Balfour building up a profit

The engineering and construction giant looks positive and finance director Ian Tyler will be looking closely at several key deals, acquisitions, and government contracts, which have helped keep Balfour afloat in the economic downturn.

The chartered accountant joined the company in 1999 from competitor Hanson, where he also headed the finance department.

Recently, Balfour was given a stamp of approval from Ernst & Young as the Big Five firm undertook an independent review of the controversial public private partnership for London Underground.

E&Y affirmed the government was getting value for money from its partners, which include Metronet, a consortium including Balfour.

The Big Five firm said: ‘Overall it can be seen that the London Underground analysis provides evidence to support a value for money assessment of PPPs.’

Another PPP deal for Balfour was a £86m contract to design, construct, finance and maintain a hospital in Blackburn, Lancashire. This is the fourth hospital deal the company sealed this year. Balfour opened a £70m hospital in North Durham earlier in the year.

The company’s 2001 acquisitions included US contractors National Engineering and Contracting Company and utility service contractor John Kennedy holdings.

This year, Balfour sold its Dubai Cable Company.

In the company’s interim report in August chief executive Mike Welton said the order book, which stood at over £3.9bn, was at record levels with an increasing proportion of long-term contracts and that margins were also improving.

Globally, the company has established itself in several key markets.

Notably, it has entered the US market and has recently won several infrastructure contracts.

But things are not all positive for the company. As it is responsible for the rail network’s maintenance, Balfour was faced with a double-whammy this year. The company is at the centre of the Hatfield crash inquiry.

It also faced uncertainty after Railtrack went into administration in October, although the government assured the company that its existing financial contracts would not be affected.

Its civil engineering sector saw a slump in the first half of the year, as the foot and mouth epidemic made power lines inaccessible, making profits drop by £3m. However, Welton said he expected the situation to improve when the disease was eradicated.

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