Carillion picks up £1.5bn contract as order book grows

Lynsey Barber
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Anfield stadium is one of Carillion's lucrative contracts (Source: Getty)

The figures

Carillion's pre-tax profit jumped by 29 per cent in 2014 to £142.6m, on revenue of £4.1bn, which remained flat on the previous year.

For the full year to the end of December, underlying pre-tax profit slipped slightly to £173m, down one per cent, taking into account "the planned reduction in the sale of equity investments in Public Private Partnership projects", the construction firm said.

Its order book grew to £5.1bn from £4.9bn a year earlier, and its pipeline of contract opportunities grew to £39.2bn from £37.5bn.

It also picked up a new contract with public sector built environment firm Scape to manage facilities, worth £1.5bn over six years.

Why it's interesting

A little over six months after Carillion's failed bid for Balfour Beatty, the construction firm is now free to make a further bid for the British company under Takeover Panel rules. This could renew the on-again off-again deal talks torpedoed by Balfour's Parson's Brinkerhoff arm which has now been sold off.

It has acquired a number of lucrative contracts, including developments in Kings Cross and Dubai, and is the firm building the high-profile new Anfield stadium for Liverpool.

Having benefitted from increasing government outsourcing with contracts maintaining roads, prisons, railways and military bases over the last few years, a slowdown in the run-up to the election has tempered growth for Carillion.

What Carillion said

In 2014, our markets remained challenging and we continued to be very selective in choosing the contracts for which we bid in order to maintain margin discipline, which continues to be a key element of our strategy. Looking forward, we expect the steady improvement in our markets that began in 2014 to continue in 2015, subject to a sustained macro-economic recovery.

We have also continued to strengthen the Group's position in growth markets, notably in support services through a further bolt-on acquisition in Canada. Therefore, with strong cash flow, a high-quality order book, record revenue visibility and a growing pipeline of contract opportunities, we continue to believe the Group is well-positioned to make progress over the medium term," Carillion chairman Philip Green.

In Short

While there was more of the same for Carillion, with results broadly in lie with the previous year, its order book continues to grow. With a £1.5bn contract win, it appears the pre-election government contract slowdown is on track to return to normal.

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