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John McDonough to leave Carillion

Carillion group chief executive John McDonough CBE will leave the company at the end of this year.

Mr McDonough will retire from the board and from the company on 31 December, having reached the age of 60. He will be succeeded by Richard Howson, who is currently chief operating officer.

Chairman Philip Rogerson said:  “Our group chief executive, John McDonough CBE, will be retiring from the board and from the company on 31 December 2011, having reached the age of 60.  He will be succeeded as group chief executive by Richard Howson who is currently our chief operating officer. 

“John will leave the board and the company with our grateful thanks and very best wishes for his retirement.”

Mr McDonough was appointed group chief executive in January 2001 and is chairman of the CBI’s Construction Council and a member of the CBI’s President’s Committee.

The news comes as the support services and construction firm announced that its re-scaling strategy had led to a 15 per cent reduction in UK construction revenue.

Construction revenue outside the Middle East was down to £943m, from £1.05bn (excluding joint ventures), but underlying profit rose from £11.8m to £15.2m.

Group revenue was down to £2.45bn in the six months to 30 June 2011, compared with £2.5bn in 2010. Integration following the £298.4m acquisition of green outsourcing firm Eaga, now Carillion Energy Services, is ”going well”, the company said.

Overall profit before tax is down from £58.8m to £38.2m, due to £28m of one-off costs relating to the acquisition and integration of Carillion Energy Services. Underlying profit before these items was up 10 per cent, from £65.7m last year to £72.5m this year.

The company said it is on course to fill 96 per cent of its revenue target for the year, based on expected revenue and secure and probable orders. The combined value of the group’s order book and probable orders increased to £19.4 billion (31 December 2010: £19.1bn). The order book reduced to £17.7bn from £18.2 bn at the end of last year, due to the planned re-scaling of UK construction, and probable orders increased to £1.7bn (from £0.9 bn at 31 December 2010).

Mr Rogerson added:  “The group’s strong track record of profitable growth continues to reflect its well-balanced and resilient UK and international business mix and good revenue visibility. We expect to make further progress in the second half of 2011 to deliver earnings growth in line with market expectations.

“Furthermore, with strong market positions and a record pipeline of contract opportunities, the group continues to target strong international growth and substantial growth in UK support services over the medium term.”

The company said its pipeline of contract opportunities is up 25 per cent to £32bn, including major public sector outsourcing opportunities.

The acquisition also means the company has a net debt of £93.7m, compared with £68m cash this time last year.

The group’s total  first-half operating margin rose to 3.3 per cent (2010: 3.1 per cent). Underlying operating margin for construction outside of the Middle East is 1.6 per cent (up from 1.1 per cent), while the Middle East construction margin is down to 7.5 per cent from 8.4 per cent. Support services has seen margin improve to 4.1 per cent (3.9 per cent in 2010).

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