TOP NEWS: Carillion Expects Solid First Half Revenue, Signs New Deals

Wed, 06th Jul 2016 06:33

LONDON (Alliance News) - Construction and support services company Carillion PLC on Wednesday said it expects a growth in revenue in its first half to offset a slight reduction in its underlying operating margin, as it announced it has been awarded a number of support services contracts worth up to GBP600.0 million.

The FTSE 250-listed company said it expects its performance in the first half to be led by revenue and margin growth within its support services division, which it said is expected to offset the effect on its profit of a slight reduction in underlying operating margin.

This dip is due to the quantum of equity sales in its public private partnership projects being lower than in the first half of the previous financial year, as well as a one-off contribution from the reorganisation of Middle Eastern labour facilities a year earlier which was not repeated.

Carillion said it expects its average net borrowing to be in line with its full-year average from 2015 of around GBP539.0 million, though said its net borrowing at June 30 will be around GBP295.0 million, higher than a year earlier, reflecting a number of "temporary factors", including the effect of paying the final dividend for 2015 in June 2016.

Carillion said its new first-half orders and probable contracts were worth around GBP2.50 billion, including two deals announced in a separate statement on Wednesday.

The company said it signed a four-and-a-half-year contract extension for exploration company Petroleum Development Oman to continue the provision of integrated facilities management services at twelve locations across Oman, worth GBP240.0 million.

Meanwhile, in a separate deal, Carillion was awarded two contracts by the Northern Ireland Housing Executive to deliver maintenance services for its housing stock, worth up to GBP366.0 million over a period of up to 10 years.

Carillion said its order book plus probable orders stood at GBP17.40 billion at the end of the first half, on June 30, and said it continues to have a substantial pipeline of specific contract opportunities, which at the half-year was worth approximately GBP41.50 billion.

Carillion said it continues to expect our full-year performance to be led by revenue and margin growth in support services, with public private partnership projects, Middle East construction services and construction services excluding the Middle East also performing in line with expectations.

"Therefore, with revenue visibility for the full year of 97% and a strong pipeline of further contract opportunities, the group remains on track to make further progress in 2016," the company said.

Carillion added that the referendum vote in favour of the UK leaving the European Union has "obviously created uncertainty for the UK economy as a whole and therefore for businesses generally, including Carillion, and it is clearly too early to predict the extent to which businesses will be impacted by this result".

However, Carillion said it has no significant operations in mainland Europe and prior to the referendum noted it undertook extensive work to assess the possible impact on its business of a vote to leave.

By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland

Carillion Plc