Preliminary Results 2012

RNS Number : 6009Y

Carillion PLC

27 February 2013

Annual results for the year ended 31 December 2012

Robust performance with underlying earnings slightly ahead of market consensus forecast

	2012	2011
		As restated⁽¹⁾	Change from restated	As previously reported
Revenue	£4.4bn	£5.1bn	-13%	£5.1bn
Underlying profit from operations⁽²⁾	£232.4m	£227.4m	+2%	£215.9m
Underlying operating margin⁽²⁾	5.7%	4.9%	n/a	4.7%
Underlying profit before taxation⁽²⁾	£214.7m	£223.5m	-4%	£212.0m
Underlying earnings per share⁽²⁾	43.0p	45.7p	-6%	43.0p
Profit before taxation	£179.5m	£142.8m	+26%	£142.8m
Basic earnings per share	37.2p	32.0p	+16%	32.0p
Proposed full year dividend per share	17.25p	16.9p	+2%	16.9p

· Robust financial performance

- Revenue reduced as previously guided, primarily due to the planned rescaling of UK construction

- Underlying profit from operations⁽²⁾ increased, reflecting an improvement in total operating margin

- Reported profit before taxation and basic earnings per share both increased substantially, due to minimal non-recurring and non-operating items

- Underlying profit before taxation⁽²⁾ and underlying earnings per share⁽²⁾ reduced slightly, due to a higher net financial expense, including an increase in the non-cash interest charge relating to pensions

· Strong balance sheet

- Net borrowing of £155.8 million (2011: £50.7 million) reflects the expected outflow of working capital, primarily due to the rescaling of UK construction, and the acquisition of the Bouchier Group in Canada

- Over £1 billion of committed borrowing facilities and private placement funding

· Strong order book and record pipeline of contract opportunities

- £5.2 billion of new and probable orders in 2012

- Total order book plus probable orders of £18.1 billion (2011: £19.1 billion), with the reduction on 2011 due primarily to the sale of equity investments in Public Private Partnership (PPP) projects and the rescaling of UK construction

- 75% revenue visibility⁽³⁾ for 2013 (2011: 77% for 2012)

- Pipeline of contract opportunities worth some £35.2 billion (2011: £33.1 billion)

· Proposed full year dividend increased by 2% to 17.25p (2011: 16.9p)

(1)	Restated following the change in presentation of profits from the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).
(2)	The underlying results stated above are based on the definitions included in the key financial figures.
(3)	Based on expected revenue and secure and probable orders, which exclude variable work and re-bids.

Carillion Chairman, Philip Rogerson, commented:

"Carillion has continued to deliver a robust performance, with underlying earnings per share slightly ahead of the market consensus forecast. Having rescaled our UK construction activities, we have also further improved the risk profile and the overall quality of our business. Looking forward, we expect market conditions to remain challenging in 2013. However, with a resilient business model, a strong order book and a substantial pipeline of contract opportunities, the Group remains well positioned to achieve its targets of delivering annual growth in support services and of doubling annual revenues in the Middle East and in Canada, in each case to around £1 billion, in the five-year period from 2010 to 2015."

There will be a presentation for analysts and investors today at 08.30am. A telephone dial in facility (01296 311600) will be available for analysts and investors who are unable to attend the presentation. The presentation can be viewed on Carillion's website at www.carillionplc.com/investors/investors_presentations.asp. A replay facility is also available following the call on Toll Free UK: 0207 136 9233 - Access Code: 77830598# and Toll Free US: 1 +44 207 136 9233 - Access Code: 77830598#.

For further information contact:

Richard Adam, Group Finance Director

John Denning, Group Corporate Affairs Director

Finsbury - James Murgatroyd and Gordon Simpson

tel: +44 (0) 1902 422431

tel: +44 (0) 20 7251 3801

27 February 2013

Notes to Editors:

Carillion is a leading integrated support services company with a substantial portfolio of Public Private Partnership projects and extensive construction capabilities. The Group had annual revenue in 2012 of some £4.4 billion, employs around 40,000 people and operates across the UK, in the Middle East and Canada.

The Group has four business segments:

Support services - this includes facilities management, facilities services, energy services, utility services, road

maintenance, rail services and consultancy services.

Public Private Partnership (PPP) projects - this includes investing activities in PPP projects for Government buildings and infrastructure, mainly in the Defence, Health, Education, Transport and Secure accommodation sectors.

Middle East construction services - this includes building and civil engineering activities in the Middle East.

Construction services (excluding the Middle East) - this includes building, civil engineering and developments activities in the UK and construction activities in Canada.

This and other Carillion news releases can be found at www.carillionplc.com.

Photographs:

High resolution photographs are available free of charge to the media at www.newscast.co.uk telephone

+ 44 (0) 208 886 5895.

Cautionary statement

This announcement may contain indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the Group's results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently anticipated. No obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Key financial figures

		2012	2011 As restated⁽¹⁾	2011 Change from restated	2011 As previously reported
Income statement
Total revenue	£bn	4.4	5.1	-13%	5.1
Underlying profit from operations⁽²⁾	£m	232.4	227.4	+2%	215.9
Total Group underlying operating margin⁽³⁾	Percentage	5.7	4.9	n/a	4.7
Support services underlying operating margin⁽³⁾	Percentage	5.2	5.2	n/a	5.2
Middle East construction services underlying operating margin⁽³⁾	Percentage	6.1	8.9	n/a	8.9
Construction services (excluding the Middle East) underlying operating margin⁽³⁾	Percentage	5.6	3.1	n/a	3.1
Underlying profit before taxation⁽⁴⁾	£m	214.7	223.5	-4%	212.0
Profit before taxation	£m	179.5	142.8	+26%	142.8
Underlying earnings per share⁽⁵⁾	Pence	43.0	45.7	-6%	43.0
Basic earnings per share	Pence	37.2	32.0	+16%	32.0
Dividends
Proposed full year dividend per share	Pence	17.25	16.9	+2%	16.9
Underlying proposed dividend cover⁽⁵⁾	Times	2.5	2.7	n/a	2.5
Basic proposed dividend cover	Times	2.2	1.9	n/a	1.9
Cash flow statement
Cash generated from operations⁽⁶⁾	£m	97.9	255.5	-62%	230.3
Underlying profit from operations cash conversion	Percentage	42.1	112.4	n/a	106.7
Deficit pension contributions	£m	30.2	36.2	-17%	36.2
Balance sheet
Net borrowing	£m	(155.8)	(50.7)	-207%	(50.7)
Committed borrowing facility to 2016	£m	737.5	737.5	-	737.5
Private placement borrowings maturing between 2017 and 2024	£m	310.0	100.0	n/a	100.0
Net retirement benefit liability (net of taxation)	£m	269.9	229.3	+18%	229.3
Net assets	£m	1,009.5	982.5	+3%	982.5

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).
(2)	After Joint Ventures net financial expense of £16.0 million (2011: £18.8 million) and taxation charge of £1.7 million (2011: £3.5 million) and before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial information).
(3)	Before Joint Ventures net financial expense and taxation, intangible amortisation and non-recurring operating items (see note 3 to the financial information).
(4)	After Joint Ventures taxation charge of £1.7 million (2011: £3.5 million) and before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial information).
(5)	Before intangible amortisation, non-recurring operating items and non-operating items (see note 3 to the financial information).
(6)	Before pension deficit recovery payments and non-recurring operating items and after dividends received from Joint Ventures.

Summary results

Total revenue, including Joint Ventures, reduced to £4.4 billion (2011: £5.1 billion), primarily due to the planned rescaling of our UK construction business, which has been achieved by tightening the criteria we use to select the contracts for which we bid, to ensure that the size of this business remains aligned with the shrinking UK construction market. Furthermore, rescaling our UK construction activities has supported margins and improved the overall risk profile and quality of our business mix. Revenue contributions from the Middle East and Canada were also lower in 2012 due to the timing of our opportunities in those markets. However, we continue to believe that we can deliver strong medium-term growth in both the Middle East and Canada.

In our pre-close trading update on 12 December 2012, we announced that from 2012 onwards profits from the sale of equity investments in Public Private Partnership (PPP) projects would be treated as part of underlying profit, instead of non-operating profit, as this is consistent with the treatment now adopted by most of our industry. PPP equity sales made modest contributions to underlying profit from operations⁽¹⁾ of £11.5 million in 2011 and £13.2 million in 2012. Our 2011 results have been restated to reflect this change in treatment.

In 2012, underlying profit from operations⁽¹⁾ increased by two per cent to £232.4 million (2011: £227.4 million⁽²⁾). The total operating margin increased to 5.7 per cent (2011: 4.9 per cent⁽²⁾), as we continued to benefit from rescaling UK construction and our highly selective approach to the contracts for which we bid, together with an ongoing focus on cost management and operational efficiency. Underlying profit before taxation⁽¹⁾reduced by four per cent to £214.7 million (2011: £223.5 million⁽²⁾), due to a substantial increase in the Group's net financial expense to £17.7 million (2011: £3.9 million), including an increase in the interest charge relating to the Group's pension schemes. For the same reason, underlying earnings per share⁽¹⁾ reduced six per cent to 43.0 pence (2011: 45.7 pence⁽²⁾).

Reported profit before taxation increased by 26 per cent to £179.5 million (2011: £142.8 million) and basic earnings per share increased by 16 per cent to 37.2 pence (2011: 32.0 pence).

Carillion continues to have a strong balance sheet. Net borrowing at 31 December 2012 was £155.8 million (2011: £50.7 million), which reflected the expected outflow of working capital attendant on rescaling UK construction and the acquisition of the Bouchier Group in Canada. During 2012, the addition of a further £210 million of private placement funding took the Group's total bank facilities and private placement funding to over £1 billion.

(1)	The underlying results stated above are based on the definitions included in the key financial figures.
(2)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).

New order intake has remained strong with £5.2 billion of new and probable orders during the year. At 31 December 2012, the total value of the Group's order book plus probable orders, which exclude variable work and re-bids, was some £18.1 billion (2011: £19.1 billion), with the reduction due primarily to the sale of equity in Public Private Partnership projects and the rescaling of UK construction. The Group continues to have good revenue visibility, which is currently around 75 per cent of anticipated revenue in 2013 (2011: 77 per cent for 2012). At 31 December 2012, we had a pipeline of contract opportunities worth some £35.2 billion (2011: £33.1 billion), which continues to support our targets for growth.

The Board is recommending a final dividend of 11.85 pence per share (2011: 11.6 pence), making the total dividend for 2012 17.25 pence, an increase of two per cent on the 16.9 pence paid in respect of 2011.

Financial reporting segments and analysis

Operating profit by financial reporting segment

			Change from
	2012	2011⁽¹⁾	2011
	£m	£m	%
Support services	122.7	120.8	+2
Public Private Partnership projects	33.8	31.4	+8
Middle East construction services	29.0	49.1	-41
Construction services (excluding the Middle East)	72.4	57.9	+25
	257.9	259.2	-1
Group eliminations and unallocated items	(7.8)	(9.5)	+18
Profit from operations before Joint Ventures
net financial expense and taxation	250.1	249.7	-
Share of Joint Ventures net financial expense	(16.0)	(18.8)	+15
Share of Joint Ventures taxation	(1.7)	(3.5)	+51
Underlying profit from operations⁽²⁾	232.4	227.4	+2
Intangible amortisation	(31.4)	(31.0)	-1
Non-recurring operating items	(2.6)	(42.8)	+94

Reported profit from operations	198.4	153.6	+29

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).
(2)	After Joint Ventures net financial expense of £16.0 million (2011: £18.8 million) and taxation charge of £1.7 million (2011: £3.5 million) and before intangible amortisation and non-recurring operating items.

Support services

2012

£m

2011

£m

Change from

2011

Revenue

- Group

- Share of Joint Ventures

2,131.4

228.3

2,119.8

225.4

2,359.7

2,345.2

Underlying operating profit⁽³⁾

- Group

- Share of Joint Ventures

101.8

20.9

105.7

15.1

122.7

120.8

(3)	Before intangible amortisation and non-recurring operating items.

In this segment we report the results of our facilities management, facilities services, energy services, rail services, road maintenance, utility services and consultancy businesses in the UK, Canada and the Middle East.

Revenue in support services showed a marginal improvement with the expected reduction in revenue from Carillion Energy Services, due to contracts coming to an end, offset by organic growth in both the UK and Canada. Despite a high level of bidding activity and the associated costs and ongoing competitive market pressures, operating performance in this segment remained strong, with underlying operating profit also marginally ahead as we maintained our operating margin at 5.2 per cent.

New order intake in 2012 remained very healthy, with a substantial number of new contracts and contract extensions across all the sectors and geographies in which we operate, including several notable successes. In the UK, pressure on Local Authorities to reduce spending continues to create a substantial pipeline of opportunities as more Authorities look to outsource services to reduce costs and increase efficiency. In April 2012, Carillion was awarded a 10-year contract by Oxfordshire County Council to provide integrated property and facilities management services. This contract, which was the first of its kind to be let in the UK, is initially expected to be worth up to £700 million, but this could potentially increase significantly as the contract is extendable to 20 years. We also secured a 10-year strategic partnership with Lancashire County Council to deliver property services, initially worth up to £150 million, but again with the potential for this to increase substantially, as the contract provides for the scope of services to be expanded considerably. In November 2012, Carillion achieved financial close on the first major energy services contract that implements the provisions of the UK Government's "Green Deal" legislation, namely an eight-year contract for Birmingham City Council potentially worth up to some £1.5 billion.

In Canada, we won new contracts and successfully re-bid contracts for highways maintenance worth £525 million. In the Middle East, where we are seeing an increasing number of support services opportunities, we had two particularly notable successes, which together will nearly treble our support services revenue in the region - a highways maintenance contract in Qatar worth £36 million over three years, our first contract of this kind in the region, and our appointment as the preferred bidder for a facilities management contract for Petroleum Development Oman worth some £75 million over the initial contract period of three years, which is extendable to eight years.

Consequently, notwithstanding the in-sourcing of two contracts by customers, the value of our support services order book and probable orders was £13.1 billion at the year end (2011: £12.9 billion). This continues to provide good revenue visibility, which currently stands at 71 per cent⁽¹⁾ of expected revenue for 2013 (2011: 79 per cent for 2012). We have also maintained a strong pipeline of contract opportunities worth some £11.5 billion (2011: £12.3 billion), which supports our overall objective of delivering annual revenue growth in support services and our target of single digit growth in 2013.

(1)	Based on expected revenue and secure and probable orders, which excludes variable work and re-bids.

Public Private Partnership projects

	2012 £m	2011⁽¹⁾ £m	Change from 2011 %
Revenue - Group - Share of Joint Ventures	1.3 286.4	1.2 308.6
Revenue - Group - Share of Joint Ventures	287.7	309.8	-7
Underlying operating profit⁽²⁾ - Group - Share of Joint Ventures	17.3 16.5	14.2 17.2
	33.8	31.4	+8

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).
(2)	Before intangible amortisation and non-recurring operating items.

In this segment we report equity returns on investments in Public Private Partnership (PPP) projects in the UK and Canada, including those from the sale of equity investments.

Our integrated business model enables us to combine our capabilities in project finance, design, construction and life-time asset management, to win and deliver PPP projects in which we make equity investments and for which we also secure long-term support services contracts and good quality construction contracts. These support services and construction services contracts are reported in our support services and construction services (excluding the Middle East) segments, respectively.

Carillion has led the market in recycling equity investments, namely selling investments after projects have passed from construction into the operational phase and reinvesting the proceeds in new projects. Given the strength of our portfolio of financially closed projects and of our pipeline of project opportunities, we expect to continue recycling equity investments for the foreseeable future. Accordingly, and consistent with the treatment adopted by most of our industry, from 2012 onwards profit from selling PPP equity investments is being treated as part of underlying operating profit, rather than as non-operating profit.

Our portfolio of investments continued to perform well in 2012, in line with our target internal rate of return of 15 per cent. During the year we sold our equity investments in seven projects - the Cleadon Park Health Centre and the University of Hertfordshire, together with 90 per cent of our equity in the Durham, Nottingham, South Tyneside & Gateshead, Tameside and Wolverhampton Building Schools for the Future projects. These sales generated total gross proceeds of £34.8 million, which reflected an average discount rate of seven per cent, and an operating profit of £13.2 million.

Revenue reduced in 2012 as a result of selling equity investments in 2011 and 2012. Operating profit increased by eight per cent, because the £13.2 million of profit generated from equity sales in 2012 more than offset the equity returns no longer received from the investments sold. In 2011, equity sales generated £11.5 million of operating profit and the previously reported operating profit for 2011 of £19.9 million has been restated as £31.4 million to reflect this change in treatment.

At 31 December 2012, we had a portfolio of 23 financially closed projects in which we had invested £101.3 million (2011: £96.0 million) of equity, and in which we have commitments to invest a further £85.6 million. The Directors' valuation of existing investments in this portfolio at 31 December 2012, using a nine per cent discount rate, increased to £173 million (2011: £164 million). The value of our order book plus probable orders was approximately £2.2 billion at 31 December 2012 (2011: £2.8 billion), with the reduction on 2011 due to selling seven equity investments in 2012.

The outlook in this segment is positive, as our pipeline of contract opportunities has increased substantially to £1.6 billion (2011: £1.0 billion). In the UK, we are shortlisted for two projects - the Royal Liverpool Hospital project, in which we could invest up to £25 million of equity, and on which a preferred bidder decision is expected in the first half of 2013, and the M8 motorway improvements project, in which we could also invest up to £20 million. In Canada, which has a PPP programme with an estimated value of approximately C$60 billion, we are shortlisted for three projects - the Kingston Provident Care Centre and Hamilton Health Sciences, in Ontario, and North Island Hospital in Vancouver, British Columbia - in which we could invest up to £20 million. Furthermore, we aim to increase the number of projects for which we are shortlisted in Canada to up to seven during 2013, which will be the largest number of PPP projects that we have ever bid concurrently. In the UK, we expect the recent positive outcome of the Government's review of private finance to lead to a new pipeline of opportunities, notably in the education and defence sectors where Carillion has strong track records.

Middle East construction services

	2012 £m	2011 £m	Change from 2011 %
Revenue - Group - Share of Joint Ventures	261.4 212.2	218.9 330.0
Revenue - Group - Share of Joint Ventures	473.6	548.9	-14
Underlying operating profit⁽¹⁾ - Group - Share of Joint Ventures	13.8 15.2	13.9 35.2
	29.0	49.1	-41

(1)	Before intangible amortisation and non-recurring operating items.

In this segment we report the results of our building and civil engineering activities in the Middle East and North Africa.

As expected, full-year revenue reduced, despite a strong performance in the second-half of 2012 to deliver revenue of £272.0 million, which was significantly higher than first-half revenue of £201.6 million. Substantial fluctuations in revenue between accounting periods are not unusual in the Middle East, because the timing of project awards can have a significant effect on revenue, given our strategy is to focus on large projects for a small number of financially robust customers, for whom quality and reliability are paramount. Operating profit reduced, reflecting both lower revenue and a lower operating margin of 6.1 per cent (2011: 8.9 per cent), which is in line with the guidance we have been giving since 2010 that margins in this segment would reduce to around six per cent as negotiated contracts are replaced by contracts won through competitive tendering. The operating margin in 2011 also benefitted from favourable outturns on certain projects that reached completion in 2011 and this has not been repeated in 2012.

Although customer decisions on contract awards have been slower during 2012, we won a number of significant new contracts during the year. Notable successes in 2012 included a £113 million contract to build a mixed use development for the Oman Public Authority for Social Infrastructure, a £45 million infrastructure contract for EMAL (Emirates Aluminium) in Abu Dhabi, a £42 million contract to build the Sultan Qaboos Mosque at Nizwa for the Oman Royal Court Affairs, a £40 million contract to construct Sidab Harbour for the Royal Oman Police and a £35 million contract for the Al Baleed Resort Company in Oman.

The value of Carillion's share of the Middle East order book and probable orders was £0.8 billion at the year end (2011: £1.0 billion), which reflects the effect of the slow down in contract awards. Our pipeline of new contract opportunities of £11.4 billion (2011: £11.4 billion) includes opportunities in all the countries in which we currently operate, namely the UAE (Abu Dhabi and Dubai), Oman, Qatar and Egypt, and also in Saudi Arabia. In line with our strategy of geographical diversification, we have recently agreed a letter of intent to deliver our first major contract in Saudi Arabia. With revenue visibility for 2013 of 94 per cent⁽¹⁾ (2011: 70 per cent for 2012) and a strong pipeline of contract opportunities, we are confident of delivering double digit revenue growth in 2013 and of making progress towards our target of doubling our share of revenue in the Middle East to around £1 billion over the five year period from 2010 to 2015 at a margin of around six per cent.

(1)	Based on expected revenue and secure and probable orders, which exclude variable work and re-bids.

Construction services (excluding the Middle East)

	2012 £m	2011 £m	Change from 2011 %
Revenue - Group - Share of Joint Ventures	1,272.1 9.7	1,813.3 34.0
Revenue - Group - Share of Joint Ventures	1,281.8	1,847.3	-31
Underlying operating profit⁽²⁾ - Group - Share of Joint Ventures	73.0 (0.6)	54.4 3.5
	72.4	57.9	+25

(2)	Before intangible amortisation and non-recurring operating items.

In this segment we report the results of our UK building, civil engineering and developments businesses, together with those of our construction activities in Canada.

Our performance in this segment has continued to benefit from the swift action we took in 2010 to begin rescaling our UK business to ensure it remained aligned in size to the shrinking UK construction market. Revenue reduced, largely due to the effect of rescaling UK construction, but with operating profit increasing as a result of the margin improving to 5.6 per cent (2011: 3.1 per cent). The rescaling of our UK business has been achieved through tightening the criteria we use to select the contracts for which we bid in order to avoid low margin work and to focus increasingly on the delivery of integrated solutions for PPP projects and support services customers, and projects for other customers with whom we have long-term relationships.

In 2012, UK construction revenue was approximately £0.9 billion and we believe the process of rescaling is now largely complete. Our performance has continued to benefit from taking a highly selective approach to the contracts for which we bid, lower bid costs, a rigorous focus on cost management and positive settlements on contracts reaching completion. Clearly, some of these benefits arise only because we have been rescaling our UK business. But we believe our strategy has not only increased profitability during the period of rescaling, but created a stronger business, capable of delivering higher margins than the industry average, as we begin to target revenue growth going forward.

We won a number of significant new contracts in 2012, consistent with our selective approach. In the UK, these included contracts for the Highways Agency worth around £250 million to Carillion, including two major projects that were allocated funding in the Government's pre-budget statement, namely the A1(M) upgrade between Leeming and Barton and the A5-M1 link road scheme, which we are delivering with Joint Venture partners. In addition, we secured a £45 million contract to reconfigure Pier 5 at Gatwick Airport, a £42 million contract for Argent in Manchester and Academy Schools contracts worth over £40 million. Since the year end, Carillion has also been awarded a £115 million contract to upgrade the A465 in Wales.

As previously announced, we expected construction revenue in Canada to reduce and in 2012 it contributed some £0.4 billion of revenue to this segment (2011: £0.5 billion). In Canada, where we also apply strict contract selectivity criteria, a key element of our strategy for achieving strong medium-term growth is to win PPP projects. New PPP programmes, worth in total some C$60 billion, were launched in Canada towards the end of 2011 and bidding on PPP projects that form part of these programmes is now well underway and we have already been shortlisted for three projects, with a construction value to Carillion of some £0.5 billion. During 2013, we aim to increase the number of projects for which we are shortlisted to up to seven, as we continue to believe the strength of our PPP offering will play a key part in enabling us to achieve our objective of doubling total revenue in Canada to around £1 billion, in the five year period from 2010 to 2015.

At the year end, we had orders and probable orders in this segment worth some £2.0 billion (2011: £2.4 billion), with the reduction on 2011 primarily due to the rescaling of our UK business. Revenue visibility for 2013 is currently 72 per cent⁽¹⁾ (2011: 72 per cent for 2012). Encouragingly, our pipeline of contract opportunities at 31 December 2012 increased to £10.7 billion (2011: £8.4 billion), which not only includes significant opportunities in Canada, but also opportunities in the UK, especially over the medium term. In 2013 our target is to deliver single digit revenue growth in this segment, with our operating margin remaining above the industry average.

(1)	Based on expected revenue and secure and probable orders, which exclude variable work and re-bids.

Group income statement, cash flow and balance sheet items

Intangible amortisation

Intangible amortisation of £31.4 million (2011: £31.0 million) related to the amortisation of intangible assets primarily arising from the acquisitions of Eaga (since re-branded as Carillion Energy Services) in 2011, Alfred McAlpine in 2008 and Mowlem in 2006.

Non-recurring operating items

The non-recurring operating charge of £2.6 million (2011: £42.8 million) primarily related to a payment made to the Carillion Energy Services Employee Share Scheme in lieu of Carillion dividends waived by the Eaga Partnership Trusts of £2.6 million. The Eaga Partnership Trusts hold 3.9 per cent of Carillion's issued share capital, which they acquired as a result of Carillion's acquisition of Carillion Energy Services in 2011.

Non-operating items

The non-operating charge of £1.2 million (2011: £6.9 million⁽¹⁾), comprised £0.9 million of costs relating to the acquisition of the Bouchier Group and £0.3 million of costs associated with the closure and disposal of small non-core businesses.

Net financial expense

The Group's net financial expense of £17.7 million (2011: £3.9 million) comprised the following items: a net expense of £21.5 million (2011: £14.0 million) in respect of borrowings and other liabilities, with the increase compared to 2011 largely due to higher borrowings; a net interest charge in respect of defined benefit pension schemes of £3.6 million (2011: £3.2 million credit), with the movement due primarily to a reduction in the AA bond yield and interest received in respect of loans to PPP Joint Venture projects of £7.4 million (2011: £6.9 million).

Taxation

The underlying Group taxation charge⁽²⁾ of £23.5 million (2011: £27.8 million) when combined with a taxation charge on Joint Ventures of £1.7 million (2011: £3.5 million), represented an underlying effective tax rate⁽²⁾ of 12 per cent (2011: 14 per cent⁽¹⁾). This is significantly below the UK standard rate of corporation tax of 24.5 per cent for 2012, because our profits in the Middle East are subject to zero or low rates of tax, agreement of certain historic tax issues with HM Revenue and Customs and because we utilise carried forward tax losses in the UK that were largely inherited with the acquisitions of Mowlem, Alfred McAlpine and Carillion Energy Services. At 31 December 2012, the Group had £250 million of corporate tax losses (2011: £348 million) that are available to reduce future tax payments.

(1)	Restated following the change in presentation of profits from the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).
(2)	The underlying results stated above are based on the definitions included in the key financial figures.

Earnings per share

Underlying earnings per share⁽¹⁾ reduced by six per cent to 43.0 pence, compared with the restated figure for 2011 of 45.7 pence⁽²⁾. The weighted average number of shares in issue in 2012 was 430.1 million (2011: 420.9 million), with the increase due to the full-year effect of issuing 30.6 million of shares in respect of the acquisition of Carillion Energy Services in April 2011.

Dividend

Carillion has a progressive dividend policy that aims to increase the dividend per share broadly in line with growth in underlying earnings per share⁽¹⁾, subject to the investment needs of the business. The Board has recommended a final dividend of 11.85 pence per share for 2012, making the proposed full-year dividend 17.25 pence per share (2011: 16.9 pence per share), an increase of two per cent on the total paid in respect of 2011. The Board's decision to recommend an increase in the dividend, despite underlying earnings per share⁽¹⁾ in 2012 remaining unchanged on 2011 before restatement, and some six per cent lower than underlying earnings per share in 2011 after restatement, reflects the Board's confidence in the Group's resilience and ability to achieve its medium-term growth targets. Dividend cover based on the proposed full-year dividend of 17.25 pence per share and underlying earnings per share⁽¹⁾ is 2.5 times (2011: 2.7 times⁽²⁾).

(1)	The underlying results stated above are based on the definitions included in the key financial figures.

Cashflow
Summary of the Group's cash flow	2012 £m	2011⁽²⁾ £m
Underlying Group operating profit	198.1	178.7
Depreciation and other non-cash items	22.4	32.1
Working capital	(136.2)	5.1
Dividends received from Joint Ventures	13.6	39.6
Underlying cash inflow from operations	97.9	255.5
Deficit pension contributions	(30.2)	(36.2)
Rationalisation costs	(28.6)	(34.4)
Interest, tax and dividends	(87.2)	(77.1)
Net capital (expenditure)/income	(15.6)	4.6
Acquisitions and disposals	(32.6)	(276.6)
Other	(8.8)	(6.7)
Change in net borrowing	(105.1)	(170.9)
Net (borrowing)/cash at 1 January	(50.7)	120.2
Net borrowing at 31 December	(155.8)	(50.7)

(2)	Restated following the change in presentation of profits from the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).

Strong cash management remains a priority and this has been reflected in the Group's track record of consistently delivering cash-backed profit. However, as expected, this was not the case in 2012, when cash flow from operations represented 42 per cent of underlying profit from operations. This was primarily due to two previously announced reasons. First, when we announced our decision in 2010 to rescale our UK construction activities, we indicated that, while this would have significant overall benefits for the Group, it would also result in a substantial outflow of working capital, some £80 million of which occurred in 2012. Second, as we indicated when presenting our 2011 results, net borrowing at 31 December 2011 was some £50 million lower than we expected, because we received substantial payments from customers close to the year end. This resulted in a temporary reduction in net borrowing at 31 December 2011 that reversed early in 2012, adding some £50 million to the outflow of working capital in 2012. Adjusting for these two factors, underlying cash flow from operations was 98 per cent of underlying profit from operations.

Deficit recovery payments to the Group's pension funds of £30.2 million remain in line with the agreement reached in 2010 with the Trustees of the Group's main defined benefit schemes. The £28.6 million of rationalisation costs primarily relate to the integration of Carillion Energy Services. Interest, tax and dividend payments of £87.2 million included higher interest and dividends payable due to the acquisition of Carillion Energy Services. Net capital expenditure of £15.6 million included £18.3 million of capital investment, net of proceeds received from disposals of £2.7 million. Net payments of £32.6 million in respect of acquisitions and disposals primarily comprised net equity investments in Joint Ventures of £20.1 million and Bouchier acquisition related payments of £10.1 million.

The above items, together with other payments of £8.8 million, resulted in a change in net borrowing of £105.1 million, leaving the Group with net borrowing of £155.8 million at 31 December 2012 (2011: £50.7 million).

Balance sheet
Summary of the Group's balance sheet	2012 £m	2011 £m
Property, plant and equipment	127.1	134.2
Intangible assets	1,540.1	1,547.6
Investments	237.9	210.9
	1,905.1	1,892.7
Inventories, receivables and payables	(460.6)	(607.4)
Net retirement benefit liability (net of tax)	(269.9)	(229.3)
Other	(9.3)	(22.8)
Net operating assets	1,165.3	1,033.2
Net borrowing	(155.8)	(50.7)
Net assets	1,009.5	982.5

Average net borrowing

(344.1)

(218.9)⁽¹⁾

(1)	Post-acquisition of Carillion Energy Services

There are three notable movements in the table above. First, the movement in inventories, receivables and payables, which reflected the movement in working capital described in the commentary on the summary cash flow statement above. Second, the increase in the Group's net retirement benefit liability, which was primarily due to a reduction in the AA bond yield, which is used as the discount rate in calculating retirement scheme obligations. Third, the increase in average net borrowing, which is largely due to the working capital movement described in the commentary on the summary cash flow statement above.

Acquisition of the Bouchier Group

The Group acquired a 49 per cent interest in the Bouchier Group, a support services company in Canada, on 11 December 2012 for a cash consideration of £23.8 million. The consideration will be paid in instalments over the period to January 2014, with instalments adjusted to ensure that the acquisition is completed on a debt free, cash free basis. Following a provisional assessment of the fair value of assets and liabilities at the acquisition date, goodwill arising on this acquisition amounted to £20.8 million. The Group has options to acquire the remaining 51 per cent of the Bouchier Group over the next 10 years. The Bouchier Group is being consolidated as a subsidiary on the basis of the terms of these options and the powers granted as a shareholder which enable Carillion management to exert control.

Committed bank facilities and private placements

The Group has committed bank facilities and private placement funds of £1,062.5 million. This comprises a £737.5 million syndicated five-year facility maturing in March 2016 and a £15.0 million 364-day facility, together with borrowing of £310 million under three private placements: a £100 million placement that commenced in August 2011, comprising a £49 million seven-year facility at 4.38 per cent per annum and a £51 million 10-year facility at 5.1 per cent per annum; a £35 million placement in August 2012 split equally between seven year and 10 year notes at 3.6 per cent and 4.2 per cent respectively; and a £175 million placement that commenced in November 2012, comprising a £15 million five-year facility at 3.5 per cent per annum, a £50 million seven-year facility at 4.3 per cent per annum, a £88 million 10-year facility at 4.9 per cent per annum and a £22 million 12-year facility at 5.0 per cent per annum.

Funding and liquidity

In addition to Carillion plc's principal borrowing facilities described above, money market and short-term overdraft facilities are available to Carillion plc and certain subsidiaries. Operating and finance leases are also employed to fund longer-term assets. The quantum of committed borrowing facilities available to the Group is regularly reviewed by the Carillion Board and is designed to satisfy the requirements of the Group's business plan. At 31 December 2012, the Group had undrawn committed facilities amounting to £288.6 million (2011: £356.1 million). This excludes the Group's share of cash balances amounting to £49.4 million (2011: £94.2 million) within jointly controlled operations, which are outside of the Group's facilities.

Foreign exchange

The average and year-end exchange rates used to translate the Group's overseas operations were as follows:

£sterling	Average		Year End
	2012	2011	2012	2011
Middle East (US Dollar)	1.59	1.61	1.63	1.55
Oman (Rial)	0.61	0.62	0.63	0.60
UAE (Dirham)	5.84	5.90	5.97	5.71
Canada (Dollar)	1.59	1.58	1.62	1.58

Operational and financial risk management

Carillion has rigorous policies and processes in place to identify, mitigate and manage strategic risks and those specific to individual businesses and contracts, including economic, social, environmental and ethical risks. The Group's risk management policies and processes, together with the principal operational and financial risks to our UK and overseas operations and the measures being taken to mitigate and manage them, will be described in detail in our 2012 Annual Report and Accounts, which will be published in March 2013. The Board regularly reviews the risks facing the Group to ensure they are up-to-date and the appropriate measures are in place to mitigate and manage them. In summary, the Group's principal risks are as follows: continuing to win work in our existing and new markets and geographies, managing our pension schemes effectively, delivering major contracts successfully, selecting good quality joint venture and supply chain partners, attracting, developing and retaining excellent people by being an employer of choice and maintaining high standards of performance in respect of Health and Safety and other regulatory requirements.

Outlook and prospects

Looking forward, we expect market conditions to remain challenging in 2013. However, with a resilient business model, a strong order book and a substantial pipeline of contract opportunities, the Group remains well positioned to achieve its targets of delivering annual growth in support services and of doubling annual revenues in the Middle East and in Canada, in each case to around £1 billion, in the five-year period from 2010 to 2015.

Consolidated income statement for the year ended 31 December 2012
	Note	2012 £m	2011⁽¹⁾ £m
Total revenue		4,402.8	5,051.2
Less: Share of jointly controlled entities' revenue		(736.6)	(898.0)
Group revenue	2	3,666.2	4,153.2
Cost of sales		(3,279.4)	(3,761.8)
Gross profit		386.8	391.4
Administrative expenses		(235.9)	(298.0)
Profit on disposal of Public Private Partnership equity investments		13.2	11.5
Group operating profit		164.1	104.9
Analysed between:
Group operating profit before intangible amortisation and non-recurring operating items		198.1	178.7
Intangible amortisation⁽²⁾		(31.4)	(31.0)
Non-recurring operating items⁽³⁾	3	(2.6)	(42.8)
Share of results of jointly controlled entities	2	34.3	48.7
Analysed between:
Operating profit		52.0	71.0
Net financial expense		(16.0)	(18.8)
Taxation		(1.7)	(3.5)
Profit from operations		198.4	153.6
Analysed between:
Profit from operations before intangible amortisation and non-recurring operating items		232.4	227.4
Intangible amortisation⁽²⁾		(31.4)	(31.0)
Non-recurring operating items⁽³⁾	3	(2.6)	(42.8)
Non-operating items	3	(1.2)	(6.9)
Net financial expense	4	(17.7)	(3.9)
Analysed between:
Financial income		115.3	132.0
Financial expense		(133.0)	(135.9)
Profit before taxation		179.5	142.8
Analysed between:
Profit before taxation, intangible amortisation, non-recurring operating items and non-operating items		214.7	223.5
Intangible amortisation⁽²⁾		(31.4)	(31.0)
Non-recurring operating items⁽³⁾	3	(2.6)	(42.8)
Non-operating items	3	(1.2)	(6.9)
Taxation	5	(13.3)	(4.8)
Profit for the year		166.2	138.0
Profit attributable to:
Equity holders of the parent		160.1	134.6
Non-controlling interests		6.1	3.4
Profit for the year		166.2	138.0
Earnings per share	6
Basic		37.2p	32.0p
Diluted		37.0p	31.8p

(1) Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).

(2) Arising from business combinations.

(3) This includes integration and rationalisation costs and Eaga Partnership Trusts related charges (see note 3).

Consolidated statement of comprehensive income for the year ended 31 December 2012
	2012		2011
	£m	£m	£m	£m
Profit for the year		166.2		138.0
Net gain on hedge of net investment in foreign operations	1.5		0.1
Currency translation differences on foreign operations	(8.8)		1.9
Movement in fair value of cash flow hedging derivatives	(7.1)		-
Reclassification of effective portion of cash flow hedging derivatives to profit	2.1		-
Increase in fair value of available for sale assets	4.9		5.0
Actuarial losses on defined benefit pension schemes	(73.4)		(96.6)
	(80.8)		(89.6)
Taxation in respect of the above	11.4		20.0
Share of recycled cash flow hedges within jointly controlled entities (net of taxation)	10.4		13.4
Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation)	(3.2)		(13.3)

Other comprehensive expense for the year		(62.2)		(69.5)
Total comprehensive income for the year		104.0		68.5

Attributable to:
Equity holders of the parent		97.9		65.1
Non-controlling interests		6.1		3.4
		104.0		68.5

Consolidated statement of changes in equity

for the year ended 31 December 2012

	Share capital £m	Share premium £m	Translation reserve £m	Hedging reserve £m	Fair value reserve £m	Merger reserve £m	Retained earnings £m	Equity shareholders' funds £m	Non-controlling interests £m	Total equity £m

At 1 January 2012	215.1	21.2	(16.1)	(23.7)	10.9	464.6	300.9	972.9	9.6	982.5
Comprehensive income
Profit for the year	-	-	-	-	-	-	160.1	160.1	6.1	166.2
Other comprehensive income
Net gain on hedge of net investment in foreign operations	-	-	1.5	-	-	-	-	1.5	-	1.5
Currency translation differences on foreign operations	-	-	(8.8)	-	-	-	-	(8.8)	-	(8.8)
Movement in fair value of cash flow hedging derivatives	-	-	-	(7.1)	-	-	-	(7.1)	-	(7.1)
Reclassification of effective portion of cash flow hedging derivatives to profit	-	-	-	2.1	-	-	-	2.1	-	2.1
Increase in fair value of available for sale assets	-	-	-	-	4.9	-	-	4.9	-	4.9
Actuarial losses on defined benefit pension schemes	-	-	-	-	-	-	(73.4)	(73.4)	-	(73.4)
Taxation	-	-	(0.4)	-	-	-	11.8	11.4	-	11.4
Share of recycled cash flow hedges within jointly controlled entities (net of taxation)	-	-	-	10.4	-	-	-	10.4	-	10.4
Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation)	-	-	-	(3.2)	-	-	-	(3.2)	-	(3.2)
Transfer between reserves	-	-	-	-	-	(31.4)	31.4	-	-	-
Total comprehensive income/(expense)	-	-	(7.7)	2.2	4.9	(31.4)	129.9	97.9	6.1	104.0
Transactions with owners
Contributions by and distributions to owners
Acquisition of own shares	-	-	-	-	-	-	(3.0)	(3.0)	-	(3.0)
Equity settled transactions (net of taxation)	-	-	-	-	-	-	2.3	2.3	-	2.3
Cash settlement of vested equity settled transactions	-	-	-	-	-	-	(0.8)	(0.8)	-	(0.8)
Dividends paid	-	-	-	-	-	-	(70.4)	(70.4)	(8.2)	(78.6)
Non-controlling interests acquired	-	-	-	-	-	-	-	-	3.1	3.1
Total transactions with owners	-	-	-	-	-	-	(71.9)	(71.9)	(5.1)	(77.0)

At 31 December 2012	215.1	21.2	(23.8)	(21.5)	15.8	433.2	358.9	998.9	10.6	1,009.5

Consolidated statement of changes in equity

for the year ended 31 December 2011

	Share capital £m	Share premium £m	Translation reserve £m	Hedging reserve £m	Fair value reserve £m	Merger reserve £m	Retained earnings £m	Equity shareholders' funds £m	Non-controlling interests £m	Total equity £m

At 1 January 2011	199.8	21.2	(18.1)	(23.8)	5.9	393.1	277.5	855.6	9.6	865.2
Comprehensive income
Profit for the year	-	-	-	-	-	-	134.6	134.6	3.4	138.0
Other comprehensive income
Net gain on hedge of net investment in foreign operations	-	-	0.1	-	-	-	-	0.1	-	0.1
Currency translation differences on foreign operations	-	-	1.9	-	-	-	-	1.9	-	1.9
Increase in fair value of available for sale assets	-	-	-	-	5.0	-	-	5.0	-	5.0
Actuarial losses on defined benefit pension schemes	-	-	-	-	-	-	(96.6)	(96.6)	-	(96.6)
Taxation	-	-	-	-	-	-	20.0	20.0	-	20.0
Share of recycled cash flow hedges within jointly controlled entities (net of taxation)	-	-	-	13.4	-	-	-	13.4	-	13.4
Share of change in fair value of effective cash flow hedges within jointly controlled entities (net of taxation)	-	-	-	(13.3)	-	-	-	(13.3)	-	(13.3)
Transfer between reserves	-	-	-	-	-	(30.9)	30.9	-	-	-
Total comprehensive income/(expense)	-	-	2.0	0.1	5.0	(30.9)	88.9	65.1	3.4	68.5
Transactions with owners
Contributions by and distributions to owners
Share capital issued on acquisition of Eaga plc	15.3	-	-	-	-	102.4	-	117.7	-	117.7
Acquisition of own shares	-	-	-	-	-	-	(6.9)	(6.9)	-	(6.9)
Equity settled transactions (net of taxation)	-	-	-	-	-	-	6.0	6.0	-	6.0
Dividends paid	-	-	-	-	-	-	(64.6)	(64.6)	(3.4)	(68.0)
Total transactions with owners	15.3	-	-	-	-	102.4	(65.5)	52.2	(3.4)	48.8

At 31 December 2011	215.1	21.2	(16.1)	(23.7)	10.9	464.6	300.9	972.9	9.6	982.5

Consolidated balance sheet

as at 31 December 2012

	Note	2012 £m	2011 £m
Non-current assets
Property, plant and equipment		127.1	134.2
Intangible assets		1,540.1	1,547.6
Retirement benefit assets		0.7	-
Investments in jointly controlled entities		176.4	159.6
Other investments		61.5	51.3
Deferred tax assets		121.4	137.6
Total non-current assets		2,027.2	2,030.3
Current assets
Inventories		55.3	71.6
Trade and other receivables		1,108.7	1,094.6
Cash and cash equivalents	9	657.1	490.7
Derivative financial instruments		0.4	-
Current asset investments		2.5	4.3
Income tax receivable		10.8	7.7
Total current assets		1,834.8	1,668.9
Total assets		3,862.0	3,699.2
Current liabilities
Borrowing		(35.3)	(32.5)
Derivative financial instruments		(7.1)	(0.9)
Trade and other payables		(1,615.2)	(1,773.6)
Provisions		(27.0)	(45.8)
Income tax payable		(3.8)	(4.4)
Total current liabilities		(1,688.4)	(1,857.2)
Non-current liabilities
Borrowing		(777.6)	(508.9)
Other payables		(9.4)	-
Retirement benefit liabilities		(351.7)	(305.8)
Deferred tax liabilities		(16.2)	(25.5)
Provisions		(9.2)	(19.3)
Total non-current liabilities		(1,164.1)	(859.5)
Total liabilities		(2,852.5)	(2,716.7)
Net assets	2	1,009.5	982.5
Equity
Share capital	12	215.1	215.1
Share premium		21.2	21.2
Translation reserve		(23.8)	(16.1)
Hedging reserve		(21.5)	(23.7)
Fair value reserve		15.8	10.9
Merger reserve		433.2	464.6
Retained earnings		358.9	300.9
Equity attributable to shareholders of the parent		998.9	972.9
Non-controlling interests		10.6	9.6
Total equity		1,009.5	982.5

Consolidated cash flow statement

For the year ended 31 December 2012

	Note	2012 £m	2011⁽¹⁾ £m
Cash flows from operating activities
Group operating profit		164.1	104.9
Depreciation and amortisation		62.2	62.3
Loss on disposal of property, plant and equipment		1.6	0.6
Profit on disposal of Public Private Partnership equity investments		(13.2)	(11.5)
Other non-cash movements		(10.0)	0.2
Non-recurring operating items		2.6	42.8

Operating profit before changes in working capital		207.3	199.3
Decrease in inventories		15.2	19.7
(Increase)/decrease in trade and other receivables		(36.6)	53.3
Decrease in trade and other payables		(143.5)	(81.6)

Cash generated from operations before pension deficit recovery payments, rationalisation costs and Eaga Partnership Trusts related charges		42.4	190.7
Deficit recovery payments to pension schemes		(30.2)	(36.2)
Rationalisation costs		(28.6)	(34.4)
Eaga Partnership Trusts related charges		-	(0.6)

Cash (used in)/generated from operations		(16.4)	119.5
Financial income received		15.8	16.0
Financial expense paid		(27.3)	(21.3)
Acquisition costs		(0.6)	(7.2)
Taxation receipts/(payments)		2.9	(3.8)

Net cash flows from operating activities		(25.6)	103.2

Cash flows from investing activities
Disposal of property, plant and equipment		2.7	17.2
Disposal of jointly controlled entity and other investments	11	45.9	31.4
Dividends received from jointly controlled entities		13.6	39.6
Disposal and closure of businesses		(3.8)	(1.9)
Decrease in current asset investments		1.8	3.7
Acquisition of subsidiaries, net of cash acquired		(4.9)	(182.7)
Acquisition of intangible assets		(3.7)	(2.8)
Acquisition of property, plant and equipment		(14.6)	(9.8)
Acquisition of equity in and net loan advances to jointly controlled entities		(19.7)	(27.6)
Acquisition of other non-current asset investments		(3.0)	(3.4)

Net cash flows from investing activities		14.3	(136.3)

Cash flows from financing activities
Draw down of bank and other loans		277.2	223.0
Payment of finance lease liabilities		(16.8)	(15.8)
Acquisition of own shares		(3.0)	(6.9)
Payment to employees in settlement of share options		(0.8)	(1.8)
Dividends paid to equity holders of the parent		(70.4)	(64.6)
Dividends paid to non-controlling interests		(8.2)	(3.4)

Net cash flows from financing activities		178.0	130.5

Increase in net cash and cash equivalents		166.7	97.4
Net cash and cash equivalents at 1 January		487.7	391.1
Effect of exchange rate fluctuations on net cash and cash equivalents		(2.2)	(0.8)
Net cash and cash equivalents at 31 December	9	652.2	487.7

1 Basis of preparation

Carillion plc (the 'Company') is a company domiciled and incorporated in the United Kingdom (UK). The condensed consolidated financial statements of the Company for the year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in jointly controlled entities.

The Group's financial statements have been approved by the Directors and prepared in accordance with International Financial Reporting Standards as adopted by the European Union. There have been no significant changes in accounting policies or any material impact on the Group arising from the adoption of new accounting standards and interpretations in 2012. The following accounting standards and interpretations, which are not yet effective and have not been early adopted by the Group, will be adopted in future accounting periods:

- International Financial Reporting Standard (IFRS) 9 'Financial instruments'

- International Financial Reporting Standard (IFRS) 10 'Consolidated financial statements'

- International Financial Reporting Standard (IFRS) 11 'Joint arrangements'

- International Financial Reporting Standard (IFRS) 12 'Disclosure of interests in other entities'

- International Financial Reporting Standard (IFRS) 13 'Fair value measurement'

- Amendment to International Accounting Standard (IAS) 19 'Employee benefits'

The amendment to IAS 19 makes significant changes to the recognition and measurement of the defined benefit pension expense and termination benefits and disclosures relating to all employee benefits. The amendment is effective for accounting periods commencing on 1 January 2013 and it is anticipated that the total pension cost relating to defined benefit schemes recognised in the income statement in 2013 will be approximately £28 million on a revised IAS 19 basis. In 2013, comparative information for 2012 will be restated on a revised IAS 19 basis, which will lead to an increase of £14.7 million in the reported 2012 total pension cost to £24.2 million.

None of the other standards noted above are expected to have a material impact on the Group.

In 2012, profit from the disposal of equity investments in Public Private Partnership projects has been presented within Group operating profit in the income statement in recognition of the recurring nature of the disposals and to align the Group with current practice within the industry. Previously, such profits were presented within non-operating items. Comparative information has been restated accordingly as disclosed in note 14.

The financial information set out herein (which was approved by the Board on 27 February 2013) does not constitute the Company's statutory accounts for the years ended 31 December 2012 and 2011 but is derived from the 2012 statutory accounts.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement itself does not contain sufficient information to comply with IFRS. The Company will make available the full financial statements that comply with IFRS by 31 March 2013.

The statutory accounts for the year ended 31 December 2011 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 2012 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified, did not include references to any matter which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The Group's business activities, together with the factors likely to affect its future development, performance and position are described in the Annual Report on pages 2-35. The Group has considerable financial resources, including a £737.5 million committed syndicated facility expiring in March 2016 and £310.0 million of private placement notes expiring between 2017 and 2024. The Group has long-term contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The Directors confirm that, after making enquiries, they have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements for the year ended 31 December 2012.

2 Segmental reporting

Segment information is presented in respect of the Group's strategic operating segments. The operating segment reporting format reflects the differing economic characteristics and nature of the services provided by the Group and is the basis on which strategic operating decisions are made by the Group Chief Executive, who is the Group's chief operating decision maker.

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, except finance items and income tax.

Operating segments

The Group is comprised of the following main operating segments:

Support services

In this segment we report the results of our facilities management, facilities services, energy services, road maintenance, rail services, utilities services and consultancy businesses.

Public Private Partnership projects

In this segment we report the equity returns on our investing activities in Public Private Partnership projects for Government buildings and infrastructure, mainly in the defence, health, education, transport and secure accommodation sectors.

Middle East construction services

In this segment we report the results of our building and civil engineering activities in the Middle East and North Africa.

Construction services (excluding the Middle East)

In this segment we report the results of our UK building, civil engineering and developments businesses and our construction activities in Canada.

Segmental revenue and profit

2012

2011⁽¹⁾

	Revenue	Operating profit before intangible amortisation and non-recurring operating items	Revenue	Operating profit before intangible amortisation and non-recurring operating items
	£m	£m	£m	£m
Support services
Group	2,131.4	101.8	2,119.8	105.7
Share of jointly controlled entities	228.3	20.9	225.4	15.1
	2,359.7	122.7	2,345.2	120.8
Inter-segment	87.3	-	75.2	-

Total	2,447.0	122.7	2,420.4	120.8

Public Private Partnership projects
Group	1.3	17.3	1.2	14.2
Share of jointly controlled entities	286.4	16.5	308.6	17.2
	287.7	33.8	309.8	31.4
Inter-segment	-	-	-	-

Total	287.7	33.8	309.8	31.4

Middle East construction services
Group	261.4	13.8	218.9	13.9
Share of jointly controlled entities	212.2	15.2	330.0	35.2
	473.6	29.0	548.9	49.1
Inter-segment	-	-	-	-

Total	473.6	29.0	548.9	49.1

Construction services (excluding the Middle East)
Group	1,272.1	73.0	1,813.3	54.4
Share of jointly controlled entities	9.7	(0.6)	34.0	3.5
	1,281.8	72.4	1,847.3	57.9
Inter-segment	3.2	-	0.4	-

Total	1,285.0	72.4	1,847.7	57.9

Group eliminations and unallocated items	(90.5)	(7.8)	(75.6)	(9.5)

Consolidated
Group	3,666.2	198.1	4,153.2	178.7
Share of jointly controlled entities	736.6	52.0	898.0	71.0

Total	4,402.8	250.1	5,051.2	249.7

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).

Reconciliation of operating segment results to reported results

	2012 £m	2011⁽¹⁾ £m
Group and share of jointly controlled entities' operating
profit before intangible amortisation and non-recurring operating items	250.1	249.7
Net financial expense
- Group	(17.7)	(3.9)
- Share of jointly controlled entities	(16.0)	(18.8)
Share of jointly controlled entities' taxation	(1.7)	(3.5)
Underlying profit before taxation	214.7	223.5
Intangible amortisation⁽²⁾	(31.4)	(31.0)
Non-recurring operating items⁽²⁾	(2.6)	(42.8)
Non-operating items⁽²⁾	(1.2)	(6.9)
Profit before taxation	179.5	142.8
Taxation	(13.3)	(4.8)
Profit for the year	166.2	138.0

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).
(2)	Intangible amortisation, non-recurring operating items and non-operating items arise in the following segments:

				2012	2011⁽¹⁾
	Intangible amortisation £m	Non-recurring operating items £m	Non-operating items £m			Intangible amortisation £m	Non-recurring operating items £m	Non-operating items £m




Support services	(28.4)	(2.6)	(1.2)			(26.1)	(40.6)	(4.3)
Construction services (excluding the Middle East)	(3.0)	-	-			(4.9)	(2.2)	(2.6)

Total	(31.4)	(2.6)	(1.2)			(31.0)	(42.8)	(6.9)

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).

Depreciation and amortisation and capital expenditure arise in the following segments:

	2012		2011
	Depreciation and amortisation £m	Capital expenditure £m	Depreciation and amortisation £m	Capital expenditure £m
Support services	(40.7)	(13.6)	(40.3)	(4.1)
Middle East construction services	(2.0)	(1.1)	(2.1)	(1.1)
Construction services (excluding the Middle East)	(4.0)	(0.5)	(6.4)	(0.4)
Unallocated Group items	(15.5)	(12.1)	(13.5)	(7.8)

Total	(62.2)	(27.3)	(62.3)	(13.4)

Segmental net assets

				2012	2011
	Operating assets £m	Operating liabilities £m	Net operating assets/ (liabilities) £m			Operating assets £m	Operating liabilities £m	Net operating assets/ (liabilities) £m
Support services
Intangible assets ⁽¹⁾	1,261.3	-	1,261.3			1,268.9	-	1,268.9
Operating assets	626.7	-	626.7			610.0	-	610.0
Investments	9.8	-	9.8			11.6	-	11.6
Total operating assets	1,897.8	-	1,897.8			1,890.5	-	1,890.5
Total operating liabilities	-	(587.0)	(587.0)			-	(622.1)	(622.1)
Net operating assets/(liabilities)	1,897.8	(587.0)	1,310.8			1,890.5	(622.1)	1,268.4
Public Private Partnership projects
Operating assets	6.8	-	6.8			7.9	-	7.9
Investments	112.1	-	112.1			93.2	-	93.2
Total operating assets	118.9	-	118.9			101.1	-	101.1
Total operating liabilities	-	(17.8)	(17.8)			-	(9.6)	(9.6)
Net operating assets/(liabilities)	118.9	(17.8)	101.1			101.1	(9.6)	91.5
Middle East construction services
Operating assets	263.4	-	263.4			226.5	-	226.5
Investments	73.0	-	73.0			57.3	-	57.3
Total operating assets	336.4	-	336.4			283.8	-	283.8
Total operating liabilities	-	(260.6)	(260.6)			-	(224.8)	(224.8)
Net operating assets/(liabilities)	336.4	(260.6)	75.8			283.8	(224.8)	59.0
Construction services (excluding the Middle East)
Intangible assets ⁽¹⁾	261.2	-	261.2			264.5	-	264.5
Operating assets	363.5	-	363.5			425.4	-	425.4
Investments	43.0	-	43.0			48.8	-	48.8
Total operating assets	667.7	-	667.7			738.7	-	738.7
Total operating liabilities	-	(798.2)	(798.2)			-	(928.2)	(928.2)
Net operating assets/(liabilities)	667.7	(798.2)	(130.5)			738.7	(928.2)	(189.5)
Consolidated before Group items
Intangible assets ⁽¹⁾	1,522.5	-	1,522.5			1,533.4	-	1,533.4
Operating assets	1,260.4	-	1,260.4			1,269.8	-	1,269.8
Investments	237.9	-	237.9			210.9	-	210.9
Total operating assets	3,020.8	-	3,020.8			3,014.1	-	3,014.1
Total operating liabilities	-	(1,663.6)	(1,663.6)			-	(1,784.7)	(1,784.7)
Net operating assets/(liabilities) before Group items	3,020.8	(1,663.6)	1,357.2			3,014.1	(1,784.7)	1,229.4

Group items
Deferred tax asset/(liabiities)	121.4	(16.2)	105.2			137.6	(25.5)	112.1
Net cash/(borrowing)	657.1	(812.9)	(155.8)			490.7	(541.4)	(50.7)
Retirement benefits (gross of taxation)	0.7	(351.7)	(351.0)			-	(305.8)	(305.8)
Income tax	10.8	(3.8)	7.0			7.7	(4.4)	3.3
Other	51.2	(4.3)	46.9			49.1	(54.9)	(5.8)

Net assets/(liabilities)	3,862.0	(2,852.5)	1,009.5			3,699.2	(2,716.7)	982.5

(1) Arising from business combinations.

Geographic information - by origin

	2012 £m	2011 £m
United Kingdom
Total revenue from external customers	3,247.9	3,664.0
Less: share of jointly controlled entities' revenue	(394.6)	(386.7)
Group revenue from external customers	2,853.3	3,277.3

Non-current assets	1,586.7	1,628.8

Middle East and North Africa
Total revenue from external customers	487.1	561.3
Less: share of jointly controlled entities' revenue	(225.7)	(342.4)
Group revenue from external customers	261.4	218.9

Non-current assets	78.1	66.7

Canada
Total revenue from external customers	650.9	782.3
Less: share of jointly controlled entities' revenue	(116.3)	(147.4)
Group revenue from external customers	534.6	634.9

Non-current assets	178.8	145.9

Rest of the World
Total revenue from external customers	16.9	43.6
Less: share of jointly controlled entities' revenue	-	(21.5)
Group revenue from external customers	16.9	22.1

Non-current assets	-	-

Consolidated
Total revenue from external customers	4,402.8	5,051.2
Less: share of jointly controlled entities' revenue	(736.6)	(898.0)
Group revenue from external customers	3,666.2	4,153.2

Non-current assets

Total of geographic analysis above	1,843.6	1,841.4
Retirement benefit assets	0.7	-
Other investments	61.5	51.3
Deferred tax assets	121.4	137.6
Total non-current assets	2,027.2	2,030.3

Revenue from the Group's major customer, the UK Government, is shown below:

Support services

£m

Public Private Partnership projects

£m

Construction services (excluding the Middle East)

£m

Total

£m

2012

924.1

175.4

990.1

2,089.6

2011

920.4

188.3

1,499.7

2,608.4

3 Non-recurring operating and non-operating items

Non-recurring operating items	2012 £m	2011 £m
Integration and rationalisation costs	-	(40.0)
Eaga Partnership Trusts related charges	(2.6)	(2.8)
	(2.6)	(42.8)

The Group operates a Share Incentive Plan (SIP) under which qualifying Carillion Energy Services partners may receive free shares. The Eaga Partnership Trusts (EPT) waived part of its entitlement to the 2011 final dividend and all of its entitlement to the 2012 interim dividend paid during the year amounting to £2.6 million. This £2.6 million has been used to satisfy UK SIP awards which vest immediately. These awards give rise to a charge under International Financial Reporting Standard 2 'Share-based payment' of £2.6 million. The Group is not committed to make any awards under the SIP in excess of those funded by the EPT. Where the award of shares under the SIP is fully funded by the waiver of dividends by the EPT, there is no material net impact on the net debt or net assets of the Group over the contractual life of the plan compared to if the EPT had not waived its dividends. As this charge has arisen from the decision by the EPT to waive its entitlement to dividends and is outside of the control of the normal operating parameters of the Group, the charge is classified as a non-recurring operating item.

Integration and rationalisation costs of £40.0 million in 2011 primarily relates to redundancy and property exit costs arising from a review of the Group's requirements following the acquisition of Carillion Energy Services including relatively modest costs associated with focusing the Canadian construction services business on the growing Public Private Partnership market in the region.

An income tax credit of £0.6 million (2011: £11.9 million) relating to the above has been included within taxation in the income statement.

Non-operating items	2012 £m	2011⁽¹⁾ £m
Profit on disposal of jointly controlled entities	-	3.8
Acquisition costs	(0.9)	(7.5)
Closure and disposal of non-core businesses	(0.3)	(3.2)
	(1.2)	(6.9)

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).

In 2011, the Group disposed of a small jointly controlled entity in the Netherlands. The disposal generated a cash consideration of £6.9 million (before disposal costs of £0.7 million) and a non-operating profit of £3.8 million. There is no income tax associated with this profit.

Acquisition costs in 2012 of £0.9 million relate to adviser costs incurred in relation to the Bouchier Group acquisition contract and due diligence procedures. Acquisition costs in 2011 of £7.5 million relate to adviser costs incurred in relation to the Carillion Energy Services acquisition contracts and due diligence procedures. An income tax credit of nil (2011: £0.6 million) has been included in the income statement in respect of these costs.

In 2012 costs of £0.3 million have arisen on the disposal and closure of a number of non-core businesses. In 2011, a number of small non-core businesses were also closed at a cost of £3.2 million. An income tax credit of £0.3 million (2011: £0.6 million) has been included in the income statement in respect of these costs.

4 Financial income and expense

	2012 £m	2011 £m
Financial income
Bank interest receivable	0.4	1.6
Other interest receivable	14.9	14.4
Expected return on retirement plan assets	100.0	116.0
	115.3	132.0
Financial expense
Interest payable on bank loans and overdrafts	(11.5)	(9.6)
Other interest payable and similar charges	(17.9)	(13.5)
Interest cost on retirement plan obligations	(103.6)	(112.8)
	(133.0)	(135.9)
Net financial expense	(17.7)	(3.9)

Other interest payable and similar charges includes finance lease charges of £2.0 million (2011: £2.7 million) and the discount unwind associated with onerous lease provisions of £2.1 million (2011: £1.8 million). No borrowing costs have been capitalised in either 2012 or 2011 as they are not material.

5 Income tax

The Group's income tax expense (including the Group's share of jointly controlled entities' income tax) for the year ended 31 December 2012 is calculated based on an effective underlying income tax rate of 12% (2011⁽¹⁾: 14%). This effective rate differs to the UK standard corporation tax rate of 24.5% (2011: 26.5%) primarily due to items such as the effect of tax rates in foreign jurisdictions, the agreement of certain issues with the tax authorities and the recognition of deferred tax on trading losses.

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).

6 Earnings per share

(a) Basic earnings per share

The calculation of earnings per share for the year ended 31 December 2012 is based on the profit attributable to equity holders of the parent of £160.1 million (2011: £134.6 million) and a weighted average number of ordinary shares in issue of 430.1 million (2011: 420.9 million), calculated as follows:

In millions of shares	2012	2011
Issued ordinary shares at 1 January	430.3	399.7
Effect of shares issued in the year	-	21.4
Effect of own shares held by Employee Share Ownership Plan and Qualifying Employee Share Ownership Trust	(0.2)	(0.2)

Weighted average number of ordinary shares at 31 December	430.1	420.9

(b) Underlying performance

A reconciliation of profit before taxation and basic earnings per share, as reported in the income statement, to underlying profit before taxation and earnings per share is set out below. The adjustments made in arriving at the underlying performance measures are made to illustrate the impact of the amortisation of intangible assets arising from business combinations, non-recurring operating items and non-operating items.

	2012		2011⁽¹⁾
	Profit before tax £m	Tax £m	Profit before tax £m	Tax £m
Profit before taxation
Profit before taxation as reported in the income statement	179.5	13.3	142.8	4.8
Amortisation of intangible assets arising from business combinations	31.4	9.3	31.0	9.9
Non-recurring operating items	2.6	0.6	42.8	11.9
Non-operating items	1.2	0.3	6.9	1.2
Underlying profit before taxation	214.7	23.5	223.5	27.8
Underlying taxation	(23.5)		(27.8)
Underlying profit attributable to non-controlling interests	(6.1)		(3.4)
Underlying profit attributable to shareholders	185.1		192.3

	2012 Pence per share	2011⁽¹⁾ Pence per share
Earnings per share
Basic earnings per share	37.2	32.0
Amortisation of intangible assets arising from business combinations	5.1	5.0
Non-recurring operating items	0.5	7.3
Non-operating items	0.2	1.4
Underlying basic earnings per share	43.0	45.7
Underlying diluted earnings per share (post-tax basis)	42.8	45.4

(1)	Restated following the change in presentation of profits on the disposal of Public Private Partnership equity investments from non-operating items to operating items (amounting to £13.2 million in 2012 and £11.5 million in 2011).

The calculation of diluted earnings per share is based on profit as shown in note 6 (a) and (b) and a weighted average number of ordinary shares outstanding calculated as follows:

In millions of shares	2012	2011
Weighted average number of ordinary shares at 1 January	430.1	420.9
Effect of share options in issue	2.1	2.5

Weighted average number of ordinary shares (diluted) at 31 December	432.2	423.4

7 Dividends

The following dividends were paid by the Company:

		2012		2011
	£m	Pence per share	£m		Pence per share
Previous year final dividend	48.5	11.6	43.0		10.7
Current year interim dividend	21.9	5.4	21.6		5.3

Total	70.4	17.0	64.6		16.0

The following dividends were proposed by the Company:

		2012		2011
	£m	Pence per share	£m	Pence per share
Interim	21.9	5.40	21.6	5.3
Final	51.0	11.85	49.9	11.6

Total	72.9	17.25	71.5	16.9

The final dividend for 2012 of 11.85 pence per share was approved by the Board on 27 February 2013 and, subject to approval by the shareholders at the Annual General Meeting, will be paid on 14 June 2013 to shareholders on the register on 17 May 2013.

8 Pension commitments

The following expense was recognised in the income statement in respect of pension commitments:

	2012 £m	2011 £m
Charge to operating profit
Current service cost relating to defined benefit schemes	(5.9)	(6.6)
Defined contribution schemes	(20.0)	(22.7)

Total	(25.9)	(29.3)

(Charge)/credit to other financial income and expense
Expected return on retirement plan assets	100.0	116.0
Interest cost on retirement plan obligations	(103.6)	(112.8)

Net financial (expense)/income	(3.6)	3.2

The valuation of the Group's main defined benefit pension schemes were reviewed by the schemes' actuary at 31 December 2012.

A summary of defined benefit obligations and scheme assets is given below:

	2012 £m	2011 £m
Present value of defined benefit obligation	(2,352.5)	(2,203.7)
Fair value of scheme assets	2,012.3	1,897.9
Minimum funding requirement	(10.8)	-

Net pension liability	(351.0)	(305.8)
Deferred tax on the above	81.1	76.5
Net pension liability after tax	(269.9)	(229.3)

The weighted average of principal assumptions used by the independent qualified actuaries in providing the IAS 19 position were:

	2012 %	2011 %
Rate of increase in salaries	3.40	3.50
Rate of increase in pensions	2.90	3.00
Inflation rate - Retail Price Index	2.90	3.00
Inflation rate - Consumer Price Index	2.05	1.90
Discount rate	4.55	4.80

9 Cash and cash equivalents and net borrowing

Cash and cash equivalents and net borrowing comprise:

	2012 £m	2011 £m
Cash and cash equivalents	657.1	490.7
Bank overdrafts	(4.9)	(3.0)
Net cash and cash equivalents	652.2	487.7
Bank loans	(466.2)	(399.7)
Finance lease obligations	(34.5)	(38.4)
Other loans	(307.3)	(100.3)

Net borrowing	(155.8)	(50.7)

Reconciliation of net cash flow to movement in net borrowing:

	2012 £m	2011 £m
Increase in net cash and cash equivalents	166.7	97.4
Net cash and cash equivalents in subsidiaries acquired	-	1.5
Draw down of bank and other loans	(277.2)	(223.0)
Payment of finance lease liabilities	16.8	15.8
Change in net borrowing resulting from cash flows	(93.7)	(108.3)
Net borrowing in subsidiaries acquired	(4.6)	(61.5)
Finance lease additions	(9.0)	(0.8)
Currency translation differences	2.2	(0.3)
Change in net borrowing	(105.1)	(170.9)
Net (borrowing)/cash at 1 January	(50.7)	120.2

Net borrowing at 31 December	(155.8)	(50.7)

10 Related party transactions

The Group has made sales to the Group's jointly controlled entities, which are in the normal course of business and on commercial terms, amounting to £988.4 million in the year ended 31 December 2012 (2011: £776.1 million). Amounts receivable from jointly controlled entities amounted to £107.7 million (2011: £128.5 million) and amounts payable to jointly controlled entities amounted to £55.3 million (2011: £15.5 million).

11 Acquisitions and disposals

Acquisitions

On 11 December 2012, the Group acquired a 49% equity shareholding in the Bouchier Group for a cash consideration of £23.8 million. The consideration is payable in instalments, with £4.9 million paid in December 2012 which is included in the cash flow statement within acquisition of subsidiaries, net of cash acquired. The remaining instalments of £9.5 million payable in early 2013 and £9.4 million payable in January 2014 have been included as a deferred consideration payable within liabilities in the balance sheet. The Group has options to acquire the remaining 51% of the equity over the next 10 years for a consideration capped at £43.1 million. The Bouchier Group is being consolidated as a subsidiary on the basis of the terms of these options and the powers granted as a shareholder which enable Carillion management to exert control. A provisional assessment has been made of the fair value of the net assets acquired of £3.0 million. On the basis of this assessment the provisional goodwill arising on the acquisition amounts to £20.8 million. Due to the proximity of this acquisition to the year end, it has not been possible to identify the amount of goodwill attributable to other intangible assets. Following the expected finalisation of the completion accounts process in the first half of 2013, quantification of goodwill and other intangible assets arising from this acquisition will be completed. The Bouchier Group, which is based in Alberta, Canada, provides a range of services, including road maintenance, infrastructure services and facilities management. The acquisition compliments the Group's existing support services activities in Canada and provides access to substantial new growth markets. Due to the immaterial nature of this acquisition the full disclosures required under International Financial Reporting Standard 3 'Business combinations' have not been presented.

Disposals

In 2012, the Group disposed of equity interests in seven Public Private Partnership projects. The disposals generated a cash consideration of £34.8 million which is included in the cash flow statement within disposal of jointly controlled entity and other investments, and a profit of £13.2 million which is included in Group operating profit within the Public Private Partnership projects segment. In addition, on 29 June 2012 the Group received cash proceeds of £7.1 million on exchange of contracts for the sale of an equity interest in a Public Private Partnership project. At 31 December 2012, all the conditions precedent had not been met in relation to the sale contract and therefore the disposal of this equity interest has not been recognised. The proceeds received of £7.1 million have been recognised within disposal of jointly controlled entity and other investments in the cash flow statement. Legal completion of the sale occurred in January 2013. Proceeds of £2.6 million from the disposal of equity interests in land development jointly controlled entities in Canada and £1.4 million from the disposal of the Group's investment in HomeSun Holdings Limited are included in the cash flow statement within disposal of jointly controlled entity and other investments.

The Group disposed of its equity interests in two small wholly owned subsidiaries during the year for a total cash consideration of £1.0 million (net of expenses paid of £0.2 million). The net cash consideration received of £0.1 million (net of £0.9 million of cash in the subsidiaries sold) is included in the cash flow statement within disposal and closure of businesses, together with cash payments of £3.9 million in relation to business closures made in 2012 and 2011.

12 Share capital

The issued and fully paid share capital at 31 December 2012 was 430.3 million shares (2011: 430.3 million).

13 Guarantees and contingent liabilities

The Group has entered into guarantees in respect of letters of credit issued by banks in relation to deferred equity payments, interest payments in jointly controlled entities and performance contracts in Public Private Partnership jointly controlled entities. These guarantees in total amount to £177.6 million (2011: £192.8 million). There has been no material change to the contingent liabilities of the Group in the year ended 31 December 2012.

14 Change in presentation

As described in note 1, in 2012 profit from the disposal of equity investments in Public Private Partnership projects has been presented within Group operating profit in the income statement. Previously such profits were presented within non-operating items. Following this change in presentation, comparative information has been restated accordingly, which has had the following impact on underlying profit before taxation, non-operating items and underlying earnings per share:

		Year ended 31 December 2011
		As previously reported	Impact of change	As restated
Underlying profit before taxation	£m	212.0	11.5	223.5
Non-operating items	£m	4.6	(11.5)	(6.9)
Underlying earnings per share	Pence	43.0	2.7	45.7

There is no impact on reported profit before taxation and basic and diluted earnings per share.

15 Company information

This preliminary announcement was approved by the Board of Directors on 27 February 2013. The 2012 Annual Report will be posted to all shareholders by 31 March 2013 and both this statement and the 2012 Annual Report will be available on the internet at www.carillionplc.com or on request from the Company Secretary, Carillion plc, Birch Street, Wolverhampton, WV1 4HY.

Forward-looking statements

This report may contain certain statements about the future outlook for Carillion plc. Although the Directors believe their expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

Governing law

This report of Carillion plc for the year ended 31 December 2012 has been drawn up and presented for the purposes of complying with English law. Any liability arising out of or in connection with the report for the year ended 31 December 2012 will be determined in accordance with English law.

Directors' responsibilities

This preliminary announcement complies with the Disclosure and Transparency Rules (DTR) of the United Kingdom's Financial Services Authority. The preliminary announcement is the responsibility of, and has been approved by, the Directors of Carillion plc.

The responsibility statement below has been prepared in connection with the Company's full Annual Report for the year ended 31 December 2012. Certain parts thereof are not included in this announcement.

The Directors of Carillion plc confirm that to the best of their knowledge:

· the financial statements prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole, and

· the Operating and Financial Review includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

On behalf of the Board

Richard Adam FCA

Group Finance Director

27 February 2013

This information is provided by RNS

The company news service from the London Stock Exchange

END

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