Balfour Beatty reports strong FM order book

11 November 2009

Balfour Beatty’s good interim performance has been buoyed by a strong order book from its UK FM division, a trading statement said.

Trading performance continues to be in line with expectations, note the interim trading statement covering the period 28 June to 10 November, 2009.

Average net cash is in excess of £260m. In the period Balfour also completed the acquisition of Parsons Brinckerhoff “which was substantially funded by a rights issue and, in addition, had net cash on acquisition of $188m (£114m).”

Balfour Beatty Construction has continued its strong performance in the US as well as in the UK, a difficult market but with good contract wins in the education sector including construction contracts for schools and academies schemes in Hull, Lincolnshire, Stoke-on-Trent and West Sussex.

On 17 September, the Balfour announced that it had entered into an agreement to acquire Parsons Brinckerhoff (PB), a major global professional services companies, for a cash consideration of US$626m (around £380m).

Formal completion of the acquisition took place on 27 October, from which point PB was consolidated into the group’s results although, given the seasonality of the business, it is not expected to have a significant impact on the 2009 results, other than cash flow, the statement said.

As described in the PB acquisition prospectus, there will be substantial cash outflows in the first year due to a number of factors, including additional tax charges, the unwinding of certain working capital positions and project settlement costs and the exceptional transaction and integration costs.

“A joint integration team has been formed to ensure the smooth transition of PB into Balfour Beatty and to ensure that the enlarged Group maximises the opportunities available to it in the coming months and years.”