Metronet warnings from WS Atkins and Balfour Beatty

Two members of the Metronet consortium, WS Atkins and Balfour Beatty, have this morning warned the Stock Exchanges that all is not well.

In a trading update issued by Atkins, the group gives advance warning of a £36m hit when it unveils the results for the financial year ending on 31 March 2007.

Metronet apart, Atkins has enjoyed a sparking year and pre-tax profit, before the impact of the London Underground venture, is “anticipated to be ahead of expectations.”

Atkins’ staff numbers ended the year at 16,600 which represents a rise of 1,700 on the previous year-end head count.

Strong cash generation has taken Atkins’ net funds to close on £190m.

However, Atkins adds: “The results for the year are anticipated to be impacted by an exceptional loss of £36m in relation to Metronet.”

Balfour has picked the same moment to issue a Metronet update which states that: “Metronet’s finances are under increasing pressure as a result of the high level of unanticipated costs which have been and continue to be incurred and the continuing absence of a commercial settlement with LUL in respect of these costs.”

Balfour says that the prospect of a lengthy extraordinary review, with the Arbiter only then advising on how these unanticipated costs should be split, has raised the level of uncertainty.

The £59m carrying value of Balfour’s shareholding in Metronet is under review.

Since the start of 2007, Balfour has invested £13m in the consortium and is committed to a further £19m tranche.

Balfour believes that anticipated losses in contracting work on Metronet are fully covered by the provisions made in its 2006 figures.