Babcock International, the support services company which owns the Faslane and Rosyth dockyards in Scotland, yesterday reported a 53% rise in annual profit and said it was increasing its dividend by 43%.

The company described the past 12 months as "extremely successful", adding that the outlook for the current year was positive.

The biggest supplier of services to the Royal Navy posted adjusted pre-tax profit of £95.5m for the year ending March 2008. The group said it had an order book of £3bn with a strong bidding pipeline.

Babcock is one of the companies designated to built two aircraft carriers for the Royal Navy. The company is upgrading its Rosyth dockyard in Fife to assemble the 65,000-tonne ships, although contracts to build them have yet to be signed.

Numis analyst Clive Forestier-Walker said he expected the opportunities for Babcock within the civil and nuclear sectors to prove "very significant" over the longer term.

Babcock also said the result of talks with the Ministry of Defence relating to new submarine support contacts should become clearer over the next six months.

"We're making really good progress on it and the timing I gave last year was third quarter this calendar year," Peter Rogers, Babcock's chief executive told Reuters.

During the year, Babcock acquired Devonport Management, International Nuclear Solutions and Strachan & Henshaw, but has ruled out making more major purchases in the near term.

"I'd hesitate about making another really big one (acquisition) in the next six months but we have the capacity to handle smaller ones," said Rogers.

The group added that all major markets remained attractive.

Babcock's rail business recovered from a difficult first half after a management overhaul and returned to profit after being chosen as one of Network Rail's four specialist renewals contractors last September.

Last May, Babcock agreed to buy Devonport, a dockyard which refuels nuclear submarines, from US group KBR, the Glasgow-based Weir Group and Balfour Beatty.

The company announced a final dividend of 8.20p, making dividend payments for the full year to 11.50p, up 43% on the previous year.

Elsewhere in the sector, VT Group, the defence and support services company, boosted its orders by almost a third to £4.9bn as it boasted "excellent progress" in the year.

VT, formerly Vosper Thornycroft, has also won work on major long-term defence programmes such as the Future Strategic Tanker Aircraft scheme, which will provide aircraft and support needed by the RAF to fly air-to-air refuelling and transport missions worldwide.

Southampton-based VT is forming a partnership with BAE Systems to help build the navy's new aircraft carriers.

Shares in Babcock fell by 1.5% - down 9p to 589.5p while VT stock closed 16.5p, or 2.4%, lower at 675p.