TIDMCLLN
RNS Number : 5229K
Carillion PLC
10 July 2017
10(th) July 2017
2017 first-half trading update
Strategic review and management changes
H1 revenue expected to be similar to that in 2016 at
approximately GBP2.5bn.
-- H1 operating profit lower than expectations primarily due to
phasing of Public Private Partnerships (PPP) equity disposals,
which are now expected to be in H2.
-- Strong work-winning performance, with GBP2.6bn of new work
secured in H1 - GBP2.1bn in support services.
-- Progress made against strategic objectives set at full year
results, with cost reduction underway and disposal of 50 per cent
of the economic interest in the Group's business in Oman, Carillion
Alawi, for an immediate cash consideration of GBP12.8m.
-- Deterioration in cash flows on a select number of
construction contracts led the Board to undertake an enhanced
review of all of the Group's material contracts, with the support
of KPMG and its contracts specialists, as part of the new Group
Finance Director's wider balance sheet review.
-- This review has resulted in an expected contract provision of
GBP845m at 30 June 2017, of which GBP375m relates to the UK
(majority three PPP projects) and GBP470m to overseas markets, the
majority of which relates to exiting markets in the Middle East and
Canada. The associated future net cash outflows in respect of these
contracts is GBP100m-GBP150m (primarily in 2017 and 2018).
-- s a result of the enhanced contracts review and the strategic
actions below, reflecting difficult markets and exits from certain
territories, Carillion is issuing revised full-year guidance, with
revenue now expected to be between GBP4.8bn and GBP5.0bn and
overall performance expected to be below management's previous
expectations.
Actions to reduce net borrowing
-- Deterioration in cash flows on construction contracts,
combined with a working capital outflow due to a higher than normal
number of construction contracts completing and not being replaced
by new contract starts, means H1 average net borrowing is now
expected to be GBP695m (Full year: 2016: GBP586.5m).
-- The actions the Board put in place in March 2017 to reduce
net borrowing have been accelerated and further actions are being
taken to reduce net borrowing including:
-- Disposals to exit non-core markets and geographies to raise
up to a further GBP125m(1) in the next 12 months.
-- Further annual cost savings to be quantified as part of the
strategic and operational review.
-- Maximising the recovery of receivables.
-- 2017 dividends suspended resulting in a cash saving of approximately GBP80m.
Strategic and operational review
-- The Board announces today that it is undertaking a
comprehensive review of the business and the capital structure,
with all options to optimise value for the benefit of shareholders
under consideration. An update on the Board's review of the
business and capital structure will be provided at the Group's
interim results, in September.
-- Significant actions already taken to reposition the business.
-- Exit from construction PPP projects.
-- Exit from construction markets in Qatar, the Kingdom of Saudi Arabia and Egypt.
-- Only undertaking future construction work on a highly
selective basis and via lower-risk procurement routes.
[1] Includes GBP12.8m immediate cash consideration from the sale
of Carillion Alawi
Philip Green, Non-Executive Chairman said,
"Despite making progress against the strategic priorities we set
out in our 2016 results announcement in March, average net
borrowing has increased above the level we expected, which means
that we will no longer be able to meet our target of reducing
leverage for the full year.
"We have therefore concluded that we must take immediate action
to accelerate the reduction in average net borrowing and are
announcing a comprehensive programme of measures to address that,
aimed at generating significant cashflow in the short-term.
"In addition, we are also announcing that we are undertaking a
thorough review of the business and the capital structure, and the
options available to optimise value for the benefit of
shareholders. We will update the market on the progress of the
review at our interim results in September.
"Richard Howson has stepped down as Group Chief Executive and
from the Board with immediate effect and Keith Cochrane, previously
our Senior Independent Non-Executive Director, will take over as
interim Group Chief Executive, while a search is underway for a new
Group Chief Executive. We are fortunate to have had Keith as a
Non-Executive member of our Board as he has considerable plc CEO
experience. Richard will stay with the Group for up to one year to
support the transition."
A presentation for institutional investors and analysts will be
held today at etc.venues St Paul's, 200 Aldersgate, London EC1A 4HD
starting at 08:30 today. The presentation will be webcast live on
www.carillionplc.com and subsequently available on demand. A
dial-in facility is also available on 0808 109 0700 (UK Toll Free)
or +44 (0) 20 3003 2666 (Standard International Access) with a
participant pin code of 110717. A replay facility will be available
for 7 days on +44 (0) 20 8196 1998 with an access code of
9946232
The announcement contains inside information. The person
responsible for the release of this announcement on behalf of
Carillion plc is Zafar Khan, Group Finance Director.
For further information contact:
Institutional Investors and Analysts
John Denning, Group Corporate Affairs tel: +44 (0) 1902 906333
Director tel: +44 (0) 1902 906333
Kellie McAvoy, Head of Investor Relations
Media M: +44 7990 003 314
Liz Morley - Bell Pottinger M: +44 7818 877 040
Sam Cartwright - Bell Pottinger
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/5229K_1-2017-7-10.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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