Balfour Beatty PLC 10 October 2001 BALFOUR BEATTY ACQUIRES JOHN KENNEDY HOLDINGS, A LEADING UTILITY SERVICE CONTRACTOR, FOR £43 MILLION Balfour Beatty plc, the international engineering, construction and services group, announces today that it has agreed to acquire John Kennedy Holdings (Kennedy), a leading UK utilities service business, for a total consideration of approximately £43 million (including the assumption of debt). Completion of the transaction is expected to take place today. Kennedy provides the group with a strong position in a growing sector of the utilities market. It also adds strength to Balfour Beatty's support service business portfolio which forms an increasing component of its business in the creation and care of essential assets. Kennedy comprises two operating businesses, John Kennedy Civil Engineering and Pipeline Consultants. John Kennedy Civil Engineering provides maintenance and renewal services to utilities in respect of their underground assets, principally in the gas and water sectors. The business has term contracts of up to five years' duration with a number of regional water utilities and with Transco. Several of these contracts are under partnering arrangements. Pipeline Consultants provides design consultancy and management services to a number of regional water utilities. In the year ended 31 March 2001, Kennedy had sales of £72.9 million and an operating profit of £4.5 million, before goodwill amortisation, representing an operating margin of 6%. At 31 March 2001, Kennedy had net assets of £12.7 million, including goodwill of £15.7 million. The company has an order book in excess of £200 million, which gives it substantial growth opportunities for the year to 31 March 2002 and beyond. Commenting on the acquisition, Balfour Beatty Chief Executive, Mike Welton, said today: 'The acquisition of Kennedy further expands our already strong position in infrastructure services and provides us with a quality business which has a significant opportunity to grow with the fast-expanding requirements for maintaining and upgrading utility networks.' Following privatisation, gas and water utilities have developed a much greater propensity to outsource asset maintenance, renewal and other services. This trend is accelerating as utilities seek to outsource an increasingly wide range of asset management and other operational services in addition to maintenance and renewal. In addition, safety considerations are resulting in markedly increased investment in asset renewal, particularly in the gas sector. Kennedy is being sold by its current and past management and by clients of Aberdeen Murray Johnstone Private Equity (AMJ), with whom a management buyout was executed in 1997. It is headquartered in Manchester and employs approximately 1,200 people. The business operates principally in the Midlands, north and south-west England and Scotland. Its principal customers are Transco, Southwest Water, United Utilities, Severn Trent Water, Yorkshire Water and the Scottish water authorities. The consideration for the acquisition will be satisfied from the group's existing cash resources and by the issue of guaranteed loan notes payable up to 30 April 2005. Up to £0.25 million of consideration is payable to management shareholders dependent on the profit performance of the business for the two years ending 31 March 2003. It is anticipated that the acquisition will be earnings enhancing from the date of completion. Enquiries to: Tim Sharp Tel: 020 7216 6884
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