Contractor makes confident prediction for March's year-end results, largely due to PFI disposals.

Contractor Balfour Beatty has announced that it is likely to make a one-off profit in its year-end results in March.

The firm said there should be a “net exceptional profit” due to PFI disposals and the receipt of initial distributions by Barking Power from the administrators of TXU Europe. However, this could be partly offset by costs arising from the purchase of preference shares and the costs of repaying a term loan and settling a legacy legal issue in the US.

Predicting results broadly in line with expectations, Balfour said the Group's order book grew by 13% from £6.8bn to approximately £7.7bn with almost £1.2bn more work at preferred bidder stage, including the £520m Birmingham Hospital PFI project. Operating cash flow was again “very satisfactory”, as it gears up to bid for Mowlem.

The firm said there was another good performance from Mansell and satisfactory progress in other operating companies, including Balfour Beatty Construction, whose profits have recovered strongly in the second half following the contract losses that were reported at the interim results. Order intake in the building sector has strengthened further in the year with the conversion to contract of PPP schools projects in Scotland and Nottinghamshire and a wide range of other successes in the social housing, accommodation, healthcare and commercial sectors.

In engineering, progress has been very satisfactory with particularly strong performances from RCS, the road manager and maintainer, and Balfour Beatty Power Networks. Results in Balfour Beatty Construction Inc in the US showed significant improvement following the closure of its heavy marine engineering division. During the year, order books grew substantially, with a number of major long-term contract wins in the UK utilities and roads sectors and for Gammon in Hong Kong.

In rail, performance was good in the UK and in the international rail electrification business, but reflected a first full year without UK maintenance profits and the continued impact of contract difficulties in the USA. There were contract wins for a further section of the West Coast Main Line upgrade, a major rail link in Australia and for the continuing provision of track plant machines to Network Rail. Activity levels under major track renewal contracts for Network Rail and under the London Underground PPP were satisfactory.

In investments, new concessions came on stream for the M77 motorway in Scotland, major schools schemes in North Lanarkshire and Bassetlaw and a street lighting scheme on Tyneside. Financial close is anticipated in 2006 for the Birmingham Hospital and Birmingham Schools schemes and for the Pinderfields & Pontefract and the Northern Batched hospitals schemes. The operational performance of Metronet was broadly satisfactory. Plans are in hand to address delays in the capital expenditure programme, most particularly in stations upgrade.

In two separate transactions, the group's shareholding in the Edinburgh Royal Infirmary concession was increased from 42.5% to 73.9% and a 15% interest in three of Connect Roads' projects, previously 100% owned, was sold.