Last checked at 30 Apr 2009 15:26
Carillion plc
(the 'Company')
Annual Report and Accounts 2008 and
Notice of Annual General Meeting 2009
Following the release on 4 March 2009 of the Company's preliminary full year results announcement for the year ended 31 December 2008 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for 2008 (the "Annual Report and Accounts").
The Company's 2009 AGM will be held at Austin Court, 80 Cambridge Street, Birmingham B1 2NP on Wednesday 6 May 2009 at 12 noon.
Copies of the Annual Report and Accounts, the Notice of the Annual General Meeting for 2009 and the Preliminary Announcement are available to view on the Company's website at www.carillionplc.com
Pursuant to Listing Rule 9.6.1, two copies of each of the Annual Report and Accounts, the Notice of the Annual General Meeting for 2009 and the related form of proxy were submitted to the UK Listing Authority. These documents are available for inspection at the Document Viewing Facilities of the UK Listing Authority which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
In accordance with Disclosure and Transparency Rule 6.3.5(2)(b) additional information is set out in the appendices to this announcement.
The Preliminary Announcement included a set of condensed financial statements prepared in accordance with IAS 34 and a fair review of the development and performance of the business and the position of the Company and the Carillion Group.
Tim George
Deputy Company Secretary
Carillion plc
30 April 2009
Appendices
Appendix A: Responsibility Statement
Each of the current directors of Carillion plc, whose names and functions are listed below, confirms to the best of his or her knowledge:
The financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, and contained in the Carillion plc Annual Report and Accounts 2008 give a true and fair view of the assets, liabilities, financial position and profit of Carillion plc and the Carillion Group taken as a whole; and
The business review, contained in the Directors' Report and the operating and financial review section in the Carillion plc Annual Report and Accounts 2008, includes a fair review of the development and performance of the business and the position of Carillion plc and the Carillion Group taken as a whole, together with the principal risks and uncertainties they face.
The Board:
Philip Rogerson - Chairman
John McDonough - Group Chief Executive
Richard Adam - Group Finance Director
David Garman - Senior Independent Non-Executive Director
David Hurcomb - Executive Director
Don Kenny - Executive Director
David Maloney - Non-Executive Director
Steve Mogford - Non-Executive Director
Vanda Murray OBE - Non-Executive Director
Roger Robinson - Executive Director
Appendix B: Principal risks and uncertainties
Operational risk management
The following description of the most significant areas of risk for the Carillion Group is extracted from pages 16 and 17 of the Annual Report and Accounts.
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. These processes are described in more detail in the Corporate Governance Report on page 49. The more significant areas of risk for the Group and the measures being taken to mitigate and manage them are summarised here.
We apply our risk management processes to every aspect of our operations from choosing our market sectors and the contract we bid for to the selection of our suppliers and sub-contractors. We also apply them to every stage of a contract from inception to completion, in order to deliver the cash-backed profit we expect and high-quality services for our customers.
| Risk | Mitigation |
| The impact of the current global economic downturn on the financial stability of our customers, partners and suppliers. | Applying rigorous selectivity criteria to the choice of customers, projects, partners and suppliers, in relation to their financial stability, the security of project funding and contractual terms and conditions. |
| Managing major contracts to ensure they are delivered on time, to budget and to the required standards. | Applying rigorous selectivity criteria to ensure that we take on contracts only where we understand the risks involved and can manage them; applying equally rigorous policies and processes to monitor and manage contract performance. |
| Managing our pension schemes to ensure that scheme liabilities are within a range appropriate to our capital base. | Having already closed the Group's main defined benefit schemes to new entrants, these schemes will close to future accrual and be replaced with defined contribution schemes, from April 2009; investment policies are reviewed regularly to ensure that employee and company contributions and scheme benefits remain appropriate. |
| Attracting, developing and retaining excellent people to maintain service quality and brand leadership. | The ongoing development and implementation of our leadership, personal development and employee engagement programmes. |
| Winning new work to deliver growth. | Maintaining a firm focus on cost reduction and efficiency to remain competitive; "living" our values in everything we do to ensure we listen to and understand the needs of our customers and offering solutions tailored to meet their needs. |
| Maintaining financial discipline. | In addition to strict contract selectivity criteria, applying strong cash management policies and processes to deliver cash-backed profit. |
Financial risk
The following description of the areas of significant risk for the Carillion Group is extracted from page 24 of the Annual Report and Accounts.
Treasury policy and risk management
The Group has a centralised Treasury function whose primary role is to manage funding, liquidity and financial risks. In addition, Treasury sources and administers contract bond and guarantee facilities for the Group. Treasury is not a profit centre and does not enter into speculative transactions. The Board sets policies within which Treasury operates that ensure the most effective financing of the Group's operations and limit exposure to financial risk.
Financial risk
The areas of significant financial risk facing the Group relate to funding, liquidity, counter party risk, foreign exchange and interest rates.
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 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.
Counter party risk
The Carillion Group undertakes significant financial transactions only with counter parties that have strong credit ratings. The limits and requirements in respect of such transactions are reviewed regularly by the Board of Carillion plc.
Foreign exchange
The Group hedges all significant currency transaction exposures using foreign exchange risk management techniques. In order to protect the Group's balance sheet from the impact of exchange rate volatility, foreign currency net assets are hedged using matching currency loans equivalent to at least 60 per cent of the net asset value, where these assets exceed the equivalent of £10 million. Profits arising within overseas subsidiaries are not hedged unless it is planned to make a distribution. Such distributions are then treated as currency transactions and hedged accordingly.
The average and year end exchange rates used to translate the Group's overseas operations were as follows:
| Average | Year End | |||
| £sterling | 2008 | 2007 | 2008 | 2007 |
| Middle East (US Dollar | 1.84 | 2.00 | 1.44 | 1.99 |
| Oman (Rial) | 0.71 | 0.77 | 0.55 | 0.77 |
| UAE (Dirham) | 6.75 | 7.63 | 5.28 | 7.31 |
| Canada (Dollar | 1.95 | 2.14 | 1.77 | 1.96 |
| Trinidad (Dollar) | 11.52 | 12.64 | 9.04 | 12.52 |
Interest rates
The Group's borrowing facilities are at floating rates of interest linked to the London Inter Bank Offered Rate, UK base rate or prevailing local currency interest rates. The Group has nor entered into interest rate derivatives to fix or hedge interest rate risk and currently none are outstanding. Certain longer-term assets have been financed using fixed rate leases.
Carillion has invested equity in a number of Joint Venture Special Purpose Companies (SPC) to deliver Public Private Partnership projects. SPCs obtain funding for these projects in the form of long-term bank loans or corporate bonds without recourse to the Joint Venture partners and secured on the assets of the SPC. A number of SPCs have entered into interest rate derivatives as a means of hedging interest rate risk. These derivatives are interest rate swaps that effectively fix the rate of interest payable.
Appendix C: Related parties
| Identity of related parties | |||||
| The Group has related party relationships with its key management personnel and jointly controlled entities. | |||||
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| Transactions with key management personnel | |||||
| The Group's key management personnel are the Executive and Non-Executive Directors as identified in the Remuneration Report on page 53. | |||||
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| In addition to their salaries, the Group also provides non cash benefits to Executive Directors, and contributes to a post-employment defined benefit plan or a defined contribution plan on their behalf. | |||||
| Executive Directors also participate in the Group's share option programme. | |||||
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| Non-Executive Directors receive a fee for their services to the Carillion plc Board. | |||||
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| Full details of key management personnel compensation is given in the Remuneration Report on pages 51 to 58. | |||||
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| Other than disclosed in the Remuneration Report, there were no other transactions with key management personnel in either the current or preceding year. | |||||
| The IFRS 2 cost charged to administrative expenses relating to share options of key management personnel amounted to £1.8 million (2007: £1.3 million). | |||||
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| Transactions with jointly controlled entities | |||||
| The table below summarises the principal receivable and payable balances, together with sales to the Group's jointly controlled entities, which are in the normal course of business and on commercial terms: | |||||
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| | | | 2008 | | | 2007 | |
| | | Sales | Receivables | Payables | Sales | Receivables | Payables |
| | | £m | £m | £m | £m | £m | £m |
| PPP jointly controlled entities | | | | | | | |
| Aspire Defence Holdings Limited | | 185.7 | 0.3 | - | 179.2 | 0.1 | - |
| The Hospital Company (QAH Portsmouth) Holdings Limited | | 101.6 | 0.6 | - | 85.8 | 3.6 | - |
| Eastbury Park (Holdings) Limited | | 76.8 | - | - | 48.4 | 4.7 | - |
| Education 4 Ayrshire (Holdings) Limited | | 29.9 | 1.4 | - | 37.9 | 1.8 | - |
| Inspiredspaces Nottingham (Holdings1) Limited | | 13.0 | - | - | - | - | - |
| Inspiredspaces STaG (Holdings) Limited | | 12.6 | - | - | - | - | - |
| Inspiredspaces STaG Limited | | 11.3 | - | - | - | - | - |
| The Hospital Company (Oxford John Radcliffe) Holdings Limited | | 10.0 | - | - | 16.0 | 0.9 | - |
| Inspiredspaces Nottingham Limited | | 6.5 | - | - | - | - | - |
| Sheppey Route (Holdings) Limited | | 1.5 | 0.9 | (0.2) | - | 0.2 | - |
| Aspire Services Limited | | - | - | (3.2) | - | 1.5 | - |
| Modern Schools (Exeter) Holdings Limited | | 2.9 | 0.2 | - | - | - | - |
| RSP (Holdings) Limited | | - | 0.4 | - | 22.9 | - | - |
| Other | | 18.4 | 0.5 | (0.7) | 15.4 | 1.9 | - |
| | | 470.2 | 4.3 | (4.1) | 405.6 | 14.7 | - |
| | | | | | | | |
| Other jointly controlled entities | | | | | | | |
| CarillionEnterprise Limited | | 67.3 | 6.6 | (8.7) | 62.4 | 1.5 | - |
| CR Thanet Limited Partnership | | 7.3 | 1.7 | (4.5) | - | 14.3 | (20.6) |
| Al Futtaim Carillion LLC | | 4.8 | 5.0 | (0.2) | - | - | - |
| Carillion Richardson | | - | 17.6 | (10.2) | - | - | - |
| RT Bridgend Limited | | - | - | (1.5) | - | - | - |
| Carillion Richardson Partnership | | - | - | (6.2) | - | - | - |
| Modern Housing Solutions (Prime) Limited | | - | 0.3 | - | 12.6 | 0.6 | - |
| Other | | 1.3 | 1.5 | (0.2) | 0.2 | 3.0 | (1.0) |
| | | 550.9 | 37.0 | (35.6) | 480.8 | 34.1 | (21.6) |
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