Balfour Beatty bullish about trading expectations

Balfour Beatty has issued a robust trading statement saying that it is firing on all cylinders and that the 2008 performance “will be at the top end of current expectations”.

The update, issued on the Stock Exchange this morning, covers the period from 1 January to 14 May 2008.

Chairman Sir David John said: "A number of major new orders have been secured across our business sectors and geographical markets. Our confirmed order book and anticipated work pipeline has grown further from its year-end levels."

Work brought on board includes:

• Appointment of Connect Plus (in which Balfour has a 40% interest) as provisional preferred bidder for the M25 London orbital motorway 30-year PPP;
• £300m London Olympic Aquatics Centre;
• £320m legislative council complex in Hong Kong;
• £320m contract to design and build additions at the National Military Medical Centre in Maryland, USA.

Balfour reported that the conversion of three PPP preferred bidder positions, with a total construction value of £320m and an equity commitment of £14m, is anticipated in the near future.

Sir David said that operating cash flow has been very satisfactory although Balfour’s average net cash position has reduced as a result of acquisition expenditure.

Sector Performances

• Building. Particularly strong performances in Balfour Beatty Construction in the US and the UK. Also in Mansell and Haden Building Management, which secured a substantial extension to its facilities management contract for BT during the period.
• Engineering. Good progress, particularly in the existing UK regional civil engineering network, now augmented by Dean & Dyball, and in Dubai.
• Rail. Market prospects continue to improve, although the period has not benefited from one-off settlements of historic projects as was the case in the first months of 2007.
• Investments. Balfour continues to make substantial commitments in both new PPP projects and other infrastructure assets. Existing concessions continue to perform at anticipated levels.