Carillion's confidence and new contracts lifts shares from lows

The FTSE 250 support services and construction group said growth in first half revenues would offset any effect on profit from a slight reduction in underlying operating margins.

On the outlook, directors higlighted the high level of revenue visibility for the full year, and in relation to Brexit risks, that it has no significant operations in mainland Europe and "robust plans" put in place before the referendum to cope with any possible impact on the business from a vote to leave the EU.

First-half revenue and operating margin in the support services business were both expected to move ahead, while the pblic private partnership (PPP) arm delivered a lower quantum of equity sales than the same period last year.

In construction services, first-half revenues and margins from the Middle East are expected to be slightly lower than in the first half of 2015, while outside the the Middle East revenue appeared to increase with operating margin towards the upper end of the target range of 2.5-3.0%.

In the first six months of 2016, Carillion has won orders and probable orders worth £2.5bn and has visibility over 97% of full year revenue, up from 84% at 31 December.

This included a £240m 4.5-year contract extension won by the Omani business from the Petroleum Development Oman (PDO) to continue the provision of integrated facilities management services at twelve locations across the sultanate.

Carillion also won two contracts worth a combined £366m over a period of up to 10 years with the Northern Ireland Housing Executive for housing maintenance services.

At the end of June, the value of the group order book plus probable orders remained at the £17.4bn level from the end of December, while it saw a pipeline of potential contract opportunities worth roughly £41.5bn.