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Carillion H1 2016 results show support services made up 60% of profit as finance director retires

  • Group revenue up 10 per cent to £2.5bn
  • Construction division posts 12 per cent increase
  • Finance director to retire in December

Carillion’s support services division has accounted for 60 per cent of its total underlying operating profit for the first half of the year.

Group revenue increased by 10 per cent to £2.49bn for the period, compared with £2.26bn in the same period of 2015, while operating profit remained relatively flat at £112.7m, compared with £112.5m a year earlier.

Carillion said this was led by its support services division, which increased its underlying profit by 30 per cent to £75.9m for the period, while revenue grew by 8 per cent to £1.33bn.

The division has also increased its operating margin to 5.7 per cent in H1 2016 from 4.7 per cent in H1 2015. The contractor said it expected its support services growth to continue for the second half of the year.

Elsewhere in the company, Carillion posted a £10.5m charge, which it is expecting to pay in compensation to the victims of the blacklisting scandal.

Carillion’s construction services division also saw growth. It posted a 12 per cent increase in revenue to £687m, compared with £611m in H1 2015.

Underlying operating profit for the division increased by 7 per cent to £20.7m, although its operating margin reduced slightly to 3 per cent, from 3.2 per cent a year earlier.

The contractor said it expected operating margin to continue to reduce to a “more normal level” of between 2.5 and 3 per cent, as the “temporary benefits” of rescaling its UK construction business – namely lower bid costs – have now ended.

“A margin of 3 per cent is a very satisfactory result at the top end of our target range and equal to the full-year margin we achieved in 2015,” it added.

Overall, Carillion posted a 24 per cent jump in pre-tax profit to £83.9m, compared with £67.5m for the same period the year before.

The contractor said it would up its interim dividend by 2 per cent to 5.8p per share.

Carillion has also announced that its finance director Richard Adam will be retiring from the board in December.

He will be succeeded by Zafar Khan, who has been Carillion’s group financial controller since 2013.

Prior to that, Mr Khan had been the finance director at Carillion’s Al Futtaim joint venture in the UAE after joining the company in 2011.

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