PPP disposals deliver boost to Balfour Beatty

The UK construction giant described its performance in the first half of 2012 as a ‘solid result in challenging markets’ – an outcome assisted by disposals of PPP assets, which proved more lucrative than expected.

In the first half of 2012, the investments division of UK developer Balfour Beatty delivered what the firm described as a “considerably better result” than in 2011 due to the “successful” disposal of two infrastructure assets.

It said that total consideration for the assets was £84 million (€107 million; $132 million), resulting in total disposal gains of £52 million – compared with £14 million in the first half of last year. The firm said the proceeds “exceeded the directors’ valuation of these PPP [public-private partnership] concessions as at 31 December 2011”.

The firm said that even after the impact of the disposals, the directors’ valuation of its total PPP concessions in June 2012 was £711 million – an increase on the £682 million figure recorded in June 2011 and only £32 million down on the £743 million at the end of last year.

The firm said: “These transactions demonstrate the value that has accumulated in our PPP portfolio and are in keeping with our strategy of generating greater income from our infrastructure investments activity through a regular stream of mature asset disposals.”

It added that it would continue to develop the infrastructure investments portfolio in the UK and internationally. It pointed out that, in the UK, it reached financial close on the Essex Waste Treatment project in May and had achieved planning ahead of schedule, with construction due to start in the first quarter of next year.

Meanwhile, in North America, it has been shortlisted for the Ohio River Bridge project while, in the student housing sector, it won preferred bidder status for the University of Nevada, Reno project. It is also working on a number of military housing projects for the US Air Force.

Commenting on the overall results, Balfour Beatty chief executive Ian Tyler said: “We have delivered another set of solid results in challenging markets and remain on track to meet our expectations for the full year.”

The firm reported £5 billion of new orders in the first half, with the order book “stable” at £15.0 billion compared with £15.2 billion at the end of last year. Revenues rose 6 percent (or 1 percent excluding the impact of acquisitions and currency factors), while underlying earnings per share rose 28 percent.