CLLN Carillion Plc

RNS Number:8838W
Carillion PLC
9 January 2001



Carillion plc trading update

Carillion, the construction to services group, is providing this update on
trading for the year ended 31 December 2000, in advance of its preliminary
results announcement on 14 March.

Trading in the second half of the year has been in line with our expectations,
resulting in the Group making further progress in the development of its
strategy for generating a growing stream of more visible and predictable
earnings.

The driver for this is the development of our activities in private finance
and infrastructure and facilities management, while maintaining a selective
approach to the construction contracts we undertake. The programmes for
restructuring, cost reduction and implementation of new financial and risk
management procedures have also continued as planned. Consequently, the
Group's full year result is expected to be in line with the current consensus
forecast.

Opportunities in Private Finance remain at a high level and bidding activity
increased in the second half of the year. In order to respond to the growing
demand and to build upon its market leading position, the Group has therefore
increased the size and capability of its already strong PFI team. In addition
to making good progress on Manchester Magistrates Court, where we are the
preferred bidder, we are now shortlisted for a further 20 projects. We have
also been invited by the Home Office to negotiate contract extensions at two
secure training centres, demonstrating the potential for increasing the scope
and value of our portfolio from existing concessions. Turnover on the fourteen
PFI projects that have been financially closed is already expected to exceed #
3 billion, over the next 30 years.

Infrastructure Management made good progress in the second half of the year in
both the road and rail sectors. The financial performance of our rail
businesses improved as expected in the second half. This was achieved despite
the significant restructuring and other costs incurred in achieving the high
levels of quality, safety and efficiency that made GTRM, our joint venture
rail maintenance business, the best performing maintenance contractor, heading
Railtrack's key performance indicators for most of the year. The intensive
rail renewal programme launched in the aftermath of the Hatfield accident
resulted in only a modest increase in turnover in the year, as this primarily
involved drawing resources from other rail activities.

The rail market, however, now has even greater potential if the increased
investment programme proceeds as planned, with the continuity needed by the
industry to maximise quality and efficiency. Having completed complex
contracts such as the remodelling of Proof House Junction on the West Coast
Mainline on time and to budget, we are convinced that working in alliance with
Railtrack benefits both parties and holds the key to delivering a successful
rail investment programme.

In our Services segment, all our support services businesses have continued to
make good progress. In particular, our integrated facilties and property
management activities increased substantially during the year with the
addition of BT Jaguar and the new Darent Valley Hospital. Mobilisation for BT
Jaguar, to manage BT's 8,500 properties and provide support services, is
nearing completion. With Darent Valley hospital now fully operational, we have
reinforced our position as the leading supplier of integrated facilities
management services to the NHS. Carillion has also maintained its position as
a leading supplier to other public sector customers, including the Ministry of
Defence and the Metropolitan Police. We therefore remain on course to achieve
our objective of profitably doubling turnover from these activities in the
current year. Crown House Engineering is making steady progress with
implementing the restructuring and new strategic objectives announced in
August.

As a result of our policy of greater selectivity, overall turnover in Building
and Capital Projects reduced and improvements in overall margins began to show
through in both these segments. Our overseas regions performed in line with
expectations in generally positive market conditions.

The continuing opportunities in all our main markets during the second half of
the year has enabled the Group to maintain its order book at the record level
reported for the first half. With trading conditions in both the UK and
overseas expected to remain positive, we are able to continue with confidence
our strategy for generating more visible and predictable earnings from a
portfolio with a reducing risk profile.

For further information

Chris Girling     Finance Director

01902 422431

John Denning     Head of Group Corporate Affairs and Communications

01902 316384

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