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City forms a queue behind the Ps


THE INDUSTRY'S three biggest listed guns, Amec, Balfour Beatty and Carillion, produced results last week showing they are all making varying degrees of progress on improving margins and keeping their order books in good shape.

Of the trio, Balfour seems to have the strongest story underlined by a 10 per cent rise in the dividend and a 17 per cent increase in its already vast order book to £6.8 billion. In contrast to its rivals, Balfour has managed to report both a double digit increase in underlying pre-tax profits and a strong operating cash performance.

The group seems to be taking advantage of most of the industry's happening sectors at the moment, and the acquisition of Mansell at the end of 2003 was well timed to capitalise on the social housing boom.

Balfour has also done well to lift profits at its civils and specialist engineering business, working on roads and for gas and water utilities - all areas where others have struggled recently.

But the City has taken most encouragement from the progress the major groups are making with their PPP operations.

Balfour is preferred bidder on five new PPP schemes after the full acquisition of various road concessions, the first full year of Metronet profit and recovery at Barking Power helped it increase pre-tax profits from investments by 58 per cent.

Carillion now reckons to have a PPP equity portfolio worth £83 million, after reporting exceptional profits of £7.7 million from the sale of two roads concessions.

Moreover, it has a strong project pipeline, supported by a strong cash flow. It plans to increase equity invested from £29 million to £67 million over the next three years, and possibly more.

Amec also expects increased earnings from its PPP portfolio, which it values at around £77 million.

The firm has recently been awarded preferred bidder status for the Docklands Light Railway extension and Colchester Hospital. Its onshore wind energy business is also looking promising.