Carillion wins GBP1.7bn new business since half year

Shares in Carillion surged after the construction and support services group expressed confidence over its full-year targets, as it said it has signed contracts, secured preferred bidder positions and been awarded frameworks worth around £1.7bn since 30 June.

In UK infrastructure services, Carillion and its joint ventures have been selected by Network Rail for a number of frameworks and early contractor involvement contracts from which the company expects to generate over £400m of revenue.

These include the Midland Main Line Electrification project, which was recently ‘unpaused’ by the UK government, the Northwest Electrification project and the electrification of the Schotts line in Scotland.

In UK Construction, Carillion has secured contracts and preferred bidder positions that are expected to be worth £311m. These include the recently announced A14 upgrade, which is being delivered by a Carillion joint venture for Highways England and which is expected to be around £146m to the company, together with preferred bidder positions for a £90m contract to build the Great Arundel Court development on London's Embankment and a £75m schools contract for Peterborough City Council.

As announced on 11 August, the group’s joint venture has been selected as the preferred bidder for the Midland Metropolitan Hospital Public Private Partnership project in Birmingham that is expected to generate over £600m of revenue.

In Canada, since the half year a Carillion joint venture has been selected as the preferred bidder for the Stanton Hospital PPP project in Northwest Territories, on which it has now reached financial close.

Carillion will invest approximately £4m of equity in this project, which is expected to generate total revenue of over £220m.

Also in Canada, a Carillion joint venture has achieved financial close on the North Battleford) PPP hospital in Saskatchewan, having been selected as the preferred bidder for the project in the first half of 2015. The company will invest around £4m of equity in this project, which is expected to generate total revenue of over £140m.

In the Middle East, Al Futtaim Carillion, Carillion’s joint venture business in the UAE, has been selected as the preferred bidder for two commercial development projects in Dubai, which are worth approximately £90m.

Chief Executive Richard Howson said: "With cash flow remaining healthy and these recent contract successes, we remain confident of achieving this year's targets, including ending the year with strong revenue visibility for 2016."

Whitman Howard said Monday’s update is a timely reminder of the company’s ability to win projects. It noted that Carillion had a good period of contract success in 2013 and 2014, with well over £10bn of new work in the two-year period, and said the slight slowing in the first half of this year had caused some concern.

“The £1.7bn of new work won so far in the second half, highlighted today, should reassure some supporters and cause doubters to question their position,” it said.

At 0940 BST, Carillion shares were up 8.3% at 326.60p.