Carillion joint venture wins £190m schools contract

Carillion are set to work with Equitix on Priority School Building Programme work in the Midlands over 27 years

Carillion
Carillion

Just two days after signing a £75m contract to deliver the expansion of Liverpool Football Club’s Main Stand at Anfield stadium, Carillion - in a joint venture with Equitix - has been appointed as the selected bidder for a £190m Public Private Partnership project.

The group, which took over Newcastle’s warm front business Eaga in 2011, will be helping finance, design, build and provide facilities management for eight schools in the so-called Midlands Private Finance Batch, under the Government’s £750m Priority School Building Programme, aimed at renewing parts of the schools estate in England that have been prioritised for replacement or upgrading.

Carillion expects to invest up to £9m of equity in the project, from which construction and services revenues of approximately £190m should be generated over a 27-year period.

Carillion chief executive, Richard Howson, said: “We are delighted that we have been appointed as the selected bidder for the Midlands Private Finance Batch under the Priority School Building Programme.

“Carillion is a market leader in the education sector, having delivered around 180 new schools and academies through a combination of privately and publicly financed projects and we look forward to working closely with the Education Funding Agency and the schools to create excellent facilities for pupils and staff.

“This is the second major PPP project in the UK for which we have been selected as the preferred bidder this year, following our success in being selected for the Aberdeen Western Peripheral Route, in which we will invest some £20m of equity and from which we expect to generate around £175m of construction revenue.”

The Carillion group is a leading support services company, employing 40,000 people - 500 of which are based in the North East.

It operates across the UK, the Middle East and Canada.

In a pre-close trading update, issued alongside news of the schools contract, the group confirmed that total revenue for this year would likely be similar to 2013, with growth in the Middle East and UK construction services offset by a reduction in revenue from PPP work due to its policy of recycling equity investments in mature projects.

Around £4.6bn of new work has been won in the year to date and the group expects the order book, plus probable orders, at the year end to amount to more than £18.5bn

The pipeline of contract opportunities, meanwhile, is set to rise to more than £39bn, while net debt before acquisitions is reducing as expected

The trading update said: “Although our markets remain challenging, we continue to have a strong, high quality order book and a substantial pipeline of contract opportunities, consistent with the selective approach we take to choosing the contracts for which we bid.

“We expect the steady improvement in our markets that began in 2014 to continue in 2015, subject to a sustained macro-economic recovery.

“Overall, the group therefore continues to be well positioned to make further progress over the medium term.”

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