Final Results
Carillion PLC
10 March 2004
10 March 2004
Carillion plc 2003 Preliminary Results
UK Business and Construction Services company Carillion plc announces its
preliminary results for the year ending 31 December 2003.
Highlights
• Pre-tax profit £50.8 million (2002 £50.2 m) pre exceptionals and
goodwill
• Earnings per share 16.8 pence (2002 16.6 p) pre exceptionals and
goodwill
• Exceptional profit of £11.2 million on first PPP equity sale
• Pre-tax profit £23.8 million (2002 £42.2 m) post exceptionals and
goodwill
• Net cash inflow from operating activities of £84.2 million
• Final ordinary dividend up 5 per cent to 3.475 pence per share (2002
3.3 p)
• Additional dividend from PPP equity sale of 1.7 pence per share
• Total dividend for 2003 6.75 pence per share
• Order book and frameworks of £5 billion plus 'probables' of £2.5
billion
Note: Exceptional items and goodwill amortisation are explained in the Operating
and Financial Review on pages 8 and 9 of this announcement.
Commenting, Chairman Sir Neville Simms, said, 'I am pleased to report that
Carillion met the objective in my 2003 interim report to shareholders of
delivering full year profit before tax, goodwill and exceptional items of not
less than the £50.2 million achieved in 2002, despite the previously announced
cost overrun on the Nottingham Express Transit project and substantial
unavoidable increases in pensions and insurance costs.
'With its strong order book and focus on growing markets, the Group expects to
deliver healthy earnings growth in 2004 and beyond.
'In addition, the Board's current intention is to continue to return to
shareholders a proportion of the sustainable new profit stream the Group will
create from its programme of PPP equity sales'.
For further information contact
Chris Girling Finance Director 01902 422431
John Denning Director Group Corporate Affairs 01902 316426
High resolution photographs are available, free of charge, to the media at
www.newscast.co.uk Telephone 0207 608 1000.
CHAIRMAN'S STATEMENT
I am pleased to report that Carillion met the objective in my 2003 interim
report to shareholders of delivering full-year profit before tax, goodwill and
exceptional items of not less than the £50.2 million achieved in 2002, despite
the cost overrun on Nottingham Express Transit (NET) project and substantial
unavoidable increases in pensions and insurance costs.
The Group also made an exceptional net profit of £11.2 million on its first PPP
equity sale, the first in a planned programme of such sales to create a
sustainable new profit stream. One third of the profit from this sale is being
returned to shareholders by way of a dividend. The Board's current intention is
to continue to return a proportion of the profit from future equity sales to
shareholders, whilst re-investing in new PPP projects to generate further
returns.
The Group's performance in 2003 demonstrates the benefits of its consistent and
effective strategy for growth and its relentless focus on cost reduction and
performance improvement. Equally, the Group's continued prosperity stems from
the skills and commitment of all our people and the culture of success that has
been developed throughout the business. The Board recognises that our people are
an important differentiator and we are grateful for the contributions made by
everyone in Carillion to its success.
The risk profile of the Group's activities has changed significantly over the
last three years, following the introduction of new risk management criteria
that govern project selection, bidding and delivery. This resulted in the Group
withdrawing in 2002 from bidding for further light rapid transit projects such
as NET, because the procurement model for such projects does not meet these new
criteria. Today, the Group's UK civil engineering activities are focused
exclusively on heavy rail and major road projects, where it has a track record
of delivering more reliable earnings.
The leading role the Group has taken on Corporate Social Responsibility (CSR)
has also made a significant contribution to risk management as well as to the
value of the Carillion brand. This was recognised in 2003 when Carillion
received Business in the Community's (BITC) 'Company of the Year' award for
excellence in CSR and was ranked in the top quartile of BITC's first CSR Index.
This Index attracted 122 entries, including many of the UK's leading companies.
The Group's commitment to Health and Safety remains paramount and we have
continued to work hard to improve our own performance and that of our industry
by working with others to develop and implement best practice. In 2003, the
Group's Accident Frequency Rate was down to its lowest ever level, a performance
that we expect to rank with the best in our industry. This was overshadowed by
the tragic rail accident on the West Coast Main Line in February 2004, in which
four of our employees were killed and three injured. While this accident remains
the subject of formal independent investigations, it would be inappropriate to
comment on it. However, the deep sense of shock and sadness felt by all our
people throughout the Group has redoubled our commitment to Health and Safety.
Our challenge is to continue to turn this absolute commitment into further real
and measurable progress so that our people can work safely wherever they are.
In line with the confidence I expressed in the Report and Accounts for the year
ending 2002, I can now report that Carillion has already put in place the
measures necessary to report against the recommendations of the Higgs review as
adopted in the revised Combined Code, which will come into force for the
financial year ending 31 December 2004.
The Group has continued to develop strong positions in its key growth markets to
maintain its order book at around £5 billion and build its largest ever pipeline
of probable orders worth around £2.5 billion, despite the loss of valuable rail
maintenance contracts following Network Rail's surprise decision to take rail
maintenance in-house. Even without this maintenance work, the Group will
continue to have a substantial rail infrastructure business with opportunities
for growth in the UK and in Scandinavia, following the acquisition of Swedish
Rail Systems in 2003.
The Group has also significantly strengthened its ability to deliver its
strategy for growth, having completed its restructuring to create three new
market focused businesses - Health, Transport and Business Services - and
disposed of four more non-core businesses.
Therefore, with its strong order book and focus on growing markets in which it
holds well-balanced positions, the Group expects to deliver healthy earnings
growth in 2004 and beyond.
The Board is recommending the payment of a final dividend of 3.475 pence per
share, making the total ordinary dividend for the year 5.05 pence, an increase
of 5.2 per cent on 2002. In addition, a dividend of 1.7 pence per share will be
paid in respect on the exceptional profit arising from the first sale of PPP
equity. The final ordinary dividend and special dividend will be paid together
on 25 June 2004 to shareholders on the register at close of business on 30 April
2004.
Sir Neville Simms
Chairman
CHIEF EXECUTIVE'S REVIEW
A number of significant achievements and events influenced our performance in
2003 and shaped the outlook for the Group going forward.
The basis for our success is our strategy for sustainable long-term growth,
supported by our ongoing drive for cost reduction and performance improvement.
This not only enabled us to deliver profit before tax, goodwill and exceptional
items of £50.8 million, backed by strong cash generation, but also positions the
Group for further growth in 2004 and beyond, despite Network Rail's decision to
take all rail maintenance contracts in-house.
Strong cash management resulted in a substantial second half cash inflow of
almost £100 million and net cash at the year-end of £75.8 million.
Nottingham Express Transit (NET)
We have completed the infrastructure contract for NET and the tram system is now
fully operational and open to the public. Returns on our £3.4 million (12.5 per
cent) equity interest in this project are expected to be in-line with our
original investment model.
A sustainable new profit stream from PPP equity sales
In addition to ordinary profit before tax, goodwill and exceptional items of
£50.8 million, we made an exceptional tax-free net profit of £11.2 million on
the sale of our £4.1 million equity interest in the Darent Valley Hospital PPP
project. The proceeds from this sale supported the Directors' previous valuation
of the Group's total PPP equity portfolio of approximately £115 million. We plan
to continue selling our PPP equity stakes in mature projects and the Board's
current intention is to continue to return a proportion of the profits to
shareholders, whilst re-investing in new PPP projects to generate further
returns.
Further investment of between £20 million and £30 million is already planned in
seven new projects, which have recently reached financial close or for which we
are the preferred bidder. Re-cycling our PPP equity stakes in this way will
create a new sustainable profit stream for the Group, which we expect to be
tax-free in 2004 and 2005, given the Group has substantial capital tax losses
and can claim tax relief by way of substantial shareholder exemption on certain
projects.
Rail Maintenance
Network Rail's announcement in October 2003 that all rail maintenance contracts
are to be taken in-house by September 2004 came as a complete surprise to the
industry, given earlier public assurances from Network Rail that it would not do
this. As previously announced, we estimate that the loss of rail maintenance
contracts will reduce our operating profit by around £7 million in 2004 and by
£15 million in 2005. However, the precise effects will depend on the timing and
terms under which contracts are transferred to Network Rail, which remain
subject to negotiations with Network Rail.
Cost reduction and performance improvement
The pursuit of cost reduction and performance improvement is fundamental to the
long-term success of our business. In 2003, unavoidable increases in pensions
and insurance costs of £18 million were covered by cost reduction. Our drive to
do things 'smarter, better, faster' will play a major part in helping us to
achieve our target of improving the Group's operating margin by one per cent
over the next three years.
Health and Safety
In 2003, the Group's Accident Frequency Rate reduced by 24 per cent to its
lowest ever level of 0.34 (accidents reportable under the 'Reporting of
Injuries, Diseases and Dangerous Occurrences Regulations' per 100,000 hours),
which we expect to rank with the best in our industry. However, as the Chairman
has commented in his statement, this has been overshadowed by the deep sense of
shock and sadness felt by all our people following the tragic rail accident on
the West Coast Main Line in February 2004. We shall, as usual, report in more
detail on Health and Safety in our 2003 Annual Report and Accounts and in our
annual Sustainability Report, including our performance in 2003 and programme
for continuous improvement.
Sustainability
Creating a more sustainable business through understanding, measuring and
improving the impacts we have on society and the environment, is not only an
important part of risk management, but a differentiator that is helping us to
deliver our business objectives and our strategy for growth. We will report our
performance in 2003 and our programme for 2004 in our 2003 Sustainability Report
and include summaries of both in our 2003 Annual Report and Accounts.
Order Book
In 2003, we continued to win work in all our key markets and maintained our
year-end order book at £5 billion. The composition of our order book continues
to reflect our strategy, with 70 per cent of the £5 billion now in our growth
markets of Services and PPP Investments and 70 per cent for 2005 and beyond. In
addition, our pipeline of probable new orders is at its highest ever level at
around £2.5 billion.
Restructured for growth
In 2003, we completed our current restructuring programme to improve operational
efficiency and accelerate the delivery of our growth strategy. We have created
three major new business groups - Health, Transport and Business Services -
aligned with our growth markets. Each is driven by the needs of its customers
and capable of delivering fully integrated solutions, from project finance
through design and construction to lifetime maintenance and facilities
management. These three new businesses together with our Private Finance, Crown
House, Building Developments and International Regional businesses are supported
by common shared services and a lean head office function.
The acquisition of Swedish Rail Systems in June 2003 for £2.9 million has
enhanced prospects for growth in our Transport business and the disposal of four
more non-core businesses - Expanded Piling, Markfield Insurance and two
materials testing facilities in the Middle East for a total of £7.0 million -
will help us focus senior management time and resources on our growth market
sectors.
Markets and outlook
Transport
In transport we are focused on the heavy rail and roads markets. Capital
investment in the UK's heavy rail network is forecast to grow by between 5 per
cent and 10 per cent per annum over the next three years. The outlook for
enhancement projects and track renewals therefore remains positive. In
particular, further investment in West Coast Route Modernisation, which is
expected to be at least £5 billion, and being selected as a framework contractor
by Network Rail for its new £2.5 billion track renewal programme, will continue
to create significant opportunities for our rail business.
We will continue to have a strong presence in UK rail maintenance, because our
contract to maintain the Channel Tunnel Rail Link, worth up to £120 million over
10 years, is unaffected by Network Rail's recent decision on maintenance.
Following the acquisition of Swedish Rail Systems, we expect significant
opportunities for growth in Scandinavia. For example, the Swedish rail
authorities plan to outsource an additional £500 million per annum of
infrastructure work by 2008.
The outlook for road construction and maintenance is continuing growth. In
construction, we are targeting the £11 billion programme of projects being
procured under the Government's Early Contractor Involvement and PFI initiatives
and were awarded two major projects worth nearly £200 million in 2003. In
maintenance, we are seeking to increase our 11 per cent share of the £800
million a year Highways Agency market, by expanding the range of services we
provide. We also continue to target large maintenance contracts for Local
Highway Authorities, a market worth around £800 million a year and growing at 5
per cent per annum. Our success in winning a major contract for Surrey County
Council in 2003 has been followed by a similar contract for Warwickshire County
Council, early in 2004, together worth over £240 million.
Health
The UK health market is set to grow rapidly as a result of the Government's
commitment to increase annual spending on health by some £40 billion to £105
billion by 2008. Within this market we are targeting five specific sectors - PPP
hospitals, Independent Sector Treatment Centres (ISTC), Local Improvement
Finance Trust (LIFT) projects, ProCure 21 and non-PPP facilities management.
PPP hospitals will continue to be one of our most important growth sectors, with
over 20 further concessions for major hospitals, worth around £15 billion, due
to be let as early as 2005. We are a market leader in this sector and expect to
build on the progress we made in 2003, which included reaching financial close
on our sixth UK hospital and becoming the preferred bidder for a further UK
hospital and for Canada's first two PPP hospitals. These four hospitals are
together worth around £2.3 billion.
With planned new investment of some £12 billion in ISTCs, LIFT and ProCure 21
projects between 2004 and 2008, we shall be seeking to build on the presence we
have established in these sectors. In 2003, we reached financial close on our
first ISTC, became preferred bidder for our first LIFT project, were selected by
the NHS as one of its principal partners for ProCure 21 and were awarded our
first ProCure 21 contract. Non-PPP facilities management continues to be an
important growth sector for us. With annual NHS expenditure of around £1 billion
in this sector, we will be seeking to add to the four long-term contracts we
already hold, worth around £42 million per annum.
Business Services
Our Business Services business is focused on two UK markets - private sector
facilities management and commercial building. In commercial building, we
continue to target the offices, retail and urban high-rise residential sectors.
The downturn in the South East, particularly in office developments, continues
to be offset by buoyant markets in the Midlands and North. Consequently, the
order book is healthy and we expect growth in our commercial building activities
in 2004.
In facilities management we are targeting a market worth around £5.5 billion a
year and growing at 5 per cent per annum. The acquisition of Citex Management
Services in 2002 considerably strengthened our presence and capability in this
market. We therefore expect to build on the success we had in 2003 in winning a
£90 million contract for Telewest Broadband and grow this area of our business
in 2004.
Crown House, our mechanical and electrical engineering business, made good
progress in 2003. It achieved an overall breakeven performance on substantially
reduced turnover and it exited the year trading profitably with a very strong
order book. Our Building Developments business once again delivered excellent
results and we expect this performance to continue in 2004.
Overall, the outlook for our International Regional Businesses remains positive.
In Canada, we expect further growth in our Business Services and PPP investment
activities, following the good progress made in 2003. In the Middle East, we
expect our traditional construction market to remain strong and to grow our
facilities management business. In France, trading conditions in 2003 were the
most positive for several years and this is expected to continue in 2004.
Therefore, the outlook for the Group is encouraging and we expect to deliver
healthy growth in 2004 and beyond.
John McDonough
Chief Executive
OPERATING AND FINANCIAL REVIEW
Growth in Business Services, particularly rail, enabled us to recover strongly
in the second half of the year to deliver profit before tax, goodwill
amortisation and exceptional items of £50.8 million, despite the cost overrun on
the Nottingham Express Transit project. At the same time, increases in pension
and insurance costs of approximately £18 million were offset by savings arising
from the Group's on-going programme of cost reduction and performance
improvement.
Interest and Cash
Group net interest payable increased to £0.5 million from a credit of £0.6
million in 2002, largely as a result of a first-half cash outflow due to advance
payments on a number of our large PPP contracts unwinding as these reached
completion. However, late in the second half there was a substantial cash inflow
from operating activities due to a strong performance in Business Services,
resulting in a net operating cash inflow for the year of £84.2 million. In
addition, there were cash receipts of £16.0 million from re-financing the Darent
Valley PPP concession and subsequent disposal of the Group's equity interest in
this project and £6.4 million from the disposal of four non-core businesses.
Capital expenditure amounted to £15.6 million and £14.9 million of loan advances
were made to PPP joint ventures. Corporate tax was a net receipt of £0.5 million
due largely to refunds of tax overpaid in prior years. Equity dividend payments
amount to £10.1 million. Net cash at the year-end increased by £70.5 million to
£75.8 million, excluding finance leases of £15.6 million.
Exceptional items
The net exceptional charge of £23.2 million comprises three main items. An
exceptional net profit of £11.2 million was made on the sale of our £4.1 million
equity interest in the Darent Valley Hospital PPP concession. A total provision
of £33.1 million has been made due to the impairment of goodwill resulting from
Network Rail's decision to take all rail maintenance work in-house. Maintenance
work represented the majority of the business of GT Railway Maintenance (GTRM)
when we acquired 49 per cent of that company in 1996 and the remaining 51 per
cent in 2001. Accordingly the goodwill arising on these acquisitions has been
written down. A net book loss of £1.3 million arose from the disposal of four
non-core businesses.
Goodwill amortisation
The increase in goodwill amortisation of £1.1 million to £3.8 million mainly
reflects a full-year charge for the goodwill arising from the acquisition of
Citex Management Services in September 2002.
Taxation
The Group's effective rate of tax on profit before exceptional items and
goodwill amortisation fell to 28 per cent in 2003. This is below the UK standard
rate of tax as we continued to access losses for which deferred tax assets had
not previously been recognised.
Earnings per share
Earnings per share before exceptional items and goodwill amortisation were 16.8
pence compared to 16.6 pence in 2002.
Acquisitions and Disposals
In June 2003, the Group acquired the entire share capital of Swedish Rail
Systems Entreprenad (SRSE), Sweden and Norway's largest private sector rail
infrastructure contractor. The consideration amounted to £2.9 million, which
represented the net asset value of SRSE and therefore no goodwill arose on the
acquisition. The disposal of four more non-core businesses in 2003 generated
proceeds of £7.0 million and a net profit of £4.2 million, before writing back
goodwill previously written off to reserves of £5.5 million.
Pensions
The Group continues to account for pension costs in accordance with SSAP 24. A
full valuation of the Group's main defined benefit pension schemes, the Staff,
'B' and Public Sector schemes, was undertaken at 31 December 2002. The global
fall in equity markets since September 2001 has reduced the funding position of
these principal schemes since the previous full valuation in 2000. At 31
December 2002, the staff scheme had a deficit of £22 million, the 'B' scheme had
a surplus of £1 million and the Public Sector scheme had a deficit of £3
million. As a result of this funding position, the Group recommenced
contributions to the Staff and 'B' schemes, which were also closed to new
members on 31 March 2003. The Group's pensions cost has therefore increased by
approximately £14 million in 2003.
The transitional disclosures required by Financial Reporting Standard (FRS) 17
'Retirement benefits' continue to be made by the Group. On an FRS 17 basis the
Group's various schemes had a net deficit at the end of 2003 of £76.6 million
compared to a net deficit of £52.9 million in 2002. The increase in net deficit
is due to the adoption of revised actuarial assumptions for life expectancy and
lower bond yields. Had the Group adopted the requirements of FRS 17, the
pensions cost would have been £22.2 million, compared to the SSAP 24 pension
cost of £22.1 million.
A substantial number of Carillion employees are expected to transfer to Network
Rail as a result of its decision to take all maintenance work in-house.
Consequently, an appropriate proportion of the assets of the Railways Pension
Scheme, which on a SSAP 24 basis is slightly in surplus, will transfer with
these employees. The Group accounts include prepayments to the Railways Pension
Scheme of some £13 million. Details of the transfer have yet to be finalised,
but our objective is for the overall effect of the transfer on pensions to be
neutral.
REPORTING SEGMENTS
INVESTMENTS
In this segment we report the equity returns on our investments in Public
Private Partnership (PPP) projects.
2003 2002
Turnover £67.5m £61.6m
Operating Profit* £8.6m £7.8m
Pre-tax Profit** £3.5m £2.5m
PPP net bid costs £3.2m (2002 £4.5m)
* Before goodwill amortisation of £0.1m (2002 nil)
** Before exceptional items of £0.6m (2002 nil)
Pre-tax profit increased by 40 per cent primarily because bid costs reduced.
This increase would have been higher, but profit from the Darent Valley hospital
concession reduced because the Dartford and Gravesham NHS Trust is receiving its
share of the gain made on re-financing this concession through lower
availability payments.
Construction of GCHQ was completed within budget, three months early in June
2003, and this concession is operating successfully.
In November 2003, the Group disposed of its £4.1 million equity shareholding in
the Darent Valley Hospital concession for £5.2 million. The disposal also
crystallised as profit the £10.8 million of cash received from the refinancing
to generate total proceeds of £16.0 million and a net exceptional profit of
£11.2 million. No tax was payable on this exceptional profit as the Group has
substantial capital losses for the purposes of taxation. In accordance with HM
Treasury Guidelines, the refinancing gain was shared with the Dartford and
Gravesham NHS Trust, which will receive around £11 million, mainly in the form
of reduced annual payments to the PPP concession company.
As expected, the flow of PPP projects reaching financial close and preferred
bidder increased significantly in 2003. We reached financial close on the £700
million Oxford John Radcliffe Hospital in December 2003 and were appointed
preferred bidder for five further PPP projects during the year that are expected
to generate construction, maintenance and facilities management work for the
Group worth around £1.8 billion. Our equity investment in these projects will be
between £20 million and £30 million.
Our preferred bidder successes included four health projects - the £800 million
William Osler and £60 million Royal Ottawa Hospitals, both in Canada, the new £1
billion Queen Alexandra Hospital in Portsmouth and the £80 million Birmingham
and Solihull LIFT (Local Improvement Finance Trust) project, involving the
development, construction and provision of facilities management for primary
care facilities. We were also appointed preferred bidder for the £130 million
A249 road improvement project, which reached financial close early in 2004, and
short listed for a further five projects worth around £2.0 billion.
Business Services
In this segment we report the results of our activities in rail infrastructure,
roads maintenance and facilities management and support services.
2003 2002
Turnover £933.5m £821.7m
Operating Profit* £51.1m £39.0m
Margin % 5.5 4.7
PPP net bid costs £1.3m (2002 £0.7m)
* Before exceptional operating charges of £33.1 m (2002 Nil) and goodwill
amortisation of £3.6 m (2002 £2.6 m).
Turnover increased by nearly 14 per cent primarily due to growth in heavy rail
maintenance. Operating profit rose by 31 per cent, with around half this
increase coming from improved margins and the remainder from higher volumes. The
improvement in margins reflected a positive outcome from final settlements on a
number of old Railtrack debts.
Rail
Carillion Rail continued to perform well in all areas of its activities, which
together account for around £550 million of turnover in this segment. Its
activities for Network Rail include maintenance of around 20 per cent of its
network, major projects for West Coast Route Modernisation, a wide range of
regional improvement projects, track renewals and specialist services. Carillion
Rail is also constructing Phase II of the Channel Tunnel Rail Link (CTRL) and
has a ten-year contract to maintain Phase I of the CTRL, which is not affected
by Network Rail's decision to take its rail maintenance contracts in-house.
Despite Network Rail's decision on rail maintenance, we will continue to have a
substantial rail projects, track renewals and maintenance business with good
prospects for growth from increasing capital investment in the UK rail network
and new opportunities overseas. In 2003, Carillion Rail was selected as one of
Network Rail's framework contractors to deliver its new £2.5 billion, five-year
track renewal programme and continues to be well positioned to benefit from
further substantial investment in the West Coast Route Modernisation project.
The acquisition of Swedish Rail Systems Entreprenad (SRSE) in June 2003 provides
access to the growing private sector rail market in Scandinavia. Sweden in
particular offers good opportunities for growth as it plans to outsource all
rail infrastructure work to the private sector by 2008, taking the current value
of this market from around £100 million per annum to £600 million per annum.
Road Maintenance
Our roads maintenance business, which is focused on long-term maintenance
contracts for the Highways Agency and large contracts for Local Authorities,
continued to perform well in 2003. It maintained its position as a leading
supplier to the Highways Agency, winning its second Managing Agent Contractor
contract for Area 12. This contract, which is initially for five years, is
extendable to seven years and worth up to £140 million.
Winning our first large Local Authority contract for Surrey County Council was a
major success in 2003. This is a four-year contract, extendable to 10 years,
with the maintenance element worth up to £160 million. In addition to
maintenance work, we will carry out improvement schemes under this contract up
to a value of £0.5 million. Early in 2004 we had a further success in this
growing market, winning a four-year contract for Warwickshire County Council,
which is extendable to seven years and worth up to some £84 million.
Facilities Management
The acquisition of Citex Management Services in the second half of 2002
significantly strengthened our offering for private sector customers and helped
our facilities management business to make good progress in 2003. It was
successful in winning a five-year National Total Facilities Management contract
for Telewest Broadband, worth around £90 million. This was awarded to Carillion
specifically on the basis of our proven capability and ability to deliver a
nationwide solution. Our facilities management business also secured contract
extensions for a number of existing blue chip private sector customers,
including Coca-Cola and HBOS that were in the portfolio acquired with Citex
Management Services.
Reaching financial close on the Oxford John Radcliffe Hospital PPP project and
securing preferred bidder positions on four more large PPP hospitals in 2003,
will also lead to further valuable contracts for our facilities management
business.
CONSTRUCTION SERVICES
In this segment we report the results of our UK Building and Capital Projects
businesses, which includes our International Regional businesses.
2003 2002
Turnover £1,001.8m £1,125.4m
Operating Profit* £5.6m £17.1m
Margin % 0.6 1.5
PPP net bid costs £7.9m (2002 £10.6m)
* Before goodwill amortisation of £0.1 m (2002 £0.1 m)
Turnover reduced by 11 per cent during 2003, primarily because a number of large
projects, including the GCHQ PPP project and the M6 Toll, were completed during
the year and there were no new starts on construction projects of comparable
size. Continuing our selective approach to construction also affected turnover,
particularly in UK civil engineering.
The reduction in operating profit reflects the cost overrun on the Nottingham
Express Transit (NET) project and lower turnover.
Building
Our UK building business performed soundly in 2003. Although turnover reduced as
PPP building activity declined, this is expected to reverse in 2004 as several
PPP projects for which we are preferred bidder are due to reach financial close
and move into construction.
Work winning in our chosen sectors of the commercial building market, namely
offices, retail and high-rise urban residential developments, was encouraging in
2003, with good progress in the North and Midlands more than offsetting a
reduced activity in the South. We also continued to benefit from developing
long-term relationships with our customers, with 75 per cent of turnover
generated by 20 key customers. Consequently, our building business ended the
year in a healthy position, having orders for 75 per cent of planned turnover
for 2004 and 50 per cent of planned turnover for 2005, either secured or
probable.
Our Building Developments business once again delivered excellent results by
pursuing its strategy of specialising in the regeneration of brown field sites
and developments where risk is minimised through pre-letting or sale to
occupiers in sectors where there is continuing demand.
Capital Projects
The M6 Toll, one of the UK's largest ever road projects and which accounted for
the majority of our UK civil engineering activity, was completed six weeks ahead
of schedule in December 2003.
Our contract to build the infrastructure for the Nottingham Express Transit PPP
project has also been completed and following a period of successful shadow
running the tram system is now fully operational.
In 2003, we won our first road construction contract under the UK Government's
Early Contractor Involvement (ECI) programme - the £65 million upgrade to the
A74 in Cumbria to motorway standard. We are specifically targeting the ECI and
PPP programmes, under which some £11 billion of projects are planned over the
period 2000 to 2010, because these procurement methods meet our risk management
criteria. ECI contracts involve the development of a detailed design before the
project moves into construction, which in the case of the A74 is scheduled for
2006. Our appointment as the preferred bidder for the A249 Design, Build,
Finance and Operate PPP concession, which reached financial close early in 2004,
is expected to generate over £100 million of construction work for the Group
over the next three years, starting in 2004.
Our international regional business in Canada, the Middle East and France all
performed well in 2003, as they continued to implement their strategy for
growth, which mirrors our UK strategy. We made particularly good progress in
Canada, where Government procurement is following the UK model for Public
Private Partnerships (PPP) and for outsourcing infrastructure services. As well
as our successes in the PPP health market (see Business Services above), we also
won two more highways maintenance contracts in Ontario, worth a total of £40
million.
By continuing to focus on project selectivity and operational efficiency, Crown
House significantly improved its performance in 2003 and ended the year trading
profitably with a strong order book.
Chris Girling
Finance Director
Consolidated Profit and Loss Account
for the year ended 31 December 2003
2003 2002
Note Before Exceptional Before Exceptional
exceptional items exceptional items Total
items (see Note 3) Total items (see Note 3)
£m £m £m £m £m £m
Total
turnover 2 1,977.6 - 1,977.6 1,974.4 - 1,974.4
Less: share of
joint
ventures'
turnover 2 (116.7) - (116.7) (127.1) - (127.1)
------ ------ ------ ------- ------ ------
Group
turnover 1,860.9 - 1,860.9 1,847.3 - 1,847.3
Cost of
sales (1,693.2) - (1,693.2) (1,660.1) - (1,660.1)
------ ------ ------ ------- ------ ------
Gross profit 167.7 - 167.7 187.2 - 187.2
Administrative
expenses (129.6) (33.1) (162.7) (149.4) - (149.4)
------ ------ ------ ------- ------ ------
Group
operating
profit 38.1 (33.1) 5.0 37.8 - 37.8
Share of
operating
profit in
joint
ventures 2 14.3 - 14.3 14.3 - 14.3
------ ------ ------ ------- ------- ------
Total
operating
profit 2 52.4 (33.1) 19.3 52.1 - 52.1
Profit on sale
of fixed asset
investments 3 - 11.8 11.8 - - -
Profit/(loss)
on sale of
businesses
------------------------------------------------------------------------------------------------
Group 3 - (1.5) (1.5) - (0.3) (0.3)
Joint ventures 3 - 0.2 0.2 - (5.0) (5.0)
------------------------------------------------------------------------------------------------
- (1.3) (1.3) - (5.3) (5.3)
------- ------- ------- ------- ------- ------
Profit on
ordinary
activities
before
interest 2 52.4 (22.6) 29.8 52.1 (5.3) 46.8
Net interest
(payable)/
receivable
------------------------------------------------------------------------------------------------
Group (0.5) - (0.5) 0.6 - 0.6
Joint ventures (4.9) (0.6) (5.5) (5.2) - (5.2)
------------------------------------------------------------------------------------------------
(5.4) (0.6) (6.0) (4.6) - (4.6)
------- ------- ------- ------- ------- ------
Profit on
ordinary
activities
before
taxation 47.0 (23.2) 23.8 47.5 (5.3) 42.2
Taxation on
profit on
ordinary
activities (13.8) - (13.8) (13.8) 0.9 (12.9)
------- ------- ------- ------- ------- ------
Profit on
ordinary
activities
after
taxation 33.2 (23.2) 10.0 33.7 (4.4) 29.3
Equity
minority
interests (1.7) - (1.7) (2.1) - (2.1)
------- ------- ------- ------- ------- ------
Profit for the
financial
year 31.5 (23.2) 8.3 31.6 (4.4) 27.2
Equity
dividends 4 (14.1) - (14.1) (9.9) - (9.9)
------- ------- ------- ------- ------- ------
Retained
(loss) /
profit for the
Group and
its share of joint
ventures 17.4 (23.2) (5.8) 21.7 (4.4) 17.3
------- ------- ------- ------- ------- ------
Earnings per 5
ordinary
share
Basic 15.2p (11.2p) 4.0p 15.3p (2.1p) 13.2p
------ ------ ------ ------- ------- ------
Diluted 15.1p (11.1p) 4.0p 15.1p (2.1p) 13.0p
------- ------- ------- ------- ------- ------
Basic before
all exceptional
items and
goodwill
amortisation 16.8p 16.6p
------ -------
Dividends per
ordinary
share 4 6.75p 4.8p
------ ------
The above results are wholly derived from continuing operations.
Consolidated Statement of Total Recognised Gains and Losses
2003 2002
£m £m
Profit for the financial year
Group 2.7 25.0
Joint ventures 5.6 2.2
------- -------
8.3 27.2
Exchange rate movements (1.3) (1.4)
------- -------
Total recognised gains and losses for the year 7.0 25.8
======= =======
Consolidated Balance Sheet
At At
31 December 31 December
2003 2002
£m £m
Fixed assets
Intangible assets 21.3 49.0
Tangible assets 68.1 56.9
Investments in joint ventures:
-------- -------
Share of gross assets 634.7 646.1
Share of gross liabilities (594.7) (606.8)
-------- -------
40.0 39.3
Loan advances 33.1 21.7
-------- -------
73.1 61.0
Other investments 6.3 6.1
-------- -------
Total investments 79.4 67.1
-------- -------
168.8 173.0
-------- -------
Current assets
Stocks 46.3 43.7
Debtors 511.3 523.6
Investments 4.7 8.2
Cash at bank and in hand 128.1 85.1
-------- -------
690.4 660.6
Creditors: amounts falling due within one year
Borrowings (14.0) (20.4)
Other creditors (621.2) (574.9)
-------- -------
(635.2) (595.3)
Net current assets
-------- -------
Due within one year 26.1 42.3
Debtors due after more than one year 29.1 23.0
-------- -------
55.2 65.3
-------- -------
Total assets less current liabilities 224.0 238.3
Creditors: amounts falling due after more than one year
Borrowings (53.9) (66.8)
Other creditors (7.6) (13.7)
-------- -------
(61.5) (80.5)
Provisions for liabilities and charges (4.7) (8.1)
-------- -------
Net assets 157.8 149.7
======== =======
Financed by:
Capital and reserves
Called up share capital 107.0 106.5
Share premium account 6.5 5.5
Merger reserve 8.2 8.2
Profit and loss account 33.8 27.3
-------- -------
Equity shareholders' funds 155.5 147.5
Equity minority interests 2.3 2.2
-------- -------
157.8 149.7
======== =======
Consolidated Cash Flow Statement
Year ended Year ended
31 December 31 December
2003 2002
£m £m
Net cash inflow from operating activities 84.2 1.1
Distributions received from joint ventures 14.7 3.8
Returns on investments and servicing of finance
-----------------------
Dividend paid to minority interests (1.6) (3.2)
Interest paid (5.6) (5.3)
Finance lease charges (0.4) (0.1)
Interest received 5.5 5.9
-----------------------
Net cash outflow from returns on investments and
servicing of finance (2.1) (2.7)
Corporate taxation received / (paid) 0.5 (9.0)
Capital expenditure and financial investment
-----------------------
Payments to acquire tangible fixed assets (15.6) (21.0)
Payments to acquire fixed asset investments - (0.1)
Sale of current asset investments 3.5 0.9
Purchase of own shares by ESOP (0.2) -
Sale of tangible fixed assets 1.5 4.8
----------------------
Net cash outflow from capital expenditure and
financial investment (10.8) (15.4)
Acquisitions and disposals
-----------------------
Purchase of businesses - (8.9)
Sale of businesses 4.6 0.3
Purchase of equity investment in joint ventures (0.4) (0.1)
Sale of equity investment in joint ventures 5.1 -
Loan advances to joint ventures (14.9) (2.5)
-----------------------
Net cash outflow from acquisitions and disposals (5.6) (11.2)
Equity dividends paid (10.1) (9.3)
-----------------------
Net cash inflow / (outflow) before management of
liquid resources and financing 70.8 (42.7)
Management of liquid resources
-----------------------
Increase in short term deposits (25.4) (10.6)
-----------------------
Net cash outflow from management of liquid
resources (25.4) (10.6)
Financing
-----------------------
Net (repayment) / drawdown of debt (20.9) 45.0
Repayment of finance leases (2.2) (2.5)
Issue of share capital 1.5 0.4
-----------------------
Net cash (outflow) / inflow from financing (21.6) 42.9
--------- --------
Increase / (decrease) in cash in the year 23.8 (10.4)
========= ========
Notes to the Cash Flow Statement
Reconciliation of operating profit to net cash inflow from operating activities
2003 2002
£m £m
Group operating profit before exceptional items 38.1 37.8
Depreciation 15.0 14.6
Reversal of impairment in tangible fixed assets (2.2) -
Loss/(profit) on disposal of fixed assets 0.1 (0.8)
Decrease in market value of listed current asset
investments - 0.3
Amortisation of goodwill 3.8 2.7
Amortisation of own shares - (3.3)
Decrease in stocks 0.9 9.7
Decrease in debtors 22.6 41.9
Increase / (decrease) in creditors due within one year 10.4 (96.9)
(Decrease) / increase in creditors due after more than one
year (5.9) 2.1
Decrease in provisions (0.9) -
Increase / (decrease) in bills of exchange 3.0 (3.5)
-------- --------
Net cash inflow from operating activities before exceptional
items 84.9 4.6
Exceptional operating cash spend (0.7) (3.5)
-------- --------
Net cash inflow from operating activities 84.2 1.1
======== ========
Analysis of changes in net funds/(debt)
At Cash flows Exchange Other non At 31
1 January rate cash December
2003 movements movements 2003
£m £m £m £m £m
Cash at bank 54.6 16.0 0.1 - 70.7
and in hand Bank (18.3) 7.8 (0.8) - (11.3)
overdrafts
------- ------- ------- ------- -------
36.3 23.8 (0.7) - 59.4
Short term deposits 30.5 25.4 1.5 - 57.4
Bank loans (61.5) 22.5 (0.4) - (39.4)
Other loans - (1.6) - - (1.6)
Finance leases (7.4) 2.2 - (10.4) (15.6)
------- ------- ------- ------- -------
Net funds/(debt) (2.1) 72.3 0.4 (10.4) 60.2
------- ------- ------- ------- -------
Reconciliation of net cash flow to movement in net funds/(debt)
2003 2002
£m £m
Increase / (decrease) in cash in the year 23.8 (10.4)
Increase in short term deposits 25.4 10.6
Cashflow from repayment/(drawdown) of debt 20.9 (45.0)
Cash outflow from finance leases 2.2 2.5
--------- --------
Movement in net funds resulting from cash flows 72.3 (42.3)
Exchange rate movements 0.4 (1.5)
Non cash movements from finance leases (10.4) (3.0)
--------- --------
Movement in net funds in the year 62.3 (46.8)
Net (debt)/ funds at 1 January (2.1) 44.7
--------- --------
Net funds / (debt) at 31 December 60.2 (2.1)
--------- --------
1. Basis of preparation
The financial information set out herein (which was approved by the Board on 10
March 2004) does not constitute the Company's statutory accounts for the years
ended 31 December 2003 and 2002. The statutory accounts for the year ended 31
December 2002 have been delivered to the Registrar of Companies and those for
the year ended 31 December 2003 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those accounts; their reports
were unqualified and did not contain statements under section 237(2) or (3) of
the Companies Act 1985.
Following the announcement made by Network Rail on 24 October 2003 that it
intends to terminate rail maintenance contracts by September 2004 the Directors
have performed a review of the Group's rail maintenance business and its
associated assets. In light of the Network Rail contracts ending, an impairment
of goodwill originally recognised on the acquisition of GT Railway Maintenance
Holdings Limited has been made of £33.1m (see Note 3). In addition, there is a
degree of uncertainty concerning the carrying value of certain fixed assets,
stocks and debtors that relate to the Network Rail contracts. At the date of
approval of the financial statements, the potential transfer of these assets to
Network Rail is subject to on-going discussions. In the opinion of the Directors
the realisable values of these assets are not expected to be significantly
different from their carrying values. Therefore, the financial statements have
been prepared on the basis that there are no material adjustments required to
the carrying values of these assets as at 31 December 2003.
2. Analysis of turnover, profit before interest and net assets
Net assets/(liabilities)
2003 2002 2003 2002
£m £m £m £m
Class of business:
Investments 67.5 61.6 46.5 32.2
Business services 933.5 821.7 (22.4) 60.9
Construction 1,001.8 1,125.4 106.3 64.2
services
Internal trading (25.2) (34.3) - -
Corporate centre - - (48.4) (12.9)
Net cash - - 75.8 5.3
------- ------- ------- -------
1,977.6 1,974.4 157.8 149.7
======= ======= ======= =======
Geographical
origin:
UK 1,633.2 1,694.4 85.9 153.4
Europe 212.3 146.9 (17.5) (23.7)
Rest of the World 132.1 133.1 13.6 14.7
Net cash - - 75.8 5.3
------- ------- ------- -------
1,977.6 1,974.4 157.8 149.7
======= ======= ======= =======
The analysis of turnover by geographical market served is not materially
different from that by geographical origin.
Profit on ordinary activities before interest
2003 2002
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
items items
Class of £m £m £m £m £m £m
business:
Investments 8.5 11.8 20.3 7.8 - 7.8
Business
services 47.5 (32.8) 14.7 36.4 - 36.4
Construction
services 5.5 (1.6) 3.9 17.0 (5.3) 11.7
Corporate
centre (9.1) - (9.1) (9.1) - (9.1)
-------- -------- ------ ------- -------- ------
52.4 (22.6) 29.8 52.1 (5.3) 46.8
======== ======== ====== ======= ======== ======
Geographical
origin:
UK 48.6 (23.0) 25.6 50.1 (5.3) 44.8
Europe 3.9 - 3.9 (0.9) - (0.9)
Rest of the World (0.1) 0.4 0.3 2.9 - 2.9
-------- -------- ------ ------- -------- ------
52.4 (22.6) 29.8 52.1 (5.3) 46.8
======== ======== ====== ======= ======== ======
The Group's share of the turnover and net assets in joint ventures was as
follows:
Turnover Net assets/(liabilities)
2003 2002 2003 2002
Class of business: £m £m £m £m
Investments 65.1 60.9 50.8 38.8
Business 3.8 0.6 (1.6) -
services
Construction 47.8 65.6 23.9 22.2
services ------- ------- ------- -------
116.7 127.1 73.1 61.0
======= ======= ======= =======
Geographical
origin:
UK 71.7 89.4 68.1 56.7
Europe 2.3 3.6 (2.8) (2.6)
Rest of the 42.7 34.1 7.8 6.9
World ------- ------- ------- -------
116.7 127.1 73.1 61.0
======= ======= ======= =======
The Group's share of the profit on ordinary activities before interest in joint
ventures was as follows:
2003 2002
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
Class of items items £m
business:
£m £m £m £m £m
Investments 11.5 - 11.5 12.5 - 12.5
Business
services (1.9) - (1.9) - - -
Construction
services 4.7 0.2 4.9 1.8 (5.0) (3.2)
-------- -------- ------ ------- -------- ------
14.3 0.2 14.5 14.3 (5.0) 9.3
======== ======== ====== ======= ======== ======
Geographical
origin:
UK 12.0 - 12.0 13.0 (5.0) 8.0
Europe 0.2 - 0.2 - - -
Rest of the 2.1 0.2 2.3 1.3 - 1.3
World
-------- -------- ------ ------- -------- ------
14.3 0.2 14.5 14.3 (5.0) 9.3
======== ======== ====== ======= ======== ======
3. Exceptional items
2003 2002
Gross Tax Gross Tax
£m £m £m £m
Operating items:
Group:
Impairment of goodwill 25.0 - - -
Impairment of goodwill
previously written off
to reserves 8.1 - - -
-------- ------- ------- -------
33.1 - - -
-------- ------- ------- -------
Non-operating items:
Group:
Profit on sale of fixed asset
investments (11.8) - - -
Loss on sale of businesses 1.5 0.2 0.3 -
-------- ------- ------- -------
(10.3) 0.2 0.3 -
Joint ventures:
(Profit)/loss on sale of (0.2) - 5.0 (0.9)
businesses
Interest payable 0.6 (0.2) - -
-------- ------- ------- -------
(9.9) - 5.3 (0.9)
-------- ------- ------- -------
Total exceptional items 23.2 - 5.3 (0.9)
======== ======= ======= =======
Further disclosure on the Group's sale of businesses and fixed asset investments
during 2003 can be found in Note 7. The profit on sale of business of £0.2
million in joint ventures relates to the disposal of a materials testing
business in the Middle East.
4. Equity dividends
2003 2002
Pence Pence
£m per share £m per share
Equity shares
Ordinary shares:
Interim 3.3 1.575 3.1 1.5
Final 10.8 5.175 6.8 3.3
------ ------ ------ ------
Total equity 14.1 6.75 9.9 4.8
dividends ====== ====== ====== ======
The final dividend for 2003 includes 1.7 pence per share that represents a
return to shareholders of a proportion of the profit generated on the disposal
of the Group's equity shareholding in the Darent Valley Hospital PPP joint
venture.
5. Earnings per ordinary share
(a) Basic
Earnings per share is calculated by dividing the profit attributable to ordinary
shareholders, amounting to £8.3m (2002: £27.2 m), by 207,622,166 (2002:
206,450,536) ordinary shares being the weighted average number of shares in
issue during the year. The weighted average number of shares excludes shares
held by the Employee Share Ownership Plan and the QUEST, which amount to
6,206,528 shares in total (2002: 6,489,637).
(b) Basic before all exceptional items and goodwill amortisation
A reconciliation of the basic earnings per ordinary share to the adjusted
amounts shown on the face of the profit and loss account is calculated below to
show the impact of all exceptional items (as disclosed in Note 3) and the
amortisation charge from goodwill:
2003 2002
Pence Pence
£m per share £m per share
Profit attributable to
ordinary shareholders 8.3 4.0 27.2 13.2
Exceptional items:
Impairment of goodwill 33.1 15.9 - -
Profit on sale of
fixed asset investments(11.8) (5.6) - -
Loss on sale of 1.3 0.6 5.3 2.5
businesses
Interest payable 0.6 0.3 - -
Less taxation
in respect of
the above - - (0.9) (0.4)
------- ------- ------- -------
Profit before all
exceptional items 31.5 15.2 31.6 15.3
Amortisation of
goodwill 3.8 1.8 2.7 1.3
Less taxation
in respect of
the above (0.4) (0.2) (0.1) -
======= ======= ======= =======
Profit before
all exceptional
items and
goodwill
amortisation 34.9 16.8 34.2 16.6
======= ======= ======= =======
(c) Diluted
Diluted earnings per ordinary share have been calculated on both profit before
and after all exceptional items, using the same earnings numerators as set out
in (a) and (b) above and by reference to the following number of shares:
Number of ordinary
shares
2003 2002
million million
Number of ordinary shares per basic earnings per share
calculations 207.6 206.5
Adjustments to reflect dilutive shares under option 1.7 2.1
------- -------
Number of ordinary shares per diluted earnings per 209.3 208.6
share calculations ======= =======
6. Reconciliation of movements in consolidated equity shareholders' funds
2003 2002
£m £m
Profit for the financial year
Group 2.7 25.0
Joint ventures 5.6 2.2
-------- --------
8.3 27.2
Equity dividends (14.1) (9.9)
-------- --------
Retained (loss) / profit for the Group and its share of
joint ventures (5.8) 17.3
Exchange rate movements (1.3) (1.4)
New share capital subscribed by QUEST 1.5 0.2
Other new share capital issued - 0.2
Transfer arising on issue of shares to QUEST - (0.2)
Goodwill written back on disposal 5.5 -
Impairment of goodwill previously written off to reserves 8.1 -
-------- --------
Net addition to equity shareholders' funds 8.0 16.1
Opening equity shareholders' funds 147.5 131.4
-------- --------
Closing equity shareholders' funds 155.5 147.5
======== ========
7. Acquisitions and disposals
(a) Acquisitions
In June 2003, the Group acquired the entire share capital of Swedish Rail
Systems Entreprenad (SRSE), Sweden and Norway's largest private sector rail
infrastructure contractor for consideration of £2.9m. In July 2003, the Group
acquired an additional 31% of the ordinary share capital of UK Highways Services
Limited for consideration of £1.4m. Details of these acquisitions are summarised
in total below:
Book value Fair value Total
adjustments
£m £m £m
Tangible fixed assets 1.4 - 1.4
Stocks 2.2 - 2.2
Debtors due within one year 6.2 (1.0) 5.2
Cash 3.9 - 3.9
Creditors due within one year (9.4) - (9.4)
Creditors due after more than one year (0.1) - (0.1)
------- -------- --------
Group share of net assets acquired 4.2 (1.0) 3.2
======= ========
Goodwill arising on acquisition 1.1
--------
Fair value of consideration 4.3
========
The fair value adjustment relates to a re-assessment of the recoverability of
contract debtors. Of the fair value of consideration, £3.9m was satisfied in
cash, which includes costs associated with the acquisitions of £0.1m. Contingent
consideration of £0.4m is included within creditors due in less than one year.
The acquisitions have been reflected in the Group cash flow statement as
follows:
£m
Cash consideration paid (including acquisition costs) 3.9
Cash acquired in the businesses (3.9)
--------
Cash movement in respect of acquisitions -
========
During the year the Group increased its equity investments in joint venture
companies by £0.5m, of which £0.4m was satisfied in cash and £0.1m by way of
capitalisation of a short-term loan advance. No goodwill arose on these
transactions.
(b) Disposals
During the year the Group disposed of a number of non-core businesses. The
movements in total that relate to these disposals are summarised below:
Net Book Value
£m
Tangible fixed assets (2.0)
Stocks (0.1)
Debtors due within one year (6.4)
Cash (1.8)
Creditors due within one year 8.7
---------
Net assets disposed of (1.6)
Fair value of consideration receivable 7.0
Closure costs (1.4)
Goodwill written back on disposal (5.5)
=========
Loss on disposal (1.5)
=========
The consideration receivable is stated after deducting costs associated with the
disposals of £0.5m and includes £0.6m held in debtors due within one year at the
year end.
The disposals have been reflected in the Group cash flow statement as follows:
£m
Cash consideration received (net of disposal costs) 6.4
Cash in businesses disposed of (1.8)
---------
Cash inflow in respect of disposals 4.6
=========
In November 2003, the Group disposed of its 30% equity shareholding and its loan
advances in the Darent Valley Hospital PPP joint venture. This followed the
successful re-financing of the joint venture in March 2003 which generated
£10.8m of cash for the Group.
The carrying value of the investment at the date of disposal was negative at
£6.7m, principally due to the receipt of the re-financing proceeds. The equity
disposal generated cash consideration of £5.1m (after deducting disposal costs
of £0.1m). The profit generated from the disposal was therefore £11.8m.
8. Posting of statutory accounts to shareholders
The Company's report and accounts will be posted to shareholders by 6 April
2004. From that date copies will be available from the registered office,
Carillion plc, Birch Street, Wolverhampton, WV1 4HY.
9. Annual General Meeting
A resolution will be put to shareholders at the AGM on 12 May 2004 for the
Company to be authorised to purchase its own shares. The Board has no present
intention of making any such purchase and the resolution is in keeping with the
practice of other companies.
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