Re Contract

Balfour Beatty PLC
17 December 2007


17 December 2007


                   BALFOUR BEATTY REACHES FINANCIAL CLOSE FOR
             £163 MILLION KNOWSLEY BUILDING SCHOOLS FOR THE FUTURE
                                  PPP PROJECT

Balfour Beatty, the international engineering, construction and services group,
announces today that its specialist education PPP concession company, Transform
Schools, has reached financial close for the £163 million Knowsley Metropolitan
Borough Council PPP concession to construct seven new learning centres under the
Building Schools for the Future (BSF) programme.

The concession, which is for 25 years, will provide seven state-of-the-art
learning centres which will replace all of the Borough's existing secondary
schools over a three-year period.

Transform Schools will work with Knowsley Council not only in the building and
management of the new premises, but also in the further development of a clear
educational vision through researching and evaluating progressive learning
environments and teaching models in the UK and internationally. Together,
Balfour Beatty and the Council are investigating the potential for the
establishment of a not-for-profit company to manage the extended use of the
facilities and an employment and training hub to maximise local employment,
training and development opportunities.

Commenting today, Balfour Beatty Chief Executive, Ian Tyler, said:

'We are delighted to have reached financial close on this exciting project which
will transform education provision in Knowsley. We bring the experience gained
not only from our work on five other major schools PFI schemes but also lessons
learned from personalised project-based learning schemes in the UK, US,
Australia and Asia.'

Councillor Graham Wright, Knowsley's Cabinet Member for Children's Services,
said:

'We are delighted to set the seal on this contract and look forward to working
with the company as we progress our plans to transform education in Knowsley.
Our proposals are genuinely ground-breaking and will combine up-to-date
facilities and the latest technology with a modern curriculum and teaching
methods.'

Construction and building services work under the contract will be carried out
by Balfour Beatty Construction and Balfour Kilpatrick. The maintenance of the
schools will be undertaken by Haden Building Management, also a subsidiary of
Balfour Beatty.

Balfour Beatty will invest £15.3 million of equity in the project which will
bring its overall equity commitment to the education sector to almost £50
million.

Knowsley is the sixth major Balfour Beatty schools PFI project to reach
financial close and its first as a concession company under the BSF scheme. Its
projects at Stoke and Rotherham are in their seventh and fifth year of operation
respectively. Projects in North Lanarkshire and Bassetlaw began in the summer of
2005 and its Birmingham PP2 concession became operational in April 2006. Balfour
Beatty is currently preferred bidder for the BSF scheme in Islington, north
London.

Last month, Gammon Capital, the Group's PPP vehicle in South East Asia, was
appointed preferred bidder for the £90 million Institute of Technical Education
in Singapore.

                                      ENDS

Enquiries to:
Tim Sharp
Tel: [phone]
www.balfourbeatty.com


Notes to Editors:
----------------

1.  Balfour Beatty's other schools PFI projects are:

    -  for Stoke City Council (13 new schools and numerous new extensions in a
       25-year concession worth £153 million)
    -  for the Metropolitan Borough of Rotherham (10 new schools and five 
       refurbished schools plus energy management, repairs and maintenance, 
       caretaking, cleaning and catering in a 30-year concession worth £100 
       million in construction and £40 million in long-term services)
    -  for North Lanarkshire Council (24 new schools in a 30-year concession 
       worth £140 million in construction and up to £100 million in long term 
       services)
    -  for Nottinghamshire County Council (Bassetlaw Grouped Schools - five new
       secondary schools, a new special school and two new centres for post-16
       education in a 25-year concession worth £123 million in construction and
       in excess of £100 million in long-term services)
    -  for Birmingham City Council (12 new and refurbished schools, including 
       two secondary schools, nine primary schools and one early years centre - 
       £56 million of construction work, £40 million in long-term services)
    -  For Islington Council, the £140 million BSF scheme to deliver nine 
       secondary schools and two pupil referral units in a 25-year concession.

2.  Transform Schools won both Best Operational Education Project and the 
    overall top prize of Best Operational Partnership (All Sectors) at the 2004 
    Public Private Finance Awards for its 25-year Stoke Schools concession. In 
    May 2006 its Rotherham project won Best Operational Educational Project 
    under the same award scheme.

3.  Balfour Beatty is undertaking all design and construction work for schools 
    in East Lothian in a contract worth some £40 million under the PPP 
    concession for that council.

4.  Balfour Beatty is providing all design and build services for Babcock and
    Brown in its schools PFI projects. Work secured under this arrangement to 
    date exceeds £80 million, including the construction of five new schools in
    Calderdale, West Yorkshire.

5.  The company is also one of the two framework contractors who are providing
    construction services to the £160 million BSF scheme for Manchester City
    Council.

6.  Balfour Beatty is a world-class engineering, construction, services and
    investment business, well-positioned in infrastructure markets which offer
    significant long-term growth. We work in partnership with sophisticated
    customers who value the highest levels of quality, safety and technical
    expertise. Our skills are applied in appropriate combinations to meet 
    individual customer need. Balfour Beatty's financial position, with 
    significant net cash and with strong operating cash flows, offers continuing
    flexibility to add additional capacity and expertise to the business mix and
    to make appropriate investments in PPP and other long-term growth 
    opportunities.




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