SEA - 7th March 2007(b)
Consolidated Income Statement
Consolidated income statement
For the year ended 31 December 2006
2006 2005
Note £m £m
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Total revenue 3,593.4 2,284.2
Less: Share of jointly controlled entities revenue (528.5) (258.7)
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Revenue 2 3,064.9 2,025.5
Cost of sales (2,862.2) (1,888.6)
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Gross profit 202.7 136.9
Administrative expenses (170.8) (104.6)
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Group operating profit before restructuring costs 31.9 32.3
Restructuring costs (22.6) -
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Group operating profit 9.3 32.3
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Jointly controlled entities
Operating profit 47.7 20.3
Net financing (expense)/income (8.0) 1.1
Non-operating items - (0.8)
Income tax (8.1) (5.0)
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Share of results of jointly controlled entities 3 31.6 15.6
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Profit from operations 40.9 47.9
Non-operating items 4 25.3 -
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Financial income 5 87.1 54.4
Financial expenses 5 (85.7) (50.4)
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Net financial income 1.4 4.0
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Profit before tax * 67.6 51.9
Income tax (7.2) (11.1)
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Profit for the year 60.4 40.8
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Attributable to:
Equity holders of the parent 58.2 39.3
Minority interests 2.2 1.5
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Profit for the year 60.4 40.8
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Earnings per share * 7
Basic 21.6p 18.7p
Diluted 21.3p 18.4p
Total dividend declared for the year 6 9.0p 8.0p
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The above results for both years derive from continuing operations.
* A reconciliation of the reported result to the underlying result is given in Note 7(b)
Consolidated statement of recognised income and expense
For the year ended 31 December 2006
2006 2005
£m £m
Foreign exchange translation adjustments (2.9) 1.6
Actuarial gains and losses on defined benefit pension schemes 34.6 6.7
Share of change in fair value of effective cash flow hedges
within jointly controlled entities (net of tax) 0.2 (1.3)
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31.9 7.0
Tax in respect of the above (11.5) (1.5)
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Income and expense recognised directly in equity 20.4 5.5
Profit for the year 60.4 40.8
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Total recognised income and expense for the year 80.8 46.3
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Attributable to:
Equity holders of the parent 78.6 44.8
Minority interests 2.2 1.5
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Total recognised income and expense for the year 80.8 46.3
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Consolidated balance sheet
As at 31 December 2006 2006 2005
£m £m
Assets
Non-current assets
Property, plant and equipment 146.6 100.9
Intangible assets 596.1 62.3
Retirement benefit assets 10.9 6.4
Investments in jointly controlled entities 178.8 62.7
Other investments 15.0 4.7
Deferred tax assets 55.4 35.2
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Total non-current assets 1,002.8 272.2
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Current assets
Inventories 38.5 21.2
Income tax receivable 0.2 0.2
Trade and other receivables 875.3 459.7
Cash and cash equivalents 144.5 180.9
Derivative financial instruments 0.8 -
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Total current assets 1,059.3 662.0
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Total assets 2,062.1 934.2
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Liabilities
Current liabilities
Borrowings (12.6) (17.0)
Derivative financial instruments - (0.3)
Trade and other payables (1,195.8) (600.4)
Provisions (2.4) -
Income tax payable (13.0) (13.3)
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Total current liabilities (1,223.8) (631.0)
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Non-current liabilities
Borrowings (239.9) (73.1)
Retirement benefit liabilities (123.8) (74.3)
Deferred tax liabilities (37.4) (6.0)
Provisions (3.5) -
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Total non-current liabilities (404.6) (153.4)
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Total liabilities (1,628.4) (784.4)
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Net assets 433.7 149.8
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Equity
Issued share capital 140.6 107.4
Share premium 199.9 8.2
Reserves (3.9) (1.0)
Retained earnings 96.1 34.1
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Equity attributable to equity holders of the parent 432.7 148.7
Minority interests 1.0 1.1
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Total equity 433.7 149.8
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Consolidated statement of cash flows
For the year ended 31 December 2006
2006 2005
£m £m
Cash flows from operating activities
Profit for the year 60.4 40.8
Depreciation, amortisation and impairment 36.9 20.5
Profit on disposal of property, plant and equipment (1.9) (0.9)
Share based payment expense 1.3 1.2
Other non-cash movements - (3.2)
Share of results of jointly controlled entities (31.6) (15.6)
Non-operating profit on disposal of investments in jointly
controlled entities (25.3) -
Restructuring costs 22.6 -
Net financing income (1.4) (4.0)
Income tax expense 7.2 11.1
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Operating profit before changes in working capital and
provisions 68.2 49.9
Increase in inventories - (2.6)
Increase in trade and other receivables (57.8) (26.4)
Increase in trade and other payables 80.5 65.1
Decrease in provisions 0.1 (2.2)
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Cash generated from operations before pension deficit
recovery payments and restructuring costs 91.0 83.8
Deficit recovery payments to pension schemes (31.8) (10.0)
Restructuring costs (18.2) -
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Cash generated from operations 41.0 73.8
Financial expenses paid (17.4) (4.6)
Income tax received/(paid) 1.7 (19.5)
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Net cash flows from operating activities 25.3 49.7
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Cash flows from investing activities
Disposal of property, plant and equipment 12.1 7.3
Disposal of investments in jointly controlled
entities 47.3 0.6
Disposal of other non-current investments - 3.4
Financial income received 15.4 7.4
Dividends received from jointly controlled entities 15.7 8.4
Disposal of businesses, net of cash disposed of 30.4 -
Acquisition of subsidiary, net of cash acquired (122.3) (37.1)
Acquisition of intangible assets (1.8) (4.3)
Acquisition of property, plant and equipment (39.1) (34.2)
Acquisition of equity in and loan advances to jointly
controlled entities (19.7) (2.3)
Acquisition of non-current investment (0.5) -
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Net cash flows from investing activities (62.5) (50.8)
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Cash flows from financing activities
Proceeds from the issue of share capital 0.4 1.7
Draw down of bank and other loans 321.3 3.4
Repayment of bank loans (276.6) (2.8)
Payment of finance lease liabilities (9.6) (3.7)
Dividends paid to equity holders of the parent (23.2) (16.1)
Dividends paid to minority interests (2.3) (2.5)
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Net cash flows from financing activities 10.0 (20.0)
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Net decrease in cash and cash equivalents (27.2) (21.1)
Cash and cash equivalents at beginning of year 169.7 189.6
Effect of exchange rate fluctuations on cash held (1.1) 1.2
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Cash and cash equivalents at end of year 141.4 169.7
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Cash and cash equivalents comprise:
Cash and cash equivalents 144.5 180.9
Bank overdrafts (3.1) (11.2)
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141.4 169.7
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Notes
1. Basis of preparation
Carillion plc (the "Company") is a company domiciled in the United Kingdom (UK). The consolidated financial statements of the Company for the year ended 31 December 2006 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in jointly controlled entities. The financial information set out herein (which was approved by the Board on 7 March 2007) does not constitute the company's statutory accounts for the years ended 31 December 2006 and 2005 but is derived from the 2006 statutory accounts. The statutory accounts for the year ended 31 December 2005 have been reported on by the company's auditors and delivered to the registrar of companies. The statutory accounts for the year ended 31 December 2006 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not include references to any matter which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under section 237(2) or (3) of the Companies Act 1985.
2. Segment reporting
Segment information is presented in respect of the Group's business segments, which are the primary basis of segment reporting. The business segment reporting format reflects the Group's management and internal reporting structure.
Inter-segment pricing is determined on an arm's length basis.
Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Business segments
The Group is comprised of the following main business segments:
* Construction Services: UK building, development and civil engineering
activities and international regional construction activities.
* Support Services: Rail infrastructure, roads maintenance, facilities
management and other support services.
* Investments: Equity returns on investments in Public Private Partnership
(PPP) projects.
Construction Support Investments Eliminations Consolidated
Services Services and unallocated
head office
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
£m £m £m £m £m £m £m £m £m £m
Revenue from
external
customers 1,667.8 1,050.1 1,395.8 974.6 1.3 0.8 - - 3,064.9 2,025.5
Inter-segment
revenue 4.0 0.3 30.2 28.6 - - (34.2) (28.9) - -
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Segment
revenue 1,671.8 1,050.4 1,426.0 1,003.2 1.3 0.8 (34.2) (28.9) 3,064.9 2,025.5
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Segment
trading
result 11.4 4.8 50.9 39.9 7.1 0.8 - - 69.4 45.5
Amortisation/
impairment
of intangible
assets (3.6) - (11.9) (2.5) (0.4) (0.3) (1.3) - (17.2) (2.8)
Unallocated
expenses - - - - - - (20.3) (10.4) (20.3) (10.4)
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Group
operating
profit
before
restructuring
costs 7.8 4.8 39.0 37.4 6.7 0.5 (21.6) (10.4) 31.9 32.3
Restructuring
costs (1.5) - (6.0) - (0.2) - (14.9) - (22.6) -
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Share of
results of
jointly
controlled
entities 19.1 8.2 5.2 0.5 7.3 6.9 - - 31.6 15.6
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Profit from
operations 25.4 13.0 38.2 37.9 13.8 7.4 (36.5) (10.4) 40.9 47.9
------ ------- ------ ------ ------ ------ ------ ------
Non -
operating
items 25.3 -
Net financing
income 1.4 4.0
Income tax
expense (7.2) (11.1)
------ -----
Profit for
the 60.4 40.8
year ------ -----
Construction Services Support Services Investments Unallocated Consolidated
Head Office
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
£m £m £m £m £m £m £m £m £m £m
Segment
assets 832.0 306.3 761.5 323.0 7.0 5.3 - - 1,600.5 634.6
Investment
in
jointly
controlled
entities 45.8 33.6 2.1 1.2 130.9 28.3 - (0.4) 178.8 62.7
Unallocated
assets - - - - - - 282.8 236.9 282.8 236.9
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Total
assets 877.8 339.9 763.6 324.2 137.9 33.6 282.8 236.5 2,062.1 934.2
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Segment
liabilities (709.9) (340.7) (420.2) (229.0) (22.0) (4.3) - - (1,152.1) (574.0)
Unallocated
liabilities - - - - - - (476.3) (210.4) (476.3) (210.4)
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Total
liabilities (709.9) (340.7) (420.2) (229.0) (22.0) (4.3) (476.3) (210.4) (1,628.4) (784.4)
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Net
assets/
(liabilities) 167.9 (0.8) 343.4 95.2 115.9 29.3 (193.5) 26.1 433.7 149.8
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Capital
expenditure 4.7 4.0 29.5 29.9 - - 19.7 20.1 53.9 54.0
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Depreciation
and
amortisation 8.1 2.4 25.2 12.7 - - 5.3 4.1 38.6 19.2
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Impairment
losses/
(reversals) (1.1) - (1.0) 1.0 0.4 0.3 - - (1.7) 1.3
------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Unallocated assets include cash and cash equivalents, Group retirement benefit assets and taxation related assets. Unallocated liabilities include current and non-current borrowings, Group retirement benefit deficits and taxation related liabilities.
Geographic segments
United Kingdom Europe Rest of the World Consolidated
2006 2005 2006 2005 2006 2005 2006 2005
£m £m £m £m £m £m £m £m
Revenue
from
external
customers 2,781.2 1,796.7 84.3 40.2 199.4 188.6 3,064.9 2,025.5
------- ------- ------- ------- ------- ------- ------- ------
Segment
assets 1,798.2 747.5 73.7 19.7 190.2 167.0 2,062.1 934.2
------- ------- ------- ------- ------- ------- ------- ------
Capital
expenditure 31.7 32.7 0.7 0.6 21.5 20.7 53.9 54.0
------- ------- ------- ------- ------- ------- ------- ------
3. Share of results of jointly controlled entities
The Group's share of results of jointly controlled entities is analysed below:
2006 2005
£m £m
Revenue 528.5 258.7
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Operating profit 47.7 20.3
Net financing (expense)/income (8.0) 1.1
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Profit before tax and non operating items 39.7 21.4
Non-operating items (see note 4) - (0.8)
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Profit before tax 39.7 20.6
Income tax (8.1) (5.0)
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Profit for the year 31.6 15.6
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The Group's share of the operating profit of jointly controlled entities arises
in the following business segments:
2006 2005
£m £m
Construction Services 21.0 12.1
Support Services 7.3 0.7
Investments 19.4 7.5
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47.7 20.3
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4. Restructuring costs and non-operating items
Restructuring costs
Restructuring costs of £22.6m includes redundancy, property exit and associated costs of £18.4m arising from a review of the enlarged Group's requirements following the acquisition of Mowlem plc on 23 February 2006. In addition, redundancy costs of £4.2m have been incurred following a strategic review of the Group's rail activities. A tax credit of £5.0m in relation to these costs has been included within income tax in the income statement.
2006 2005
Gross Tax Gross Tax
credit/ credit/
(charge) (charge)
Non-operating items £m £m £m £m
Group:
Profit on disposal of investments
in jointly controlled entities 26.0 - - -
Loss on closure of business (0.7) - - -
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25.3 - - -
Jointly controlled entities:
Loss on disposal of business - - (0.8) -
------- ------- ------- -------
Total 25.3 - (0.8) -
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The loss on closure of £0.7m principally relates to a small rail business in
Norway.
The loss on disposal of business in jointly controlled entities of £0.8m in 2005 relates to the sale of a small non-core plant hire business.
5. Financial income and expenses
2006 2005
£m £m
Financial income
Bank interest receivable 8.1 4.3
Other interest receivable 7.3 3.1
Expected return on retirement plan assets 71.7 47.0
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87.1 54.4
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Financial expenses
Interest payable on bank loans and overdrafts (13.3) (1.7)
Other interest payable and similar charges (4.2) (2.9)
Interest cost on retirement plan obligations (68.2) (45.8)
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(85.7) (50.4)
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Net financial income 1.4 4.0
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Other interest payable and similar charges includes finance lease charges of £2.7m (2005: £1.5m).
6. Dividends
The following dividends were paid by the Company:
2006 2005
£m Pence per £m Pence per
share Share
Current year interim 8.7 3.1 6.0 2.8
Previous year final 14.5 5.2 10.1 4.825
------- ------- ------- -------
23.2 8.3 16.1 7.625
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6. Dividends (continued)
The following dividends were proposed by the Company in respect of each
financial year:
2006 2005
£m Pence per £m Pence per
Share share
Interim 8.7 3.1 6.0 2.8
Final 16.6 5.9 14.6 5.2
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25.3 9.0 20.6 8.0
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The final dividend for 2006 of 5.9 pence per share was approved by the Board on 7 March 2007, and in accordance with IFRS's, has not been included as a liability as at 31 December 2006.
7. Earnings per share
(a) Basic earnings per share
The calculation of basic earnings per share at 31 December 2006 is based on the profit attributable to equity holders of the parent of £58.2m (2005: £39.3m) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2006 of 269.5m (2005: 210.5m), calculated as follows:
Weighted average number of ordinary shares
In millions of shares 2006 2005
Issued ordinary shares at 1 January 214.9 214.3
Effect of own shares held by ESOP and QUEST (1.9) (4.1)
Effect of shares issued in the year 56.5 0.3
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Weighted average number of ordinary shares at 31 December 269.5 210.5
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(b) Underlying performance
A reconciliation of profit before tax and basic earnings per share, as reported in the income statement, to underlying profit before tax and basic 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.
2006 2005
£m £m
Profit before tax
Profit before tax as reported in the income statement 67.6 51.9
Restructuring costs 22.6 -
Amortisation of intangible assets arising from business
combinations 16.8 2.5
Impairment of goodwill 0.4 0.3
(Profit)/loss on disposal of investments and businesses (25.3) 0.8
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Underlying profit before tax 82.1 55.5
Underlying income tax (16.6) (11.1)
Minority interests (2.2) (1.5)
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Underlying profit attributable to shareholders 63.3 42.9
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2006 2005
Pence per share Pence per share
Basic earnings per share
Basic earnings per share as reported in
the income statement 21.6 18.7
Restructuring costs 6.5 -
Amortisation of intangible assets arising
from business combinations 4.6 1.2
Impairment of goodwill 0.2 0.1
(Profit)/loss on disposal of investments
and businesses (9.4) 0.4
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Underlying basic earnings per share 23.5 20.4
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7. Earnings per share (continued)
c) Diluted earnings per share
The calculation of diluted earnings per share at 31 December 2006 is based on profit as shown in note 7(a) and a weighted average number of ordinary shares outstanding calculated as follows:
Weighted average number of ordinary shares (diluted)
In millions of shares 2006 2005
Weighted average number of ordinary shares at 31 December 269.5 210.5
Effect of share options in issue 3.1 3.1
------ -------
Weighted average number of ordinary shares (diluted) at 31
December 272.6 213.6
------ -------
8. Reconciliation of movements in consolidated equity shareholders' funds
2006 2005
£m £m
Recognised income and expense 78.6 44.8
New share capital subscribed 224.9 1.7
Share options exercised by employees 2.8 0.7
Equity settled transactions (net of deferred tax) 0.9 0.9
Dividends paid to equity holders of the parent (23.2) (16.1)
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Net addition to equity shareholders' funds 284.0 32.0
Opening equity shareholders' funds 148.7 116.7
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Closing equity shareholders' funds 432.7 148.7
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9. Posting of statutory accounts to shareholders
The Company's report and accounts will be posted to shareholders on 3 April 2007. From that date copies will be available from the registered office, Carillion plc, Birch Street, Wolverhampton, WV1 4HY.
10. Annual General Meeting
The Company's Annual General Meeting will be held on 9 May 2007.
