Support services company Carillion is reporting strong earnings growth this morning with the publication of its annual results to 31st December 2011. However, revenues are down 9.1% to £5.1 billion.
The Group said the drop in revenue from £5.6 billion in 2009 was primarily due to the sale of non-core businesses and equity investments in Public Private Partnership (PPP) projects, the planned reduction in UK construction activity and an ongoing focus on contract selectivity and financial discipline.
Underlying profit before taxation is up 7% to £188.1 million from £175.5 million in 2009 - with growth more than offsetting the £17 million of underlying profit before taxation contributed by the non-core businesses and investments in Public Private Partnership projects sold in 2009. Total operating margin increased to 4.2% from 3.8% in 2009.
The Group said it had a strong cash flow and balance sheet, with cash flow from operations of £230.2 million well ahead of profit from operations of £194.9 million (2009: £268.2 million and £190.1 million, respectively) and net cash at 31 December 2010 of £120.2 million (2009: £24.9 million).
Total revenue reduced by 9% to £5.1 billion (2009 -£5.6 billion). The Group said this reflected the effects of selling non-core businesses and investments in Public Private Partnership projects in 2009, the planned re-scaling of UK construction and a focus on margins through contract selectivity and financial discipline.
Carillion said it has maintained a very strong order book worth some £18.2 billion (2009: £17.9 billion) –despite the sale of a further Public Private Partnership equity investment that removed £0.5 billion from the order book.
Carillion Chairman, Philip Rogerson, commented:
"I am pleased to report that Carillion performed well in 2010, building on its strong track record to deliver good earnings growth, despite tough market conditions, particularly in the UK. 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. 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.
“In addition, since the year end Carillion has announced a recommended £306.5 million offer for the acquisition of Eaga plc. The Board believes the acquisition would be immediately earnings enhancing and would build on the Group’s previously announced objectives for growth”.
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