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In the early stages of a project there is an initial cash outflow, representing the share of equity and subordinated debt invested by Balfour Beatty. Frequently this outflow can be timed to coincide with completion of construction.
The cash inflows to Balfour Beatty from a project, aside from margins earned on construction maintenance and facilities management subcontracts, arise from:
| |
To |
2001 £m |
2002 £m |
2003 £m |
2004 £m |
2005 £m |
2006 £m |
2007 £m |
Total £m |
|---|---|---|---|---|---|---|---|---|---|
| Investment in concessions: | |||||||||
| Equity
| (2) | - | - | (0) | (10) | (25) | (0) | (0) | (42) |
| Subordinated
debt
| (11) | (10) | (6) | (2) | (6) | (22) | (13) | (9) | (102) |
| Gross investment in concessions | (13) | (10) | (6) | (3) | (16) | (48) | (13) | (9) | (144) |
| Subordinated debt principal repaid | - | 1 | 2 | 3 | - | 4 | 2 | 2 | 13 |
| Net investment in concessions | (13) | (9) | (5) | (0) | (16) | (44) | (11) | (7) | (130) |
| Subordinated debt interest received | - | 8 | 1 | 2 | 8 | 6 | 9 | 8 | 41 |
| Dividends | - | 2 | 13 | 6 | 11 | 10 | 15 | 58 | 114 |
| Upstream Loans | - | 7 | 18 | - | - | - | - | 1 | 27 |
| Proceeds on disposal | - | - | - | - | - | 14 | - | - | 14 |
| Total cash received from concessions | - | 17 | 32 | 7 | 19 | 29 | 23 | 67 | 194 |
| Net cashflow (to)/from concessions | (13) | 8 | 27 | 7 | 3 | (15) | 12 | 60 | 64 |
Balfour Beatty's equity investment (including subordinated loans) in its PPP/PFI projects at 31 December 2007 was as detailed below:
| Projects | BB Shareholding (%) |
BB Investment at 31/12/07 (£m) |
BB Future Investment (£m) |
BB Total Investment (£m) |
|---|---|---|---|---|
| Equity Invested in Concessions | ||||
| Connect Roads M1-A1 | 50% | 14 | 0 | 14 |
| Connect Roads A30/A35 | 85% | 21 | 0 | 21 |
| Connect Roads A50 | 85% | 6 | 0 | 6 |
| Connect Roads M77 | 85% | 15 | 0 | 15 |
| Connect Roads Sunderland Street Lighting | 100% | 0 | 3 | 3 |
| Connect Roads South Tyneside Street Lighting | 100% | 0 | 2 | 2 |
| Connect Roads Derby Street Lighting | 100% | 0 | 3 | 3 |
| Consort Healthcare (Durham) | 50% | 7 | 0 | 7 |
| Consort Healthcare (ERI) | 74% | 40 | 0 | 40 |
| University College London Hospital | 33% | 9 | 0 | 9 |
| Consort Healthcare (Blackburn) | 50% | 6 | 0 | 6 |
| Consort Healthcare (Birmingham) | 40% | 0 | 23 | 23 |
| Consort Healthcare (Mid Yorkshire) | 50% | 0 | 15 | 15 |
| Consort Healthcare (Salford) | 50% | 0 | 10 | 10 |
| Consort Healthcare (Tameside) | 50% | 0 | 6 | 6 |
| Transform Schools (Stoke) | 50% | 5 | 0 | 5 |
| Transform Schools (Rotherham) | 50% | 5 | 0 | 5 |
| Transform Schools (North Lanarkshire) | 50% | 1 | 8 | 9 |
| Transform Schools (Bassetlaw) | 50% | 7 | 0 | 7 |
| Transform Schools (Birmingham) | 50% | 0 | 4 | 4 |
| Transform Schools (Knowsley) | 100% | 0 | 15 | 15 |
| Powerlink/PADCo | 10% / 25% | 4 | 0 | 4 |
| Aberdeen Environmental Services | 45% | 4 | 0 | 4 |
| 144 | 89 | 233 | ||
| Preferred Bidder Projects | ||||
| Islington BSF | 80% | 0 | 3 | 3 |
| FIFE Hospital | 50% | 0 | 7 | 7 |
| ITE West | 50% | 0 | 4 | 4 |
| CNDR | 100% | 0 | 4 | 4 |
| TOTAL | 144 | 107 | 251 |
During construction profits may be earned from construction activity plus income on the financial asset, less net interest expense. After construction is complete, the earliest cashflows from the project are used to fund the senior debt cash reserve accounts. These factors mean that the cashflow to Balfour Beatty from projects will lag their profitability.
Graphs showing annual and cumulative shareholder profits after tax and cashflow for Balfour Beatty's existing concessions are shown below (click on the image to download the data as an Excel document):
Balfour Beatty's share of existing concessions at 31 December 2007
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