Tube consortium's £50m profit gives Balfour a boost Balfour

Metronet, the consortium which took over two-thirds of the London Underground, has made a £50m profit in its first full year of operations.

Metronet, the consortium which took over two-thirds of the London Underground, has made a £50m profit in its first full year of operations.

Balfour Beatty, which has a 20 per cent stake in Metronet, announced yesterday it had made a £10m profit on its equity investment - and further undisclosed profits on contracts awarded to it by the consortium.

The part-privatisation of the Tube is expected to generate around £200m worth of work a year for Balfour Beatty.

Metronet has taken over the Central, Victoria and Bakerloo deep underground lines and the sub-surface District, Circle and Metropolitan and Hammersmith & City lines. It expects to invest £7bn in the first seven and a half years of its 30-year concession on new trains and refurbishment work.

Metronet's contribution helped lift Balfour's pre-tax profits before one-off gains and goodwill charges by 15 per cent to £150m last year. Operating profits in its investments and developments division, including the Metronet stake, increased by 24 per cent to £67m.

Balfour's rail and engineering services division also increased profits by 5 per cent to £43m. However, this was flattered by a one-off payment from Network Rail to compensate Balfour for the ending of its £150m a year rail maintenance contract with the infrastructure company. Ian Tyler, Balfour's new chief executive, cautioned that profits from the rail business would be significantly lower this year.

Following the sale last year of Balfour's US business, Andover Controls, which netted an exceptional profit of £142m, the group has net cash on its balance sheet of £311m. Mr Tyler said acquisition opportunities were being looked at, although the alternative was to return the surplus cash to shareholders.

News of the profit increase came as Balfour celebrated a £241m contract to widen a busy stretch of the M1. Balfour's order book now stands at £6.8bn, including £1bn worth of private finance initiative deals secured in the last year.

The group took a £16m charge to write down the value of its American rail business and also suffered substantial losses on its US civil engineering business.