Kier takes over Carillion projects, wins further contracts

Property, residential, construction and services group Kier updated the market on its infrastructure and regional building businesses on Monday, including the transfer of HS2 and Highways England smart motorway projects from the defunct Carillion.

The FTSE 250 company also announced the award of £140m in additional infrastructure contracts, and the award of a £160m Public Health England contract.

It said that, further to its previous announcement on 15 January and after discussions with the Government and their clients, it could confirm that on the HS2 high-speed railway project, Kier and Eiffage were now 50/50 joint venture partners delivering two of the seven civil engineering packages - namely, lots C2 and C3.

All 51 Carillion employees working on the CEK HS2 joint venture - including apprentices - had been offered the opportunity to join Kier/Eiffage with continuous service to the client being maintained.

Kier said it has also assumed “full responsibility” for the Highways England smart motorway schemes on which it had been working in joint venture with Carillion.

All employees currently working on the schemes had been offered the opportunity to join Kier.

In total, around 150 employees would be making the transition to Kier in the next week including seven apprentices.

The board said engagement with the existing supply chain on the project had also taken place, again ensuring continuity of skills, resources and suppliers.

“The above contracts are all performing well, operationally and financially,” Kier’s board said in its update.

In addition, the board said that following the acquisition of McNicholas in July last year, a number of contract extensions had been awarded to this business, totalling £140m.

They included a five-year £31m 'Gas to the West' network distribution operation for SGN Natural Gas in Northern Ireland, which the board said secured the group's place as the “principal contractor” to three gas distributors in Northern Ireland/

There was also a £40m contract extension to 2022 to the Phoenix Natural Gas contract in Northern Ireland, and a one-year £30m contract extension to 2020 for the Network Rail CP5 High Voltage and Electrification and Plant framework.

In regional building, Kier announced it has been awarded a £160m Public Health England contract for a new 17,000 square metre bioscience facility in Harlow, Essex.

“This is the largest lot of four in a new Public Health England development which will create a leading science campus and headquarters,” the board explained.

It said the new building would comprise specialist bioscience laboratories, an energy centre and associated support facilities.

Work on the development was scheduled to commence in February.

“We have been working collaboratively with our clients and are pleased to have reached agreement with Government concerning these joint ventures,” commented Kier chief executive Haydn Mursell.

“We have been able to take action quickly and reassure the project teams that they continue to play an important role in the delivery of these contracts.

“The McNicholas acquisition is performing well, providing a highly complementary addition to our utilities services business, and the Public Health England award reflects our growing presence in the bioscience market.”

Kier Group was set to announce its trading update for the half year to 31 December on 25 January.