Statement re JLIF Proposal

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

5 December 2014

Rejection of the proposal by John Laing Infrastructure Fund Ltd and update on the timing of the KPMG review

The Board of Balfour Beatty plc has carefully considered the non-binding proposal from John Laing Infrastructure Fund Ltd ("JLIF") to acquire its entire PPP portfolio for approximately £1 billion. The Board has concluded that the proposal falls significantly short of its own view of the value of the portfolio, and accordingly the proposal from JLIF has been rejected.

The Directors' Valuation of the PPP portfolio stood at £1.05 billion, as at 28 June 2014. However, the Group's targeted approach to selling individual assets as each investment matures, combined with the current and expected future strength of the market, leads the Board to conclude that the realisable value of the PPP portfolio continues to be substantially in excess of the current Directors' valuation. This has been recently evidenced by the disposal of an investment at a 28% premium to the half-year Directors' Valuation.

As a result, the Board intends to publish an updated Directors' Valuation in January 2015. This valuation will take into account recent contract wins, further investments and disposals in the period since June, and a further review of underlying project valuations. Separately, it will also seek to provide an indicative value range for the current investments pipeline. In combination, these will set out the Board's view of a market value for the existing PPP portfolio and the pipeline.

In addition, the strategic value and synergies from owning the current Investments business - both the PPP portfolio itself and the skilled team that operates and develops the business - is material to the Balfour Beatty group as a whole. The Group's Construction and Support Services businesses derive real value from the Investments business being in the Group, something which needs to be taken into account in valuing the Group as a whole, and in evaluating any proposal to acquire the Investments portfolio or business alone. This has not been a factor in rejecting the JLIF proposal, given the substantial valuation gap versus the Board's view of realisable value. Nevertheless, these broader synergistic benefits are of real value to shareholders, and will be further commented on at the time of publishing the January 2015 Directors' Valuation.

Timing of KPMG Review

Separately, the KPMG review of projects in the UK Construction business is well progressed and field work will be completed by the end of the year. The scope of the report is unchanged and will be delivered to the Board in January. This allows KPMG the time to complete its detailed review and develop recommendations to the Board. The Board intends to announce the key findings and conclusions from the review as soon as they are to hand. This is likely to be in the second half of January.

As previously announced, Leo Quinn joins on 1 January 2015 as the new Group Chief Executive.