Carillion plc (“Carillion”, the “Group” or the “Company”) announces its H1 results and an update on its strategic review.
H1 financial performance weaker
- Total revenue flat at £2.5bn
- Underlying pre-tax profit down 40% due to:
– The phasing of PPP equity disposals; and
– The trading of contracts with H1 provisions at zero margin
- Contracts review finalised:
– No change to previously announced provision of £845m for construction contracts
– Further £200m provision for support services contracts, but minimal impact on cash
- Goodwill impairment charge of £134m in respect of UK and Canadian construction businesses
- Average net debt in H1 £694m
- New H1 orders plus probable orders of £2.6bn, with total orders plus probables stable at £16bn
Strategic review and balance sheet update
- Business refocused on core strengths and markets – support services, infrastructure and building
- New leadership team and operating model – delayered structure, greater accountability and transparency
- Initial cost reduction target of £75m by mid-2019
- Actions underway to improve cash flow and strengthen balance sheet
- Expected proceeds from non-core business disposals increased to £300m from £125m
- Discussions ongoing regarding sales of Carillion’s business in Canada and the UK Healthcare business
- Pension deficit reduction of £80m, potential to reduce further by £120m
- Agreed further £140m committed facility with a number of banks
Revised full-year outlook
- Full-year results to be lower than current market expectations
- Total revenue expected to be between £4.6bn and £4.8bn (previously £4.8bn to £5.0bn)
- 2017 H1/H2 profit split similar to recent years, before £10m of cost savings and business disposals
- Full-year average net debt expected to be between £825m and £850m
- Estimated further restructuring costs of £75m to £100m in H2.
Commenting Keith Cochrane, Interim Chief Executive, said:
“This is a disappointing set of results which reflects the issues we flagged in July and the additional £200m provision for our Support Services business that we have announced today. We now expect results for the full year to be lower than current market expectations.
“The Strategic Review that we launched in July has enabled us to get a firm handle on the Group’s problems and we have implemented a clear plan to address them. Our objective is to be a lower risk, lower cost, higher quality business generating sustainable cash backed earnings. In the immediate short term, our focus is to complete the disposal programme, accelerate our action to take cost out of the business and get our balance sheet back to a place where it can support Carillion going forward.
“No one is in any doubt of the challenge that lies ahead. We have made an encouraging start and the ambition is there to build on that progress. At the heart of this company, there is a strong core. Supported by an operating model that manages risk much more effectively and led by a fresh management team with a mandate to drive cultural change, I am confident that a strong business can emerge.”
 Alternative performance measures are defined in note 17 on page 37 of the full announcement.
A presentation for institutional investors and analysts will be held today at 09:00. The presentation will be webcast live on http://view-w.tv/982-1390-18765/en and subsequently available on demand.