Quebec engineering firm Genivar Inc. tripled its revenue in the fourth quarter as it booked results from a major acquisition last August.
The results were unveiled Wednesday, the second day of testimony before the Charbonneau Commission by a former Genivar vice-president, François Perreault.
Mr. Perreault has been providing details on alleged improper links between Genivar, one of Quebec’s biggest engineering firms, and political parties.
Genivar was part of a cartel of Montreal engineering firms that divided up the pie on municipal public works contracts in the mid-2000s, Mr. Perreault told the commission on Tuesday.
Mr. Perreault said the firms rigged their bids and picked the winners of contracts with the aid of the head of financing at the Union Montreal political party, between the years 2004 and 2008.
In return, the firms funnelled hundreds of thousands of dollars in illegal donations to the party, Mr. Perreault – who resigned from his position at Genivar last Friday – testified.
In his testimony on Wednesday, Mr. Perreault detailed how subcontractors doing business with Genivar routinely sent invoices to the company without actually providing any services.
He also said he had personally given Union Montreal financing official Bernard Trépanier large sums of cash, ranging between $20,000 and $50,000 at a time.
The commission is investigating allegations of corruption and collusion among engineering and construction firms and political parties.
Genivar said last month it had uncovered “inappropriate conduct” after an internal investigation into the company’s role financing political parties and bidding on municipal contracts.
An unnamed employee was put on leave of absence until a review by a special committee of the board is completed, the company said.
Genivar spokeswoman Isabelle Adjahi said she cannot comment directly on Mr. Perreault’s testimony, but said the gist of it “corroborates” what the company has uncovered so far in its internal investigation of alleged improper dealings, including the use of false invoices.
“What happened is regrettable. We condemn these acts,” she said in an interview Wednesday.
The company has recently implemented several measures to ensure such actions never occur again, including tougher internal controls and the hiring of an ethics officer, said Ms. Adjahi.
Genivar said on Wednesday that total revenue in the fourth quarter was $516.5-million, up 200.3 per cent from $172-million in the year-earlier period.
Montreal-based Genivar said the revenue growth was mostly attributable to the acquisition of British firm WSP Group PLC in a $442-million deal.
Net profit for the fourth quarter was $23-milion, or 45 cents per share, up from $10-million, or 37 cents, in the year-earlier period.
Excluding unusual items, profit was $26.5-million, or 52 cents per share, up from $10-million, or 37 cents. The 52-cent share profit was 13 cents above analysts’ consensus estimate.
Desjardins Securities analyst Pierre Lacroix said in a research note Wednesday that the results are better than expected.
Adjusted EPS of 52 cents was above his estimate of 42 cents.
However, the company’s 2013 guidance for earnings before interest, taxes, depreciation and amortization (EBITDA) of $160-million to $180-million is below the consensus range of $180-million to $200-million, said Mr. Lacroix.
“From a trading perspective, although the company’s guidance will likely lead to some pressure on earnings forecasts, we expect the shares to react positively to the results given the WSP acquisition is, thus far, delivering on its promise – providing added comfort to investors that the dividend payout is sustainable,” he said.