PRE-CLOSE TRADING UPDATE
FIRST-HALF PERFORMANCE IN LINE WITH EXPECTATIONS
Integrated support services company, Carillion plc, is providing this update on trading in the first six months of 2012 ahead of announcing its interim results on 22 August 2012.
Highlights
· First-half trading is in line with expectations.
· As expected, the planned re-scaling of UK construction, together with the timing of project starts in the Middle East, means total revenue will be lower than in the first half of 2011.
· Total operating margin is expected to increase.
· Cash flow and balance sheet remain strong with net debt expected to be around £125m.
· A further £20m of equity in Public Private Partnership (PPP) projects has been sold.
· Total first-half new orders and probable orders worth up to £2.2bn.
· Operational integration of Carillion Energy Services is largely complete, with integration cost savings expected to reach our target of £25m by end 2013.
· Underlying profit and earnings are on track to meet full-year expectations, despite market conditions remaining challenging.
Group performance
Despite challenging market conditions, trading in the first six months of 2012 is in line with the Board's expectations, as the Group continues to benefit from a resilient business mix and from adhering to the strict selectivity criteria we apply to choosing the contracts for which we bid.
As expected, total revenue will be lower than in the first half of 2011. This is due primarily to lower UK construction revenue, as we continue the planned re-scaling of our UK construction activities to align them with the shrinking UK market and, as also previously announced, to Middle East construction revenue being second-half weighted, which reflects the timing of project starts.
The Group's total first-half operating margin is expected to increase, reflecting the benefit to margins of re-scaling our UK construction business, together with our group-wide focus on contract selectivity.
The value of the Group's order book and probable orders is expected to remain strong at around £18.0 billion and the Group's pipeline of contract opportunities is expected to have increased to some £35 billion.
Net borrowing at the half year is expected to be approximately £125 million.
