Carillion : Results for the year ended 31 December 2016 - Performance in line with expectations

Financial performance in line with expectations

• Total revenue growth of 14 per cent, primarily organic (1)
• Performance led by growth in support services
• Support services contributed over two thirds of total operating profit and more than offset expected reductions in profit from Public Private Partnership projects and Middle East construction services
• Underlying operating margin (1) lower as expected at 4.9 per cent (2015: 5.3 per cent)
• Underlying profit from operations (1) fully cash-backed - cash conversion (1) 117 per cent
• Net borrowing of £218.9 million at 31 December 2016 (2015: £169.8 million) and average net borrowing (1) for 2016 of £586.5 million (2015: £538.9 million), with the increases mainly reflecting adverse movements in foreign exchange rates

High-quality order book and strong pipeline of contract opportunities

• £4.8 billion of new orders and probable orders in 2016 (2015: £3.7 billion)
• High-quality order book plus probable orders worth £16.0 billion at 31 December 2016 (2015: £17.4 billion)
• Revenue visibility (2) for 2017 of 74 per cent (2015: 84 per cent for 2016)
• Expect over £1.5 billion of revenue from framework agreements not yet included in orders, probable orders or revenue visibility
• Substantial pipeline of contract opportunities worth £41.6 billion (2015: £41.4 billion)

Proposed full-year dividend increased by one per cent to 18.45p (2015: 18.25p)

Begin reducing average net borrowing over medium term

Carillion Chairman, Philip Green, commented:

'In 2016, Carillion's performance was led by revenue growth and an increased margin in support services, together with good cash flow. Given the size and quality of our order book and pipeline of contract opportunities, our customer-focused culture and integrated business model, we have a good platform from which to develop the business in 2017. We will accelerate the rebalancing of our business into markets and sectors where we can win high-quality contracts and achieve our targets for margin and cash flows, while actively managing the positions we have in challenging markets. We will also begin reducing average net borrowing by stepping up our ongoing cost reduction programmes and our focus on managing working capital.'

(1) Alternative Performance Measures are defined in note 15 on pages 40 to 45 of the full announcement
(2) Based on expected revenue and secure and probable orders, which exclude variable work, frameworks and re-bids.