Completion of Acquisition

Balfour Beatty PLC 7 January 2002 BALFOUR BEATTY COMPLETES THE ACQUISITION OF RAIL ELECTRIFICATION PROJECT BUSINESS FROM ABB FOR Euro42 MILLION Leadership in Growing Fixed Rail Infrastructure Engineering Market Further Consolidated Balfour Beatty, the international engineering, construction and services group, announces today that it has completed the acquisition of the rail electrification project business of ABB for a total consideration of Euro42 million. This acquisition was the subject of a previous announcement on 21 December 2001. The business acquired designs, manages, installs and commissions railway electrification systems and services internationally. It operates principally on major high-speed electrification projects in Italy and has established market positions in Greece, the UK and the Netherlands. It is also active in the mass transit market with, in particular, a major project under way in Portugal. Its principal customers are TAV, the Italian state railway company high-speed division, the transit authority of the City of Porto and the Greek state railway company. The acquired business will have estimated 2001 sales of approaching Euro100 million and operating profits of approximately Euro8.5 million. Its order book stands at over Euro300 million, principally through its participation in three major long-term Italian high-speed rail developments, but also in secured work on Metro de Porto in Portugal and on the Athens-Thessaloniki contract in Greece. It employs 350 people. It is anticipated that the acquisition will be earnings enhancing in 2002*. The acquisition will be financed from Balfour Beatty's existing cash resources. Commenting on the acquisition, Balfour Beatty Chief Executive, Mike Welton, said today: 'The completion of this transaction further strengthens Balfour Beatty's position as market leader in the provision of fixed rail infrastructure with projected worldwide annual revenues of approaching £800 million. With investment in rail infrastructure on a steady upward trend, Balfour Beatty's many strong market positions and world-recognised technology put us in an excellent position for growth.' The Italian rail market benefits from substantial government investment. In the 10-year plan published in 2000, more than Euro40 billion was allocated to mainline rail and a further 15% to mass transit schemes. The first section of a new link between Milan and Turin is scheduled to begin in 2002, with further sections of that route and the development of four other major schemes planned for 2003 onwards. The acquired business has a strong and established management team and first-class technology and resources. Balfour Beatty's rail traction power and control system capabilities and market coverage will be substantially enhanced as a result of the transaction. The acquired business has a number of existing working relationships with Balfour Beatty Rail Power Systems, the electrification and power supply business based in Germany which Balfour Beatty acquired from Adtranz last year. It will become part of Balfour Beatty Rail Power Systems. The acquisition price is based on a net asset value of Euro9 million with a mechanism for adjustment on agreement of the closing balance sheet. The transaction is subject to customary regulatory review in Italy. Investment in the world's rail infrastructure is growing under the influence of rapid traffic growth, increasing demand for high-speed routes, the development of mass transit systems and rail utility restructuring. * This statement should not be construed as a profit forecast or be interpreted to mean that the future earnings per share of Balfour Beatty will necessarily match or exceed earnings per share for completed financial periods. Enquiries to: Tim Sharp Tel: 020 7216 6884 www.balfourbeatty.com Notes to Editors 1. Balfour Beatty's 2001 worldwide turnover in rail engineering and services will be approximately £700 million. 2. The acquired company's principal contracts are for the electrification of the lines from: - Rome to Naples - Bologna to Florence - Milan to Bologna - Athens to Thessaloniki (Greece) - Metro de Porto (Portugal). 3. Through Balfour Beatty Rail Power Systems, the company is already a leading international rail electrification and power supply specialist. With annual sales of Euro250 million, Balfour Beatty Rail Power Systems has strong market positions in Germany, Austria, Sweden, Spain, China, Malaysia and South America. Its principal current contracts are the Euro100 million Harbin-Dalian Line in China, the Euro60 million Nurnberg to Ingolstadt Line in Germany, the Euro24 million Madrid to Barcelona high-speed line in Spain, a Euro22 million project in Sao Paulo in Brazil and a Euro21 million main line project from Qinhuangdao to Shenyang in China. 4. In the UK, Balfour Beatty Rail is a major supplier to Railtrack, including major infrastructure development work on the West and East Coast Main Lines in electrification and infrastructure upgrades; infrastructure services provision, principally in Wessex, Kent and Anglia & Great Eastern; the manufacture and supply of switches and crossings; the supply of specialist rail plant; and the provision of specialised technologies and technical expertise. Balfour Beatty is also undertaking major project work on the Channel Tunnel Rail Link. 5. In the USA, Balfour Beatty is a market leader in trackwork through Marta Track Constructors Inc and Metroplex Corporation and a specialist in signalling technology and engineering through Balfour Beatty Rail Systems Inc. It was responsible for the $500 million electrification of the new high-speed North-East Corridor link between Boston and New Haven for Amtrak. Current work includes major projects in Los Angeles, Dallas, New Jersey and Pittsburgh. Many major rail development projects in the US are currently in the prequalification and bidding process and federal appropriations for future high-speed and mass transit rail transportation projects stand at record levels.
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