re Metronet

Invensys PLC
01 April 2008


1 April 2008



Invensys announces outcome of discussions concerning Metronet


  ? Cash settlement of £95m from Bombardier following rescoping of work on the
    London Underground

  ? Around £180 million of continuing work on Victoria and Sub Surface Lines
    and significant opportunity to win rescoped contract

  ? Rail Group double digit revenue growth outlook unchanged and margin
    outlook improved materially through to 2010



Summary

As part of the arrangements being put in place following Metronet entering into
administration last year, London Underground Limited (LUL) has decided to
rescope the new signalling work for the Sub Surface Lines (SSL).  This has
resulted in a cash payment due today from Bombardier to Invensys of £95 million
and a reduction in the Westinghouse Rail Systems Limited (WRSL) order book of
£550 million in respect of work that would have been carried out mainly in the
period 2010 to 2014.  This development has provided Invensys with a significant
opportunity to win the rescoped contract when it is retendered in accordance
with public procurement rules.  Invensys has the certified engineering capacity
and the capabilities to meet LUL's vision for the London Underground.  Invensys'
other signalling work on the SSL and the Victoria Line, representing around £180
million of revenue, is unaffected by this change.



Ulf Henriksson, Chief Executive of Invensys, commented:



"We view this development as a great opportunity to demonstrate our commitment
to LUL and share a vision with LUL of developing an efficient solution that
meets the needs of LUL and the people of London.  Our work so far on the SSL and
Victoria Lines is on or ahead of schedule which demonstrates WRSL's reputation
for delivery.



"In addition to our ongoing involvement with LUL, I expect the Rail Group to
make continued progress throughout its business with double digit revenue growth
and materially improved margins over the next two years.



"For the Group as a whole, we have made further progress in the final quarter of
our financial year and we remain confident that we have a sound platform for
growth next year."



Background and contractual changes

Following Metronet entering into PPP administration on 18 July 2007,
Westinghouse Rail Systems Limited (WRSL), part of the Invensys Rail Group (IRG),
has now reached a series of agreements in respect of all its contracts with
Bombardier, a member of the Metronet consortium, for signalling on the London
Underground.



WRSL's existing contract with Bombardier for work to install new signalling on
the Victoria Line will remain with Bombardier and is expected to be transferred
intact as part of the statutory transfer of Metronet in Administration to 'new'
Metronet.  Work remains on schedule for delivery of the planned performance
upgrades in 2012.  WRSL's signalling upgrade technology (Distance To Go - Radio)
was successfully trialled during engineering hours on 7 February 2008 and is due
to be trialled during passenger hours in summer 2008.



WRSL understands that, in order to reduce future maintenance and driver
training, LUL has decided to rescope the new signalling work for SSL.  As a
result WRSL's existing contract with Bombardier for SSL signalling has been
rescoped and LUL has asked WRSL only to continue to work on changes to SSL's
existing signalling system to allow new trains to operate on those lines.
WRSL's existing contract with Bombardier will be novated to Metronet and amended
to reflect the agreed rescoping, resulting in a cash settlement due today of £95
million from Bombardier.  The revised contract will then be recommended for
transfer to "new" Metronet.  The new contract for the upgraded SSL signalling
will be retendered in accordance with public procurement rules and WRSL fully
intends to participate in the future retendering which LUL has strongly
encouraged it to do.



The ongoing contracts are subject to the successful implementation of the
statutory transfer scheme being proposed by the Administrator of Metronet,
including approval of the High Court.  LUL has agreed to recommend the proposed
transfers and a copy of a joint LUL, Bombardier and WRSL press release is
attached.



Tim O'Toole, Managing Director of London Underground, said:



"I look forward to the successful commissioning of WRSL's new signalling system
on the Victoria Line and to the completion of its work on the existing
signalling system on SSL and hope WRSL will participate in the re-tender of the
signalling system for SSL."



Disposal

On 31 March 2008, IRG sold its North American rail logistics business Burco to a
US company, Railroad Controls Limited, for $31 million.  Burco was not core to
IRG's signalling and related systems operations.  In the year ended 31 March
2007, Burco reported external revenue of $128 million and operating profit of $5
million.  Burco will be treated as a discontinued operation in the Group's
results.



Overall financial implications

The cash payment from Bombardier to WRSL of £95 million will be treated as
operating exceptional income in the Group's income statement.   However due to
the rescoping of the planned new signalling work on SSL and prior to the
retendering of this work, WRSL's long term order book will be reduced by around
£550 million in respect of work that would have mainly been carried out in the
period from 2010 to 2014.  IRG's order book remains strong at around £700
million and IRG believes that there is a significant opportunity to win the
rescoped contract for the SSL signalling system.



IRG expects that these changes to its contractual arrangements will have no
effect on its expectation of achieving double digit revenue growth from
continuing operations in 2008/09 and 2009/10.   With the disposal of Burco and
improved sales mix, IRG expects a material improvement in operating margin
during this period.





Contact:


Invensys plc              Steve Devany             tel: +44 (0) 20 7821 3758

Financial Dynamics        Richard Mountain         tel: +44 (0) 20 7269 7121



Notes to Editors



Westinghouse Rail Systems Limited (WRSL) is part of the Invensys Rail Group,
which is a business unit of Invensys plc.



In 2003, WRSL contracted with Bombardier Transportation for the delivery of the
signalling upgrade as part of the Metronet scope of works for the London
Underground on both the BCV (Bakerloo, Central and Victoria Lines) and SSL
Lines. SSL (Sub Surface Lines) covers the Circle, District, Hammersmith and City
and Metropolitan Lines. The SSL contract was awarded in February 2003 with a
contract value of £755m, and was due to deliver its performance upgrade
commitment in 2017.  BCV  covers upgrade work only to the Victoria line and was
also awarded  in February 2003 with a contract value of £135m, and is due to
deliver its performance upgrade commitment in 2012.





The scope of works in both contracts was to contribute to an improvement in
Journey Time Capability (JTC), improving passenger journey times between
stations amongst other things by an increase in the number and frequency of
trains.





Invensys Rail Group designs, manufactures, installs, tests and commissions
safety-related rail signalling and control systems and other rail signalling
products for mainline, metro and freight railways. It is made up of businesses
based in Australia (Westinghouse Rail Systems Australia Pty Limited), Iberia
(Dimetronic SA), North America (Safetran Systems Corp) and the UK (Westinghouse
Rail Systems Limited). Invensys Rail Group employs around 3,500 people across
its businesses.





Invensys plc is a global automation, controls and process solutions Group. Its
products, service expertise and ongoing support enable intelligent systems to
monitor and control processes in many different environments. Leading companies
in a wide range of industries rely on Invensys to help them perform with greater
efficiency, safety and cost-effectiveness.





The Invensys Group is made up of Process Systems, Eurotherm, Invensys Rail Group
and Controls. The Group is headquartered in London and is listed on the London
Stock Exchange, with around 23,000 employees working in around 60 countries.




Appendix - Joint announcement



Andie Harper, CEO of Metronet, released the following statement:



Metronet's entry into Administration has caused a significant number of
challenges for the planned modernisation programme for the London Underground
network.  Metronet has made changes to the structure and timing of works, which
has affected many of their suppliers and sub-suppliers.



Since Metronet entered into Administration, LUL has been seeking to agree with
the Administrator the basis upon which the Metronet undertakings can be
transferred to LUL nominee companies.



The result of those negotiations, among other things, is that the BCV programme,
currently working to upgrade the Victoria Line with Bombardier's new trains and
Westinghouse' Rail Systems' (WRSL) new signalling system, will continue and
complete its implementation as originally anticipated.



The Sub-Surface Line (SSL) upgrade programme, which is less advanced in its
implementation, is being revisited in light of issues unique to those lines.
LUL will continue to install new Bombardier trains on SSL, and WRSL will
continue to improve the existing signalling system to enable those trains to
operate on those lines.  The signalling upgrade works will be re-tendered in
accordance with procurement rules as a consequence of the successful transfer of
Metronet from Administration.



Tim O'Toole, LUL Managing Director, said:



"I look forward to the successful commissioning of WRSL's new signalling system
on the Victoria Line and to the completion of its work on the existing
signalling system on SSL and hope WRSL will participate in the re-tender of the
signalling system for SSL."



James Drummond, CEO and President of Invensys Rail Group, which owns WRSL, said:



"We continue to support LUL through this difficult time and look forward to the
successful completion of the BCV re-signalling programme.  In the longer term,
as Metronet emerges from Administration, we will continue to work with LUL and
utilise our signalling technologies to deliver the increase in safety,
performance and capacity of the Tube network that London needs."



Andre Navarri, President of Bombardier Transportation said:



''Bombardier has always performed on its contracts to date and will continue to
do so. We are committed to the successful completion of the BCV programme as
planned and we look forward to the continuation of the delivery of our trains
for the SSL lines.  Bombardier is fully committed to offer the best to the users
of the London Underground.''




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