Shares in environmental services outfit Fountains were scythed back by 18.5p to 131.5p today on a disappointing profits alert for the year to 30 September. In a trading update, chairman Barry Gamble warned full year figures would fall short of expectations due to longer than expected lead times to the start of certain work programmes. ‘Significant’ rail work, which he had expected to deliver to a concentrated timetable, will not be completed until next financial year. While Fountains has already absorbed the costs, revenues for the work won’t swell company coffers until next year. Gamble also warned of a short-term rise in costs relating to an un-named electrical utility vegetation management contract, which will also hurt profits. These machinations mean second half profits will fall significantly short of the first, hence the warning for the year. Despite this blip, Gamble was at pains to point out the issues are confined to the rail and electrical utilities business, with trading in other parts of the business remaining on track. Furthermore, frantic bidding efforts mean the forward order book now stands at just under £70m and Fountains is in the running for a number of significant new long-term contracts. As a result, the group’s progressive dividend policy is not under threat, and investors can expect an improved payout for the year. Frequently backed by Growth Company Investor, Fountains has been a pretty consistent performer in recent years and offers investors tidy cash generation and long-term earnings visibility. Figures for the half to March were strong, with pre-tax profits lifted 14% to £724,000 (although earnings per share suffered a 19% fall to 3.51p after recent dilution). Well worth holding for the long-term.