It’s a billion for Carillion as new contracts announced

CONSTRUCTION and support services giant Carillion has revealed that it has been awarded new contracts amounting to around £1bn.

In support services the Wolverhampton firm has been awarded new contracts or is in one-to-one negotiations on contracts with an estimated total value to Carillion of more than £350m. 

These include new facilities management contracts or contract extensions in the UK for Direct Line Group, Verizon and Virgin Media.

In Canada, Outland, the business Carillion acquired in May this year, is in one-to-one negotiations with customers as their preferred delivery partner for a number of new contracts and contract extensions to provide remote site accommodation and associated services. 

Carillion joint ventures are also in one-to-one negotiations to deliver further support services work for the Defence Infrastructure Organisation and for Openreach to deliver a substantial proportion of its Superfast Extension Programme to extend Superfast Broadband to 95% of the UK by the end of 2017. 

In construction, Carillion has secured preferred delivery partner positions and new contracts worth more than £550m. These include further projects for the Defence Infrastructure Organisation, together with projects for the Paradise Circus Limited Partnership in Birmingham and the Kings Cross Central Limited Partnership in London.

A Carillion joint venture has been selected as the preferred bidder by the National Treasury Management Agency in the Republic of Ireland to deliver bundle five of its schools public private partnership programme, which comprises five schools located in counties Meath, Carlow, Wicklow and Wexford. 

As well as delivering design, construction and support services over the 27-year concession period, Carillion also expects to invest equity in the project that will generate significant concession revenue. 

Carillion chief executive, Richard Howson, said: ”I am pleased to say that the pace of work winning in the second half of the year has continued to pick up, as we expected.

“Much of the £1bn of new work announced today reflects our continuing success in winning repeat work for long-term customers, consistent with our selective approach to contracts and margins. 

“We also continue to see some improvements in market conditions, especially in the UK, and following the UK Government’s spending review, we expect to see further opportunities for outsourcing and capital projects over the medium term.”

Meanwhile, in a 2015 pre-close trading update to the London Stock Exchange, Carillion has said it is on track to achieve its full year targets.

It said total revenue is expected to grow strongly, with the group’s operating profit in line with the guidance it gave at the half year. 

“Overall, this is particularly pleasing, given that much of the work we are currently delivering was won during the economic downturn, and demonstrates the benefits of maintaining a selective approach to choosing the contracts for which we bid, together with our rigorous risk management processes, efficient centralised operating platform and ongoing cost reduction programmes,” it said.

“Profit will be less second-half weighted than in previous years, although we expect to revert to a greater second half weighting in 2016.”    

Carillion said operating cash flow remains strong and, following the renewal of its main revolving bank facility, it now has total available funding of some £1.4 bn.

The value of the firm’s order book plus probable orders at the year end is expected to remain very strong at around £17bn (31 December 2014: £18.6bn).

Carillion’s pipeline of contract opportunities is expected to increase at the year end to over £41bn (31 December 2014: £39.2bn).