Half Yearly Report

RNS Number : 0650Y

Carillion PLC

27 August 2009

 



Half Yearly Results for the six months ended 30 June 2009  

Strong earnings and dividend growth with net borrowing substantially reduced

Underlying results

●	Total revenue up 13% to £2,722.9m (2008: £2,411.0m)
●	Underlying profit before taxation up 17% to £62.6m (2008: £53.6m)(1)
●	Underlying earnings per share up 11% to 12.8p (2008: 11.5p)(2)

Reported results

●	Profit before taxation up 92% to £51.9m (2008: £27.0m)(1)
●	Basic earnings per share up 60% to 11.2p (2008: 7.0p)
●	Proposed interim dividend up 12% to 4.6p (2008: 4.1p)
●	Net borrowing at 30 June 2009 of £146.0m (2008: £264.1m)

Operational highlights

●	Strong first-half growth in underlying earnings(2) - on track to achieve objective of delivering materially enhanced earnings in the full year.
●	Balance sheet remains robust - cash backed profit, net borrowing at the half year reduced substantially to £146.0 million (31 December 2008: £226.7 million).
●	Alfred McAlpine integration cost savings coming through as planned - increasing from £15 million in 2008 to £35 million in 2009 and to £50 million per annum in 2010.
●	Disposed of external IT Services business and outsourced internal IT Services function - generated net cash of £75.4 million.
●	Support services continues to be a key driver of earnings growth - margins improving in line with expectations and benefiting from Alfred McAlpine integration cost savings.
●	Equity investments in Public Private Partnership projects continue to generate substantial value - sale of two investments in June 2009 generated proceeds of £13.8 million.
●	Middle East construction services performing strongly - on track to increase revenue from £464m in 2008 to around £600m by the end of 2009 following successful expansion into Abu Dhabi.
●	Construction services (excluding the Middle East) performing satisfactorily - continues to benefit from a high quality order book and pipeline.
●	High quality order book of some £19.7 billion at 30 June 2009 (31 December 2008: £20.4 billion), plus probable new orders worth approximately £2.9 billion (31 December 2008: £3.1 billion).

(1)	After Joint Ventures taxation of £3.3m (2008: £4.5m) and before intangible amortisation, impairment, restructuring costs and non-operating items (see notes 3 and 4 to the interim financial information).
(2)	Before intangible amortisation, impairment, restructuring costs and non-operating items. (see notes 3 and 4 to the interim financial information).

Philip Rogerson, Chairman, commented:

'Carillion continued to perform strongly in the first half of 2009. A high quality order book, a resilient business mix, strong positions in our chosen market sectors and a robust balance sheet continue to underpin our expectation that, despite challenging market conditions, Carillion will deliver materially enhanced earnings in 2009'. 

A telephone dial in facility ([phone]) will be available from 9:00am for analysts and investors who are unable to attend the presentation. The presentation can be viewed on Carillion's website at:-

www.carillionplc.com/investors/investors_presentations.asp.

For further information contact:

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

27 August 2009 

Notes to Editors:

Carillion is the UK's leading support services company with a substantial portfolio of Public Private Partnership projects and extensive construction capabilities. The Group has annual revenue of around £5 billion, employs over 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

Photographs:

High resolution photographs are available free of charge to the media at www.newscast.co.uk telephone 

+ 44 (0) 208 886 5895.

Cautionary statement

This announcement may contain indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the Group's results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently anticipated. No obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Key financial figures

		2009	2008	Change
Income statement
Total revenue	£m	2,722.9	2,411.0	+13%
Support services underlying operating margin(1)	Percentage	3.4	3.3	n/a
Total construction services underlying operating margin(1)	Percentage	2.6	2.1	n/a
Total Group underlying profit from operations margin(2)	Percentage	2.6	2.3	n/a
Underlying profit from operations(2)	£m	72.0	54.8	+31%
Underlying profit before taxation(2)	£m	62.6	53.6	+17%
Profit before taxation	£m	51.9	27.0	+92%
Underlying earnings per share(1)	Pence	12.8	11.5	+11%
Basic earnings per share	Pence	11.2	7.0	+60%
Dividends
Proposed interim dividend per share	Pence	4.6	4.1	+12%
Underlying proposed dividend cover (1)	Times	2.8	2.8	n/a
Basic proposed dividend cover	Times	2.4	1.7	n/a
Cash flow statement
Cash generated from operations(3)	£m	114.4	96.9	+18%
Underlying profit from operations cash conversion	Percentage	158.9	176.8	n/a
Deficit pension contributions	£m	12.3	31.6	-61%
Balance sheet
Net borrowing	£m	146.0	264.1	-45%
Committed borrowing facility to 2012	£m	590.0	590.0	n/a
Net retirement benefit liability (net of taxation)	£m	176.4	87.0	+103%
Net assets	£m	749.9	842.0	-11%

(1)	Before intangible amortisation, impairment, restructuring costs and non-operating items (see notes 3 and 4 to the interim financial information)
(2)	After Joint Ventures taxation of £3.3m (2008: £4.5m) and before intangible amortisation, impairment, restructuring costs and non-operating items (see notes 3 and 4 to the interim financial information)
(3)	Before pension deficit recovery payments and restructuring costs and after dividends received from Joint Ventures

  Summary results

Carillion continued to perform strongly in the first half of 2009 and we remain on track to deliver materially enhanced earnings in the full year.  

These results reflect the Group's resilient business mix in which support services continues to be a key driver of earnings growth, supported by strong performances in Public Private Partnership projects and in construction services in our international businesses.

Cost savings from integrating the Carillion and Alfred McAlpine businesses continue to come through in line with our expectations and are making a significant contribution to margin and earnings growth.  

Revenue including joint ventures increased by 13 per cent to £2,722.9 million (2008: £2,411.0 million) and underlying profit before tax(1)  increased by 17 per cent to £62.6 million (2008: £53.6 million). Underlying earnings per share(1) increased by 11 per cent to 12.8 pence (2008: 11.5 pence).

The Group has maintained its robust balance sheet, with net borrowing reduced significantly to £146.0 million (31 December 2008: £226.7 million). Underlying cash flow from operations of £114.4 million (2008: £96.9 million) was substantially ahead of underlying profit from operations of £72.0 million (2008: £54.8 million). 

The Group has continued to win significant new orders and our forward order book at 30 June was worth £19.7 billion (31 December 2008: £20.4 billion), in addition to which the Group had a pipeline of probable new orders worth £2.9 billion (31 December 2008: £3.1 billion).

In view of our strong first half performance and prospects for the second half, the Board has increased the interim dividend by 12 per cent to 4.6 pence per share (2008: 4.1 pence). 

A high quality order book, a resilient business mix, strong positions in our chosen market sectors and a robust balance sheet continue to underpin our expectation that, despite challenging market conditions, Carillion will deliver materially enhanced earnings in 2009. 

(1)  Before intangible amortisation, impairment, restructuring costs and non-operating items

Business performance

Total revenue in the first half of 2009 increased by 13 per cent to £2,722.9 million (2008: £2,411.0 million), including revenue from joint ventures of £501.1 million (2008: £326.4 million).

Total underlying profit from operations(1) increased by 31 per cent to £72.0 million (2008: £54.8 million), including profit from joint ventures of £29.4 million (2008: £18.8 million).  

The total underlying profit from operations margin increased to 2.6 per cent (2008: 2.3 per cent) primarily reflecting the integration and re-organisation cost savings arising from the acquisition of Alfred McAlpine, together with a continuing focus on strict contract selectivity criteria and our ability to provide customers with innovative, value for money services.

After a net financial expense of £9.4 million (2008: £1.2 million), which included a £7.2 million increase in pension scheme interest expense, underlying profit before taxation(1) was £62.6 million (2008: £53.6 million), an increase of 17 per cent. Underlying earnings per share on the same measure increased by 11 per cent to 12.8 pence (2008: 11.5 pence).

Intangible amortisation was £15.2 million (2008: £28.8 million, which included a £9.9 million impairment of other investments) and non-operating income amounted to £4.5 million (2008: £22.1 million), leaving profit before taxation of £51.9 million (2008: £27.0 million). The Group taxation charge of £5.6 million (2008: £0.1 million income) when combined with Joint Venture taxation of £3.3 million (2008: £4.5 million), represented an underlying effective tax rate(1) of 20 per cent. Profit after tax was £46.3 million (2008: £27.1 million). After minority interests of £2.1 million (2008: £1.4 million), profit attributable to Carillion shareholders was £44.2 million (2008: £25.7 million) and basic earnings per share were 11.2 pence (2008: 7.0 pence). 

Non-operating income of £4.5 million comprised a provisional profit on the disposal of our external IT Services business of £1.5 million and profit on the disposal of two equity investments in Public Private Partnership projects of £3.0 million. 

As part of the Group's policy for managing the risks and liabilities associated with its defined benefit pension schemes, Carillion's main defined benefit schemes were closed to future accrual on 5 April 2009. The ongoing pensions charge to profit in the first half of 2009 was £14.4 million (2008: £17.7 million). After additional cash payments to the Group's pension schemes of £12.3 million, in line with the Group's pension deficit recovery plan, the Group's pension schemes had a total deficit net of tax at 30 June 2009 of £176.4 million (31 December 2008: £76.2 million). The increase in the net deficit primarily reflects a reduction in market bond yields and equity values since December 2008.  

 (1)  Before intangible amortisation, impairment, restructuring costs and non-operating items

  Underlying cash flow from operations of £114.4 million included a £40.0 million working capital inflow as a result of outsourcing our internal IT Services function and once again exceeded underlying profit from operations of £72.0 million. After payments of £12.3 million to pension funds, in line with our pension deficit recovery plan, restructuring and other costs of £1.3 million, interest, tax and dividend payments of £38.9 million, net capital expenditure of £24.9 million and net income of £43.7 million from acquisitions and disposals, net borrowing at 30 June 2009 reduced significantly to £146.0 million (31 December 2008: £226.7 million).

Net income from acquisitions and disposals of £43.7 million comprised net proceeds of £35.4 million from the sale of our external IT Services business and £13.8 million from the sale of two investments in Public Private Partnership (PPP) projects, less £5.5 million of net investments in PPP projects.  

Cash inflow from operations for the full-year is expected to remain strong and we expect net borrowing at 31 December 2009 to be below the £146.0 million we achieved at the half-year, in line with our objective of continuing to reduce net borrowing.

Despite challenging market conditions, we have continued to win significant new orders and our forward order book at the half year was worth £19.7 billion (31 December 2008: £20.4 billion). In addition, our pipeline of probable new orders was worth £2.9 billion, which includes only projects where there is a very high degree of certainty that we will secure the order, such as those for which we are the preferred bidder. At 30 June, 98 per cent of targeted revenue(1) for 2009 was either secured or probable.  

Financial reporting segments and analysis

Operating profit by financial reporting segment

				Change from
		2009	2008	2008
		£m	£m	%
Support services		42.9	39.1	10
Public Private Partnership projects		16.1	13.1	23
Middle East construction services		24.9	13.1	90
Construction services (excluding the Middle East)		10.9	10.8	1
		94.8	76.1	25
Group eliminations and unallocated items		(8.8)	(10.6)	17
Profit from operations before Joint Ventures
net financial expense and taxation		86.0	65.5	31
Share of Joint Ventures net financial expense		(10.7)	(6.2)	(73)
Share of Joint Ventures taxation		(3.3)	(4.5)	27
Underlying profit from operations(2)		72.0	54.8	31
Intangible amortisation and impairment		(15.2)	(28.8)	47
Restructuring costs		-	(19.9)	100
Reported profit from operations		56.8	6.1	831

(1)  Percentage of targeted revenue provided by current order book and probable orders

(2)  Before intangible amortisation, impairment, restructuring costs and non-operating items

Support services

	2009  £m	2008 £m	Change from 2008  %
Revenue - Group - Share of Joint Ventures	1,132.8 145.2	1,060.1 119.3
	1,278.0	1,179.4	8
Underlying operating profit(1) - Group - Share of Joint Ventures	35.6 7.3	32.1 7.0
	42.9	39.1	10

(1)  Before intangible amortisation, impairment, restructuring costs and non-operating items

In this segment we report the results of our facilities management, facilities services, rail services, road maintenance, utility services and consultancy businesses. 

Revenue increased by eight per cent to £1,278.0 million and underlying operating profit increased by 10 per cent to £42.9 million, with the operating margin improving from 3.3 per cent to 3.4 per cent. Our performance in this segment improved despite more competitive market conditions, as we continue to benefit from the Alfred McAlpine integration and re-organisation costs savings, from new contracts secured through our ability to provide customers with innovative cost effective solutions and from a continuing focus on applying strict contract selectivity and risk management criteria in order to protect margins.

New order intake has remained positive, with a number of notable first half successes. These included new facilities management and services contracts for the NHS worth some £260 million, road and rail infrastructure maintenance contracts worth £250 million and facilities management contracts for blue chip private sector customers worth some £175 million. These new contracts more than compensate for the expiry of our contracts with HSBC and Aviva, later this year and next year respectively.

The value of our forward order book for support services at 30 June increased to £11.2 billion (31 December 2008: £10.8 billion) and we also maintained a healthy pipeline of probable new orders worth £0.5 billion (31 December 2008: £0.6 billion). In addition, we have a significant pipeline of contract opportunities worth in the region of £5.5 billion.

Since the half year a Carillion-led Joint Venture has signed a letter of intent with Openreach, BT's local access network business, for a future contract to provide nationwide support services which we expect to be worth in the region of £1 billion.

Given the strength of our order book and pipeline of probable and potential new orders, together with the benefits of the Alfred McAlpine integration cost savings still to come through, we expect to build on our first-half performance and to increase the full-year operating margin from the 4.6 per cent we achieved in 2008.  

Public Private Partnership (PPP) projects

	2009 £m	2008 £m	Change from 2008  %
Revenue - Group - Share of Joint Ventures	0.5 87.4	0.5 80.5
	87.9	81.0	9
Underlying operating profit(1) - Group - Share of Joint Ventures	- 16.1	0.3 12.8
	16.1	13.1	23

(1)  Before intangible amortisation, impairment, restructuring costs and non-operating items

In this segment we report the equity returns on our investments in Public Private Partnership projects.

Overall, our PPP markets remain positive and we continue to bid projects to achieve a target internal rate of return on our investments of 15 per cent over the life of the concession contracts, which is typically between 25 and 35 years.  

In June 2009, we sold investments in two further projects - Exeter Schools and Renfrewshire Schools - generating proceeds of £13.8 million, which reflected a discount rate of some eight per cent. Over the last six years, we have sold a total of 25 PPP investments, generating proceeds of £194 million and a pre-tax profit of £107 million. 

Carillion joint ventures achieved financial close on three new projects in the first half of 2009 - Tameside Building Schools for the Future (BSF) programme, the Lister Surgicentre in Hertfordshire and the Royal Victoria Hospital in Ontario, Canada - in which Carillion expects to invest a combined total of £11.2 million of equity.  

At the half year, we had a portfolio of 21 financially closed projects in which we had invested, or had commitments to invest £148.2 million of equity. The Directors' valuation of this portfolio was £177 million (31 December 2008: £216 million), based on discounting the cash flows from these investments at an average discount rate of nine per cent. At 30 June 2009, we had a forward order book worth £5.1 billion (31 December 2008: £5.3 billion) and probable orders worth £0.2 billion (31 December 2008: £0.1 billion).

In the first half of 2009, Carillion Joint Ventures were also appointed as the preferred bidder for the Durham Building Schools for the Future (BSF) programme and as the proposed preferred bidder for the new Southmead Hospital in Bristol in which we expect to invest combined equity of approximately £46 million. Since the half year, we have achieved financial close on the Durham BSF programme and we have also been appointed preferred bidder for the Rochdale BSF programme, in which we expect to invest some £2.4 million of equity.  In addition, we are currently shortlisted for a further six projects in the UK and Canada in which Carillion could potentially invest up to £49.0 million.  

Overall, we expect the outlook for PPP projects to remain positive. The UK and Canada continue to have substantial PPP investment programmes, notably the £55 billion BSF programme in the UK and the £10 billion programme in Ontario, much of which is in the health sector. Carillion has strong positions in these sectors and we therefore expect to continue to add new investments to our portfolio.  

Middle East construction services

	2009 £m	2008 £m	Change from  2008  %
Revenue - Group - Share of Joint Ventures	54.9 266.7	55.7 125.3
	321.6	181.0	78
Underlying operating profit(1) - Group - Share of Joint Ventures	3.8 21.1	3.5 9.6
	24.9	13.1	90

(1)  Before intangible amortisation, impairment, restructuring costs and non-operating items

In this segment we report the results of our building and civil engineering activities in the Middle East and North Africa.

We have continued to make strong progress in the Middle East. Revenue increased by 78 per cent to £321.6 million, primarily as a result of growth in Abu Dhabi, which more than offset the expected reduction in revenue from Dubai. Underlying operating profit increased by 90 per cent to £24.9 million, reflecting revenue growth and an increase in operating margin from 7.2 per cent to 7.7 per cent. Cashflow has also remained strong with first-half receipts from customers of some £280 million which supported an increase in the half year dividend received from our Middle East businesses.

Growth in Abu Dhabi has been very strong and our progress there was further underpinned when Al Futtaim Carillion signed a £550 million contract with ALDAR in February 2009, to build the Al Muneera development. In addition, our Middle East businesses secured other substantial first-half new orders worth approximately £100 million, including further infrastructure works for Emirates Aluminium in Abu Dhabi, the Qasr Al Muwaiji museum project in Al Ain for the Abu Dhabi Authority for Culture and Heritage, the Muscat Court Complex and the next phase of the Botanical Gardens in Oman.  Since the half year, we have also been awarded a £275 million contract by the Royal Court Affairs in Oman to construct the Majlis, a prestigious new Parliament building in Muscat. 

At the half year, Carillion's share of the forward order book of our Middle East businesses was £0.5 billion (31 December 2008: £0.8 billion) and we had a pipeline of probable new orders worth approximately £0.6 billion (31 December 2008: £0.9 billion).  

Although opportunities for new projects in Dubai have reduced substantially and market conditions across the region generally have become more competitive, our strategy of geographical diversification, notably into Abu Dhabi, has kept us on track to increase our Middle East revenue from £464 million in 2008 to around £600 million by the end of 2009, at an operating margin in excess of six per cent for the full year.  We also remain on track to extend our operations into Qatar, early in 2010.

Construction services (excluding the Middle East)

	2009 £m	2008 £m	Change from  2008  %
Revenue - Group - Share of Joint Ventures	1,033.6 1.8	968.3 1.3
	1,035.4	969.6	7
Underlying operating profit(1) - Group - Share of Joint Ventures	12.0 (1.1)	10.7 0.1
	10.9	10.8	1

(1)  Before intangible amortisation, impairment, restructuring costs and non-operating items

In this segment we report the results of our UK building, civil engineering and developments businesses, together with those of our construction activities in Canada and the Caribbean.

Overall performance in this segment continues to be satisfactory, despite challenging trading conditions in our chosen sectors of the UK non-housing construction market. We continue to apply our strict project selectivity and risk management criteria and this has enabled us to maintain a high-quality order book to support our objective of improving margins in this segment. Consequently, the UK contribution to revenue reduced slightly in the first half of 2009, in line with our expectations. In Canada and the Caribbean, our markets have remained positive and revenue from our businesses in this region increased, due to the acquisition of the Vanbots Group in October 2008. This more than offset the reduced contribution from the UK and moved overall revenue ahead by seven per cent, with the operating margin maintained at 1.1 per cent.  

We have continued to win substantial new orders, particularly in the education, health and transport infrastructure sectors. Notable new first-half contracts included the £130 million Project Bankside, a luxury residential development for Grosvenor on London's South Bank, the £300 million Tameside Building Schools for the Future programme, the £144 million Royal Victoria Hospital in Barrie, Ontario and the £209 million upgrade of the A1 between Dishforth and Leeming in Yorkshire.  

At the half year, our forward order book for construction services (excluding the Middle East) was worth £2.9 billion (31 December 2008: £3.5 billion) and we had a pipeline of probable new orders worth approximately £1.6 billion (31 December 2008: £1.5 billion).  

Since the half year, we have won four further major high-quality projects, namely the £500 million Durham BSF programme, a £116 million contract for the Scottish Prison Service to design and build HMP Low Moss, a £50 million contract for Segro plc to design and build office accommodation and a £45 million contract to provide a new headquarters for the Greater Manchester Police Authority.

Going forward, we will continue to apply our strict project selectivity and risk management criteria in order to maintain the quality of our order book and we expect to improve the full-year operating profit and operating margin, in line with our strategy.  

Operational and financial risk management

Carillion has rigorous policies and processes in place to identify, mitigate and manage strategic risks and those specific to individual businesses and contracts, including economic, social, environmental and ethical risks. The Group's risk management policies and processes, together with the Group's principal operational and financial risks and the measures being taken to mitigate and manage these risks, are described on pages 16, 34 and 49 of our 2008 Annual Report and Accounts, which was published in March 2009. The principal operational risks summarised in that report have not changed materially, other than the removal of the risk relating to our ability to attract, develop and retain excellent people, as this has become considerably easier in the current economic climate.    

Outlook and prospects

We expect trading conditions in all our market sectors to remain challenging in the second half of 2009. However, we have a well balanced and resilient business, a high quality order book, good positions in our chosen market sectors and a robust balance sheet. These factors, together with the cost savings we are delivering from integrating the Alfred McAlpine business, will allow us to build on our first half performance and achieve our objective of delivering materially enhanced earnings in 2009. 

Unaudited condensed consolidated income statement for the six months ended 30 June
	Note	2009 £m	2008 £m	Year ended 31 December 2008 £m
Total revenue		2,722.9	2,411.0	5,205.8
Less: Share of jointly controlled entities' revenue		(501.1)	(326.4)	(772.0)
Group revenue	2	2,221.8	2,084.6	4,433.8
Cost of sales		(2,056.7)	(1,925.5)	(4,069.4)
Gross profit		165.1	159.1	364.4
Administrative expenses		(137.7)	(180.1)	(329.8)
Other operating income		-	8.3	8.3
Group operating profit/(loss)		27.4	(12.7)	42.9
Analysed between:
Group operating profit before intangible amortisation, impairment of other investments, curtailment gain and restructuring costs		42.6	36.0	120.1
Intangible amortisation and impairment of other investments	3	(15.2)	(28.8)	(54.5)
Curtailment gain		-	-	35.5
Restructuring costs	4	-	(19.9)	(58.2)
Share of results of jointly controlled entities	2	29.4	18.8	45.1
Analysed between:
Operating profit		43.4	29.5	74.0
Net financial expense		(10.7)	(6.2)	(18.2)
Taxation		(3.3)	(4.5)	(10.7)
Profit from operations		56.8	6.1	88.0
Analysed between:
Profit from operations before intangible amortisation, impairment of other investments, curtailment gain and restructuring costs		72.0	54.8	165.2
Intangible amortisation and impairment of other investments	3	(15.2)	(28.8)	(54.5)
Curtailment gain		-	-	35.5
Restructuring costs	4	-	(19.9)	(58.2)
Non-operating items	4	4.5	22.1	35.6
Net financial expense	5	(9.4)	(1.2)	(7.7)
Analysed between:
Financial income		56.6	71.2	137.4
Financial expense		(66.0)	(72.4)	(145.1)
Profit before taxation		51.9	27.0	115.9
Analysed between:
Profit before taxation, intangible amortisation, impairment of other investments, curtailment gain, restructuring costs and non-operating items		62.6	53.6	157.5
Intangible amortisation and impairment of other investments	3	(15.2)	(28.8)	(54.5)
Curtailment gain		-	-	35.5
Restructuring costs	4	-	(19.9)	(58.2)
Non-operating items	4	4.5	22.1	35.6
Taxation	6	(5.6)	0.1	(4.1)
Profit for the period		46.3	27.1	111.8
Profit attributable to:
Equity holders of the parent		44.2	25.7	108.3
Minority interests		2.1	1.4	3.5
Profit for the period		46.3	27.1	111.8
Earnings per share	7
Basic		11.2p	7.0p	28.4p
Diluted		11.1p	6.9p	28.2p

Unaudited condensed consolidated statement of comprehensive income
for the six months ended 30 June
			2,009			2008(1)			Year ended 31December 2008(1)
		£m	£m		£m	£m		£m	£m
Profit for the period			46.3			27.1			111.8
Net gain/(loss) on hedge of net investment in foreign operations		6.0			0.6			(8.9)
Currency translation differences on foreign operations		(29.1)			(5.3)			8.9
Currency translation differences relating to minority interests		(0.1)			-			0.2
Increase in fair value of available for sale assets		-			1.1			-
Actuarial losses on defined benefit pension schemes		(154.0)			(43.4)			(92.7)
		(177.2)			(47.0)			(92.5)
Taxation in respect of the above		41.5			11.6			27.8
Share of recycled cash flow hedges within jointly controlled entities (net of taxation)		9.9			2.1			10.4
Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation)		(5.2)			8.2			(13.1)
Other comprehensive expense for the period			(131.0)			(25.1)			(67.4)
Total comprehensive (expense)/income for the period			(84.7)			2.0			44.4
Attributable to:
Equity holders of the parent			(86.7)			0.6			40.7
Minority interests			2.0			1.4			3.7
			(84.7)			2.0			44.4

(1)  Restated on adoption of IFRIC 14 (see note 13)   

  Unaudited condensed consolidated statement of changes in equity 

for the six months ended 30 June

	Share capital £m	Share premium £m	Translation reserve £m	Hedging  reserve £m	Fair value reserve £m	Merger reserve £m	Retained earnings   £m	Equity shareholders  funds £m	Minority interests   £m	Total   equity   £m
At 1 January 2009 as previously reported	197.8	12.9	(0.9)	(17.0)	-	449.1	227.3	869.2	3.4	872.6
Impact of adoption of IFRIC 14	-	-	-	-	-	-	(5.0)	(5.0)	-	(5.0)
At 1 January 2009 as restated	197.8	12.9	(0.9)	(17.0)	-	449.1	222.3	864.2	3.4	867.6
Total comprehensive income	-	-	(24.8)	4.7	-	-	(66.6)	(86.7)	2.0	(84.7)
New share capital issued	0.1	0.4	-	-	-	-	-	0.5	-	0.5
Equity settled transactions(1)	-	-	-	-	-	-	1.7	1.7	-	1.7
Transfer between reserves	-	-	-	-	-	(14.5)	14.5	-	-	-
Dividends paid	-	-	-	-	-	-	(35.2)	(35.2)	-	(35.2)
At 30 June 2009	197.9	13.3	(25.7)	(12.3)	-	434.6	136.7	744.5	5.4	749.9
At 1 January 2008 as previously reported	140.6	8.6	(2.8)	(14.3)	0.9	166.2	202.4	501.6	1.3	502.9
Impact of adoption of IFRIC 14	-	-	-	-	-	-	(15.6)	(15.6)	-	(15.6)
At 1 January 2008 as restated	140.6	8.6	(2.8)	(14.3)	0.9	166.2	186.8	486.0	1.3	487.3
Total comprehensive income(2)	-	-	(4.9)	10.3	0.8	-	(5.6)	0.6	1.4	2.0
New share capital issued	57.1	4.0	-	-	-	325.0	-	386.1	-	386.1
Acquisition of own shares	-	-	-	-	-	-	(4.5)	(4.5)	-	(4.5)
Share options exercised
by employees	-	-	-	-	-	-	0.7	0.7	-	0.7
Equity settled transactions(1)	-	-	-	-	-	-	1.0	1.0	-	1.0
Transfer between reserves	-	-	-	-	-	(18.7)	18.7	-	-	-
Dividends paid	-	-	-	-	-	-	(29.6)	(29.6)	(1.0)	(30.6)
At 30 June 2008	197.7	12.6	(7.7)	(4.0)	1.7	472.5	167.5	840.3	1.7	842.0
At 1 January 2008 as previously reported	140.6	8.6	(2.8)	(14.3)	0.9	166.2	202.4	501.6	1.3	502.9
Impact of adoption of IFRIC 14	-	-	-	-	-	-	(15.6)	(15.6)	-	(15.6)
At 1 January 2008 as restated	140.6	8.6	(2.8)	(14.3)	0.9	166.2	186.8	486.0	1.3	487.3
Total comprehensive income(2)	-	-	1.9	(2.7)	-	-	41.5	40.7	3.7	44.4
New share capital issued	57.2	4.3	-	-	-	325.0	-	386.5	-	386.5
Acquisition of own shares	-	-	-	-	-	-	(4.7)	(4.7)	-	(4.7)
Equity settled transactions(1)	-	-	-	-	-	-	2.4	2.4	-	2.4
Transfer to income statement	-	-	-	-	(0.9)	-	-	(0.9)	-	(0.9)
Transfer between reserves	-	-	-	-	-	(42.1)	42.1	-	-	-
Dividends paid	-	-	-	-	-	-	(45.8)	(45.8)	(1.6)	(47.4)
At 31 December 2008	197.8	12.9	(0.9)	(17.0)	-	449.1	222.3	864.2	3.4	867.6

(1) Net of deferred tax (2) Restated on adoption of IFRIC 14 (see note 13)

  Unaudited condensed consolidated balance sheet 

as at 30 June

	Note	2009   £m	2008(1)   £m	At 31 December   2008(1)   £m
Non-current assets
Property, plant and equipment		163.8	150.2	167.2
Intangible assets		1,258.8	1,286.2	1,276.9
Retirement benefit assets		2.9	13.3	37.1
Investments in jointly controlled entities		239.1	216.5	238.6
Deferred tax assets		123.1	74.5	103.5
Total non-current assets		1,787.7	1,740.7	1,823.3
Current assets
Inventories		40.3	38.0	44.6
Trade and other receivables		1,136.7	1,132.2	1,186.8
Cash and cash equivalents	10	296.1	215.9	257.3
Income tax receivable		1.5	9.2	0.6
Assets classified as held for sale		-	5.6	-
Derivative financial instruments		-	-	1.1
Total current assets		1,474.6	1,400.9	1,490.4
Total assets		3,262.3	3,141.6	3,313.7
Current liabilities
Borrowing		(56.3)	(41.8)	(58.0)
Derivative financial instruments		(1.8)	(0.2)	-
Trade and other payables		(1,742.9)	(1,595.9)	(1,721.8)
Provisions		(17.3)	(16.7)	(23.4)
Income tax payable		(10.5)	(4.6)	(3.1)
Total current liabilities		(1,828.8)	(1,659.2)	(1,806.3)
Non-current liabilities
Borrowing		(385.8)	(438.2)	(426.0)
Retirement benefit liabilities		(249.9)	(138.8)	(146.2)
Deferred tax liabilities		(40.0)	(55.6)	(59.6)
Provisions		(7.9)	(7.8)	(8.0)
Total non-current liabilities		(683.6)	(640.4)	(639.8)
Total liabilities		(2,512.4)	(2,299.6)	(2,446.1)
Net assets	2	749.9	842.0	867.6
Equity
Issued share capital		197.9	197.7	197.8
Share premium		13.3	12.6	12.9
Translation reserve		(25.7)	(7.7)	(0.9)
Hedging reserve		(12.3)	(4.0)	(17.0)
Fair value reserve		-	1.7	-
Merger reserve		434.6	472.5	449.1
Retained earnings		136.7	167.5	222.3
Equity attributable to shareholders of the parent		744.5	840.3	864.2
Minority interests		5.4	1.7	3.4
Total equity		749.9	842.0	867.6

(1) Restated on adoption of IFRIC 14 (see note 13)

Unaudited condensed consolidated cash flow statement for the six months ended 30 June
		Note			2009   £m	2008   £m	Year ended 31 December 2008 £m
Cash flows from operating activities
Group operating profit/(loss)			27.4			(12.7)	42.9
Depreciation, amortisation and impairment			33.3			47.3	86.5
Loss/(profit) on disposal of property, plant and equipment			2.1			(8.3)	(8.3)
Share based payment expense			2.4			1.4	3.4
Curtailment gain			-			-	(35.5)
Other non-cash movements			(12.2)			(1.3)	(7.9)
Restructuring costs			-			19.9	58.2
Operating profit before changes in working capital				53.0		46.3	139.3
(Increase)/decrease in inventories				(0.2)		3.5	4.1
Increase in trade and other receivables				(16.6)		(95.0)	(130.1)
Increase in trade and other payables				57.6		124.6	160.0
Cash generated from operations before pension deficit recovery payments and restructuring costs				93.8		79.4	173.3
Deficit recovery payments to pension schemes				(12.3)		(31.6)	(50.5)
Restructuring costs				(6.5)		(13.5)	(32.4)
Cash generated from operations				75.0		34.3	90.4
Financial income received				6.0		12.6	17.1
Financial expense paid				(13.8)		(19.7)	(36.6)
Taxation				4.1		(1.4)	4.7
Net cash flows from operating activities				71.3		25.8	75.6
Cash flows from investing activities
Disposal of property, plant and equipment				4.0		14.9	20.5
Disposal of investments in jointly controlled entities				13.8		61.6	85.8
Dividends received from jointly controlled entities				20.6		17.5	25.0
Disposal of businesses, net of cash disposed of	12			35.4		-	-
Acquisition of subsidiaries, net of cash acquired				-		(135.3)	(138.2)
Acquisition of intangible assets				(0.8)		(0.3)	(2.7)
Acquisition of property, plant and equipment				(28.1)		(19.0)	(44.2)
Acquisition of equity in, and loan advances to, jointly controlled entities				(5.5)		(18.8)	(28.4)
Acquisition of other non-current asset investments				-		-	(1.7)
Net cash flows from investing activities				39.4		(79.4)	(83.9)
Cash flows from financing activities
Proceeds from issue of share capital				0.5		-	0.3
Repayment of bank and other loans				(41.4)		(32.9)	(7.8)
Payment of finance lease liabilities				(8.4)		(7.9)	(16.3)
Dividends paid to equity holders of the parent				(35.2)		(29.6)	(45.8)
Dividends paid to minority interests				-		(1.0)	(1.6)
Net cash flows from financing activities				(84.5)		(71.4)	(71.2)
Increase/(decrease) in net cash and cash equivalents for the period				26.2		(125.0)	(79.5)
Net cash and cash equivalents at 1 January				250.0		323.8	323.8
Effect of exchange rate fluctuations on net cash and cash equivalents				(3.8)		0.4	5.7
Net cash and cash equivalents at period end	10			272.4		199.2	250.0

1    Basis of preparation

Carillion plc (the 'Company') is a company domiciled in the United Kingdom (UK). The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2009 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in jointly controlled entities.

This interim financial information has been prepared applying the accounting policies and presentation which were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2008 which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union except for the following accounting standards and interpretations which are effective from 1 January 2009:

• Amendments to International Accounting Standard (IAS) 1 'Presentation of financial statements - A revised presentation'

• Revised International Accounting Standard (IAS) 23 'Borrowing costs'

• International Financial Reporting Standard (IFRS) 8 'Operating segments'

• International Financial Reporting Interpretations Committee (IFRIC) 14 'The limit on a defined benefit asset, minimum funding requirements and their interaction'.

IAS 1 'Presentation of financial statements' requires the presentation of a consolidated statement of changes in equity as a primary statement rather than as a note. Since this change is presentational only, there is no impact on profit or earnings per share.

IAS 23 'Borrowing costs' requires the Group to capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of the asset. Previously, Group subsidiaries immediately recognised all borrowing costs as an expense. IAS 23 has been applied prospectively from 1 January 2009 and has no impact on net assets, profit or earnings per share in the interim period ending 30 June 2009.

IFRS 8 'Operating segments' requires operating segments to be identified on the basis of information that internally is provided to the Group Chief Executive, who is the Group's chief operating decision maker. Following adoption of IFRS 8, Middle East construction services has been classified as a separate operating segment, whereas previously it was a component of the construction services segment. Since this change is presentational only, there is no impact on profit or earnings per share.

IFRIC 14 'The limit on a defined benefit asset, minimum funding requirements and their interaction' limits the amount of defined benefit pension assets which can be recognised on certain schemes where the Group does not have an unconditional right to the refund of any surplus which may exist. This results in the derecognition of any surplus and the recognition of a liability for deficit funding arrangements. Comparative information has been restated for the effect of the retrospective application of IFRIC 14, the impact of which has been to reduce net assets at 1 January 2009 by £5.0m (see note 13). The adoption of IFRIC 14 has no impact on profit or earnings per share.

The condensed consolidated interim financial statements for the six months ended 30 June 2009 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union.

The comparative financial information for the year ended 31 December 2008 does not constitute the Company's statutory accounts for that financial year. The statutory accounts for the year ended 31 December 2008 have been reported on by the Company's auditors and delivered to the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified, did not include references to any matter which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under section 237(2) or (3) of the Companies Act 1985.

The Group's business activities, together with the factors likely to affect its future development, performance and position are described on pages 4 to 11. The Group has considerable financial resources, including a £590 million committed syndicated facility expiring on 30 September 2012. The Group also has long-term contracts with a number of customers across different geographic areas and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The Directors confirm that, after making enquiries, they have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the condensed interim financial statements

2    Segmental reporting

Segment information is presented in respect of the Group's strategic operating segments. The operating segment reporting format reflects the differing nature of the services provided by the Group and is the basis on which internal management reports are presented to the Group Chief Executive.

Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Operating segments

The Group is comprised of the following main operating segments:

Support Services

In this segment we report the results of our facilities management, facilities services, road maintenance, rail services, utility services and consultancy businesses.

Public Private Partnership projects

In this segment we report the equity results on our investments in Public Private Partnership projects in our chosen sectors of Defence, Health, Education, Transport, Secure and other Government accommodation.

Middle East Construction Services

In this segment we report the results of our Building and Civil Engineering activities in the Middle East and North Africa.

Construction Services (excluding the Middle East)

In this segment we report the results of our UK building, civil engineering and developments businesses and our construction activities in Canada and the Caribbean.

2    Segmental reporting (continued)

Segmental revenue and profit

	2009			2008			Year ended 31 December 2008
	Revenue	Operating profit before intangible amortisation, impairment and restructuring costs		Revenue	Operating profit before intangible amortisation, impairment and restructuring costs		Revenue	Operating profit before intangible amortisation, impairment and restructuring costs
	£m	£m		£m	£m		£m	£m
Support services
Group	1,132.8	35.6		1,060.1	32.1		2,227.1	99.5
Share of jointly controlled entities	145.2	7.3		119.3	7.0		236.4	14.0
	1,278.0	42.9		1,179.4	39.1		2,463.5	113.5
Inter-segment	69.6	-		56.9	-		124.3	-
Total	1,347.6	42.9		1,236.3	39.1		2,587.8	113.5
Public Private Partnership projects
Group	0.5	-		0.5	0.3		0.9	(0.2)
Share of jointly controlled entities	87.4	16.1		80.5	12.8		177.5	30.0
	87.9	16.1		81.0	13.1		178.4	29.8
Inter-segment	-	-		-	-		-	-
Total	87.9	16.1		81.0	13.1		178.4	29.8
Middle East construction services
Group	54.9	3.8		55.7	3.5		111.7	6.4
Share of jointly controlled entities	266.7	21.1		125.3	9.6		352.5	28.1
	321.6	24.9		181.0	13.1		464.2	34.5
Inter-segment	-	-		-	-		-	-
Total	321.6	24.9		181.0	13.1		464.2	34.5
Construction services (excluding the Middle East)
Group	1,033.6	12.0		968.3	10.7		2,094.1	26.8
Share of jointly controlled entities	1.8	(1.1)		1.3	0.1		5.6	1.9
	1,035.4	10.9		969.6	10.8		2,099.7	28.7
Inter-segment	15.1	-		14.3	-		39.5	-
Total	1,050.5	10.9		983.9	10.8		2,139.2	28.7
Group eliminations and unallocated items	(84.7)	(8.8)		(71.2)	(10.6)		(163.8)	(12.4)
Consolidated
Group	2,221.8	42.6		2,084.6	36.0		4,433.8	120.1
Share of jointly controlled entities	501.1	43.4		326.4	29.5		772.0	74.0
Total	2,722.9	86.0		2,411.0	65.5		5,205.8	194.1

  2    Segmental reporting (continued)

Reconciliation of operating segment results to reported results

	2009 £m	2008 £m	Year ended 31 December 2008 £m
Group and share of jointly controlled entities' operating profit before intangible amortisation, impairment of other investments, curtailment gain and restructuring costs
	86.0	65.5	194.1
Net financial expense
- Group	(9.4)	(1.2)	(7.7)
- Share of jointly controlled entities	(10.7)	(6.2)	(18.2)
Share of jointly controlled entities' taxation	(3.3)	(4.5)	(10.7)
Underlying profit before taxation	62.6	53.6	157.5
Intangible amortisation and impairment of other investments	(15.2)	(28.8)	(54.5)
Curtailment gain	-	-	35.5
Restructuring costs	-	(19.9)	(58.2)
Non-operating items	4.5	22.1	35.6
Profit before taxation	51.9	27.0	115.9
Taxation	(5.6)	0.1	(4.1)
Profit for the period	46.3	27.1	111.8

  2    Segmental reporting (continued)

Additional segmental information on intangible amortisation and impairment, curtailment gain, restructuring costs and non-operating items is set out below:

		2009			2008				Year ended 31 December 2008
	Intangible amortisation and impairment £m		Non-operating items £m		Intangible amortisation and impairment £m	Restructuring costs £m	Non-operating items £m		Intangible amortisation and impairment £m	Curtailment gain £m	Restructuring costs £m	Non-operating items £m
Support services	(11.2)		1.5		(13.9)	(6.0)	-		(31.5)	-	(17.5)	-
Public Private Partnership projects	-		3.0		-	-	22.1		(11.7)	-	(0.4)	35.6
Construction services (excluding the Middle East)	(4.0)		-		(14.1)	(2.3)	-		(11.3)	-	(21.1)	-
Unallocated group items	-		-		(0.8)	(11.6)	-		-	35.5	(19.2)	-
Total	(15.2)		4.5		(28.8)	(19.9)	22.1		(54.5)	35.5	(58.2)	35.6

Depreciation, amortisation and impairment and capital expenditure arise in the following segments:

	2009			2008			Year ended 31 December 2008
	Depreciation, amortisation and impairment  £m	Capital expenditure £m		Depreciation, amortisation and impairment (1) £m	Capital   expenditure   £m		Depreciation,   amortisation and   impairment(1)   £m	Capital    expenditure £m
Support services	21.2	13.7		26.1	9.1		50.2	17.1
Public Private Partnership projects	-	-		9.9	-		11.7	-
Middle East construction services	1.1	1.4		0.5	0.7		1.2	4.1
Construction services (excluding the Middle East)	5.3	1.8		5.4	1.5		13.8	4.7
Unallocated group items	5.7	12.0		5.4	8.0		9.6	23.1
Total	33.3	28.9		47.3	19.3		86.5	49.0

(1)	Includes impairment of other investments within Public Private Partnership projects for the six months ended 30 June 2008 of £9.9m and the year ended 31 December 2008 of £11.7m

  2    Segmental reporting (continued)

Segmental net assets

	2009						2008		Year ended 31 December 2008
	Operating       assets      £m	Operating    liabilities        £m	Net    operating       assets/ (liabilities)        £m		Operating        assets        £m	Operating        liabilities        £m	Net operating   assets/     (liabilities)      £m		Operating         assets        £m	Operating      liabilities         £m	Net  operating assets/ (liabilities)        £m
Support services
Intangible assets (1)	973.6	-	973.6		1,004.4	-	1,004.4		986.7	-	986.7
Operating assets	478.0	-	478.0		594.8	-	594.8		541.2	-	541.2
Investments in jointly  controlled entities	10.1	-	10.1		11.0	-	11.0		9.8	-	9.8
Total operating assets	1,461.7	-	1,461.7		1,610.2	-	1,610.2		1,537.7	-	1,537.7
Total operating liabilities	-	(592.3)	(592.3)		-	(574.5)	(574.5)		-	(651.9)	(651.9)
Net operating assets/(liabilities)	1,461.7	(592.3)	869.4		1,610.2	(574.5)	1,035.7		1,537.7	(651.9)	885.8
Public Private Partnership projects
Operating assets	4.7	-	4.7		2.7	-	2.7		2.5	-	2.5
Investments in jointly  controlled entities	139.7	-	139.7		140.2	-	140.2		136.8	-	136.8
Total operating assets	144.4	-	144.4		142.9	-	142.9		139.3	-	139.3
Total operating liabilities	-	(12.8)	(12.8)		-	(10.4)	(10.4)		-	(9.2)	(9.2)
Net operating assets/(liabilities)	144.4	(12.8)	131.6		142.9	(10.4)	132.5		139.3	(9.2)	130.1
Middle East construction services
Operating assets	55.2	-	55.2		66.5	-	66.5		71.6	-	71.6
Investments in jointly controlled entities	42.4	-	42.4		16.5	-	16.5		42.7	-	42.7
Total operating assets	97.6	-	97.6		83.0	-	83.0		114.3	-	114.3
Total operating liabilities	-	(63.5)	(63.5)		-	(71.9)	(71.9)		-	(86.2)	(86.2)
Net operating assets/(liabilities)	97.6	(63.5)	34.1		83.0	(71.9)	11.1		114.3	(86.2)	28.1
Construction services (excluding the Middle East)
Intangible assets (1)	279.0	-	279.0		277.6	-	277.6		283.9	-	283.9
Operating assets	644.7	-	644.7		587.3	-	587.3		629.3	-	629.3
Investments in jointly  controlled entities	46.1	-	46.1		48.8	-	48.8		49.3	-	49.3
Total operating assets	969.8	-	969.8		913.7	-	913.7		962.5	-	962.5
Total operating liabilities	-	(988.2)	(988.2)		-	(807.7)	(807.7)		-	(901.0)	(901.0)
Net operating assets/(liabilities)	969.8	(988.2)	(18.4)		913.7	(807.7)	106.0		962.5	(901.0)	61.5
Consolidated before Group items
Intangible assets (1)	1,252.6	-	1,252.6		1,282.0	-	1,282.0		1,270.6	-	1,270.6
Operating assets	1,182.6	-	1,182.6		1,251.3	-	1,251.3		1,244.6	-	1,244.6
Investments in jointly  controlled entities	238.3	-	238.3		216.5	-	216.5		238.6	-	238.6
Total operating assets	2,673.5	-	2,673.5		2,749.8	-	2,749.8		2,753.8	-	2,753.8
Total operating liabilities	-	(1,656.8)	(1,656.8)		-	(1,464.5)	(1,464.5)		-	(1,648.3)	(1,648.3)
Net operating assets/(liabilities) before Group items	2,673.5	(1,656.8)	1,016.7		2,749.8	(1,464.5)	1,285.3		2,753.8	(1,648.3)	1,105.5
Group items
Assets/(liabilities) classified as held for sale	-	-	-		5.6	-	5.6		-	-	-
Deferred tax	123.1	(40.0)	83.1		74.5	(55.6)	18.9		103.5	(59.6)	43.9
Net borrowing	296.1	(442.1)	(146.0)		215.9	(480.0)	(264.1)		257.3	(484.0)	(226.7)
Retirement benefit  (gross of taxation)	2.9	(249.9)	(247.0)		13.3	(138.8)	(125.5)		37.1	(146.2)	(109.1)
Income tax	1.5	(10.5)	(9.0)		9.2	(4.6)	4.6		0.6	(3.1)	(2.5)
Other	165.2	(113.1)	52.1		73.3	(156.1)	(82.8)		161.4	(104.9)	56.5
Net assets/(liabilities)	3,262.3	(2,512.4)	749.9		3,141.6	(2,299.6)	842.0		3,313.7	(2,446.1)	867.6

(1)Arising from business combinations

  2    Segmental reporting (continued)

Geographic information - by origin

	2009   £m	2008   £m	Year ended 31 December 2008 £m
United Kingdom
Total revenue from external customers	2,129.7	2,090.4	4,377.1
Less: share of jointly controlled entities' revenue	(204.2)	(175.2)	(359.8)
Group revenue from external customers	1,925.5	1,915.2	4,017.3
Total operating assets	2,370.0	2,486.8	2,408.1
Capital expenditure	22.0	16.9	37.1
Middle East
Total revenue from external customers	327.5	184.9	473.6
Less: share of jointly controlled entities' revenue	(272.6)	(129.2)	(361.9)
Group revenue from external customers	54.9	55.7	111.7
Total operating assets	55.2	62.0	71.6
Capital expenditure	1.4	0.7	4.1
Canada and the Caribbean
Total revenue from external customers	237.6	110.4	301.8
Less: share of jointly controlled entities' revenue	(2.2)	(2.7)	(7.5)
Group revenue from external customers	235.4	107.7	294.3
Total operating assets	212.4	125.0	216.0
Capital expenditure	5.5	1.6	7.7
Rest of the World
Total revenue from external customers	28.1	25.3	53.3
Less: share of jointly controlled entities' revenue	(22.1)	(19.3)	(42.8)
Group revenue from external customers	6.0	6.0	10.5
Total operating assets	35.9	76.0	58.1
Capital expenditure	-	0.1	0.1
Consolidated
Total revenue from external customers	2,722.9	2,411.0	5,205.8
Less: share of jointly controlled entities' revenue	(501.1)	(326.4)	(772.0)
Group revenue from external customers	2,221.8	2,084.6	4,433.8
Total operating assets	2,673.5	2,749.8	2,753.8
Capital expenditure	28.9	19.3	49.0

  3    Intangible amortisation and impairment of other investments

Amortisation and impairment costs	2008 £m	2009   £m	Year ended 31 December 2008 £m
Amortisation of intangible assets arising from business combinations	15.2	18.9	42.8
Impairment of other investments	-	9.9	11.7
	15.2	28.8	54.5

4    Restructuring costs and non-operating items

Restructuring costs	2009 £m	2008   £m	Year ended 31 December 2008 £m
McAlpine integration and re-organisation costs	-	19.9	55.0
Vanbots Group integration and re-organisation costs	-	-	3.2
	-	19.9	58.2

Alfred McAlpine and the Vanbots Group integration and re-organisation costs in 2008 relate primarily to redundancy and property exit costs arising from a review of the Group's requirements following the acquisition of these businesses in 2008. A tax credit relating to restructuring costs of £4.9m for the six months ended 30 June 2008 and £16.5m for the year ended 31 December 2008 has been included within income tax in the income statement.

Non-operating items	2009 £m	2008 £m	Year ended 31 December 2008 £m
Profit on disposal of investments in jointly controlled entities	3.0	22.1	35.6
Profit on disposal of businesses	1.5	-	-
	4.5	22.1	35.6

In the six months ended 30 June 2009, the Group disposed of equity investments in two Public Private Partnership jointly controlled entities. The disposal generated cash consideration of £13.8m and a non-operating profit of £3.0m. On 30 June 2009, the Group disposed of Carillion IT Services Limited for disposal proceeds of £36.0m, generating a provisional non-operating profit of £1.5m. There is no income tax associated with any of the non-operating items in any of the above periods.

5    Financial income and expense

	2009   £m	2008   £m	Year ended   31 December   2008   £m
Financial income
Bank interest receivable	0.7	6.6	7.3
Other interest receivable	5.3	6.5	9.8
Expected return on retirement plan assets	50.6	58.1	120.3
	56.6	71.2	137.4
Financial expense
Interest payable on bank loans and overdrafts	(8.0)	(15.1)	(25.9)
Other interest payable and similar charges	(6.1)	(5.1)	(11.5)
Interest cost on retirement plan obligations	(51.9)	(52.2)	(107.7)
	(66.0)	(72.4)	(145.1)
Net financial expense	(9.4)	(1.2)	(7.7)

In the six months ended 30 June 2009, no borrowing costs have been capitalised.

6    Income tax

The Group's income tax expense (including the Group's share of jointly controlled entities' income tax) for the six months ended 30 June 2009 is calculated based on the estimated average annual effective underlying income tax rate of 20% (six months ended 30 June 2008: 25%). This effective rate differs to the UK standard corporation tax rate of 28% (six months ended 30 June 2008: 28%) due to items such as the effect of tax rates in foreign jurisdictions, non-deductible expenses and the recognition of deferred tax on trading losses.

The Finance Act 2009, which was substantively enacted on 8 July 2009, exempts foreign distributions received on or after 1 July 2009 from UK corporation tax. The impact of this change in tax legislation has not been reflected in the six months ended 30 June 2009 but will result in the release of a deferred tax liability of £7.4m in the second half of the year.

7    Earnings per share

(a)    Basic earnings per share

The calculation of earnings per share for the six months ended 30 June 2009 is based on the profit attributable to equity holders of the parent of £44.2m (six months ended 30 June 2008: £25.7m; year ended 31 December 2008: £108.3m) and a weighted average number of ordinary shares in issue of 395.5m (six months ended 30 June 2008: 368.2m; year ended 31 December 2008: 381.7m), calculated as follows:

In millions of shares	2009	2008	Year ended   31 December   2008
Issued ordinary shares at beginning of period	395.7	281.2	281.2
Effect of shares issued in the period	0.2	87.4	101.0
Effect of own shares held by Employee Share Ownership Plan and Qualifying Employee Share Ownership Trust	(0.4)	(0.4)	(0.5)
Weighted average number of ordinary shares	395.5	368.2	381.7

(b)  Underlying performance

A reconciliation of profit before taxation and basic earnings per share, as reported in the income statement, to underlying profit before taxation and earnings per share is set out below. The adjustments made in arriving at the underlying performance measures are made to illustrate the impact of non-trading and non-recurring items.

		2009						2008						Year ended  31 December  2008
		Profit before tax £m		Tax £m				Profit before tax £m		Tax £m				Profit before tax £m		Tax £m
Profit before taxation
Profit before taxation as reported in the  income statement		51.9		5.6				27.0		(0.1)				115.9		4.1
Amortisation of intangible assets arising  from business combinations		15.2		4.3				18.9		5.3				42.8		12.2
Impairment of other investments		-		-				9.9		-				11.7		-
Curtailment gain		-		-				-		-				(35.5)		(9.9)
Restructuring costs		-		-				19.9		4.9				58.2		16.5
Profit on disposal of investments  and businesses		(4.5)		-				(22.1)		-				(35.6)		-
Underlying profit before taxation		62.6		9.9				53.6		10.1				157.5		22.9
Underlying taxation		(9.9)						(10.1)						(22.9)
Minority interests		(2.1)						(1.4)						(3.5)
Underlying profit attributable to  shareholders		50.6						42.1						131.1

7    Earnings per share (continued)

	2009 Pence per share	2008 Pence per share	Year ended 31 December 2008 Pence per share
Earnings per share
Basic earnings per share	11.2	7.0	28.4
Amortisation of intangible assets arising from business combinations	2.7	3.7	8.0
Impairment of other investments	-	2.7	3.1
Curtailment gain	-	-	(6.7)
Restructuring costs	-	4.1	10.9
Profit on disposal of investments and businesses	(1.1)	(6.0)	(9.4)
Underlying basic earnings per share	12.8	11.5	34.3

(c)    Diluted earnings per share

The calculation of diluted earnings per share is based on profit as shown in note 7 (a) and (b) and a weighted average number of ordinary shares outstanding calculated as follows:

In millions of shares	2009	2008	Year ended 31 December 2008
Weighted average number of ordinary shares	395.5	368.2	381.7
Effect of share options in issue	3.1	2.9	2.8
Weighted average number of ordinary shares (diluted)	398.6	371.1	384.5

8    Dividends

The following dividends were paid by the Company:

		2009			2008			Year ended 31 December 2008
	£m	Pence per share		£m	Pence per share		£m	Pence per share
Previous period final dividend	35.2	8.9		29.6	7.5		29.6	7.5
Current period interim dividend	-	-		-	-		16.2	4.1
Total	35.2	8.9		29.6	7.5		45.8	11.6

The following dividends were proposed by the Company:

		2009			2008			Year ended 31 December 2008
	£m	Pence per share		£m	Pence per share		£m	Pence per share
Interim	18.2	4.6		16.2	4.1		16.2	4.1
Final	-	-		-	-		35.2	8.9
Total	18.2	4.6		16.2	4.1		51.4	13.0

The interim dividend for 2009 of 4.6 pence per share was approved by the Board on 27 August 2009 and will be paid on 11 November 2009 to shareholders on the register on 11 September 2009.

  9    Pension commitments

The following expense was recognised in the income statement in respect of pension commitments:

	2009 £m	2008 £m	Year ended 31 December 2008 £m
(Charge)/credit to operating profit
Current service cost relating to defined benefit schemes	(5.3)	(12.4)	(24.1)
Settlements	-	-	(1.2)
Curtailments	-	-	38.3
Defined contribution schemes	(9.1)	(5.3)	(10.5)
Total	(14.4)	(17.7)	2.5
(Charge)/credit to other financial income and expense
Expected return on retirement plan assets	50.6	58.1	120.3
Interest cost on retirement plan liabilities	(51.9)	(52.2)	(107.7)
Net financial (expense)/income	(1.3)	5.9	12.6

The valuation of the Group's main defined benefit pension schemes were reviewed by the scheme's actuary at 30 June 2009. 

A summary of defined benefit obligations and scheme assets is given below:

	2009   £m	2008   £m	Year ended   31 December   2008   £m
Present value of defined benefit obligation as originally reported	(1,804.4)	(1,891.4)	(1,683.6)
Impact of adoption of IFRIC 14	-	(15.1)	(18.5)
Present value of defined benefit obligation as restated	(1,804.4)	(1,906.5)	(1,702.1)
Fair value of scheme assets as originally reported	1,557.4	1,782.8	1,594.5
Impact of adoption of IFRIC 14	-	(1.8)	(1.5)
Fair value of scheme assets as restated	1,557.4	1,781.0	1,593.0
Net pension liability	(247.0)	(125.5)	(109.1)
Deferred tax on the above	70.6	38.5	32.9
Net pension liability after tax	(176.4)	(87.0)	(76.2)

  10    Cash and cash equivalents and net borrowing

Cash and cash equivalents and net borrowing comprise:

	2009   £m	2008   £m	Year ended 31December   2008 £m
Cash and cash equivalents	296.1	215.9	257.3
Bank overdrafts	(23.7)	(16.7)	(7.3)
Net cash and cash equivalents at period end	272.4	199.2	250.0
Bank loans	(327.8)	(369.3)	(365.9)
Finance lease obligations	(68.0)	(80.3)	(79.1)
Other loans	(22.6)	(13.7)	(31.7)
Net borrowing at period end	(146.0)	(264.1)	(226.7)

Reconciliation of net cash flow to movement in net borrowing:
		2009 £m	2008   £m	Year ended 31 December 2008 £m
Increase/(decrease) in net cash and cash equivalents for the period		26.2	(125.0)	(79.5)
Repayment of bank and other loans		41.4	32.9	7.8
Payment of finance lease liabilities		8.4	7.9	16.3
Decrease/(increase) in net borrowing resulting from cash flows		76.0	(84.2)	(55.4)
Net borrowing in subsidiaries acquired		-	(143.2)	(143.2)
Loan notes issued on acquisition of Alfred McAlpine		-	(1.3)	(1.3)
Finance lease additions		(0.2)	-	(2.1)
Finance lease disposals		-	7.3	7.3
Currency translation differences		4.9	2.2	12.9
Change in net borrowing during the period		80.7	(219.2)	(181.8)
Net borrowing at 1 January		(226.7)	(44.9)	(44.9)
Net borrowing at period end		(146.0)	(264.1)	(226.7)

11    Related party transactions

The Group has made sales to the Group's jointly controlled entities, which are in the normal course of business and on commercial terms, amounting to £274.3m in the six months ended 30 June 2009.

12    Disposals

On 30 June 2009, the Group disposed of the entire issued share capital of Carillion IT Services Limited for total cash consideration of £36.0m. The disposal is subject to an on-going completion process and therefore the profit arising on disposal of £1.5m is provisional.

Cash flows associated with the disposal are included in the cash flow statement as follows:

	£m
Cash received (net of transaction costs paid of £nil)	36.0
Cash and cash equivalents disposed	(0.6)
Net cash inflow on disposal	35.4

In June 2009, the Group disposed of equity investments in two Public Private Partnership jointly controlled entities. The disposals generated a cash consideration of £13.8m and a non-operating profit of £3.0m.

13    New accounting standards and interpretations

Upon the adoption of International Financial Reporting Interpretations Committee (IFRIC) 14 'The limit on a defined benefit asset, minimum funding requirements and their interaction' on 1 January 2009, the Group has restated prior period information, which has had the following impact on net assets:

			2008		31 December 2008
		£m	£m		£m	£m
Net assets as previously reported			844.8			872.6
Impact of adoption of IFRIC 14 on	- goodwill	9.4			9.4
	- retirement benefits	(16.9)			(20.0)
	- deferred tax	4.7			5.6
			(2.8)			(5.0)
Net assets as restated			842.0			867.6

The impact on goodwill of £9.4m relates to the effect of IFRIC 14 on retirement benefit liabilities (net of deferred tax) at the date of acquisition of Alfred McAlpine on 12 February 2008.

The adoption of IFRIC 14 has no impact on reported profit, earnings per share or cash flows. None of the other new accounting standards adopted on 1 January 2009, as described in the basis of preparation, have any impact upon reported profit, earnings per share, net assets or cash flows.

14    Estimates

The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2008.

15 Company information

This preliminary announcement was approved by the Board of Directors on 27 August 2009. The 2009 interim results will be posted to all shareholders by 14 September 2009 and both this statement and the 2009 interim results will be available on the internet at www.carillionplc.com or on request from the Company Secretary, Carillion plc, Birch Street, Wolverhampton, WV1 4HY.

Directors' responsibilities

This interim report complies with the Disclosure and Transparency Rules (DTR) of the United Kingdom's Financial Services Authority in respect of the requirements to produce a half yearly financial report. The interim report is the responsibility of, and has been approved by, the Directors of Carillion plc.

The Directors of Carillion plc confirm that to the best of their knowledge

• the condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union

• the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months of 2009 and description of principal risks and uncertainties for the remaining six months)

• the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of any material related party transactions and changes therein).

On behalf of the Board

Richard Adam 

Group Finance Director

27 August 2009

Forward-looking statements

This report may contain certain statements about the future outlook for Carillion plc. Although we believe our expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

Governing law

This report of Carillion plc for the six months ended 30 June 2009 has been drawn up and presented for the purposes of complying with English law. Any liability arising out of or in connection with the report for the six months ended 30 June 2009 will be determined in accordance with English law.

Independent review report to Carillion plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated statement of cash flows, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Services Authority ('the UK FSA'). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union (EU). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

D K Turner

For and on behalf of KPMG Audit Plc

Chartered Accountants

2 Cornwall Street

Birmingham

B3 2DL

27 August 2009

 

END

 

 

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