Contracts Settlement

Carillion PLC
01 June 2004


Carillion plc

Transfer of rail maintenance contracts to Network Rail

Following Network Rail's announcement on 24 October 2004 of its decision to take
all rail maintenance in-house, the arrangements for transferring Carillion's
rail maintenance work to Network Rail have been agreed.

Carillion has net assets of £16.5 million relating to the maintenance activities
transferring to Network Rail. In respect of the assets transferring, Carillion
will receive £17.6 million from Network Rail, which will be paid in cash.

Carillion will use the proceeds arising from the transfer to support its
strategy for growth, both organically and through further acquisitions.

Carillion's responsibilities for rail maintenance in the Bristol and Gloucester
areas, transferred to Network Rail on 29 May 2004. Its responsibilities for
maintenance in the Preston, West Coast Mainline South and South Wales and
Marches areas, will transfer on 24 July 2004.

Despite losing this work, Carillion will continue to have a strong rail
infrastructure business, with annual turnover expected to be in excess of £250
million. Carillion won over £400 million of new rail contracts in the first four
months of 2004. These included enhancement projects and the renewal of track and
switches and crossings under a five-year framework agreement with Network Rail.
Further opportunities for growth are expected in both the UK and Scandinavia.

As previously announced by Carillion in its trading update on 7 January 2004,
the transfer of rail maintenance is expected to reduce operating profit by £7
million in 2004 and by £15 million in 2005.

This settlement is in-line with Carillion's expectations and therefore as
reported in its AGM statement on 10 May 2004, the Group remains firmly on track
to deliver healthy earnings growth in 2004 and beyond.

For further information contact
John Denning, Director Group Corporate Affairs, on 01902 316426




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