction;

· risk of revenue and cost leakage; and

· the impact of terminating the Parsons Brinckerhoff sales process.



The Board has also considered the opportunities represented by pursuing its independent strategy, the benefits of which will accrue 100% to its shareholders. These include:

· a recovering UK construction business;

· the opportunity to deliver further efficiencies;

· a strong US construction business in a growing market;

· a leading Investments business;

· material exposure to recovery in the UK; and

· the anticipated successful sale of Parsons Brinckerhoff


more...

I wonder if CLLN will go hostile now. BBY's shareholders must surely be hoping for something better.

Statement by Carillion

Carillion refers to the following statement attributed to Philip Green in an article published by the Sunday Times on 17 August 2014: "Our synergy numbers have been audited, and at £1.5bn it is virtually the same as the current market value of either company." Carillion wishes to clarify that, while its previous statement that "as a direct result of the merger, the cost-base of the combined group could be reduced by at least £175 million per annum by the end of 2016"1 has not been "audited" in the technical sense, as set out in Carillion's announcement made on 14 August 2014, an independent accounting firm has provided public assurance, having tested the basis of preparation of the statement in line with the requirements of the Code, and has publicly reported that it has been properly compiled on the basis stated in that announcement. Also, Carillion's previous statement that the cost savings it has identified "would represent a capitalised value of over £1.5 billion before any re-rating"2 has not been audited or reported on by an independent accounting firm. Rather, that number was calculated on the basis set out in detail in Carillion's announcement of 14 August 2014.

1 Statement made on the basis of publicly available Balfour Beatty information
2 Calculated using weighted LTM multiple applied to cost-base reduction achieved by the end of 2016. See Appendix I


As required by Rule 2.6(a) of the Code, Carillion is required, by not later than 5.00 p.m. on 21 August 2014, to either announce a firm intention to undertake a transaction in accordance with Rule 2.7 of the Code or announce that it does not intend to undertake a transaction, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline may be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code. Carillion understands that, in accordance with Rule 2.6(c), the Takeover Panel will take into account the views of Balfour Beatty in considering whether to grant such an extension.

This announcement is not being made with the consent of Balfour Beatty.

Rejection of Carillion's Proposal

The Board of Balfour Beatty has considered the terms of the revised merger proposal from Carillion plc ("Carillion") dated 19 August 2014 and consulted with its major shareholders.

The revised proposal again fails to address the two key concerns that Balfour Beatty has consistently raised:

1. The considerable risks associated with the proposed business plan, including the strategy to significantly reduce the scale of the UK Construction business when it is poised to benefit from a recovery in the market; and
2. The continued intention to terminate the sale of Parsons Brinckerhoff at a point when it is reaching a successful conclusion.

Accordingly, the Board has unanimously concluded that the proposal is not in the best interests of its shareholders and has decided to reject the proposal. Therefore the Board will not be seeking an extension to the PUSU ("Put Up or Shut Up") deadline of 5pm on 21 August 2014.

The Board also notes that the revised proposal represents only a small value change in the terms compared to the proposal from Carillion rejected on 11 August 2014. Further details are set out within the Appendix.


more...

"Carillion has announced that it put an improved Merger proposal to Balfour Beatty. The Board of Balfour Beatty subsequently announced that it has considered the terms of the revised Merger proposal, consulted with its Major Shareholders and unanimously rejected the proposal. As a result Carillion is no longer pursuing such a Merger. For the purpose of Rule 2.8 and other relevant provisions of the Code, Carillion reserves the right to announce an offer or possible offer for Balfour Beatty within the next six months. There can be no certainty that any further offers will be made by Carillion for Balfour Beatty nor as to the terms of any such offer. Further information may follow in due course. "

Interim Management Statement

Trading remains in line with the Board's expectations and the guidance we gave when we announced the Group's half-year results on 13 August 2014.

Following our strong work winning performance in the first half of the year, during which we won new orders and probable orders worth approximately £3.2 billion, the successful mobilisation of new contracts, particularly in support services, will continue to be a major focus for the Group during the balance of 2014 and in the first half of 2015. Importantly, in winning new work we have maintained our highly selective approach to the contracts for which we bid and therefore the Group continues to target revenue growth in 2014 at an operating margin in line with expectations.

The Group also continues to have a robust balance sheet with strong cash flow and net borrowing reducing in line with expectations. Our cash flow performance continues to follow the profile we have consistently forecast, namely that following the completion of the planned rescaling of our UK construction activities the Group would return to positive net cash generation, as evidenced by our first-half results.

With trading in line with expectations, a strong order book and a substantial pipeline of contract opportunities, the Board's expectations for 2014 and the Group's prospects for growth over the medium term, remain unchanged.

Pre-close trading update

Carillion will issue a pre-close update on trading for 2014 on 10 December 2014, in advance of its preliminary full-year results announcement on 4 March 2015.

Decent enough statement skinny. Steady as she goes with no nasty surprises. Makes a mockery of the recent share price falls. Single figure PE and a 6% yield anyone?

It certainly is.

Re Contract

Chancellor of the Exchequer announces Carillion will be the first company to benefit from UK Export Finance's new Direct Lending Facility

The Chancellor of the Exchequer, George Osborne, has announced that Carillion will be the first company to benefit from the new Direct Lending Facility, which is being provided by UK Export Finance (UKEF) to boost UK exports.

Under the Direct Lending Facility, HM Treasury has made £3 billion available to support export finance on a first come, first served, basis that enables UKEF to provide funding at the Commercial Interest Reference Rate with partner banks arranging loans.

Carillion already has a strong relationship with UKEF, having secured a number of contracts in the Middle East and North Africa with the support of UKEF's Standard Buyer Credit Facility. The latest contract to be secured with the support of UKEF is a £75 million contract to deliver Phase 1 of the Dubai World Trade Centre District development for the Dubai World Trade Centre, using UKEF's new Direct Lending Facility with the loan being arranged by Deutsche Bank.

The contract involves the construction of a 146,000 square metre development between the current Dubai International Convention and Exhibition Centre and Emirates Towers in the heart of the city's Central Business District that will include an eight storey office building and a 588-room business and tourism hotel. The development will be designed to best-in-class quality standards and Phase 1 will include international Grade A quality offices, which have achieved LEED® Gold pre-certification from the US Green Building Council - the industry benchmark for green building performance covering design, construction, operations and maintenance. The technology solutions and infrastructure being planned align with the Dubai Government's Smart City strategic agenda.

Commenting, Chancellor of the Exchequer, George Osborne said: "Helping British companies to access global markets is a key part of our long term economic plan. So I'm delighted to announce the first deal supported by UK Export Finance's Direct Lending Facility, along with the twenty financial institutions that are going to help us deliver the loans.

"It is great to see successful companies like Carillion winning contracts around the world. This deal, the first in a pipeline of many will help us reverse the age old trend of not exporting enough, boosting growth and creating jobs."

Carillion Chief Executive, Richard Howson, added: "We have built a strong relationship with UKEF, which is helping companies like Carillion to use its sector-leading expertise and reputation for quality, reliability and safety to win major contracts. The new Direct Lending Facility is an exciting development, which will further enhance our ability to use Carillion's world-class skills to compete and win contracts in our international markets."

StockMarketWire.com
Carillion has been selected by the Highways Agency as one of five contractors that will deliver highway schemes with values between £100 million and £450 million, which form part of the HA's Collaborative Delivery Framework (CDF).

The CDF, under which the Agency plans to invest some £5 billion in England's motorways and major A roads over the next five years, is the largest framework the Agency has ever awarded and will allow the Agency to deliver large scale improvements to strategic roads, enabling economic growth across the country.

Of the £5 billion of planned investment, approximately £2.7 billion will be spent on schemes valued at between £100 million and £450 million. As one of five contractors appointed to deliver these schemes, Carillion expects to generate up to some £500 million of revenue from the Framework over the five year period.

StockMarketWire.com
Carillion has achieved financial close on the Sunderland City Council regeneration programme potentially worth up to £800m.

Carillion says that following its announcement in November 2013 that it had been selected as the preferred bidder to deliver the city's regeneration programme, the terms of the joint venture between Carillion and SCC have been agreed and the project has achieved financial close. This innovative contract, which will initially focus on the redevelopment of key sites across the City, is potentially worth up to £800 million to Carillion over the 20 year life of the regeneration programme.

Chief executive Richard Howson said: "We are delighted to have achieved financial close on this major innovative programme. I believe our success reflects Carillion's ability to offer solutions tailored to the specific needs of our customers and our ability to provide a fully integrated solution that will deliver the immediate and long-term services required by the Council. "We look forward to working with Sunderland City Council and to engaging with local communities and businesses to deliver the Council's vision for the City, which will bring major benefits to the people of Sunderland and act as a catalyst for further inward investment."

The gentle down trend in play since March has now been broken and it looks as though we have finally put the BBY debacle behind us. Onwards and upwards. This surge north is looking good and strong. 360 next stop I would have thought.

I would be happy with 390p and might seriously consider taking profit......hopefully ahead of everyone else!

StockMarketWire.com
The UK Ministry of Justice has appointed Carillion as the preferred bidder for two contracts to provide a range of services to the National Offender Management Service for public sector prisons in two geographical areas.

One contract will provide services in prisons in London and East of England and the second will provide services in prisons in the South West, South Central, Kent and Sussex.

These contracts, which cover approximately 50 prisons, will be for an initial five-year period, but with the potential for two subsequent one-year extensions, subject to satisfactory performance.

Carillion will provide a wide range of hard and soft facilities management services, including mechanical and electrical engineering maintenance, building fabric maintenance, energy and environmental services, waste management, escort services for contractors, cleaning services and minor building works.

Mobilisation is scheduled to begin in 2015 with a contract start date of 1 June 2015. The combined revenue from these two contracts is expected to be between £35 million and £40 million per annum.