Support services firm Babcock International Group posted a 25 per cent rise in underlying pretax profit - while claiming a possible takeover bid risks undervaluing the firm.
Profit rose to £44.6 million for the year to March 31 before taxes, amortisation of acquired intangibles and operating exceptional losses, the company said.
Revenues rose 15 per cent to £836.7 million.
Analysts said the results yesterday were helped by a strong performance in Defence Services and a lower-than-expected tax rate of 20.6 per cent versus guidance of about 24 per cent.
Babcock's directors recommended a final dividend of 4.25p per share giving a total dividend for the year of 6p, up 50 per cent from a year ago.
Numis Securities analyst Clive Forestier-Walker said: "Not surprisingly, with a potential bid in prospect, all stops would have been pulled out to produce an excellent outturn and this is reflected in the 50 per cent dividend increase."
He raised his target price to 345p from 306p and held his "hold" rating on the stock.
Chief executive Peter Rogers said: "The visibility of revenue resulting from an order book totalling £2.3 billiion gives us further confidence in both the short and medium term."
He said Babcock would consider acquisitions and said the firm was awaiting adjudication on potential contracts worth more than £5 billion.
"Of particular note are the bids for the Royal School of Military Engineering and the Defence Training Review which could add around £100 million a year to revenues for 25 years," Mr Rogers said.
Rivals BAE Systems and VT Group have until May 18 to clarify their intentions regarding a possible joint takeover of Babcock, the Takeover Panel has announced.
Babcock chairman Gordon Campbell said such a bid was likely to undervalue the firm.
"The board believes that such a bid risks undervaluing our successful support services operations and the excellent long-term prospects of Rosyth (shipyard)," he said in the statement.
Babcock helps maintain, refit and modernise UK warships including nuclear submarines and alongside BAE and VT will also help build a pair of aircraft carriers which the Royal Navy hopes to have in service by about 2015.
Mr Campbell noted that the marine business now comprises less than 20 per cent of Babcock's activities.
Its other businesses include military flight training and construction and engineering services for the rail and power transmission industries.
Analysts have said BAE is most likely interested in the marine-related operations while the broader support services business would fit with VT. ..SUPL: