Carillion profits up to £188m despite revenue decline
SUPPORT services group Carillion has reported a 7% increase in full year underlying pre-tax profits despite a 9% fall in revenue.
The company said it had performed well in 2010, building on its strong track record to deliver good earnings growth, despite tough market conditions, particularly in the UK.
Underlying pre-tax profit grew to £188.1m, from £175.5m in 2009, with the group’s underlying operating margin increasing to 4.2% from 3.8% the year before. Underlying earnings per share increased by 6% to 39.4p.
The Wolverhampton-based company said profit continued to be cash-backed, with underlying cash flow from operations of £230.2 m. This was down from £268.2m in 2009 but ahead of underlying profit from operations of £194.9m.
Consequently, the group said its financial position remained very strong, with net cash at the year-end of £120.2m, substantially ahead of the £24.9m reported in 2009.
The fall in revenues – from £5.6bn to £5.1bn – has been mainly attributed to the sale of non-core businesses and equity investments in Public Private Partnership (PPP) projects in 2009.
A reduction in UK construction activity and an ongoing focus on contract selectivity and financial discipline were flagged up by the group.
Carillion said despite the tough trading conditions, revenue prospects looked good with an 82% visibility for 2011. This was said to reflect a strong performance winning new orders.
The group’s forward order book stood at £18.2bn by the year-end, up from the £17.9bn reported at the end of 2009, despite the sale of a further PPP equity investment during 2010 that removed £0.5bn from the order book.
Probable orders at December 31, 2010 stood at approximately £0.9bn and the group said it had its largest ever pipeline of contract opportunities, notably in markets where it was targeting strong or substantial growth over the medium term, namely Canada, the Middle East and UK support services.
Such was the performance, the board has recommended a final dividend for 2010 of 10.7p per share, making the total dividend for 2010 15.5p, up from 14.6p in 2009.
Philip Rogerson, Carillion chairman, said he was pleased with the group’s performance and its success in building on its strong track record to deliver earnings growth.
“Looking forward, we expect the global economic environment to continue to make trading conditions difficult, especially in our UK markets. However, Carillion has a resilient and well-balanced business mix, good revenue visibility and a record pipeline of contract opportunities,” he said.
“Therefore, the board believes that Carillion is well positioned to make further progress in 2011 and to achieve its objectives for medium-term growth, namely, to double its revenues in Canada and in the Middle East and to deliver substantial growth in UK support services.”
He added the recent £306.5m acquisition of Eaga was expected to be earnings enhancing and would build on the group’s objectives for growth in 2011.
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