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Carillion sees 15pc growth following tax cut

Construction giant Carillion said today it is expecting its full year earnings to grow by about 15 per cent thanks to a reduction in the group’s tax rate.

In a pre-close trading update, ahead of the firm’s preliminary results on 4 March 2009, the firm said earnings for the 12 months to 31 December are expected to grow by approximately 15 per cent, some 5 per cent ahead of expectations.

Carillion has successfully negotiated a tax rate reduction regarding tax losses acquired with Alfred McAlpine, which will see the group's tax rate reduce from 25 per cent in 2007 to around 20 per cent in 2008, and beyond.

Carillion bosses told Construction News that the company’s £20 billion order book was providing the company with stability in the current uncertain economic climate.

Finance director Richard Adam said: “We do not live in an economic bubble. It will get tougher for everyone.

“But we have got a £20 billion order book. It will see us through 2009 and beyond. The vast majority of what we do is for Government. If anything they want to accelerate spending to stimulate the economy.

Chief executive John McDonough added: “Our order book is not fantasy numbers, they are hard numbers. They are all signed contracts.

“But in times like this, some of our sectors are facing a tough time. We will be keeping a close eye on what’s going on.”

The trading update said Middle East operations will deliver “strong” growth with an increasing contribution from Abu Dhabi.

The emirate’s expansion plans have provided Carillion with £1 billion of work this year.

The firm said that going forward it expects growth to be increasingly driven by Abu Dhabi.

Carillion expects to build on "its strong performance in 2008 and deliver materially enhanced earnings in 2009.”

The group said that integration and reorganisation cost savings following the acquisition of Alfred McAlpine are now expected to reach £50 million by the end of 2009, up from original forecasts of £30 million.