In a trading update covering the period to 8 December 2022, Balfour Beatty said its year-end order book is expected to be around 5% ahead of the prior year (FY2021 £16.1 billion), largely due to favourable foreign exchange movements. The group continues to de-risk the order book across its portfolio by focusing on projects with the appropriate terms and conditions, it added.

Full year revenue is expected to be about 5% ahead of prior year (FY2021: £8.3bn), also largely driven by foreign exchange, while full year underlying profit from operations from earnings-based businesses is expected to be in line with guidance at the half year.

Cash performance continues to be strong. Full year average monthly net cash now forecast to be around £800 million, ahead of the previous guidance of £740-£780m.

In UK construction, Balfour Beatty has been appointed as the sole contractor to both of the SCAPE Civil Engineering frameworks, covering England, Wales and Northern Ireland, and covering the entirety of Scotland. The frameworks are worth up to £3.25bn and £750m, respectively, covering a period of four years, with an option for a two-year extension.

Following the group’s success in being selected for the eight-year £176m Buckinghamshire highways maintenance contract, the Support Services arm was also awarded a new seven-year contract, worth £297m, by East Sussex County Council for the maintenance of highways assets and the delivery of infrastructure services across the county.

Balfour Beatty has disposed of five assets in the year for around £90m consideration and £65m profit on disposal, while investing around £30m in new projects. The group is currently the preferred bidder on two projects in the UK and one project in the US, all of which are student accommodation projects.

The company said it continues to deliver attractive total cash returns to shareholders while maintaining an appropriate balance between investment in the business, and a strong capital position.

Once the 2022 share buyback programme completes this month, over £385m will have been distributed to shareholders through share buybacks and dividends since the start of 2021. This includes over £200m in 2022 and total cash returns are expected to be broadly similar in 2023. From January, the Group intends to buy back further shares ahead of confirming the full 2023 share buyback at the Group’s full year results in March.

The group expects net interest income for the 2022 full year, largely due to the group benefitting from higher interest rates. This is expected to continue in 2023.

In addition, given the group’s profitable outlook, further deferred tax assets relating to UK tax losses from prior periods are expected to be recognised in the second half of 2022, resulting in only a small 2022 tax charge.

Going forward, however, the effective tax rates in each of the three geographies are expected to be close to statutory rates, albeit with cash tax payments in the UK remaining below statutory levels in the medium term as losses are utilised.

Leo Quinn, Balfour Beatty group chief executive, said: “We continue to expect a strong full year operational and financial performance. Looking to 2023 and beyond, our improved, de-risked and diversified order book gives us confidence that we will continue to make progress in delivering profitable managed growth.”