Interim Management Statement

RNS Number : 7738R

Carillion PLC

06 May 2009

 

6 May 2009    

CARILLION PLC

AGM AND INTERIM MANAGEMENT STATEMENT

'CONTINUING GOOD PROGRESS'

At Carillion plc's Annual General Meeting today, Chairman, Philip Rogerson, made the following comments on trading in the period 1 January to 5 May 2009.

'Carillion has continued to make good progress in line with our strategy and the objective of delivering materially enhanced earnings in 2009, reflecting the resilience of our business mix. 

The Group has maintained its strong financial position with net debt in line with our expectations. New order intake has remained healthy and we have maintained our record order book.

As a result of successfully integrating the Carillion and Alfred McAlpine businesses, we delivered annual cost savings of £15 million in 2008 and we remain firmly on track to deliver total annual cost savings of £35 million in 2009 and £50 million in 2010. The one-off cost of delivering these savings remains unchanged at £55 million, all of which was charged to profit in 2008.  

In support services, which accounts for over half the Group's operating profit, we continue to benefit from a strong order book of long-term contracts for Government and high quality private sector customers. The current economic environment is creating opportunities to extend existing contracts and bid for new ones, as private and public sector customers seek to reduce operating costs by outsourcing facilities management and other non-core services.  Although market conditions have become more competitive, we still expect full-year margins in support services to improve within our target range of four to five per cent, as many of the Alfred McAlpine integration savings coming through in 2009 will occur in support services.  Consequently, we continue to expect support services to be an important driver of this year's earnings growth.   

Our portfolio of investments in Public Private Partnership projects continues to perform well.  Since the end of 2008, we have achieved financial close on three further projects, the £300 million Tameside Building Schools for the Future programme, the £31 million Surgicentre at the Lister Hospital in Stevenage and the £144 million Royal Victoria Hospital in Canada. We have also been selected as the preferred bidder for a new £1.6 billion hospital project at Southmead, Bristol and for the £500 million Building Schools for the Future programme in Durham.  Beyond this, we continue to have a good pipeline of opportunities to bid for new projects, driven primarily by the Building Schools for the Future programme in the UK and by health projects in Canada.  

In Middle East construction services, the geographical balance of our business continues to change, with much reduced revenue in Dubai more than outweighed by substantial growth in Abu Dhabi and steady growth in Oman and in Egypt. Our prospects for growth in Abu Dhabi were further underpinned in February 2009, when we signed a £550 million contract for ALDAR to build the Al Muneera development. Overall, we continue to target strong revenue growth in this segment in line with our objective of increasing our share of revenues from our Middle East businesses from £464 million in 2008 to around £600 million by the end of 2009, at an operating margin of some six per cent.  

In construction services (excluding the Middle East), we continue to focus on improving margins through applying our well-established, strict project selectivity and risk management criteria.  Despite more challenging market conditions we have already announced a number of major new contracts in 2009, which have further strengthened our substantial order book.  This, together with a healthy pipeline of further opportunities for good quality contracts, supports our objective of improving margins in this segment in 2009.

We were pleased to note that the UK Government confirmed in its 2009 Budget Report its intention to exempt foreign earnings from UK corporation tax from 1 July 2009, which underpins our ability to maintain our effective underlying tax rate at 20 per cent.

Therefore, despite challenging market conditions, the Group's overall performance continues to reflect the quality and resilience of our business and we remain on track to deliver materially enhanced earnings in 2009'.

For further information contact

Richard Adam, Group Finance Director                           tel: [phone]

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

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

 

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