2. Important Legal Notice
This presentation is directed only at: (i) persons who fall within the definition of “Investment professionals” under Article 19(5) of the
Financial Services and Markets Act (Financial Promotions) Order 2005 (the “Order”); and (ii) any persons to whom it may lawfully be
communicated pursuant to the Order or otherwise (all such persons being “Relevant Persons”). Any person who is not a Relevant Person
should not act or rely in this presentation or any of its contents.
This presentation is not a prospectus. It does not constitute or form part of an offer to sell or any invitation to purchase or subscribe for
any securities or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities or the
solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise. Any acceptance or response to the
Acquisition should only be made on the basis of the information referred to in the scheme document and the prospectus to be prepared in
connection with the Acquisition.
This presentation contains ‘forward-looking statements’ concerning Carillion and Eaga that are subject to risks and uncertainties.
Generally, the words ‘will’, ‘may’, ‘should’, ‘continue’, ‘believes’, ‘targets’, ‘plans’, ‘expects’, ‘aims’, ‘intends’, ‘anticipates’ or similar
expressions or negatives thereof identify forward-looking statements. Forward looking statements include statements relating to the
following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of
Carillion’s or Eaga’s operations and potential synergies resulting from the Acquisition; and (iii) the effects of government regulation on
Carillion’s or Eaga’s business.
These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed
in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Carillion’s and Eaga’s ability to
control or estimate precisely, such as future market conditions, changes in regulatory environment and the behaviour of other market
participants. Neither Carillion nor Eaga can give any assurance that such forward-looking statements will prove to have been correct. The
reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation.
Neither Carillion nor Eaga undertakes any obligation to update or revise publicly any of the forward-looking statements set out herein,
whether as a result of new information, future events or otherwise, except to the extent legally required.
The statements in this presentation that the Acquisition is expected to be immediately earnings enhancing for Carillion before synergies
relates to future actions and circumstances, which, by their very nature, involve risks, uncertainties and other factors.
Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of Carillion, Eaga or
any other person following the implementation of the Acquisition or otherwise.
The expected operational cost savings described in this presentation have been calculated on the basis of the existing cost and operating
structures of the Carillion Group and the Eaga Group respectively. These statements of estimated cost savings and one-off costs for
achieving them relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. Because
of this, the cost savings referred to may not be achieved, or those achieved could be materially different from those estimated.
The release, publication or distribution of this presentation in jurisdictions other than the United Kingdom may be restricted by the laws of
those jurisdictions and therefore persons into whose possession this presentation comes should inform themselves about and observe
any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such
jurisdiction.
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3. Agenda
Introduction & strategic rationale John McDonough
Group Chief Executive
Financial overview Richard Adam
Group Finance Director
Enhanced accelerated growth prospects John McDonough
Summary & conclusions John McDonough
3 MAKING TOMORROW A BETTER PLACE
4. Introduction
• Carillion
- delivered strong performance in 2010
- well positioned for short and medium term organic growth
- made a positive start to 2011
- in excess of £100m of cash at 31 December 2010
• Eaga
- a leading UK provider of domestic energy efficiency solutions
- strong position in growing low carbon market
• Low carbon market is a key area of focus for Carillion’s customers
• Carillion provides scalable platform for enhancing Eaga’s growth
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5. Introduction
• Recommended cash acquisition
(1)
- values Eaga at 120p per share
- values issued and to be issued share capital of Eaga at £306.5m(1)
• Limited share alternative up to a maximum of 40% of consideration,
(2)
reflecting the Eaga Partnership Trusts’ objective of holding significant
equity in the enlarged Group
• 40.8% irrevocable commitments received
• Follows positive discussions between Eaga and Carillion to explore ways
of working together
• Extensive due diligence
• Acquisition has compelling financial and strategic rationale
• Enhances Carillion’s organic growth
(1) Includes Eaga’s interim dividend
(2) The Eaga Partnership Trusts hold 36.7% of Eaga’s issued share capital
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6. Strategic rationale
• Brings together two complementary companies
• Enhances Carillion’s position as one of the UK’s leading support services
companies
• Creates scalable platform to build the UK’s largest independent energy
services provider
• Increases Carillion’s capabilities to provide integrated solutions
• Attractive cross-selling opportunities between Carillion’s and Eaga’s customers
• Historic proforma combined support services revenue circa £3bn
• Expected to be immediately earnings enhancing even before synergies
• Builds on Carillion’s previously announced objectives for growth
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8. Offer terms and structure
• Recommended cash offer with limited share alternative
• Values each Eaga share at 120p(1)
• Eaga’s ownership structure includes an Employee Trust (EPT) which holds
36.7% of Eaga equity
• Limited share alternative meets EPT’s objective of having a significant
holding in Carillion post acquisition
• Up to 31.5m(2) Carillion ordinary shares to be issued – 7.3% of enlarged
share capital
• Cash element of £192m(3) will be funded from new borrowing facilities
• Documents posted to shareholders – by 4th March 2011
• Expected completion - April 2011
(1) Includes Eaga’s interim dividend
(2) Based on Carillion share price at close of business on 10 February 2011 of 385.2 pence and 3.24 Eaga shares per Carillion share
(3) 118.8p consideration per share (excluding dividend) and assumes equity take up of 36.6%
8 MAKING TOMORROW A BETTER PLACE
9. Strong financial returns
• Extensive due diligence including run down of Warm Front
• Immediately earnings enhancing even before synergies(1)
• Enhances Carillion’s growth potential
• Eaga margin consistent with Carillion’s existing support services margin
• Synergy cost savings from Carillion and Eaga totalling £9m by end 2013,
at a one-off cost of £15m, in addition to Eaga’s previously announced
cost savings programme(1)
(1) See slide 2
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10. Robust capital structure
• Carillion expects net cash at 31 December 2010 to be well in excess of £100m
• Eaga net cash at 30 November of £20m
• Eaga has no significant pension deficit
• Carillion’s new 5-year borrowing facilities of £737m will comfortably cover
- £192m(1) cash element of consideration
- working capital and investment requirements
- £15m cost of delivering synergy savings
- more than adequate headroom
• Combined Group will have robust capital structure
(1) 118.8p consideration per share (excluding dividend) and assumes equity take up of 36.6%
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12. Eaga overview
General
• A leading UK energy services company
• Established in 1990
• Listed June 2007
• Strong operational management team and reputation for quality services
• Strong growth track record
- leading provider of residential energy efficiency solutions
- one of the UK’s largest national suppliers of heating and renewable energy
- at forefront of low carbon economy in the UK
- managing end-to-end solutions for Government and other organisations
• Core focus is working with central and local Government, their agencies, housing
associations and with utility companies to
- lower carbon emissions
- combat fuel poverty
- improve living conditions
- reduce energy consumption
• Specialist knowledge, skills and delivery capabilities
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13. Eaga overview
Five-year(1) history
1,000 60
50
800
40
600
30
400
20
200
10
0 0
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Group Revenue (£m) Group EBITA (£m)
(1) Financial years ending 31 May
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14. Eaga overview
Principal activities and markets
Total Annual Revenue £762m(1)
Heating & Renewables (% of Group revenue)
• National installer of domestic heating and renewable energy solutions for
Central and Local Government and private households £110m
(15%)
Carbon Services
• Leading provider of energy efficient, green technology and renewable
energy solutions under Carbon Emissions Reduction Target (CERT) and
Community Energy Savings Programme (CESP)
£223m
(29%)
Managed Services
• Provision of energy efficiency solutions to a wide range of environments
and able-to-pay markets including Warm Front
• Digital Switch Over (DSO) for BBC
£429m
(56%)
(1) Year ended 31 May 2010
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15. Established
Eaga’s market sectors
position in a Targeted
stable market
markets worth circa £20bn(1)
(2) and growing
£10bn
Building a good
position in a Targeting
growing market growth in a
Market leader for stable market
Warm Front & (6)
Digital Switch Over £3.5bn
First mover Market leader. (7)
as sole provider.
advantage. Strong growth £3bn
‘Warm Front’ being
Strong growth potential replaced by ‘Pay- Good capability
potential
as-you-Save’ and in a growing
‘Green Deal’ market
(4)
Annual (3) £1.3bn
Market £1bn
Size
£200m(5) £230m(8)
Social Micro- Carbon Managed New Insurance External Wall
Housing generation Services Services Managed Backed Insulation
(CERT, CESP (Warm Front Services Aftercare
& ECO) & DSO)
(1) Estimated market sizes based on historic and/or prospective financial information
(2) FM Central and Local Government 2009-2013 (AMA Research Ltd, Jan, 2009) & Facilities Management Market (MTW Research, Jan 2010)
(3) Estimates based on funding from Feed-in-Tariffs and the Renewable Heat Incentive
(4) Sustainable Refurbishment (Energy Savings Trust, 2010 Edition)
(5) Funding for Warm Front published by DECC; DSO contract £80m p.a.
(6) Child Maintenance” and “Back to Work” Frameworks only – Department for Work & Pensions website
(7) Estimate based on British Gas 2009 Annual Report
(8) Estimate based on “Solid wall insulation – supply chain review (Energy Savings Trust & Energy Efficiency Partnership for Homes) May 2009”
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16. Carillion creates scalable platform for Eaga growth
• Operational and financial resource and capability to invest in existing and
new market opportunities
• Private Finance experience and expertise
- financially closed over 50 PFI concession contracts
- will help with potential £300m Phase One privately financed project for
Photo-Voltaic systems
• Access to new market opportunities in the UK and internationally
– both Middle East and Canada
• Access to a broad portfolio of public and private sector blue-chip customers
who increasingly require energy solutions
• Supply chain scale and leverage
• Leading-edge technology to manage large workforces and workflows
• Opportunity to accelerate Eaga’s growth
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17. Strong revenue growth prospects
Managed
Services/Business Revenue
Energy
Process Synergies
Company
Outsourcing
Obligations
Green (ECO)
Renewables
(Photo-Voltaic Deal
Systems)
Warm
Front
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18. New market opportunities
Privately financed solar Photo-Voltaic (PV) systems
• Major new market opportunity
• UK Government encouraging and supporting local electricity generation from
non-fossil fuels
• Government’s initial target is to install renewable energy systems, principally PV,
in some 750,000 homes
• New market with Private Finance opportunities
• Eaga developing first UK large-scale (PV) solar investment vehicle
• Feed in Tariff (FIT) Regulation provides 25-year indexed revenue stream
• Proven capability to deliver integrated service solutions, including installation,
maintenance and management of PV systems
• Contracts signed with social landlords for c120,000 homes, with negotiations for a
further 200,000 at an advanced stage
• Phase One privately financed project – key objectives
- up to £15m equity investment (20% share of £75m total equity) & £225m debt
- up to £300m of installation and maintenance revenue
- Carillion can provide strong support
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19. New market opportunities
‘Green Deal’ - domestic energy efficiency
• Flag-ship Government policy for domestic energy efficiency
• Major market opportunity - 26 million UK houses to become energy efficient, of
which approx. 8 million have disadvantaged occupants, a key focus and capability
of Eaga
• Enables UK to fulfil a large part of its carbon reduction commitments, as residential
sector is estimated to be responsible for 27% of CO2 emissions
• The main component of the Energy Security and Green Economy Bill 2010/11,
currently going through Parliament
• Limited take-up of energy efficient opportunities to date
• Green Deal should force change
- energy companies would become responsible for collecting revenue through
electricity and gas charges
- creates revenue stream to support privately financed costs of making houses
energy efficient
• Carillion well positioned with integrated delivery model through selected channels
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20. New market opportunities
Energy Company Obligations (ECO)
• Energy Security and Green Economy Bill, (Green Deal component), establishes new
Energy Company Obligation (ECO)
• From January 2013, ECO includes new legal requirement for energy companies to
reduce CO2 emissions, or face fines of up to 10% of global revenue
• ECO replaces the current Carbon Emissions Target (CERT) and Community Energy
Savings Programme (CESP) obligations on energy suppliers and generators
• Both CERT and CESP will be subsumed into Green Deal at the end of 2012, with
ECO applying from January 2013
• ECO will provide further support for low income, disadvantaged households
• ECO will also apply to homes more difficult or expensive to improve ie where
financial savings cannot be achieved without additional financial support
• £1.3bn per annum market and growing
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21. New market opportunities
Managed Services/Business Process Outsourcing (BPO)
• Government is engaging private sector through framework contracts for managed
services/BPO to deliver priority welfare reforms
• Eaga key supplier in this market e.g.
- Department of Energy and Climate change
- BBC
- Legal Services commission
• Potential to secure further contracts for other services where social welfare needs
are central theme
• Combination with Carillion creates new opportunities
- access to Carillion’s large customer base
- ability to deliver wider integrated service offering including some BPO
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22. Revenue synergies
Opportunities for cross-selling and accelerating growth
• Carillion already receiving many requests from existing customers for energy
efficiency/low carbon services
• Adding a market-leading capability in energy efficiency/low carbon will create
opportunities for Carillion to sell these services to new and existing customers
- for support services
– Carillion manages over 100,000 properties for public, private sector
blue-chip and Regulated sector customers eg
– 43,000 houses for Ministry of Defence
– 7,000 properties for BT
– Carillion provides asset management and maintenance services for
substantial sections of the road, rail and utility services networks
- for Public Private Partnership projects and other new buildings and infrastructure
- in UK, Canada & Middle East e.g. Abu Dhabi building first ‘zero carbon’ city
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23. Business integration
• Thorough due diligence carried out to provide clear integration plan
• Full access to, and co-operation of, Eaga
• Experienced integration team with strong track record
• Integration team will include members of Eaga senior management team
• Eaga, based in North East, will become a Carillion business unit reporting
directly to Carillion Chief Executive
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24. Conclusions
• Creates scalable platform to build the UK’s largest independent energy services
provider
• Creates leading positions in energy efficiency/low carbon markets with strong
growth potential
• Increases Carillion’s capabilities to provide integrated support services solutions
• Attractive cross-selling opportunities
• Delivers substantial shareholder value
• Immediately earnings enhancing even before synergies(1)
• Builds on Carillion’s positive start to 2011 and previously announced targets
for growth
(1) See slide 2
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26. Facts about Carillion
Support services
• We are one of the UK’s largest facilities management companies, with the skills
and resources to provide all the services needed to manage and maintain property,
road, rail and utility infrastructure
• We provide facilities management and other support services for over a hundred
thousand buildings, including 43,000 houses for the Ministry of Defence and 7,000
properties for BT
• We provide management and maintenance services for some 17,000 kilometres of
road in the UK and Canada
• In the UK, we provide extensive services for public utility networks, including 120
million miles of copper telecommunications cable for Openreach
Public Private Partnership (PPP) projects
• We have been a leader in PPP projects since the inception of the UK’s Private
Finance Initiative in the early 1990’s
• Since then, we have won over 50 PPP contracts in the UK and Canada for
hospitals, schools, prisons, military accommodation, roads and railways
• We have sold 30 PPP equity investments generating proceeds of some £327
million and a pre-tax profit of over £122 million
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27. Facts about Carillion
Middle East
• We have 40 years experience of operating in the Middle East, where we have built
an outstanding reputation for quality and reliability
• We have built many of the region’s iconic landmark projects, including Dubai
Festival City, the Grand Mosque in Oman and the recently completed Yas Hotel,
which is the centre piece of Abu Dhabi’s new Formula 1 Grand Prix circuit
Construction services (excluding the Middle East)
• Our history in construction spans almost two centuries, as Carillion brings together the
heritage of Tarmac, Mowlem and Alfred McAlpine
• Carillion has continued to deliver outstanding projects, such as the new Government
Communication Headquarters, Cheltenham, 15 major hospitals, some 150 new
schools, several prisons and numerous motorway, trunk road and rail projects
• In Canada, where we have operated for nearly 50 years, we have also built a
reputation for delivering high quality projects, particularly Public Private Partnerships
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28. Facts about Eaga
• One of the UK’s leading green support services companies
• A 20-year track record of developing, marketing and delivering household energy
efficiency solutions
• Employs around 4,000 people
• Working with central and devolved government, utility companies, local authorities
and housing providers, delivering energy efficiency improvements in up to 2,300
households every working day
• Through its work to alleviate fuel poverty, Eaga has assisted more than 2.2 million
households since 2000 – helping to make their homes warmer and more
affordable to heat
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29. Facts about Eaga
• Installs around 37,000 heating systems annually and provides 24/7 cover to
more than 393,000 systems
• Made energy efficiency improvements, such as loft and cavity wall insulation,
in 250,000 homes last year.
• As an installation specialist in solar photo-voltaic and other renewable energy
systems, such as ground and air source heat pumps and solar thermal, Eaga
is at the forefront of the drive toward low carbon living
• A leading provider of outsourced managed services, eg on behalf of the BBC,
Eaga has assisted more than 343,000 households to switch from analogue to
digital TV, under the Switchover Help Scheme
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