Carillion shrugs-off Government cost-cutting

Grant Prior 13 years ago

Carillion bosses are confident the Government drive to slash hundreds of millions from the cost of public contracts will not hit its profit figures.

Carillion was among contractors called-in by Cabinet Office minister Francis Maude late last year to renegotiate deals as part of the Government’s cost-cutting drive.

The firm told the City this morning: “Carillion has had constructive discussions with the UK Government under its Supplier Engagement Programme and has now signed a Memorandum of Understanding identifying how Carillion can work together with the Government to help re-engineer procurement and service delivery, including changing the scale and scope of outsourced services across a number of our existing contracts.

“Following these constructive discussions, Carillion believes that the opportunities to work with both central and local government to deliver greater efficiencies through outsourcing services remain very strong. The outcome of these discussions has no material effect on Carillion’s current market guidance.”

Carillion also confirmed a number of contract awards including an M&E deal with airport operator BAA worth £75m to provide maintenance work at Heathrow for the next three years.

The company has also landed a £25m, five-year contract to provide a range of hard and soft facilities management services to the Land Registry estate of 37 properties.

Carillion said it is also on the verge of signing £100m of facilities management contracts worth £100m for a variety of financial services clients.

The firm has also won a £45m contract to build new, and refurbish existing, accommodation at Whittington Barracks for Defence Estates where work will start in September 2011 with completion due in February 2014.

Carillion has also been awarded a £21m contract by Argent to design and build a social rented and shared equity apartment building as part of The Kings Cross Partnership’s £3 billion Kings Cross regeneration scheme.

John McDonough, Group Chief Executive, said: “We have made a positive start to 2011, following our strong performance in 2010, for which we expect to report good profit and earnings growth, and year-end net cash of well over £100 million.

“New order intake remains healthy and we have secured new orders plus probable orders worth some £350 million.

“I am also pleased to report that we have signed a Memorandum of Understanding with the UK Government.  We look forward to working with our customers to provide value-for-money services that support their business objectives and with Government customers specifically to improve efficiency and deliver savings that will enable them to reduce running costs.”

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