5th Jul 2006 07:01
Carillion PLC05 July 2006 Carillion plc Trading update Support services and construction company Carillion plc is providing this updateon trading in the first six months of 2006, ahead of its interim resultsannouncement on 6 September 2006. Overall, trading in the first half of 2006 has been strong and in line with ourexpectations. This is also reflected in the value of our order book and framework contracts,which has increased from £7 billion at December 2005 to around £13 billion atJune 2006, following a number of major first half successes. The most notable ofthese was achieving financial close on the £12 billion Allenby Connaught PPPproject for the Ministry of Defence to transform Army garrisons across the Southof England, of which some £4.9 billion has been included in our order book todate. The integration of Carillion and Mowlem is progressing well. As announced on 24April, cost synergies are running ahead of original targets. The new businessstructure, established immediately after acquisition, is operating well, basedupon Carillion's risk management procedures and supported by our values. Thecontracts for which revised fair value adjustments were announced on 24 April2006, are progressing in line with expectations. Disposals of non-core businesses acquired with Mowlem are running ahead ofschedule, with Charter, Edgar Allen and MESG, all sold in the first half of2006. In addition, we have reached agreement on the sale of Barclay Mowlem onwhich completion is expected shortly. Cash generation remains very strong andnet debt was under £130 million at 30 June 2006. Our support services markets remain buoyant, with the exception of UK railinfrastructure, where activity levels have declined and on which we havecommented previously. Public sector markets, notably defence, education andhealth, continue to offer opportunities for growth, particularly for integratedsolutions that combine our facilities management skills and resources with thoseof private finance, design, construction and lifetime asset management. Theoutlook in the private sector facilities management and services market is alsopositive. Our UK and international construction markets remain strong. We continue to takea selective approach to these markets, targeting opportunities that shouldenable us to increase margins over time, particularly in the UK RegionalBuilding and Regional Civil Engineering businesses acquired with Mowlem. Our portfolio of equity investments in financially closed projects continues togrow and generate significant returns. The book value of equity already investedin, and committed to, financially closed projects increased from £60 million atDecember 2005 to £173 million at June 2006, as a result of acquiring Mowlem'sPPP portfolio and reaching financial close on the Allenby Connaught project.Secondary market demand for PPP equity is strong and the value of good qualityequity has increased substantially. Carillion remains focused on maximisingvalue, in line with our policy of retaining equity investments unless we cangenerate greater economic value by selling them. With a large order book, strong cash generation and trading conditions expectedto remain positive in the second half of 2006, Carillion remains firmly on trackto achieve our expectations for the full year.Carillion will host a conference call for analysts and investors on thisstatement at 0845 today, 5 July 2006. For further information contact John Denning Director Group Corporate Affairs01902 316426 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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