Financial Information

Introduction

Each of Balfour Beatty’s PPP/PFI contracts ("concessions") is signed between a public sector Authority and a private sector project company, whose shareholders comprise Balfour Beatty and other investors, except for the Sunderland, South Tyneside, Derby and Knowsley concessions which are wholly owned by Balfour Beatty.

Because of provisions in each concession's Shareholders’ Agreement requiring unanimity on all significant matters, Balfour Beatty cannot by itself control these concessions.

The Balfour Beatty Group therefore accounts for its investment in these concessions by taking to profit and loss its share of profit after tax of each concession, in line with International Accounting Standard 28, Accounting for Investments in Associates and International Accounting Standard 31, Financial Reporting of Interests in Joint Ventures.

The consolidated balance sheet of the Balfour Beatty Group includes Balfour Beatty’s share of the net assets of each project company.

The full profit and loss and balance sheet for Sunderland Street Lighting, South Tyneside Street Lighting, Derby Street Lighting and Knowsley Schools are included within the Balfour Beatty group accounts for 2007, in line with International Accounting Standard 27, Consolidated Financial Statements and Accounting for Investments in Subsidiaries.

Summary of PPP/PFI Concession Results

	Subsidiaries	Joint Ventures	PFI/PPP 2007	PFI/PPP 2006
Income Statement
Revenue	51	275	326	237
Operating profit	1	5	6	6
Investment income	2	113	115	108
Finance costs	(2)	(78)	(80)	(71)
Profit before taxation	1	40	41	43
Taxation	0	(11)	(11)	(14)
Profit after taxation	1	29	30	29

Balance Sheet
Property, plant and equipment	0	0	0	29
Intangible assets	0	2	2	2
Financial assets	62	1,375	1,437	1,563
Other non-current assets	0	177	177	121
Cash and cash equivalents	3	87	90	144
Other current assets	10	202	212	150
Total assets	75	1,843	1,918	*2,009*

Borrowings	(64)	(1,355)	(1,419)	(1,423)
Other non-current liabilities	(4)	(112)	(116)	(110)
Other current liabilities	(10)	(164)	(174)	(160)
Total liabilities	(78)	(1,631)	(1,709)	*(1,694)*
Net assets	(3)	212	209	*314*