Carillion has reported a 5% drop in pre-tax profits despite delivering strong turnover and profit growth at its UK construction division.

According to results published yesterday, pre-tax profits had slipped to £147 million on revenues up 14% to £5.2 billion in 2016, helped by the uplift in UK construction turnover from ££1.2bn to £1.5bn.

Support services continues to be the main profit driver although revenue growth at the division was more modest, up 7% to £2.71bn.

Underlying margins across the business came under pressure falling from 5.3% to 4.9%, due to fall for Public Private Partnership projects and Middle East construction services.

UK construction margin slipped from 3% to 2.7%, still an industry beating for a major contractor.

Chairman Philip Green said: “In 2016, Carillion’s performance was led by revenue growth and an increased margin in support services, together with good cash flow. Given the size and quality of our order book and pipeline of contract opportunities, our customer-focused culture and integrated business model, we have a good platform from which to develop the business in 2017.

“We will accelerate the rebalancing of our business into markets and sectors where we can win high-quality contracts and achieve our targets for margin and cash flows, while actively managing the positions we have in challenging markets.

“We will also begin reducing average net borrowing by stepping up our ongoing cost reduction programmes and our focus on managing working capital.”