Trading Statement

Balfour Beatty PLC
13 January 2005


13 January 2005
                               BALFOUR BEATTY PLC
                               ==================
                                 Trading Update
                                 --------------


Balfour Beatty plc, the engineering, construction and services group, is
providing this update on trading for the year ended 31 December 2004 in advance
of its preliminary results announcement on 9 March 2005.

In 2004, Balfour Beatty's principal markets in healthcare, education, road and
rail transport and utility systems continued to deliver significant
opportunities. During the year, the Group's order book has grown substantially
to approximately £6.5 billion, with approximately £1 billion of further
construction work at preferred bidder stage.

It is anticipated that growth in Group profits and earnings for the year, before
exceptional items and goodwill amortisation, will be in line with expectations.
Operating cashflow performance was again very satisfactory and year-end net cash
will be approximately £300 million.

Sectors
-------

In Building, Mansell, which was acquired at the end of 2003, performed at
anticipated levels and continued to grow, particularly in social housing. This
more than offset profits forgone as a result of the sale of Andover Controls at
the half year. Elsewhere in the building sector, performance was good and order
intake continued at very satisfactory levels, with a number of substantial
contracts and preferred bidder positions secured, including major new PPP
schools and healthcare projects in Birmingham, Scotland, Nottinghamshire and
Yorkshire.

In Engineering, performance in the UK was good. Particularly encouraging
progress was made in utilities contracting, where major new projects have been
secured in both the gas and water sectors, and in road management and
maintenance, where RCS won the £300 million Highways Agency Area 2 Enhanced
Managing Agent Contractor contract late in the year. In the US, further
substantial costs were incurred in the second half of the year on the residual
portions of some contracts in the heavy marine engineering business. Our US
business has now been reorganised and the heavy marine engineering business is
being closed. The associated costs of these actions will be fully accounted for
in 2004. The acquisition of 50% of Gammon in Hong Kong and the accelerating
development of the Dubai market, where we have a strong presence, provide
further opportunities for long-term future growth.

In Rail, the maintenance contracts taken in-house by Network Rail were settled
on satisfactory terms. A significantly larger share of the mainline renewals
programme was secured in new contracts awarded by Network Rail early in the year
and the renewals workload for the London Underground is now increasing sharply.
Our UK projects, plant and track systems businesses also performed well. There
were losses in Balfour Beatty Rail Inc and the business has been reorganised and
downsized as a result. The carrying value of this business is under review.
There was also some weakness in the German market, but major projects in Italy,
Portugal and elsewhere in Europe progressed well.

In Investments, there has been very satisfactory progress, with the acquisition
of 100% ownership of Connect Roads, a first full year of Metronet profits and a
strong recovery in profits in Barking Power. In this latter context, a
settlement in respect of the administration of TXU Europe is anticipated during
2005. Preferred bidder status was achieved for five new PPP schemes - hospitals
at Birmingham and Pinderfields in Yorkshire through Consort Healthcare and
schools schemes at North Lanarkshire, Nottinghamshire and Birmingham through
Transform Schools.

Andover Controls
----------------

There will be an exceptional profit of approximately £120 million arising from
the disposal of Andover Controls.

Outlook
-------

We believe that our trading environment will continue to be healthy during 2005
and that we will continue to generate secure, sustainable income from our
partnerships with customers in both the public and private sectors.

We anticipate that the Group will make further progress in 2005.

                                      ENDS

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



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