Offer for Birse Group plc

Balfour Beatty PLC
26 June 2006


 Not for release, publication or distribution, in whole or in part, in, into or
               from Australia, Canada, Japan or the United States


Embargoed until 7.00 a.m. (London time) on 26 June 2006


26 June 2006



BALFOUR BEATTY LAUNCHES A £32 MILLION RECOMMENDED CASH OFFER FOR BIRSE GROUP, A
                 LEADING UK REGIONAL CIVIL ENGINEERING COMPANY


 The acquisition of Birse will further enhance Balfour Beatty's already strong
position in UK civil engineering whilst delivering value for Birse Shareholders


HIGHLIGHTS
     
•    Recommended cash offer of 16.625 pence per Birse Share.

•    Balfour Beatty's UK civil engineering operations and Birse combined will 
     create a powerful force in UK civil engineering with a broad and strong 
     regional presence and a high-quality customer base.

•    The combination of Balfour Beatty and Birse offers significant growth 
     potential based on the strong strategic fit between Birse and Balfour
     Beatty's UK civil engineering business.

•    For Birse, the Offer represents a successful conclusion to the review of 
     the Birse Group's options by its board and advisers, prompted by the
     continuing narrowing of Birse's capital base and relatively high levels of
     gearing. Balfour Beatty's financial strength will allow the acceleration of 
     the continuing development of Birse's businesses.

•    The transaction strengthens the Balfour Beatty Group's capabilities in 
     coastal and rail-related civil engineering work and will add to its 
     engineering and project management skills in water and other process
     sectors.

•    For Balfour Beatty Shareholders, the transaction is expected to enhance 
     shareholder value and be earnings enhancing* (see note below) in 2007, the 
     first full year following completion of the acquisition of Birse.

* The statement as to earnings per share enhancement does not constitute a
profit forecast and should not be interpreted to mean that Balfour Beatty's
future earnings per share will necessarily exceed or match those of any prior
year.


Commenting on the Offer, Ian Tyler, Chief Executive of Balfour Beatty, said:

'The acquisition of Birse is a substantial step in delivering Balfour Beatty's
stated strategy of expanding and strengthening its regional presence in the UK
civil engineering and building sectors. We are confident that by bringing the
two businesses together, we can accelerate growth and significantly improve
performance.

We attach great importance to the skills and experience of Birse's management
and employees, who have made excellent progress towards focusing the business on
profitable activities. We expect them to play an important role in the further
development of the enlarged business.'


Peter Watson, Chairman of Birse, said:

'We have always been responsive to the needs of our customers and the
marketplace whilst focusing on shareholder value. With opportunities on the
increase in our main infrastructure markets the benefit of the stronger covenant
offered by Balfour Beatty will enable our businesses to take a leading position
in meeting that demand and enhance their service proposition to customers. The
Offer will further support the positive momentum behind our businesses and
provide value for Birse Shareholders together with greater and more varied
career opportunities for our people within the enlarged Balfour Beatty Group.'


 Not for release, publication or distribution, in whole or in part, in, into or
               from Australia, Canada, Japan or the United States



26 June 2006



BALFOUR BEATTY LAUNCHES A £32 MILLION RECOMMENDED CASH OFFER FOR BIRSE GROUP, A
                 LEADING UK REGIONAL CIVIL ENGINEERING COMPANY



THE OFFER

The boards of Balfour Beatty and Birse are pleased to announce that they have
reached agreement on the terms of a recommended cash offer to be made by Balfour
Beatty for the entire issued share capital of Birse.

Under the terms of the Offer, Birse Shareholders will be entitled to receive
16.625 pence in cash for each Birse Share. On this basis, the terms of the Offer
value the entire issued share capital of Birse at approximately £32 million. A
Loan Note Alternative will be made available.

The terms of the Offer represent:

•    a premium of approximately 23.1 per cent. to the closing mid market price 
     of 13.5 pence per Birse Share on 23 June 2006, being the last
     business day prior to the announcement of the Offer;

•    a premium of approximately 35.2 per cent. to the average closing mid market 
     price of 12.3 pence per Birse Share for the three months ended 23 June 
     2006, being the last business day prior to the announcement of the Offer;
     and

•    a price in excess of the highest closing mid market price of a Birse Share 
     since 21 October 2003.


RATIONALE AND KEY BENEFITS

Balfour Beatty's UK civil engineering business serves public and private sector
customers with engineering solutions from minor works through to major
infrastructure development projects. For the year ended 31 December 2005, this
business reported revenue (including its share of joint ventures) of £425
million.  Its overall order book at the end of 2005 exceeded £1 billion.

Birse provides a range of civil engineering construction services to public and
private sector customers throughout the UK. Its principal business is in civil
engineering, with specialist skills in the coastal, rail and metro sectors and
in plant hire. It is also a process engineer providing turnkey design and
engineering services and solutions to customers in the water, power and nuclear
sectors.

For the year ended 30 April 2005, as restated under IFRS, Birse reported revenue
of £340.5 million, and profit before tax and exceptional operating items of £2.8
million.

Balfour Beatty believes that there is compelling strategic logic for the
acquisition of  Birse, which will strengthen further Balfour Beatty's position
as the UK's leading engineering, construction and services group.  Specifically:

•    the combination of Balfour Beatty's UK civil engineering operations and 
     Birse will create a powerful force in UK civil engineering, broadening and 
     strengthening Balfour Beatty's existing regional presence in England;

•    Birse will strengthen Balfour Beatty's capabilities, notably in coastal 
     work for Local Authorities and rail-related civil engineering work for
     the UK rail industry;

•    Birse will enhance Balfour Beatty's engineering and project management 
     skills, in water as well as other process activities; and

•    Birse's ongoing building activities, which operate from one branch, focus 
     mainly on educational work in the North of England. This business, which 
     has a good track record in this sector, will be integrated into Mansell,
     Balfour Beatty's regional building business, and will be an attractive 
     extension of Balfour Beatty's capabilities in this region.

Balfour Beatty's management capability and integration expertise will accelerate
the process already well underway at Birse of focusing its operations on
activities in which it has a strong track record and which offer attractive
margins.  Balfour Beatty's financial strength will allow these businesses more
effectively to exploit opportunities in these sectors.

The Offer for Birse is expected to enhance shareholder value and be earnings
enhancing* (see note below) for Balfour Beatty in 2007, the first full year
following completion of the acquisition of Birse.

* The statement as to earnings per share enhancement does not constitute a
profit forecast and should not be interpreted to mean that Balfour Beatty's
future earnings per share will necessarily exceed or match those of any prior
year.



RECOMMENDATION

The Birse Directors, who have been so advised by Rothschild, consider the terms
of the Offer to be fair and reasonable. In providing advice to the Birse
Directors, Rothschild has taken into account the commercial assessments of the
Birse Directors. Accordingly, the Birse Directors will unanimously recommend
Birse Shareholders to accept the Offer.

Connected parties of Birse Directors, Peter Watson and Martin Budden, holding
Birse Shares comprised in certain trusts settled by Peter Birse, have
irrevocably undertaken to accept the Offer in respect of their aggregate holding
of 8,000,000 Birse Shares, representing approximately 4.2 per cent. of the
issued share capital of Birse.

In addition, irrevocable undertakings to accept the Offer have been received
from Peter Birse in respect of 11,115,685 Birse Shares, from Peter Birse and
Helen Birse (as trustees) in respect of 12,755,135 Birse Shares which are
comprised in certain trusts, and from HSBC Bank plc in respect of 19,439,838
Birse Shares.

Accordingly, Balfour Beatty has received irrevocable undertakings in respect of,
in aggregate, 51,310,658 Birse Shares, representing approximately 26.7 per cent.
of Birse's issued share capital. The irrevocable undertaking from HSBC Bank plc
will cease to be binding if a Higher Competing Offer is made for the Birse
Shares.

Further details of these irrevocable undertakings are set out in section 5 and
Appendix II to the attached announcement.



This summary should be read in conjunction with the full text of the following
announcement. Appendix III to the following announcement contains definitions of
certain terms used in this summary and the following announcement. The Offer
Document and the Form of Acceptance will be posted to Birse Shareholders (other
than to persons with addresses in any Restricted Jurisdiction), as soon as
practicable and, in any event, within twenty-eight days of this announcement
unless otherwise agreed with the Panel.



ENQUIRIES:
Balfour Beatty                                       Tel: [phone]
Ian Tyler (Chief Executive)
Anthony Rabin (Finance Director)
Tim Sharp (Head of Corporate Communications)

Citigroup                                            Tel: [phone]
(Financial Adviser to Balfour Beatty)
Jan Skarbek
James Ireland

Hoare Govett                                         Tel: [phone]
(Corporate Broker to Balfour Beatty)
Bob Pringle
Neil Collingridge

Gainsborough                                         Tel: [phone]
(PR Adviser to Balfour Beatty)
Duncan Murray
Andy Cornelius

Birse                                                Tel: [phone]
Martin Budden (Group Managing Director)
Gerry Roche (Group Finance Director)

Rothschild                                           Tel: [phone]
(Financial Adviser to Birse)
David Forbes
David Wilton

JP Morgan Cazenove                                   Tel: [phone]
(Corporate Broker to Birse)
Steve Baldwin
Jonathan Walker

Financial Dynamics                                   Tel: [phone]
(PR Adviser to Birse)
Sally Lewis


Citigroup, which is authorised and regulated by the Financial Services
Authority, is acting exclusively for Balfour Beatty and no one else in
connection with the Offer and this announcement and will not be responsible to
anyone other than Balfour Beatty for providing the protections afforded to
clients of Citigroup or for providing advice in connection with the Offer or
this announcement or any matter referred to herein.

Rothschild, which is authorised and regulated by the Financial Services
Authority, is acting exclusively for Birse and no one else in connection with
the Offer and this announcement and will not be responsible to anyone other than
Birse for providing the protections afforded to clients of Rothschild or for
providing advice in connection with the Offer or this announcement or any matter
referred to herein.

This announcement is for informational purposes only and does not constitute an
offer to sell or invitation to purchase any securities or the solicitation of
any vote for approval in any jurisdiction, nor shall there be any sale, issue or
transfer of the securities referred to in this announcement in any jurisdiction
in contravention of applicable law. The Offer will be made solely by the Offer
Document and the Forms of Acceptance accompanying the Offer Document, which will
contain the full terms and conditions of the Offer, including details of how the
Offer may be accepted.

This announcement has been prepared for the purpose of complying with English
law and the City Code and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been prepared in
accordance with the laws of jurisdictions outside the United Kingdom. The
release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law. Persons who are not resident in the
United Kingdom or who are subject to other jurisdictions should inform
themselves of, and observe, any applicable requirements.

The Offer will not be made, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in that
jurisdiction, and the Offer is not capable of acceptance from or within a
Restricted Jurisdiction. Accordingly, copies of this announcement and all
documents relating to the Offer are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in, into or from
a Restricted Jurisdiction where to do so would violate the laws in that
jurisdiction, and persons receiving this announcement and all documents relating
to the Offer (including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such jurisdictions as doing
so may invalidate any purported acceptance of the Offer. The availability of the
Offer to Birse Shareholders who are not resident in the United Kingdom may be
affected by the laws of the relevant jurisdictions in which they are resident.
Persons who are not resident in the United Kingdom should inform themselves of,
and observe, any applicable requirements.

The Loan Notes to be issued in connection with the Offer have not been, nor will
they be, listed on any stock exchange and have not been, nor will they be,
registered under the Securities Act or under any relevant laws of any state or
other jurisdiction of the United States, nor have clearances been, nor will they
be, obtained from the securities commission or similar authority of any
province, territory or jurisdiction of Canada and no prospectus has been, or
will be, filed, or registration made, under any securities law of any province
or territory of Canada, nor has a prospectus in relation to the Loan Notes been,
nor will one be, lodged with, or registered by, the Australian Securities and
Investments Commission, nor have any steps been taken, nor will any steps be
taken, to enable the Loan Notes to be offered in compliance with applicable
securities laws of Japan.  Accordingly, unless an exemption under relevant
securities laws is available, the Loan Notes may not be offered, sold, resold,
delivered or transferred, directly or indirectly, in or into a Loan Note
Restricted Jurisdiction in which an offer of the Loan Notes would constitute a
violation of the relevant laws of, or require registration thereof in, such
jurisdiction or to, or for the account or benefit of, a person located in a Loan
Note Restricted Jurisdiction.

In accordance with normal UK market practice, Balfour Beatty or its nominees or
brokers (acting as agents) may from time to time make certain purchases of, or
arrangements to purchase, Birse Shares outside the United States, other than
pursuant to the Offer, before or during the period in which the Offer remains
open for acceptance. These purchases may occur either in the open market at
prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the UK.

This announcement contains statements about Balfour Beatty and Birse that are or
may be forward looking statements. All statements other than statements of
historical facts included in this announcement may be forward looking
statements. Without limitation, any statements preceded or followed by or that
include the words 'targets', 'plans' 'believes', 'expects', 'aims',' intends', '
will', 'may', 'anticipates', 'estimates', 'projects' or, words or terms of
similar substance or the negative thereof, are forward looking statements.
Forward looking statements include statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion and
growth of Balfour Beatty's or Birse's operations and potential synergies
resulting from the Offer; and (iii) the effects of government regulation on
Balfour Beatty's or Birse's business.

Such forward looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key assumptions.
Many factors could cause actual results to differ materially from those
projected or implied in any forward looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue reliance on
such forward looking statements, which speak only as of the date hereof. Balfour
Beatty and Birse disclaim any obligation to update any forward looking or other
statements contained herein, except as required by applicable law.


Dealing Disclosure Requirements

Please note that certain aspects of the rules on disclosure of the Code have
changed since 20 May 2006. The following represents a current summary of the
position.

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, '
interested' (directly or indirectly) in 1 per cent.  or more of any class of '
relevant securities' of Birse, all 'dealings' in any 'relevant securities' of
Birse (including by means of an option in respect of, or a derivative referenced
to, any such 'relevant securities') must be publicly disclosed by no later than
3.30 pm (London time) on the London business day following the date of the
relevant transaction. This requirement will continue until the date on which the
Offer becomes, or is declared, unconditional as to acceptances, lapses or is
otherwise withdrawn or on which the 'offer period' otherwise ends. If two or
more persons act together pursuant to an agreement or understanding, whether
formal or informal, to acquire an 'interest' in 'relevant securities' of Birse,
they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of Birse by Balfour Beatty or Birse, or by any of their respective '
associates', must be disclosed by no later than 12.00 noon (London time) on the
London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, please contact an independent financial
adviser authorised under the Financial Services and Markets Act 2000, consult
the Panel's website at www.thetakeoverpanel.org.uk or contact the Panel on
telephone number [phone]; fax [phone].



 Not for release, publication or distribution, in whole or in part, in, into or
               from Australia, Canada, Japan or the United States




Embargoed until 7.00 a.m. (London time) on 26 June 2006



26 June 2006

BALFOUR BEATTY LAUNCHES A £32 MILLION RECOMMENDED CASH OFFER FOR BIRSE GROUP, A
                 LEADING UK REGIONAL CIVIL ENGINEERING COMPANY



1.             Introduction

The boards of Balfour Beatty and Birse are pleased to announce that they have
reached agreement on the terms of a recommended cash offer to be made by Balfour
Beatty for the entire issued share capital of Birse.

The Birse Directors will unanimously recommend Birse Shareholders to accept the
Offer.



2.             The Offer

The Offer will be made on and subject to the terms and conditions summarised
below and set out in Appendix I to this announcement and to be set out in full
in the Offer Document and, in the case of Birse Shares held in certificated
form, the Form of Acceptance which will accompany the Offer Document. The Offer
will be made on the following basis:

                  for each Birse Share   16.625 pence in cash

The Offer values the entire issued share capital of Birse at approximately £32
million. A Loan Note Alternative will be made available, further details of
which are set out below.

The board of Birse has agreed not to recommend a final dividend in respect of
the year ended 30 April 2006 and that decision is reflected in the offer price.

These terms represent:

•              a premium of approximately 23.1 per cent. to the closing mid
market price of 13.5 pence per Birse Share on 23 June 2006, being the last
business day prior to the announcement of the Offer;

•              a premium of approximately 35.2 per cent. to the average closing
mid market price of 12.3 pence per Birse Share for the three months ended 23
June 2006, being the last business day prior to the announcement of the Offer;
and

•              a price in excess of the highest closing mid market price of a
Birse Share since 21 October 2003.

3.             Recommendation

The Birse Directors, who have been so advised by Rothschild, consider the terms
of the Offer to be fair and reasonable. In providing advice to the Birse
Directors, Rothschild has taken into account the commercial assessments of the
Birse Directors. Accordingly, the Birse Directors will unanimously recommend
Birse Shareholders to accept the Offer.



4.             Loan Note Alternative

As an alternative to all or some of the cash consideration of 16.625 pence per
Birse Share, Birse Shareholders (other than any Birse Shareholders in any Loan
Note Restricted Jurisdiction) who validly accept the Offer will be able to elect
to receive Loan Notes issued by Balfour Beatty on the following basis:

     for each £1 of cash consideration      £1 nominal value of Loan Notes

The Loan Note Alternative will be conditional upon the Offer becoming or being
declared unconditional in all respects. The Loan Note Alternative will remain
open for acceptance until the Offer closes.

The Loan Notes will be issued by Balfour Beatty, credited as fully paid, in
amounts and integral multiples of £1 and the balance of any entitlement that is
not a whole multiple of £1 will be disregarded and not issued. The Loan Notes
will be guaranteed as to the payment of principal and interest by HSBC Bank plc
but will otherwise be unsecured. The Loan Notes will bear interest at 0.75 per
cent. below six-month sterling LIBOR to be determined on the first business day
of each interest period. Interest will be payable by half-yearly instalments in
arrear (less any tax) on 30 June and 31 December in each year (the 'Interest
Payment Date') or, if such a day is not a business day, on the immediately
preceding business day. The first payment of interest will be made on 31
December 2006 (the 'First Payment Date').

On the First Payment Date, interest will be paid in respect of the period from
(and including) the date of issue of the relevant Loan Notes to (but excluding)
the First Payment Date. The Loan Notes will be redeemable in whole or in part
for cash at par at the option of noteholders on the first Interest Payment Date
which falls more than six months after the date of issue of the Loan Notes and
thereafter on any Interest Payment Date. If not previously redeemed, the final
redemption date will be 31 December 2009. Any Loan Notes outstanding on the
final redemption date will be redeemed at par (together with any accrued
interest) on that date.

No Loan Notes will be issued by Balfour Beatty unless, on or before the date on
which the Offer becomes or is declared unconditional in all respects, the
aggregate nominal value of all Loan Notes to be issued as a result of valid
elections for the Loan Note Alternative exceeds £500,000. If such aggregate is
equal to or less than £500,000, any such election shall, unless Balfour Beatty
decides otherwise, be void and, provided the acceptance of the Offer is
otherwise valid, the relevant Birse Shareholders will be deemed to have accepted
the Offer for cash. Balfour Beatty will have the right to redeem all of the Loan
Notes if the aggregate nominal value of outstanding Loan Notes is equal to or
falls below £500,000 at any time during their term.

The Loan Notes will not generally be transferable, and no application will be
made for them to be listed on, or dealt on, any stock exchange or other trading
facility. The Loan Notes and the Loan Note Instrument constituting them will be
governed by and construed in accordance with English law.

Further details of the Loan Notes and the Loan Note Alternative will be
contained in the formal Offer Document.



5.             Irrevocable undertakings

Balfour Beatty has received irrevocable undertakings to accept the Offer from
connected parties of Birse Directors, Peter Watson and Martin Budden, holding
Birse Shares comprised in certain trusts settled by Peter Birse, in respect of
their aggregate holding of 8,000,000 Birse Shares (representing approximately
4.2 per cent. of the issued share capital of Birse). These undertakings will
remain binding even if a higher competing offer is made for Birse, unless the
Offer lapses or is withdrawn.



Peter Birse has also given an irrevocable undertaking to accept the Offer in
respect of his holdings (beneficial and non-beneficial) of 11,115,685 Birse
Shares in aggregate (representing approximately 5.8 per cent. of the issued
share capital of Birse). Balfour Beatty has also received irrevocable
undertakings from Peter Birse and Helen Birse (as trustees) of the Birse Shares
which are comprised in certain trusts to accept the Offer in respect of their
holdings (as trustees) of 12,755,135 Birse Shares in aggregate (representing
approximately 6.6 per cent. of the issued share capital of Birse). These
undertakings will remain binding even if a higher competing offer is made for
Birse, unless the Offer lapses or is withdrawn.



HSBC Bank plc has given an irrevocable undertaking to accept the Offer in
respect of its holding of 19,439,838 Birse Shares (representing approximately
10.1 per cent. of the issued share capital of Birse).  This undertaking will
cease to be binding in the event of a Higher Competing Offer.



In summary, therefore, Balfour Beatty has received irrevocable undertakings to
accept the Offer in respect of 51,310,658 Birse Shares in aggregate,
representing approximately 26.7 per cent. of the issued share capital of Birse.



Further details of these irrevocable undertakings are set out in Appendix II to
this announcement.



6.              Background to and reasons for the Offer

Balfour Beatty believes that there is compelling strategic logic for the
acquisition of  Birse, which will strengthen further Balfour Beatty's position
as the UK's leading engineering, construction and services group.  Specifically:

•              the combination of Balfour Beatty's UK civil engineering
operations and Birse will create a powerful force in UK civil engineering,
broadening and strengthening Balfour Beatty's existing regional presence in
England;

•              Birse will strengthen Balfour Beatty's capabilities, notably in
coastal work for Local Authorities and rail-related  civil engineering work for
the UK rail industry;

•              Birse will enhance Balfour Beatty's engineering and project
management skills, in water as well as other process activities; and

•              Birse's ongoing building activities, which operate from one
branch, focus mainly on educational work in the North of England. This business,
which has a good track record in this sector, will be integrated into Mansell,
Balfour Beatty's regional building business, and will be an attractive extension
of Balfour Beatty's capabilities in this region.

Balfour Beatty's management capability and integration expertise will accelerate
the process already well underway at Birse of focusing its operations on
activities in which it has a strong track record and which offer attractive
margins. Balfour Beatty's financial strength will allow these businesses more
effectively to exploit opportunities in these sectors.

Birse's business will be integrated with Balfour Beatty's existing domestic
operations. Balfour Beatty's executive and regional management teams have
demonstrated successful acquisition integration in recent years, through the
acquisitions of Mansell in the UK building sector, and John Kennedy and Kentons
in the UK utilities sector, amongst others.



7.             Background to the recommendation

Over recent years significant progress has been made in repositioning the Birse
Group.  Birse has focused its operations on attractive sectors such as civils
and rail and London Underground infrastructure projects and specialist water and
process engineering sectors in which it can operate with an acceptable balance
of reward and risk. It has withdrawn from the majority of its building business
and has resolved many of the legacy contract issues in this area.



Birse has successfully introduced a corporate culture based upon customer focus
and understanding customer requirements and matching the demands of those
customers with its own underlying competencies. Its operations have also been
restructured with emphasis upon subsidiary autonomy whilst also maintaining
appropriate levels of operational risk management.



This progress and underlying forward momentum has been achieved despite Birse
having a narrowing capital base and relatively high levels of gearing consisting
primarily of short term borrowings. For the year ended 30 April 2005, Birse
reported revenue of approximately £340.5 million. The Interim Results disclosed
net assets of approximately £0.6 million and net debt of approximately £8.4
million as at 31 October 2005. This net debt consisted of an overdraft of
approximately £18.6 million, net of deposits of approximately £10.2 million. The
level of net debt fluctuates within a relatively wide range reflecting the
normal working capital requirements inherent in the Birse Group's trading
operations.



In the Interim Results as at 31 October 2005, Birse reported that it was
continuing to make progress towards its target of eliminating material losses in
its curtailed building business by 30 April 2007 and was actively looking at
options to accelerate that process.  Since that time it has emerged that the
most efficient and economical approach to adopt involves cutting ongoing
overhead costs particularly in the area of commercial management, and securing
commercial closedown of contract balances and related assets from the
perspective of optimising net cash flows as opposed to profit maximisation. As a
consequence of this approach, the book value of assets in terms of actual
recoveries is likely to be compromised and, in turn, will give rise to
additional provisioning, which will result in a significant and material
increase in the level of losses which will be reported for the year ended 30
April 2006 in respect of the curtailed building business, thereby affecting
Birse's consolidated balance sheet.



The Birse Directors believe that the continuing narrowing of Birse's capital
base combined with its net debt position may in the future impact adversely upon
Birse's ability to generate new business and hence increase the risk to Birse's
continued progress.



It is against this background that the Birse Directors and their advisers
considered the options available to Birse, including the possibility of a sale
to a larger and well capitalised group. As part of this process, the Birse
Directors received a proposal from Balfour Beatty. The Birse Directors were of
the view that this proposal was sufficiently credible and attractive to enter
into the formal discussions that have now led to the Offer.



In considering whether the Offer is fair and reasonable to Birse Shareholders,
the Birse Directors have considered:



•              that the Offer represents a premium of approximately 23.1 per
cent. to the closing mid market price of 13.5 pence per Birse Share on 23 June
2006, being the last business day prior to the announcement of the Offer;

•              that the Offer represents a premium of approximately 35.2 per
cent. to the average closing mid market price of 12.3 pence per Birse Share for
the three months ended 23 June 2006, being the last business day prior to the
announcement of the Offer;

•              that the Offer is in excess of the highest closing mid market
price of a Birse Share since 21 October 2003;

•              that the Offer provides immediate and certain benefits against
the uncertain potential future return from remaining a Birse Shareholder given
its narrowing capital base, relatively high levels of gearing and the consequent
uncertainties concerning its ability to generate new business; and

•              that Birse will become part of a much larger group, providing the
opportunity for  its ongoing operations to accelerate and build upon the
positive progress made to date.



Accordingly, the Birse Directors have concluded that the terms of the Offer are
fair and reasonable and they will unanimously recommend Birse Shareholders to
accept the Offer.



8.             Information on Birse

Birse is a provider of regional construction and engineering services to public
and private sector customers with a comprehensive range of activities in the UK.
Birse offers a wide range of construction and engineering services, from process
engineering and infrastructure projects through to smaller building and civil
engineering works.

In recent years, there has been a radical change in the nature and shape of the
Birse business, successfully withdrawing from the general building sector and
focusing on the development of its civil and process engineering businesses,
which included the establishment of a multi-disciplinary in-house design
capability.

Birse has four business sectors in its ongoing operations:

•              Civil Engineering: provides a comprehensive range of civil
engineering services and related disciplines for small to medium sized projects
delivered via a network of regional offices in the Midlands, Northern England
and the South East. It also has a specialist office focused on coastal defence
works and businesses dedicated to the rail infrastructure and London Underground
sectors;

•              Process Engineering: working in conjunction with the Civil
Engineering division, Process Engineering provides turnkey design and
engineering services and solutions to clients in the water, power and nuclear
sectors. Using its in-house multi-disciplinary design capability, Birse Process
Engineering has established a leading position in the design and development of
odour control solutions for the wastewater sector;

•              Building: provides building services mainly to local authority
and education sector clients in the North of England; and

•              Plant Hire: operating under the BPH Equipment brand, the division
hires heavy duty crawler cranes and piling equipment mainly to UK civil
engineering contractors.

In addition, Birse has curtailed operations ('Curtailed Operations') comprising:

•              Commercial Property, which now represents the collection of
outstanding contingent consideration in respect of one commercial property
development;

•              The Cabin Company Limited, the business and certain assets of
which were sold on 9 May 2005; and

•              Residual legacy general building contracts that were undertaken
by Birse Build which is being closed down.

For the year ended 30 April 2005, as restated under IFRS, Birse reported revenue
of £340.5 million, profit before tax and exceptional operating items of £2.8
million, and as at 30 April 2005 had net assets of £12.4 million and gross
assets of £141.9 million. In the six months to 31 October 2005 as reported under
IFRS, Birse reported revenue of £154.1 million, loss on ordinary activities
before tax and exceptional operating items of £4.2 million, and at 31 October
2005 had net assets of £0.6 million and gross assets of £148.3 million.



9.             Current trading and prospects of the Birse Group



Ongoing operations



Birse's Interim Results for the six months ended 31 October 2005 reported that
the prospects for advances in the second half of the financial year were
encouraging with major contract starts and other productivity increases
underway. These expectations have materialised with turnover levels in the
second half running ahead of the first half by some £45 million, of which £40
million has been generated from Birse's civil engineering activities, its most
profitable area of operations. With order book levels largely being maintained
and demand expected to increase across the UK infrastructure sector, Birse's
ongoing operations are well positioned, subject to the uncertainties referred to
above, to continue the forward momentum already established.



Engineering:  Civil Engineering



Birse's civil engineering activities are undertaken by Birse Civils Limited ('
Birse Civils'), Birse Metro Limited ('Birse Metro') (a dedicated London
Underground business) and Birse Rail Limited ('Birse Rail').



Since 31 October 2005, Birse Civils has increased production to record levels
with monthly turnover reaching £20 million and has been working at near
capacity. With demand expected to increase, particularly in the South, avoiding
over-stretching has now become a key management issue. Birse's strategy in this
respect is to focus on established customers and ensure that their expectations
are met. Criteria for targeting projects from new customers have therefore
hardened. Work on its largest contract, a coastal defence project at Blackpool,
is ahead of schedule. Birse Civils is now a leading operator in this sector with
further contract awards secured at Wyre and Weston-super-Mare.



Birse Metro operates exclusively in the London Underground environment working
for Tubelines and Metronet (the 'Infracos'), and London Underground. Since the
Infracos took over responsibility for the maintenance and modernisation of the
Underground environment, demand has been relatively low, with the period between
an enquiry for work and work commencing abnormally long compared to other
sectors of the market.  Opportunities, however, have begun to crystallise at a
faster rate with Birse Metro competing on each of the second set of station
modification packages put out to tender by Tubelines, and also examining
opportunities from Metronet and its sister operations that in the past have not
been accessible to it.



As previously reported, in February 2005 Birse Rail was awarded two five-year
framework contracts by Network Rail. In the immediate aftermath, the focus of
efforts was upon setting up the appropriate business infrastructure required to
meet the future production outputs required by this customer. Hence, in the
first half of the financial year to 30 April 2006 activity levels were
depressed. However, in the second half, particularly in the last quarter, Birse
Rail has been working at near capacity to achieve project deliveries within the
timescales determined by its customer.  In all material cases those timescales
have been met.



Engineering: Process Engineering



Having suffered subdued demand from key water customers as a result of the
cyclical impact of the regulatory price reviews to which the UK Water Industry
is subjected, since 31 October 2005 Birse Process Engineering Limited ('Birse
Process') has made good progress, having commenced work on site at Mogden, its
major odour control project for Thames Water, and has seen an increase in
enquiries from other water companies.



Regarding its other key area of operations, electrical power upgrades, Birse
Process has received additional orders in respect of its large scale project to
upgrade power supply capacity in relation to the Channel Tunnel Rail Link which
means that work on that project will continue into the second half of the
financial year ending 30 April 2007.  The business has also been one of the
first recipients of contract awards from the newly formed nuclear
de-commissioning companies. With many of the skills and capabilities associated
with the water sector transferable into this marketplace, Birse Process is
looking to position itself in a sector where future expenditure is expected to
increase significantly.



Construction: Building



Birse's ongoing build operations function completely independently of those
curtailed build divisions that are in the process of closedown. The Birse
Directors believe that the net operating margins for this business benchmark
well against comparable businesses.  The business has increased its order book
to the extent that the value of secured work as at 30 April 2006 exceeds the
turnover achieved in the year ended on that date.



Plant Hire



As at 31 October 2005 it was reported that BPH Equipment Limited ('BPH') had
been faced with very weak market conditions. Since that time, in line with
activity in the infrastructure sector, demand has increased gradually each month
whereby the value of hires achieved by BPH in the last quarter of Birse's
financial year ended 30 April 2006 exceeded those relating to the first quarter
of that year by 20 per cent.  This positive trend is expected to continue into
the current year.



Curtailed Operations



Commercial Property



The only turnover and profit that may accrue in the future will relate to
contingent consideration in respect of contracted sales in the past.  No
material value has accrued in the financial year ended 30 April 2006 and no
material value is expected to accrue in the future.



Plant Hire



The sale of the business and certain assets of The Cabin Company Limited was
completed on 9 May 2005.



Construction - Building



As previously announced and reported by Birse, the process of litigation with
CIB Properties Limited arising from the adjudication relating to the termination
of the contract for construction services for a new data centre facility at
Riverdale, Lewisham (referred to as the 'Citibank Litigation') was settled in
2005, thereby removing the risk and uncertainty associated with that process.



As detailed above, the impact of cutting ongoing overhead costs and accelerating
the commercial closedown of contract balances within those divisions of Birse
Build Limited that are in the process of closedown, is likely to compromise the
book value of assets in terms of actual recoveries.





Prospects



Birse's ongoing operations continue to progress in a positive manner. With
demand from the UK infrastructure sectors expected to increase, the prospects
for these ongoing businesses are encouraging. However, these favourable
prospects need balancing against the background of a narrowing capital base,
Birse's net debt position and the uncertainties and risks that go hand in hand
with that financial position.



10.         Information on Balfour Beatty

Balfour Beatty is a world-class engineering, construction and services group,
which creates and cares for infrastructure for governments, utilities and
private sector customers. The Balfour Beatty Group serves the international
markets for rail, road and utility infrastructure, buildings and complex
structures. The Balfour Beatty Group focuses and invests in businesses with
superior long-term growth characteristics, which deliver superior value to
shareholders. Balfour Beatty has four divisions:

•              Building, Building Management and Services - Balfour Beatty is a
specialist in the design, construction, equipping, maintaining and management of
buildings and selected aspects of their internal environment. Operations include
Balfour Beatty Construction, which designs and constructs buildings, Mansell,
the specialist regional construction and property service provider, Balfour
Kilpatrick, the electrical engineering and mechanical services contractor, Haden
Young, the building services company, Haden Building Management, the building
and facilities management company and Heery International, the US architectural,
engineering and programme management business;

•              Civil and Specialist Engineering and Services - Balfour Beatty is
a leading provider of civil and other specialist engineering, design and
management services, principally in transport, energy and water sectors, with
operations in the UK, US and Hong Kong. Its activities range from project
management, major project design and engineering to long-term highway management
and maintenance;

•              Rail Engineering and Services - Balfour Beatty is an
international leader in the design, construction, equipping, maintenance,
management and renewal of rail assets and systems; and

•              Investments and Developments - Balfour Beatty is a leading
investor in privately-funded infrastructure projects and developments in
selected sectors in the UK. Balfour Beatty specialises in healthcare, education
and road and rail transportation.

As at 23 June 2006 (the last business day before this announcement), Balfour
Beatty had an equity market capitalisation of approximately £1,413 million. For
the year ended 31 December 2005, Balfour Beatty reported revenue (including
Balfour Beatty's share of joint ventures and associates) of £4,938 million,
profit before tax and exceptional items of £134 million and net assets of £292
million.







11.         Financial effects of the Offer

The Offer for Birse is expected to enhance shareholder value and be earnings
enhancing* (see note below) for Balfour Beatty in 2007, the first full year
following completion of the acquisition of Birse.

The Offer will be funded through a combination of cash in hand and drawings
under existing £400 million committed facilities.

It is expected that, consistent with Balfour Beatty's existing approach, Balfour
Beatty will adjust the balance sheet of Birse in accordance with Balfour
Beatty's existing accounting policies. These adjustments will include the
writedown of all unagreed income, alignment of contract accounting policies and
recognition of the pension deficit.

* The statement as to earnings per share enhancement does not constitute a
profit forecast and should not be interpreted to mean that Balfour Beatty's
future earnings per share will necessarily exceed or match those of any prior
year.



12.         Management, employees and locations

Balfour Beatty attaches great importance to the skills and experience of the
existing management and employees of Birse, who will play an important role in
the further development of the enlarged business.

Balfour Beatty also believes that the Birse employees will benefit from a
broader range of opportunities for personal and professional development as part
of a larger, more diverse and financially stronger group.

The Balfour Beatty Directors have given assurances to the Birse Directors that,
following the Offer becoming effective, the existing contractual employment
rights of all employees of the Birse Group will be safeguarded.



13.         Pensions

Birse will continue to make regular contributions to Birse's pension scheme to
fund the cost of ongoing benefits. In addition, Birse has already agreed with
the Birse trustees to make further contributions in order to address the scheme
deficit. Balfour Beatty will discuss with the Birse trustees the future funding
basis for the scheme.



14.         Financing

Balfour Beatty will fund the Offer through a combination of cash in hand and
drawings under existing £400 million committed facilities. Citigroup, financial
adviser to Balfour Beatty, is satisfied that sufficient resources are available
to satisfy in full the cash consideration payable to Birse Shareholders under
the terms of the Offer.



15.         Break fee

Birse and Balfour Beatty have agreed that Birse will pay to Balfour Beatty a fee
of one per cent. of the value of the Offer (exclusive of value added tax to the
extent that such value added tax is recoverable by Birse) if, prior to the
withdrawal or lapse of the Offer, a higher competing offer for Birse is
announced and such offer subsequently becomes or is declared unconditional in
all respects or is otherwise completed.



16.         Compulsory acquisition, de-listing and cancellation of trading

If Balfour Beatty receives acceptances under the Offer in respect of, or
otherwise acquires, 90 per cent. or more of the Birse Shares to which the Offer
relates, Balfour Beatty intends to exercise its rights pursuant to the
provisions of Schedule 2 of the Interim Implementation Regulations to acquire
compulsorily any remaining Birse Shares to which the Offer relates.

It is intended that, following the Offer becoming or being declared
unconditional in all respects, and subject to applicable requirements of the
London Stock Exchange and/or the UKLA, Balfour Beatty will procure that Birse
will apply to the London Stock Exchange and the UKLA for cancellations,
respectively, of the trading of the Birse Shares on the London Stock Exchange
and of the listing of the Birse Shares on the Official List.



17.         Disclosure of interests in Birse

Neither Balfour Beatty, nor any director of Balfour Beatty, nor, so far as
Balfour Beatty is aware, any person acting in concert with Balfour Beatty is
interested in or has any rights to subscribe for any Birse Shares, nor does any
such person have any short position or any arrangement in relation to Birse
Shares. For these purposes, 'arrangement' includes any agreement to sell or any
delivery obligation or right to require another person to purchase or take
delivery and borrowing or lending of Birse Shares. An 'arrangement' also
includes any indemnity or option arrangement, any agreement or understanding,
formal or informal, of whatever nature relating to Birse Shares which may be an
inducement to deal or refrain from dealing in such securities. 'Interest'
includes any long economic exposure, whether conditional or absolute, to changes
in the price of securities and a person is treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.



18.         General

The Birse Shares that are subject to the Offer will be acquired by Balfour
Beatty fully paid and free from all liens, charges, equitable interests, third
party rights and interests and encumbrances and together with all rights now and
hereafter attaching thereto, including the right to receive all dividends and
other distributions (if any) declared, made or paid after the date of the
announcement of the Offer.

The formal Offer Document and the Form(s) of Acceptance setting out the full
terms and conditions of the Offer will be posted to Birse Shareholders. In
deciding whether or not to accept the Offer in respect of their Birse Shares,
Birse Shareholders should rely on the information contained in, and procedures
described in, the Offer Document and Form(s) of Acceptance.

The conditions to the Offer are set out in Appendix I to this announcement.
Appendix III to this announcement contains definitions of certain expressions
used in this announcement.





ENQUIRIES:
Balfour Beatty                                       Tel: [phone]
Ian Tyler (Chief Executive)
Anthony Rabin (Finance Director)
Tim Sharp (Head of Corporate Communications)

Citigroup                                            Tel: [phone]
(Financial Adviser to Balfour Beatty)
Jan Skarbek
James Ireland

Hoare Govett                                         Tel: [phone]
(Corporate Broker to Balfour Beatty)
Bob Pringle
Neil Collingridge

Gainsborough                                         Tel: [phone]
(PR Adviser to Balfour Beatty)
Duncan Murray
Andy Cornelius

Birse                                                Tel: [phone]
Martin Budden (Group Managing Director)
Gerry Roche (Group Finance Director)

Rothschild                                           Tel: [phone]
(Financial Adviser to Birse)
David Forbes
David Wilton

JP Morgan Cazenove                                   Tel: [phone]
(Corporate Broker to Birse)
Steve Baldwin
Jonathan Walker

Financial Dynamics                                   Tel: [phone]
(PR Adviser to Birse)
Sally Lewis


Citigroup, which is authorised and regulated by the Financial Services
Authority, is acting exclusively for Balfour Beatty and no one else in
connection with the Offer and this announcement and will not be responsible to
anyone other than Balfour Beatty for providing the protections afforded to
clients of Citigroup or for providing advice in connection with the Offer or
this announcement or any matter referred to herein.

Rothschild, which is authorised and regulated by the Financial Services
Authority, is acting exclusively for Birse and no one else in connection with
the Offer and this announcement and will not be responsible to anyone other than
Birse for providing the protections afforded to clients of Rothschild or for
providing advice in connection with the Offer or this announcement or any matter
referred to herein.

This announcement is for informational purposes only and does not constitute an
offer to sell or invitation to purchase any securities or the solicitation of
any vote for approval in any jurisdiction, nor shall there be any sale, issue or
transfer of the securities referred to in this announcement in any jurisdiction
in contravention of applicable law. The Offer will be made solely by the Offer
Document and the Forms of Acceptance accompanying the Offer Document, which will
contain the full terms and conditions of the Offer, including details of how the
Offer may be accepted.

This announcement has been prepared for the purpose of complying with English
law and the City Code and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been prepared in
accordance with the laws of jurisdictions outside the United Kingdom. The
release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law. Persons who are not resident in the
United Kingdom or who are subject to other jurisdictions should inform
themselves of, and observe, any applicable requirements.

The Offer will not be made, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in that
jurisdiction, and the Offer is not capable of acceptance from or within a
Restricted Jurisdiction. Accordingly, copies of this announcement and all
documents relating to the Offer are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in, into or from
a Restricted Jurisdiction where to do so would violate the laws in that
jurisdiction, and persons receiving this announcement and all documents relating
to the Offer (including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such jurisdictions as doing
so may invalidate any purported acceptance of the Offer. The availability of the
Offer to Birse Shareholders who are not resident in the United Kingdom may be
affected by the laws of the relevant jurisdictions in which they are resident.
Persons who are not resident in the United Kingdom should inform themselves of,
and observe, any applicable requirements.

The Loan Notes to be issued in connection with the Offer have not been, nor will
they be listed on any stock exchange and have not been, nor will they be,
registered under the Securities Act or under any relevant laws of any state or
other jurisdiction of the United States, nor have clearances been, nor will they
be, obtained from the securities commission or similar authority of any
province, territory or jurisdiction of Canada and no prospectus has been, or
will be, filed, or registration made, under any securities law of any province
or territory of Canada, nor has a prospectus in relation to the Loan Notes been,
nor will one be, lodged with, or registered by, the Australian Securities and
Investments Commission, nor have any steps been taken, nor will any steps be
taken, to enable the Loan Notes to be offered in compliance with applicable
securities laws of Japan.  Accordingly, unless an exemption under relevant
securities laws is available, the Loan Notes may not be offered, sold, resold,
delivered or transferred, directly or indirectly, in or into a Loan Note
Restricted Jurisdiction in which an offer of the Loan Notes would constitute a
violation of the relevant laws of, or require registration thereof in, such
jurisdiction or to, or for the account or benefit of, a person located in a Loan
Note Restricted Jurisdiction.

In accordance with normal UK market practice, Balfour Beatty or its nominees or
brokers (acting as agents) may from time to time make certain purchases of, or
arrangements to purchase, Birse Shares outside the United States, other than
pursuant to the Offer, before or during the period in which the Offer remains
open for acceptance. These purchases may occur either in the open market at
prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the UK.

This announcement contains statements about Balfour Beatty and Birse that are or
may be forward looking statements. All statements other than statements of
historical facts included in this announcement may be forward looking
statements. Without limitation, any statements preceded or followed by or that
include the words 'targets', 'plans' 'believes', 'expects', 'aims',' intends', '
will', 'may', 'anticipates', 'estimates', 'projects' or, words or terms of
similar substance or the negative thereof, are forward looking statements.
Forward looking statements include statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion and
growth of Balfour Beatty's or Birse's operations and potential synergies
resulting from the Offer; and (iii) the effects of government regulation on
Balfour Beatty's or Birse's business.

Such forward looking statements involve risks and uncertain ties that could
significantly affect expected results and are based on certain key assumptions.
Many factors could cause actual results to differ materially from those
projected or implied in any forward looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue reliance on
such forward looking statements, which speak only as of the date hereof. Balfour
Beatty and Birse disclaim any obligation to update any forward looking or other
statements contained herein, except as required by applicable law.



Dealing Disclosure Requirements

Please note that certain aspects of the rules on disclosure of the Code have
changed since 20 May 2006. The following represents a current summary of the
position.

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, '
interested' (directly or indirectly) in 1 per cent.  or more of any class of '
relevant securities' of Birse, all 'dealings' in any 'relevant securities' of
Birse  (including by means of an option in respect of, or a derivative
referenced to, any such 'relevant securities') must be publicly disclosed by no
later than 3.30 pm (London time) on the London business day following the date
of the relevant transaction. This requirement will continue until the date on
which the Offer becomes, or is declared, unconditional as to acceptances, lapses
or is otherwise withdrawn or on which the 'offer period' otherwise ends. If two
or more persons act together pursuant to an agreement or understanding, whether
formal or informal, to acquire an 'interest' in 'relevant securities' of Birse,
they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of Birse by Balfour Beatty or Birse, or by any of their respective '
associates', must be disclosed by no later than 12.00 noon (London time) on the
London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the  Panel's website at www.thetakeoverpanel.org.uk.

'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, please contact an independent financial
adviser authorised under the Financial Services and Markets Act 2000, consult
the Panel's website at www.thetakeoverpanel.org.uk or contact the Panel on
telephone number [phone]; fax [phone].


 APPENDIX I

Conditions to the Offer

The Offer, which will be made by Balfour Beatty, will comply with the City Code
and will be governed by English law and subject to the jurisdiction of the
English courts. In addition, the Offer will be subject to the terms and
conditions to be set out in the Offer Document. The Offer will be subject to the
following conditions:

1                   valid acceptances of the Offer being received (and not,
where permitted, withdrawn) by no later than 1.00 p.m. on the first closing date
as set out in the Offer Document (or such later time(s) and/or date(s) as
Balfour Beatty may, subject to the rules of the Code, decide) in respect of not
less than 90 per cent. (or such lesser percentage as Balfour Beatty may decide)
of the Birse Shares to which the Offer relates, provided that this condition
will not be satisfied unless Balfour Beatty and/or any member of the Balfour
Beatty Group shall have acquired or agreed to acquire (whether pursuant to the
Offer or otherwise) the Birse Shares carrying in aggregate more than 50 per
cent. of the voting rights normally exercisable at a general meeting of Birse.
For the purposes of this condition:

1.1              the Birse Shares which have been unconditionally allotted but
not issued shall be deemed to carry the voting rights which they will carry upon
issue;

1.2              the expression 'Birse Shares to which the Offer relates' shall
be construed in accordance with Schedule 2 of the Interim Implementation
Regulations; and

1.3              valid acceptances shall be deemed to have been received in
respect of the Birse Shares which are treated for the purposes of paragraph 2
(15) of Schedule 2 of the Interim Implementation Regulations as having been
acquired or contracted to be acquired by Balfour Beatty by virtue of acceptances
of the Offer;

provided that unless Balfour Beatty otherwise determines, this condition 1 shall
be capable of being satisfied only at a time when all of the other conditions 2
to 8 inclusive have either been satisfied, fulfilled or, to the extent
permitted, waived;

2

2.1              the UK Office of Fair Trading ('OFT') indicating in terms
reasonably satisfactory to Balfour Beatty that it has decided not to refer the
proposed acquisition of Birse by Balfour Beatty (the 'Transaction') or any part
of it to the Competition Commission ('CC'); or

2.2              the period for considering any merger notice given to the OFT
under section 96 of the Enterprise Act 2002 ('EA') by Balfour Beatty having
expired without any such reference being made, provided that section 100(1)(a),
(d) and (f) of the EA do not apply in relation to such merger notice;

2.3              if Clause 2.1 or 2.2 is satisfied, the period specified in Rule
26 of the Competition Appeal Tribunal Rules 2003 for making any application
under section 120(1) of the EA for the review of a decision in relation to the
Transaction having expired without any such application being made.

3                   no central bank, government or governmental, quasi-
governmental, supranational, statutory, regulatory or investigative body, trade
agency, court, professional association, or any other such body or person in any
jurisdiction (each a 'Third Party') having given notice of a decision to take,
institute or threaten any action, proceeding, suit, investigation, enquiry or
reference, or having required any action to be taken, or otherwise having done
anything, or having enacted, made or proposed any statute, regulation, decision
or order which would:

3.1              make the Offer, its implementation or the acquisition or
proposed acquisition of any of the Birse Shares by Balfour Beatty void,
unenforceable or illegal, or restrict, prohibit or delay to a material extent or
otherwise materially interfere with the implementation of, or impose material
additional conditions or obligations with respect to, or otherwise materially
challenge or require material amendment of, the Offer or the acquisition of any
of the Birse Shares by Balfour Beatty;

3.2              result in a material delay in the ability of Balfour Beatty, or
render it unable, to acquire some or all of the Birse Shares or require a
divestiture by Balfour Beatty or any member of the Wider Balfour Beatty Group of
any shares in Birse;

3.3              require, prevent or delay the divestiture, or alter the terms
envisaged for any proposed divestiture, by Balfour Beatty or any member of the
Wider Balfour Beatty Group or by any member of the Wider Birse Group, in any
such case of all or any part of their respective businesses, assets or
properties, or impose any limitation on their ability to conduct their
respective businesses (or any of them) or to own their respective assets or
properties or any part of them, to an extent in any such case which is material
in the context of the Offer;

3.4              impose any material limitation on, or result in a material
delay in, the ability of Balfour Beatty or any member of the Wider Balfour
Beatty Group to acquire or to hold or to exercise effectively, directly or
indirectly, all rights of ownership of shares, loans or other securities (or the
equivalent) in, or to exercise management control over, Birse or the ability of
any member of the Wider Birse Group or Balfour Beatty to hold or exercise
effectively any rights of ownership of shares, loans or other securities in, or
to exercise management control over any member of the Wider Birse Group;

3.5              save pursuant to the Offer or Part XIIIA of the Act, require
any member of the Wider Balfour Beatty Group or of the Wider Birse Group to
acquire or offer to acquire any shares or other securities (or the equivalent)
in, or any asset owned by, any member of the Wider Birse Group owned by any
third party;

3.6              result in any member of the Wider Birse Group ceasing to be
able to carry on business under any name which it presently does so, the
consequences of which would be material in the context of the Wider Birse Group
taken as a whole;

3.7              otherwise adversely affect the business, assets, liabilities,
or profits of any member of the Wider Balfour Beatty Group or of the Wider Birse
Group, to an extent in any such case which is material in the context of the
Wider Balfour Beatty Group or the Wider Birse Group, as the case may be, taken
as a whole, and all applicable waiting and other time periods during which any
such Third Party could take, institute or threaten any such action, proceeding,
suit, investigation, enquiry or reference or otherwise so intervene having
expired, lapsed or been terminated;

4                   all necessary material notifications and filings having been
made in connection with the Offer and all statutory and regulatory obligations
in connection with the Offer in any jurisdiction having been complied with and
all material authorisations, orders, recognitions, grants, consents, clearances,
confirmations, certificates, licences, permissions and approvals
('Authorisations') deemed reasonably necessary or appropriate by Balfour Beatty
in any jurisdiction for, or in respect of, the Offer and the acquisition or the
proposed acquisition of the Birse Shares by Balfour Beatty or any member of the
Balfour Beatty Group having been obtained in terms reasonably satisfactory to
Balfour Beatty from all appropriate Third Parties, or from any persons or bodies
with whom any member of the Wider Balfour Beatty Group or the Wider Birse Group
has entered into contractual arrangements, all or any applicable waiting and
other time periods having expired, lapsed or been terminated (as appropriate)
and all such Authorisations (together with all material Authorisations deemed
reasonably necessary or appropriate to carry on the business of any member of
the Wider Birse Group) remaining in full force and effect at the time at which
the Offer becomes otherwise unconditional and there being no notice of any
intention to revoke, suspend, restrict, amend or not to renew any such
Authorisations;

5                   save as disclosed in writing to any member of the Balfour
Beatty Group or its advisers by or on behalf of Birse prior to the date of this
announcement or save as publicly announced by Birse prior to the date of this
announcement, there being no provision of any arrangement, agreement, lease,
licence, permit or other instrument to which any member of the Wider Birse Group
is a party or by or to which any such member or any of its assets is or may be
bound or be subject, which as a consequence of the Offer or the acquisition or
the proposed acquisition by Balfour Beatty or any member of the Wider Balfour
Beatty Group of any shares or other securities (or the equivalent) in Birse or
because of a change in the control or management of any member of the Wider
Birse Group or otherwise, would result, in any case to an extent which is
material in the context of the Wider Birse Group taken as a whole, in:

5.1              any monies borrowed by, or any other indebtedness, actual or
contingent, of, any member of the Wider Birse Group being or becoming repayable,
or being capable of being declared repayable immediately or prior to their or
its stated maturity, or the ability of any such member to borrow monies or incur
any indebtedness being withdrawn or inhibited;

5.2              the creation or enforcement of any mortgage, charge or other
security interest, over the whole or any part of the business, property or
assets of any member of the Wider Birse Group or any such mortgage, charge or
other security interest (whenever arising or having arisen) becoming
enforceable;

5.3              any such arrangement, agreement, lease, licence, permit or
other instrument being terminated or adversely modified or affected or any
onerous obligation or liability arising or any adverse action being taken
thereunder;

5.4              any assets or interests of any member of the Wider Birse Group
being or falling to be disposed of or charged or any right arising under which
any such asset or interest could be required to be disposed of or charged;

5.5              any such member of the Wider Birse Group ceasing to be able to
carry on business under any name under which it presently does so;

5.6              the value or financial or trading position or profits of Birse
or any member of the Wider Birse Group being prejudiced or adversely affected;
or

5.7              the creation of any liability (actual or contingent) by any
member of the Wider Birse Group;

6                   save as disclosed in the Annual Report or in the Interim
Results, as publicly announced through a Regulatory Information Service prior to
the date of this announcement or as disclosed in writing to any member of the
Balfour Beatty Group or its advisers by or on behalf of Birse prior to the date
of this announcement, no member of the Wider Birse Group having since 30 April
2005:

6.1              issued or agreed to issue or authorised or proposed or
announced its intention to authorise or propose the issue of additional shares
of any class, or securities convertible into, or exchangeable for, or rights,
warrants or options to subscribe for or acquire, any such shares or convertible
securities (save as between Birse and wholly-owned subsidiaries of Birse);

6.2              recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus issue, dividend or other distribution whether
payable in cash or otherwise other than dividends (or other distributions
whether payable in cash or otherwise) lawfully paid or made by any wholly-owned
subsidiary of Birse to Birse or any of its wholly-owned subsidiaries;

6.3              other than pursuant to the Offer (and save for transactions
between Birse and its wholly-owned subsidiaries or other than in the ordinary
course of business) implemented, effected, authorised, proposed or announced its
intention to implement, effect, authorise or propose any merger, demerger,
reconstruction, amalgamation, scheme, commitment or acquisition or disposal of
assets or shares (or the equivalent thereof) in any undertaking or undertakings,
in any such case, that is material in the context of the Birse Group taken as a
whole or any change in its share or loan capital;

6.4              (save for transactions between Birse and its wholly-owned
subsidiaries or other than in the ordinary course of business) disposed of, or
transferred, mortgaged or created any security interest over any asset or any
right, title or interest in any asset, in any such case, that is material in the
context of the Birse Group taken as a whole or authorised, proposed or announced
any intention to do so;

6.5              (save for transactions between Birse and its wholly-owned
subsidiaries) issued, authorised or proposed or announced an intention to
authorise or propose, the issue of any debentures or (save for transactions
between Birse and its wholly-owned subsidiaries or transactions under existing
credit arrangements or in the ordinary course of business) incurred any
indebtedness or contingent liability which is material in the context of the
Birse Group taken as a whole;

6.6              entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, arrangement, agreement,
transaction or commitment (whether in respect of capital expenditure or
otherwise) which is of a long term, unusual or onerous nature or magnitude or
which involves or is reasonably likely to involve an obligation of such a nature
or magnitude which is, in any such case, or which is or is likely to be
restrictive on the business of any member of the Wider Birse Group, which is, in
any such case, material in the context of the Wider Birse Group taken as a
whole;

6.7              entered into or varied to a material extent or authorised,
proposed or announced its intention to enter into or vary to a material extent
the terms of, or make any offer (which remains open for acceptance) to enter
into or vary to a material extent the terms of, any service agreement with any
director or, save for salary increases, bonuses or variations of terms in the
ordinary course, senior executive of Birse;

6.8              purchased, redeemed or repaid or announced a proposal to
purchase, redeem or repay any of its own shares or other securities (or the
equivalent) or reduced or made any other change to or proposed the reduction or
other change to any part of its share capital, save for any shares allotted
between Birse and wholly-owned subsidiaries of Birse;

6.9              waived, compromised or settled any claim which is material in
the context of the Birse Group taken as a whole otherwise than in the ordinary
course of business;

6.10          terminated or varied the terms of any agreement or arrangement
between any member of the Birse Group and any other person in a manner which
would or might reasonably be expected to have a material adverse effect on the
financial position or prospects of the Birse Group taken as a whole;

6.11          (save as disclosed on publicly available registers) made any
alteration to its memorandum or articles of association;

6.12          made or agreed or consented to any significant change to the terms
of the trust deeds constituting the pension schemes established for its
directors and/or employees and/or their dependants or to the benefits which
accrue, or to the pensions which are payable, thereunder, or to the basis on
which qualification for or accrual or entitlement to such benefits or pensions
are calculated or determined or to the basis upon which the liabilities
(including pensions) of such pension schemes are funded or made, or agreed or
consented to any change to the trustees involving the appointment of a trust
corporation;

6.13          been unable, or admitted in writing that it is unable, to pay its
debts or having stopped or suspended (or threatened to stop or suspend) payment
of its debts generally or ceased or threatened to cease carrying on all or a
substantial part of any business which is material in the context of the Birse
Group taken as a whole;

6.14          (other than in respect of a member which is dormant and was
solvent at the relevant time) taken or proposed any corporate action or had any
action or proceedings or other steps instituted against it for its winding-up
(voluntary or otherwise), dissolution or reorganisation or for the appointment
of a receiver, administrator, administrative receiver, trustee or similar
officer of all or any material part of its assets or revenues or any analogous
proceedings in any jurisdiction or appointed any analogous person in any
jurisdiction; or

6.15          entered into any agreement, arrangement or commitment or passed
any resolution or made any proposal or announcement with respect to, or to
effect, any of the transactions, matters or events referred to in this condition
6;

7                   since 30 April 2005, save as disclosed in the Annual Report
or in the Interim Results, or save as disclosed in writing to any member of the
Balfour Beatty Group or its advisers by or on behalf of Birse or except as
publicly announced by Birse (by the delivery of an announcement to a Regulatory
Information Service), in each case prior to the date of this announcement, there
having been:

7.1              no adverse change in the business, assets, financial or trading
position or profits or prospects of any member of the Wider Birse Group which is
material in the context of the Wider Birse Group taken as a whole;

7.2              no litigation, arbitration proceedings, prosecution or other
legal proceedings having been announced or instituted by or against or remaining
outstanding against or in respect of any member of the Wider Birse Group and no
enquiry or investigation by or complaint or reference to any Third Party against
or in respect of any member of the Wider Birse Group having been threatened,
announced or instituted or remaining outstanding, against or in respect of any
member of the Wider Birse Group and which in any such case might reasonably be
expected to have a material adverse effect on the Wider Birse Group taken as a
whole; and

7.3              no contingent or other liability having arisen or become
apparent to any member of the Wider Balfour Beatty Group which might reasonably
be expected to adversely affect any member of the Wider Birse Group and which in
any such case is material in the context of the Wider Birse Group taken as a
whole;

8                   save as publicly announced by the delivery of an
announcement to a Regulatory Information Service prior to the date of this
announcement or as otherwise disclosed in the Annual Report or in the Interim
Results or in writing to any member of the Balfour Beatty Group or its advisers
by or on behalf of Birse prior to the date of this announcement, Balfour Beatty
not having discovered:

8.1              that the financial, business or other information concerning
the Wider Birse Group publicly announced or disclosed at any time by or on
behalf of any member of the Wider Birse Group is misleading, contains a
misrepresentation of fact or omits to state a fact necessary to make the
information contained therein not misleading and which is, in any case, material
in the context of the Wider Birse Group;

8.2              that any member of the Wider Birse Group is, otherwise than in
the ordinary course of business, subject to any liability, contingent or
otherwise, which is material in the context of the Wider Birse Group taken as a
whole;

8.3              that any past or present member of the Wider Birse Group has
failed to comply in any material respect with any applicable legislation or
regulations of any jurisdiction or any notice or requirement of any Third Party
with regard to the storage, disposal, discharge, spillage, release, leak or
emission of any waste or hazardous or harmful substance or any substance likely
to impair the environment or harm human or animal health or otherwise relating
to environmental matters or that there has been any such storage, presence,
disposal, discharge, spillage, release, leak or emission (whether or not the
same constituted non-compliance by any person with any such legislation or
regulation, and whenever the same may have taken place), any of which
non-compliance would be likely to give rise to any material liability (whether
actual or contingent) or cost on the part of any member of the Wider Birse Group
and which is material. in any such case, in the context of the Wider Birse Group
taken as a whole; or

8.4              there is, or is reasonably likely to be, any material
obligation or liability (whether actual or contingent) to make good, repair,
reinstate or clean up any property now or previously owned, occupied, operated
or made use of or controlled by any past or present member of the Wider Birse
Group under any environmental legislation, regulation, notice, circular or order
of any Third Party in any jurisdiction, in each case to an extent which is
material in the context of the Wider Birse Group taken as a whole.

For the purposes of this Appendix:

'Wider Balfour Beatty Group' means Balfour Beatty and its subsidiary
undertakings, associated undertakings and any other undertakings in which
Balfour Beatty and such undertakings (aggregating their interests) have a
substantial interest; and

'Wider Birse Group' means Birse and its subsidiary undertakings, associated
undertakings and any other undertakings in which Birse and such undertakings
(aggregating their interests) have a substantial interest.

For these purposes, 'subsidiary', 'subsidiary undertaking', 'undertaking' and '
associated undertaking' have the respective meanings given thereto by the Act,
but for this purpose ignoring paragraph 20(1)(b) of Schedule 4A of the Act, and
'substantial interest' means a direct or indirect interest in 20 per cent. or
more of the equity capital of an undertaking.

Balfour Beatty reserves the right to waive, in whole or in part, all or any of
the above conditions 2 to 8 (inclusive).

If Balfour Beatty is required by the Panel to make an offer for the Birse Shares
under the provisions of Rule 9 of the Code, Balfour Beatty may make such
alterations to any of the above conditions, including condition 1 above, and
terms of the Offer as are necessary to comply with the provisions of that Rule.

The Offer will lapse unless all the above conditions have been fulfilled or,
where permitted, waived or, where appropriate, have been determined by Balfour
Beatty to be or remain satisfied, by midnight on the 21st day after the later of
the first closing date of the Offer Document and the date on which condition 1
is fulfilled (or in each case such later date as Balfour Beatty may determine,
in accordance with the City Code). Balfour Beatty shall be under no obligation
to waive (if capable of waiver), to determine to be or remain satisfied or to
treat as fulfilled any of conditions 2 to 8 (inclusive) by a date earlier than
the latest date for the fulfilment of that condition notwithstanding that the
other conditions of the Offer may at such earlier date have been waived or
fulfilled and that there are at such earlier date no circumstances indicating
that any of such conditions may not be capable of fulfilment.

The Offer will lapse (unless otherwise agreed with the Panel) if, before the
later of the first closing date of the Offer and the date when the Offer becomes
or is declared unconditional as to acceptances the OFT has referred the Offer to
the Competition Commission.

If the Offer lapses, the Offer will cease to be capable of further acceptance
and accepting Birse Shareholders and Balfour Beatty shall cease to be bound by
Forms of Acceptance submitted at or before the time when the Offer so lapses.


APPENDIX II

                      DETAILS OF IRREVOCABLE UNDERTAKINGS

The following holders of Birse Shares have given irrevocable undertakings to
accept the Offer:

              Name                Number of Birse Shares               % of issued share capital

 The Barbinder Trust MB Account                4,000,000                              2.1
   Grange Nominees Limited GI                  4,000,000                              2.1
             Account
           Peter Birse                         11,115,685                             5.8
Peter and Helen Birse (The Peter               12,755,135                             6.6
   Birse Charitable Trust, B70
    Account and B83 Account)
          HSBC Bank plc                        19,439,838                            10.1



APPENDIX III

Definitions of certain terms used in this announcement

The following definitions apply throughout this announcement unless the context
requires otherwise.

'Acceptance Condition'                    the condition as set out in paragraph 1 of Appendix I to this
                                          announcement

'Act'                                     the Companies Act 1985, as amended

'Annual Report'                           the annual report and accounts of Birse for the year ended 30
                                          April 2005

'Australia'                               the commonwealth of Australia, its territories and possessions
                                          and all areas subject to its jurisdiction and all political
                                          sub-divisions thereof

'Authorisations'                          has the meaning given to it in paragraph 4 of Appendix I of this
                                          announcement

'Balfour Beatty'                          Balfour Beatty plc

'Balfour Beatty Directors'                the directors of Balfour Beatty

'Balfour Beatty Group'                    Balfour Beatty plc, its subsidiaries and subsidiary undertakings

'Birse' or the 'Company'                  Birse Group plc

'Birse Directors'                         the directors of Birse

'Birse Group'                             Birse Group plc, its subsidiaries and subsidiary undertakings

'Birse Shareholders' or 'Shareholders'    the holders of Birse Shares, as the case may be

'Birse Shares'                            the existing unconditionally allotted or issued and fully paid
                                          ordinary shares of 10 pence each in the capital of Birse and any
                                          further such ordinary shares which are unconditionally allotted
                                          or issued while the Offer remains open for acceptance or before
                                          such earlier date as Balfour Beatty (subject to the City Code)
                                          may determine, not being, unless the Panel so permits, earlier
                                          than the date on which the Offer is declared unconditional as to
                                          acceptances or, if later, the first closing date of the Offer

'Canada'                                  Canada, its provinces and territories and all areas subject to
                                          its jurisdiction and all political sub-divisions thereof

'Citigroup'                               Citigroup Global Markets Limited

'City Code' or 'Code'                     the City Code on Takeovers and Mergers

'Form of Acceptance'                      the form of acceptance and authority to be issued in connection
                                          with the Offer and which will accompany the Offer Document

'FSA'                                     the Financial Services Authority

'Higher Competing Offer'                  a general offer by a third party for the Birse Shares, the value
                                          of the consideration per Birse Share available under which at
                                          the time it is made exceeds the value of the consideration per
                                          Birse Share available under the Offer at that time by at least
                                          2.75p on the assumption, in each case, that any rights to elect
                                          to receive different forms of consideration (including rights to
                                          accept underwritten cash alternatives or other collateral
                                          offers) are exercised in such manner as maximises that value but
                                          ignoring the possible impact of any 'mix and match' or similar
                                          arrangement under which Shareholders can elect, subject to the
                                          elections of other Shareholders, to vary the proportion in which
                                          they receive different forms of consideration

'IFRS'                                    International Financial Reporting Standards

'Interim Implementation Regulations'      the Takeovers Directive (Interim Implementation) Regulations
                                          2006

'Interim Results'                         the unaudited interim results of Birse for the six months ended
                                          31 October 2005

'Japan'                                   Japan, its cities and prefectures, territories and possessions

'LIBOR'                                   the British Bankers Association Interest Settlement Rate
                                          (rounded down, if necessary, to four decimal places) which is
                                          quoted as of 11.00 a.m. on the first Business Day of the
                                          relevant interest period on the appropriate page of Reuters
                                          screen (or such other page or service as may replace it for the
                                          purpose of displaying London inter-bank sterling offered rates
                                          of leading reference banks) as being the interest rates offered
                                          in the London inter-bank market of six month sterling deposits

'Listing Rules'                           the rules and regulations made by the Financial Services
                                          Authority in its capacity as the UK Listing Authority under the
                                          Financial Services and Markets Act 2000, and contained in the UK
                                          Listing Authority's publication of the same name

'Loan Notes'                              the floating rate guaranteed unsecured Loan Notes due 2009 of
                                          Balfour Beatty to be issued pursuant to the Loan Note
                                          Alternative

'Loan Note Alternative'                   the Loan Note alternative by which Birse Shareholders (other
                                          than Birse Shareholders in any Loan Note Restricted
                                          Jurisdiction) who validly accept the Offer may elect to receive
                                          Loan Notes instead of all or part of the cash consideration to
                                          which they would otherwise have been entitled under the Offer

'Loan Note Restricted Jurisdiction'       any of the United States, Australia, Canada or Japan or any
                                          jurisdiction where extension or acceptance of the Loan Note
                                          Alternative would violate the law of that jurisdiction

'London Stock Exchange'                   London Stock Exchange plc

'Offer'                                   the recommended cash offer being made by Balfour Beatty to
                                          acquire the whole of the issued share capital of Birse on the
                                          terms and subject to the conditions to be set out in the Offer
                                          Document and the Form of Acceptance, including, where the
                                          context requires, any subsequent revision, variation, extension
                                          or renewal of such offer and includes any election available
                                          thereunder

'Offer Document'                          the document to be despatched on behalf of Balfour Beatty
                                          containing the terms and conditions of the Offer and, where
                                          appropriate, any other document(s) containing terms and
                                          conditions of the Offer constituting the full terms and
                                          conditions of the Offer

'Official List'                           the Official List of the UK Listing Authority

'Panel'                                   the Panel on Takeovers and Mergers

'Regulatory Information Service'          any of the services set out in Appendix 3 to the Listing Rules

'Restricted Jurisdiction'                 any of the United States, Australia or Canada or any
                                          jurisdiction where extension or acceptance of the Offer would
                                          violate the law of that jurisdiction

'Rothschild'                              N M Rothschild & Sons Limited

'Securities Act'                          the United States Securities Act of 1933 (as amended) and the
                                          rules and regulations promulgated thereunder

'Third Party'                             has the meaning given to it in paragraph 3 of Appendix I of this
                                          announcement

'UKLA'                                    the UK Listing Authority, being the Financial Services Authority
                                          Limited acting in its capacity as the competent authority for
                                          the purposes of Part IV of the Financial Services and Markets
                                          Act 2000

'United Kingdom' or 'UK'                  the United Kingdom of Great Britain and Northern Ireland

'United States' or 'US'                   the United States of America, its territories and possessions,
                                          any State of the United States of America and the District of
                                          Columbia



For the purposes of this announcement, 'subsidiary', 'subsidiary undertaking', '
undertaking' and 'associated undertaking' have the respective meanings given
thereto by the Act, but for this purpose ignoring paragraph 20(1)(b) of Schedule
4A of the Act.

All the times referred to in this announcement are London times unless otherwise
stated.

References to the singular include the plural and vice versa.

£ and pence means Pounds and Pence Sterling, the lawful currency of the United
Kingdom.


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