Balfour to net millions Underground

BALFOUR Beatty has indicated it is set to make tens of millions of pounds from the part-privatisation of the London Underground.

The construction and civil engineering group, which is part of the Metronet consortium set to run two-thirds of the Tube under the Government's Public Private Partnership project, is aiming to make a return of up to 18% over the first seven years on its £70m equity investment in the consortium.

In addition, the company intends to secure 'substantial amounts' of work upgrading and maintaining track and refurbishing stations, its chief executive Mike Welton said. He said there would be contracts worth £2bn up for grabs with Balfour Beatty in line to win significant amounts of work on profit margins of about 4%.

The PPP dael, which is expected to be finalised in the summer, will provide a major boost to Balfour Beatty, which has reported strong results on the back of a two-year reform programme following the restructuring of its former BICC cables company parent business.

For 2001, the company saw a 20% rise in underlying pre-tax profits to £103m and a record forward order book of £4.3bn. The dividend is being lifted by 11% to 5p.