Contractor Carillion is on course for a good year, despite making no profit from its construction business in the first six months.

Carillion reported a £19.1m pre-tax loss, compared with a £7.7m profit for the same period last year, after exceptionals and goodwill writebacks. The loss was because of the sale of its M&E arm, Crown House Engineering, to Laing O’Rourke for £17.3m in June.

Carillion made an underlying interim pre-tax profit of £19.9m compared with £10.5m last year.

The construction arm did not make a profit, but chief executive John McDonough said this was the result of the timing of projects.

He said: “This will improve as projects started in the first half of 2004 move further into construction and others for which we are the preferred bidder reach financial close.”

Turnover was £1bn, a rise of 9% compared with the £932.6m in the first half last year.

The sale of two PPP equity stakes in June made an exceptional profit of £7.7m. McDonough said he will continue to invest in PPP equity stakes.

The share price rose 1.5% to 200p after the announcement of the results.

Carillon announced on Tuesday that it has been appointed preferred bidder on a £180m Scottish schools PPP project in a joint venture with Amey and Halifax bank. Renfrewshire council will build 10 schools near Glasgow for about £100m.

Construction will start in January with completion expected in October 2007.

Carillion has also appointed David Garman, of logistics company TDG, a non-executive director.

  • Interserve, the support services group, this week reported a 28% rise in pre-tax profit to £14.2m for the six months to 30 June 2004. Turnover was up 25% to £663m.