Carillion plc Interim Results 2012
Half-year results for the six months ended 30 June 2012
In line with expectations
|
|
Six months ended 30 June 2012 |
Six months ended 30 June 2011 |
Change |
|
Revenue |
£2,156.8m |
£2,453.5m |
-12% |
|
Underlying profit from operations(1) |
£80.7m |
£74.4m |
+8% |
|
Underlying operating margin(2) |
4.1% |
3.3% |
+24% |
|
Underlying profit before taxation(3) |
£73.1m |
£72.5m |
+1% |
|
Underlying earnings per share(4) |
14.4p |
14.3p |
+1% |
|
Profit before taxation |
£64.1m |
£38.2m |
+68% |
|
Basic earnings per share |
13.4p |
7.9p |
+70% |
|
Net borrowing |
£(115.2)m |
£(93.7)m |
-23% |
|
Interim dividend per share |
5.4p |
5.3p |
+2% |
· Financial performance in line with expectations
- First-half revenue reduced, primarily due to the continued re-scaling of UK construction and the timing of project awards in the Middle East
- Strong growth in underlying profit from operations reflects a continuing improvement in operating margin
- Underlying profit before taxation and underlying earnings per share increased, despite a higher net financial expense
- Substantial increases in reported profit before taxation and basic earnings per share, included a contribution from the sale of equity investments in Public Private Partnership projects
· Strong balance sheet
- Net borrowing better than expected
- Over £800m of long-term borrowing facilities
· Good revenue visibility: strong order book plus probable orders; record pipeline of opportunities
- 92% revenue visibility(5) for 2012
- £2.2bn of new and probable orders won in the first half, with total orders and probable orders worth £18.3bn at 30 June 2012 (31 December 2011: £19.1bn)
- Record pipeline of contract opportunities of £35.6bn (31 December 2011: £33.1bn), including major UK public sector outsourcing opportunities, supports targets for growth
· Interim dividend increased by 2% to 5.4p (2011: 5.3p)
|
(1) |
After Joint Ventures net financial expense of £5.7 million (2011: £7.0 million) and taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial information). |
|
(2) |
Before Joint Ventures net financial expense and taxation, intangible amortisation and non-recurring operating items (see note 3 to the financial information). |
|
(3) |
After Joint Ventures taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial information). |
|
(4) |
Before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial information). |
|
(5) |
At 30 June 2012, based on expected revenue and secure and probable orders, which exclude variable work and re-bids. |
Carillion Chairman, Philip Rogerson, commented:
"Carillion delivered a robust first-half performance, in line with the Board's expectations, despite market conditions remaining challenging. Given the strength of our business model, order book and pipeline of contract opportunities, we remain on track to deliver full-year results in line with expectations and to achieve our medium-term targets, namely to deliver growth in support services and to double our annual revenues in the Middle East and in Canada in the five-year period to 2015, in each case to around £1 billion."
There will be a presentation for analysts and investors today at 09.00am. A telephone dial in facility (+44 (0) 207 190 1595) will be available 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. A replay facility is also available following the call on Toll Free UK: 0800 358 3474 - Access Code: 4549682# and Toll Free US: 1 800 406 7325 - Access Code: 4549682#.
For further information contact:
|
Richard Adam, Group Finance Director John Denning, Group Corporate Affairs Director Finsbury - James Murgatroyd and Gordon Simpson |
tel: +44 (0) 1902 422431 tel: +44 (0) 1902 422431 tel: +44 (0) 20 7251 3801 |
22 August 2012
Notes to Editors:
Carillion is a leading integrated support services company with a substantial portfolio of Public Private Partnership projects and extensive construction capabilities. The Group had annual revenue in 2011 of some £5.1 billion, employs around 45,000 people and operates across the UK, in the Middle East and Canada.
The Group has four business segments:
Support services - this includes facilities management, facilities services, energy services, utility services, road
maintenance, rail services and consultancy services.
Public Private Partnership (PPP) projects - this includes our investing activities in PPP projects in our chosen sectors of Defence, Health, Education, Transport, Secure, Energy Services and other Government accommodation.
Middle East construction services - this includes our building and civil engineering activities in the Middle East.
Construction services (excluding the Middle East) - this includes our building, civil engineering and developments activities in the UK and our construction activities in Canada.
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
|
|
|
2012 |
2011 |
Change |
|
Income statement |
|
|
|
|
|
Total revenue |
£m |
2,156.8 |
2,453.5 |
-12% |
|
Underlying profit from operations(1) |
£m |
80.7 |
74.4 |
+8% |
|
Total Group underlying operating margin(2) |
Percentage |
4.1 |
3.3 |
n/a |
|
Support services underlying operating margin(2) |
Percentage |
4.1 |
4.1 |
n/a |
|
Middle East construction services underlying operating margin(2) |
Percentage |
6.7 |
7.4 |
n/a |
|
Construction services (excluding the Middle East) underlying operating margin(2) |
Percentage |
4.1 |
1.6 |
n/a |
|
Underlying profit before taxation(3) |
£m |
73.1 |
72.5 |
+1% |
|
Profit before taxation |
£m |
64.1 |
38.2 |
+68% |
|
Underlying earnings per share(4) |
Pence |
14.4 |
14.3 |
+1% |
|
Basic earnings per share |
Pence |
13.4 |
7.9 |
+70% |
|
Dividends |
|
|
|
|
|
Proposed interim dividend per share |
Pence |
5.4 |
5.3 |
+2% |
|
Underlying proposed dividend cover(4) |
Times |
2.7 |
2.7 |
n/a |
|
Basic proposed dividend cover |
Times |
2.5 |
1.5 |
n/a |
|
Cash flow statement |
|
|
|
|
|
Cash generated from operations(5) |
£m |
16.0 |
110.0 |
-85% |
|
Underlying profit from operations cash conversion |
Percentage |
19.8 |
147.8 |
n/a |
|
Deficit pension contributions |
£m |
13.0 |
13.4 |
-3% |
|
Balance sheet |
|
|
|
|
|
Net borrowing |
£m |
(115.2) |
(93.7) |
-23% |
|
Committed borrowing facility to 2016 |
£m |
737.5 |
737.5 |
n/a |
|
Private placement borrowings to 2018 and 2021 |
£m |
100.0 |
- |
- |
|
Net retirement benefit liability (net of taxation) |
£m |
247.6 |
150.6 |
+64% |
|
Net assets |
£m |
969.1 |
997.9 |
-3% |
|
(1) |
After Joint Ventures net financial expense of £5.7 million (2011: £7.0 million) and taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial information). |
|
(2) |
Before Joint Ventures net financial expense and taxation, intangible amortisation and non-recurring operating items (see note 3 to the financial information). |
|
(3) |
After Joint Ventures taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial information). |
|
(4) |
Before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial statements). |
|
(5) |
Before pension deficit recovery payments and non-recurring operating items and after dividends received from Joint Ventures. |
Summary results
As expected, first-half revenue of £2,156.8 million was lower than in the first half of 2011 (2011: £2,453.5 million). This was primarily due to the planned re-scaling of our UK construction activities and the timing of project awards in the Middle East, where we expect revenue to be second-half weighted, partially offset by growth in support services. We also expect revenue in the full year to be lower than in 2011, as the effect of continuing our strategy of re-scaling UK construction to align this business with the smaller market will more than offset growth in support services.
Underlying profit from operations(1) increased by eight per cent to £80.7 million (2011: £74.4 million), as a result of increasing our total operating margin(2) to 4.1 per cent (2011: 3.3 per cent), in line with our focus on cost management and selective approach to the contracts for which we bid. We also expect this approach to result in an improvement in our total full-year operating margin, as we continue to improve the overall quality of our business.
Underlying profit before taxation(3) increased by one per cent to £73.1 million (2011: £72.5 million), after a £5.7 million increase in the Group's net financial expense, £3.3 million of which related to an increase in the Group's pension scheme interest charge. Underlying earnings per share(4) also increased by one per cent to 14.4 pence (2011: 14.3 pence).
Net borrowing at 30 June 2012 of £115.2 million (31 December 2011: £50.7 million) was better than expected.
The operational integration of Carillion Energy Services is largely complete and we remain on track to deliver integration cost savings of £25 million per annum by the end of 2013.
At 30 June 2012, the Group's order book plus probable orders, which exclude variable work and re-bids, was worth some £18.3 billion (31 December 2011: £19.1 billion), with the reduction since 31 December 2011 primarily due to the re-scaling of UK construction and the sale of equity in Public Private Partnership projects. The strength of our order book plus probable orders continues to provide good revenue visibility, which is currently around 92 per cent of anticipated revenue in 2012. At 30 June 2012, our pipeline of contract opportunities had increased to a record level of some £35.6 billion (31 December 2011: £33.1 billion), including a significant number of public sector outsourcing opportunities.
The Board has increased the interim dividend by two per cent to 5.4 pence per share (2011: 5.3 pence), which is covered 2.7 times by underlying earnings per share (2011: 2.7 times).
|
(1) |
After Joint Ventures net financial expense of £5.7 million (2011: £7.0 million) and taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation, non-recurring operating items and non-operating items. |
|
(2) |
Before Joint Ventures net financial expense and taxation, intangible amortisation and non-recurring operating items. |
|
(3) |
After Joint Ventures taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation, non-recurring operating items and non-operating items. |
|
(4) |
Before intangible amortisation, non-recurring operating items and non-operating items. |
Business performance
We continue to benefit from a resilient business mix and the strict selectivity criteria we apply to choosing the contracts for which we bid. The Group's operating performance has remained strong, with underlying profit from operations(1) up eight per cent to £80.7 million (2011: £74.4 million), due to the continuing improvement in total operating margin, which increased to 4.1 per cent (2011: 3.3 per cent). This increase was driven by an improved operating margin in construction services (excluding the Middle East), which more than offset the effect of the operating margin in Middle East construction services moving back towards six per cent, in line with our previously announced expectations.
After a net financial expense of £7.6 million (2011: £1.9 million), underlying profit before taxation(2) increased by one per cent to £73.1 million (2011: £72.5 million). The increase in the Group's net financial expense was due to the interest charge relating to retirement liabilities moving from a £1.5 million credit in the first half of 2011 to a £1.8 million charge in the first half of 2012, together with higher net borrowing costs, which included the full half-year effect of acquiring Carillion Energy Services on 21 April 2011.
After underlying Group taxation of £9.1 million (2011: £12.4 million) and profit attributable to non-controlling interests of £2.2 million (2011: £1.4 million), underlying profit attributable to shareholders increased by five per cent to £61.8 million (2011: £58.7 million). Underlying earnings per share(3) increased by one per cent to 14.4 pence (2011: 14.3 pence), which reflected an increase in the weighted average number of Carillion shares in issue to 430.1 million (2011: 411.3 million), due to the acquisition of Carillion Energy Services.
The underlying Group taxation charge of £9.1 million, when combined with taxation in respect of Joint Ventures of £1.4 million (2011: £0.8 million credit), represented an underlying effective tax rate(3) of 14 per cent (2011: 16 per cent).
Intangible amortisation amounted to £15.7 million (2011: £14.2 million) and there was a non-operating profit of £6.7 million (2011: £0.1 million charge) relating to the sale of equity in three Public Private Partnership projects. After intangible amortisation and non-operating items, reported profit before taxation increased by 68 per cent to £64.1 million (2011: £38.2 million). The Group taxation charge was £4.3 million (2011: £4.1 million), leaving reported profit after taxation up 75 per cent to £59.8 million (2011: £34.1 million). Non-controlling interests amounted to £2.2 million (2011: £1.4 million), which left profit attributable to Carillion shareholders up 76 per cent to £57.6 million (2011: £32.7 million). Basic earnings per share increased by 70 per cent to 13.4 pence per share (2011: 7.9 pence).
|
(1) |
After Joint Ventures net financial expense of £5.7 million (2011: £7.0 million) and taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation, non-recurring operating items and non-operating items. |
|
(2) |
After Joint Ventures taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation, non-recurring operating items and non-operating items. |
|
(3) |
Before intangible amortisation, non-recurring operating items and non-operating items. |
Pensions
The Group's pensions charge against profit in the first half of 2012 amounted to £13.8 million (2011: £14.2 million). The movement in interest relating to pensions, from a credit of £1.5 million in 2011 to a charge of £1.8 million in 2012, largely reflected a reduction in bond yields. At 30 June 2012, the total pension scheme deficit net of taxation amounted to £247.6 million (31 December 2011: £229.3 million). The increase in the net deficit since the end of 2011 is due to a reduction in the discount rate reflecting the movement in bond yields, partly offset by an increase in asset values.
Cash flow
Cash flow from operations, before changes in working capital, increased to £77.1 million (2011: £69.6 million), reflecting the Group's improved operating performance.
The working capital outflow of £66.9 million comprised two main elements. As indicated at the time of our 2011 results announcement, net borrowing at 31 December 2011 was some £50 million better than expected, because of the phasing of working capital movements in 2011. As a result, the working capital outflow that was originally expected in 2011 occurred in the first half of 2012. In addition, there was, as expected, a further outflow of working capital in the first half of 2012 due to the ongoing re-scaling of UK construction.
Dividends received from joint ventures reduced to £5.8 million (2011: £24.7 million), primarily because we decided not to take a first-half dividend from our Middle East joint venture business, as this approach is consistent with the fact that we expect the contribution to profit from this joint venture to be second-half weighted.
Committed bank facilities
The Group has substantial committed bank facilities, comprising a £737.5 million syndicated five-year facility maturing in March 2016 and a £15.0 million 364-day facility. In addition, the Group has private borrowings of £100.0 million, of which £49.0 million matures in 2018 and £51.0 million matures in 2021.
Financial reporting segments and analysis
Operating profit by financial reporting segment
|
|
|
|
|
Change from
|
|
|
|
2012
|
2011
|
2011
|
|
|
|
£m
|
£m
|
%
|
|
Support services
|
|
48.8
|
45.6
|
+7
|
|
Public Private Partnership projects
|
|
7.3
|
8.8
|
-17
|
|
Middle East construction services
|
|
13.6
|
18.7
|
-27
|
|
Construction services (excluding the Middle East)
|
|
25.9
|
15.3
|
+69
|
|
|
|
95.6
|
88.4
|
+8
|
|
Group eliminations and unallocated items
|
|
(7.8)
|
(7.8)
|
-
|
|
Profit from operations before Joint Ventures
|
|
|
|
|
|
net financial expense and taxation
|
|
87.8
|
80.6
|
+9
|
|
Share of Joint Ventures net financial expense
|
|
(5.7)
|
(7.0)
|
+19
|
|
Share of Joint Ventures taxation
|
|
(1.4)
|
0.8
|
-275
|
|
Underlying profit from operations(1)
|
|
80.7
|
74.4
|
+8
|
|
Intangible amortisation
|
|
(15.7)
|
(14.2)
|
-11
|
|
Non-recurring operating items
|
|
-
|
(20.0)
|
+100
|
|
|
|
|
|
|
|
Reported profit from operations
|
|
65.0
|
40.2
|
+62
|
|
(1) |
After Joint Ventures net financial expense of £5.7 million (2011: £7.0 million) and taxation charge of £1.4 million (2011: £0.8 million credit) and before intangible amortisation and non-recurring operating items. |
Support Services
|
|
2012 £m |
2011 £m |
Change from 2011 % |
|
Revenue - Group - Share of Joint Ventures |
1,057.9 122.4 |
980.2 130.1 |
|
|
1,180.3 |
1,110.3 |
+6 |
|
|
Underlying operating profit(2) - Group - Share of Joint Ventures |
37.6 11.2 |
38.1 7.5 |
|
|
48.8 |
45.6 |
+7 |
|
(2) |
Before intangible amortisation and non-recurring operating items. |
In this segment we report the results of our facilities management, facilities services, energy services, rail services, road maintenance, utility services and consultancy businesses in the UK, Canada and the Middle East.
Revenue in support services increased by six per cent, which comprised organic growth of some two per cent, together with a full first-half contribution from Carillion Energy Services, which was acquired in April 2011. Underlying operating profit increased by seven per cent, with the first-half operating margin maintained at 4.1 per cent.
During the first half, we secured new orders and probable orders worth some £1.1 billion, which included some notable successes. In April 2012, we won a contract to provide integrated property and facilities management services for Oxfordshire County Council, worth up to £700 million over 10 years, the first large, complex Local Authority contract of this kind. In Canada, we were appointed as the preferred bidder for two highways maintenance contracts in Ontario, together worth some £120 million over 12 years. In Oman, Carillion Alawi was appointed preferred bidder for a three-year facilities management contract for Petroleum Development Oman, worth approximately £75 million over three years and with an option to extend the contract period up to eight years. In the UK, we won a Managed Motorways contract for the Highways Agency worth £62 million over two years, a five-year contract worth some £45 million for the Ministry of Defence to provide facilities management services for United States Visiting Forces, a three-year contract for Direct Line Group worth £22 million and two energy services contracts for the Northern Ireland Housing Executive worth £60 million over four years. In addition, sales of Ecopod have already reached £20 million since we began marketing this award-winning energy efficient heating system earlier this year, and the scope of our contract with Openreach has again been extended, as we continue to support Openreach in delivering the roll-out of superfast broadband across the UK.
Consequently, notwithstanding the intended insourcing of two contracts by our customers, the value of our support services order book and probable orders remains strong at £12.9 billion (31 December 2011: £12.9 billion). We have also maintained a strong pipeline of contract opportunities worth some £13.8 billion (31 December 2011: £12.3 billion), which includes a significant number of Local Authority outsourcing contracts, and this continues to support our objectives for growth. We continue to have good revenue visibility in this segment, which currently stands at 93 per cent of expected revenue for 2012(1), providing a solid revenue platform for continuing growth in 2012 and beyond.
|
(1) |
Based on expected revenue and secure and probable orders, which excludes variable work and re-bids. |
Public Private Partnership (PPP) projects
|
|
2012 £m |
2011 £m |
Change from 2011 % |
|
Revenue - Group - Share of Joint Ventures |
0.7 142.6 |
0.5 138.9 |
|
|
143.3 |
139.4 |
+3 |
|
|
Underlying operating profit(2) - Group - Share of Joint Ventures |
0.8 6.5 |
1.4 7.4 |
|
|
7.3 |
8.8 |
-17 |
|
(2) |
Before intangible amortisation and non-recurring operating items. |
In this segment we report equity returns on investments in Public Private Partnership (PPP) projects in the UK and Canada.
We use our capabilities to provide fully integrated solutions to win and deliver PPP projects in which we make equity investments and for which we also secure long-term support services contracts and good quality construction contracts. The support services and construction services we provide as part of delivering PPP projects are reported in our support services and construction services (excluding the Middle East) segments, respectively. Once a project has passed from construction into the operational phase, we have the option of selling our equity and reinvesting the proceeds in new projects.
Revenue increased slightly, because the effect of projects moving from construction into the operational phase, at which point we receive revenue payments from customers, more than offset the effect of selling equity investments in mature projects. Operating profit reduced, mainly due to the effect of selling equity investments and an increase in the Group's bidding activity.
In the first half of 2012, we sold our equity in two projects - the Cleadon Park Health Centre and the University of Hertfordshire - and 90 per cent of our equity in the Tameside Building Schools for the Future project. These sales generated total gross proceeds of £19.3 million, which reflect an average discount rate of seven per cent and generated a first-half non-operating profit of £6.7 million.
At 30 June 2012, we had a portfolio of 23 financially closed projects in which we had invested some £101 million of equity, including £17.8 million in the first half of 2012, and in which we have commitments to invest a further £107 million. The Directors' valuation of existing investments in this portfolio at 30 June 2012, using a nine per cent discount rate, remained broadly unchanged at £163 million (31 December 2011: £164 million) despite the sale of three further investments. The value of our order book plus probable orders in this segment at 30 June 2012 was approximately £2.5 billion (31 December 2011: £2.8 billion), with the reduction due to the three equity sales in the first half of 2012.
Looking forward, we are shortlisted for the Royal Liverpool Hospital project, in which we could invest up to £25 million of equity, and on which a preferred bidder decision is expected towards the end of 2012. Beyond this, we have our largest ever pipeline of PPP opportunities. In Canada, Infrastructure Ontario is moving forward with its new 10-year Alternative Financing Procurement (AFP) programme, under which it plans to invest approximately C$35 billion over the first three years, notably in the health sector where Carillion is a market leader. During 2012 and 2013, we expect to begin bidding for up to five new projects in Ontario and for two projects in British Columbia, together potentially worth in the region of £2.5 billion to Carillion. In the UK, new project opportunities await the final outcome of the Government's review of the current PFI model. This will be key to delivering the Government's £250 billion National Infrastructure Plan, as some two thirds of this Plan is to be privately financed. We therefore welcomed the Government's recent announcement of the 'UK Guarantees Scheme', aimed at accelerating infrastructure projects by providing guarantees to lenders of project finance, alongside a temporary lending programme under which Government itself will provide debt finance for projects.
Middle East construction services
|
|
2012 £m |
2011 £m |
Change from 2011 % |
|
Revenue - Group - Share of Joint Ventures |
90.8 110.8 |
101.6 152.0 |
|
|
201.6 |
253.6 |
-21 |
|
|
Underlying operating profit(1) - Group - Share of Joint Ventures |
4.0 9.6 |
5.3 13.4 |
|
|
13.6 |
18.7 |
-27 |
|
(1) |
Before intangible amortisation and non-recurring operating items. |
In this segment we report the results of our building and civil engineering activities in the Middle East and North Africa.
First-half revenue was lower than in 2011, in line with our previously announced expectations that revenue in 2012 will be second-half weighted. This is due to the timing of project awards, which can have a significant effect on revenue movements between financial reporting periods, given our strategy in the Middle East is to focus on large projects for a small number of financially robust customers, for whom quality and reliability are paramount. The reduction in operating profit reflected both lower revenue and a reduction in operating margin to 6.7 per cent (2011: 7.4 per cent). In 2010, we announced that we expected operating margins in this segment to reduce to around six per cent, as negotiated contracts have now been largely replaced by contracts won through competitive tendering.
Despite the general slow down in contract awards in 2012, notably in Abu Dhabi, we had a number of first-half successes. For example, Carillion Alawi won a £40 million contract to construct Sidab Harbour for the Royal Oman Police and a £42 million contract to build the Sultan Qaboos Mosque at Nizwa for Royal Court Affairs. In Abu Dhabi, Al Futtaim Carillion (AFC) was awarded a £45 million contract by EMAL (Emirates Aluminium) to provide infrastructure works for Phase 2 of its new aluminium smelter, which follows AFC's successful completion of Phase 1, worth over £100 million. In line with our strategy of geographical diversification in the Middle East, we also remain positive about our prospects for extending our operations into Saudi Arabia during 2012, where major investment programmes offer significant prospects for growth.
At 30 June 2012, Carillion's share of the order book plus probable orders of our Middle East businesses was approximately £0.9 billion (31 December 2011: £1.0 billion). Revenue visibility for 2012 is currently 91 per cent(2). At 30 June 2012, our pipeline of contract opportunities in the Middle East increased to some £12.2 billion (31 December 2011: £11.4 billion), as the medium to long-term investment programmes in our chosen countries and markets remain large and broadly unchanged. Therefore, while Middle East revenue is not expected to grow sufficiently to offset the lower operating margin and deliver earnings growth in 2012, the medium-term outlook for profitable growth remains positive and we remain confident of achieving the target we announced in 2010 of doubling our Middle East revenue to around £1 billion by 2015, at an operating margin of some six per cent.
|
(2) |
Based on expected revenue and secure and probable orders, which exclude variable work and re-bids. |
Construction services (excluding the Middle East)
|
|
2012 £m |
2011 £m |
Change from 2011 % |
|
Revenue - Group - Share of Joint Ventures |
629.5 2.1 |
943.1 7.1 |
|
|
631.6 |
950.2 |
-34 |
|
|
Underlying operating profit(1) - Group - Share of Joint Ventures |
25.9 - |
15.2 0.1 |
|
|
25.9 |
15.3 |
+69 |
|
(1) |
Before intangible amortisation and non-recurring 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.
The reduction in first-half revenue was primarily due to the continued re-scaling of our UK construction activities to align them with the size of the market. Re-scaling is being achieved through tightening contract selectivity by basing our activities progressively around the delivery of integrated solutions for PPP projects and support services customers, and projects for other customers with whom we have long-term partnerships. Operating profit grew strongly due to an increase in operating margin to 4.1 per cent (2011: 1.6 per cent), as we continue to benefit from our highly selective approach to the contracts for which we bid, positive settlements on contracts being completed, lower bid costs and a rigorous focus on cost management.
In the first half of 2012, we won a number of significant contracts, including a £45 million contract for the Highways Agency to upgrade the A23 between Handcross and Warninglid, a £45 million contract to reconfigure Pier 5 at Gatwick Airport, a £42 million contract for Argent in Manchester and Academy Schools contracts worth over £40 million. At 30 June 2012, we had orders and probable orders in this segment worth some £2.0 billion (31 December 2011: £2.4 billion). Revenue visibility(2) for 2012 is currently 90 per cent. Our pipeline of contract opportunities at 30 June 2012 amounted to £8.3 billion (31 December 2011: £8.4 billion).
|
(2) |
Based on expected revenue and secure and probable orders, which exclude variable work and re-bids. |
Over the medium term, we continue to expect new opportunities, notably from the UK Government's £250 billion, five-year National Infrastructure Plan. In Canada, the medium-term outlook for growth remains strong and continues to support the objective we announced in 2010 of doubling our total revenue in Canada to around £1 billion by 2015. We expect opportunities for growth in Canada to come primarily from private finance projects, notably Infrastructure Ontario's C$35 billion AFP programme, and this is expected to generate a high level of bidding activity, particularly during 2012 and 2013.
Full-year revenue in this segment is expected to be lower than in 2011, as we complete the re-scaling of our UK activities. However, we expect the full-year operating margin to remain strong and to more than offset the effect of lower revenue, with a consequent improvement in full-year operating profit. Looking further forward, we intend to maintain our highly selective approach in order to continue supporting margins while targeting the opportunities we expect for revenue growth.
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 in our 2011 Annual Report and Accounts, published in March 2012 and have not fundamentally changed. The principal operational risks summarised on pages 20 and 21 in that report include continuing to win work in competitive markets, managing our pension schemes, managing major contracts successfully, business integration and re-scaling, notably of Carillion Energy Services and UK construction, attracting, developing and retaining excellent people, and maintaining high standards of performance in respect of Health and Safety and other regulatory requirements. The principal financial risks summarised on pages 32 and 33 of that report include continuing to manage our overseas operations (country risk) and treasury risk (including funding, liquidity, currency and counterparty).
Outlook and prospects
Given the strength of our order book and pipeline of contract opportunities, we remain on track to deliver full-year results in line with expectations and to achieve our medium-term targets, namely to deliver growth in support services and to double our annual revenues in the Middle East and in Canada in the five-year period to 2015, in each case to around £1 billion.
|
Unaudited condensed consolidated income statement
for the six months ended 30 June
|
||||
|
|
Note
|
2012
£m
|
2011
£m
|
Year ended
31 December
2011
£m
|
|
Total revenue
|
|
2,156.8
|
2,453.5
|
5,051.2
|
|
Less: Share of jointly controlled entities' revenue
|
|
(377.9)
|
(428.1)
|
(898.0)
|
|
Group revenue
|
2
|
1,778.9
|
2,025.4
|
4,153.2
|
|
Cost of sales
|
|
(1,615.7)
|
(1,860.6)
|
(3,761.8)
|
|
Gross profit
|
|
163.2
|
164.8
|
391.4
|
|
Administrative expenses
|
|
(118.4)
|
(146.8)
|
(298.0)
|
|
Group operating profit
|
|
44.8
|
18.0
|
93.4
|
|
Analysed between:
|
|
|
|
|
|
Group operating profit before intangible amortisation and non-recurring operating items
|
|
60.5
|
52.2
|
167.2
|
|
Intangible amortisation(1)
|
|
(15.7)
|
(14.2)
|
(31.0)
|
|
Non-recurring operating items(2)
|
3
|
-
|
(20.0)
|
(42.8)
|
|
|
|
|
|
|
|
Share of results of jointly controlled entities
|
2
|
20.2
|
22.2
|
48.7
|
|
Analysed between:
|
|
|
|
|
|
Operating profit
|
|
27.3
|
28.4
|
71.0
|
|
Net financial expense
|
|
(5.7)
|
(7.0)
|
(18.8)
|
|
Taxation
|
|
(1.4)
|
0.8
|
(3.5)
|
|
|
|
|
|
|
|
Profit from operations
|
|
65.0
|
40.2
|
142.1
|
|
Profit from operations before intangible amortisation and non-recurring operating items
|
|
80.7
|
74.4
|
215.9
|
|
Intangible amortisation(1)
|
|
(15.7)
|
(14.2)
|
(31.0)
|
|
Non-recurring operating items(2)
|
3
|
-
|
(20.0)
|
(42.8)
|
|
|
|
|
|
|
|
Non-operating items
|
3
|
6.7
|
(0.1)
|
4.6
|
|
Net financial expense
|
4
|
(7.6)
|
(1.9)
|
(3.9)
|
|
Analysed between:
|
|
|
|
|
|
Financial income
|
|
57.5
|
64.3
|
132.0
|
|
Financial expense
|
|
(65.1)
|
(66.2)
|
(135.9)
|
|
|
|
|
|
|
|
Profit before taxation
|
|
64.1
|
38.2
|
142.8
|
|
Analysed between:
|
|
|
|
|
|
Profit before taxation, intangible amortisation, non-recurring operating items and non-operating items
|
|
73.1
|
72.5
|
212.0
|
|
Intangible amortisation(1)
|
|
(15.7)
|
(14.2)
|
(31.0)
|
|
Non-recurring operating items(2)
|
3
|
-
|
(20.0)
|
(42.8)
|
|
Non-operating items
|
3
|
6.7
|
(0.1)
|
4.6
|
|
|
|
|
|
|
|
Taxation
|
5
|
(4.3)
|
(4.1)
|
(4.8)
|
|
Profit for the period
|
|
59.8
|
34.1
|
138.0
|
|
|
|
|
|
|
|
Profit attributable to:
|
|
|
|
|
|
Equity holders of the parent
|
|
57.6
|
32.7
|
134.6
|
|
Non-controlling interests
|
|
2.2
|
1.4
|
3.4
|
|
Profit for the period
|
|
59.8
|
34.1
|
138.0
|
|
|
|
|
|
|
|
Earnings per share
|
6
|
|
|
|
|
Basic
|
|
13.4p
|
7.9p
|
32.0p
|
|
Diluted
|
|
13.3p
|
7.9p
|
31.8p
|
(1) Arising from business combinations
(2) This includes integration and rationalisation costs and Eaga Partnership Trust (EPT) related charges (see note 3)
|
Unaudited condensed consolidated statement of comprehensive income for the six months ended 30 June
|
|||||||||
|
|
|
|
2012 |
|
|
2011 |
|
|
Year ended 31 December 2011 |
|
|
|
£m |
£m |
|
£m |
£m |
|
£m |
£m |
|
Profit for the period |
|
|
59.8 |
|
|
34.1 |
|
|
138.0 |
|
Net gain/(loss) on hedge of net investment in foreign operations |
|
1.1 |
|
|
(0.2) |
|
|
0.1 |
|
|
Currency translation differences on foreign operations |
|
3.3 |
|
|
0.9 |
|
|
1.9 |
|
|
Increase in fair value of available for sale assets |
|
1.2 |
|
|
1.8 |
|
|
5.0 |
|
|
Actuarial (losses)/gains on defined benefit pension schemes |
|
(31.5) |
|
|
31.5 |
|
|
(96.6) |
|
|
|
|
(25.9) |
|
|
34.0 |
|
|
(89.6) |
|
|
Taxation in respect of the above |
|
4.3 |
|
|
(10.7) |
|
|
20.0 |
|
|
Share of recycled cash flow hedges within jointly controlled entities (net of taxation) |
|
3.9 |
|
|
8.3 |
|
|
13.4 |
|
|
Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation) |
|
(4.6) |
|
|
(3.8) |
|
|
(13.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (expense)/income for the period |
|
|
(22.3) |
|
|
27.8 |
|
|
(69.5) |
|
Total comprehensive income for the period |
|
|
37.5 |
|
|
61.9 |
|
|
68.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
Equity holders of the parent |
|
|
35.3 |
|
|
60.5 |
|
|
65.1 |
|
Non-controlling interests |
|
|
2.2 |
|
|
1.4 |
|
|
3.4 |
|
|
|
|
37.5 |
|
|
61.9 |
|
|
68.5 |
Unaudited condensed consolidated statement of changes in equity
for the six months ended 30 June 2012
|
|
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 |
Non-controlling interests £m |
Total equity £m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2012 |
215.1 |
21.2 |
(16.1) |
(23.7) |
10.9 |
464.6 |
300.9 |
972.9 |
9.6 |
982.5 |
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
- |
- |
- |
57.6 |
57.6 |
2.2 |
59.8 |
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Net gain on hedge of net investment in foreign operations |
- |
- |
1.1 |
- |
- |
- |
- |
1.1 |
- |
1.1 |
|
|
Currency translation differences on foreign operations |
- |
- |
3.3 |
- |
- |
- |
- |
3.3 |
- |
3.3 |
|
|
Increase in fair value of available for sale assets |
- |
- |
- |
- |
1.2 |
- |
- |
1.2 |
- |
1.2 |
|
|
Actuarial losses on defined benefit pension schemes |
- |
- |
- |
- |
- |
- |
(31.5) |
(31.5) |
- |
(31.5) |
|
|
Taxation |
- |
- |
(0.3) |
- |
- |
- |
4.6 |
4.3 |
- |
4.3 |
|
|
Share of recycled cash flow hedges within jointly controlled entities (net of taxation) |
- |
- |
- |
3.9 |
- |
- |
- |
3.9 |
- |
3.9 |
|
|
Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation) |
- |
- |
- |
(4.6) |
- |
- |
- |
(4.6) |
- |
(4.6) |
|
|
Transfer between reserves |
- |
- |
- |
- |
- |
(15.7) |
15.7 |
- |
- |
- |
|
|
Total comprehensive income/(expense) |
- |
- |
4.1 |
(0.7) |
1.2 |
(15.7) |
46.4 |
35.3 |
2.2 |
37.5 |
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
|
|
|
|
|
Equity-settled transactions (net of deferred taxation) |
- |
- |
- |
- |
- |
- |
(0.5) |
(0.5) |
- |
(0.5) |
|
|
Dividends paid |
- |
- |
- |
- |
- |
- |
(48.5) |
(48.5) |
(1.9) |
(50.4) |
|
|
Total transactions with owners |
- |
- |
- |
- |
- |
- |
(49.0) |
(49.0) |
(1.9) |
(50.9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2012 |
215.1 |
21.2 |
(12.0) |
(24.4) |
12.1 |
448.9 |
298.3 |
959.2 |
9.9 |
969.1 |
|
Unaudited condensed consolidated statement of changes in equity
for the six months ended 30 June 2011
|
|
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 |
Non-controlling interests £m |
Total equity £m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2011 |
199.8 |
21.2 |
(18.1) |
(23.8) |
5.9 |
393.1 |
277.5 |
855.6 |
9.6 |
865.2 |
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
- |
- |
- |
32.7 |
32.7 |
1.4 |
34.1 |
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss on hedge of net investment in foreign operations |
- |
- |
(0.2) |
- |
- |
- |
- |
(0.2) |
- |
(0.2) |
|
|
Currency translation differences on foreign operations |
- |
- |
0.9 |
- |
- |
- |
- |
0.9 |
- |
0.9 |
|
|
Increase in fair value of available for sale assets |
- |
- |
- |
- |
1.8 |
- |
- |
1.8 |
- |
1.8 |
|
|
Actuarial gains on defined benefit pension schemes |
- |
- |
- |
- |
- |
- |
31.5 |
31.5 |
- |
31.5 |
|
|
Taxation |
- |
- |
- |
- |
- |
- |
(10.7) |
(10.7) |
- |
(10.7) |
|
|
Share of recycled cash flow hedges within jointly controlled entities (net of taxation) |
- |
- |
- |
8.3 |
- |
- |
- |
8.3 |
- |
8.3 |
|
|
Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation) |
- |
- |
- |
(3.8) |
- |
- |
- |
(3.8) |
- |
(3.8) |
|
|
Transfer between reserves |
- |
- |
- |
- |
- |
(14.1) |
14.1 |
- |
- |
- |
|
|
Total comprehensive income/(expense) |
- |
- |
0.7 |
4.5 |
1.8 |
(14.1) |
67.6 |
60.5 |
1.4 |
61.9 |
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
|
|
|
|
|
Share capital issued on acquisition of Eaga plc |
15.3 |
- |
- |
- |
- |
102.4 |
- |
117.7 |
- |
117.7 |
|
|
Acquisition of own shares |
- |
- |
- |
- |
- |
- |
(4.2) |
(4.2) |
- |
(4.2) |
|
|
Equity-settled transactions (net of deferred taxation) |
- |
- |
- |
- |
- |
- |
2.1 |
2.1 |
- |
2.1 |
|
|
Dividends paid |
- |
- |
- |
- |
- |
- |
(43.0) |
(43.0) |
(1.8) |
(44.8) |
|
|
Total transactions with owners |
15.3 |
- |
- |
- |
- |
102.4 |
(45.1) |
72.6 |
(1.8) |
70.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2011 |
215.1 |
21.2 |
(17.4) |
(19.3) |
7.7 |
481.4 |
300.0 |
988.7 |
9.2 |
997.9 |
|
Unaudited condensed consolidated statement of changes in equity
for the year ended 31 December 2011
|
|
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 |
Non-controlling interests £m |
Total equity £m |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2011 |
199.8 |
21.2 |
(18.1) |
(23.8) |
5.9 |
393.1 |
277.5 |
855.6 |
9.6 |
865.2 |
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
- |
- |
- |
134.6 |
134.6 |
3.4 |
138.0 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
Net gain on hedge of net investment in foreign operations |
- |
- |
0.1 |
- |
- |
- |
- |
0.1 |
- |
0.1 |
|
Currency translation differences on foreign operations |
- |
- |
1.9 |
- |
- |
- |
- |
1.9 |
- |
1.9 |
|
Increase in fair value of available for sale assets |
- |
- |
- |
- |
5.0 |
- |
- |
5.0 |
- |
5.0 |
|
Actuarial losses on defined benefit pension schemes |
- |
- |
- |
- |
- |
- |
(96.6) |
(96.6) |
- |
(96.6) |
|
Taxation |
- |
- |
- |
- |
- |
- |
20.0 |
20.0 |
- |
20.0 |
|
Share of recycled cash flow hedges within jointly controlled entities (net of taxation) |
- |
- |
- |
13.4 |
- |
- |
- |
13.4 |
- |
13.4 |
|
Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation) |
- |
- |
- |
(13.3) |
- |
- |
- |
(13.3) |
- |
(13.3) |
|
Transfer between reserves |
- |
- |
- |
- |
- |
(30.9) |
30.9 |
- |
- |
- |
|
Total comprehensive income/(expense) |
- |
- |
2.0 |
0.1 |
5.0 |
(30.9) |
88.9 |
65.1 |
3.4 |
68.5 |
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
|
|
|
|
Share capital issued on acquisition of Eaga plc |
15.3 |
- |
- |
- |
- |
102.4 |
- |
117.7 |
- |
117.7 |
|
Acquisition of own shares |
- |
- |
- |
- |
- |
- |
(6.9) |
(6.9) |
- |
(6.9) |
|
Equity-settled transactions (net of deferred taxation) |
- |
- |
- |
- |
- |
- |
6.0 |
6.0 |
- |
6.0 |
|
Dividends paid |
- |
- |
- |
- |
- |
- |
(64.6) |
(64.6) |
(3.4) |
(68.0) |
|
Total transactions with owners |
15.3 |
- |
- |
- |
- |
102.4 |
(65.5) |
52.2 |
(3.4) |
48.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2011 |
215.1 |
21.2 |
(16.1) |
(23.7) |
10.9 |
464.6 |
300.9 |
972.9 |
9.6 |
982.5 |
Unaudited condensed consolidated balance sheet
as at 30 June
|
|
Note |
2012 £m |
2011 £m |
At 31 December 2011 £m |
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
126.2 |
145.8 |
134.2 |
|
Intangible assets |
|
1,532.4 |
1,550.3 |
1,547.6 |
|
Retirement benefit assets |
|
- |
0.9 |
- |
|
Investments in jointly controlled entities |
|
174.9 |
142.4 |
159.6 |
|
Other investments |
|
55.0 |
45.4 |
51.3 |
|
Deferred tax assets |
|
133.5 |
101.7 |
137.6 |
|
|
|
|
|
|
|
Total non-current assets |
|
2,022.0 |
1,986.5 |
2,030.3 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
|
80.8 |
71.8 |
71.6 |
|
Trade and other receivables |
|
1,049.4 |
1,169.9 |
1,094.6 |
|
Cash and cash equivalents |
9 |
456.9 |
324.2 |
490.7 |
|
Current asset investments |
|
2.2 |
7.5 |
4.3 |
|
Income tax receivable |
|
1.9 |
4.7 |
7.7 |
|
Derivative financial instruments |
|
0.5 |
3.4 |
- |
|
|
|
|
|
|
|
Total current assets |
|
1,591.7 |
1,581.5 |
1,668.9 |
|
|
|
|
|
|
|
Total assets |
|
3,613.7 |
3,568.0 |
3,699.2 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Borrowing |
|
(54.0) |
(64.6) |
(32.5) |
|
Derivative financial instruments |
|
- |
- |
(0.9) |
|
Trade and other payables |
|
(1,674.6) |
(1,857.1) |
(1,773.6) |
|
Provisions |
|
(34.7) |
(26.8) |
(45.8) |
|
Income tax payable |
|
(3.4) |
(2.2) |
(4.4) |
|
|
|
|
|
|
|
Total current liabilities |
|
(1,766.7) |
(1,950.7) |
(1,857.2) |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Borrowing |
|
(518.1) |
(353.3) |
(508.9) |
|
Retirement benefit liabilities |
|
(325.9) |
(204.8) |
(305.8) |
|
Deferred tax liabilities |
|
(20.7) |
(34.3) |
(25.5) |
|
Provisions |
|
(13.2) |
(27.0) |
(19.3) |
|
|
|
|
|
|
|
Total non-current liabilities |
|
(877.9) |
(619.4) |
(859.5) |
|
|
|
|
|
|
|
Total liabilities |
|
(2,644.6) |
(2,570.1) |
(2,716.7) |
|
|
|
|
|
|
|
Net assets |
2 |
969.1 |
997.9 |
982.5 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
12 |
215.1 |
215.1 |
215.1 |
|
Share premium |
|
21.2 |
21.2 |
21.2 |
|
Translation reserve |
|
(12.0) |
(17.4) |
(16.1) |
|
Hedging reserve |
|
(24.4) |
(19.3) |
(23.7) |
|
Fair value reserve |
|
12.1 |
7.7 |
10.9 |
|
Merger reserve |
|
448.9 |
481.4 |
464.6 |
|
Retained earnings |
|
298.3 |
300.0 |
300.9 |
|
|
|
|
|
|
|
Equity attributable to shareholders of the parent |
|
959.2 |
988.7 |
972.9 |
|
Non-controlling interests |
|
9.9 |
9.2 |
9.6 |
|
Total equity |
|
969.1 |
997.9 |
982.5 |
|
Unaudited condensed consolidated cash flow statement for the six months ended 30 June
|
|
|
||
|
|
Note |
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
Cash flows from operating activities |
|
|
|
|
|
Group operating profit |
|
44.8 |
18.0 |
93.4 |
|
Depreciation and amortisation |
|
30.3 |
29.8 |
62.3 |
|
Loss on disposal of property, plant and equipment |
|
1.0 |
0.7 |
0.6 |
|
Other non-cash movements |
|
1.0 |
1.1 |
0.2 |
|
Non-recurring operating items |
|
- |
20.0 |
42.8 |
|
|
|
|
|
|
|
Operating profit before changes in working capital |
|
77.1 |
69.6 |
199.3 |
|
(Increase)/decrease in inventories |
|
(9.3) |
1.5 |
19.7 |
|
Decrease/(increase) in trade and other receivables |
|
41.7 |
(0.9) |
53.3 |
|
(Decrease)/increase in trade and other payables |
|
(99.3) |
15.1 |
(81.6) |
|
|
|
|
|
|
|
Cash generated from operations before pension deficit recovery payments, rationalisation costs and Eaga Partnership Trusts related charges |
10.2 |
85.3 |
190.7 |
|
|
Deficit recovery payments to pension schemes |
|
(13.0) |
(13.4) |
(36.2) |
|
Rationalisation costs |
|
(19.2) |
(17.0) |
(34.4) |
|
Eaga Partnership Trusts related charges |
|
- |
- |
(0.6) |
|
|
|
|
|
|
|
Cash (used in)/generated from operations |
|
(22.0) |
54.9 |
119.5 |
|
Financial income received |
|
7.5 |
6.8 |
16.0 |
|
Financial expense paid |
|
(12.2) |
(9.5) |
(21.3) |
|
Acquisition costs |
|
- |
(6.6) |
(7.2) |
|
Taxation |
|
4.8 |
(3.3) |
(3.8) |
|
|
|
|
|
|
|
Net cash flows from operating activities |
|
(21.9) |
42.3 |
103.2 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Disposal of property, plant and equipment |
|
0.9 |
16.9 |
17.2 |
|
Disposal of jointly controlled entities and other investments |
11 |
26.4 |
14.0 |
31.4 |
|
Dividends received from jointly controlled entities |
|
5.8 |
24.7 |
39.6 |
|
Disposal and closure of businesses |
|
- |
- |
(1.9) |
|
Decrease in current asset investments |
|
2.1 |
0.5 |
3.7 |
|
Acquisition of subsidiaries, net of cash acquired |
|
- |
(182.7) |
(182.7) |
|
Acquisition of intangible assets |
|
(3.2) |
(2.3) |
(2.8) |
|
Acquisition of property, plant and equipment |
|
(7.3) |
(3.3) |
(9.8) |
|
Acquisition of equity in and net loan advances to jointly controlled entities |
|
(16.3) |
(14.2) |
(27.6) |
|
Acquisition of other non-current asset investments |
|
(1.5) |
(0.7) |
(3.4) |
|
|
|
|
|
|
|
Net cash flows from investing activities |
|
6.9 |
(147.1) |
(136.3) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Draw down of bank and other loans |
|
14.7 |
58.0 |
223.0 |
|
Payment of finance lease liabilities |
|
(7.4) |
(8.3) |
(15.8) |
|
Acquisition of own shares |
|
- |
(4.2) |
(6.9) |
|
Payment to employees in settlement of share options |
|
(0.1) |
- |
(1.8) |
|
Dividends paid to equity holders of the parent |
|
(48.5) |
(43.0) |
(64.6) |
|
Dividends paid to non-controlling interests |
|
(1.9) |
(1.8) |
(3.4) |
|
|
|
|
|
|
|
Net cash flows from financing activities |
|
(43.2) |
0.7 |
130.5 |
|
|
|
|
|
|
|
(Decrease)/increase in net cash and cash equivalents for the period |
(58.2) |
(104.1) |
97.4 |
|
|
Net cash and cash equivalents at 1 January |
|
487.7 |
391.1 |
391.1 |
|
Effect of exchange rate fluctuations on net cash and cash equivalents |
|
(0.6) |
0.3 |
(0.8) |
|
Net cash and cash equivalents at period end
|
9 |
428.9 |
287.3 |
487.7 |
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 2012 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in jointly controlled entities.
The condensed consolidated interim financial statements for the six months ended 30 June 2012 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.
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 2011, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The following accounting standards and interpretations, which are not yet effective and have not been early adopted by the Group, will be adopted in future accounting periods:
- Amendments to International Accounting Standards (IAS) 12 'Deferred taxes: Recovery of underlying assets'
- International Financial Reporting Standard (IFRS) 9 'Financial instruments'
- International Financial Reporting Standard (IFRS) 10 'Consolidated financial statements'
- International Financial Reporting Standard (IFRS) 11 'Joint arrangements'
- International Financial Reporting Standard (IFRS) 12 'Disclosure of interests in other entities'
- International Financial Reporting Standard (IFRS) 13 'Fair value measurement'
- Amendment to International Accounting Standard (IAS) 1 'Presentation of items of other comprehensive income'
- Amendment to International Accounting Standard (IAS) 19 'Employee benefits'
The amendment to IAS 19 makes significant changes to the recognition and measurement of the defined benefit pension expense and termination benefits and disclosures relating to all employee benefits. If the revised standards had been adopted in 2011 it is anticipated that the amendment will increase the pension cost recognised, and therefore reduce profit before taxation by approximately £20 million. The amendment has no cash impact and is effective for accounting periods commencing 1 January 2013.
None of the other standards noted above are expected to have a material impact on the Group.
In addition to the above, amendments to a number of standards under the annual improvements project to IFRS, which are mandatory for the year ending 31 December 2012, have been adopted in 2012. None of these amendments have had a material impact on the Group's financial statements.
The comparative financial information for the year ended 31 December 2011 does not constitute the Company's statutory accounts for the purposes of section 435 of the Companies Act 2006 for that financial year. The statutory accounts for the year ended 31 December 2011 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 498(2) or (3) of the Companies Act 2006.
The Group's business activities, together with the factors likely to affect its future development, performance and position are described in the interim management review. The Group has considerable financial resources, including a £737.5 million committed syndicated facility expiring in March 2016 and £100.0 million of private placement notes expiring between 2018 and 2021. The Group has long-term contracts with a number of customers and suppliers 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 economic characteristics and nature of the services provided by the Group and is the basis on which strategic operating decisions are made by the Group Chief Executive, who is the Group's chief operating decision maker.
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, except finance items and income tax.
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, energy services, road maintenance, rail services, utilities services and consultancy businesses.
Public Private Partnership projects
In this segment we report the equity returns on our investments in Public Private Partnership projects in our chosen sectors of Defence, Health, Education, Transport, Secure, Energy Services 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.
Segmental revenue and profit
|
|
2012 |
|
2011 |
|
Year ended 31 December 2011 |
|||
|
|
Revenue |
Operating profit before intangible amortisation and non-recurring operating items |
|
Revenue |
Operating profit before intangible amortisation and non-recurring operating items |
|
Revenue |
Operating profit before intangible amortisation and non-recurring operating items |
|
|
£m |
£m |
|
£m |
£m |
|
£m |
£m |
|
Support services |
|
|
|
|
|
|
|
|
|
Group |
1,057.9 |
37.6 |
|
980.2 |
38.1 |
|
2,119.8 |
105.7 |
|
Share of jointly controlled entities |
122.4 |
11.2 |
|
130.1 |
7.5 |
|
225.4 |
15.1 |
|
|
1,180.3 |
48.8 |
|
1,110.3 |
45.6 |
|
2,345.2 |
120.8 |
|
Inter-segment |
35.8 |
- |
|
44.7 |
- |
|
75.2 |
- |
|
|
|
|
|
|
|
|
|
|
|
Total |
1,216.1 |
48.8 |
|
1,155.0 |
45.6 |
|
2,420.4 |
120.8 |
|
|
|
|
|
|
|
|
|
|
|
Public Private Partnership projects |
|
|
|
|
|
|
|
|
|
Group |
0.7 |
0.8 |
|
0.5 |
1.4 |
|
1.2 |
2.7 |
|
Share of jointly controlled entities |
142.6 |
6.5 |
|
138.9 |
7.4 |
|
308.6 |
17.2 |
|
|
143.3 |
7.3 |
|
139.4 |
8.8 |
|
309.8 |
19.9 |
|
Inter-segment |
- |
- |
|
- |
- |
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Total |
143.3 |
7.3 |
|
139.4 |
8.8 |
|
309.8 |
19.9 |
|
|
|
|
|
|
|
|
|
|
|
Middle East construction services |
|
|
|
|
|
|
|
|
|
Group |
90.8 |
4.0 |
|
101.6 |
5.3 |
|
218.9 |
13.9 |
|
Share of jointly controlled entities |
110.8 |
9.6 |
|
152.0 |
13.4 |
|
330.0 |
35.2 |
|
|
201.6 |
13.6 |
|
253.6 |
18.7 |
|
548.9 |
49.1 |
|
Inter-segment |
- |
- |
|
- |
- |
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Total |
201.6 |
13.6 |
|
253.6 |
18.7 |
|
548.9 |
49.1 |
|
|
|
|
|
|
|
|
|
|
|
Construction services (excluding the Middle East) |
|
|
|
|
|
|
|
|
|
Group |
629.5 |
25.9 |
|
943.1 |
15.2 |
|
1,813.3 |
54.4 |
|
Share of jointly controlled entities |
2.1 |
- |
|
7.1 |
0.1 |
|
34.0 |
3.5 |
|
|
631.6 |
25.9 |
|
950.2 |
15.3 |
|
1,847.3 |
57.9 |
|
Inter-segment |
- |
- |
|
0.3 |
- |
|
0.4 |
- |
|
|
|
|
|
|
|
|
|
|
|
Total |
631.6 |
25.9 |
|
950.5 |
15.3 |
|
1,847.7 |
57.9 |
|
|
|
|
|
|
|
|
|
|
|
Group eliminations and unallocated items |
(35.8) |
(7.8) |
|
(45.0) |
(7.8) |
|
(75.6) |
(9.5) |
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
Group |
1,778.9 |
60.5 |
|
2,025.4 |
52.2 |
|
4,153.2 |
167.2 |
|
Share of jointly controlled entities |
377.9 |
27.3 |
|
428.1 |
28.4 |
|
898.0 |
71.0 |
|
|
|
|
|
|
|
|
|
|
|
Total |
2,156.8 |
87.8 |
|
2,453.5 |
80.6 |
|
5,051.2 |
238.2 |
Reconciliation of operating segment results to reported results
|
|
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
Group and share of jointly controlled entities' operating |
|
|
|
|
profit before intangible amortisation and non-recurring operating items |
87.8 |
80.6 |
238.2 |
|
Net financial expense |
|
|
|
|
- Group |
(7.6) |
(1.9) |
(3.9) |
|
- Share of jointly controlled entities |
(5.7) |
(7.0) |
(18.8) |
|
Share of jointly controlled entities' taxation |
(1.4) |
0.8 |
(3.5) |
|
Underlying profit before taxation |
73.1 |
72.5 |
212.0 |
|
Intangible amortisation(1) |
(15.7) |
(14.2) |
(31.0) |
|
Non-recurring operating items(1) |
- |
(20.0) |
(42.8) |
|
Non-operating items(1) |
6.7 |
(0.1) |
4.6 |
|
Profit before taxation |
64.1 |
38.2 |
142.8 |
|
Taxation |
(4.3) |
(4.1) |
(4.8) |
|
Profit for the period |
59.8 |
34.1 |
138.0 |
(1) Intangible amortisation, non-recurring operating items and non-operating items arise in the following segments:
|
|
|
|
2012 |
|
|
|
|
2011 |
Year ended 31 December 2011 |
||||||||
|
|
Intangible amortisation £m |
Non-recurring operating items £m |
Non-operating items £m |
|
Intangible amortisation £m |
Non-recurring operating items £m |
Non-operating items £m |
|
|
Intangible amortisation £m |
Non-recurring operating items £m |
Non-operating items £m |
|
||||
|
|
|
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
|
|||||||||||||||
|
Support services |
(14.2) |
- |
- |
|
(11.7) |
(17.2) |
(6.2) |
|
|
(26.1) |
(40.6) |
(4.3) |
|
||||
|
Public Private Partnership projects |
- |
- |
6.7 |
|
- |
- |
6.1 |
|
|
- |
- |
11.5 |
|
||||
|
Construction services (excluding the Middle East) |
(1.5) |
- |
- |
|
(2.5) |
(2.8) |
- |
|
|
(4.9) |
(2.2) |
(2.6) |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total |
(15.7) |
- |
6.7 |
|
(14.2) |
(20.0) |
(0.1) |
|
|
(31.0) |
(42.8) |
4.6 |
|
||||
Depreciation and amortisation and capital expenditure arise in the following segments:
|
|
2012 |
|
2011 |
|
Year ended 31 December 2011 |
|||
|
|
Depreciation and amortisation £m |
Capital expenditure £m |
|
Depreciation and amortisation £m |
Capital expenditure £m |
|
Depreciation and amortisation £m |
Capital expenditure £m |
|
Support services |
(20.2) |
(4.6) |
|
(18.3) |
(1.0) |
|
(40.3) |
(4.1) |
|
Middle East construction services |
(1.0) |
(0.5) |
|
(1.0) |
(2.0) |
|
(2.1) |
(1.1) |
|
Construction services (excluding the Middle East) |
(2.0) |
(0.3) |
|
(3.3) |
(0.3) |
|
(6.4) |
(0.4) |
|
Unallocated Group items |
(7.1) |
(5.1) |
|
(7.2) |
(5.9) |
|
(13.5) |
(7.8) |
|
|
|
|
|
|
|
|
|
|
|
Total |
(30.3) |
(10.5) |
|
(29.8) |
(9.2) |
|
(62.3) |
(13.4) |
Segmental net assets
|
|
2012 |
|
|
|
2011 |
|
Year ended 31 December 2011 |
||||
|
|
Operating assets £m |
Operating liabilities £m |
Net operating assets/ £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) |
1,254.7 |
- |
1,254.7 |
|
1,267.7 |
- |
1,267.7 |
|
1,268.9 |
- |
1,268.9 |
|
Operating assets |
616.5 |
- |
616.5 |
|
611.8 |
- |
611.8 |
|
610.0 |
- |
610.0 |
|
Investments |
14.1 |
- |
14.1 |
|
11.1 |
- |
11.1 |
|
11.6 |
- |
11.6 |
|
Total operating assets |
1,885.3 |
- |
1,885.3 |
|
1,890.6 |
- |
1,890.6 |
|
1,890.5 |
- |
1,890.5 |
|
Total operating liabilities |
- |
(572.2) |
(572.2) |
|
- |
(630.8) |
(630.8) |
|
- |
(622.1) |
(622.1) |
|
Net operating assets/(liabilities) |
1,885.3 |
(572.2) |
1,313.1 |
|
1,890.6 |
(630.8) |
1,259.8 |
|
1,890.5 |
(622.1) |
1,268.4 |
|
Public Private Partnership projects |
|
|
|
|
|
|
|
|
|
|
|
|
Operating assets |
7.1 |
- |
7.1 |
|
14.2 |
- |
14.2 |
|
7.9 |
- |
7.9 |
|
Investments |
100.5 |
- |
100.5 |
|
87.7 |
- |
87.7 |
|
93.2 |
- |
93.2 |
|
Total operating assets |
107.6 |
- |
107.6 |
|
101.9 |
- |
101.9 |
|
101.1 |
- |
101.1 |
|
Total operating liabilities |
- |
(17.4) |
(17.4) |
|
- |
(11.1) |
(11.1) |
|
- |
(9.6) |
(9.6) |
|
Net operating assets/(liabilities) |
107.6 |
(17.4) |
90.2 |
|
101.9 |
(11.1) |
90.8 |
|
101.1 |
(9.6) |
91.5 |
|
Middle East construction services |
|
|
|
|
|
|
|
|
|
|
|
|
Operating assets |
223.7 |
- |
223.7 |
|
201.8 |
- |
201.8 |
|
226.5 |
- |
226.5 |
|
Investments |
65.8 |
- |
65.8 |
|
41.8 |
- |
41.8 |
|
57.3 |
- |
57.3 |
|
Total operating assets |
289.5 |
- |
289.5 |
|
243.6 |
- |
243.6 |
|
283.8 |
- |
283.8 |
|
Total operating liabilities |
- |
(241.8) |
(241.8) |
|
- |
(214.8) |
(214.8) |
|
- |
(224.8) |
(224.8) |
|
Net operating assets/(liabilities) |
289.5 |
(241.8) |
47.7 |
|
243.6 |
(214.8) |
28.8 |
|
283.8 |
(224.8) |
59.0 |
|
Construction services (excluding the Middle East) |
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets (1) |
262.9 |
- |
262.9 |
|
267.2 |
- |
267.2 |
|
264.5 |
- |
264.5 |
|
Operating assets |
380.0 |
- |
380.0 |
|
535.0 |
- |
535.0 |
|
425.4 |
- |
425.4 |
|
Investments |
49.5 |
- |
49.5 |
|
47.2 |
- |
47.2 |
48.8 |
- |
48.8 |
|
|
Total operating assets |
692.4 |
- |
692.4 |
|
849.4 |
- |
849.4 |
|
738.7 |
- |
738.7 |
|
Total operating liabilities |
- |
(868.9) |
(868.9) |
|
- |
(1,049.7) |
(1,049.7) |
|
- |
(928.2) |
(928.2) |
|
Net operating assets/(liabilities) |
692.4 |
(868.9) |
(176.5) |
|
849.4 |
(1,049.7) |
(200.3) |
|
738.7 |
(928.2) |
(189.5) |
|
Consolidated before Group items |
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets (1) |
1,517.6 |
- |
1,517.6 |
|
1,534.9 |
- |
1,534.9 |
|
1,533.4 |
- |
1,533.4 |
|
Operating assets |
1,227.3 |
- |
1,227.3 |
|
1,362.8 |
- |
1,362.8 |
|
1,269.8 |
- |
1,269.8 |
|
Investments |
229.9 |
- |
229.9 |
|
187.8 |
- |
187.8 |
210.9 |
- |
210.9 |
|
|
Total operating assets |
2,974.8 |
- |
2,974.8 |
|
3,085.5 |
- |
3,085.5 |
|
3,014.1 |
- |
3,014.1 |
|
Total operating liabilities |
- |
(1,700.3) |
(1,700.3) |
|
- |
(1,906.4) |
(1,906.4) |
- |
(1,784.7) |
(1,784.7) |
|
|
Net operating assets/(liabilities) before Group items |
2,974.8 |
(1,700.3) |
1,274.5 |
|
3,085.5 |
(1,906.4) |
1,179.1 |
|
3,014.1 |
(1,784.7) |
1,229.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group items |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax |
133.5 |
(20.7) |
112.8 |
|
101.7 |
(34.3) |
67.4 |
|
137.6 |
(25.5) |
112.1 |
|
Net cash/(borrowing) |
456.9 |
(572.1) |
(115.2) |
|
324.2 |
(417.9) |
(93.7) |
|
490.7 |
(541.4) |
(50.7) |
|
Retirement benefits (gross of taxation) |
- |
(325.9) |
(325.9) |
|
0.9 |
(204.8) |
(203.9) |
|
- |
(305.8) |
(305.8) |
|
Income tax |
1.9 |
(3.4) |
(1.5) |
|
4.7 |
(2.2) |
2.5 |
|
7.7 |
(4.4) |
3.3 |
|
Other |
46.6 |
(22.2) |
24.4 |
|
51.0 |
(4.5) |
46.5 |
|
49.1 |
(54.9) |
(5.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets/(liabilities) |
3,613.7 |
(2,644.6) |
969.1 |
|
3,568.0 |
(2,570.1) |
997.9 |
|
3,699.2 |
(2,716.7) |
982.5 |
(1) Arising from business combinations
Geographic information - by origin
|
|
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
United Kingdom |
|
|
|
|
Total revenue from external customers |
1,614.5 |
1,861.9 |
3,664.0 |
|
Less: share of jointly controlled entities' revenue |
(204.7) |
(246.4) |
(386.7) |
|
Group revenue from external customers |
1,409.8 |
1,615.5 |
3,277.3 |
|
|
|
|
|
|
Non-current assets |
1,610.2 |
1,647.4 |
1,628.8 |
|
|
|
|
|
|
Middle East and North Africa |
|
|
|
|
Total revenue from external customers |
208.0 |
259.4 |
561.3 |
|
Less: share of jointly controlled entities' revenue |
(117.2) |
(157.8) |
(342.4) |
|
Group revenue from external customers |
90.8 |
101.6 |
218.9 |
|
|
|
|
|
|
Non-current assets |
76.2 |
53.7 |
66.7 |
|
|
|
|
|
|
Canada |
|
|
|
|
Total revenue from external customers |
325.7 |
300.5 |
782.3 |
|
Less: share of jointly controlled entities' revenue |
(56.0) |
(2.4) |
(147.4) |
|
Group revenue from external customers |
269.7 |
298.1 |
634.9 |
|
|
|
|
|
|
Non-current assets |
147.1 |
137.2 |
145.9 |
|
|
|
|
|
|
Rest of the World |
|
|
|
|
Total revenue from external customers |
8.6 |
31.7 |
43.6 |
|
Less: share of jointly controlled entities' revenue |
- |
(21.5) |
(21.5) |
|
Group revenue from external customers |
8.6 |
10.2 |
|
|
|
|
|
|
|
Non-current assets |
- |
0.2 |
- |
|
|
|
|
|
|
Consolidated |
|
|
|
|
Total revenue from external customers |
2,156.8 |
2,453.5 |
5,051.2 |
|
Less: share of jointly controlled entities' revenue |
(377.9) |
(428.1) |
(898.0) |
|
Group revenue from external customers |
1,778.9 |
2,025.4 |
4,153.2 |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
Total of geographic analysis above |
1,833.5 |
1,838.5 |
1,841.4 |
|
Retirement benefit assets |
- |
0.9 |
- |
|
Other investments |
55.0 |
45.4 |
51.3 |
|
Deferred tax assets |
133.5 |
101.7 |
137.6 |
|
Total non-current assets |
2,022.0 |
1,986.5 |
2,030.3 |
Revenue from the Group's major customer, the UK Government, is shown below:
|
|
Support services £m |
Public Private Partnership projects £m |
Construction services (excluding the Middle East) £m |
Total £m |
|
Six months ended 30 June 2012 |
461.7 |
88.4 |
479.4 |
1,029.5 |
|
Six months ended 30 June 2011 |
392.2 |
95.1 |
616.9 |
1,104.2 |
|
Year ended 31 December 2011 |
920.4 |
188.3 |
1,499.7 |
2,608.4 |
3 Non-recurring operating and non-operating items
|
Non-recurring operating items |
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
Integration and rationalisation costs |
- |
(20.0) |
(40.0) |
|
Eaga Partnership Trusts related charges |
- |
- |
(2.8) |
|
|
- |
(20.0) |
(42.8) |
Integration and rationalisation costs in 2011 primarily relates to redundancy and property exit costs arising from a review of the Group's requirements following the acquisition of Carillion Energy Services (CES - formerly Eaga plc) including relatively modest costs associated with focusing the Canadian construction services business on the growing Public Private Partnership market in the region.
The Group operates a Share Incentive Plan (SIP) under which qualifying Carillion Energy Services partners may receive free shares. In 2011, the Eaga Partnership Trusts (EPT) waived its entitlement to the 2010 final dividend paid during the year amounting to £3.0 million. These funds were used to finance awards under the SIP which has given rise to a charge in 2011 under International Financial Reporting Standard 2 'Share-based payment' of £2.8 million. The Group is not committed to make any awards under the SIP in excess of those funded by the EPT. Where the award of shares under the SIP is fully funded by the waiver of dividends by the EPT, there is no material net impact on the net debt or net assets of the Group over the contractual life of the plan compared to if the EPT had not waived its dividends. As this charge has arisen from the decision by the EPT to waive its entitlement to dividends and is outside of the control of the normal operating parameters of the Group, the charge is classified as a non-recurring operating item.
An income tax credit of £4.1 million at 30 June 2011 and £11.9 million at 31 December 2011 relating to the above has been included within taxation in the income statement.
|
Non-operating items |
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
Profit on disposal of jointly controlled entity and other investments |
6.7 |
7.9 |
15.3 |
|
Acquisition costs |
- |
(8.0) |
(7.5) |
|
Closure of non-core businesses |
- |
- |
(3.2) |
|
|
6.7 |
(0.1) |
4.6 |
In 2012, the Group disposed of equity interests in three Public Private Partnership jointly controlled entities. The disposals generated cash consideration of £19.3 million (before disposal costs of £0.4 million) and a non-operating profit of £6.7 million.
In 2011, the Group disposed of its equity interests in three Public Private Partnership jointly controlled entities. The disposals generated a non-operating profit of £6.1 million for the six months ended 30 June 2011 and £11.5 million for the year ended 31 December 2011.
In addition, in June 2011 the Group disposed of a small joint venture in the Netherlands. The disposal generated a cash consideration of £6.9 million (before disposal costs of £0.7 million) and a provisional non-operating profit of £1.8 million at 30 June 2011 which became a final non-operating profit of £3.8 million at 31 December 2011.
Acquisition costs in 2011 relate to adviser costs incurred in relation to the CES acquisition contracts and due diligence procedures. An income tax credit of £0.5 million at 30 June 2011 and £0.6 million at 31 December 2011 has been included in the income statement in respect of these costs.
During 2011, a number of small non-core businesses were closed at a cost of £3.2 million. An income tax credit of £0.6 million has been included in the income statement in respect of these costs.
4 Financial income and expense
|
|
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
Financial income |
|
|
|
|
Bank interest receivable |
0.8 |
0.9 |
1.6 |
|
Other interest receivable |
6.7 |
5.9 |
14.4 |
|
Expected return on retirement plan assets |
50.0 |
57.5 |
116.0 |
|
|
57.5 |
64.3 |
132.0 |
|
Financial expense |
|
|
|
|
Interest payable on bank loans and overdrafts |
(5.5) |
(4.4) |
(9.6) |
|
Other interest payable and similar charges |
(7.8) |
(5.8) |
(13.5) |
|
Interest cost on retirement plan obligations |
(51.8) |
(56.0) |
(112.8) |
|
|
(65.1) |
(66.2) |
(135.9) |
|
Net financial expense |
(7.6) |
(1.9) |
(3.9) |
No borrowing costs have been capitalised in any of the above periods.
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 2012 is calculated based on the estimated average annual effective underlying income tax rate of 14% (six months ended 30 June 2011: 16%; 31 December 2011: 15%). This effective rate differs to the UK standard corporation tax rate of 24.5% (six months ended 30 June 2011: 26.5%; 31 December 2011: 26.5%) primarily due to items such as the effect of tax rates in foreign jurisdictions, the agreement of certain issues with the tax authorities and the recognition of deferred tax on trading losses.
The UK Government's Budget on 21 March 2012 announced new phased reductions in the main corporation tax rate over the next two years. The reduction in rate to 23% with effect from 1 April 2013, which became substantively enacted on 17 July 2012, would not have had a material impact on the Group's effective underlying tax rate of 14% if the change had been substantively enacted at the balance sheet date.
6 Earnings per share
(a) Basic earnings per share
The calculation of earnings per share for the six months ended 30 June 2012 is based on the profit attributable to equity holders of the parent of £57.6 million (six months ended 30 June 2011: £32.7 million; year ended 31 December 2011: £134.6 million) and a weighted average number of ordinary shares in issue of 430.1 million (six months ended 30 June 2011: 411.3 million; year ended 31 December 2011: 420.9 million), calculated as follows:
|
In millions of shares |
2012 |
2011 |
Year ended 31 December 2011 |
|
Issued ordinary shares at beginning of period |
430.3 |
399.7 |
399.7 |
|
Effect of shares issued in the period |
- |
11.8 |
21.4 |
|
Effect of own shares held by Employee Share Ownership Plan and Qualifying Employee Share Ownership Trust |
(0.2) |
(0.2) |
(0.2) |
|
|
|
|
|
|
Weighted average number of ordinary shares |
430.1 |
411.3 |
420.9 |
(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.
|
|
2012 |
|
2011 |
|
Year ended 31 December 2011 |
|||
|
|
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 |
64.1 |
4.3 |
|
38.2 |
4.1 |
|
142.8 |
4.8 |
|
Amortisation of intangible assets arising from business combinations |
15.7 |
4.8 |
|
14.2 |
3.7 |
|
31.0 |
9.9 |
|
Non-recurring operating items |
- |
- |
|
20.0 |
4.1 |
|
42.8 |
11.9 |
|
Non-operating items |
(6.7) |
- |
|
0.1 |
0.5 |
|
(4.6) |
1.2 |
|
Underlying profit before taxation |
73.1 |
9.1 |
|
72.5 |
12.4 |
|
212.0 |
27.8 |
|
Underlying taxation |
(9.1) |
|
|
(12.4) |
|
|
(27.8) |
|
|
Underlying profit attributable to non-controlling interests |
(2.2) |
|
|
(1.4) |
|
|
(3.4) |
|
|
Underlying profit attributable to shareholders |
61.8 |
|
|
58.7 |
|
|
180.8 |
|
|
|
2012 Pence per share |
2011 Pence per share |
Year ended 31 December 2011 Pence per share |
|
Earnings per share |
|
|
|
|
Basic earnings per share |
13.4 |
7.9 |
32.0 |
|
Amortisation of intangible assets arising from business combinations |
2.5 |
2.6 |
5.0 |
|
Non-recurring operating items |
- |
3.9 |
7.3 |
|
Non-operating items |
(1.5) |
(0.1) |
(1.3) |
|
Underlying basic earnings per share
|
14.4 |
14.3 |
43.0 |
|
Underlying diluted earnings per share (post-tax basis)
|
14.3 |
14.3 |
42.7 |
(c) Diluted earnings per share
The calculation of diluted earnings per share is based on profit as shown in note 6 (a) and (b) and a weighted average number of ordinary shares outstanding calculated as follows:
|
In millions of shares |
2012 |
2011 |
Year ended 31 December 2011 |
|
Weighted average number of ordinary shares |
430.1 |
411.3 |
420.9 |
|
Effect of share options in issue |
1.9 |
0.6 |
2.5 |
|
|
|
|
|
|
Weighted average number of ordinary shares (diluted) |
432.0 |
411.9 |
423.4 |
7 Dividends
The following dividends were paid by the Company:
|
|
|
2012 |
|
|
2011 |
|
|
Year ended 31 December 2011 |
|
|
£m |
Pence per share |
|
£m |
Pence per share |
|
£m |
Pence per share |
|
Previous period final dividend |
48.5 |
11.6 |
|
43.0 |
10.7 |
|
43.0 |
10.7 |
|
Current period interim dividend |
- |
- |
|
- |
- |
|
21.6 |
5.3 |
|
|
|
|
|
|
|
|
|
|
|
Total |
48.5 |
11.6 |
|
43.0 |
10.7 |
|
64.6 |
16.0 |
The following dividends were proposed by the Company:
|
|
|
2012 |
|
|
2011 |
|
|
Year ended 31 December 2011 |
|
|
£m |
Pence per share |
|
£m |
Pence per share |
|
£m |
Pence per share |
|
Interim |
23.2 |
5.4 |
|
21.3 |
5.3 |
|
21.6 |
5.3 |
|
Final |
- |
- |
|
- |
- |
|
49.9 |
11.6 |
|
|
|
|
|
|
|
|
|
|
|
Total |
23.2 |
5.4 |
|
21.3 |
5.3 |
|
71.5 |
16.9 |
The interim dividend for 2012 of 5.4 pence per share was approved by the Board on 22 August 2012 and will be paid on
7 November 2012 to shareholders on the register on 7 September 2012.
8 Pension commitments
The following expense was recognised in the income statement in respect of pension commitments:
|
|
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
Charge to operating profit |
|
|
|
|
Current service cost relating to defined benefit schemes |
(3.6) |
(3.3) |
(6.6) |
|
Defined contribution schemes |
(10.2) |
(10.9) |
(22.7) |
|
|
|
|
|
|
Total |
(13.8) |
(14.2) |
(29.3) |
|
|
|
|
|
|
(Charge)/credit to other financial income and expense |
|
|
|
|
Expected return on retirement plan assets |
50.0 |
57.5 |
116.0 |
|
Interest cost on retirement plan obligations |
(51.8) |
(56.0) |
(112.8) |
|
|
|
|
|
|
Net financial (expense)/income |
(1.8) |
1.5 |
3.2 |
The valuation of the Group's main defined benefit pension schemes were reviewed by the schemes' actuary at 30 June 2012.
A summary of defined benefit obligations and scheme assets is given below:
|
|
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
Present value of defined benefit obligation |
(2,228.2) |
(2,111.4) |
(2,203.7) |
|
Fair value of scheme assets |
1,917.3 |
1,921.1 |
1,897.9 |
|
Minimum funding requirement |
(15.0) |
(13.6) |
- |
|
|
|
|
|
|
Net pension liability |
(325.9) |
(203.9) |
(305.8) |
|
Deferred tax on the above |
78.3 |
53.3 |
76.5 |
|
Net pension liability after tax |
(247.6) |
(150.6) |
(229.3) |
The principal assumptions used by the independent qualified actuaries in providing the IAS 19 position were:
|
|
30 June 2012 |
31 December 2011 |
|
Rate of increase in salaries |
3.35% |
3.50% |
|
Rate of increase in pensions |
2.85% |
3.00% |
|
Inflation rate - Retail Price Index |
2.85% |
3.00% |
|
Inflation rate - Consumer Price Index |
2.00% |
1.90% |
|
Discount rate |
4.75% |
4.80% |
9 Cash and cash equivalents and net borrowing
Cash and cash equivalents and net borrowing comprise:
|
|
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
Cash and cash equivalents |
456.9 |
324.2 |
490.7 |
|
Bank overdrafts |
(28.0) |
(36.9) |
(3.0) |
|
Net cash and cash equivalents |
428.9 |
287.3 |
487.7 |
|
Bank loans |
(413.3) |
(334.9) |
(399.7) |
|
Finance lease obligations |
(30.5) |
(45.8) |
(38.4) |
|
Other loans |
(100.3) |
(0.3) |
(100.3) |
|
|
|
|
|
|
Net borrowing |
(115.2) |
(93.7) |
(50.7) |
|
Reconciliation of cash flow to movement in net borrowing:
|
||||
|
|
|
2012 £m |
2011 £m |
Year ended 31 December 2011 £m |
|
(Decrease)/increase in net cash and cash equivalents |
|
(58.2) |
(104.1) |
97.4 |
|
Net cash and cash equivalents in subsidiaries acquired |
|
- |
1.5 |
1.5 |
|
Draw down of bank and other loans |
|
(14.7) |
(58.0) |
(223.0) |
|
Payment of finance lease liabilities |
|
7.4 |
8.3 |
15.8 |
|
Change in net borrowing resulting from cash flows |
|
(65.5) |
(152.3) |
(108.3) |
|
Net borrowing in subsidiaries acquired |
|
- |
(61.5) |
(61.5) |
|
Finance lease additions |
|
- |
- |
(0.8) |
|
Currency translation differences |
|
1.0 |
(0.1) |
(0.3) |
|
Change in net borrowing |
|
(64.5) |
(213.9) |
(170.9) |
|
Net (borrowing)/cash at 1 January |
|
(50.7) |
120.2 |
120.2 |
|
|
|
|
|
|
|
Net borrowing |
|
(115.2) |
(93.7) |
(50.7) |
10 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 £345.4 million in the six months ended 30 June 2012 (six months ended 30 June 2011: £529.7 million; year ended 31 December 2011: £776.1 million). Amounts receivable from jointly controlled entities amounted to £124.4 million (31 December 2011: £128.5 million) and amounts payable to jointly controlled entities amounted to £19.9 million (31 December 2011: £15.5 million).
11 Disposals
In 2012, the Group disposed of equity interests in three Public Private Partnership projects. The disposals generated a cash consideration of £19.3 million. In addition, on 29 June 2012 the Group received cash proceeds of £7.1 million on exchange of contracts for the sale of an equity interest in a Public Private Partnership project. At 30 June 2012, all the conditions precedent had not been met in relation to the sale contract and therefore the disposal of this equity interest has not been recognised. The proceeds received of £7.1 million have been recognised within disposal of jointly controlled entities and other investments in the cash flow statement.
12 Share capital
The issued and fully paid share capital at 30 June 2012 was 430.3 million shares (30 June 2011: 430.3 million; 31 December 2011: 430.3 million).
13 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 2011, except in relation to key assumptions used to determine defined benefit pension obligations as disclosed in note 8.
14 Guarantees and contingent liabilities
The Group has entered into guarantees in respect of letters of credit issued by banks in relation to deferred equity payments, interest payments in jointly controlled entities and performance contracts in Public Private Partnership jointly controlled entities. These guarantees in total amount to £184.8 million (31 December 2011: £192.8 million). There has been no material change to the contingent liabilities of the Group in the six months ended 30 June 2012.
15 Company information
This preliminary announcement was approved by the Board of Directors on 22 August 2012. The 2012 interim results will be posted to all shareholders by 5 September 2012 and both this statement and the 2012 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.
Forward-looking statements
This report may contain certain statements about the future outlook for Carillion plc. Although the Directors believe their 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 2012 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 2012 will be determined in accordance with English law.
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 2012 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 during the first six months of 2012 that have materially affected the financial position or performance of the Group and any changes in the related party transactions described in the 2011 Annual Report that could do so).
On behalf of the Board
Richard Adam FCA
Group Finance Director
22 August 2012
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 2012, which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated cash flow statement, 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 2012 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
One Snow Hill
Snow Hill Queensway
Birmingham
B4 6GH
22 August 2012
This information is provided by RNS
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