Balfour Beatty Group’s order book stands at £17.4 billion (2019: £14.3 billion), over 20% higher than the prior year end position and 83% of its UK and US construction sites are now operational, according to its latest trading update.

The increase in the Group’s order book is due to the addition of over £3 billion of HS2 contracts following Notice to Proceed in April.

Balfour Beatty, in joint venture with VINCI, will deliver Lots N1 and N2 south of Birmingham – comprising extensive earthworks, ground engineering, viaducts and tunnels along a 90 kilometre stretch – and the London hub station at Old Oak Common. In April, Highways England named Balfour Beatty as a contractor partner to deliver the future smart motorway programme (southern area) via a ten year framework.

Commenting on the increase, Balfour Beatty said:

“In the current uncertainty, the approval of HS2 provides critical visibility and impetus not only for Balfour Beatty but also for the UK construction industry and its supply chain partners. In combination with increased funding for road and other rail programmes, the UK government’s decision on HS2 demonstrates its commitment to stimulate economic recovery.”

The update says Balfour Beatty had a strong first quarter of the financial year, building on the positive momentum from 2019. Thereafter the impact of COVID-19 and the resulting lockdown have had a material impact on financial performance across all divisions.

In construction, the majority of Balfour Beatty’s projects have remained operational throughout the period with the trend now improving week to week. In April, 78% of the Group’s sites, across the UK and US, were open. In May, whilst 83% of sites were open and 17% were closed, of those open 17% experienced significant disruption due to the availability of employees, subcontractors or materials.

In Support Services, many of the Group’s employees were designated as key workers. Whilst still somewhat negatively affected by COVID-19, Support Services has shown good resilience with limited closures, and in some circumstances an opportunity to accelerate maintenance works on road, rail and power assets.

Given current market uncertainty, and the strong liquidity position of the Group, in the first five months of the year, the Group has not disposed of any material Infrastructure Investment assets.

In line with its strategy to maximise shareholders’ returns the Board will only resume disposals when market conditions, which are expected to be favourable in the medium term, return to more normal levels.

On 27 March 2020, Balfour Beatty announced the postponement of its Annual General Meeting (AGM) given the uncertainty arising from COVID-19 and the limitations on gatherings of people. The re-scheduled date of the AGM is 25 June 2020.

In line with the current environment, the Board has also decided to cancel the final dividend for 2019. However, Balfour Beatty will shortly be giving notice to preference shareholders of its intention to redeem in full the £112 million of preference shares that fall due on 1 July 2020.

Commenting on the update, Leo Quinn, Group Chief Executive, said:

“These remain challenging and uncertain times. Our priority will always be the safety and health of all our employees, customers, partners and the public.

“Build to Last has made Balfour Beatty a resilient organisation with a high-quality order book and a strong balance sheet. As we navigate the Group through this exceptional year, we will maintain our focus on the longer term to ensure we are ready to capitalise fully on the significant opportunities in our chosen markets.”  

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