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Tuesday, 19 September, 2000, 11:15 GMT 12:15 UK
Carillion set for growth
GCHQ, Cheltenham
Carillion is redeveloping Cheltenham intelligence centre
The UK firm rebuilding the GCHQ intelligence centre in Cheltenham has predicted booming revenue for companies specialising in government projects.

Carillion, which in July won a 380m contract to put up the new GCHQ building, claims it has become the leading constructor for projects ordered under the Private Finance Initiative.

The firm's turnover in PFI schemes, in which private sector firms are commissioned to build state projects, more than doubled to 126m in the first half of 2000 compared with the same period last year, Carillion said in its interim results.

PFI, used in the construction of hospitals, prisons and courts, represents a growing market for firms with relevant expertise, it said.

Increasing opportunities

"The growing experience and confidence in PFI is leading to an increasing number of opportunities for companies with specialist PFI knowledge and skills," said company chairman Sir Neville Simms.

"PFI is demonstrating it does offer predictable long-term cash-flow."

The firm has now secured 14 PFI projects, including a transport development in Nottingham and the GCGQ scheme, and has been shortlisted for the building of a 30m magistrates court in Manchester.

Orders throughout the group, which has also won a 500m project to manage 8,500 BT properties, reached 2.45bn at the end of June, 20% up from the year before.

Lax financial control

Overall operating profits rose 13% to 15.8m between January and June compared with the first six months of 1999.

The results announcement confirmed that Carillion was absorbing a one-off 25m charge to cover lapses in financial control at its Crown House Engineering subsidiary.

New managers at Crown House Engineering are overseeing a major restructuring to prevent further "unacceptable" performance, Sir Neville said.

Transport boom

Carillion also reported turnover up by a quarter in its infrastructure management division, which handles road and rail maintenance for companies such as Railtrack.

The division will benefit "significantly" from a 180bn investment programme announced by the government over the summer, Sir Neville said.

Carillion shares were unchanged at 101p in mid-morning trade in London.

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