Balfour Beatty announces sale of more PPP assets

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Balfour Beatty announces sale of more PPP assets

Balfour Beatty will continue with its PPP concession disposal programme in 2014 after the company did not manage to achieve the expected results, according to a Trading Update published by the company on July 3rd.

We have seen a further worsening in the trading performance of the mechanical and electrical engineering (Engineering Services) part of our UK construction business since our Q1 Interim Management Statement. This further deterioration amounts to a £35 million profit shortfall but will be broadly offset by further targeted PPP disposal gains in the second half of 2014. Elsewhere, there has been no material change in the Group's operations. Overall Group pre-tax profit expectations for 2014 remain unchanged since the Q1 IMS, in the range of £145 - £160 million.

The firm announced it has achieved gains totalling £51 million (US$87.5 million) selling PPP assets in the year to 3 July 2014:

In Infrastructure Investments we have continued to implement our PPP concession disposal programme, achieving gains totalling £51 million in the year to date. Given this very strong performance and the continuing favourable secondary market for infrastructure assets we are targeting further PPP disposals in the second half of 2014. Full year PPP disposal profits will be broadly in line with those achieved in the full-year 2013. Recognising the strength of the secondary market we are also intending to increase the Directors' Valuation at the half year.

On 3 June 2014 we published that Balfour Beatty had announced the disposal of the stakes in two PPP assets in the UK. The firm disposed its 50% interest in the University Hospital of North Durham and its 100% interest in the Knowsley Building Schools for the Future BSF project. Both assets are being acquired by funds managed by Dalmore Capital Limited, with consideration to be paid in cash in full on completion of each transaction.

The company had already announced in its trading update of Q1 2014 potential sales in other divisions. The board undertook a strategic review to explore ways to simplify the group structure and create a more focused group. Balfour Beatty  said the review has led to a decision to evaluate options for the possible sale of Parsons Brinckerhoff.

We reported  on mid December 2013 that Balfour Beatty had reached an agreement to sell its Scandinavian Rail business to Strukton Rail B.V. for approximately £4 million in cash.

In early november 2013 the company  sold a 75% of the interest in the Carlisle Northern Development Route (CNDR) and a 65% in A30/A35 road toEquitix for a consideration totalling £47.5 million.

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