Statement re LUL PPP

Balfour Beatty PLC 04 April 2003 BALFOUR BEATTY PLC Balfour Beatty to Invest £70 Million of Equity in Metronet and Carry Out £1.2 Billion of Associated Construction and Engineering Contracts Financial Close and Operational Handover for Metronet Concessions in London Underground Public Private Partnership Balfour Beatty, the international engineering, construction and services group, announces today that the Metronet consortium, in which Balfour Beatty is a 20% shareholder, has reached financial close and secured operational handover for its two 30-year PPP concessions for the London Underground. Metronet has now taken responsibility for financing, upgrading, replacing and maintaining the Bakerloo, Central, Victoria and Waterloo & City Lines (Metronet Rail BCV) and the Metropolitan, District, Circle, Hammersmith & City and East London Lines (Metronet Rail SSL). Commenting today, Balfour Beatty Chief Executive, Mike Welton, said: 'After nearly four years of negotiation, consultation and planning, we are delighted to become part of the London Underground PPP and to be able to play a key role in creating a faster, safer, cleaner and more reliable London Underground system. 'We believe that this will prove an attractive investment for Balfour Beatty, with good returns for well-understood risks in what is, given our extensive experience of working with London Underground, a very familiar operating environment. We have now also added to our order book downstream engineering and construction contracts worth some £1.2 billion over the concessions' first 7 1/2 year period.' Balfour Beatty will invest, from its own cash resources, a total of £70 million in equity and shareholder subordinated debt in the two concessions over their first 71/2 year period. The substantial costs incurred by Balfour Beatty in association with the Metronet bid have been refunded. Balfour Beatty has also received a developer's fee. It is anticipated that Balfour Beatty's equity participation in the two concessions will contribute approximately £7 million of profits at the pre-tax level in the financial year ending 31 December 2003 and that long-term investment returns will be broadly in line with those from its other major PPP/ PFI concessions. In addition to returns on its investment, approximately £1.2 billion of downstream contracting work has now been added to Balfour Beatty's order book, which already stood at over £5 billion. This includes all the new trackwork to be undertaken in the concessions' first 71/2 period, with a value of approximately £500 million. It also includes civil engineering works and the upgrading and modernisation of over 150 stations, worth a total of over £700 million to the Group over the next 71/2 years. In line with its normal prudent accounting approach, the Group is not expecting to recognise any material profit on its downstream construction work during the first nine-month period. Balfour Beatty estimates that with all relevant flows taken into account, the concessions will produce, at minimum, a cash neutral position for the Group, both in 2003 and for the first 71/2 year period in total. Balfour Beatty is already a leading participant in the UK government's PFI/PPP programme. Its portfolio includes three major hospitals in Edinburgh, Durham and London, three large-scale road schemes in Derbyshire, Yorkshire and the West Country, the largest group schools PFI so far let in England for Stoke and the provision of the high voltage power system for the London Underground, which concession has been operational since 1998. Enquiries to: Tim Sharp Tel: 020 7216 6800 There will be an investor and analyst briefing on Monday 7 April at 12.30 pm at ABN AMRO, 250 Bishopsgate, London, EC2. Notes to Editors 1. Balfour Beatty is a specialist in infrastructure creation and care. It provides engineering, construction and service skills to customers for whom infrastructure quality, efficiency and reliability are critical. 2. Before today's announcement, Balfour Beatty's order book exceeded £5 billion. In 2002, its turnover in rail engineering and services, in which it is a world leader, exceeded £830 million. 3. Balfour Beatty had 2002 sales of £3.4 billion, pre-tax profits of £118 million and year-end net cash of £67 million. 4. Balfour Beatty has a long and successful record of working with London Underground. In 1998, it was awarded the concession, in joint venture with SEEBOARD, to finance, operate, upgrade and maintain London Underground's high voltage power distribution network. In addition to undertaking trackwork, cabling and other engineering projects for LUL, the company was responsible, in joint venture, for the section of the new Jubilee Line between Green Park and Waterloo in a contract worth over £350 million. This information is provided by RNS The company news service from the London Stock Exchange STRUUUBCCUPWGPC
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