Carillion continues to deliver strong earnings growth

Carillion plc is a British-based construction-services business which carries out track renewals on the UK rail network and contract work for Network Rail. The company has released their Full Year results, ending in December 2010, and their statement shows a strong growth throughout the company.

Some key highlights include:

•Underlying profit before taxation up 7% to £188.1 million – 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% – support services margin increased to 5.2%, Middle East construction services margin increased to 9.6% and construction services (excluding the Middle East) margin increased to 1.9%.

•Reported profit before taxation up 24% to £167.9 million (2009: £135.9 million).

•Underlying earnings per share (eps) up 6% to 39.4 pence (2009: 37.3 pence) – basic eps up 21% to 36.9 pence (2009: 30.5 pence).

•Proposed full year dividend up 6% to 15.5 pence (2009: 14.6 pence).

•Strong cash flow and balance sheet – 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) – reflecting 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.

•Forward order book worth some £18.2 billion (2009: £17.9 billion) – maintained a very strong order book 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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