There are significant differences in the average profit rates between sectors raging form a high of a 39.4% annual rate of return in the criminal justice sector to 25.5% in health (Table 12). This data is based solely on single or sector specific transactions and thus excludes a large number of transactions that include projects from different sectors. The sample is therefore small and the rate of return figures for each sector are only indicative.
Table 12: Profit on sale of PPP equity in single or sector specific transactions in UK 1998-2012 (includes multiple examples)
Sector | No. of PPP projects | Total value of equity sold (£m) | Total Profit (£m) | Average rate of return |
Health | 19 | 180.6 | 121.3 | 25.5 |
Education | 19 | 103.1 | 44.4 | 25.8 |
Transport | 15 | 270.5 | 117.3 | 30.5 |
Criminal Justice | 14 | 113.0 | 64.5 | 39.4 |
Source: European Services Strategy Unit PPP Equity Database 2012
The sale of PPP equity by the major construction companies is summarised in Table 13. This Table includes only the PPP equity transactions where profit information was available and does not reflect the full performance of PPP equity investment by these companies. However, four companies - Lend Lease, WS Atkins, Kajima Partnerships and Balfour Beatty obtained higher than average rates of return with John Laing and Carillion below average.
Table 13: Top ten sellers of PPP equity in UK between 1998-2012
Company | No. of PPP projects | Sale value (£m) | Profit (£m) | Average rate of return |
John Laing | 51 | 479.0 | 154.4 | 12.0 |
Carillion plc | 31 | 325.4 | 123.1 | 17.4 |
Lend Lease Corporation | 30 | 143.6 | 11.5 | 66.3 |
Interserve plc | 18 | 135.6 | 69.8 | 20.4 |
Costain Group plc | 16 | 65.2 | 31.8 | 25.3 |
WS Atkins | 13 | 43.1 | 19.0 | 32.9 |
Kajima Partnerships | 10 | 54.6 | 19.1 | 32.1 |
Balfour Beatty plc | 9 | 65.8 | 47.0 | 30.3 |
Kier Group plc | 9 | 47.9 | 27.9 | 27.3 |
Serco Group plc | 8 | 79.9 | 16.0 | 24.1 |
Total | 195 | 1,440.1 | 519.6 |
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Source: European Services Strategy Unit PPP Equity Database 2012. Based on partial financial data for sale value, profit and average rate of return.
If the average 29% annual return in the ESSU sample is reflected in the total number of equity transactions in the database between 1998-2012, and the average annual return forecast in full business cases at financial close of the project was 14%, the excess profit could be £2.65bn, all of which benefits private sector companies.