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| Carillion to Change Decision in the Mowlem Case Construction company Carillion plc is providing an update on the assessment of fair value adjustments to the net assets of Mowlem plc, which it acquired on 23 February 2006, and on the cost synergies expected as a result of integrating the Carillion and Mowlem businesses. Goodwill has been increased by £80 million to a total of £474 million. This has no material impact on expected earnings nor on the Group's net debt forecasts, also set out in that announcement. Earnings will increase as a result of increased cost synergy savings. Since completing the acquisition of Mowlem, it has become clear that prior to acquisition the position on a small number of large contracts had deteriorated further, particularly the Dublin Port Tunnel and Exeter Schools projects. As a result, the provisional fair value adjustment of £45 million relating to contract write-downs is now expected to increase by a further £90 million. This reflects a firm view of the expected outturn for these contracts. In the event that actual write-downs are different from expectations, full visibility will be provided of the amounts involved. In addition, there will be a non-cash adjustment of £30 million to cover costs associated with businesses closed by Mowlem in the second half of 2005 and in 2006 prior to acquisition. These increases in goodwill are expected to be reduced by £40 million in respect of a surplus of proceeds over net assets on the disposal of a number of Mowlem businesses. write your comments about the article :: © 2006 Construction News :: home page |