Balfour Beatty suffers £103m Metronet write-down

Interim report confirms that construction giant will take a major hit after Metronet's administration woes

Written by David Jetuah

Accountancy Age, 15 Aug 2007

Balfour Beatty has announced a £103m write-down in its interim accounts after Metronet's nosedive into adminstration.

The FTSE 250 player, which made revenues of £3.5bn for the first half of its financial year, has a 20% stake in Metronet Rail BCV Ltd and Metronet Rail SSL Ltd, the PPP concession companies responsible for the upgrade of two-thirds of London Underground's rail system.

Balfour Beatty said: 'Following the entry of the concessions into PPP Administration and pending final agreement with the administrator in respect of the recovery of certain day-to-day trading balances between Balfour Beatty operating and affiliate companies and Metronet, a total post-tax exceptional charge of £103m has been recorded in the half-year accounts.'

This impairment comprises an £87m net investment write-off, estimated contract provisions of £35m, and related tax credits of £19m.

The Metronet debacle has not cooled Balfour Beatty's interest in the lucrative PPP market as it is still in the running for the contract for the £1.5bn M25 widening scheme.

Balfour Beatty added: 'The London Underground PPP is unique and we do not anticipate any negative impact on the UK PPP market as a whole to arise as a result of Metronet's administration.'