Balfour: £1.2bn bonanza

Balfour Beatty will enjoy a £1.2bn boost to its workload during the next seven years because Metronet - the consortium of which it is a member - has scooped two of the London Underground PPP concessions.

"It's confirmed workload and was part of the deal," said chief executive Mike Welton. Balfour is a 20% partner in Metronet.

When the London Underground PPP reaches financial close, expected to be in the first week of April, it will make Balfour the UK's biggest PFI player, both as an investor and as a contractor.

"It has been a long-term aim," said Welton. "We've been interested in complex projects at the large end of the market because we can then use several divisions within Balfour at the same time.

"On the Edinburgh Royal Infirmary, for example, we had inputs from Balfour Beatty Construction, Haden Young, Balfour Kilpatrick, Haden Building Management and Stent," he said.

Metronet is involved in raising the funds needed to back its Tube wins. The bank syndication element of debt raising is over and was over-subscribed, said Welton with both enthusiasm and relief.

The second element, raising additional debt through bond issue, should be complete by the end of this month.

The five members of Metronet will also chip in with a further £350m of equity, Balfour's share of this being £70m.

Balfour's latest results show pre-tax profit down to £88m (£103m) after an exceptional charge of £9m and after a further £21m of goodwill. After spending £68m on acquisitions, it was no surprise that turnover was higher at £3.4bn (£3.1bn).