Carillion revenues rose 14% to £5.21bn in 2016 (£4.58bn in 2015), accompanied by £4.8 billion of new orders and probable orders in 2016 (2015: £3.7 billion), according to its final results for the year ended 31^st December 2016 published this morning.

Support services were the main profit driver – the division contributed over two thirds of total underlying operating profit and more than offset expected reductions in profit from Public Private Partnership projects and Middle East construction services. Revenue in support services grew by 7% to a record £2,712.7 million.

Strong growth in UK construction workloads also contributed to revenue growth with an increase in turnover from £1.2 billion to £1.5 billion, although UK construction margin slipped from 3% to 2.7%.

However Group pre-tax profits have fallen  5% to £147 million.

Carillion’s high-quality order book plus probable orders was worth £16.0 billion at 31 December 2016 (2015: £17.4 billion). The Group is also expecting over £1.5 billion of revenue from framework agreements not yet included in orders, probable orders or revenue visibility.

Carillion is also anticipating a substantial pipeline of contract opportunities worth £41.6 billion (2015: £41.4 billion)

The Board has proposed a final dividend for 2016 of 12.65 pence per share (2015: 12.55 pence), making the total dividend 18.45 pence for 2016 (2015: 18.25 pence), an increase of one per cent on the total dividend paid for 2015.  

Carillion described the intake of new orders and probable orders in 2016 as an encouraging performance, given that the pace of contract awards in the UK slowed after the EU Referendum and that the prolonged low oil price continues to affect the pace of customers' investment programmes in the Middle East. The firm said trading conditions in construction markets in the Middle East and in Canada continue to be challenging.

Carillion said it has good visibility of some £1.5 billion of revenue from framework contracts over the next five years, in addition to the revenue included within orders and probable orders. If expected revenue from frameworks and variable works is included, revenue visibility for 2017 would increase to 81%. The value of the Group’s pipeline of contract opportunities at 31 December 2016 remained strong at £41.6 billion (2015: £41.4 billion).

Revenue in the Group’s construction division, excluding the Middle East, grew strongly by 21% to £1,520.2 million (2015: £1,258.3 million), driven by growth in the UK where revenue increased to around £1.5 billion (2015: £1.2 billion), reflecting a number of high-quality contract wins for both infrastructure and building over the last 18 months. In Canada, Carillion is now focusing only on construction for Public Private Partnership projects - revenues reduced to £67 million in 2016 (2015: £107 million).

Carillion also said that sector leadership in sustainability also remains fundamental and an integral part of the Group’s strategy, giving it a competitive advantage when bidding for and delivering contracts and contributing significantly to profits. Carillion estimates that the contribution from sustainability to the Group’s total profit in 2016 was £36.1 million (2015: £33.8 million), already close to its target of £40 million by 2020.

Commenting on the results, Carillion Chairman, Philip Green, said:

“In 2016, Carillion’s performance was led by revenue growth and an increased margin in support services, together with good cash flow. Given the size and quality of our order book and pipeline of contract opportunities, our customer-focused culture and integrated business model, we have a good platform from which to develop the business in 2017.”

“We will accelerate the rebalancing of our business into markets and sectors where we can win high-quality contracts and achieve our targets for margin and cash flows, while actively managing the positions we have in challenging markets. We will also begin reducing average net borrowing by stepping up our ongoing cost reduction programmes and our focus on managing working capital.”