26th Jun 2007 07:01
Balfour Beatty PLC26 June 2007 26 June 2007 BALFOUR BEATTY PLC TRADING UPDATE ============== Balfour Beatty plc, the international engineering, construction and servicesgroup, is providing this trading update for the half year ended 30 June 2007 inadvance of its preliminary results announcement on 15 August 2007. In the first half of 2007, the Group's trading performance has been strong andsomewhat above expectations. Markets have remained positive and our order bookhas continued to grow before taking account of the consolidation of the orderbacklog of Balfour Beatty Construction LLC (formerly Centex Construction), theacquisition of which was completed at the end of March. Cash generationcontinues to be satisfactory. In the Building sector, progress has been good, with order intake and activitylevels particularly strong in the UK building construction business and workproceeding satisfactorily on a range of major projects. The new facilitiesmanagement contracts for the Department for Work and Pensions and theMetropolitan Police have been mobilised successfully. Balfour Beatty Construction LLC performed at anticipated levels and continued towin good quality work, including further military housing projects, a market inwhich it is a leader. In the Engineering sector, progress has also been good, with continuingimprovement in Gammon in Hong Kong and in US civil engineering and satisfactoryperformance in UK civil engineering, utilities contracting, road maintenance andin Dubai. In Rail, trading has been significantly stronger than in the first half of lastyear, with good progress made on the major works on the rail system at HeathrowTerminal 5 for BAA, renewals work for London Underground and Network Rail andthe East London Line for Transport for London. In the Investments sector, performance, as anticipated, reflects our decision totake no profit from our investment in Metronet during the period. In addition,we have continued to invest in the extension of Balfour Beatty Capital'sbusiness in the UK beyond the PPP market and also in start-up PPP businesses inthe US, Hong Kong and Germany. The acquisition of Exeter International Airport was completed early in the year.Subsequently, 40% of the equity invested in this asset has been sold to Galaxy,the international transportation equity investment fund, for £12 million. Duringthe first half of the year, we have been appointed preferred bidder for the £152million Fife Hospital and the £140 million Building Schools for the Futureconcession in Islington and the £36 million Derby Street Lighting Scheme reachedfinancial close. We anticipate the achievement of financial close for the £311million Pinderfields and Pontefract Hospital in the very near future. There will be a number of exceptional items in the half year accounts. An application for an Extraordinary Review of Metronet's BCV concession wasannounced on 21 June. The value of our investment in Metronet is dependent onthe outcome of Extraordinary Review and Metronet's ability to maintain thenecessary funding levels in the period before the outcome is known. Given the uncertainties pending the outcome of the Review, the level ofunanticipated costs associated with the concessions' capital programmes andMetronet's funding position, we have decided to take an exceptional charge inrespect of Metronet of approximately £100 million, representing the equityinvested in the Metronet concessions, the profits recognised in respect of theseinvestments in prior years and certain other, related issues. All anticipatedcosts relating to the downstream contracting activities which we carry out onbehalf of Metronet have been provided for. Balfour Beatty remains committed to Metronet and to the creation of aworld-class underground system for London. This charge will be very substantially offset by two major exceptional credits.The completion of the sale of our 24.5% interest in Devonport Dockyard, whichawaits final consent from the Ministry of Defence, will create an exceptionalgain of approximately £50 million. In addition, consequent to the acquisition ofCentex Construction, the crystallisation of the benefits of tax losses in theUS, which have to be recognised in full under IAS 12, will result in anexceptional gain of approximately £40 million. As stated in our Annual Report and in our statement made at the time of our AGM,we continue to make good progress in pursuing our strategic priorities throughinvestment and acquisition and continue to add to our earning power as a result.We expect to make very good progress in 2007 as a whole. ENDS Enquiries to: Tim SharpTel: 020 7216 6884www.balfourbeatty.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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