Welcome from our Chief Executive

Carillion delivered a robust financial performance in 2012, despite market conditions remaining challenging. Our strategy to build a more sustainable business continues to contribute to our success, including winning new and probable orders in 2012 worth £5.2 billion.

A year into our 2020 sustainability strategy

Our robust performance continues to reflect the success of our strategy in creating a resilient UK and international business mix. Our strategy has also positioned the Group to take advantage of opportunities for growth over the medium term.

The development of our people, to enable them to increase their skills and reach their full potential, is fundamental in building a more sustainable business, to the benefit of the communities in which we operate and the wider UK economy. Carillion employs over 42,000 people. Around 20,000 of our employees work in the UK, where there continues to be a ‘gap’ between education and work, especially in science, technology, engineering and maths, that threatens the UK’s ability to deliver sustainable, long-term growth. To help bridge this gap we are working closely with our public and private sector partners in a number of ways.

Carillion is one of the UK’s largest private sector providers of training, with around 2,000 apprentices receiving training in our sector-leading training centres across the country. We are also firmly committed to building employment pathways for those who are in the hardest-to-reach groups in society. This is why we have continued to work in partnership with Business Action on Homelessness and others in the UK who are seeking to help the homeless find employment. I am proud to report that in 2012 Carillion celebrated its 500th work placement for homeless people and the 200th person gaining a job as a result of these placements. Also, in 2012 we were one of the first companies to sign the UK Government’s Social Mobility Compact, which aims to widen access to training and careers.

We also seek to create employment and training opportunities in our overseas businesses. For example, in Oman, we have training centres in which local people can learn a range of construction skills, while in Egypt, our Cairo Festival City contract team has grown its student training programme for local university students.

Our sustainability vision is focused on achieving six positive outcomes which are an integral part of our business strategy and designed to deliver benefits for Carillion and all its stakeholders.

A good example of this holistic approach is the work we have done with the UK Government’s Department for Energy and Climate Change to help 2.3 million people improve the energy efficiency of their homes and reduce the risk of fuel poverty. This approach, together with our sector-leading skills and resources, enabled us to win the Birmingham Energy Savers contract in 2012. Working in partnership with Birmingham City Council, we will deliver energy efficiency services to around 60,000 homes and public buildings in the city – and potentially to homes and buildings owned by other local authorities in the West Midlands – under a contract worth up to £1.5 billion over eight years. As part of this contract we have undertaken to create at least 360 new jobs and we expect this to lead to many more job opportunities across our supply chain partners.

As the largest independent provider of energy efficiency services in the UK, Carillion Energy Services can play a major role in delivering improvement in energy efficiency to cut carbon emissions. In 2012, we delivered energy efficiency savings for our customers that reduced carbon by 3.7 million tonnes. Looking forward, we are well positioned to meet the challenges of developing a low-carbon economy and to take advantage of the growing number of opportunities that this will generate, in terms of helping our public and private sector customers to cut carbon and reduce their energy costs. In Oman, the Muscat airport contract utilises a high-tech air conditioning system which reduces embodied carbon by 30% as well as decreasing the need for raw steel material.

Innovative solutions in a competitive market

Our sustainability vision also encourages innovation and investment in order to provide value-for-money solutions for our customers. An excellent example of this is EcoPod, which is a revolutionary heating system that can be fitted, or retrofitted, to a wide range of buildings, including apartment blocks, offices, hotels, schools and hospitals, to achieve savings on annual heating bills of up to 43%.

Building design is another area in which we use our expertise to create sustainable solutions, and we have many examples across our UK and international businesses, such as the New Oakville Hospital in Ontario, where Carillion Canada is working with partners to target a silver LEED (Leadership in Energy and Environmental Design).

None of this would, of course, be possible without excellent people with the skills and commitment to make our sustainability vision a reality. I believe that our commitment to becoming a more sustainable business helps us to attract and retain the excellent people we need and to make Carillion a fulfilling and rewarding place in which to work.

The health and safety of our people, and of all those who are affected by what we do, remains our first priority and at the top of our sustainability agenda. I am disappointed to report that our Accident Frequency Rate in 2012 increased slightly from 0.074 reportable accidents per 100,000 hours worked to 0.076, although more than four out of five of our projects achieved zero reportable accidents. Despite this sector-leading performance, I deeply regret that one fatal accident occurred on a Carillion work site in 2012, when an employee was fatally injured when he was struck by a train. This personal tragedy has been deeply felt by all his colleagues in Carillion and our thoughts are with his family and friends. I remain determined to ensure that we continue to do everything in our power to achieve ‘Target Zero’, our objective of reducing reportable accidents to zero.

You will find further details on our safety performance in the health, safety and wellbeing section, together with many more examples of our progress towards becoming a more sustainable business and the challenges we continue to face in delivering our sustainability strategy and objectives. I hope you find them inspiring and would welcome your feedback on our performance.

Richard Howson
Chief Executive

Highlights of the year

 Platinum Big Tick

in Business in the Community’s 2012 Corporate Responsibility Index

 7th position

among nearly 3,000 organisations in the Carbon Reduction Commitment league table

 86%

of global waste diverted from landfill

 1%

pre-tax profits in cash and time contributed to community activities

 20%

reduction in our All Accident Frequency Rate

 3.7 million

tonnes of carbon savings for our customers

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