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Balfour Beatty profits hit by legacy costs

9 Jul 15 Balfour Beatty has warned that this year’s pre-tax profits will suffer an additional shortfall of £120m to £150m as more legacy costs continue to emerge.

An update issued this morning on its continuing business reviews and transformation programme comes ahead of its results for the half-year ended 26 June 2015, which will be announced on 12 August 2015.

An ongoing, in-depth review of group businesses has continued to identify legacy issues in the UK, US and Middle East which will result in the additional shortfall to 2015 pre-tax profit of £120 million to £150 million.  The UK accounts for approximately two-thirds of this amount.

The ‘Build to Last’ transformation programme is gaining traction, said the company.  New project disciplines and financial controls are being embedded, the new senior leadership team is substantially in place and good progress is being made against the £100m permanent cost-reduction programme.

As a result of the actions taken under the Build to Last programme, net cash is expected to exceed £200 at the half-year end. This is substantially better than H1 2014, “demonstrating the Group's ability to maintain balance sheet strength through self-help” said the company.

Group chief executive, Leo Quinn said: "The issues we are working through are as I set out in March and legacy challenges remain. However, we are making encouraging progress on the Group's transformation. The positive response of our people to change, the continuing confidence of our customers in Balfour Beatty's expertise and the first signs of improving cash performance reinforce my conviction in the Group's long-term success."

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