Struggling BICC said it had no intention of selling Balfour Beatty after the contracting arm turned in record orders this week.

The cables-to-contracting group reported pre-tax profit before exceptionals of £70m on turnover of £3.67bn for the year to 31 December 1998. However, £164m of exceptional items plunged the group into the red.

Profit in its engineering, construction and maintenance division rose 30% to £69m, with Balfour Beatty leading the way with a record £2.7bn order book.

A BICC spokesman said there was no question of either selling Balfour Beatty or demerging the company.

He said: "There is no talk from our perspective of a demerger. It's not in the scheme of things at all. Nor is Balfour Beatty up for sale. We've said that very consistently over a long period.

"The businesses are complementary and it makes good business sense to keep them together." BICC has embarked on a plan to restructure in recent months to try to turn the business around.

There is speculation that acquisitive conglomerate Wassall, which owns a 9.25% stake in BICC, is preparing a takeover bid.

BICC chairman Viscount Weir said: "Balfour Beatty is a well-managed and well-positioned business now. Its growth prospects give it encouraging further potential." Group chief executive Alan Jones hinted that more changes may be on the cards.

He said: "The group has a continuing commitment to taking whatever radical and decisive action is required as markets change in order to improve or preserve our position." Jones said BICC would be concentrating on expanding Balfour Beatty's highly profitable asset management and rail engineering businesses.

The exceptional items in the group's results included the sale of an Australian interest, the rationalisation of its communications arm, and the provision of further goodwill write-offs and asset write-downs.

The company said it had made provision for Balfour Beatty's £1.2m fine for safety breaches on the Heathrow Express project.