Re Contract

Balfour Beatty PLC
31 May 2007


31 May 2007

                  BALFOUR BEATTY APPOINTED PREFERRED BIDDER FOR
          £140 MILLION ISLINGTON BUILDING SCHOOLS FOR THE FUTURE PROJECT
          ==============================================================
                                        
Balfour Beatty, the international engineering, construction and services group,
announces today that its specialist education PPP concession company, Transform
Schools, has been appointed preferred bidder by Islington Council for the
£140 million PPP concession to deliver all eight secondary schools and two pupil
referral units under the Building Schools for the Future (BSF) programme.

The concession, which is anticipated to reach financial close at the end of this
year, will be delivered in three phases, commencing in early 2008, over a
five-year period.

The project is Transform Schools' first full BSF contract which will see the
company establishing a Local Education Partnership (LEP) in joint venture with
the borough. In addition, Transform will become responsible for the facilities
management services and, with our partner RM Education, will design and
implement a sophisticated ICT service, including a virtual learning environment.

Balfour Beatty will invest £4 million of equity in the initial project which
will bring its overall equity commitment to the education sector up to almost
£54 million.

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

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

'This award demonstrates Balfour Beatty's continuing strength and expertise in
the education sector. We are delighted to have been chosen as Islington
Council's partner to deliver the borough's secondary schools investment
programme. It is Balfour Beatty's seventh major schools PFI project and its
second as a concession company under the BSF scheme.'

Balfour Beatty also has long-standing projects at Stoke and Rotherham, in their
seventh and fifth year of operation, respectively, projects in North Lanarkshire
and Bassetlaw and its Birmingham PP2 concession.

Councillor Ursula Woolley, commenting today, said:

'This is a huge step forwards for education in Islington. We need to get it
right, which is why our standards for choosing a BSF partner were so high. We've
been clear the whole time that the new school buildings need to welcome, inspire
and support all Islington pupils to help them achieve their full potential.
Investing in our secondary schools and the future of all our young people is a
top priority for the council - which is why we're putting millions of pounds
into it.

'So there's plenty to look forward to, but much to celebrate already. Islington
schools have never been better. Exam results are at their highest level ever,
and Ofsted consistently gives the borough's schools the thumbs up. Things have
never looked brighter for education in Islington.'

Tim Pearson, CEO, RM, commenting today, said:

'ICT has a key role to play in the school of the future; it can transform the
way teachers work and, of course, for pupils it's part of everyday life.
Islington Council set high standards for its BSF project; we look forward to
working with them, and our Transform Schools partners, to make education even
better in Islington.'

                                      ENDS

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

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

1.  Balfour Beatty's other schools PFI projects are:
    -  for Stoke City Council (13 new schools and numerous new extensions in a
       25-year concession worth £153 million)
    -  for the Metropolitan Borough of Rotherham (10 new schools and five 
       refurbished schools plus energy management, repairs and maintenance, 
       caretaking, cleaning and catering in a 30-year concession worth £100 
       million in construction and £40 million in long-term services)
    -  for North Lanarkshire Council (24 new schools in a 30-year concession 
       worth £140 million in construction and up to £100 million in long term 
       services - preferred bidder)
    -  for Nottinghamshire County Council (Bassetlaw Grouped Schools - five new
       secondary schools, a new special school and two new centres for post-16
       education in a 25-year concession worth £123 million in construction and 
       in excess of £100 million in long-term services - preferred bidder)
    -  for Birmingham City Council (12 new and refurbished schools, including 
       two secondary schools, nine primary schools and one early years centre - 
       £56 million of construction work, £40 million in long-term services).

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

3.  The company is also one of the two framework contractors who are providing
    construction services to the £160 million BSF scheme for the Manchester City
    Council and is providing all design and build services for Babcock and 
    Brown in its schools PFI projects, with work secured under this arrangement 
    to date exceeding £80 million. Balfour Beatty is undertaking all design and 
    construction work for schools in East Lothian in a contract worth some £40 
    million under the PPP concession for that council.

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



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