AGM Statement

RNS Number : 3747L

Carillion PLC

05 May 2010

 



5 MAY 2010

       CARILLION PLC

AGM AND INTERIM MANAGEMENT STATEMENT

"PROGRESS IN LINE WITH EXPECTATIONS"

At Carillion plc's Annual General Meeting today, Chairman, Philip Rogerson, made the following comments on trading in the period 1 January to 5 May 2010.

"Carillion has continued to make progress in line with our expectations, reflecting the resilience of the business, good cash flow from operations and a strong balance sheet.

New order intake continues to be healthy and the Group's substantial order book has increased since the end of 2009, with 95 per cent of expected revenue in 2010 now covered by the order book and probable orders.

In support services, the outlook continues to be positive as we continue to win new orders.  As indicated in our preliminary results announcement, we expect the operating margin in support services to improve to around five per cent in 2010, with revenue declining slightly, due to the disposal of non-core businesses in 2009 and also to contract selectivity.  Our pipeline of contract opportunities remains strong as organisations in both the public and private sectors look to outsource non-core services in order to reduce costs.  Furthermore, we remain confident that as we move through 2011 and into 2012 this trend will accelerate in the public sector, as following the UK General Election there will be growing pressure on both central and local government to reduce costs and improve the quality of public services.  We are well positioned to benefit from this trend given our strengths in providing bespoke solutions for customers with large complex property estates and infrastructure networks, where we can use our nationwide skills and capabilities to differentiate our offering.  

Our portfolio of investments in Public Private Partnership (PPP) projects continues to perform strongly and we have continued to add new projects to the portfolio.  Since the end of 2009, we have achieved financial close on two further projects, Southmead Hospital in Bristol and the Rochdale Building Schools for the Future programme, in which we will invest over £52 million.  We have also been shortlisted for a further three projects in Canada, increasing the number of projects for which we are preferred bidder or shortlisted to 9, in which Carillion's total potential equity investment would be up to some £120 million.  With a good pipeline of project opportunities in the UK and particularly in Canada, we expect to continue winning PPP projects to create substantial value for the Group.

In Middle East construction services, we are now confident that our operating margin in 2010 will be significantly ahead of our original target of at least six per cent, as a result of this year's contract mix.  As previously indicated, we expect revenue to be weighted towards the second half, due to the timing of project starts and completions.  Our strong brand reputation for quality and reliability continues to help us win new orders in the Middle East, as evidenced by the contracts recently awarded in Abu Dhabi to our Joint Venture business.  These included the prestigious New York University, the UAE University and a new IKEA development, together worth some £680 million to the Joint Venture and around £333 million to Carillion.  Notwithstanding these substantial contract awards, we have maintained our pipeline of contract opportunities in the Middle East at approximately £6 billion, of which Carillion's share would be some £4 billion, which reflects the strength of our markets in Abu Dhabi, Oman and Qatar.         

In construction services (excluding the Middle East), we are making good progress with re-scaling our UK business in line with our planned reduction in its annual revenue from around £1.8 billion in 2009 to some £1.2 billion by the end of 2012.  This will ensure we maintain the construction capability needed to support the delivery of integrated solutions for Public Private Partnership projects and other support services customers, while reflecting the decline we expect in other market sectors.  In Canada, our markets remain healthy, notably Public Private Partnership projects, and we continue to expect revenue growth in Canada to offset partially the decline in the UK.  We have 100 per cent of expected revenue in this segment in 2010 covered by our high-quality order book and probable orders, which supports our objective of improving our overall construction margin, including the Middle East, towards three per cent in 2010.

Therefore, with a resilient business mix, a substantial order book and a strong pipeline of contract opportunities the Group remains well positioned to make progress in 2010, in line with our expectations".

For further information contact

Richard Adam, Group Finance Director                                                             tel: [phone]

John Denning, Group Corporate Affairs Director                                                  tel: [phone]

Finsbury

James Murgatroyd

Gordon Simpson                                                                                             tel:  [phone]

5 May 2010          

Notes to Editors

Carillion is a leading support services company with a substantial portfolio of Public Private Partnership projects and extensive construction capabilities.  The Group has annual revenue of over £5 billion, employs around 50,000 people and operates across the UK, in the Middle East, Canada and the Caribbean.

In the UK, Carillion's principal market sectors are Defence, Education, Health, Facilities Management & Services, Rail, Roads, Building, Civil Engineering and Utilities Services.

In the Middle East, Carillion's principal market sectors are Construction and Facilities Management. In Canada and the Caribbean, the Group's main sectors are Health, Roads Maintenance and Construction.

Carillion's portfolio of equity investments in Public Private Partnership projects includes projects in the UK and Canada, particularly in the Defence, Education, Health and Transport sectors.

This and other Carillion news releases can be found at www.carillionplc.com

 

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