City takes the view that Hatfield crash is a one-off event for which the contractor had already set aside funds
Balfour Beatty’s shares held firm last week despite its £10m fine over the Hatfield crash.
The result was widely expected and the City had discounted its impact. Shares were roughly unchanged at 312.5p at close last Friday.
Howard Seymour, an analyst with Bridgewell Securities, said: “It has happened and it is a very big number but this is an exceptional, one-off cost that does not affect underlying trade.”
He added: “The trouble is that it is a very emotive issue so the simple fact for Balfour Beatty is that it gets it out of the way. It won’t hit their numbers because there will have been an element of provision.” A spokesperson for Balfour Beatty confirmed that this was the case. He said: “We tend to make provisions for things that might happen.” He would not disclose how much the company had set aside in its account but said that it had “already taken the pain”.
Charges of corporate manslaughter brought against the company were dropped in July but Mr Justice Mackay described its role in the crash as “one of the worst examples of sustained industrial negligence”.
It is a very emotive issue. The simple fact for Balfour is that it gets it out of the way
Howard Seymour, analyst
Balfour Beatty said that it accepted that there had been inadequacies in its patrolling and inspection activities, for which it apologised. But it noted that “that the accident arose as a result of a systemic failure of the industry as a whole".
Another spokesperson said: “At no stage did Balfour Beatty Rail Infrastructure Services work outside the industry standards on patrolling and inspection as they were constituted before the accident. The health and safety of the public and of its employees is paramount in everything that the company does. The company will be considering the judgment in detail.”
Balfour Beatty, which has a total capitalisation of £1.3bn, made a pre-tax profit of £257m in the financial year ending 2004 after goodwill and exceptionals, an increase of 118% on the previous 12 months, when pre-tax profit was £118m.
Network Rail, the successor to Railtrack, was given a £3.5m fine for its role in causing the accident, which killed four people and injured 102.