Balfour Beatty, the international infrastructure group, has published the result of the review of the Directors' Valuation of the PPP Portfolio, as at June 2014.
Balfour Beatty said that a review of the PPP Portfolio has resulted in an increase in the total Directors' Valuation to £1,051 million as at June 2014. This represents a 46% increase to the total portfolio valuation as at June 2014, compared with applying the former valuation methodology.
The Directors' Valuation of the portfolio at December 2013 stood at £766 million. Underlying movements during the first half reduced the Directors' Valuation, under the previous methodology, to £721 million. This reduction was driven by disposals made in the first half more than offsetting underlying increases and the inclusion of Balfour Beatty Infrastructure Partners (BBIP) for the first time. The application of the updated valuation methodology saw the total portfolio valuation increase to £1,051 million.
The revaluation exercise was undertaken across the UK and North America portfolio of assets. The UK portfolio valuation increased to £801 million at June 2014, compared to £491 million at June 2014 under the previous valuation methodology, representing a 63% increase. The North America portfolio valuation increased to £250 million at June 2014, compared to £230 million under the previous valuation methodology, representing a 9% increase.
Balfour Beatty said that the Directors' Valuation is intended to provide an indicator of the value of the PPP investment portfolio. By using a consistent methodology over time, it has served to illustrate movements in the underlying value of the portfolio, rather than seeking to provide an open market valuation.
However disposals of UK assets over the last few years have highlighted the growing difference between the Directors' Valuation and the values achievable for their UK investments in the open market. After reviewing recent disposals, the Board concluded that the existing methodology no longer provided a good indicator of value.