Interim Results

Carillion PLC 05 September 2007 EMBARGO: NOT FOR PUBLICATION OR BROADCAST BEFORE 7.00am ON WEDNESDAY 5 SEPTEMBER 2007 CARILLION PLC Interim Results for the six months ended 30 June 2007 10% growth in underlying earnings per share Underlying results(1) â€¢ Total revenue up 12% to Â£1,928.6m (2006: Â£1,717.6m)(2) â€¢ Underlying profit before taxation up 28% to Â£34.3m (2006: Â£26.9m)(2) â€¢ Underlying earnings per share from continuing operations up 10% to 9.6p (2006: 8.7p) â€¢ Underlying earnings per share from continuing and discontinued operations up 15% to 9.1p (2006: 7.9p) Reported results â€¢ Profit before taxation of Â£19.5m (2006: Â£13.9m)(2) â€¢ Basic earnings per share from continuing and discontinued operations of 5.4p (2006: 3.5p) â€¢ Proposed interim dividend up 13% to 3.5p (2006: 3.1p) â€¢ Net borrowings at 30 June 2007 of Â£139.7m (2006: Â£118.4m) Strategic highlights â€¢ Successful integration of Mowlem earlier than expected - on track to deliver Â£26m per year of integration savings â€¢ Strong growth in support services - revenue up 26% â€¢ Construction margins improving â€¢ Â£15.8bn order book - pipeline of probable orders increased to Â£2.0bn â€¢ Opportunities to double Middle East revenue, from the 2006 level of Â£274.3m, over the next five years â€¢ Overall outlook in main markets remains positive (1) After Joint Ventures taxation of Â£4.1m (2006: Â£4.9m) and before intangible amortisation, goodwill impairment, restructuring costs and non-operating items (see note 3) (2) Continuing operations CARILLION PLC - ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Philip Rogerson, Chairman, commented: 'The successful integration of the Mowlem business has contributed to a strong first half performance. With a positive overall outlook in our key markets, we expect to make further good progress in the second half of 2007 and deliver materially enhanced earnings in the full year'. For further information contact: Richard Adam, Group Finance Director tel: +44 (0) 1902 422431 John Denning, Group Corporate Affairs Director tel: +44 (0) 1902 316426 5 September 2007 Notes to Editors: This announcement is also available on Carillion's website: www.carillionplc.com Carillion plc is one of the UK's leading support services, construction and Public Private Partnership project companies. The Group has annual revenue of around Â£4bn and employs over 50,000 people. The Group operates across the UK, in the Middle East and in Canada and the Caribbean. In the UK, the Group has eight principal market sectors - Defence, Education, Health, Building, Facilities Management and Services, Roads, Rail and Civil Engineering. In the Middle East, the Group's two principal market sectors are Construction and Facilities Management. In Canada and the Caribbean the Group's main sectors are Health, Roads Maintenance and Construction. The Group is a leader in Public Private Partnership projects, particularly in the Defence, Education and Health sectors in the UK and in the Health sector in Canada. This, and other news releases relating to the Group, 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 0208 886 5895. Key financial figures 2007 2006 Change -------------------------------------------------------------------------------- Income statement(1) Total revenue Â£m 1,928.6 1,717.6 +12% Support services underlying operating margin Percentage 2.9 2.6 n/a Construction services underlying operating margin Percentage 1.9 0.8 n/a Underlying profit from operations(2) Â£m 35.9 22.1 +62% Underlying profit before taxation(2) Â£m 34.3 26.9 +28% Profit before taxation Â£m 19.5 13.9 +40% Underlying earnings per share - continuing operations(2) Pence 9.6 8.7 +10% Underlying earnings per share - continuing and discontinued operations(2) Pence 9.1 7.9 +15% Basic earnings per share - continuing and discontinued operations Pence 5.4 3.5 +54% Dividends Proposed dividend per share Pence 3.5 3.1 +13% Underlying proposed dividend cover - continuing operations(2) Times 2.7 2.8 n/a Basic proposed dividend cover - continuing and discontinued operations Times 1.5 1.1 n/a Cash flow statement(1) Cash generated from operations before pension deficit recovery payments and restructuring costs and after dividends received from Joint Ventures Â£m 43.8 85.0 -48% Underlying profit from operations cash conversion Percentage 122.0 384.6 n/a Deficit pension contributions Â£m 37.2 23.0 +62% Balance sheet Net borrowings Â£m 139.7 118.4 +18% Net retirement benefit liability Â£m 26.6 115.3 -77% Net assets Â£m 476.0 371.8 +28% -------------------------------------------------------------------------------- (1) Continuing operations unless otherwise stated (2) After Joint Ventures taxation of Â£4.1m (2006: Â£4.9m) and before intangible amortisation, goodwill impairment, restructuring costs and non-operating items (see note 3) Results The successful integration of the Mowlem business has contributed to a strong first half performance. Revenue, including joint ventures, increased by 12 per cent to Â£1,928.6 million (2006: Â£1,717.6 million), reflecting a full six months contribution from Mowlem, acquired in February 2006, and continuing organic growth. Underlying profit before tax from continuing activities rose by 28 per cent to Â£34.3 million (2006: Â£26.9 million) and underlying earnings per share from continuing activities on the same basis increased by 10 per cent to 9.6 pence (2006: 8.7 pence). Average net debt in the first six months of 2007 was Â£161.6 million (2006 full year post the acquisition of Mowlem: Â£148.0 million) and the Group ended the first half of the year with net borrowings of Â£139.7 million (2006: Â£118.4 million), which was in line with the Board's expectations as a result of the continuing focus on strong cash management. The Group has continued to win substantial new work in its chosen markets and its order book stands at Â£15.8 billion. It has also maintained a substantial pipeline of probable new orders worth some Â£2.0 billion (December 2006: Â£1.6 billion). In view of our performance in the first six months of 2007 and prospects for the second half, the Board has declared an interim dividend of 3.5 pence per share, an increase of 13 per cent on the dividend paid in respect of the corresponding period in 2006. We delivered a strong first half performance and are on course to make further good progress in the second half towards achieving our key objectives including delivering cost savings at the previously announced running rate of Â£26 million a year by the year end. Strategy Mowlem's complementary skills and market strengths in private finance, support services and construction have enabled us to create a stronger and more resilient business, better equipped to accelerate Carillion's strategy for growth. CARILLION PLC - ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 This progress is evident in our order book, which stands at Â£15.8 billion (December 2006: Â£16.0 billion), of which Â£8.6 billion relates to support services, Â£2.4 billion to construction services and Â£4.8 billion to our equity investments in Public Private Partnership (PPP) projects. Our consistent and successful strategy for growth remains unchanged, namely to grow support services and PPP investment activities alongside a strong and selective construction capability and to seek opportunities to provide customers with integrated solutions that use our wide range of skills and extensive resources. In addition to revenue growth, we are also focused on improving margins, particularly in the businesses acquired with Mowlem and to bring these, over time, into line with those of Carillion. Our strategy continues to be underpinned by living our values in everything we do. Adopting the highest standards of corporate responsibility not only has positive impacts on the environment and on the communities in which we operate, but also helps us to deliver our business objectives. Our progress against the seven headline objectives we set for 2007 is summarised below. Key objectives for 2007 What we have achieved Attract, develop and retain We continue to make progress through our excellent people by becoming leadership, personal development and employee an employer of choice. engagement programmes, which enable individuals to fulfil their potential and contribute to Carillion's success. Be a recognised leader in the In May 2007, we topped our sector and received a delivery of safety and 'Gold' performance ranking in Business in the sustainability Community's 2006 Corporate Responsibility Index. Our Accident Frequency Rate in the first half 2007 of 0.15 (2006: 0.18) ranks with the best in our sector. Deliver revenue growth of a Our first half performance puts us on track to minimum of 5 per cent through achieve this target. exceeding our customers' expectations Deliver Mowlem integration We are making good progress on cost savings and cost savings at a running firmly on course to deliver savings of Â£26 million rate of Â£26 million per annum a year by the end of 2007. by the end of 2007 Generate cash-backed Underlying cash flow represented 122% of operating profit underlying operating profit at the half year. Achieve average net debt in Average debt was in line with expectations at the the full year of around Â£150 half year and we expect to achieve our objective million for the full year. Deliver materially enhanced A strong first half performance with 10% growth in earnings in 2007 underlying earnings per share(1) means we are on track to achieve this objective. (1) Continuing operations Business performance Total revenue from continuing operations in the first half of 2007 increased by 12 per cent to Â£1,928.6 million (2006: Â£1,717.6 million) including revenue from joint ventures of Â£317.7 million (2006: Â£236.6 million). Total underlying operating profit from continuing operations increased by 62 per cent to Â£35.9 million (2006: Â£22.1 million), including profit from joint ventures of Â£17.5 million (2006: Â£14.6 million). After a net financing expense of Â£1.6 million, underlying profit before tax was Â£34.3 million, an increase of nearly 28 per cent (2006: Â£26.9 million). Underlying earnings per share on the same measure increased by 10 per cent to 9.6 pence (2006: 8.7 pence). Intangible amortisation amounted to Â£9.8 million (2006: Â£7.3 million including goodwill impairment), restructuring costs to Â£5.5 million (2006: Â£5.7 million) and non-operating income to Â£0.5 million (2006: Â£nil) leaving profit before tax of Â£19.5 million (2006: Â£13.9 million). After taxation of Â£1.9 million (2006: Â£1.6 million), discontinued operations of Â£1.4 million (2006: Â£2.2 million) and minority interests of Â£1.1 million (2006: Â£1.1 million), profit attributable to Carillion shareholders was Â£15.1 million (2006: Â£9.0 million) and basic earnings per share from continuing and discontinued operations were 5.4 pence (2006: 3.5 pence). The first half underlying operating profit margin, including Joint Ventures, increased to 2.4 per cent (2006: 1.7 per cent) and reflects our continuing drive to improve margins through contract selectivity, cost reduction and greater efficiency. In particular, improving margins over time in the businesses acquired with Mowlem continues to be a significant opportunity for enhancing earnings growth. First half average net debt of Â£161.6 million (2006 full year post the acquisition of Mowlem: Â£148.0 million) and net debt at 30 June 2007 of Â£139.7 million (December 2006: Â£108.0 million) were in line with expectations. The movements in debt include a substantial cash outflow in the first half due to payments of Â£37.2 million to pension funds in line with our pension deficit recovery plan, net capital expenditure and acquisition and disposal payments of Â£18.3 million and the final 2006 dividend payment of Â£16.6 million. We expect a strong second half cash inflow from operations and to achieve our objective for average net debt in the full year of around Â£150 million. We continue to operate in three main areas - support services, construction services and investments - in which we group together activities of a similar type and risk profile to make it easier to report our earnings on a consistent basis. Support services In this segment we report the results of our facilities management, facilities services, rail infrastructure, road maintenance and consultancy businesses. 2007 2006 Change from Â£m Â£m 2006 % -------------------------------------------------------------------------------- Revenue(1) - Group 749.0 630.8 - Joint Ventures 109.6 48.5 -------------------------------------------------------------------------------- 858.6 679.3 26 -------------------------------------------------------------------------------- Underlying operating profit(1) - Group 18.6 15.0 - Joint Ventures 6.2 2.4 -------------------------------------------------------------------------------- 24.8 17.4 43 -------------------------------------------------------------------------------- (1) Continuing operations before intangible amortisation, goodwill impairment, restructuring costs and non-operating items Revenue in support services increased by 26 per cent, of which some 19 per cent was due to organic growth, with the remainder attributable to having a full first half contribution from the businesses acquired with Mowlem in February 2006. Organic growth was driven primarily by increased revenues from facilities management, both for public and private sector customers, notably the Ministry of Defence, BT, Virgin Media and Norwich Union, and from highways maintenance in the UK and Canada, partially offset by lower volumes in rail infrastructure. Underlying operating profit increased by almost 43 per cent, reflecting revenue growth, with operating margins increasing from 2.6 per cent to 2.9 per cent, primarily as a result of a strong performance by our joint venture defence contracts. Increasing margins, over time, in the businesses acquired with Mowlem remains a key objective, as this offers significant opportunities for profitable growth. We expect to make further progress in this regard in the second half and for the full year operating margin in this segment to be significantly ahead of the 2.9 per cent achieved at the half year. Overall, new order intake in support services has remained healthy and the value of our order book for this segment at 30 June 2007 was Â£8.6 billion (December 2006: Â£8.4 billion). The outlook in this segment continues to be positive with forecast growth in the UK support services market of some 5 per cent per annum over the next five years. Public and private sector outsourcing is expected to provide significant opportunities for further growth in facilities management and road maintenance. The decline in the UK rail infrastructure market has stabilised and the outlook is for potential growth with increased expenditure on network and station enhancement projects. Network Rail's intention to reduce its suppliers of track renewal services from six to four remains an opportunity for Carillion Rail to increase its market share as we believe we are well positioned in this market, particularly in the more specialised area of switches and crossings renewals. In our international regions we also expect opportunities for further growth. In Canada, the outsourcing of roads maintenance continues to be a growth market and our facilities management activities in the Middle East and Canada are expected to achieve further growth in the second half of 2007 and beyond. Construction services In this segment, we report the results of our UK building, civil engineering and developments businesses and the construction activities of International businesses. 2007 2006 Change from Â£m Â£m 2006 % -------------------------------------------------------------------------------- Revenue(1) - Group 861.5 843.0 - Joint Ventures 124.9 115.8 ---------------------------------------------- 986.4 958.8 3 -------------------------------------------------------------------------------- Underlying operating profit(1) - Group 9.2 (2.3) - Joint Ventures 9.3 10.1 --------------------------------------------- 18.5 7.8 137 -------------------------------------------------------------------------------- (1) Continuing operations before intangible amortisation, goodwill impairment, restructuring costs and non-operating items Revenue in construction services increased by three per cent due to having a full first half contribution from the businesses acquired with Mowlem in February 2006, organic growth in the UK defence and roads sectors and in the Middle East, offset by reduced revenue from UK building where our focus is on increasing margins rather than revenue. Underlying operating profit increased by 137 per cent, primarily due to an improved operating performance that reflects our focus on efficiency and project selectivity, and lower bid costs for PPP projects. Consequently, the total operating margin in this segment at the half year improved from 0.8 per cent to 1.9 per cent, in line with our objective of improving margins ahead of revenue. Overall, opportunities for new orders in this segment have remained strong and the value of our construction services order book at 30 June was Â£2.4 billion (December 2006: Â£2.9 billion). The outlook in our construction markets is for continuing growth. In the UK, the non-housing new build market is forecast to grow at some 6 per cent per annum over the next five years. However, we shall continue to focus on using these buoyant market conditions to improve margins ahead of revenues. In the Middle East we are targeting significant opportunities for growth that could potentially more than double revenue from this region over the next five years, as we seek to extend our current activities in Dubai and Oman to Abu Dhabi and Egypt. In Canada, there are also prospects for further growth, primarily from PPP construction projects. Investments In this segment we report the equity returns on our investments in PPP projects in our chosen sectors of Defence, Health, Education, Transport, Secure and other Government accommodation. 2007 2006 Change from Â£m Â£m 2006 % -------------------------------------------------------------------------------- Revenue(1) - Group 0.4 7.2 - Joint Ventures 83.2 72.3 --------------------------------------------- 83.6 79.5 5 -------------------------------------------------------------------------------- Underlying operating profit(1) - Group 0.4 4.6 - Joint Ventures 11.7 8.6 --------------------------------------------- 12.1 13.2 (8) -------------------------------------------------------------------------------- (1) Continuing operations before intangible amortisation, goodwill impairment, restructuring costs and non-operating items At 30 June 2007, we had a portfolio of 24 investments in financially closed PPP projects in which we had already invested some Â£76 million and commitments to invest a further Â£92 million, which will bring our total investment in these projects to Â£168 million. The Directors' valuation of our portfolio at 30 June 2007 was Â£277 million (December 2006: Â£238 million), based on discounting the cash flows from these investments and commitments at eight per cent. As expected, underlying operating profit in this segment reduced for two reasons, upon which we have commented previously. First, the sale of eight equity investments in September 2006, at an exceptional profit of Â£25.6 million, reduced first half profit in 2007 by some Â£3.5 million. Second, Group operating profit in the first half of 2006 benefited from a one-off fee as a result of achieving financial close on the Â£12 billion Allenby Connaught project for the Ministry of Defence in April 2006. However, these two factors were largely offset by growing returns from our portfolio of investments in financially closed projects, particularly from the addition of Allenby Connaught, and this continues to generate substantial value for the Group. Overall, the outlook in our chosen sectors of the PPP market, both in the UK and Canada, remains positive. Through our ability to win and deliver PPP projects successfully, we expect to continue to build a portfolio of good quality investments that will generate significant value for the Group. In August 2007 a Carillion joint venture achieved financial close on the Â£200 million Sault Area Hospital in Ontario, Canada, in which we will invest Â£3.5 million of equity. We expect to invest up to Â£6 million of equity in two NHS Independent Sector Treatment Centre projects for which we are the preferred bidder - London North and Bedfordshire and Hertfordshire. In addition, we are shortlisted for a further eight projects with a potential equity requirement of up to Â£68 million. Beyond that we expect continuing opportunities to bid for further PPP projects in the UK and Canada. Prospects Following the successful acquisition and integration of Mowlem we are in a strong position and we are confident about the future in our UK and International markets. With a positive overall outlook in our key markets, the Board expects Carillion to make further good progress in the second half of 2007 and deliver materially enhanced earnings in the full year. Carillion plc Unaudited group income statement for the six months ended 30 June -------------------------------------------------------------------------------- Year ended 31 December 2007 2006(1) 2006(1) Note Â£m Â£m Â£m -------------------------------------------------------------------------------- Continuing operations Total revenue 1,928.6 1,717.6 3,562.6 Less: Share of jointly controlled entities revenue (317.7) (236.6) (528.5) -------------------------------------------------------------------------------- Group revenue 2 1,610.9 1,481.0 3,034.1 Cost of sales (1,505.7) (1,395.2) (2,834.6) -------------------------------------------------------------------------------- Gross profit 105.2 85.8 199.5 Administrative expenses (102.1) (91.3) (189.4) -------------------------------------------------------------------------------- Group operating profit/(loss) 2 3.1 (5.5) 10.1 -------------------------------------------------------------------------------- Analysed between: Group operating profit before intangible amortisation, goodwill impairment and restructuring costs 18.4 7.5 49.9 Intangible amortisation and goodwill impairment (9.8) (7.3) (17.2) Restructuring costs 3 (5.5) (5.7) (22.6) -------------------------------------------------------------------------------- Share of results of jointly controlled entities 2 17.5 14.6 31.6 -------------------------------------------------------------------------------- Analysed between: Operating profit 27.2 21.1 47.7 Net financing expense (5.6) (1.6) (8.0) Taxation (4.1) (4.9) (8.1) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit from operations 2 20.6 9.1 41.7 -------------------------------------------------------------------------------- Analysed between: Profit from operations before intangible amortisation, goodwill impairment and restructuring costs 35.9 22.1 81.5 Intangible amortisation and goodwill impairment (9.8) (7.3) (17.2) Restructuring costs 3 (5.5) (5.7) (22.6) -------------------------------------------------------------------------------- Non-operating items 3 0.5 - 25.3 Net financing (expense)/income 4 (1.6) 4.8 1.4 -------------------------------------------------------------------------------- Profit before taxation 19.5 13.9 68.4 -------------------------------------------------------------------------------- Analysed between: Profit before tax, intangible amortisation, goodwill impairment, restructuring costs and non-operating items 34.3 26.9 82.9 Intangible amortisation and goodwill impairment (9.8) (7.3) (17.2) Restructuring costs 3 (5.5) (5.7) (22.6) Non-operating items 3 0.5 - 25.3 -------------------------------------------------------------------------------- Taxation 5 (1.9) (1.6) (7.2) -------------------------------------------------------------------------------- Profit for the period from continuing operations 17.6 12.3 61.2 Discontinued operations Loss for the period from discontinued operations 6 (1.4) (2.2) (0.8) -------------------------------------------------------------------------------- Profit for the period 16.2 10.1 60.4 -------------------------------------------------------------------------------- Profit attributable to: Equity holders of the parent 15.1 9.0 58.2 Minority interests 1.1 1.1 2.2 -------------------------------------------------------------------------------- Profit for the period 16.2 10.1 60.4 -------------------------------------------------------------------------------- Earnings per share 7 From continuing operations Basic 5.9p 4.3p 21.9p Diluted 5.8p 4.3p 21.6p From continuing and discontinued operations Basic 5.4p 3.5p 21.6p Diluted 5.3p 3.5p 21.3p -------------------------------------------------------------------------------- Total dividend declared for the period 8 3.5p 3.1p 9.0p -------------------------------------------------------------------------------- (1) Restated in respect of discontinued operations (see note 6) Carillion plc Unaudited group balance sheet as at 30 June 2007 2006 At 31 December 2006 Note Â£m Â£m Â£m -------------------------------------------------------------------------------- Assets Non-current assets Property, plant and equipment 146.6 134.4 146.6 Intangible assets 586.7 569.0 596.1 Retirement benefit assets 24.7 5.4 10.9 Investments in associates and jointly 200.2 162.4 178.8 controlled entities Other investments 15.9 19.6 15.0 Deferred tax assets 30.6 88.2 55.4 -------------------------------------------------------------------------------- Total non-current assets 1,004.7 979.0 1,002.8 -------------------------------------------------------------------------------- Current assets Inventories 25.1 25.9 38.5 Trade and other receivables 787.5 997.2 875.3 Cash and cash equivalents 141.0 214.1 144.5 Income tax receivable 0.5 0.5 0.2 Assets classified as held for sale 6 11.1 4.5 - Derivative financial instruments - - 0.8 -------------------------------------------------------------------------------- Total current assets 965.2 1,242.2 1,059.3 -------------------------------------------------------------------------------- Total assets 1,969.9 2,221.2 2,062.1 -------------------------------------------------------------------------------- Liabilities Current liabilities Borrowings (11.5) (31.1) (12.6) Derivative financial instruments (1.1) (0.1) - Trade and other payables (1,082.1) (1,313.2) (1,195.8) Provisions (7.7) - (2.4) Liabilities classified as held for sale 6 (10.6) (9.5) - Income tax payable (13.2) (15.3) (13.0) -------------------------------------------------------------------------------- Total current liabilities (1,126.2) (1,369.2) (1,223.8) -------------------------------------------------------------------------------- Non-current liabilities Borrowings (269.2) (301.4) (239.9) Retirement benefit liabilities (62.7) (170.1) (123.8) Deferred tax liabilities (32.3) (7.0) (37.4) Provisions (3.5) (1.7) (3.5) -------------------------------------------------------------------------------- Total non-current liabilities (367.7) (480.2) (404.6) -------------------------------------------------------------------------------- Total liabilities (1,493.9) (1,849.4) (1,628.4) -------------------------------------------------------------------------------- Net assets 2 476.0 371.8 433.7 -------------------------------------------------------------------------------- Equity Issued share capital 11 140.6 140.4 140.6 Share premium 11 8.6 8.5 8.6 Reserves 11 181.7 188.9 172.7 Retained earnings 11 144.1 33.0 110.8 -------------------------------------------------------------------------------- Equity attributable to shareholders of the parent 475.0 370.8 432.7 Minority interests 11 1.0 1.0 1.0 -------------------------------------------------------------------------------- Total equity 476.0 371.8 433.7 -------------------------------------------------------------------------------- Carillion plc Unaudited group cash flow statement for the six months ended 30 June -------------------------------------------------------------------------------- Year ended 31 December 2007 2006(1) 2006(1) Note Â£m Â£m Â£m -------------------------------------------------------------------------------- Continuing operations Cash flows from operating activities Group operating profit/(loss) 3.1 (5.5) 10.1 Depreciation, amortisation and impairment 21.3 17.0 36.7 (Profit)/loss on disposal of property, plant and equipment (3.3) 0.5 (1.9) Share-based payment expense 1.5 0.6 1.3 Other non-cash movements 2.1 2.2 (0.2) Restructuring costs 5.5 5.7 22.6 -------------------------------------------------------------------------------- Operating profit before changes in working capital and provisions 30.2 20.5 68.6 Decrease in inventories 13.6 8.8 - Decrease/(increase) in trade and other receivables 93.3 (150.9) (56.6) (Decrease)/increase in trade and other payables (106.2) 199.2 80.0 Increase in provisions - - 0.1 -------------------------------------------------------------------------------- Cash generated from operations before pension deficit recovery payments and restructuring costs 30.9 77.6 92.1 Deficit recovery payments to pension schemes (37.2 (23.0) (31.8) Restructuring costs (0.3) (4.3) (18.2) -------------------------------------------------------------------------------- Cash generated from operations (6.6) 50.3 42.1 Financial income received 5.9 6.2 15.4 Financial expense paid (10.5) (7.2) (17.4) Taxation 7.3) (1.2) 1.7 -------------------------------------------------------------------------------- Net cash flows from operating activities (3.9) 48.1 41.8 -------------------------------------------------------------------------------- Cash flows from investing activities Disposal of property, plant and equipment 6.7 0.8 12.1 Disposal of investments in jointly controlled entities 0.5 - 47.3 Dividends received from jointly controlled entities 12.9 7.4 15.7 Disposal of businesses, net of cash disposed of - 26.7 30.4 Acquisition of subsidiary, net of cash acquired - (122.1) (122.3) Acquisition of intangible assets (0.7) (0.3) (1.8) Acquisition of property, plant and equipment (11.5) (22.0) (38.5) Acquisition of equity in, and loan advances to, jointly controlled entities (12.4) (2.5) (19.7) Acquisition of other non-current asset investments (0.9) (1.4) (0.5) -------------------------------------------------------------------------------- Net cash flows from investing activities (5.4)(113.4) (77.3) -------------------------------------------------------------------------------- Cash flows from financing activities Proceeds from the issue of share capital - 0.4 0.4 Draw down of bank and other loans 27.7 107.1 321.3 Repayment of bank loans - - (276.6) Payment of finance lease liabilities (3.0) (2.5) (9.6) Dividends paid to equity holders of the parent (16.6) (14.5) (23.2) Dividends paid to minority interests (1.1) (1.2) (2.3) -------------------------------------------------------------------------------- Net cash flows from financing activities 7.0 89.3 10.0 -------------------------------------------------------------------------------- Net (decrease)/increase in cash and cash equivalents from continuing operations (2.3) 24.0 (25.5) Discontinued operations Decrease in cash and cash equivalents from discontinued operations 6 (1.7) (1.1) (1.7) -------------------------------------------------------------------------------- Net (decrease)/increase in cash and cash equivalents for the period (4.0) 22.9 (27.2) Cash and cash equivalents at beginning of period 141.4 169.7 169.7 Cash and cash equivalents included in liabilities classified as held for sale 6 1.2 - - Effect of exchange rate fluctuations on cash held 0.4 (1.1) (1.1) -------------------------------------------------------------------------------- Cash and cash equivalents at end of period 9 139.0 191.5 141.4 -------------------------------------------------------------------------------- (1) Restated in respect of discontinued operations (see note 6) Carillion plc Reconciliation of net cash flow to movement in net borrowings for the six months ended 30 June Year ended 31 December 2007 2006(1) 2006(1) Note Â£m Â£m Â£m -------------------------------------------------------------------------------- (Decrease)/increase in cash and cash equivalents for the period (4.0) 22.9 (27.2) Drawdown of bank and other loans (27.7) (107.1) (321.3) Repayment of bank loans - - 276.6 Payment of finance lease liabilities 3.0 2.5 9.6 -------------------------------------------------------------------------------- Increase in net borrowings resulting from cash flows (28.7) (81.7) (62.3) Net borrowings in subsidiaries acquired - (126.1) (126.1) Borrowings included in liabilities classified as held for sale 1.2 - - Finance lease additions (1.2) (0.5) (13.3) Currency translation differences (3.0) (0.9) 2.9 -------------------------------------------------------------------------------- Change in net borrowings during the period (31.7) (209.2) (198.8) Net (borrowings)/cash at beginning of period (108.0) 90.8 90.8 -------------------------------------------------------------------------------- Net borrowings at end of period (139.7) (118.4) (108.0) -------------------------------------------------------------------------------- Unaudited statement of recognised income and expense for the six months ended 30 June Year ended 31 December 2007 2006(1) 2006(1) Note Â£m Â£m Â£m -------------------------------------------------------------------------------- Currency translation differences 11 0.4 0.3 (2.9) Actuarial gains/(losses) on defined benefit pension schemes 33.7 (5.8) 34.6 -------------------------------------------------------------------------------- 34.1 (5.5) 31.7 Taxation in respect of the above (10.4) 1.7 (11.5) Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation) 11 18.3 5.4 0.2 -------------------------------------------------------------------------------- Income and expense recognised directly in equity 42.0 1.6 20.4 Profit for the period 16.2 10.1 60.4 -------------------------------------------------------------------------------- Total recognised income and expense for the period 58.2 11.7 80.8 -------------------------------------------------------------------------------- Attributable to: Equity holders of the parent 57.1 10.6 78.6 Minority interests 1.1 1.1 2.2 -------------------------------------------------------------------------------- 58.2 11.7 80.8 -------------------------------------------------------------------------------- (1) Restated in respect of discontinued operations (see note 6) Carillion plc Notes to the interim financial statements 1 Basis of preparation Carillion plc (the 'Company') is a company domiciled in the United Kingdom (UK). The consolidated interim financial statements of the Company for the six months ended 30 June 2007 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 which were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2006. No new accounting policies have been adopted in the six months ended 30 June 2007. The comparative financial information for the year ended 31 December 2006 does not constitute the Company's statutory accounts for that financial year. The statutory accounts for the year ended 31 December 2006 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. Presentational changes have been made to the income statement, cash flow statement and segmental reporting note compared to the presentation in the annual report for the year ended 31 December 2006 in order to facilitate a greater understanding and improve the transparency of the Group's reported results. 2 Segment reporting Segment information is presented in the consolidated interim financial statements in respect of the Group's business segments, which are the primary basis of segment reporting. The business segment reporting format reflects the Group's management and internal reporting structure. 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. Business segments The Group is comprised of the following main business segments: â€¢ Support services: Rail infrastructure, roads maintenance, facilities management and other support services â€¢ Construction services: UK building, development and civil engineering activities and international construction activities. â€¢ Investments: Equity returns on investments in Public Private Partnership (PPP) projects. Segmental revenue and Year ended 31 profit 2007 2006 December 2006 ------------------------------------------------------------------------------------------------- Operating Operating Operating profit before profit before profit before intangible intangible intangible amortisation, amortisation, amortisation, goodwill goodwill goodwill impairment and impairment and impairment and restructuring restructuring restructuring Revenue costs Revenue costs Revenue costs Â£m Â£m Â£m Â£m Â£m Â£m ------------------------------------------------------------------------------------------------- Support services Group 749.0 18.6 630.8 15.0 1,365.0 51.7 Share of jointly controlled entities 109.6 6.2 48.5 2.4 143.9 7.3 ------------------------------------------------------------------------------------------------- 858.6 24.8 679.3 17.4 1,508.9 59.0 Inter-segment 28.0 - 14.8 - 30.2 - ------------------------------------------------------------------------------------------------- Total 886.6 24.8 694.1 17.4 1,539.1 59.0 ------------------------------------------------------------------------------------------------- Construction services Group 861.5 9.2 843.0 (2.3) 1,667.8 11.4 Share of jointly controlled entities 124.9 9.3 115.8 10.1 237.9 21.0 ------------------------------------------------------------------------------------------------- 986.4 18.5 958.8 7.8 1,905.7 32.4 Inter-segment 4.8 - - - 4.0 - ------------------------------------------------------------------------------------------------- Total 991.2 18.5 958.8 7.8 1,909.7 32.4 ------------------------------------------------------------------------------------------------- Investments Group 0.4 0.4 7.2 4.6 1.3 7.1 Share of jointly controlled entities 83.2 11.7 72.3 8.6 146.7 19.4 ------------------------------------------------------------------------------------------------- 83.6 12.1 79.5 13.2 148.0 26.5 Inter-segment - - - - - - ------------------------------------------------------------------------------------------------- Total 83.6 12.1 79.5 13.2 148.0 26.5 ------------------------------------------------------------------------------------------------- Group eliminations and unallocated items (32.8) (9.8) (14.8) (9.8) (34.2) (20.3) ------------------------------------------------------------------------------------------------- Consolidated Group 1,610.9 18.4 1,481.0 7.5 3,034.1 49.9 Share of jointly controlled entities 317.7 27.2 236.6 21.1 528.5 47.7 ------------------------------------------------------------------------------------------------- Total 1,928.6 45.6 1,717.6 28.6 3,562.6 97.6 ------------------------------------------------------------------------------------------------- 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Group and share of jointly controlled entities operating profit before intangible amortisation, goodwill impairment and restructuring costs 45.6 28.6 97.6 Net financing (expense)/income - Group (1.6) 4.8 1.4 - Share of jointly controlled entities (5.6) (1.6) (8.0) Share of jointly controlled entities taxation (4.1) (4.9) (8.1) -------------------------------------------------------------------------------- Underlying profit before taxation from continuing operations 34.3 26.9 82.9 Intangible amortisation and goodwill impairment (1) (9.8) (7.3) (17.2) Restructuring costs (1) (5.5) (5.7) (22.6) Non-operating items 0.5 - 25.3 -------------------------------------------------------------------------------- Profit before taxation from continuing operations 19.5 13.9 68.4 Taxation (1.9) (1.6) (7.2) -------------------------------------------------------------------------------- Profit for the period from continuing operations 17.6 12.3 61.2 Discontinued operations Loss for the period from discontinued operations (1.4) (2.2) (0.8) -------------------------------------------------------------------------------- Profit for the period 16.2 10.1 60.4 -------------------------------------------------------------------------------- (1)Intangible amortisation and goodwill impairment and restructuring costs arise in the following segments: 2007 2006 Year ended 31 December 2006 ------------------------------------------------------------------------------------------------------------- Intangible Restructuring Intangible Restructuring Intangible Restructuring amortisation costs amortisation costs amortisation costs and goodwill and goodwill and goodwill impairment impairment impairment Â£m Â£m Â£m Â£m Â£m Â£m ------------------------------------------------------------------------------------------------------------- Support services (6.7) - (5.2) - (11.9) (6.0) Construction services (2.3) - (1.5) - (3.6) (1.5) Investments - - (0.1) - (0.4) (0.2) Unallocated Group items (0.8) (5.5) (0.5) (5.7) (1.3) (14.9) ------------------------------------------------------------------------------------------------------------- Total (9.8) (5.5) (7.3) (5.7) (17.2) (22.6) ------------------------------------------------------------------------------------------------------------- Depreciation, amortisation and impairment and capital expenditure arise in the following segments: 2007 2006 Year ended 31 December 2006 ---------------------------------------------------------------------------------------------------------------------- Depreciation, Capital Depreciation, Capital Depreciation, Capital amortisation expenditure amortisation expenditure amortisation expenditure and impairment and impairment and impairment Â£m Â£m Â£m Â£m Â£m Â£m ---------------------------------------------------------------------------------------------------------------------- Support services 13.5 7.3 7.1 7.8 23.8 28.9 Construction services 3.9 1.8 1.9 2.3 7.0 4.7 Investments - - 0.1 - 0.4 - Unallocated Group items 3.9 4.3 7.9 10.8 5.5 19.7 ---------------------------------------------------------------------------------------------------------------------- Total 21.3 13.4 17.0 20.9 36.7 53.3 ---------------------------------------------------------------------------------------------------------------------- Segmental net assets 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Support services Operating assets 716.0 714.1 761.5 Investments in jointly controlled entities 4.4 4.6 2.1 -------------------------------------------------------------------------------- Total operating assets 720.4 718.7 763.6 Total operating liabilities (375.5) (333.3) (420.2) -------------------------------------------------------------------------------- Net operating assets 344.9 385.4 343.4 -------------------------------------------------------------------------------- Construction services Operating assets 731.0 934.9 832.0 Investments in jointly controlled entities 31.5 35.4 45.8 -------------------------------------------------------------------------------- Total operating assets 762.5 970.3 877.8 Total operating liabilities (639.3) (890.0) (709.9) -------------------------------------------------------------------------------- Net operating assets 123.2 80.3 167.9 -------------------------------------------------------------------------------- Investments Operating assets 7.1 7.2 7.0 Investments in jointly controlled entities 164.3 122.4 130.9 -------------------------------------------------------------------------------- Total operating assets 171.4 129.6 137.9 Total operating liabilities (20.2) (18.0) (22.0) -------------------------------------------------------------------------------- Net operating assets 151.2 111.6 115.9 -------------------------------------------------------------------------------- Consolidated Operating assets 1,454.1 1,656.2 1,600.5 Investments in jointly controlled entities 200.2 162.4 178.8 -------------------------------------------------------------------------------- Total operating assets 1,654.3 1,818.6 1,779.3 Total operating liabilities (1,035.0) (1,241.3) (1,152.1) -------------------------------------------------------------------------------- Net operating assets before Group items 619.3 577.3 627.2 Group items Net assets/(liabilities) classified as held for sale 0.5 (5.0) - Net deferred tax (liabilities)/assets (1.7) 81.2 18.0 Net borrowings (139.7) (118.4) (108.0) Net retirement benefit liabilities (gross of taxation) (38.0) (164.7) (112.9) Net income tax payable (12.7) (14.8) (12.8) Other net assets 48.3 16.2 22.2 -------------------------------------------------------------------------------- Net assets 476.0 371.8 433.7 -------------------------------------------------------------------------------- Geographic segments 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- United Kingdom Total revenue from external customers 1,668.7 1,476.7 3,041.8 Less: share of jointly controlled entities revenue (174.7) (121.9) (260.6) -------------------------------------------------------------------------------- Group revenue from external customers 1,494.0 1,354.8 2,781.2 -------------------------------------------------------------------------------- Total operating assets 1,427.6 1,630.9 1,515.5 -------------------------------------------------------------------------------- Capital expenditure 10.0 17.2 31.7 -------------------------------------------------------------------------------- Middle East Total revenue from external customers 166.9 122.0 274.3 Less: share of jointly controlled entities revenue (125.9) (105.4) (232.0) -------------------------------------------------------------------------------- Group revenue from external customers 41.0 16.6 42.3 -------------------------------------------------------------------------------- Total operating assets 33.4 32.5 38.9 -------------------------------------------------------------------------------- Capital expenditure 0.9 0.3 1.3 -------------------------------------------------------------------------------- Canada and the Caribbean Total revenue from external customers 77.4 73.9 163.5 Less: share of jointly controlled entities revenue (1.5) (1.1) (7.3) -------------------------------------------------------------------------------- Group revenue from external customers 75.9 72.8 156.2 -------------------------------------------------------------------------------- Total operating assets 125.5 91.6 117.2 -------------------------------------------------------------------------------- Capital expenditure 2.4 3.4 20.2 -------------------------------------------------------------------------------- Rest of the World Total revenue from external customers 15.6 45.0 83.0 Less: share of jointly controlled entities revenue (15.6) (8.2) (28.6) -------------------------------------------------------------------------------- Group revenue from external customers - 36.8 54.4 -------------------------------------------------------------------------------- Total operating assets 67.8 63.6 107.7 -------------------------------------------------------------------------------- Capital expenditure 0.1 - 0.1 -------------------------------------------------------------------------------- Consolidated Total revenue from external customers 1,928.6 1,717.6 3,562.6 Less: share of jointly controlled entities revenue (317.7) (236.6) (528.5) -------------------------------------------------------------------------------- Group revenue from external customers 1,610.9 1,481.0 3,034.1 -------------------------------------------------------------------------------- Total operating assets 1,654.3 1,818.6 1,779.3 -------------------------------------------------------------------------------- Capital expenditure 13.4 20.9 53.3 -------------------------------------------------------------------------------- 3 Restructuring costs and non-operating items Restructuring costs Restructuring costs of Â£5.5 million (six months ended 30 June 2006: Â£5.7 million; year ended 31 December 2006: Â£22.6 million) primarily relates to property exit costs arising from a review of the Group's requirements following the acquisition of Mowlem plc in 2006. A tax credit relating to these costs of Â£1.7 million (six months ended 30 June 2006: Â£1.7 million; year ended 31 December 2006: Â£5.0 million) has been included within income tax in the income statement. Non-operating items 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Profit on disposal of investments in jointly controlled entities 0.5 - 26.0 Loss on disposal of businesses - - (0.7) -------------------------------------------------------------------------------- 0.5 - 25.3 -------------------------------------------------------------------------------- There is no income tax associated with any of the non-operating items in any of the above periods. 4 Financial income and expense 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Financial income Bank interest receivable 1.8 3.9 8.1 Other interest receivable 4.1 5.3 7.3 Expected return on retirement plan assets 41.9 42.2 71.7 -------------------------------------------------------------------------------- 47.8 51.4 87.1 -------------------------------------------------------------------------------- Financial expense Interest payable on bank loans and overdrafts (7.2) (5.7) (13.3) Other interest payable and similar charges (3.3) (1.5) (4.2) Interest cost on retirement plan obligations (38.9) (39.4) (68.2) -------------------------------------------------------------------------------- (49.4) (46.6) (85.7) -------------------------------------------------------------------------------- Net financial (expense)/income (1.6) 4.8 1.4 -------------------------------------------------------------------------------- 5 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 2007 is calculated based on the estimated average annual effective income tax rate of 27% (six months ended 30 June 2006: 27%). This effective rate differs to the UK standard corporation tax rate of 30% (six months ended 30 June 2006: 30%) due to items such as the effect of tax rates in foreign jurisdictions, non-deductible expenses, the effect of tax losses utilised and under/over provisions in previous years. It has been announced that the UK standard corporation tax rate applicable to the Company will change from 30% to 28% with effect from 1 April 2008. Deferred tax has been calculated in accordance with IAS 12 'Income Taxes' at 30% for those timing differences which reverse before 1 April 2008 and at 28% for those timing differences which are expected to reverse after 1 April 2008. Due to the uncertainty of when the timing differences will reverse, similar to other organisations, it has not been possible to calculate the full financial impact of this change in these financial statements. 6 Discontinued operations and non-current assets held for sale Following the Board's decision to dispose of the Group's non-core rail activities in Sweden and Denmark, these operations have been classified as discontinued and available for sale. The income statement and cash flow statement for comparative periods have been restated accordingly. Disposal of the operations completed in July 2007 and is subject to a completion accounts process. The results of these operations, which were previously reported in the support services segment were as follows: 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Revenue 14.8 8.1 30.8 Cost of sales (14.1) (8.2) (27.6) -------------------------------------------------------------------------------- Gross profit/(loss) 0.7 (0.1) 3.2 Administrative expenses (2.1) (2.1) (4.0) -------------------------------------------------------------------------------- Operating loss (1.4) (2.2) (0.8) Net financial income - - - -------------------------------------------------------------------------------- Loss before tax (1.4) (2.2) (0.8) Taxation - - - -------------------------------------------------------------------------------- Loss for the period from discontinued operations (1.4) (2.2) (0.8) -------------------------------------------------------------------------------- The analysis of the assets and liabilities held for sale relating to these operations is as follows: -------------------------------------------------------------------------------- 2007 Â£m -------------------------------------------------------------------------------- Assets classified as held for sale Non-current assets Property, plant and equipment 1.1 Current assets Trade and other receivables 10.0 -------------------------------------------------------------------------------- Assets classified as held for sale 11.1 -------------------------------------------------------------------------------- Liabilities classified as held for sale Current liabilities Borrowings (1.2) Trade and other payables (9.4) -------------------------------------------------------------------------------- Liabilities classified as held for sale (10.6) -------------------------------------------------------------------------------- The net cash flows relating to discontinued operations during the period are as follows: 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Net cash outflow from operating activities (1.6) (1.0) (1.1) Net cash outflow from investing activities (0.1) (0.1) (0.6) Net cash outflow from financing activities - - - -------------------------------------------------------------------------------- Decrease in cash and cash equivalents from discontinued operations (1.7) (1.1) (1.7) -------------------------------------------------------------------------------- 7 Earnings per share (a) Basic The calculation of earnings per share for the six months ended 30 June 2007 is based on the profit for the period of Â£15.1 million (six months ended 30 June 2006: Â£9.0 million; year ended 31 December 2006: Â£58.2 million) and a weighted average number of ordinary shares in issue of 280.2 million (six months ended 30 June 2006: 257.7 million; year ended 31 December 2006: 269.5 million), calculated as follows: In millions of shares 2007 2006 Year ended 31 December 2006 -------------------------------------------------------------------------------- Issued ordinary shares at beginning of period 281.2 214.9 214.9 Effect of own shares held by ESOP and QUEST (1.0) (3.8) (1.9) Effect of shares issued in the period - 46.6 56.5 -------------------------------------------------------------------------------- Weighted average number of shares 280.2 257.7 269.5 -------------------------------------------------------------------------------- (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. 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Profit before taxation - continuing operations Profit before taxation as reported in the income statement 19.5 13.9 68.4 Restructuring costs 5.5 5.7 22.6 Amortisation of intangible assets arising from business combinations 9.8 7.2 16.8 Impairment of goodwill - 0.1 0.4 Profit on disposal of investments and businesses (0.5) - (25.3) -------------------------------------------------------------------------------- Underlying profit before taxation - continuing operations 34.3 26.9 82.9 Underlying taxation (6.4) (3.3) (16.6) Minority interests (1.1) (1.1) (2.2) -------------------------------------------------------------------------------- Underlying profit attributable to shareholders - continuing operations 26.8 22.5 64.1 Underlying loss attributable to shareholders - discontinued operations (1.4) (2.2) (0.8) -------------------------------------------------------------------------------- Underlying profit attributable to shareholders - continuing and discontinued operations 25.4 20.3 63.3 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 2007 2006 Year ended Pence per Pence per 31 December share share 2006 Pence per share -------------------------------------------------------------------------------- Earnings per share Basic earnings per share - continuing and discontinued operations 5.4 3.5 21.6 Restructuring costs 1.4 1.6 6.5 Amortisation of intangible assets arising from business combinations 2.5 2.8 4.6 Impairment of goodwill - - 0.2 Profit on disposal of investments and businesses (0.2) - (9.4) -------------------------------------------------------------------------------- Underlying basic earnings per share - continuing and discontinued operations 9.1 7.9 23.5 Discontinued operations 0.5 0.8 0.3 -------------------------------------------------------------------------------- Underlying basic earnings per share - continuing operations 9.6 8.7 23.8 -------------------------------------------------------------------------------- (c) Diluted earnings per share The calculation of diluted earnings per share is based on profit as shown in note 7(b) and a weighted average number of ordinary shares outstanding calculated as follows: In millions of shares 2007 2006 Year ended 31 December 2006 -------------------------------------------------------------------------------- Weighted average number of ordinary shares 280.2 257.7 269.5 Effect of share options in issue 3.0 2.8 3.1 -------------------------------------------------------------------------------- 283.2 260.5 272.6 -------------------------------------------------------------------------------- 8 Dividends The following dividends were paid by the Company: Year ended 31 2007 2006 December 2006 Pence Pence Pence per per per Â£m share Â£m share Â£m share ---------------------------------------------------------------------------------------------- Previous period final dividend 16.6 5.9 14.5 5.2 14.5 5.2 Current period interim dividend - - - - 8.7 3.1 ---------------------------------------------------------------------------------------------- 16.6 5.9 14.5 5.2 23.2 8.3 ---------------------------------------------------------------------------------------------- The following dividends were proposed by the Company: Year ended 31 2007 2006 December 2006 Pence Pence Pence per per per Â£m share Â£m share Â£m share ---------------------------------------------------------------------------------------------- Interim 9.8 3.5 8.7 3.1 8.7 3.1 Final - - - - 16.6 5.9 ---------------------------------------------------------------------------------------------- 9.8 3.5 8.7 3.1 25.3 9.0 ---------------------------------------------------------------------------------------------- The interim dividend for 2007 of 3.5 pence per share was approved by the Board on 5 September 2007 and will be paid on 9 November 2007 to shareholders on the register on 14 September 2007. 9 Cash and cash equivalents Cash and cash equivalents comprise: 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Cash and cash equivalents 141.0 214.1 144.5 Bank overdrafts (2.0) (22.6) (3.1) -------------------------------------------------------------------------------- 139.0 191.5 141.4 -------------------------------------------------------------------------------- 10 Pension commitments The following expense was recognised in the income statement in respect of pension commitments: 2007 2006 Year ended 31 December 2006 Â£m Â£m Â£m -------------------------------------------------------------------------------- Charge to operating profit Current service cost relating to defined benefit schemes (13.7) (13.7) (29.1) Past service cost relating to defined benefit schemes - - (0.5) Defined contribution schemes (2.1) (2.0) (5.5) -------------------------------------------------------------------------------- Total (15.8) (15.7) (35.1) -------------------------------------------------------------------------------- Credit/(charge) to other finance income Expected return on pension scheme assets 41.9 42.2 71.7 Interest cost on pension scheme liabilities (38.9) (39.4) (68.2) -------------------------------------------------------------------------------- Net finance return 3.0 2.8 3.5 -------------------------------------------------------------------------------- The valuation of the Group's main defined benefit pension schemes were reviewed by the scheme's actuary at 30 June 2007. Based on this review, the scheme's net deficits (gross of taxation) were estimated as being Â£38.0 million at 30 June 2007, representing a reduction of Â£74.9 million since 31 December 2006. 11 Reserves and statement of changes in total equity Fair Share Share Translation Hedging value Merger Retained Equity Minority Total capital premium reserve reserve reserve reserve earnings shareholders interests equity funds Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m ------------------------------------------------------------------------------------------------------------ At 1 January 2007 140.6 8.6 (3.4) (9.6) 0.9 184.8 110.8 432.7 1.0 433.7 Total recognised income and expense - - 0.1 18.3 - - 38.7 57.1 1.1 58.2 New share capital subscribed - - - - - - - - - - Share options exercised by employees - - - - - - 0.8 0.8 - 0.8 Equity settled transactions (net of deferred tax) - - - - - - 1.0 1.0 - 1.0 Transfer between reserves - - - - - (9.4) 9.4 - - - Dividends paid - - - - - - (16.6) (16.6) (1.1) (17.7) ------------------------------------------------------------------------------------------------------------ At 30 June 2007 140.6 8.6 (3.3) 8.7 0.9 175.4 144.1 475.0 1.0 476.0 ------------------------------------------------------------------------------------------------------------ At 1 January 2006 107.4 8.2 0.7 (10.8) 0.9 8.2 34.1 148.7 1.1 149.8 Total recognised income and expense - - 0.3 5.4 - - 4.9 10.6 1.1 11.7 New share capital subscribed 33.0 0.3 - - - 190.2 - 223.5 - 223.5 Share options exercised by employees - - - - - - 2.1 2.1 - 2.1 Equity settled transactions (net of deferred tax) - - - - - - 0.4 0.4 - 0.4 Transfer between reserves - - - - - (6.0) 6.0 - - - Dividends paid - - - - - - (14.5) (14.5) (1.2) (15.7) ------------------------------------------------------------------------------------------------------------ At 30 June 2006 140.4 8.5 1.0 (5.4) 0.9 192.4 33.0 370.8 1.0 371.8 ------------------------------------------------------------------------------------------------------------ At 1 January 2006 107.4 8.2 0.7 (10.8) 0.9 8.2 34.1 148.7 1.1 149.8 Total recognised income and expense - - (4.1) 0.2 - - 82.5 78.6 2.2 80.8 New share capital subscribed 33.2 0.4 - - - 191.3 - 224.9 - 224.9 Share options exercised by employees - - - - - - 2.8 2.8 - 2.8 Equity settled transactions (net of deferred tax) - - - - - - 0.9 0.9 - 0.9 Transfer between reserves - - - 1.0 - (14.7) 13.7 - - - Dividends paid - - - - - - (23.2) (23.2) (2.3) (25.5) ------------------------------------------------------------------------------------------------------------ At 31 December 2006 140.6 8.6 (3.4) (9.6) 0.9 184.8 110.8 432.7 1.0 433.7 ------------------------------------------------------------------------------------------------------------ 12 Company Information This preliminary announcement was approved by the board of directors on 5 September 2007. The 2007 Interim Results will be posted to all shareholders by 1 October 2007 and both this statement and the 2007 Interim Results will be available via the Internet at www.carillionplc.com or on request from the Company Secretary, Carillion plc, Birch Street, Wolverhampton, WV1 4HY. This information is provided by RNS The company news service from the London Stock Exchange

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