ANNUAL REPORT

ANDACCOUNTS 2024

Building

New

Futures

ABOUT US

Balfour Beatty is a leading international infrastructure group with

27,000 employees driving the delivery of powerful new solutions,

shaping thinking, creating skylines and inspiring a new generation

of talent to be the change-makers of tomorrow.

We finance, develop, build, maintain and operate the increasingly

complex and critical infrastructure that supports national economies,

and deliver projects at the heart of local communities.

IN THIS REPORT

p14

p22

Well positioned in growth markets

We are leveraging our expertise and proven track record

tocapitalise onhigh‑growth markets to secure newopportunities.

Digital and AI advancements

Our digital‑first approach enhances safety, productivity

andassurancethrough AI, data lakes and digital tools.

Icon Awards

In 2024, we celebrated our inaugural Icon Awards at the

world‑class V&A Museum in London, bringing together almost

400 colleagues from across the UK, US and Hong Kong to

celebrate the very best of Balfour Beatty.

p74

LOOK OUT FOR THE

ICON AWARDS LOGO TO

READ OUR WINNERS’

STORIES THROUGHOUT

THEREPORT.

FIND OUT MORE AT: WWW.BALFOURBEATTY.COM

FRONT COVER IMAGE:

(Left to right) Martina Doussias,

Senior Project Accountant, Nick

Stenman, Assistant Superintendent,

and Karli Franks, Marketing Lead, on

site at the Southwestern College

Student Union project in California.

Photo credit: Emil Kara, Multimedia

Manager – US Buildings.

1Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

CONTENTSFINANCIAL PERFORMANCE

STRATEGIC REPORT

Financial performance 1

Balfour Beatty at a glance 2

Group Chair’s introduction 4

Our business model 8

Group Chief Executive’s review 10

Market review 14

Our strategy: Build to Last 24

Stakeholder value 26

Operational review 30

Directors’ valuation of the

Investmentsportfolio 38

Health, safety and wellbeing 40

Ethics and compliance 46

Tax strategy 47

Sustainability 48

Our people 68

Non‑financial and sustainability

information statement 79

Measuring our financial

performance 80

Chief Financial Officer’s review 86

Risk management 89

Viability statement 106

Climate change and Task

ForceonClimate‑related

FinancialDisclosures(TCFD) 107

GOVERNANCE

Board leadership and

Companypurpose 117

Division of responsibilities 132

Composition, succession

andevaluation 136

Nomination Committee 140

Safety and Sustainability

Committee 144

Audit and Risk Committee 146

Remuneration Committee 153

Directors’ report 175

FINANCIAL STATEMENTS

Independent auditor’s report 179

Financial statements 188

Notes to the financial statements 198

OTHER INFORMATION

Unaudited Group

five‑year summary 276

Shareholder information 277

UNDERLYING

REVENUE¹ £m

8,931

9,595

10,015

8,587

8,280

24 2420

20 2021

21 2122

22 2223

23 23

UNDERLYING PROFIT FROM

OPERATIONS (PFO) £m

197

279

228

248

UNDERLYING EARNINGS PER

SHARE (BASIC) Pence

37.3

43.6

29.7

47.5

3.7

ORDER BOOK¹

£bn

16.5

18.4

16.1

17.4

16.4

NET CASH

£m

842

943

790

815

581

STATUTORY NET CASH/

(BORROWINGS) £m

435

446

418

441

139

STATUTORY REVENUE

£m

7,185

7,629

7,320

7,9 93

8,234

STATUTORY PROFIT

FORTHEYEAR £m

194

178

139

287

STATUTORY EARNINGS

PERSHARE (BASIC) Pence

35.3

34.2

21.3

46.9

4.4

DIVIDENDS PER SHARE

Pence

9.0

10.5

1.5

11.5

12.5

KEY

Performance measures

Statutory measures

1 Including share of joint

venturesandassociates,

beforenon‑underlyingitems.

The Group has presented financial performance measures which are considered most relevant

to the Group and used to manage the Group’s performance. An explanation of these measures

and appropriate reconciliations to statutory measures are provided on pages 80 to 85.

STRATEGIC REPORT

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

BALFOUR BEATTY AT A GLANCE

NUMBER OF EMPLOYEES

27,000

DIRECTORS’ VALUATION

INVESTMENTS PORTFOLIO

£1.3bn

REVENUE

£10,015m

UNDERLYING PROFIT

BEFORE TAX

£289m

Group highlights

1 Including share of joint ventures and associates.

l United Kingdom

£9.4bn

l United States

£7.1bn

l Hong Kong

£1.9bn

GROUP ORDER BOOK

£18.4bn

Our Cultural Framework

Balfour Beatty’s Cultural Framework provides a simple and clear view

ofour purpose, values and behaviours under our Build to Last strategy.

The framework reflects who we are now as an international group,

who we want to be, what we value and what drives the way we work.

International

infrastructure

experts

Our purpose

Our strategy

Our values

Our behaviours

Our Code ofEthics

Our behaviours reflect the things we will do to consistently

delivertothe standard set out in our values.

Our values reflect the norms and beliefs that drive the way

weworkand how we measure ourselves.

TALK

POSITIVELY

COLLABORATE

RELENTLESSLY

ENCOURAGE

CONSTANTLY

MAKE A

DIFFERENCE

VALUE

EVERYONE

LEAN EXPERT TRUSTED

SAFE SUSTAINABLE

Building New Futures

We are leading the transformation of our

industry to meet the challenges of the future.

Build to Last

Build to Last is our strategy

for continuous improvement.

Our Code of Ethics is the foundation of everything we do.

Itprovides a clear direction on the standards, values and

expectations that guide the behaviours of ouremployees and

supply chain partners.

SCAN OR CLICK TO

FIND OUT MORE

ABOUT OUR CULTURAL

FRAMEWORK

FIND OUT MORE ABOUT OUR

STRATEGY AND VALUES

p24 and 25

3Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Construction Services

Specialises in the design and construction of

major infrastructure and building projects in

the UK, US and Hong Kong.

Support Services

Maintains, upgrades and manages vital

services across the power transmission,

distribution, utilities, road and rail sectors.

Infrastructure Investments

Operates and maintains infrastructure projects

and a portfolio of military and multifamily

housing and student accommodation assets.

Hong Kong International Airport for the

Airport Authority Hong Kong.

Tealing Substation, Scotland for SSEN Transmission. JBWS Charleston Homes, military family

housing for the US Navy.

Our divisions

Selective bidding

forcontracts

Our stringent gated lifecycle process

allowsus to carefully control our project

portfolio onan ongoing basis.

Financial

performance

ORDER BOOK

£15.2bn

ORDER BOOK

£3.2bn

DIRECTORS’ VALUATION

£1.3bn

REVENUE

£8,199m

UNDERLYING PROFIT

FROMOPERATIONS

£159m

STATUTORY PROFIT

FROMOPERATIONS

£87m

REVENUE

£606m

UNDERLYING

PROFIT BEFORE TAX

£54m

STATUTORY PROFIT

BEFORETAX

£51m

REVENUE

£1,210m

UNDERLYING PROFIT

FROMOPERATIONS

£93m

STATUTORY PROFIT

FROMOPERATIONS

£93m

FIND OUT MORE IN OUR

BUSINESS MODEL SECTION

FIND OUT MORE IN OUR

OPERATIONAL REVIEW

FIND OUT MORE IN OUR

OPERATIONAL REVIEW

FIND OUT MORE IN OUR

OPERATIONAL REVIEW

p31 p35 p36

1 Including share of joint venture and associates.

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

GROUP CHAIR’S INTRODUCTION

Shaping the future

ofinfrastructure

Charles Allen

Lord Allen of Kensington, CBE

Non-executive Group Chair

Dear Shareholders,

Throughout 2024, the world witnessed profound

changes – from ongoing conflicts in the Middle

East and Ukraine and geo‑political landscapes

being reshaped by key elections, to groundbreaking

advancements in artificial intelligence. Against this

dynamic global backdrop, Balfour Beatty started

2025 very well positioned for continuing success,

with infrastructure widely established as a driver

and enabler of economic growth, energy security

and rewarding careers.

After a decade of remarkable transformation,

2024 was a defining year for Balfour Beatty. The

Group has solidified its leadership in the industry,

strengthened its brand, and delivered a strong

financial performance. We see significant

opportunities across our four growth markets –

energy, defence and transport in the UK, and

buildings in the US – with notable new projects

contributing to a high‑quality order book. Most

importantly, our unwavering commitment to health,

safety, and wellbeing has been a beacon of excellence,

setting the standard for industry‑leading performance.

From this position, your Board is confident that

Balfour Beatty’s people, resilience, innovation,

anddedication ensure that we are not just

securing the future of the Group but actively

shaping the future of the infrastructure industry.

New Board appointments

During 2024, I had the pleasure of welcoming

three exceptional leaders to the Balfour Beatty

Board: Robert MacLeod, Gabby Costigan MBE,

and Rudy Wynter.

Robert, now Chair of Balfour Beatty’s Audit and

Risk Committee, is a Chartered Accountant with

an impressive track record as a CEO and CFO,

and brings a wealth of strategic, financial and

commercial expertise as well as Non‑executive

Director experience. Gabby, now Chair of Balfour

Beatty’s Safety and Sustainability Committee, is

an Aeronautical Engineer with a rich international

career, including 21 years in the Australian Army,

adding a unique perspective to our leadership.

Rudy, with over 35 years in the gas and electricity

sector, brings extensive experience in the

development and construction of large‑scale

engineering and capital energy projects.

These distinguished appointments have enriched

the Board with diverse insights and expertise,

supporting Balfour Beatty’s ambitious growth trajectory.

In March this year, following an extensive international

selection process, the Board announced the

appointment of Philip Hoare as Group Chief

Executive Officer, a position he will take up in

September 2025. Philip, a civil engineer, built his

30‑year career at AtkinsRéalis Group Inc, a global

engineering services and nuclear enterprise where

he has been fundamental to the growth and

performance of the company, first as CEO

ofAtkins in the UK and Europe, and then as

President of the global Engineering Services

business. In January 2024, he was appointed

Chief Operating Officer of the transformed group.

His depth of industry knowledge and experience

in delivering a profitable growth strategy across

multiple geographies makes him the ideal person

to continue to drive the Group’s success in our

chosen markets.

On behalf of the Board, I pay tribute to Leo, for his

exceptional and inspirational leadership of both

Balfour Beatty and the industry over the last decade.

Leo has transformed Balfour Beatty into a strong,

resilient Group, setting it firmly on a trajectory of

profitable growth. This is underpinned by a culture

across its workforce which is committed to expertise,

discipline and excellence, resulting inatrusted

reputation for delivering value for allstakeholders.

5Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Setting the standard in health,

safety and wellbeing

In 2024, Balfour Beatty delivered its best‑ever health

and safety performance, with an industry‑leading

Lost Time Injury Rate of 0.09. With over 105 million

hours worked, a record 470,000 health and safety

observations, and a remarkable 95% of employees

expressing that they feel cared for in our 2024

employee engagement survey, these achievements

underscore our unwavering commitment to

health, safety and wellbeing.

This success goes beyond mere numbers –

itreflects our embedded culture. From the

dedication of our inspirational site supervisors to

the meticulous discipline in our daily processes,

often powered by pioneering digital solutions,

tomitigate risks and assure compliance, every

aspect of our approach is geared toward creating

a safer, healthier, and happier workplace.

An evolving sustainability strategy

In June 2024, after significant investment in our

sustainability capabilities and a thorough evaluation

of the developing landscape, we evolved our

sustainability strategy. This step established new

targets and expanded focus areas critical to our

business success – climate change, nature positive,

resource efficiency, supply chain integrity, community

engagement, and employee diversity, equity

andinclusion.

To future‑proof our approach, we set a validated

net zero target, endorsed by the Science Based

Targets initiative (SBTi) and supported by a fully

transparent, UK carbon reduction plan. We also

accelerated our UK target to achieve £3 billion

ofsocial value by 2030 by five years to 2025 –

andIam very pleased to say that in 2024 we

achievedthat target. Balfour Beatty’s evolved

strategy will ensure that we continue to lead in

building a lasting, positive impact for our planet

and our communities.

Strategic growth and a market

selective approach

As we embark on another decade of infrastructure

expansion with its unparalleled opportunities,

Balfour Beatty’s diverse geographical and operational

portfolio, coupled with its leading reputation in

engineering and construction, positions us as

critical to the delivery of transformative

infrastructure projects.

The dynamic market coupled with strong

governance and controls means that Balfour

Beatty is well placed to select projects that align

with our strengths and drive sustainable growth

for the Company.

LEFT

Charles at our ‘Meet the

Affinity Networks’ event in the

Canary Wharf office in London.

Balfour Beatty

iswell placed to

select projects

thatalign with our

strengths and drive

sustainable growth

for the Company.”

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Building our reputation as the

employer of choice

Balfour Beatty’s differentiator is its depth of

unique capability. Behind this lies a long‑term

strategy of attracting, retaining and developing

toptalent at all career stages. Our aim is to

become the employer of choice by combining

unmatched career opportunities with a diverse

and inclusive culture.

Our commitment to valuing and investing in

ourcolleagues is a cornerstone of this goal.

Ourapproach empowers employees to transition

into leadership roles, strengthening our succession

pipeline and ensuring the successful delivery of

future projects. By focusing on early career

development – through hiring apprentices,

graduates and trainees, now comprising over

7.3% of our workforce – and offering targeted

programmes such as the Aspiring and Future

Leaders initiatives in the UK and the Executive

Leadership and Development programmes in the

US – we are cultivating the leaders of tomorrow.

Our latest employee engagement survey saw

aremarkable 84% engagement score in 2024,

marking our seventh year of continuous improvement

up 3% from 2023 and 11% above the industry

average, with 82% of employees participating.

This strong response underscores our employees’

commitment to and pride in the business.

Driving a productivity revolution:

leading the digital and AI frontier

Harnessing transformative AI and digital

technology allows us to work smarter, optimising

resource allocation, streamlining processes,

improving decision making, and delivering

projects with greater efficiency and precision.

We have made significant strides in integrating

digital innovations into our operations, and this

year, we are set to accelerate our progress.

Thiscommitment is underpinned by a robust

cybersecurity framework – a non‑negotiable

standard, especially in the highly regulated,

high‑security environments where we operate.

Whether it is delivering critical infrastructure for

UK defence and nuclear sectors or supporting

theUS federal and state markets, including

ourvital work with the US military, our digital

advancements are key to maintaining the trust

and security these projects demand.

Continuing to deliver a multi-year

capital allocation framework

2025 marks Balfour Beatty’s fifth consecutive year

of share buybacks. The Company’s record order

book, unique end‑to‑end capabilities and financial

strength provide a strong platform for continuing

shareholder returns balanced by maintaining an

appropriate level of investment in the business

and a strong capital position. 2024 saw £160

million delivered to shareholders through share

buybacks and dividends bringing total shareholder

distributions to over £750 million since the launch

BELOW

Charles at the launch event of The 5% Club’s Business Leadership Council in London.

Balfour Beatty’s

differentiator is its

depth of unique

capability. Behind

this lies a long-term

strategy of attracting,

retaining and

developing top talent

atall career stages.”

GROUP CHAIR’S INTRODUCTION CONTINUED

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

of our capital allocation framework in 2021. We are

confident of delivering significant future capital

returns, evidenced by the c. £125 million share

buyback programme announced for 2025. The

Board is also recommending a final dividend of

8.7 pence per share, giving a total recommended

dividend of 12.5 pence per share for the year.

Conclusion

2025 ignites a decade of infrastructure evolution

similar in scale to the Victorian engineers in terms

of its impact on how we live, work and connect.

This is Balfour Beatty’s moment – an era of bold

change and a once in a generation opportunity.

The Group expects to continue to lead the charge,

delivering groundbreaking projects that will fuel

growth and enable shared prosperity.

Section 172 statement

The Directors take their responsibilities to

stakeholders very seriously. Throughout 2024,

theBoard reviewed existing engagement

mechanisms across each of the Group’s key

stakeholder groups. The Board ensures all

complementary and divergent stakeholder

viewsare understood and embedded into Board

discussions and the decision‑making process.

Inaddition to having regard to the interests of

theGroup’s stakeholders, Directors also consider

the impact of the Group’s activities on the communities

within which it operates, the environment, and

the Group’s reputation for high standards of

business conduct.

The Directors seek to act in good faith in the way

most likely to promote the long‑term success of the

Company for the benefit of its shareholders, and to

act fairly between all of its stakeholders. Through

the Board and the Board Committees, Directors

have taken action to promote and support these

objectives across the Group, details of which can

be found throughout this Annual Report as set

outhere:

@ the Company’s purpose, values and behaviours

on pages 2 and 24;

@ a description of key stakeholder groups and

how the Group has engaged with stakeholders

on pages 26 to 29 and 127 to 131;

@ the range of activities undertaken across the

Group relating to sustainability matters on

pages 48 to 67;

@ details of how high standards of integrity are

maintained on page 46;

@ the proactive and pragmatic approach of the

Group toward risk on pages 89 to 105;

@ the framework of the Company’s decision

making on pages 132 to 135; and

@ details of the Company’s governance processes

and practice on pages 117 to 139.

To our exceptional colleagues, trusted partners,

and valued customers – thank you. Your unwavering

commitment is at the heart of our success.

Charles Allen

Lord Allen of Kensington, CBE

Non-executive Group Chair

11 March 2025

BELOW

Charles on a site visit to Gammon’s Cyberport development, a new 10‑storey office building in Hong Kong.

This is Balfour

Beatty’s moment –

an era of bold

change and a once

in a generation

opportunity.”

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Public, private and regulated entities

OUR BUSINESS MODEL

SCAN OR CLICK TO FIND OUT

HOWWE ARE SHAPING SOCIETY.

Understanding

BalfourBeatty

At Balfour Beatty, we finance,

develop, build, maintain and

operate the increasingly

complex and critical

infrastructure that supports

national economies and

deliver projects at the heart

oflocal communities.

How we work

CONSTRUCTION SERVICES

Our Construction Services businesses

operateacross infrastructureand

buildingsmarkets in the UK, in the

USandinjointventure in Hong Kong.

DIVISIONS

CAPABILITIES

CUSTOMERS

@ Constructs buildings which include commercial

defence, education, government, healthcare,

leisure, retail and residential assets and

provides a range of services including design

and/or build, mechanical and electrical

engineering, shell and core and/or fit out

andinterior refurbishment.

@ Provides construction services for four main

infrastructure asset types:

– energy: design and construction of

large‑scale, complex assets for the

energy sector;

– roads: design and construction of

motorways in the UK, the US and Hong

Kong, including widening and converting

existing assets;

– railways: design and management

ofrailwaysystems, delivering major

multi‑disciplinary projects, track work,

electrificationand power supply; and

– airports: construction and refurbishment

of major passenger terminals, passenger

transit facilities and airport facilities, and

airfield infrastructure and civils works.

@ Construction and build services for other

infrastructure assets including flood

andcoastal defences.

@ Constructs and maintains electricity

networks for power transmission and

distribution contracts.

@ Provides maintenance, asset and network

management, and design services in

respect of highways, railways and other

publicly available assets.

@ Provides support services to various

utilityassets.

@ Invests directly in various assets, mainly

infrastructure with post‑construction

management opportunities.

@ Operates a UK and US portfolio of service

concession assets.

@ Invests in real estate, particularly private

military housing, student accommodation

and multifamily housing.

@ Provides real estate management services,

including property development and

assetmanagement.

SUPPORT SERVICES

Our Support Services businesses

operate in the UK, designing, upgrading,

managing and maintaining critical

national infrastructure.

INFRASTRUCTURE INVESTMENTS

Our Infrastructure Investments

business develops and finances both

public and private infrastructure

projects in the UK and the US.

9Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Our differentiators Balanced revenue mix

1 Including share of joint ventures and associates.

UK 44%

US 40%

Rest of theWorld 16%

Buildings 46%

Infrastructure 44%

Utilities 8%

Other 2%

Public 60%

Private 25%

Regulated 15%

BY GEOGRAPHY

Revenue by primary

geographical market¹

BY ASSET

Revenue by type of

assetserviced¹

BY CUSTOMER

Revenue by public, private

andregulated entity¹

Balfour Beatty has built an industry‑leading brand based on

its reputation as a partner that is Lean, Expert, Trusted, Safe

and Sustainable – our five Build to Last values.

Balfour Beatty’s engineering and project management

expertise allows it to deliver complex, one‑of‑a‑kind

projects and has made the Group a trusted construction

partner for the public and private sector alike.

Balfour Beatty takes its responsibility as a custodian of the

planet seriously and seeks to leave a positive legacy in the

communities it works in.

Balfour Beatty invests in understanding clients’ needs,

developing bespoke solutions, and collaborating closely

withcustomers andsupply chains through integrated

deliverymodels.

With over 115 years of experience successfully

delivering transformational infrastructure projects,

Balfour Beatty has cultivated a strong track record

ofquality andreliability.

Balfour Beatty’s strong balance sheet is a testament to

strong governance. It gives customers confidence in the

Group’s ability to deliver, and that Balfour Beatty is here

forthe long term.

Innovation is part of Balfour Beatty’s culture, harnessing

the power of digital and cutting‑edge technology to

drive productivity and redefine the possible.

FINANCIAL STABILITY

WORLD-CLASS TRACK RECORDBUILD TO LAST VALUES

INNOVATION

SUSTAINABLE FOCUS

COLLABORATION EXPERT PEOPLE

FOR MORE INFORMATION,

SEE PAGE 209

Balfour Beatty plc | Annual Report and Accounts 2024

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1010

GROUP CHIEF EXECUTIVE’S REVIEW

Our investment proposition

Attractive future shareholder returns underpinned by sustained

growth opportunities and financial strength.

High-quality and de-risked portfolio

@ Diverse portfolio across UK, US and Hong Kong

@ £18.4 billion order book

@ Robust governance and disciplined bidding

Expert capability

@ Track record of complex infrastructure delivery

@ Unique end‑to‑end capabilities

@ Record employee engagement

Sustained growth drivers

@ Governments driving growth through infrastructure

@ Capabilities aligned to growth markets

@ UK demand outweighing supply

Responsible goals

@ Evolved sustainability strategy launched in 2024

@ Net zero carbon emissions targets verified by SBTi

@ Ambitious community targets

Financial strength

@ Strong cash generation

@ £1.25 billion Investments portfolio

@ Sector leading balance sheet

Continued strong

performance delivering

profitable growth

2024 profitable growth targets achieved

Balfour Beatty delivered another year of strong

operational performance in 2024, which resulted

in the Group growing earnings, average cash and

order book. The key 2024 objective of growing

theprofit from earnings‑based businesses

(Construction Services and Support Services) was

achieved, with underlying profit from operations

(PFO) from those businesses increasing by 7%

to£252 million (2023: £236 million), while the

year‑end order book increased by 12% to £18.4 billion

(2023: £16.5 billion) following progress in Balfour

Beatty’s chosen growth markets. The Group’s underlying

profit for the year improved to £227 million

(2023:£205 million) driven by the earnings‑based

businesses, increased gains on Investments disposals

and higher net finance income. Non‑underlying items

after tax were a loss of £49 million (2023: £11 million)

and included a charge in relation to the Group’s

obligations under the UK Building Safety Act (BSA).

In 2024, £161 million of cash was returned to

shareholders (2023: £208 million) through a

combination of dividends and share buybacks

andaverage net cash increased to £766 million

compared to £700 million in 2023.

Strong Group portfolio

performanceled by UK

Balfour Beatty’s geographical, operational and

contract diversity is a key strength of the Group,

and has been an important factor in the consistency

of its financial results in recent years. This was

further demonstrated in 2024, as the Group

Leo Quinn

Group Chief Executive

11Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

delivered profitable growth in both of the

earnings‑based businesses. Construction Services

underlying PFO increased to £159 million, as UK

Construction PFO margin continued to improve

with a further year of strong project delivery and

Gammon recorded 14% revenue growth, while

US Construction profitability reduced due to the

cost of delays at a small number of civils projects.

Support Services delivered strong growth, with

revenue increasing by 20% and PFO margin

remaining close to the top of its targeted range.

Infrastructure Investments surpassed its disposal

targets, which offset an increase in costs. The

Directors’ valuation of the Investments portfolio

increased by 3% to £1.3 billion (2023: £1.2 billion),

with two new projects added. The Group has

forecast further growth in the medium term,

driven by its focus on four key markets; UK

energy, transport and defence and US buildings.

High-quality order book providing

foundations for 2025 and 2026

The Group’s order book grew by 12% in 2024 to

£18.4 billion (2023: £16.5 billion), and while orders

remain significant across Balfour Beatty’s focused

geographic footprint of the UK, US and Hong Kong,

the increase was largely driven by progress in two

of the identified growth markets:

@ In the UK, the strengthening and upgrading of

the power transmission network is underway

and the demand for engineering and construction

expertise continues to outweigh supply. Balfour

Beatty holds market‑leading capabilities in this

space and the order book for power transmission

and distribution work has more than doubled

in2024;

@ In the US, the combination of the Group’s organic

growth strategy and a more stable economy

has resulted in the buildings business growing

its order book by 26% (24% at constant

exchange rate (CER)) during the year, with

increased demand across most of its

geographies and client sectors.

In a period of rising demand, the Group continues

to be selective in the work it undertakes, using

increased bid margin thresholds and utilisation

ofdisciplined risk frameworks and contract

governance to reduce risk and raise quality in the

forward order book. As a result, the order book

comprises a portfolio of projects that the Group

believes has the appropriate contractual terms

and conditions for the risk undertaken, with UK

Construction being heavily weighted towards

lower‑risk target cost and cost plus incentivised

fee contracts and US Construction being heavily

weighted towards buildings projects, for which

the Group ensures early issuing of subcontracts

and insurance of the supply chain in order to

protect its margin.

Beyond the reported order book, Balfour Beatty

has positions on several long‑term frameworks,

including Scottish and Southern Electricity

Networks’ (SSEN) c.£10 billion Accelerated

Strategic Transmission Investment (ASTI)

framework and two SCAPE Civil Engineering

frameworks in the UK, which were extended for

two further years in 2024. The Group’s awarded

but not contracted pipeline also grew in the year,

due largely to the addition of SSEN’s £690 million

Skye 132kV reinforcement project and various US

Buildings projects.

Looking ahead to further growth

The Group’s outlook in each of its chosen markets

is positive through the medium term. In the UK,

multi‑year investment in infrastructure is a priority

and a necessity for the Government and will be

crucial in achieving the country’s growth and clean

energy goals. The Government has also committed

to leveraging private investment, upskilling the

UK’s workforce and delivering planning reform

with the Planning and Infrastructure Bill. In the

US, US Buildings’ organic growth strategy and a

more stable economy have contributed to the

division’s encouraging progress.

The ‘Quinn-tessential’ Award

This category recognised individuals who have made an outstanding

contribution toBalfourBeatty. The winners of this award were personally

selected by Leo Quinn, GroupChiefExecutive.

ABOUT OUR ICON

AWARDS EVENT

ON p74

Winner: Keith McCoy

Senior Vice President, US

Buildings and Civils

Keith joined us over 31 years ago as

aProject Engineer. Two years ago, he

took on the Caltrain Rail job over in

California – a herculean effort – building

a cohesive team, tackling complex

delivery and with a ‘Bethe Best’

mantra that inspires people to deliver.

Winner: Steve O’Sullivan

Senior Project Director, Major Projects

Steve started his career with Balfour Beatty 44 years

ago as an electrical apprentice aged 16. He is now

leading our HS2 Old Oak Common station project in

London. He is not just a Balfour Beatty leader, but an

industry leader – one of the very best.

SCAN OR CLICK

TOHEAR LEO’S

THOUGHTS ON

BALFOUR BEATTY’S

INAUGURAL ICON

AWARDS

In 2024, Balfour Beatty celebrated its inaugural Icon Awards at the world-class

V&A Museum in London, bringing together almost 400 colleagues from across

theUK, US and Hong Kong to celebrate the very best of Balfour Beatty.

Above: Award presentation photo. (Left to right) Steve O’Sullivan, Senior

Project Director – Major Projects and Leo Quinn, Group Chief Executive.

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

1212

GROUP CHIEF EXECUTIVE’S REVIEW CONTINUED

Looking ahead to further growth

continued

@ UK energy: The essential long‑term upgrade to

the UK’s energy infrastructure is well underway,

driving improvement in energy security and

facilitating the energy transition, with significant

and timely investment in both generation and

network infrastructure necessary to meet the

Government’s net zero targets. Balfour Beatty

is heavily involved in projects such as the new

Hinkley Point C nuclear power station and Net

Zero Teesside and across the UK with its

market‑leading power transmission and

distribution capability.

@ US buildings: Balfour Beatty’s buildings

operations are focused primarily on specific,

high growth regions, with construction spending

in the Group’s chosen states projected to grow

7% per year to 2029, ahead of the national

average. There are encouraging trends in the

division’s specialist industries, with increased

investment in government buildings, higher

residential construction, and booming data

centre demand. The Group has also seen

encouraging results from its organic growth

strategy, securing increased orders in sectors

such as education, aviation and hospitality, as

aresult of further geographic diversification.

@ UK defence: Government plans to strengthen

national security and modernise defence

infrastructure are bringing material opportunities

to market, with these schemes increasingly

requiring contractors with high‑security experience

and end‑to‑end capabilities. Balfour Beatty’s

capabilities and credentials, including its experiences

in civil nuclear construction, are well matched

to these requirements and in 2024 the Group

was selected by Rolls‑Royce as a construction

partner for its Ministry of Defence and

AUKUSexpansion.

@ UK transport: Investment in the UK transport

network is an important component of the

Government’s growth plans and is essential to

address ageing infrastructure, net zero targets

and domestic and international connectivity.

Given Balfour Beatty’s capabilities and market

share in the construction and maintenance of

road and rail, and its experience in delivering

major airport projects, the Group is well

positioned to capitalise on transport opportunities

when they arise, with growth expected in the

medium term.

In the shorter term, PFO growth across 2025 and

2026 in Balfour Beatty’s Construction Services

division is expected to be weighted towards

further margin improvement, rather than higher

volumes. Growth in the Support Services division

is expected to be largely driven by the expansion

of work in the power transmission and distribution

sector, which is not reliant on Government funding

or the ongoing comprehensive spending review.

Capability is key

The combination of a strong order book and broad

market opportunities is supportive for Balfour

Beatty’s growth aspirations, but as demand rises,

challenges surrounding capability and workforce

naturally rise too. As such, attracting and recruiting

new talent and retaining its existing experts are

increasingly important areas of focus and investment

for the Group, as it looks to closely match the

rising trajectory of work with a growing, and

appropriately skilled, workforce.

The annual employee engagement survey is an

essential tool for the Group to assess its own

performance and the progress made in the year.

In 2024, the survey results were particularly

strong, with overall employee engagement at

84% (2023: 81%), which is 11 percentage points

above the industry average. This is the seventh

successive year of improvement in Balfour

Beatty’s employee engagement scores.

Balfour Beatty’s people strategy focuses on the

four strategic pillars of Attract, Retain, Grow and

Thrive. To attract new talent at all levels of experience

the Group leverages its inclusive culture, the breadth

of its capabilities and its portfolio of nationally

critical infrastructure projects as a powerful part of

its employer proposition. In 2024, this contributed

to an increase in new starters in the UK, including

over 500 in the Power Transmission and Distribution

business alone. To retain its talent, Balfour Beatty

focuses on providing an inclusive environment

where its people feel valued and can be productive,

and progress was made in the year with the

Group’s voluntary attrition rates in the UK

improving to 10% (2023: 12%). This supportive

culture also offers employees the opportunity

todevelop their skills and competencies, while

building their careers, with the Group’s focus on

employee wellbeing supporting them to thrive.

Atyear end, 7.3% of the UK workforce were

apprentices, graduates and sponsored students

in‘earn and learn’ positions, exceeding both

The5% Club’s base target and overall average.

Strong progress in pursuit

ofZeroHarm

Health, safety and wellbeing (HS&W) continues

tobe the top priority for Balfour Beatty. Given

thenature of the work undertaken by the Group,

Balfour Beatty has a duty of care to all of those

working on its projects and the public to deliver

anindustry‑leading HS&W programme, which is

present on site and reinforced each day. In 2024,

the Group’s key metrics, which exclude international

joint ventures, improved further and achieved

record levels, with the Lost Time Incident

Ratereducing from 0.11 to 0.09, the three‑day

Lost Time Injury Rate falling from 0.08 to 0.07

andobservations increasing to over 470,000

(2023:400,000), due in part to the US business

almost doubling its number of observations

raisedthroughout the year.

The Group remains determined to keep raising

the bar and taking the next step on the journey

toZero Harm, with further utilisation of technology

a key enabler to this. Balfour Beatty’s introduction

of digital permits and checklists, while enabling AI

solutions, has contributed to the Group leading

the industry in safety performance, while improving

productivity and assurance. In 2024, the roll out of

human form recognition cameras continued at

pace. These award‑winning multi‑camera systems,

installed on mobile plant, detect the human form

and proactively communicate this detection visually

and audibly to the plant operator. Insights from

the data collected, combined with advancements

in AI, will allow for teams to plan work more safely

and effectively in the future. AI is also being used

to more thoroughly analyse the vast amount of

safety data collected across Balfour Beatty, which

will allow the Group to be more predictive in the

identification of safety trends and events.

Launch of evolved

SustainabilityStrategy

In June, Balfour Beatty launched its evolved

Sustainability Strategy, extending its focus to six

areas which encompass climate change, nature

positive, resource efficiency, supply chain integrity,

community engagement and employee diversity,

equity, and inclusion. As part of the evolved strategy,

the Company has brought forward its UK based

target to create £3 billion of social value by 2025

(previously 2030) as well as initiating new net zero

targets as its understanding of the scale of the

challenge has evolved. Following a process to

stress test its targets with the Science Based

Targets initiative (SBTi), the Group has revised its

net zero target for Scope 1 and 2 emissions to

2045, and Scope 3 to 2050, both originally set for

2040. The targets, which are both stretching and

realistic, have been validated by the SBTi and are

underpinned by an industry‑leading, fully

transparent UK carbon reduction plan.

13Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

In 2024, the Group delivered £991 million

(2023:£936 million) of social value, including

spend with local suppliers and local businesses,

and volunteering. The Group also achieved a small

decrease in absolute carbon emissions and a 13%

intensity reduction in Scope 1 and 2 greenhouse

gas (GHG) emissions.

Increased dividends and share

buybacks in 2025

The Group’s capital allocation framework has been

in place since 2021, facilitating the delivery of

attractive shareholder returns, while ensuring the

appropriate balance between investment in the

business, and a strong capital position. Given the

Group’s encouraging position, including its large

order book, strong balance sheet and the depth of

opportunities in its chosen markets, Balfour Beatty

is confident of continuing to deliver significant

future shareholder returns. As such, the Board is

today recommending a final dividend of 8.7

penceper share (2023: 8.0 pence), giving a total

recommended dividend for the year of 12.5 pence

per share (2023: 11.5 pence). Additionally, the

Company intends to repurchase £125 million of

shares during the 2025 phase of its multi‑year

share buyback programme, bringing the cumulative

return to shareholders since the introduction in

2021 of the multi‑year capital allocation framework

to over c. £940 million.

The total cash return to shareholders in 2025

(including the final 2024 dividend and 2025

interim dividend) is therefore expected to

bec.£188 million (2024: £161 million).

Outlook

The Board expects an increase in PFO from its

earnings‑based businesses in 2025, with further

growth in 2026.

Infrastructure Investments is expected to

continue to deliver attractive end‑to‑end returns

from its recurring income, by divesting assets and

making new investments in line with the Group’s

capital allocation framework. For 2025, gains on

investment disposals are expected in the range

of£20 ‑£30 million.

The Board expects net finance income of around

£25 million for 2025 and for the effective tax rates

in each of the three geographies to remain close

to statutory rates, albeit with cash tax payments

in the UK remaining below statutory levels in the

medium term as losses are utilised. Average net

cash in 2025 is expected to be roughly £800 million,

with capital expenditure between £35 and £40 million

and working capital remaining broadly flat.

The Group’s long‑term outlook remains positive,

with the growth forecast in 2025 and 2026 being

driven by strong visibility from its high‑quality

order book, alongside the further opportunities in

the energy, transport and defence sectors in the

UK and the Group’s chosen buildings sectors in

the US. This gives the Board confidence in Balfour

Beatty’s continued ability to deliver profitable

managed growth and sustainable cash generation,

and in turn significant ongoing shareholder returns.

Leo Quinn

Group Chief Executive

11 March 2025

The Diamond Award

This category celebrated individuals who have dedicated

manyyears to Balfour Beatty or the wider industry.

READ MORE ABOUT OUR ICON

AWARDS EVENT ON p74

Above: Award presentation photo. (Left to right) Paul Raby, Group Human

Resources Director, Kennedy Cheung, Director – Gammon, and Leo Quinn,

GroupChiefExecutive.

Winner: Kevin Webber

Commercial Services Manager,

Major Projects and Highways

Kevin joined the Company in 1988

asa Trainee Quantity Surveyor. Since

then he’s helped deliver flagship

infrastructure projects and created

anindustry‑leading upskilling

programme for the commercial

profession – the go‑to person to

support and guide our teams.

Winner: Kennedy Cheung

Director, Gammon

Kennedy joined as a Graduate Civil

Engineer in 1978. Known for his

innovative project management and

his leadership in the industry, his

reputation for groundbreaking

advancements has seen him

recognised by the ‘Hong Kong

Engineering Wonders of the

21stCentury’ awards.

Above: Award presentation photo. (Left to right) Paul Raby, Group Human

Resources Director, Kevin Webber, Commercial Services Manager – Major

Projects and Highways, and Leo Quinn, Group Chief Executive.

1414

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

UK transport

The UK transport sector is expected to deliver significant growth as demand increases

forinfrastructure upgrades, sustainable transport solutions, and ongoing asset maintenance

of ageing networks. Balfour Beatty is a trusted partner in advancing the UK’s transport

network with extensive experience in delivering major UK transport projects, ongoing

maintenance contracts, and infrastructure management. As a result, Balfour Beatty is

wellpositioned to capitalise on opportunities to deliver new assets andrefurbish existing

transport infrastructure, help cities shift towards low‑carbon transport networks, and

provide essential maintenance services, which are crucial for the long‑term performance

ofroads, railways, airports, and public spaces.

£234bn

TRANSPORT SPENDING IN THE UK’S NATIONAL

INFRASTRUCTURE PIPELINE (2023/24-2032/33)

2024 momentum

@ Awarded major road contract, A9 dualling in Scotland

@ Early Contractor Involvement (ECI) activities atLowerThamesCrossing

@ Delivering highways maintenance contracts withBuckinghamshire,

East Sussex and LincolnshireCountyCouncils

Well positioned

ingrowth markets

Capitalising on high-growth markets where theGroup has the

capabilities and aproven track record to secure newopportunities.

UK energy transition andsecurity

Balfour Beatty has been at the forefront of delivering some of the most complex

energy schemes in the UK. The UK energy transition offers immense growth

opportunities underpinned by the UK Government’s commitment to make Britain a

‘clean energy superpower’, with £100 billion in spending planned over the next five

years. Capital investment in energy infrastructure is expected to surge over the next

three decades tosupport the transition to renewable‑powered, electrified systems.

Flagship initiatives such as Scottish and Southern Electricity Networks Accelerated

Strategic Transmission Investment (ASTI) framework and the Sizewell C nuclear power

station, demonstrate the scale of infrastructure required tomodernise the grid and

support low‑carbon energy generation, whilst the £22 billion commitment to carbon

capture and storage projects underscores the UK Government’s focus on the sector.

£19bn

AVERAGE ANNUALPOWER GENERATION AND

GRIDCAPITAL INVESTMENT (2022–2030)

Source: UK Energy Transition Outlook 2024, DNV; Analysis

oftheNational Infrastructure and Construction Pipeline, 2024

2024 momentum

@ Awarded first phase of the Skye 132kV reinforcement project for Scottish

andSouthern Electricity Networks (SSEN) Transmission

@ Delivering Early Contractor Involvement (ECI) activities for Sizewell C with

fundingcommitted until April 2026

@ Selected as the preferred construction partner for Net Zero Teesside

MARKET REVIEW

Image: DWLArchitects.

15Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

UK defence and security

The UK defence and security sector offers significant growth opportunities, driven

byongoing Government commitments to strengthen national security and modernise

defence infrastructure. As geopolitical tensions continue to rise, the UK Government

istargeting 2.5% defence spending as a share of GDP in 2030 to maintain its nuclear

deterrent and expand, modernise and maintain its existing estate. The sector’s critical

nature ensures long‑term funding and stability, with increasing investment in military

bases, training facilities and secure installations. Balfour Beatty has worked on a range

of defence facilities and has expertise in delivering large‑scale, high‑value projects in

highly regulated and secure environments which means it is well positioned to support

this critical work.

US buildings

The US buildings sector presents a compelling growth opportunity driven by strong

demand for commercial, industrial and institutional facilities. Economic expansion,

population growth, urban development and the modernisation of ageing government

building stock continue to fuel the need for office spaces, retail and hospitality

centres, warehouses, manufacturing plants and healthcare, educational and

government buildings. This sustained demand, combined with the scale and

diversity of projects, makes the US buildings market a key opportunity for seeking

long‑term growth. Balfour Beatty’s track record across a wide range of sectors

andlarge‑scale projects, along with its established and expanding footprint,

provides a robust foundation to deliver challenging, high‑value buildings projects.

US$428bn

2029 BUILDING SPENDING IN OUR CHOSEN STATES

2.5% GDP

UK’S 2030 DEFENCE SPENDING TARGET

Source: Defending Britain: leading in a more dangerous world,

HM Government; Dodge Construction Central

2024 momentum

@ Selected by Rolls‑Royce Submarines Limited as the

construction partner for their major expansion in Derby

@ Long track record of defence delivery; currently working

on 10 military‑related sites

2024 momentum

@ Notable awards include Maryland Avenue office to residential

conversion in Washington DC, Durham public schools in North Carolina,

Georgia State Capitol and Legislative Office Building, Little Elm High

School in Texas, Sacramento International Airport Pedestrian Walkway

in California, and several tenant improvement projects in the Northwest

KEY

Skye 132kV reinforcement

project, Scotland.

A9 Dualling Contract, Scotland

RAF Marham, Norfolk

Sacramento International

Airport Pedestrian Walkway

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

1616

Market trends

The UK Construction and Support Services

businesses capabilities and track record means

itis well positioned to support the delivery of

critical infrastructure necessary for the UK’s

long‑term priorities.

Expanding energy infrastructure

The UK’s target to achieving net zero emissions

by2050 necessitates a significant increase in

low‑carbon energy projects. The UK Government

iscommitted to supporting multi‑billion pound

projects in offshore wind, conventional nuclear,

small modular reactors and carbon capture, utilisation,

and storage (CCUS). Whilst the establishment of

Great British Energy, and continued funding for

Sizewell C, further underpins the UK Government’s

commitment to transition the country into a clean

energy superpower.

UK Construction

andSupport Services

Balfour Beatty awarded first phase of the Skye

Reinforcement Project for SSEN Transmission

Balfour Beatty has been awarded the

firstphaseof the £690 million Skye 132kV

reinforcement project for Scottish and Southern

Electricity Network (SSEN) Transmission.

Oncompletion, the project will ensure the

supply of secure, clean electricity to thousands

of homes and businesses across the Hebrides

and West Highlands.

The detailed design and development phase,

valued at £32 million, will see Balfour Beatty

provide technical solutions for a new 137km,

132kV double circuit overhead line between the

existing Fort Augustus and Edinbane substations,

as well as new sealing end compounds to link

the overhead line to the underground electricity

network, ultimately joining the Isle of Skye and

Western Isles to mainland Scotland.

Due to the expansive and unique terrain,

Balfour Beatty will engage its in‑house

Environmental and Sustainability team to

consider ecological and environmental

requirements, from peat management to

wildlife translocation, contributing to SSEN

Transmission’s biodiversity net gain targets.

In addition, the Company will work closely

andcollaboratively with local communities to

minimise disruption wherever possible, including

introducing a ‘Skye workers village’ to provide

the construction workforce with dedicated

siteaccommodation.

This latest award follows the Company’s

appointment to SSEN Transmission’s Accelerated

Strategic Transmission Investment (ASTI) framework

in August 2023 for which it commenced

detailed development and design in early 2024.

Main construction work for the Isle of Skye

Reinforcement Project is expected to begin in

early 2025. At project peak, Balfour Beatty will

employ 650 people including 32 apprenticeship

and graduate positions as part of the

Company’s commitment to The 5% Club.

Balfour Beatty is the UK’s leading construction and infrastructure

provider, collaborating with its customers to develop cutting-edge

solutions to meet the challenges of tomorrow.

UK CONSTRUCTION SPENDING FORECAST TO

GROW 5% PER YEAR

Construction spending, £bn, nominal

2024

432

544

2029

Infrastructure

Non-residential buildings

Residential buildings

Source: IHS Markit

+5%/yr

MARKET REVIEW CONTINUED

17Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Investment to modernise

theUK’selectricity grid

Facilitating the integration of renewable energy

sources necessitates expansion and upgrading of

the current electricity grid, with an estimated

£60billion of investment in network infrastructure

required by 2030. This includes projects such

asSSEN’s Accelerated Strategic Transmission

Investment (ASTI) framework, SP Energy Networks’

Strategic Agreement for Transmission Overhead

Line Works and National Grid’s RIIO‑T2 projects,

which bring to market a strong pipeline of

opportunities for Balfour Beatty.

Enhancing and future-proofing

theStrategic Road Network

The Government’s Road Investment Strategy 3

(RIS3, 2025–30) is expected to prioritise maintaining

and improving the Strategic Road Network (SRN),

reducing congestion, advancing environmental

goals and integrating modern technologies. While

the focus may shift toward smaller maintenance

projects, deferred RIS2 schemes, such as the

Lower Thames Crossing, ensure continued

opportunities for major infrastructure

developments as well.

Balfour Beatty selected by Rolls-Royce as construction

partner for MOD and AUKUS expansion work in Derby

In 2024, Balfour Beatty was selected by

Rolls‑Royce as its non‑fissile construction

partner to help deliver the expansion of their

site in Raynesway, Derby.

Rolls‑Royce is currently supporting the existing

Astute and Dreadnought boat build programmes

through the delivery of reactor plant and associated

components. Additionally, it provides frontline

support across the world for reactor plant

equipment from its Operations Centre in

Derbyand supports the submarines when in

the Barrow‑in‑Furness shipyard and the naval

bases at Devonport and Faslane.

Rolls‑Royce will be doubling thesize of their

Raynesway site, after a needto meet the

growth in demand from theRoyal Navy and

following last year’s AUKUS announcement.

The increase in demand will see Balfour Beatty

build new manufacturing and office facilities as

well as the adjoining site infrastructure.

The increase in work from the Ministry of

Defence (MOD) will create 1,170 skilled roles

atRolls‑Royce, across a range of disciplines

including manufacturing and engineering.

WSP, the leading multi‑disciplinary professional

services consultancy, has been selected as

Rolls‑Royce’s non‑fissile design partner. Balfour

Beatty andWSP will work closely over the next

decadeto bring the Raynesway site

expansionplans to life.

UK energy transition and security

UK transport

UK defence and security

US buildings

Balfour Beatty’s growth markets Rising demand for essential

localroad maintenance

The UK faces a local road maintenance backlog

ofbetween £7.6 billion and £15.6 billion. Despite

central funding allocations, such as the pothole

fund and highways maintenance block, and the

£8.3 billion earmarked for maintenance allocated

under the Network North Plan for the 2023/24 to

2033/34 period, local authorities still report funding

gaps amid rising maintenance cost and increasing

repair needs. This presents an opportunity to

deliver cost‑effective maintenance solutions and

technology‑driven infrastructure management.

Sustained rail investment

Under Control Period 7 (2024–29), £45 billion

isallocated to Network Rail for infrastructure

upgrades, including track renewals, bridge

replacements, station refurbishments, and

electrification. HS2 continues with Government

funding for phase one and tunnelling to Central

London. The Government is investing in

electrification to phase out diesel‑only trains by

2040, with projects like the TransPennine route

upgrade and Midland Main Line electrification

involving major work, including overhead line

installation and signalling upgrades.

Prioritised defence

andsecurityspending

Amid rising geopolitical tensions, the Government

has reaffirmed its commitment to maintaining a

nuclear deterrent and advancing the development

of a new class of submarine, the SSN‑AUKUS,

necessitating substantial infrastructure investment.

Additionally, there is a clear acknowledgement of

the need to modernise other defence infrastructure

to strengthen the UK’s military capabilities, which

is driving a significant pipeline of opportunities.

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

1818

Market trends

Construction spending in our target states is

projected to surpass the national average,

drivinggrowth for our business amid favourable

broader trends.

Demographics spur demand

foreducation facilities

School districts continue to focus on building and

renovating K‑12 facilities to tackle overcrowding

and ageing infrastructure, while higher education

prioritises student accommodation and teaching

facilities. In Balfour Beatty’s chosen states,

education construction is expected to reach

US$65 billion by 2029.

Steady pipeline of government

building modernisation projects

A steady pipeline of projects is expected to drive

the modernisation, repair, and renovation of

ageing, underfunded government buildings stock

to meet current needs. For example, the General

Accountability Office (GAO) reports that 903

federal buildings require repairs and alterations,

with 44 needing urgent attention. Consequently,

the government buildings segment in Balfour

Beatty’s target states is projected to grow at

11%per annum from 2024 to 2029.

Our chosen states

US Construction

Balfour Beatty builds the structures and infrastructure that enhance

how people live, work, learn and play in specific, high-growth regions.

CONSTRUCTION SPENDING IN OUR

CHOSEN STATES FORECAST TO GROW 7%

PER YEAR

Construction spending, US$bn, nominal

2024

612

861

2029

Infrastructure

Non-residential buildings

Residential buildings

Source: Dodge Construction Central

+7%/yr

Why these areas

@ Strong growth in the Mid‑Atlantic

andCarolinas

@ Diversification potential in the Southeast

@ Demographic‑driven projects in Texas

@ Leading education builder in California

@ Prominent data centre presence in

theNorthwest

Georgia Legislative

OfficeBuilding

Working in partnership withGarbutt Construction

and SG Contracting, Balfour Beatty began the

construction on the Georgia Legislative Office

Building in Atlanta.

The 350,000 square‑foot facility is designed

to meet the needs of the General Assembly.

The eight‑storey building will house all

legislative offices and supporting functions,

including office suites for legislators, meeting

and committee rooms, and dedicated areas

for the public, press and lobbyists.

This is one of three significant initiatives

currently underway by the team for the

Georgia State Financing and Investment

Commission, including major renovations

tothe Capitol building. These projects

demonstrate the team’s focus on delivering

impactful solutions for Georgia’s evolving

infrastructure needs.

“We are truly honoured to be part of this

transformative project for the State of

Georgia. It’s an incredible opportunity for our

team to contribute to a landmark development

that will serve as a cornerstone for the state’s

legislative operations for generations to come,”

says Scott Skidelsky, President of the

Southeast geography.

MARKET REVIEW CONTINUED

Photo credit: rendering courtesy of Nelson Worldwide.

19Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Resilient hospitality and

leisurepipeline

The US hotel construction pipeline continues to

expand, with projects up 11% and rooms up 6%

year‑on‑year. Dallas, Atlanta, Phoenix, and Austin

rank among the top five US cities for pipeline

activity, as the sector is set to reach US$14 billion

in2029 in Balfour Beatty’s chosen states. Despite

low consumer sentiment, strong consumer

spending fuels investment in convention centres,

stadiums, arenas, and theme parks, with

public‑private partnerships and infrastructure

expansion driving the most promising projects.

Office recovery and booming

datacentre demand

Office construction spending in Balfour Beatty’s

target states is expected to reach US$40 billion

by2029, driven by demand for hybrid workspaces,

rising return‑to‑office trends, and reversal in

extremely high vacancy rates. Data centre

construction will continue to grow at pace, with

Amazon, Meta, Google, and Microsoft set to

invest US$178 billion in 2025, fuelled by surging

cloud adoption and AI infrastructure demand.

Sacramento International Airport’s new pedestrian walkway

In August 2024, Balfour Beatty began construction

activities to deliver the Sacramento International

Airport Pedestrian Walkway project. The Pedestrian

Walkway project is part of SMForward, a $1.3 billion

capital improvement programme to expand the

Sacramento International Airport (SMF) to

accommodate future anticipated demand.

Oncecomplete, the new walkway will support

the airport’s traveller growth well into the future

by connecting SMF’s Terminal B to Concourse B

via a sky bridge, providing passengers with the

ability to walk or ride the airport’s existing

automated people mover.

The project team will deliver a quarter‑mile

walkway featuring 1,800 tonnes of steel, 3,425

cubic yards of concrete, four moving walkways,

four escalators and three elevators along a

panoramic corridor.

As the first undertaking of the airport’s expansion

programme, the Pedestrian Walkway project is

the initial step in leveraging transformative

partnerships and creative financing solutions

todeliver the future of SMF. Throughout the

programme’s projected duration, 800 jobs will

be created in the first four years alone, contributing

to economic growth opportunities for local

businesses and further development in

thecommunity.

Balfour Beatty has more than 75 years of

extensive aviation experience in delivering

complex and recognisable airport projects

across the US. The Company specialises in

building landside and airside facilities and

hasworked with clients including Los Angeles

World Airports, Raleigh‑Durham International

Airport, Jacksonville International Airport and

Dallas‑Fort Worth International Airport.

The project team is leveraging lean construction

methods, innovation and technology, including

live estimating, Building Information Modelling,

OpenSpace and offsite prefabrication to deliver

SMF’s Pedestrian Walkway. The project is

scheduled for completion in 2026.

Balfour Beatty is truly honoured to

bethe selected building partner on

the pedestrian walkway. Sacramento

International Airport is our local

airport, so we take great pride in

bringing this project in for a nice

smooth landing and turning it over

tothe community.”

Kyle Frandsen

Vice President, Sacramento,

Balfour Beatty US Buildings

Stable demand for

multifamilyhousing

Higher financing and maintenance costs and slow

rental growth has depressed multifamily housing

activity in recent years, but a combination of

continued job growth, elevated mortgage rates,

and rising house prices, continues to sustain

demand. Such strong demand dynamics in

BalfourBeatty’s chosen states is expected to

seemultifamily activity outperform the national

outlook, with 16% annual construction spending

growth projected from 2024 to 2029.

Economic growth maintains

ongoing transport investment

Continued US economic expansion and a return

topre‑pandemic travel patterns are expected to

sustain demand for new and upgraded transport

infrastructure. Investment in road and airport

construction will focus on expanding capacity

andmodernising facilities to support steadily

increasing traffic and passenger volumes. This

rising demand is driving major projects, including

the I‑35 Capital Express Central project and the

SMForward initiative at Sacramento International

Airport, which aims to expand the airport in

anticipation of future passenger growth.

UK Energy transition and security

UK transport

UK defence and security

US buildings

Balfour Beatty’s growth markets

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

2020

Gammon

For over 65 years,Gammon, Balfour Beatty’s joint venture with Jardine Matheson,

has forged a reputation for delivering high-quality projects throughout Asia.

HONG KONG CONSTRUCTION SPENDING FORECAST TO GROW 5% PER ANNUM

Construction spending, HK$bn, nominal

Hong Kong

Northern Metropolis

The HK$224 million Northern Metropolis project aims to turn 30,000

hectares of land into a housing and economic powerhouse, with key

projects including the development of the San Tin Technopole, a new

government building in Kwu Tung North, the new Huanggang Port

building and the North District hospital expansion.

Transport infrastructure extension

The Major Transport Infrastructure Development Blueprint lays the

foundation for extensive expansion of Hong Kong’s existing transportation

network, with the railway network set to increase from 270km to nearly

390km and major roads from 260km to nearly 380km.

Enhanced aviation investment

The Airport Authority Hong Kong expanded its Airport City blueprint,

more than doubling the scale of development. New projects include an

ecosystem for the art industry, AsiaWorld‑Expo Phase 2 development,

amarina with ancillary facilities and a fresh food market.

SINGAPORE CONSTRUCTION SPENDING FORECAST TO GROW 4% PER ANNUM

Construction spending, HK$bn, nominal

Singapore

Rail and aviation expansion

Phase 2 of the Cross Island Line will see the construction of six stations

from Turf City to Jurong Lake District. The Changi East airport development,

spanning 1,080 hectares, includes the new Terminal 5 project, a three‑runway

system, tunnel and underground systems construction and the Changi

East Industrial Zone.

Green Data Centre Roadmap

Singapore’s Infocomm Media Development Authority (IMDA) has

launched a Green Data Centre (DC) Roadmap in May 2024 that charts

asustainable pathway for the continued growth of DCs in Singapore.

Theroadmap is aimed to support the country’s AI and compute

developments in the digital economy.

Hospitality development

The Resorts World Sentosa expansion encompasses the construction of

two new hotels, enlargement of the Singapore Oceanarium, the addition

of Universal Studio’s Minion Land, three levels of retail and dining called

The Forum and renovations of three existing hotels.

2024

240

302

2029

+5%/yr

2024

352

435

2029

+4%/yr

MARKET REVIEW CONTINUED

Gammon enables

three-runway system

launch atHong Kong

InternationalAirport

The official inauguration of the three‑runway

system at Hong Kong International Airport in

November 2024 further strengthens Hong

Kong’s position as a major international

aviation hub.

Gammon has contributed significantly to

thiskey milestone through delivering the key

tunnel structure of the Automated People

Mover, Baggage Handling System and

Terminal 2 Expansion Works projects, including

the tunnel beneath the runway and taxiways,

essential infrastructure for air traffic control,

and viaduct and road systems.

It also completed the façade and roof works

of the Terminal 2 building, all integral parts

ofthe Airport Authority Hong Kong’s

MasterProgramme.

Market trends

Gammon operates within markets that areprojected to continue to grow over the nextdecade, whilst continuing to explore newopportunities.

Infrastructure

Non-residential buildings

Residential buildings

Infrastructure

Non-residential buildings

Residential buildings

Source: IHS MarkitSource: IHS Markit

21Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

SHARE OF

PORTFOLIO VALUE

UK roads 13%

UK student

accommodation 11 %

UK healthcare 11 %

UK energy transition 5%

UK other 2%

US military housing 48%

US student

accommodation 5%

US residential 5%

New investments

@ 296‑unit multifamily housing project in

New Jersey (Philadelphia metropolitan

statistical area)

@ 564‑bed purpose‑built student housing

asset in Denton, Texas

Disposals

@ Sell‑down of 2,540 University of Texas

(Dallas) student housing project to a

5%shareholding

Student accommodation

@ Construction underway for student housing

projects at The University of Sussex in

the UK and William & Mary in the US

@ Development contract executed for new

1,070‑bed student accommodation at

University of Texas (Austin)

New military homes

@ New Government funding at Fort

Leonard Wood and Fort Eisenhower

tbuild new houses

@ Potential ground lease extension at Fort

Carson to fund faster redevelopment

Energy upgrades

@ Delivered green energy generation

andefficiency solutions to multiple

militarybases

First UK EV installations

@ Urban Fox electric vehicle chargers

installed in Dundee and across the

Balfour Beatty estate

US P3

@ Los Angeles International Airport, Automated

People Mover construction progress

Financing critical infrastructure

@ M25 design, build, finance and

operatecontract

Infrastructure Investments

Balfour Beatty Investments is recognised as a leader in public-private

partnerships and other developments in the UK and US.

An actively managed portfolio investing inthegrowth

and enhancement of public andprivateinfrastructure.

Investment focus

Demand for student accommodation

remains strongforboth

conventionaland off‑campus

studenthousing projects.

As the UK’s energy mix transitions

tomore renewable sources, the

Group continues to evaluate these

changes for both investment and

construction opportunities.

Growth in EV adoption

providesopportunities for the

Groupin the residential charger

deployment market.

The Group continues to develop

andmaintain a large network of

privatised military housing facilities

across the US.

STUDENT ACCOMMODATION NASCENT ENERGY TRANSITIONEV CHARGING INFRASTRUCTURE

MILITARY HOUSING

£1.3bn*

* Directors’ valuation as at 31 December 2024.

University of Sussex,

West Slope Residences.

Fort Bliss Military Housing,

Texas.

Urban Fox UEone retractable

EV charger.

US multifamily accommodation

continues to come to market,

providing opportunity to

investintheregeneration of

theseproperties.

MULTIFAMILY HOUSING

Landings at Lake Gray,

Jacksonville.

Humber Gateway

OFTO, UK.

Legislation allowing public‑private

partnership (P3) projects has passed

in 42 states, creating opportunities

incourthouse, school, government

building and transport projects.

PUBLIC-PRIVATE PARTNERSHIP PROJECTS

Automated People Mover, Los Angeles

International Airport.

2222

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

Digital and AI

advancements

By capitalising on our investment in a central data

lake – a secure repository containing billions of

data points from across Balfour Beatty – we are

swiftly integrating new AI and digital technologies.

This is revolutionising how we manage and deliver

projects. We’re also empowering our workforce

with personal AI assistants to streamline repetitive

tasks, allowing them to focus on more complex,

high‑value work.

Today, over 90% of our UK projects and contracts

leverage our digital toolkit to enhance efficiency

and compliance. Tasks such as progressive

assurance, checklists and permits are now digital,

supporting our Zero Harm and Right First Time

focus by capturing safety and quality observations

through our Observations App. In 2024, over

470,000 observations and examples of good

practice were submitted across the Group –

anincrease of 70,000 compared to the previous

year. These observations guide interventions that

ensure safety and meet quality standards for

ourcustomers.

We have also continued to roll out new hardware

and technology. Notably, we’ve mandated the

useof human form recognition cameras on

various heavy plant machinery in the UK,

includingexcavators, dumpers, and wheeled

loaders. These cameras alert operators to nearby

personnel, reducing the risk of accidents. Incident

data is captured on a central dashboard, enabling

us totrack trends and address safety concerns

moreeffectively.

470,000

OBSERVATIONS

RAISEDIN 2024

90%

OF UK PROJECTS

USE DIGITAL TOOLS

ABOVE

Jay Saddington, Survey and Product

Communications Support with Balfour

Beatty’s robotic dog ‘Spot’ which documents

construction progress using autonomous

3Ddata capture on site.

Our digital-first approach is improving safety,

productivity and assurance.

23Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Digital Dynamo

Award

This category celebrated an individual

who embraces technology to redefine

howwe do business.

Winner: George McArthur

Concrete Technical Manager, HS2 Major Projects

George has demonstrated exceptional leadership and

innovation in revolutionising fresh concrete quality control

through the implementation of in‑transit digital monitoring.

His initiative has not only eliminated the need for manual

testing at concrete pours, but also significantly reduced

costsand improved efficiency across a large‑scale project.

Above: Award presentation photo. (Left to right) Jon Ozanne, Chief

Information Officer, George McArthur, Concrete Technical Manager

– HS2 Major Projects, and Clare Barclay – Microsoft CEO, UK.

ABOVE

At Balfour Beatty, we use drones to provide real‑time data

and high‑resolution aerial imagery for site inspections,

surveying and progress tracking.

READ MORE ABOUT OUR ICON

AWARDS EVENT ON p74

AI collaboration for

enhancedoutcomes

Our in‑house AI assistant, StoaOne, is now

supporting 1,500 UK‑based employees by

automating mundane tasks. This allows our

experts to dedicate more time to their core work.

For example, on the Midlands Metropolitan

University Hospital project, StoaOne categorised

and prioritised over tens of thousands of data

points, playing a crucial role in the successful

handover ofthe 770‑bed hospital.

In addition to developing our proprietary AI tools,

we are adopting market‑leading solutions. In our

US Balfour Beatty Communities business,

AI‑powered software now generates accurate

1Dand 3D as‑built drawings from photographs,

streamlining project closeout. In the UK, AI is

being used to assess site supervisors’ competencies

before they join our teams, while our work winning

teams use AI tools to enhance processes and

improve bid submissions.

To accelerate our AI adoption, in November 2024,

we hosted ‘The Big AI Challenge’ hackathon with

70 experts from Balfour Beatty and Microsoft.

Theevent explored how we could leverage data

and AI to bring six innovative ideas, submitted

through our My Contribution programme, to life.

The solutions developed during the event include

automating the generation of inspection and test

plans to prevent costly rework and clustering

highways repairs to improve productivity by

reducing the time spent travelling between

eachrepair, are now being refined for

implementation in 2025.

FIND OUT MORE ABOUT THE

BIGAICHALLENGE ON p78

Our recent ‘Big AI

Challenge’ brought

together some of the

greatest minds from

across Balfour Beatty

andMicrosoft to

generatesolutions to

some of our biggest

business opportunities.”

Jon Ozanne,

Chief Information Officer, Balfour Beatty

2424

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

OUR STRATEGY: BUILD TO LAST

Delivering Build to Last

Build to Last is Balfour Beatty’s strategy for continuous

improvement. It is the day-to-day guide we use to

uphold our purpose and underpins everything we do.

Our strategy

Our strategy, Build to Last, is fundamental to how we are

building a market‑leading Balfour Beatty for the next 100 years.

Itis our platform for sustainable growth, productivity, inclusive

talent – all ensuring the best capability to deliver on our

promisesand our enduring commitment to Zero Harm.

Our KPIs

Our Build to Last strategy is measured against our five values–

Lean, Expert, Trusted, Safe and Sustainable.

We create value for our customers

and drive continuous improvement

We are thoughtful and agile, continuously challenging

ourways of working to improve health and safety and

productivity, eliminate waste and enhance quality to make

usmorecompetitive.

NET CASH £m

excluding non‑recourse borrowings

andlease liabilities

2024:

£943m

UNDERLYING PROFIT/(LOSS)

FROMCONTINUING

OPERATIONS£m

2024:

£248m

p86

Our highly skilled colleagues

andpartnersset us apart

Our people are leaders. We’re the experts of today and inspire

the leaders of tomorrow. We invest in our colleagues, building

their skills and knowledge, to develop a passionate, world‑class

workforce drawn fromallparts of our society.

EMPLOYEE ENGAGEMENT

INDEX%

2024:

84%

p68

Lean Expert

More information

Find out how our strategy is supported bythe current

market on pages 14 to 21. Forthe risk appetite in the

context of the Company values seepage 92.

815

842

943

512

337

335

163

173

15 16

581

790

22 23 2419181716 20 21

279

228

248

221

205

196

197

(74)

23 24221918171615 20 21

25Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

We deliver on our promises

andwedothe right thing

We build trust every day by delivering on our promises,

always. We’re accountable for our decisions and work

withthe upmost integrity to ensure we’re making the

rightchoices.

CUSTOMER SATISFACTION

AVERAGE%

2024:

96%

p46

We make safetypersonal

Safety is our licence to operate. Nothing is more important

than the health, safety andwellbeing of ourcolleagues

andthe communities we serve. Weareunrelenting and

uncompromising in our commitmentto achieving Zero Harm.

LOST TIME INJURY RATE (LTIR)

excluding international joint ventures

2024:

0.09 LTIR

p40

We act responsibly to protect and

enhance ourplanet and society

We leave a positive legacy for the people we work with,

thecommunities we work in, and the world in which we

operate. We want toenhance our impact on the environment,

working with our supply chain partners, customers and

communities to ensure our choices are sustainable.

TOTAL SCOPE 1 AND 2 EMISSIONS

(tCO

e) 000s

2024:

144 tCO

e 000s

p48

Safe SustainableTrusted

0.11

0.09

145

144

0.15

0.19

0.16

0.18

0.24

0.16

0.14

147

138

131

155

191

196

122

124

23 24 2423 23 2422 22 2219 19 1918 18 1817 17 171615 1615 161520 20 2021 21 21

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

2626

STAKEHOLDER VALUE

Sharing the

value wecreate

In striving to achieve its purpose of Building New Futures, Balfour

Beatty touches the lives of millions of people around the world.

Working with multiple stakeholders across the industry and beyond,

the Group continues to innovate and lead the market through driving

change, shaping the debate and inspiring a new generation of talent

to be the change-makers of tomorrow.

About our stakeholders

From shareholders and employees to

customers, supply chain partners and the

communities we operate in, each stakeholder

group holds a vested interest in Balfour

Beatty’s activities, performance or success.

Their support, feedback and collaboration

are vital for driving business growth and

profitability but also for fostering trust and

sustainability and building a positive

lastinglegacy.

@ As part of the Group’s annual shareholder

engagement plan, CharlesAllen, Lord Allen of

Kensington, CBE, Non‑executive Group Chair

met with anumber of the top 10 shareholders.

In addition, management also saw international

shareholders with Group Chief Executive Leo

Quinn meeting investors in Hong Kong, and

Chief Financial Officer Phil Harrison meeting

investors in New York.

Creating value:

Balfour Beatty has established the strongest

balance sheet in its sector and from this position

of strength, continues to deliver on its multi‑year

capital allocation framework, announced in 2021.

This provides a balanced approach between the

investment needs of the business, regular

dividend payments and additional returns to

shareholders. Balfour Beatty intends to return

c.£188 million in 2025 through a combination of

dividends and share buybacks, which will bring

the cumulative return to shareholders since the

introduction in 2021 of the multi‑year capital

allocation framework to over £940 million.

Expanding our shareholder

engagement reach

Balfour Beatty’s 2024 half year results

and2023 full year results announcements

generated 2,000 virtual views, with the

announcements accessed over 25,000

times in 2024. Headlines from full and half

year results are shared in an engaging way

on our corporate social media channels and

from our Group Chief Executive, Leo Quinn’s

LinkedIn profile.

In 2024, Leo’s LinkedIn posts received

record engagement levels; in March 2024,

his post was seen by 33,000 people and

inAugust 2024, his post was seen by

255,732 people.

SCAN OR CLICK TO WATCH

LEO’SBEHIND THE SCENES VIDEO

ONBALFOUR BEATTY’S 2024

HALFYEAR RESULTS

MEETINGS HELD IN 2024

33,000

VIEWS OF LEO’S HALF YEAR RESULTS

LINKEDIN POST

Shareholders

Our shareholders, as owners of the

Company, are a critical stakeholder

for the Group.

2024 engagement examples:

@ Throughout 2024, the Company held 83 meetings

with shareholders and investors. TheGroup also

attended eight investor conferences during

2024, hosted by London‑based investment

banks, and further investor roadshows were

held in Jersey, Edinburgh, Boston and Montreal.

For details on how theBoard engages with

investors see pages128 and 131.

@ To keep shareholders up to date with Company

news including financial information, we share

regular updates via regulatory announcements,

webcasts and presentations.

27Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Customers

Collaborative and long-term mutually

beneficial relationships with our

customers are the foundation of

oursuccess.

2024 engagement examples:

@ In October 2024 and November 2024, we

hosted the first of our ministerial roundtables

with the Labour Government, focusing on

nuclear power with Nuclear Minister, Lord Hunt,

and offshore wind, with key speaker, Michael

Shanks MP, Parliamentary Under‑Secretary of

State for Energy and Net Zero. These roundtables

serve as a platform to address the challenges

hindering infrastructure delivery, bringing together

decision‑makers, key industry leaders, customers

and potential customers to shape the agenda

and reinforce Balfour Beatty’s role as a key player

in this space.

@ As an industry leader, we know that freely

sharing best practice is the best way to help

the industry develop and evolve. In 2024, we

continued with our ‘five‑minute reads’ focusing

on ‘fuelling the energy transition: tackling the

skills gap’. Balfour Beatty HR Director, Maxine

Wheldon, shared her views on how the industry

can tackle the skills gap to deliver vital infrastructure

that supports secure, affordable, decarbonised

energy by 2050.

@ As construction partner appointed by Rolls‑Royce

Submarines for their non‑fissile infrastructure

programme, we are working in collaboration

with Rolls‑Royce and the Design Partner WSP,

co‑located in a shared office, to jointly develop

the programme masterplan and project designs.

This early contractor involvement and collaboration

between partners is essential to overcome the

significant challenges associated with delivering

such a large complex programme of work

96%

CUSTOMER SATISFACTION SCORE

Employees

Talented and engaged employees committed to upholding our values

enableus to deliver on our Build to Last strategy ensuring we win, and

expertly deliver, the best and most exciting projects whilst continuing

tobuilda great place to work.

2024 engagement examples:

@ My Contribution (MyC) is our engagement

programme for employee‑led business change,

giving every colleague a voice and the empowerment

to take personal action to build a better company,

by sharing their ideas for improvement and

collaborating with colleagues to make them

happen. In 2024 colleagues from across the

UKand the US shared over 2,000 MyC ideas,

with those delivered generating an estimated

£3.2 million of cash, £3.2 million of cost savings,

53,800 hours of time saved, as well as 270

ideas delivered in the Better Place to Work

category that have helped us improve inclusivity,

health and wellbeing, safety, and create a more

sustainable business.

@ Live events and conferences form a key

approach for delivering impactful employee

engagement across the Group. In 2024, the

Group took a new approach to recognising and

engaging employees. On 25 September Balfour

Beatty held its inaugural Icon Awards at the

V&A Museum in London. Bringing together

almost 400 colleagues from across the UK,

USand Hong Kong, the evening celebrated the

very best of the Group, proving an endorsement

of the Group’s leading place in the industry, the

strength of the brand and the power of the culture.

@ In November, the Group took an innovative

approach to Strategic Business Unit (SBU)

conferences. With a series of back‑to‑back

leadership events at a single venue in Birmingham.

The aim was to deliver high‑impact and high‑quality

events, through a more efficient and sustainable

approach, drawing inspiration from the concept

of ‘modern methods of construction’. Over five

days, three events wereheld hosting a combined

681 delegates, presented by 96 speakers. This

new, lean approach provided a high‑impact,

lower‑cost, more effective way to update and

engage employees across the business.

@ In February, Charles Allen, Lord Allen of Kensington

CBE, Non‑executive Group Chair of Balfour Beatty,

spent time with the Co‑Chairs of the five UK

Affinity Networks, who work to make a positive

difference to the Company’s workplace processes,

and practices. The session afforded him the

chance to hear first hand why the Co‑Chairs

have stepped up to get involved, and some

examples of their efforts including the supply

ofsanitary products being mandated across all

offices and sites.

Creating value:

The key metric for our Expert value is employee

engagement. In 2024, our Group employee

engagement score was the highest since 2017,

rising for the seventh year in a row to 84%,

upfrom 81% in 2023 and 11% higher than

theindustry average.

ABOVE

Neil Dalton, Work Winning Director – Defence, Balfour

Beatty signingtheArmedForces Covenant with

Major General Andy Sturrock, Director of Strategy

and Plans, Defence Infrastructure Organisation.

FOR DETAILS ON HOW THE BOARD

ENGAGES WITH EMPLOYEES SEE

PAGES 127 TO 128

SCAN TO WATCH OUR VIDEO

ON THE RE-SIGNING OF THE

ARMED FORCES COVENANT

whilst maintaining safe operation of the existing

estate. Our collaborative approach and team

behaviours were key components of the

selection process that led to our appointment.

Creating value:

The key metric for our Trusted value is customer

satisfaction. In 2024, over 1,800 customer satisfaction

reviews were carried outwith the Group’s customer

satisfaction scorestanding at96%.

84%

EMPLOYEE ENGAGEMENT SCORE

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

2828

STAKEHOLDER VALUE CONTINUED

Supply chain and strategicpartners

The thousands of supply chain partners we work with across the

Group play an instrumental role in our success and in improving

and enhancing best practice across our industry.

ABOVE

The Founder’s Pledge graduation ceremony.

It’s fantastic to

celebrate the

achievements of

the12 apprentices

and the success of

the Founder’s Pledge.

Mentoring programmes

like this are vital to

help apprentices.”

The Rt Hon Baroness Jacqui Smith

Minister for Skills

98%

OF INVOICES PAID WITHIN

60DAYS(86%IN 2019)

2024 engagement examples:

@ In the UK, Leo Quinn, Group Chief Executive,

announced his Founder’s Pledge as part of

The5% Club’s 10‑year anniversary in 2023.

12apprentices from across the UK business

and its supply chain secured the coveted

Founder’s Pledge award. Leo personally gifted

£10,000 to support the chosen apprentices and

help address the troubling statistics that nearly

half of apprentices in the UK fail to complete

their training due to a lack of wellbeing and

financial support. The year‑long programme was

closed out in December 2024 with a graduation

ceremony hosted by Leo and the Rt Hon

Baroness Jacqui Smith, the Minister for Skills,

and the supply chain companies’ CEOs and

their mentees. Patrick Flannery, Managing

Director of Flannery Plant Hire, said: “It was

incredibly rewarding to be part of the Founder’s

Pledge, mentoring and spending time with my

mentee Chloe throughout her journey. The

experience has provided me with valuable

insights into the challenges apprentices face

and has inspired us as a business to look into

how we can provide them with the support they

need to ultimately maximise completion rates.”

Rupert Forster, a Balfour Beatty apprentice

working at Hinkley Point C, who was mentored

by Leo, said: “Being part of this mentorship

programme hasn’t just been about gaining skills

and advice – it’s about learning how to practically

navigate the challenges that come with early

career development, and how to persevere

throughthem”.

@ Balfour Beatty regularly acts as a convener of

thought leaders, collaborating relentlessly for

the benefit of its customers. In July, an early

careers team within Balfour Beatty’s Strategic

Design Partnership – established in 2017 to

redefine the relationship between contractor

and designer – came together for a hackathon

tackling the topic of carbon reduction in the

industry. Also in July, Balfour Beatty and

Microsoft joined together for ‘The Big AI

Hackathon’. Testing out six ideas generated

from My Contribution, the 70‑strong team

worked for seven hours armed with its

knowledge and competitive spirit to pursue

prototypes and prizes.

@ Balfour Beatty is a founder, gold member and

board member of the Supply Chain Sustainability

School. We support our suppliers and subcontractors

to become active members of the School, and

to demonstrate improvement through regular

self‑assessment and work towards a level of

accreditation as a demonstration of competence.

In 2024, we generated £1,035,580 of partner

value through a variety of activities delivered

through the school including workshops.

Creating value:

Ensuring cash reaches our supply chain partners

quickly for work carried out remains a priority.

Balfour Beatty is committed to paying all supply

chain partners on time and to mutually agreed

terms. We continually invest in our processes

andprocedures to improve our payment

performance and enhance accuracy and

transparency through increased automation

andefficient exception management.

We exceed the UK’s Government Procurement

Policy Notice, which is applicable to newly advertised

central government procurements and frameworks

exceeding £5 million annually. Thepolicy maintains

the obligation for bidders to demonstrate they pay

95% of invoices within 60days and to settle all

invoices within an average of 55 days.

In the last six months of 2024, we improved our

performance with invoices paid within 60 days

rising from 97% in the first six months of 2024

to98%, and the average days to pay improving

to33days.

29Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Governments

Governments set the policy and

legislative context in which we

operate and are also valued customers

across our chosen geographies.

2024 engagement examples:

@ In December 2024, we supported The Institute

for Government by publishing a report titled

‘Devolution and Urban Regeneration: How

CanMetro Mayors Transform England’s Towns

and Cities?’ and hosted a research roundtable

attended by around 20 representatives from

combined authorities and development

corporations. This initiative is part of Balfour

Beatty’s broader efforts to strengthen

relationships with combined authorities.

Creating value:

In June 2024, as the UK entered the second week

of the UK general election campaign trail, 12 Tier

One UK infrastructure and construction contractors

and consultants published their ‘Blueprint for

Growth’. The work, orchestrated by Balfour Beatty,

shared 12 recommendations that the future

government should implement to effectively

boost the UK’s economic growth and productivity.

The document represented a notable

collectivecommitment from the UK infrastructure

and construction industry to collaborate with

policymakers, industry stakeholders and Government

agencies to help develop the 12 recommendations

and realise the shared vision of a thriving infrastructure

sector, which continues to drive sustainable

growth, create jobs and build a brighter future

forthe UK.

Communities

Our activities can have a lasting

impact on the communities in which

we operate – we strive to leave a

positive legacy.

2024 engagement examples:

@ When Hurricanes Milton and Helene crossed

over the Southeast of the US within three

weeks of each other, they left significant wind

damage and, tragically, loss of life in their wake.

Colleagues from Balfour Beatty’s US Buildings

and Civils business across Florida, Georgia and

the Carolinas volunteered with church and

community organisations and made countless

donations to support the people most affected

within their communities.

@ In the UK, the Sellafield Box Encapsulation

(BEP) Project team held the third Social Prescribing

Festival, at The Whitehaven Rugby League

Stadium, bringing together 1,550 people from

the community to talk about mental health and

wellbeing. The event saw 562 children fed, with

66 support services and 17 activity providers in

attendance. Balfour Beatty, Mental Health and

Wellbeing Lead Cath Melvin, said “We may

never know the true impact of the ripple effect

caused by something as simple as picking up

aleaflet, having a five‑minute chat, or browsing

a service provider’s information stand. What we

do know is that we touched the lives those

who attended”.

Award-winning

volunteering in Hong Kong

In Hong Kong, Gammon was recognised by

the Construction Industry Volunteer Award

Scheme with six prestigious awards. Notably,

Gammon colleague Au Kam Chuen was

individually recognised for his exceptional

contributions, receiving the Gold award for

Excellence in Construction Industry Volunteering.

Right First

TimeAward

This category is for an individual

who constantly delivers with quality at the

forefront of their mind seeking improvements

to ensure we avoid costly re-work and deliver

on our commitments.

Winner: Frank O’Hare

Construction Manager, HS2 Area North

Frank is a dedicated leader who prioritises

quality, ensuring projects are completed to the

highest standard with his ‘check, check, and

check again’ philosophy. His meticulous

attention to detail during preconstruction helps

identify and correct even the smallest errors,

preventing delays and ensuring first‑time

success. Frank’s leadership extends beyond

project management; he mentors team

members, apprentices, and summer

placements, helping them develop their

strengths and improve weaknesses.

Above: Award presentation photo. (Left to right) Steve

Helliwell, Managing Director – Balfour Beatty Living Places,

Frank O’Hare, Construction Manager – HS2 Area North, and

Shaun Davies MP – Member of Parliament for Telford.

READ MORE ABOUT OUR ICON

AWARDS EVENT ON p74

Creating value:

In the UK, Balfour Beatty continues to use

theNational TOMs framework as a method

ofmeasuring and reporting social value to a

consistent and recognised standard. In 2024

across Balfour Beatty’s UK projects, we delivered

over £990 million in social value and met our

target to deliver £3 billion in social value by 2030

five years early.

For more information about our community

engagement efforts in 2024, see pages 63 to 65.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

3030

OPERATIONAL REVIEW

Strong performance

across diverseportfolio

Throughout this report, the Group

has presented financial performance

measures which are considered

mostrelevant to Balfour Beatty

andare used to manage the

Group’sperformance.

These financial performance measures are chosen

to provide a balanced view of the Group’s operations

and are considered useful to investors as these

measures provide relevant information on the

Group’s past or future performance, position or

cash flows. These financial performance measures

are also aligned to measures used internally to

assess business performance in the Group’s

budgeting process and when determining

compensation. An explanation of the Group’s

financial performance measures and appropriate

reconciliations to its statutory measures are

provided in the Measuring Our Financial Performance

section. Non‑underlying items are the cause of

the differences between underlying and statutory

profitability. Additionally, revenue includes the

Group’s share of revenue of joint ventures

andassociates.

REVENUE¹

£8,199m

2023: £8,081m

STATUTORY REVENUE

£6,630m

2023: £6,695m

UNDERLYING PROFIT FROM OPERATIONS

£159m

2023: £156m

STATUTORY PROFIT FROM OPERATIONS

£87m

2023: £143m

ORDER BOOK¹

£15.2bn

2023: £13.7bn

1 Including share of joint ventures and associates.

The UK Construction order book grew marginally

to £6.2 billion (2023: £6.1 billion), with 92%

(2023:91%) of those orders from public sector

and regulated industry clients.

US Construction: Revenue in US Construction

decreased by 2% (1% increase at CER) to

£3,638million (2023: £3,697 million). Underlying

profit from operations for US Construction reduced

by 22% to £40 million (2023: £51 million) as a

small number of civils projects have taken longer

than initially scheduled. Due to the fixed‑price

nature of the contracts, the cost of these delays

has impacted profitability in 2024 and US Construction

PFO is expected to improve in 2025.

The US Construction order book increased by

27% (25% at CER) to £7.1 billion (2024: £5.6billion)

with increases in both the buildings and civils

divisions. US Buildings grew its order book in all

but one of its geographic divisions, with an increase

in commercial office, hospitality, government,

education and airports. US Civils order book

growth was largely due to the business signing

a$746 million contract to rebuild part of the

Interstate 35 through Austin for the Texas

Department of Transportation.

Gammon: The Group’s share of Gammon’s revenue

increased by 14% (17% at CER) to £1,550 million

(2023: £1,357 million) driven by an increase in

major civils volumes, including the Terminal 2

expansion and automated people mover projects

at Hong Kong International Airport. Underlying

profit increased to £38 million (2023: £36 million)

representing a 2.5% profit margin (2023: 2.7%).

The Group’s share of Gammon’s order book

decreased by 5% (11% at CER) to £1.9 billion

(2023: £2.0 billion), with the progress made on

the airport projects largely offset by new orders,

which included a residential development in the

Kai Tak area for the Hong Kong Housing Society,

data centres in Hong Kong and Singapore, and a

civils contract in Hong Kong’s Northern Metropolis

to prepare the land and deliver engineering

infrastructure works for a new development area.

Construction Services

Our Construction Services businesses

operate across infrastructure and

buildings markets in the UK, in the

US and in joint venture in Hong Kong.

Financial review

Revenue at £8,199 million was up 1%

(2023:£8,081 million), a 3% increase at CER,

withhigher volumes at Gammon. Underlying

profit from operations increased to £159 million

(2023: £156million) due to improved profitability

in UK Construction and higher volumes at Gammon,

partially offset by reduced profitability in US

Construction. Statutory profit for the year was

£87million (2023: £143 million). The order book

increased 11% (9% at CER) in the year to £15.2 billion

(2023: £13.7 billion), due to a strong year of orders

in US Construction.

UK Construction: Revenue in UK

Constructiondecreased by 1% to

£3,011 million (2023: £3,027 million).

UK Construction underlying profit from operations

increased to £81 million (2023: £69 million),

largelydriven by improved project delivery and the

mix of work. This represents a 2.7% PFO margin

(2023: 2.3%) and demonstrates progress in the

Group’s medium‑term ambition to achieve a 3%

PFO margin in UK Construction, with further

improvement expected in 2025 and 2026.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

31Balfour Beatty plc | Annual Report and Accounts 2024

Operational review

UK Construction

Strong medium-term outlook in UK

growthmarkets

Since coming to power in July 2024, the UK

Government has been firm in its commitment

tostimulating growth in the UK economy, and

hashighlighted the importance of maintaining,

improving, and expanding UK infrastructure in

achieving this. As part of its broad investment

plans, the Government has addressed the

requirement for additional investment in various

sectors, including Balfour Beatty’s UK growth

areas of energy, transport and defence, with

further detail to follow in June as part of the

10Year Infrastructure Strategy and multi‑year

comprehensive spending review. The Government

is also investigating other potential enablers to

reduce the time and costs associated with

infrastructure development in the UK, including

the simplification of planning and the utilisation of

private financing. In January 2025, the Government

announced plans to block campaigners from

making repeated legal challenges to planning

decisions for major infrastructure projects in

England and Wales, with the intention of reducing

the time taken to achieve the relevant consents.

The essential long‑term upgrade to the UK’s

energy infrastructure is now well underway,

driving improvement in energy security and

facilitating the energy transition, with Balfour

Beatty heavily involved in active projects such

asthe new Hinkley Point C nuclear power station

in Somerset and across the UK with its market‑leading

power transmission and distribution proposition.

The scale of work required to meet the UK’s net

zero ambitions is vast and is likely to be ongoing

for decades to come. In 2024, there were a

number of key developments in the progression

of new projects which Balfour Beatty expect to

play a major role in:

@ the UK Government announced a £21.7 billion

pledge for projects to capture and store carbon

emissions from energy, industry and hydrogen

production. Following this, Balfour Beatty,

alongside Technip Energies and GE Vernova,

received notice to proceed to start the full

engineering, procurement and construction

package for the onshore power, capture and

compression contract at Net Zero Teesside,

theworld’s first gas‑fired power station with

carbon capture and storage;

@ for the proposed Sizewell C nuclear power station,

the UK Government increased its financial

commitment to take the project to final

CONSTRUCTION SERVICES

2024 2023

Revenue

£m

PFO

£m

Order book

£bn

Revenue

£m

PFO

£m

Order book

£bn

UK Construction 3,011 81 6.2 3,027 69 6.1

US Construction 3,638 40 7.1 3,697 51 5.6

Gammon 1,550 38 1.9 1,357 36 2.0

Underlying

8,199 159 15.2 8,081 156 13.7

Non‑underlying – (72) – – (13) –

Total 8,199 87 15.2 8,081 143 13.7

1 Including share of joint ventures and associates.

2 Before non‑underlying items (Note 10).

A reconciliation of the Group’s performance measures to its statutory results is provided in the Measuring our financial performance section .

Pioneering

Engineering

Award

This category was for a team who create new

boundaries by designing out risk, moving us

into more modern ways of working.

READ MORE ABOUT

OUR ICON AWARDS

EVENT ON p74

Above: Award presentation photo. (Left to right) Nigel Russell,

Chief Executive Officer – HS2 Major Projects, The HS2 Marston

Box Slide Team, and Alistair Phillips‑Davies CBE, Chief

Executive Officer – SSE.

investment decision to £5.5 billion. Balfour

Beatty is part of the Civils Works Alliance for

Sizewell C, alongside Bouygues Travaux Publics

and Laing O’Rourke, which will deliver the

extensive civil works package; and

@ Great British Nuclear, the UK Government’s

expert nuclear delivery body, shortlisted four

companies for its small modular reactor programme,

including Holtec, for which Balfour Beatty is the

main construction partner. Final decisions are

expected to be announced in the coming months.

The UK Government plans to strengthen national

security and modernise defence infrastructure,

with the intent of increasing defence spending to

2.5% of GDP by 2027. Balfour Beatty has been a

long‑term participant in the UK’s defence and

security sector and has delivered growth in its

market share during 2024. The Group’s experiences

in civil nuclear construction hold close adjacencies

with some of the projects being tendered, while

its end‑to‑end capabilities can simplify high security

project delivery by reducing complex interfaces.

As a testament to this, Balfour Beatty has been

selected by Rolls‑Royce as a construction partner

for the expansion work in Raynesway, Derby,

needed to meet the growth in demand from the

Ministry of Defence and as a result of the AUKUS

agreement. As part of the package of works,

which will be executed in stages over the next

eight years, Balfour Beatty will deliver infrastructure

enabling works, build new manufacturing and

office facilities, and redevelop existing industrial

buildings on site. Thiswill increase Rolls‑Royce’s

capacity to manufacture reactor components for

nuclear submarines. The UK defence sector has

been identified as one of the Group’s key growth

markets, and as such, further material

opportunities are currently being pursued.

In the UK transport sector, the Group retains

strongmarket positions in both major road

andrailconstruction.

Winner: The HS2 Marston

BoxSlide Team

Sasan Ghavami, Neil Kennard

andJohnGill, HS2MajorProjects

In a huge feat of engineering last year, our HS2

team delivered the world’s longest box slide to

move Marston Box railway bridge into place over

the M42. Built using the Autoripage method –

enabling the installation of a structure entirely

prefabricated on a nearby base and sliding it to

itsfinal position – the Marston Box bridge slide

reduced construction time from two years to six

months and eliminated the need for piling, lowering

the carbon footprint. The operation was developed

through a collaboration between Balfour Beatty

VINCI joint venture, HS2 and National Highways,

and was completed safely, moving the 12,600‑tonne

structure 186 meters in just 48 hours.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

3232

Construction services

continued

Operational review continued

UK Construction continued

Strong medium-term outlook in UK growth

markets continued

Transport is an important component of the

Government’s growth plans, and further details

are expected as part of the 10 Year Infrastructure

Strategy and the Treasury’s multi‑year comprehensive

spending review, due in June. Following these

announcements, National Highways will release

its third Road Investment Strategy (RIS3). These

plans will give a clearer timeline for projects such

as the Lower Thames Crossing road scheme, a

project which the Group was awarded £1.2 billion

of work for in 2023 but has yet to go to contract,

and major rail electrification schemes, all of which

are of strategic importance to both the UK and

Balfour Beatty. The Group also holds deep experience

in construction at UK airports, so the Government’s

plan for expansion and development of London

airports is also positive for Balfour Beatty in the

medium term. During 2024, Balfour Beatty was

awarded a £185 million contract on the A9 road

inScotland, which will see the Group upgrade six

miles of single carriageway to dual carriageway,

and undertook early contractor involvement

activities on the Lower Thames Crossing.

Continued margin expansion and strong

operational delivery

Balfour Beatty holds a market‑leading position in

agrowing UK infrastructure market, with unmatched

scale and vertically integrated capability for delivering

major and regional civils projects. In a period of

increased demand, the Group is being more

selective in the work it undertakes, resulting in a

higher quality and lower‑risk forward order book.

The 2024 order book is heavily weighted towards

lower‑risk contract forms, with 59% target cost

and 20% cost plus incentivised fee, while the

remaining 21% is weighted towards two stage

fixed price contracts, which are inherently

lower‑risk than one stage fixed price arrangements.

UK Construction currently has around 700 live

projects, and the Group remains focused on

ensuring that new work is contracted on the

appropriate contractual terms and conditions

forthe risk undertaken, in order to protect the

Group’s margin and reduce the loss‑making

portion of the project portfolio.

The two key drivers of the ongoing increase in the

UK Construction margin, which has improved for a

fourth successive year and is forecast to do so

further in 2025, are the lower‑risk nature of the

order book and strong operational delivery. Balfour

Beatty’s ambition to provide industry‑leading project

delivery across the UK Construction portfolio not

only drives margin performance inthe period, but

demonstrates the Group’s capabilities and

standards, thereby aiding the pursuit of future

work.

On the UK’s largest infrastructure project, HS2,

Balfour Beatty and its joint venture partners are

delivering the main civil engineering works for the

Area North section and the new station at Old

Oak Common in west London. On Area North, the

Balfour Beatty VINCI joint venture hascompleted

the four huge piers of the Curzon 2 bridge,

marking a significant construction milestone on

the sequence of viaducts that will take high‑speed

trains in and out of Birmingham. At Old Oak

Common, the Balfour Beatty VINCI SYTRA joint

venture completed the excavation ofthe stations

underground box, a vast structure big enough to

accommodate the equivalent of 300 Olympic

sized swimming pools, and has now completed

construction of the stations baseslab, which

required 76,000 cubic metres ofconcrete and

17,000 tonnes of reinforced steel. At Hinkley Point

C, the Balfour Beatty team delivering the marine

works for the new nuclear station have made

strong progress under the Bristol Channel. In

December, the team completed the two

OPERATIONAL REVIEW CONTINUED

connections in the outfall tunnel, whichwas a key

project milestone for theyear, with focus now on

the remaining connections in the two intake

tunnels.

The Major Highways team is two years in to the

major improvement scheme at the interchange

between Junction 10 of the M25 and the A3.

During 2024, Balfour Beatty conducted three full

weekend closures as part of the improvement

scheme at Wisley, the first in the M25’s 38 year

history, with works completed ahead of schedule

on all occasions. The team has also made good

progress on the A63 improvement scheme in Hull

and has added additional emergency refuge areas

on the M25, M3 and M4, improving safety for all

users of these routes.

In 2024, the division completed work at a wide

range of projects including the Edinburgh Futures

Institute at the University of Edinburgh, highway

and junction improvements in North West Crewe

and the Lewisham Gateway residential project.

Beyond the new Rolls‑Royce and A9 contracts,

other projects added to the UK Construction order

book during 2024 included HMP Highland in

Inverness, on behalf of the Scottish Prison

Service, enabling works at HMNB Devonport,

areplacement secondary school for the Nairn

academy and also the divisions share of the

Group’s recent power transmission and

distribution orders.

In November, Balfour Beatty signed a two year

extension to its existing four year term as sole

contractor to both of the SCAPE Civil Engineering

frameworks, which cover England, Wales and

Northern Ireland, and the entirety of Scotland.

Theframeworks will now run until November

2028.

Balfour Beatty VINCI

completes first sections

ofHS2 Curzon Street

station viaduct

In 2024, Balfour Beatty VINCI completed the

first sections of the landmark viaduct that will

bring high‑speed trains into Birmingham’s

new Curzon Street station.

The completed sections mark the next step

on the programme to build a series of

viaducts to carry the railway through

Birmingham’s industrial heartland and into

the city centre.

High speed trains will travel out of the west

portal of the 3.5 mile Bromford Tunnel at

Washwood Heath and onto a one mile long

stretch of connected viaducts through

Duddeston, and cross over the Birmingham

to Derby railway, Lawley Middleway and

Digbeth Canal.

On the approach into Birmingham, the five

viaducts are Duddeston, Curzon 1, Curzon 2,

Lawley Middleway and Curzon 3, which links

to Curzon Street station.

The completed six metre‑high sections of the

Curzon 3 viaduct are where the structures

widen from a single deck to four separate

decks, spanning 65 metres at the widest

point, to carry the tracks to the Curzon Street

station platforms.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

33Balfour Beatty plc | Annual Report and Accounts 2024

US Construction

Balfour Beatty’s US Construction division is

comprised of the US Buildings and US Civils

businesses. US Buildings is a construction

management business diversified across

geographies and client sectors, which targets

major cities and urban areas in states with

favourable economic outlooks. The US Civils

business focuses on highways projects in Texas

and the Carolinas, and on local rail and civils work

in California. Given the division’s diversification

across capabilities, geographies and sectors,

theresult of the recent US election has not

hadamaterial impact on the outlook for US

Construction, while recent third party forecasts

have projected construction spending in the

Group’s chosen states to surpass the national

average to 2029, with an annual average growth

of 7% forecast.

At the 2023 full year results announcement, the

Group outlined differing strategic approaches to

the two US Construction disciplines, which have

influenced the direction of the businesses in 2024

and will continue to do so in the future. US Buildings

had been recognised as one of Balfour Beatty’s

four growth markets, with the business making

notable progress in 2024, and is considered the

lower‑risk segment within the division. With most

of the projects undertaken by US Construction

contracted on fixed‑price terms, Buildings utilise

the early issuance of subcontracts and insurance

of the supply chain to mitigate risk. Comparatively,

civils contracts in the US are generally delivered

on a self‑perform basis, which on fixed price

arrangements gives limited scope to mitigate

inflation and schedule risk. As a result, the Group

remains cautious in its approach to complex civils

contracts in the US and has reduced its exposure

to the sector in recent years, with bidding now

focused on projects which closely align to its

corecapabilities.

US activities further weighted towards

growing US Buildings business

Balfour Beatty’s growth engine in the US is its

buildings business, which increased revenue by

2% (5% at CER) in 2024 and contributed 87% of

US Construction revenues (2023: 85%, 2022: 78%).

Having identified the opportunity for growth in

2023, based on the strength of some core markets,

including aviation, leisure, education and government,

combined with the impact of a more settled

economy, the Group put to work its two‑pronged

organic growth strategy to add further diversification

to its regional businesses. The Group opened new

offices, targeting additional cities in states with

existing Balfour Beatty offices, and broadened the

end‑markets served in some regions where the

business was already active. These factors have

contributed to the US Buildings order book

increasing 26% (24% at CER) in 2024, underpinning

the growth expectations for 2025 and beyond.

The new office locations, which were chosen

based on market fundamentals and adjacency

toestablished offices, include Sacramento in

California, Savannah in Georgia, Charleston in

South Carolina, Wilmington in North Carolina,

Richmond in Virginia, and Jacksonville and Tampa

in Florida. These offices have played an important

role in the order book growth and are delivering

projects such as the construction of a new terminal

at the Jacksonville International Airport, a runway

expansion at the Airport in Onslow County near

Wilmington, and the second phase of an

elementary school project in Sacramento.

By broadening the regions in which it serves

certain end‑markets, the US Buildings business

isfurther utilising its in‑house expertise and

long‑term customer relationships to drive organic

growth, with success in various sectors. Following

on from recent activity at Los Angeles International

Airport, the Group more than doubled its aviation

order book in 2024, adding new work in North

Carolina, Florida and California. In education, the

Group has leveraged its market‑leading Californian

Dream Team Award

This category was for a team who encompasses everything we expect

atBalfour Beatty. A team who constantly do the right thing and work

together to be collaborative, inclusive, safe, sustainable, customer focused,

innovative – who’ve gone that extra mile and delivered something amazing.

READ MORE ABOUT

OUR ICON AWARDS

EVENT ON p74

offering, where it was the top education builder

for the second consecutive year, to strengthen

itslocal order book and also win work in North

Carolina and Oregon. While for theme parks, as

well as material new work being added in Florida,

work is under way on projects in Texas and California.

The Group is also exploring data centre opportunities

outside of the Northwest market, which has

served the business well in recent years.

Strong operational delivery in US Buildings

During the year, progress has been made on

significant Buildings projects including:

@ transformation of an old Coca‑Cola bottling

facility in Atlanta, Georgia, into an elevated

mixed‑use property;

@ the completion of the Del Mar Heights School

rebuild project in San Diego, California;

@ began construction activities to deliver

Sacramento International Airport’s pedestrian

walkway project in California;

Above: Award presentation photo. The Harkers Island

Bridge Replacement Team (left), Stephen Tarr, Divisional

CEO – Power, Transmission & Distribution, Rail and

Balfour Beatty Kilpatrick, (middle, back), and Andrew

McNaughton, Executive Director – Atomic Weapons

Establishment (right).

Winner: The Harkers Island

BridgeReplacement Team

Pete Distefano, Mike Ewell, WillJanning,

AlexTejero, Benjamin Sasser, Michael McDermot,

Jacob Willcox and GregWilkerson, US Civils

The Harkers Island team went more than the extra

mile to deliver the project a year early. They partnered

with the client to work through challenges at world

record speed to expedite the delivery of the project

while making sure all work was delivered safely.

Theteam also used new innovations and products

toprovide the client with a better and more durable

product. They were the first in the US to use carbon

strand reinforcing and fibreglass bars in place of steel

rebar – alightweight and strong material to use

forstructural strengthening and repairs. Thisalone

willbe a legacy for Balfour Beatty.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

3434

Construction services

continued

Operational review continued

US Construction continued

Strong operational delivery in US Buildings

continued

@ started construction of a mixed‑use

development in Dallas, Texas, which includes

retail, restaurant, office and parking; and

@ broke ground at the new Durham School of the

Arts in North Carolina, alongside our joint

venture partner.

Further progress made in US Civils strategy

The US Civils business continued to pivot towards

a more concentrated portfolio of projects in 2024.

Highways and bridges, which are profitable activities

for the division, represents 75% of the order book

at year end compared to 60% the year before.

Thiswas driven by progress made on live projects

during the year and new orders, which included a

$746 million contract to rebuild part of the Interstate

35 through Austin for the Texas Department of

Transportation. The project, which is expected to

complete in 2033, closely aligns to the Group’s

selective approach to US civils; working for a

long‑term customer and in a geography where

Balfour Beatty has proven expertise, strong

teamsand trusted supply chain partners.

Progress at the major US Civils projects in

2024included:

@ Balfour Beatty achieved substantial completion

on the Caltrain electrification rail project in

California in 2024, with final completion

achieved in February 2025;

@ the business completed construction of the

Sterling Natural Resource Center, a water

reclamation facility in California;

@ as part of the LINXS joint venture at Los

Angeles International Airport, the Group

entered the testing and commissioning phase

of the project, with recent testing bringing

atrain vehicle through the airport’s central

terminal area, and the three automated people

mover stations inside it, for the first time;

@ as part of the Colorado River Constructors

jointventure on the Oak Hill Parkway highways

project in Texas, the Group opened four

cross‑street bridges to traffic; and

@ progress continues on the Havelock Bypass

project in North Carolina, with all 16 bridges

androadway construction now

successfullycompleted.

Gammon

Strong positions in Hong Kong and Singapore

Gammon, Balfour Beatty’s 50:50 joint venture

with Jardine Matheson based in Hong Kong, has

forged a reputation for delivering high‑quality

projects in Southeast Asia. The outlook for the

Hong Kong construction sector remains positive,

with Government commitments to grow the

railway network and build new major roads, in

addition to the long‑term Northern Metropolis

project to develop more than 3,000 hectares by

phases over the next 20 years. Gammon’s Singapore

operations finished 2024 with a record order book

and further opportunities to come. The Singapore

Government is projecting increased infrastructure

spend in 2025 and 2026, as it rolls out major

infrastructure projects at its airport and metro,

andthe private sector property market continues

to be strong.

Gammon celebrates

thetopping out of

OneCauseway Bay

In 2024, Gammon celebrated the topping out

of the One Causeway Bay project, developed

by Mandarin Oriental Hotel Group and

managed by Hongkong Land. This milestone

marked the structural completion of Hong

Kong’s newest premium waterfront

commercial development.

The building has achieved provisional

Platinum ratings from BEAM Plus and

Leadership in Energy and Environmental

Design (LEED), pre‑certification from WELL,

and a Platinum rating from WiredScore

certification. It is also targeting a Platinum

rating from SmartScore certification. The

project employs sustainable materials,

including green concrete, green rebar,

FSC‑certified timber, and recycled materials.

Once complete, One Causeway Bay will offer

500,000 sq. ft. of premium Grade A office

space across 24 floors, along with 55,000 sq.

ft. of retail space over five floors, including a

rooftop bar and restaurant.

OPERATIONAL REVIEW CONTINUED

Gammon continues to have a strong share of both

the buildings and civils markets in Hong Kong. In

buildings, the focus is on the use of Design for

Manufacture and Assembly (DfMA) and modular

construction to improve productivity and efficiency

and expanding the customer base on a selective

basis. In civils, the strategy is to leverage engineering

excellence, with a key area of future work likely to

be from significant infrastructure programmes in

Hong Kong and in Singapore.

During 2024, Gammon delivered an increased

volume of work, with the automatic people mover

(APM) and Terminal 2 expansion projects at Hong

Kong International Airport both reaching peak

levels of activity. The official inauguration of the

airport’s three‑runway system in November signified

a key milestone for both projects, with Gammon

playing a crucial role in the airports expansion to

date, including the construction of a tunnel

beneath the runway and taxiways, as well as

essential infrastructure for air traffic control,

utilities, roads, and drainage.

Gammon’s Tonkin Street project reached

substantial completion in October and is the first

private residential project in Hong Kong to adopt

concrete Modular Integrated Construction (MiC).

By implementing MiC for the 22‑storey, 198 unit,

residential tower, the project achieved 65%

reduction in construction waste and noise, as well

as 60% decrease in traffic loading, significantly

lowering carbon emissions throughout the

construction process.

Gammon’s buildings team is progressing with

theOne Causeway Bay project, which when

complete will have 500,000 square feet of office

space across 24 floors and five floors for retail,

marked a major milestone with a topping‑out

ceremony. The project, which occupies the former

site of the historic Excelsior Hotel on the waterfront

of Hong Kong’s Victoria Harbour, willopen in 2025.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

35Balfour Beatty plc | Annual Report and Accounts 2024

Support Services

Our Support Services businesses

operate in the UK, designing,

upgrading, managing and

maintaining critical national

infrastructure.

REVENUE¹

£1,210m

2023: £1,006m

STATUTORY REVENUE

£1,210m

2023: £1,006m

UNDERLYING PROFIT FROM OPERATIONS

£93m

2023: £80m

STATUTORY PROFIT FROM OPERATIONS

£93m

2023: £80m

ORDER BOOK¹

£3.2bn

2023: £2.8bn

1 Including share of joint ventures and associates.

Financial review

The Support Services business provides power,

plant, road and rail maintenance and is characterised

by profitable recurring revenues underpinned by

long‑term frameworks targeting a PFO margin of 6‑8%.

Support Services revenue increased by 20%

to£1,210 million (2023: £1,006 million), mainly

due

to higher volumes in the road maintenance

business,

which included the first full years of

themajor contracts at Buckinghamshire and

EastSussex, and increased power transmission

and distribution activity. Underlying profit from

operations increased to £93 million (2023: £80million)

driven by higher revenue. This resulted in PFO

margin of 7.7% in the year (2023:8.0%), which

isat the top end of the targeted 6‑8% PFO margin

range and representsa further strong year for the

power, road and rail maintenance businesses,

with the reduction in

margin driven by a change

inthe mixof work delivered.

The Support Services order book increased by

14% to £3.2 billion (2023: £2.8 billion) driven by

new power transmission and distribution

contacts, aligned with the growing demand

inthesector.

Operational review

Further traction in power transmission

anddistribution expansion

In 2024, the UK Electricity System Operator

published a report titled ‘Beyond 2030 – A national

blueprint for a decarbonised electricity system in

Great Britain’, which estimated that over £60

billion of investment in network infrastructure is

required by 2030 to facilitate the connection of

new offshore generation and other new renewable

energy sources. The key transmission infrastructure

operators, National Grid, SSEN and SPEN, have

now published their RIIO‑T3 business plans, which

layout their proposed projects to 2031 and confirm

the sharp expansion of work required across the

industry in the balance of this decade and beyond.

SUPPORT SERVICES

2024 2023

Order book (£bn) 3.2 2.8

Revenue

(£m) 1,210 1,006

Profit from

operations

(£m) 93 80

Non‑underlying

items (£m) – –

Statutory profit from

operations (£m) 93 80

1 Including share of joint ventures and associates

2 Before non‑underlying items (Note 10)

A reconciliation of the Group’s performance measures to its

statutory results is provided in the Measuring our financial

performance section

Unlocking renewable

energy capacity between

Scotland and England

In 2024, we were awarded a contract by

Prysmian to install 68km of high voltage

direct current (HVDC) land cables from

Fraisthorpe Sands to Drax in Yorkshire,

England, as well as an additional 1km of

HVDC land cable at Peterhead, in Scotland.

The works are part of the Eastern Green Link

2 (EGL2) project, which was jointly developed

by Scotland and Southern Electricity

Networks (SSEN) Transmission and National

Grid Electricity Transmission. The project will

form a 2GW HVDC electrical ‘superhighway’

cable link from Scotland to England which,

when complete in 2029, will carry enough

electricity to power two million households.

Our teams will be responsible for delivering

approximately 15% of the route on behalf

ofPrysmian, replacing and upgrading

approximately 25km of overhead lines in

North Yorkshire, which will increase the

capacity to connect the EGL2 project.

The new cables will be installed underground,

to reduce the visual impact of the scheme and

ensure that the landscape across East Riding

of Yorkshire, North Yorkshire and at Peterhead

remains unhindered for the local community

and visitors alike.

Balfour Beatty holds a market‑leading position in

the rapidly growing UK power transmission and

distribution construction industry and saw a

record level of bidding success in 2024, being

contracted or selected for various schemes and

frameworks including:

@ an Initial Works Contract with SSEN for the

Skye Reinforcement project;

@ a £192 million contract with SSEN for the Argyll

Substations project;

@ a £363 million contract with National Grid to

deliver the Bramford to Twinstead

Reinforcement project;

@ a contract with Prysmian to install 69km of

high‑voltage direct current land cables as part

ofthe Eastern Green Link 2 (EGL2) project,

being jointly developed by SSEN Transmission

and National Grid; and

@ selected as one of eight preferred partners

forScottish Power Energy Networks’ Strategic

Agreement for Transmission OverheadLine

Works, with up to £3 billion ofwork being tendered.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

3636

Support Services continued

Operational review

Further traction in Power T&D expansion

The increased activity in the market is driving a

capability imbalance, with demand outweighing

supply. This brings commercial opportunities to

the Group, which benefits from holding the

largest power workforce in the UK, and ensures

that contracts can be undertaken on a lower‑risk

basis than in the past. It also leaves the Group

with a recruitment challenge to meet the growing

demand, and in 2024 the Power team had over

500 new starters, while improving the retention

ofexisting colleagues.

During the year, the business finished wiring all

116 T‑Pylons and constructing a further 27 traditional

lattice pylons on the Hinkley Point C Connection

project for National Grid. The Viking Link interconnector

the longest interconnector in the world for which

Balfour Beatty constructed the 65km UK onshore

underground cable route, is now live and transmitting

power between the UK and Denmark. The Group

also completed 62km of overhead line refurbishment

between Bramford and Norwich, began to

transition 3.5km of overhead lines in the North

Wessex Downs to underground cables, handed

back the first leg of the London Power Tunnels 2

project and energised the final circuit at the 400kV

Littlebrook Substation. Balfour Beatty’s portfolio

ofpower transmission and distribution projects

continues to reflect the major role which the

Group is playing in upgrading the grid to meet

theUK’s net zero ambitions.

OPERATIONAL REVIEW CONTINUED

REVENUE¹

£606m

2023: £508m

STATUTORY REVENUE

£394m

2023: £292m

UNDERLYING PROFIT BEFORE TAX

£54m

2023: £47m

STATUTORY PROFIT BEFORE TAX

£51m

2023: £43m

DIRECTORS’ VALUATION

£1.25bn

2023: £1.21bn

1 Including share of joint ventures and associates, before

non‑underlying items.

Increased road maintenance activity

The addressable road maintenance market

continues to grow, with the Government’s Autumn

2024 Budget announcing nearly £1.6 billion in

capital funding for local highways maintenance in

England for the financial year starting April 2025,

which represents a £500 million increase on the

prior year. Longer‑term funding will be determined

by the ongoing comprehensive spending review.

In 2024, Balfour Beatty substantially increased

thevolume of road maintenance work delivered,

driven by the first full year of the Buckinghamshire

and East Sussex contracts which had started in

2023, and increased demand for road patching

activities. Looking forward, there are several Local

Authority contracts coming to market in the next

year for which the Group is well positioned, as it

looks to further deploy its effective maintenance

solutions and technology‑driven infrastructure

management.

Rail

The rail maintenance market is well funded for

theperiod to 2029, with £45 billion available

forinvestment in operations, maintenance and

renewal as part of Network Rail’s Control Period 7

(CP7) strategic business plan. The business is

diversified across various frameworks, and during

the year won £169 million of work for the Central

Rail Systems Alliance framework, with the Group

now half way through its 10 year contract.

The Group is particularly focused on electrification

schemes, as part of its ambition to deliver more

net zero infrastructure in the UK. Furthermore,

theproposed restructuring of the UK rail industry

should see greater opportunities for efficiency as

the management of track and trains are brought

closer together.

Infrastructure investments

Our Infrastructure Investments business develops and finances both

public and private infrastructure projects in the UK and the US.

Financial review

Infrastructure Investments made an £8 million

underlying loss from operations in the year

(2023:£5 million profit). In the US, the costs

relating to the independent compliance monitor’s

work across the US military housing portfolio

increased, and in the UK, the Group wrote off

capitalised bidding costs following the cancellation

of a student accommodation project, for which

ithad been awarded preferred bidder status.

Whenincluding a gain on disposal of £43 million

(2023:£26 million), underlying profit from

operations was £35 million (2023: £31 million).

Balfour Beatty continues to invest in attractive

new opportunities, each expected to meet its

investment hurdle rates. In the year, the Group

invested £28 million in new and existing projects,

with a US student accommodation project and a

US multifamily housing project added to the

portfolio. Balfour Beatty also continues to sell

assets, timed to maximise benefit to shareholders.

One disposal was completed in 2024, with the

Group reducing its stake in the Northside student

accommodation project at the University of Texas

at Dallas. The transaction delivered £43 million

gain on disposal and £43 million of cash, which

was above the Directors’ valuation.

Net investment income of £19 million was £3 million

higher than the prior year (2023: £16 million) and

included an impairment write back of subordinated

debt as, following a final decision from Ofgem,

costs were recovered relating to a faulty OFTO

cable, which had been provided for in prior periods.

This was partially offset by lower interest received

on subordinated debt.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

37Balfour Beatty plc | Annual Report and Accounts 2024

INFRASTRUCTURE INVESTMENTS

2024

£m

2023

£m

Pre‑disposals operating profit² (8) 5

Gain on disposals² 43 26

Profit from operations² 35 31

Net investment income

19 16

Profit before tax² 54 47

Non‑underlying items (3) (4)

Statutory profit before tax 51 43

2 Before non‑underlying items (Note 10).

~ Subordinated debt interest receivable, net interest receivable on PPP financial assets and non‑recourse borrowings, fair value (loss)/gain

on investment asset and impairment to subordinated debt receivable and accrued interest.

A reconciliation of the Group’s performance measures to its statutory results is provided in the Measuring our financial performance section.

Balfour Beatty Communities celebrates the start of a new

military housing development at Fort Carson

Balfour Beatty Communities, in partnership with

the United States Army, celebrated the start of a

new military family housing construction at Fort

Carson, Colorado. The ceremony, held in August

2024, at the Arapahoe Village neighbourhood

construction site within Fort Carson Family Homes,

marked the commencement of the first phase in

an anticipated multi‑phased project looking to

bring more than 200 new homes onthe base.

This initial phase will deliver 56 new three and

four bedroom townhome units, including an

accessible unit designed for persons with

disabilities. This development aims to provide

high‑quality, modern living spaces that cater

tothe needs of military families stationed at

FortCarson. Features will include garages,

anopen‑concept floor plan, plank flooring,

energy‑efficient appliances, and EV

charginginfrastructure.

Col. Sean M. Brown, former Garrison Commander,

Fort Carson said: “This project represents a

critical investment in the quality of life for our

service members and their families. We are

excited to see these new homes come to

fruition and are grateful for the partnership in

making this vision a reality."

Construction of the first phase of homes is

underway, with completion anticipated in

Autumn 2025.

Underlying profit before tax increased to £54 million

(2023: £47 million). Statutory profit before tax was

£51 million (2023: £43 million).

Operational review

Balfour Beatty’s competitive expertise to finance,

develop, build and maintain infrastructure puts the

Group in a strong position to capitalise on new

investment opportunities. The Group has

maintained its disciplined approach to investments

and disposals to ensure the delivery of investment

hurdle rates and is currently assessing investment

opportunities in:

@ student accommodation: Across the UK and

US, demand for student accommodation

remains strong as universities continue to

improve their facilities to attract students;

@ residential: Balfour Beatty continues to see

attractive US multifamily housing come to

market, providing opportunity to invest

profitably in the regeneration of these

properties;

@ US P3: The US has become an increasingly

exciting market for public‑private partnerships,

and, to date, 42 states (plus DC) have passed

legislation allowing P3 projects; and

@ energy transition: As the UK’s energy mix

transitions to more renewable sources, and the

UK adopts more sustainable transport such as

electric vehicles, there are opportunities for

private sector investment.

In the UK, the Group has commenced

construction of a new student accommodation

project – the 1,899 bed West Slope development

– on behalf of the University of Sussex. The first

new student accommodation and the health and

wellbeing centre are expected to be open in time

for the 2026/27 academic year, with more

accommodation, catering and retail facilities

opening over the following two years.

In the US, the Group added two new projects

tothe portfolio, with a 564 bed US student

accommodation project in Denton, Texas, and a

296 unit US multifamily housing project in Mount

Laurel, New Jersey. The Group was also awarded

a developer contract to build a 1,070 bed

undergraduate student housing complex at the

University of Texas in Austin, while good progress

has been made with construction on the 1,204

bed William & Mary University project in Virginia.

The Group’s key US P3 investment is the automated

people mover project at Los Angeles International

Airport, with US Construction contributing to the

build phase and Infrastructure Investments

providing an element of the financing.

Construction is ongoing.

In US military housing, the Group supported the

military’s energy resilience goals by completing

rooftop solar projects across five Navy bases in

Florida, totalling 10.55 megawatts, and a $31

million energy savings performance contract

bringing energy and water efficiency improvements

to the housing communities at 11 Navy installations

in the Southeast. In 2025, the Group will be

redeveloping homes at Ft Eisenhower and Ft

Leonard Wood, with Government funding

announced for both, while a ground lease

extension at Ft Carson is under negotiation in

order to bring forward funds to finance faster

redevelopment. The Group continues to work

withthe independent compliance monitor, who

commenced work in 2022 having been appointed

by the Department of Justice. In November 2024,

Balfour Beatty Communities and the independent

compliance monitor agreed to extend the most

recent implementation period to enable the

delivery of the additional recommendations set

out in the first follow‑up report and agreed to

commence the second follow‑up review period

inMarch 2025.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

3838

DIRECTORS’ VALUATION OF THE INVESTMENTS PORTFOLIO

Strong track

record of value

creation

The Directors’ valuation increased by 3% to £1,254 million (2023: £1,212 million).

The portfolio is 58% weighted towards the US (2023: 58%). Thenumber of

projects in the portfolio increased by one to 60 (2023:59).

Balfour Beatty invested £28 million (2023: £31 million)

in new and existing projects. During the year the

Group added two new investments: a student

accommodation project in Denton, Texas, and a

multifamily housing project in Mount Laurel,

NewJersey.

Cash yield from distributions amounted to

£34million (2023: £48 million). Balfour Beatty

continued disposals in the year with proceeds of

£43 million (2023: £61 million), with the Group

reducing its stake in the Northside student

accommodation project at the University of Texas

at Dallas. A preferred bidder student accommodation

project in the UK was cancelled and has been

removed from the portfolio.

Unwind of discount at £81 million (2023: £87 million)

is a function of moving the valuation date forward

by one year with the result that future cash flows

are discounted by twelve months less.

Operational performance movements resulted

ina£2 million decrease (2023: £1 million). The

operational performance movements in the UK

were primarily due to recovery of costs for

previous repairs on a faulty OFTO cable, offset by

a higher costs and risk premia on certain assets.

In the US, higher than forecast rental increases

onthe military housing portfolio were offset by

higher costs, including an increase in independent

compliance monitor costs.

The exchange rate movement was a £12 million

increase (2023: £43 million decrease). This was

driven by sterling depreciating against the US

dollar, slightly offset by sterling appreciating

against the euro and thereby reducing the valuation

of the one euro denominated project in the portfolio.

Methodology and assumption changes

The methodology for valuing most investments in

the portfolio remains the discounted cash flow

(DCF) method. Under this methodology cash

flows for each project are forecast based on

historical and present performance, future risks

and macroeconomic forecasts. They also factor in

secondary market assumptions. These cash flows

are then discounted using different discount

rates, which are based on the risk and maturity

MOVEMENT IN VALUE 2023 TO 2024

£m 2023

Equity

invested

Distributions

received

Sales

proceeds

Unwind of

discount

Operational

performance FX 2024

UK 509 2 (18) – 34 (1) (1) 525

US 703 26 (16) (43) 47 (1) 13 729

Total 1,212 28 (34) (43) 81 (2) 12 1,254

PORTFOLIO VALUATION DECEMBER 2024

Value by sector

Sector

2024

No. projects

2023

No. projects

2024

£m

2023

£m

Roads 12 12 162 168

Healthcare 2 2 133 129

Student accommodation 5 6 137 137

Energy transition 4 4 64 44

Other 2 2 29 31

UK total 25 26 525 509

US military housing 21 21 605 562

Student accommodation and other PPP 5 4 58 83

Residential housing 9 8 66 58

US total 35 33 729 703

Total 60 59 1,254 1,212

Value by phase

Phase

2024

No. projects

2023

No. projects

2024

£m

2023

£m

Operations 57 55 1,208 1,164

Construction 3 3 46 46

Preferred bidder – 1 – 2

Total 60 59 1,254 1,212

Value by income type

Income type

2024

No. projects

2023

No. projects

2024

£m

2023

£m

Availability based 17 17 370 353

Demand – operationally proven (2+years) 39 37 836 807

Demand – early stage (less than 2years) 4 5 48 52

Total 60 59 1,254 1,212

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

39Balfour Beatty plc | Annual Report and Accounts 2024

ofindividual projects and reflect secondary market

transaction experience. The main exception to the

use of DCF is for US multifamily housing projects

which, due to the perpetual nature of the assets

and the depth and liquidity of the rental housing

market, are valued based on periodic broker

reports for each property.

UK discount rates range from 7.25% to 10.25%

(2023: 7.25% to 9.25%) depending on the

maturity and risk of each project. The implied

weighted average discount rate for the UK

portfolio is 8.4% (2023 8.3%). A 1% change in

the discount rate would change the value of

theUK portfolio by approximately £48 million.

US discount rates range between 6.25% and 10.5%

(2023: 6.25% and 10.5%) and the implied US

weighted average discount rate is 7.9% (2023: 8.1%).

A 1% change in the discount rate would change

the value of the US portfolio by approximately

£79million.

The portfolio remains positively correlated to

inflation. A 1% change in the long‑term inflation

rate in the UK portfolio would change the valuation

by approximately £28 million and a 1% change in

the long‑term rental growth rate in the US

portfolio would change the valuation by

approximately £74 million.

As in previous periods, the Directors’ valuation

may differ significantly from the accounting book

value of investments shown in the financial

statements, which are produced in accordance

with International Financial Reporting Standards

(IFRS) rather than using a discounted cash flow

approach. A full reconciliation is provided in

section i) of the Measuring Our Financial

Performance section.

UK PORTFOLIO VALUE AT A RANGE OF DISCOUNT RATES

600

700

800

500

Directors’ valuation £m

Discount rate

December 2024 December 2023

400

300

200

100

+2% +1.5% +1% +0.5% DV case

‑0.5% ‑1% ‑1.5% 2%

482

525

577

464

509

564

US PORTFOLIO VALUE AT A RANGE OF DISCOUNT RATES

1,200

1,000

Directors’ valuation £m

Discount rate

December 2024 December 2023

800

600

400

200

+2% +1.5% +1% +0.5% DV case ‑0.5% ‑1% ‑1.5% 2%

656

729

818

634

703

788

PORTFOLIO INVESTMENT, DIVESTMENT AND DISTRIBUTIONS

Directors’ valuation £m

Distributions Investment Divestment Directors’ valuation

Distributions, investment and divestment

‑250

‑50

‑500

‑100

‑750

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

‑150

250

500

100

750

150

1,000

200

1,250

250

1,500

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Balfour Beatty plc | Annual Report and Accounts 2024

4040

HEALTH, SAFETY AND WELLBEING

Creating a safe and

healthy workplace

At Balfour Beatty, the health, safety and wellbeing of our people

and partners is fundamental to our success.

Through our Zero Harm vision, we are committed

to eliminating all illness and injuries caused by our

work activity and embedding a culture where

safety is a core value. Through monitoring our

leading indicators, and adopting an innovative,

collaborative and data‑driven approach, we can

proactively manage health, safety and wellbeing

risks. Beyond physical safety, we recognise the

importance of occupational health, including

mental health and wellbeing, and offer comprehensive

support, training and initiatives to ensure everyone

goes home safe and well every day. Aligned with

our Build to Last strategy, we continue to drive

industry‑leading standards, fostering a workplace

where people feel empowered to speak up, take

responsibility, and help shape a safer,

healthierfuture.

In 2024, Balfour Beatty successfully delivered

anumber of incredibly complex projects, delivering

over 105 million hours of work and achieving our

safest year to date across challenging environments.

This milestone is a direct result of the unwavering

dedication of our people and partners, who live

and breathe our Zero Harm ethos every day. Our

success goes beyond statistics; it embodies a

culture of shared responsibility, where safety is

not just a priority but a fundamental value that

guides every decision and action.

Performance statistics

LOST TIME INJURY RATE

0.09

MAJOR INJURY RATE

0.02

ACCIDENT FREQUENCY RATE

3-DAYLOSTTIME INJURIES

0.07

ACCIDENT FREQUENCY RATE

7-DAYLOSTTIME INJURIES

0.05

Balfour Beatty requires its employees

and supply chain partners to always

follow our four Golden Rules. We believe

that if these simple steps are followed at

all times, the chance of a preventable

incident is eliminated.

Strong governance

andaccountability

Health, safety and wellbeing remain our highest

priority, underpinned by strong governance and

accountability. We treat health like safety and

mental health like physical health, ensuring a

holistic approach to wellbeing.

Our Board‑level Safety and Sustainability

Committee provides strategic oversight of

theZero Harm strategy, ensuring continuous

improvement, while our Executive Committee

drives accountability for this strategy working

closely with the Health, Safety and Wellbeing

team to identify areas of focus and performance

criteria, and reviewing any serious incidents

where necessary.

To strengthen operational safety, in 2024 we

launched a Project Construction Leads group for

all those responsible for frontline safety across

our sites. Recognising the vital role our supply

chain has in delivering our projects safely, we also

hosted the inaugural Strategic Supplier Safety,

Health, and Environment Leadership team (SHELT)

forum. By aligning our supply chain partners with

our Zero Harm objectives, we aim to drive systemic

safety improvements throughout our operations.

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41Balfour Beatty plc | Annual Report and Accounts 2024

Our industry-leading safety

performance this year

isadirect result of the

unwavering commitment,

vigilance and care shown

by our people every day.

Zero Harm isn’t just a goal,

it’s a mindset that defines

how we work, support

each other and drive

change across our industry.”

Lee Hewitt

UK Health, Safety and Wellbeing

Director,Balfour Beatty

Industry-leading safety

performance

2024 saw industry‑leading safety performance,

with improvements across all key indicators:

@ our Lost Time Injury Rate (LTIR) improved from

0.11 to 0.09 across the Group, marking our

lowest‑ever rate of injury;

@ in the UK, we recorded an LTIR of 0.11,

surpassing even the artificially low incident

rates seen during the COVID‑19 pandemic; and

@ in the US, our LTIR dropped from 0.10 to 0.07,

alongside industry‑leading performance across

other safety metrics.

These achievements were underpinned by a

strengthened Zero Harm culture, with a significant

increase in health and safety observations – our

key leading indicator – rising to over 470,000,

driven in part by the US business nearly doubling

its observations.

Despite working a record 105 million hours, we

maintained a strong safety record, proving that

increased complexity and scale do not compromise

our commitment to Zero Harm. Individual projects

and business units exemplified this ethos:

@ in UK Construction three of our Regional Civils

delivery units, along with the Regional Buildings

Business Unit celebrated year‑long Zero Harm

milestones; and

@ our Balfour Beatty VINCI HS2 joint venture, with

a 9,000‑strong workforce, celebrated 1.7 million

hours without a Lost Time Injury (LTI).

LOST TIME INJURY RATE AND HEALTH, SAFETY AND WELLBEING OBSERVATIONS

Observations (000)

LTIR

@ Across the US:

– 41 projects achieved over one year without

an LTI;

– 12 projects reached over five years without an

LTI; and

– our US military housing Navy base, Quiet

Harbor at Saratoga Springs’ team marked

16years without an LTI.

As Balfour Beatty continues to build the critical

infrastructure of the future, its focus remains

steadfast: ensuring that every person who works

with us goes home safe and well. Through leadership,

digital innovation, and engagement, we are setting

new benchmarks for health, safety, and wellbeing

– driving progress across our industry and beyond.

MAJOR INJURY RATE

Excluding international joint ventures.

0.03

0.02

0.03

0.04

0.05

0.06

0.05

24201918171615 21 22 23

00.00

50,000

0.05

100,000

0.10

150,000

0.15

200,000

0.20

250,000

0.25

300,000

0.30

350,000

400,000

450,000

500,000

16 17 18 19 20 21 22 23 24

Pre 2022 LTIR adjusted upwards in 2022 report, following internal reclassification of

incidents within one business area. Excluding international joint ventures.

LTIR

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Balfour Beatty plc | Annual Report and Accounts 2024

4242

HEALTH, SAFETY AND WELLBEING CONTINUED

18th consecutive year of safety

recognition in the US

In 2024 Balfour Beatty’s US Rail team celebrated

their 18th consecutive year of recognition from

the National Railroad Construction (NRC)

Maintenance Association through their Safe

Contractor of the Year award programme.

This year was the 10th time the team received

platinum level recognition, equating to a perfect

score of 100 out of 100 points in the rigorous

evaluation process. This award was given in

recognition of nearly 800 Balfour Beatty

teammates working almost one million hours

with zero lost time injury, to deliver approximately

700 miles of track work across three states.

Best mental health in the workplace

strategy award in the UK

In 2024, Balfour Beatty won the ‘Best Mental

Health in the Workplace Strategy’ Award at the

This Can Happen Global Awards which recognises

organisations that have implemented an exceptional

strategy to strengthen mental wellbeing through

adopting an inclusive, preventative, and supportive

approach. This cross‑sector accolade recognised

the evolution of our wellbeing strategy since

2020 as it has progressed from awareness

raising and people‑focused reactive support,

toproactivesolutions.

Balfour Beatty was proud to showcase its

holistic approach encompassing our Health and

Wellbeing Strategy underpinned by our Zero

Harm vision, alongside project and employee‑led

initiatives such as the appointment of health and

wellbeing advisers and employee groups such

as the Menopause Support Group.

The judge recognised ‘great implementation (of

the strategy) with a holistic approach to improve

mental health and wellbeing’.

Gammon celebrates success

at2024 CIC Outstanding

ContractorAwards

Gammon, our joint venture which operates

inSoutheast Asia, won multiple awards at the

2024 CIC Outstanding Contractor Awards,

including the prestigious ‘Outstanding Contractor

Award’ in the Major Contractor category. These

awards recognise commitment to safety,

innovation, young practitioners, sustainability,

professionalism and integrity management.

Driving Zero Harm through

digital innovation

In 2024, StoaSafety, our in‑house, AI‑driven digital

innovation programme for safety, began to bring

the power of artificial intelligence to bear in

enhancing safety outcomes. As an organisation,

we collect vast amounts of safety data, much of

which has traditionally been used to shape our

strategic direction. However, many of these

datapoints are lagging indicators. By leveraging

AI‑powered large language model tools, we can

now analyse this data more comprehensively,

enabling a more predictive approach to identifying

safety trends and risks.

A key example is our observation data – one of the

strongest indicators of safety culture on our sites

and projects. Over the course of our Build to Last

journey, our industry‑leading Lost Time Injury Rate

(LTIR) has been closely linked to an increase in

observations. AI allows us to harness this correlation,

pinpointing areas where early intervention can

driveeven stronger safety outcomes.

Already, this approach is delivering tangible benefits.

AI analysis of observation data has enabled us to

identify and address instances of abuse faced by

ourcolleagues on the road network. By mapping

high‑risk locations at a glance, we can proactively

engage with local police forces and authorities to

mitigate risks and enhance protection for our

workforce. This is just one example of how an

AI‑powered, data‑driven approach can help drive

improvements in health, safety and wellbeing.

BELOW

Gammon team at the CIC Outstanding

Contractor Awards

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43Balfour Beatty plc | Annual Report and Accounts 2024

Human form recognition

In 2024, we accelerated the development and

deployment of human form recognition (HFR)

cameras, reinforcing our commitment to innovation

in site safety. From June, all plant hired from

Balfour Beatty’s approved supply chain partners

has been equipped with this mandatory system,

marking a significant milestone in our safety

strategy. These award‑winning, multi‑camera

systems are installed on mobile plant to detect

human presence and provide immediate visual

and audible alerts to operators, preventing

potential collisions before they occur.

A key advantage of HFR technology is its ability to

capture and analyse incursion data. By providing

both telematic data and automated video footage

of exclusion zone breaches, HFR enables

supervisors and management teams to build a

more comprehensive understanding of site‑specific

risks. As AI technology advances, the integration

of real‑time video analysis will allow us to identify

patterns, trends, and root causes of people‑plant

interface infringements. These insights will help

us refine our approach, enhancing planning,

training, and operational safety measures to

further reduce risk and ensure our people go

home safe every day.

Digital rehearsal to manage risk

The work Balfour Beatty colleagues undertake is

often challenging and highly technical. Factors

such as location, other ongoing works, proximity

to road and rail infrastructure and members of the

public, programme and space constraints, all add

layers of complexity to our operations. In 2024,

we developed the capacity to perform ‘digital

rehearsals’ – 3D animated walk‑throughs of work

activities in simulated environments designed to

replicate real‑world conditions. These rehearsals

can help highlight additional risks and hazards that

may not have been apparent at design phase, and

can be turned into short, animated videos to help

brief colleagues.

Winner: Nick Boyle

Technical Director, Major Projects

Nick’s contribution to Zero Harm by driving innovation, improvement and

health and safety by design across Balfour Beatty and the broader industry

is significant. Since 2009, Nick has created, organised, promoted and

hosted the Zero Harm Safety by Design and Engineering Forum. With

300+ presentations and 1000+ online attendees, colleagues of all levels,

academics, and our supply chain are empowered to share improvements

in health and safety. Nick also created the Technical Expert Networks,

empowering others to challenge and improve their areas of the business.

READ MORE ABOUT

OUR ICON AWARDS

EVENT ON p74

Above: Award presentation photo. (Left to right) Lee Hewitt, UK Health, Safety and

Wellbeing Director, Nick Boyle, Technical Director – Major Projects, and Stuart Doughty

CMG, former Balfour Beatty Non‑executive Director.

Zero Harm Award

This category recognised those who put health

and safety at the heart of everything they do;

challenging the norm, driving empowerment,

and taking action to eliminate risks and protect

the mental and physical health of our people.

Equipping our teams with

essentialinformation

Minimising the risk of debilitating conditions caused by prolonged use

ofpowered hand tools remains a critical focus across our projects.

Where possible, we design out activities that require vibrating tools,

butwhere their use is unavoidable, we are committed to reducing

exposure and mitigating risk. Our Hand Arm Vibration Syndrome (HAVS)

zero target – a campaign to eliminate new cases of HAVS – has driven

innovation and engagement across the business, generating a series

ofMyC ideas aimed at improving workplace health.

One such idea led to the development of the Balfour Beatty Tool Selector

Guide, created in collaboration with occupational health specialists and

our Asset & Technology Solutions team. This mobile app provides site

teams with a regulated and approved list of low‑vibration tools that

deliver the same efficiency while significantly reducing health risks.

Byoffering a selection of at least five alternative tools for each task,

theguide helps eliminate high‑vibration options and raises awareness

ofsafer alternatives.

The introduction of this tool marks a significant step forward in reducing

HAVS risks across our operations.

BELOW

A screenshot of the HAVS selector tool mobile app.

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Balfour Beatty plc | Annual Report and Accounts 2024

4444

HEALTH, SAFETY AND WELLBEING CONTINUED

US Buildings’ Zero Harm lunch and learn sessions

In 2024, Balfour Beatty’s US Buildings team entered its third year of hosting employee Lunch

andLearn sessions, reinforcing our commitment to continuous learning and safety excellence.

Aminimum of sixteen sessions are held each year, with participation required for all operations,

preconstruction, and Health, Safety, and Environmental teams.

These sessions cover a wide array of topics, including impactful safety observations, client

perspectives on safety, driver expectations, managing public access routes, utility strike prevention,

and more. Each Lunch and Learn offers an in‑depth exploration of lessons learned, innovative

solutions, and knowledge sharing; fostering meaningful discussions to drive forward our Zero

Harmculture.

Going beyond compliance

inhealth and wellbeing

Balfour Beatty’s award‑winning health, safety and

wellbeing strategy, established in 2022, is focused

on fostering a healthy organisation that goes beyond

compliance. It aims to support the long‑term

health and success of our employees, partners,

and the communities we serve. Through continuous

evaluation and improvement, our wellbeing

initiatives have led to innovations such as the

Health Maturity Matrix, a self‑assessment tool to

help our projects determine a baseline, and then

plan areas for improvement with specific action

plansand commitment to priority areas, tailored

e‑learning tools on health topics, enhanced

peersupport programmes, and new trauma

support guidelines.

Driving Zero Harm through

digital innovation continued

Mandatory digital permits

Building on the success of its digital permitting

systems in managing high‑risk activities, Balfour

Beatty made digital permits mandatory across its

sites from January 2024. This step drives clarity,

efficiency and discipline in adhering to safe

systems of work, ensuring that critical checks are

visibly and consistently applied.

Our approach to digital permitting has evolved

beyond the initial mandate, now encompassing

allpoint‑of‑work safety checks, including permits,

briefings, and risk assessments. These can now

be conducted digitally, approved remotely, and

supported by photographs and geolocation data to

verify that checks occur precisely where they are

required. The workforce has embraced this innovation,

contributing 12 My Contribution ideas to enhance

functionality. One of the outputs was the digitisation

of pre‑use plant inspection checklists, which

streamlines checks while ensuring only relevant,

equipment‑specific questions are asked. Work is

also progressing to link these inspection records

directly to permits, further strengthening

safetyoversight.

Digital permits have been particularly impactful

inreducing risks associated with breaking ground

near existing services ‑ over 40,000 digital permits

to break ground were issued in 2024, contributing

to a 30% reduction in service strikes. (See the

2024 utility strike rate graph to the right.) As a

result of these enhanced control measures, only

two high‑potential service strikes were recorded

in the UK this year, demonstrating the tangible

safety benefits of our digital‑first approach.

Today, 90% of our permits are managed digitally,

with ongoing efforts to expand coverage in areas

with limited internet connectivity.

2024 UTILITY STRIKE RATE

Hours worked

Utility strike rate

0.000

Hours worked – millions

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2022 2023

2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

45Balfour Beatty plc | Annual Report and Accounts 2024

‘Let’s Talk’ across the UK

Each September, Balfour Beatty takes the opportunity to reflect on our health, safety and wellbeing

culture, focusing on how we can continue to enhance safety across our sites. In 2024, our Project

Construction Leads – including Works Managers, General Foremen, Site Managers, and Supervisors

– led ‘Let’s Talk’ sessions, supported by local Health, Safety, and Wellbeing teams. These sessions

focused on empowering our local leaders to set the tone for safe work practices, inspiring their

teams and reinforcing the importance of leading by example. The ‘Let’s Talk’ initiative recognised

thesignificant progress made while also encouraging open discussions on the challenges still to

beaddressed, reinforcing the need to make safety personal at every level.

Promoting psychological wellbeing

In December 2024, Balfour Beatty achieved ISO

45003 accreditation, the first global standard for

managing psychological health and safety at work.

This prestigious certification affirms the quality of

our business processes and demonstrates our

ongoing commitment to addressing mental health

within the construction industry. Balfour Beatty is

proud to be one of only a few companies in our

sector to have attained this certification, reinforcing

our leadership in promoting psychological wellbeing.

By meeting the rigorous standards of ISO 45003,

we ensure that best practices are consistently

applied, driving accountability and fostering a

culture of care and mental health awareness

across our projects.

Suicide Prevention Month in the US

Recognising the heightened suicide risk in the

construction industry, Balfour Beatty’s US Buildings

and Civils business is committed to raising awareness

and empowering our teams and partners to recognise

the warning signs of suicide. During the 2024

Suicide Prevention Awareness Month, and beyond,

the team facilitated important conversations and

highlighted vital mental health resources for

ourcolleagues.

Two training sessions were conducted to equip

attendees with the skills to support colleagues,

friends, or family members at risk. Participants

were trained to recognise signs of suicide risk,

offer support, and connect individuals with the

help they need.

UK supervisor forums and project

construction leads

Balfour Beatty’s Health, Safety and Wellbeing

strategy continues to evolve, embedding safety

deeply into our organisational culture. In 2024,

westrengthened our engagement with employees

at all levels through multiple communication channels,

including The Hi‑Vis newsletter, Site Leader calls,

and health, safety and wellbeing function calls.

These channels ensure that safety remains at

thefront of our minds and support a culture of

transparency and continuous improvement

acrossthe business.

Recognising that our supervisors are the linchpins

of safety on the ground, Balfour Beatty has

reinforced their critical role in shaping our Zero

Harm objectives. The establishment of the UK

Supervisor Forum gives these leaders a direct

voice in influencing the direction of our strategy,

creating a forum for sharing expertise and driving

safety initiatives across our operations. Their

insights are vital in cascading safety priorities

through local Business Unit forums, creating a

consistent and integrated approach to safety

across all levels of the business.

Building on the success of this approach, in 2024

we created a dedicated group of Project Construction

Leads (PCLs), who are pivotal in influencing safety

outcomes on site. This ‘Community of Practice’

fosters collaboration and standardisation across

the business, empowering approximately 125

colleagues to drive a consistent, high‑performance

safety culture across all projects. Regular interactions

through face‑to‑face meetings and bi‑monthly

online forums ensure the ongoing evolution of our

safety practices and strengthen our collective

commitment to Zero Harm.

SCAN OR CLICK TO

WATCH LEO'S VISIT TO

THE UNIVERSITY OF

SUSSEX FOR THE 'LET'S

TALK' EVENT.

SCAN OR CLICK TO WATCH THE

IMPORTANCE OF SITE BRIEFING

The ‘Let’s Talk’ campaign has

been pivotal in promoting open

communication and tackling

local project challenges. With the

strong backing of our Project

Construction Leads, we’ve seen

an incredible level of engagement

that will undoubtedly strengthen

our safety culture

moving forward.”

Eddie Tapper

UK Works Manager, Balfour Beatty

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Balfour Beatty plc | Annual Report and Accounts 2024

4646

ETHICS AND COMPLIANCE

Ethics programme

Under the oversight of the Board, the ethics and

compliance programme consists of a framework

of enterprise‑wide and Strategic Business

Unit‑specific policies, procedures, guidelines

andresponsibilities designed to:

@ promote and foster an organisational culture of

integrity, ethical decision making and compliance

with Balfour Beatty’s values and behaviours as

reflected in the Cultural Framework;

@ assure that employees conduct business with

the highest standards of ethics and integrity

and in compliance with all applicable laws and

regulations; and

@ promote appropriate risk assessment and due

diligence to prevent and detect unlawful and

unethical conduct.

In 2024 a key focus area was the enhancement

ofour ethics and compliance systems. A new

Group‑wide Speak Up helpline and disclosure

registers were launched, with the systems

co‑located in a new portal, providing a one‑stop

shop for the main ethics and compliance systems

our employees need to use.

Steps have also been taken to align the programme

itself across our territories with common, global

principles underpinning our new Group policies on

conflicts of interest and gifts and hospitality. This

alignment has been aided by the appointment of

new Heads of Ethics and Compliance for the UK

and US Buildings and Civils businesses. 2025 will

see a continued focus on alignment across the

Group where possible.

In the UK, a key area of focus during 2024 has

been on strengthening the engagement with our

Ethics Officers, a network of employees who

volunteer to support key ethics and compliance

initiatives.

A Fraud Working Group chaired by the Group

General Counsel has also been established to

oversee our response to the new ‘failure to

prevent fraud’ offence under the Economic Crime

and Corporate Transparency Act 2023. A key first

step has been to focus on our fraud risk assessment.

We anticipate this being a priority area in 2025.

In relation to the US Military Housing business,

Balfour Beatty continues to co‑operate with

theUS Department of Justice and is now in

thethird year of a monitorship entered into on

6September 2022.

SCAN OR CLICK TO FIND OUT

MORE ABOUT OUR CODE OF

ETHICS PROGRAMME

Doing the right thing

Every day we are trusted by customers, business partners and the communities

we work with to do the right thing, make a difference and behave responsibly.

That includes treating each other fairly, respecting our business partners and

caring for our communities – leaving a legacy we can be proud of. It also

means being transparent and acting with integrity.

Speak Up

Speaking up is at the heart of our ethics and

compliance programme and we continue to

explore all opportunities for encouraging

employees to voice their concerns or questions.

In our 2024 employee engagement survey, 75%

of responding UK and US employees indicated

that they felt empowered to raise concerns and

speak up without fear of negative consequences,

an increase of 1% compared to 2023.

In 2024, 495 Speak Up cases were received

across the Group, an increase of 11% from 2023.

The Right to Respect programme that we started

to roll out in 2023 appears to have been a key

driver in our increased reporting, something which

we view positively and is indicative of a healthy

Speak Up culture. Our Speak Up reporting rate is

in line with benchmarks.

Rates of substantiation remained consistent with

the prior year at 40% (2023: 39%). Concerns

about employee conduct continue to make up the

majority of cases received, accounting for 50% of

all cases in 2024 (2023: 51%), followed by cases

relating to fraud, deception and dishonesty (15%),

and Code of Ethics violations (14%).

Confirmed breaches of Balfour Beatty’s Code of

Ethics may result in disciplinary action, including

termination of employment for serious breaches,

with 47 individuals leaving the business in 2024

following substantiation of a Speak Up case.

Asubstantiated breach by a supply chain partner

of our Code of Ethics or Supplier Standards may

result in termination of their contract. As well as

addressing cases individually, we conduct root

cause analysis where possible to enable us to

take steps to prevent similar issues arising again

in the future.

NUMBER OF SPEAK UP

HELPLINE CASES

NUMBER OF CASES PER

1,000 EMPLOYEES

444

495

196

279

292

22 23 24

20 21

In 2025, we will be providing more transparency

to our employees on our Speak Up data and on

the real issues we address as part ofour ongoing

efforts to demonstrate the benefitsof speaking up.

Improving industry standards

The Group plays its part in supporting others

tooand strives to help improve ethical business

standards across the industry, regularly interacting

and supporting ethics focused industry bodies

such as the Institute for Business Ethics and the

Business Ethics Leadership Alliance.

FIND OUT MORE INFORMATION ON OUR

APPROACH TO MODERN SLAVERY ON

PAGE 62

SCAN OR CLICK TO READ THE

GROUP’S MODERN SLAVERY

STATEMENT 2024

24.9

26.7

11.0

15.8

15.5

22 23 2420 21

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47Balfour Beatty plc | Annual Report and Accounts 2024

TAX STRATEGY

Being a responsible taxpayer

Balfour Beatty recognises that paying taxes arising

from its activities is an important part of how it

supports the communities in which it operates.

The Group makes a major contribution to the tax

revenues of governments in the numerous territories

in which it operates. For example, the Group’s tax

contribution extends considerably beyond corporation

tax and the collection of substantial amounts of

income tax and includes the payment of

significant employer social security contributions.

The Group’s tax strategy, approved by the Board,

is to sustainably minimise tax cost whilst complying

with the law. In doing so, Balfour Beatty ensures

it acts in accordance with its Cultural Framework,

which provides a simple and clear view of the

purpose, values and behaviours of the Group’s

Build to Last strategy. The Group aims to meet

alllegal requirements, filing all appropriate tax

returns and making tax payments accurately and

on time. The Group’s tax strategy applies to all

territories in which it does business.

Tax governance

Balfour Beatty has clear tax policies, procedures

and controls in place which are overseen by the

Chief Financial Officer.

A dedicated internal Tax team, led by the Group

Head of Tax, is responsible for the implementation

of the Group’s tax strategy and supporting tax

policies. Members of the Tax team are highly

experienced with appropriate professional

qualifications and experience which reflect the

responsibilities required for their roles.

Tax risk appetite

The Group manages its tax affairs in a proactive

manner that seeks to maximise shareholder value

and as such utilises tax incentives or opportunities

for obtaining tax efficiencies where appropriate

and where they support genuine commercial

activity. The Group does not enter into artificial

arrangements that lack commercial purpose in

order to secure a tax advantage. The aim is to

ensure full compliance with all statutory

obligations and as a consequence attempt to

minimise risk wherever possible.

In keeping with the Corporate Criminal Offence of

Failure to Prevent the Facilitation of Tax Evasion

legislation, Balfour Beatty does not tolerate tax

evasion or the facilitation of tax evasion. Balfour

Beatty applies appropriate procedures and controls

which seek to prevent any person acting on its

behalf from facilitating tax evasion.

Managing tax risk

There are a number of factors that affect the

Group’s tax risk and these arise both internally

and externally. Balfour Beatty’s ability to control

these factors varies and its internal Tax team

works to minimise these risks to an acceptable

level. For example:

@ new and developing tax legislation is monitored

and where it is relevant Balfour Beatty participates

in consultations issued by the tax authorities.

When new or changed legislation is announced,

the impact on the Group is assessed and active

measures are taken to ensure there are adequate

processes in place to comply with any change;

@ tax risks in relation to compliance and reporting

are managed by meeting regularly with professional

advisers, industry groups and the tax authorities

to both keep abreast of changes in these areas

and to seek information on new systems and

software; and

@ risk in relation to tax in general is managed

bythe internal Tax team and if a position is

uncertain the Group may obtain third‑party

advice in order to gain clarity or support for

aparticular stance or approach.

Any tax risks are included in the Group risk

approach to risk management.

Interaction with tax authorities

Balfour Beatty’s approach to its tax affairs is

supported by an open, honest and positive

working relationship with the tax authorities,

withregular dialogue. Should any dispute arise

with regard to the interpretation and application

oftax law, the Group is committed to addressing

the matter promptly and resolving it in an open

and constructive manner.

Being a responsible taxpayer

This tax strategy has been prepared and published in accordance with

Paragraph 16 (2), Schedule 19 of the Finance Act 2016, on behalf of Balfour

Beatty plc and all UK tax resident entities in the Balfour Beatty Group.

Winner: Julia Buckland

Head of Benchmarking,

MajorProjectsand Highways

Alongside her role as Head of Benchmarking,

Julia’s commitment to improving honesty,

respect, fairness and responsibility has been

the catalyst for cultural change in Balfour

Beatty. As a technical specialist and engineer,

Julia brings a unique perspective and

approach, which allows her to offer logical,

reasoned and detailed insight into ethical

issues. This experience, coupled with her

extensive site‑based and engineering

background, allows her to provide a balanced,

well‑rounded perspective on the challenges

faced both in an office and out on site.

READ MORE ABOUT

OUR ICON AWARDS

EVENT ON p74

Above: Award presentation photo. (Left to right) Tracey

Wood, Group General Counsel and Company Secretary,

JuliaBuckland, Head of Benchmarking – Major Projects and

Highways, and Nigel Cann, Managing Director – Sizewell C.

Walk the

Talk Award

This category celebrated a colleague who

always acts with integrity, treats everyone

fairly, speaks up when things aren’t right

and helps us to make sure our business is

worthy of the trust others place in us.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

4848

SUSTAINABILITY

Building New Futures

This evolution expanded our sustainability focus

areas to better address the evolving challenges

and opportunities we see. It maintains a strong

emphasis on net zero, waste reduction and

community value, driven by the urgency of the

climate crisis and a belief that we can achieve

more. In addition, we have added critical new

focus areas: supply chain integrity, nature positive,

and employee diversity, equity, and inclusion.

These additions reflect our understanding that

sustainability can only be achieved through a

trulyholistic approach.

Our commitment to mitigate and adapt to climate

change is now underpinned by meaningful,

science‑based net zero targets that ensure we are

on the right path. In 2024, we received independent

validation from the Science Based Targets initiative

(SBTi) for our near‑ and long‑term net zero targets,

reinforcing the ambition and achievability of our

goals. Meanwhile, our approach to waste reduction

has evolved into a broader focus on resource

efficiency, reflecting our approach to tackling the

issue from the design stage to prevent waste

before it arises.

In our community engagement focus area, we

have exceeded expectations by surpassing our

target to generate £3 billion of social value in the

UK by 2030, five years earlier than originally

planned. We will be setting a new target in this

area in 2025, aiming to generate even greater

impact and deliver more value to the communities

we serve.

Understanding that net zero cannot be achieved

without also restoring and protecting the natural

world, we have placed biodiversity – or being nature

positive – at the heart of our strategy. As part of this,

we committed to the UK Business & Biodiversity

Forum’s Nature Positive Pledge in 2024, and during

2025, we will set clear and measurable UK targets

to halt nature loss, ensuring the natural environment

is fully integrated into our approach. This focus on

biodiversity enables us to enhance ecosystems and

drive tangible improvements as part of our broader

sustainability efforts.

Achieving our ambitious targets requires robust

collaboration across our supply chain. As part of

this, we have introduced supply chain integrity as

a new focus area in our strategy, understanding

that ensuring the sustainability and resilience of

our supply chain is critical to reaching our long‑term

objectives. By strengthening these partnerships,

we are ensuring shared accountability and a unified

approach to our sustainability commitments.

The sixth focus area is the employee diversity,

equity and inclusion. By fostering an organisation

and culture that is diverse, equitable and inclusive,

we aim to be the employer of choice for talented

individuals, harnessing their creativity and innovation

to drive forward our sustainability efforts and build

a stronger, more resilient business.

To enable progress and ensure we meet our

sustainability targets, shown on page 49, we have

made significant investments in our sustainability

function, building in‑house expertise in key areas

such as energy, carbon, social impact, biodiversity,

and materials engineering. These investments are

delivering tangible results. As well as exceeding

expectations against our £3billion social value target

in 2024, most significant decrease in carbon intensity

dropping from 15.0 to 12.8 tCO

e per £m revenue,

representing a 15% reduction. In addition to this,

despite several key projects being at the peak of

their carbon‑intensive activities, we were able to

maintain our absolute carbon emissions from last

year, reflecting our consistent progress towards

ambitious climate objectives and sustainable growth.

Looking to the future, we remain unwavering in

our mission to drive transformative change. By

embedding our core values – Lean, Expert, Trusted,

Safe, and Sustainable – into everything we do, we

are positioning ourselves as the partner of choice

for our customers and continuing to build a resilient,

sustainable future for our industry and the

communities we serve.

In June 2024, we published the next evolution of our Building New Futures sustainability

strategy, responding to the rapid changes in the sustainability agenda since 2020.

Building

NewFutures

Award

We want to build a better future for

everyone, so this category celebrated an

individual who played a key role in making

us a more sustainable business.

Winner: Kyle Frandsen

Kyle Frandsen, Vice President,

Sacramento, US Buildings

Kyle has passionately led on the ‘Green Apple

Day of Service’ for 11 years – an initiative by

the United States Green Building Council that

brings volunteers together to host local service

projects that make schools healthier and more

sustainable. The impact that Kyle has brought

to the business and our client’s communities

through his work on this sustainability project

are laudable. It is spectacular that Kyle’s efforts

have not only inspired Balfour Beatty but have

also inspired California’s Encinitas Union

School District to carry the sustainability torch

with amazing results – a true example of

leaving a positive legacy.

Above: Award presentation photo. (Left to right) Jo Gilroy,

Group Director of Sustainability, Kyle Frandsen, Vice President,

Sacramento – US Buildings, and Philippa Spence, Managing

Director Global Division – Ramboll.

READ MORE ABOUT OUR ICON

AWARDS EVENT ON p74

Environmental, Social

andGovernance (ESG)

ratingsand scores

In 2024, Balfour Beatty plc achieved a

FTSE4Good ESG score of 3.2 on a scale from

0 to 5 (higher scores are better).

Balfour Beatty submitted a disclosure to CDP

for 2024; however, we did not receive a

score by the date of this publication.

CDP scores are made publicly available at:

www.cdp.net/en/data/scores

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

49Balfour Beatty plc | Annual Report and Accounts 2024

1 Measured against a 2020 baseline and verified by the SBTi.

2 Measured against a 2020 baseline, not verified by the SBTi as the

SBTionlyvalidateournear(2030)andlongterm (2050) targets.

3 Targets to be set in 2025.

4 Measured against a 2021 baseline.

5 As the Group has not yet quantified climate‑related risk and opportunity

metrics, cross‑industry climate‑related metrics from the TCFD guidance

for all sectors have not been applied. For more information refer to the

climate‑risk and opportunities section (see pages 107 to 115).

6 In 2021 Balfour Beatty set a target to deliver £3 billion in social value by

2030. In 2024 as part of the evolved sustainability strategy this social

value target was updated to be delivered five years early, in 2025.

Our sustainability strategy - Building New Futures

Our focus areas

Our commitments

Our targets

Protecting and enhancing the environment

Climate

change

Supply chain

integrity

Mitigate and adapt

to climate change

Empower

sustainable

suppliers and

champion ethical

practices

42% reduction in

Scope 1 and 2 carbon

emissions by 2030

Net zero Scope 1 and 2

carbon emissions by

2045

Net zero Scope 1, 2

and 3 carbon

emissions by 2050

25% reduction in

Scope 3 carbon

emissions from

purchased goods and

services by2030

Deliver on our clear

and measurable

targets

to halt nature

loss by2030

Nature positive

principles embedded

across our UK

operations to support

nature recovery by

2050

£3 billion of social

value created in the

UK by 2025

4,6

Eliminate

non-hazardous

excavation waste to

landfill in the UK by

2030

Zero avoidable waste

in the UK by2040

Zero avoidable waste

in the US by2050

50% Increase in the

number of female

colleagues% in the UK

by2030

60%

Increase in

minority ethnic and

black representation

in the UK by2030

Nature

positive

Community

engagement

Protect and enhance

the natural

environment

Deliver long lasting

social benefits for

the communities we

operate in

Resource

efficiency

Employee

diversity,

equity

andinclusion

Deliver resource

efficiency through

our operations

Create a diverse

andinclusive

organisation

Leaving a positive social legacy

SCAN OR CLICK TO READ MORE ABOUT OUR

APPROACH TO SUSTAINABILITY AND

EXPLORE OUR BEST CASE STUDIES

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

5050

SUSTAINABILITY CONTINUED

In 2024, Balfour Beatty’s near and long‑term

science‑based targets were validated by the SBTi.

This provides a clear carbon reduction pathway

focused on addressing key activities and

emissions sources across the business.

Balfour Beatty commits to:

@ achieving a 42% reduction in Scope 1 and 2

carbon emissions by 2030;

@ net zero Scope 1 and 2 carbon emissions by

2045; and

@ net zero for Scope 1, 2 and 3 emissions by 2050.

In 2024, we saw a small decrease in the Group’s

absolute carbon emissions and a 15% reduction in

carbon emissions intensity, using the market‑based

methodology.

Of the Group’s Scope 1 and 2 emissions, 91%

were Scope 1 and 9% Scope 2. Balfour Beatty’s

Greenhouse Gas (GHG) emissions are predominantly

from the use of diesel in vehicles, plant and equipment

Market-based

Balfour Beatty’s total Scope 1 and 2 GHG

emissions in 2024 were 143,705 tCO

e. This is a

decrease from 2023 of 1,020 tCO

e, representing

a fractional reduction change of less than 1%.

Market‑based GHG emissions intensity also

showed a reduction from 15.0 to 12.8 tCO

e/£m

revenue, an 15% reduction. Market‑based

methodology uses actual emissions intensity data

from the sources of energy an organisation has

purposefully chosen to calculate carbon emissions

from electricity usage.

Location-based

Balfour Beatty’s total Scope 1 and 2 GHG emissions

in 2024 were 147,296 tCO

e. This is an increase

from 2023 by 835 tCO

e, representing an increase

of less than 1%. The Group’s location‑based GHG

emissions intensity decreased from 15.2 tCO

e/£m

revenue in 2023 to 13.1 tCO

e/£m revenue in 2024,

a reduction of 13%. Location‑based methodology

uses average emissions intensity data to calculate

carbon emissions from electricity usage.

Approach to carbon

emissionsreduction

In 2024, Balfour Beatty set out in detail its approach

to emissions reduction in its PPN 06/21 Carbon

Reduction Plan (CRP) at:

www.balfourbeatty.com/carbon‑reduction‑plan.

Although specific to UK operations, the principles

contained within the CRP apply to global operations

where Balfour Beatty has operational control or

significant influence.

Plant, fleet and generators account for 92% of

Balfour Beatty’s Scope 1 and 2 emissions, to

address this we are taking a three‑pronged

approach to emissions reduction: efficiency,

electrification and alternative fuels.

Climate change

Tailoring battery storage solutionstosuit project needs

Our Energy Management team has developed a

deep understanding of battery capability which

will underpin our ability to effectively charge and

use electric plant, which will be a big focus

in2025.

There are a number of factors which influence

abattery’s performance, and it is important tomake

data‑based decisions that account for arange of

elements including seasonal weather and

temperature variations across the UK, mobilisation

timescales and daily fluctuations indemand.

To determine how these various factors impact

battery use and decide on the technology and

timing for deployment, the team has conducted

extensive trials to analyse the performance of

batteries from our existing fleet. In the process,

they have gained a detailed understanding of

how each of these batteries work, their

efficiency and opportunities and barriers to

adoption in different site locations. Different use

cases have been identified for each technology

type and methodologies developed to measure

and monitor each battery’s efficiency.

Several key lessons have been learned including

how to configure batteries to meet the site

power demands and specific operational

conditions, how to select appropriate battery

technology to best fit generator sizing to

optimise efficiencies and developing a best

practice approach to monitoring. These insights

have driven improvement both within our own

projects but also in the supply chain partners

with whom we work.

We have not stopped our research and will

continue developing our understanding through

strong collaboration with original equipment

manufacturers and suppliers. This will ensure

that as new technology comes to market, we

arewell placed to make well‑informed site

deployment decisions and support our clients

tomake cost‑effective decisions.

Focus areas:

SCAN OR CLICK TO EXPLORE

OUR BEST CASE STUDIES

BELOW

Battery energy storage system used

on Balfour Beatty's sites in the UK.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

51Balfour Beatty plc | Annual Report and Accounts 2024

The site energy efficiency dashboard

Efficiency is part of our three‑pronged approach

to reducing carbon emissions, alongside

electrification and alternative fuels. To help our

site teams understand how they are using

energy in order to identify how they can be

more efficient, we wanted to provide them with

data on how they are using energy.

To do this, we had to overcome a number of

challenges, including:

@ a lack of aggregated and accessible real‑time

data making it hard to identify efficiency

opportunities across fuel consumption,

plantutilisation and energy use;

@ a lack of tools to monitor and manage a sites

carbon footprint effectively; and

@ monitoring of equipment to understand if

itisbeing properly utilised.

To address these challenges, we developed

theSite Energy Efficiency Dashboard (SEED),

which is an innovative tool in our industry.

Theeasy‑to‑use tool brings together energy

consumption data from several sources to

helpour teams to:

@ make decisions that reduce energy

consumption;

@ identify underutilised plant and take actions

to optimise usage;

@ identify assets that are not working efficiently

and address issues;

@ discuss fuel efficiency during monthly project

reviews; and

@ identify training requirements to support

efficient energy use.

Over time, we will be expanding SEED to

capture data from more assets, providing

further opportunities to improve efficiency

andreduce carbon emissions.

GHG reporting methodology

andassurance

Balfour Beatty discloses energy, carbon and

related data aligned to the UK Government

Streamlined Energy and Carbon Reporting

requirements (SECR), covering all seven UN

Framework Convention on Climate Change/Kyoto

gases, and includes data from certain joint

ventures and joint operations in line with the

standards set out in our sustainability reporting

criteria, which is available at: www.balfourbeatty.

com/sustainabilityreporting

Scope 1 and 2 GHG emissions were calculated

using the UK Government, US Environmental

Protection Agency (EPA) and International Energy

Agency’s (IEA) most current conversion factors to

determine equivalent tonnes of carbon dioxide

(tCO

e) that include Global Warming Potential

rates from the Intergovernmental Panel on

Climate Change (IPCC) assessment reports based

on a 100‑year timeframe. To meet this, the Group

has determined and reported all direct emissions

it is responsible for within the organisational

boundary set and does not believe there are

anymaterial omissions.

Balfour Beatty’s Scope 1 and 2 GHG emission

sources include emissions from assets that are

otherwise not referred to across the rest of the

financial statements, such as energy provided by

landlords and customers that Balfour Beatty does

not directly procure.

PwC LLP was engaged to undertake an independent

limited assurance engagement of the Group’s

Scope 1 and 2 emissions and resulting emissions

intensity (expressed as a ratio of emissions to

revenue), reporting to Balfour Beatty plc using

theassurance standards ISAE 3000 (Revised)

andISAE 3410 over the GHG data that has been

highlighted in this report with the symbol

Ⓐ

PwC LLP's full statement is available

at: www.balfourbeatty.com/ILA_2024

Market-based methodology

Since 2020, alongside the location‑based method,

Balfour Beatty has reported against the GHG

Protocol Scope 2 market‑based reporting methodology.

This method allows the application of an emissions

factor of zero tCO

e per kWh to supply contracts

from suppliers of electricity purchased from

renewable sources with a guarantee of origin

certificate. For example, in 2024 in the UK

c.34,474 MWh of green tariff electricity was

procured through the Group’s utility procurement

contract. A residual mix emission factor is applied

to electricity where a REGO is not available. For

electricity which does not come from a renewable

source and a country‑specific residual mix emission

factor is not available, Balfour Beatty has applied

either the appropriate supplier factor based on the

supplier’s published fuel mix where it is known

and can be evidenced, or the country average

electricity emission factor provided by the UK

Government, EPA or IEA (asappropriate).

Scope 3 and outside

ofscopeemissions

Scope 3 emissions and biogenic emissions have

been prepared using the GHG Protocol Scope 3

guidance. As part of the compilation of a full GHG

inventory for submission for validation to the SBTi,

a review was undertaken for both biogenic emissions

and forest, land and agriculture (FLAG) emissions.

Outside of scope emissions are detailed in the

table on page 54. FLAG emissions have been

prepared in alignment with the GHG Protocol

Land Sector and Removals guidance and the

Draftfor Pilot Testing and Review.

Focus areas:

BELOW

A screenshot of Site Energy Efficiency Dashboard.

5252

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Syntech biofuel

Alternative fuels have been identified as key

toour Scope 1 and 2 Science Based Targets

initiative (SBTi) validated carbon reduction

pathway and are important in our ability to

reduce emissions now whilst preparing for

low‑carbon plant options to become more

widely available and feasible for use at scale.

During 2024, working with our strategic plant

hire partners and Original Equipment

Manufacturers (OEMs), we have been trialling

a sustainable biofuel produced by Syntech.

Syntech biofuel is a truly sustainable alternative

to HVO fuel as it is produced in the UK and

100% sourced from UK waste cooking oil. It

can be used as a 100% drop‑in replacement for

diesel in engines with OEM agreement, which

provides an 80 – 90% reduction in carbon

emissions. It can also be blended with diesel

tosupport emissions reductions.

We have agreements to use the biofuel with

several OEMs and suppliers and have an

established framework volume, price and

warranty arrangement for Balfour Beatty

andassociated supply chain use.

Balfour Beatty co‑funded a deep dive¹ into

HVO in 2024, and following the publication of

the report in June we reviewed and updated

our position statement² on HVO. Our position

remains that we have chosen not to promote

HVO use at this time.

SUSTAINABILITY CONTINUED

Climate change continued

Approach for Group carbonreporting

Balfour Beatty’s approach for Group carbonreporting is set out in the following diagram. Tolearn more, please read our sustainability

reporting criteria at: www.balfourbeatty.com/sustainabilityreporting

OUR DIVISIONS

Construction Services Support Services Infrastructure Investments

OPERATIONAL CONTROL (FULLAUTHORITY)

Balfour Beatty uses the operational control GHG

consolidation approach, applying only the guidance

explicit in the GHG Protocol. The Group accounts for

100% of GHG data from operations over which it has full

authority in Scopes 1 and 2 with their associated Scope 3

value chainemissions.

SCOPE 1 AND 2 GHG EMISSIONS

ALL RELEVANT SCOPE 3 CATEGORIES

SCOPE 1 AND 2 GHG EMISSIONS

ALL RELEVANT SCOPE 3 CATEGORIES

SCOPE 3 CATEGORY 15: INVESTMENTS

ENHANCED REPORTING CRITERIA

Balfour Beatty includes Scope 1 and 2 emissions of

certain joint operations and unincorporated joint ventures

where it has been concluded that neither party has full

authority in accordance with the GHG protocol guidance,

but in line with the enhanced reporting criteria where

Balfour Beatty believes that it exerts considerable

influence over operating policies and purchasing

decisions, including those impacting carbon emissions.

Balfour Beatty therefore deems it appropriate to include

such operations within the reporting boundary as it has

operational control in line with the enhanced reporting

criteria. All emissions from these operations are included.

VALUE CHAIN

Direct emissions from equity investments and

incorporated joint ventures are accounted for as

proportional emissions that occur in the reporting year

within Scope 3, Category 15 (Investments) as are any

other joint operations where the Group does not have

considerable influence over operating policies, purchasing

decisions or sustainability performance improvement actions.

Joint operation/

unincorporated joint venture

Incorporated jointventure

Does Balfour Beatty have

full authority to introduce

and implement operating

policies in the shared

operation?

Ye s No

100% Balfour Beatty

operations

Projects that are joint ventures or joint operations with Balfour Beatty

alongside other partners

Equity investments

Focus areas:

1 www.actionsustainability.com/resources/hvo‑guide‑launch/

2 www.balfourbeatty.com/media/0ouj2nyi/hvo‑positioning‑

paper‑2024.pdf

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

53Balfour Beatty plc | Annual Report and Accounts 2024

Offsetting

Balfour Beatty does not, at present, offset

anyGHG emissions arising from the Group’s

operations, on the basis that there are significant

opportunities to abate GHG emissions across

Scopes 1, 2 and 3 through implementing

efficiencies, modern methods of construction

andthe adoption of low‑carbon technologies

andmaterials. As the Group has committed to

anear‑term science‑based target and net zero

target aligned to the business ambition for 1.5°C

campaign via the SBTi, should any offsetting be

decided to be undertaken by the Group in future,

this would abide by the Oxford Principles*.

Balfour Beatty also recognises the role large

organisations can take in ‘insetting’ GHG emissions

by implementing reduced or low‑carbon solutions

within the Group’s value chain and supporting

thedecarbonisation of the construction sector.

Insetting is the reduction of GHG emissions

through investing in projects that sequester or

reduce carbon emissions within a company’s own

supply chain or operational boundary and focuses

on internal actions that directly contribute to

emission reductions or removals.

* www.smithschool.ox.ac.uk/sites/default/

files/2022‑01/Oxford‑Offsetting‑Principles‑2020.pdf

Scope 1 and 2 GHG emissions, baseline year (2020) to 2024

Carbon emissions

Baseline year

2020 2021 2022 2023 2024

Absolute (tCO

Scope 1 – operational control boundary (full authority) 90,850 90,180 83,456 77,8 5 4 71,246

Scope 1 – applying enhanced reporting criteria

20,117 30,772 48,223 54,736 59,632

Total Scope 1 110,9 67 120,952 131,679 132,590 130,878

Ⓐ

Scope 2 – operational control boundary (full authority) 12,668 17, 245 12,296 10,628 15,782

Scope 2 – applying enhanced reporting criteria

534 775 2,634 3,243 635

Total Scope 2 (location-based) 13,202 18,020 14,930 13,871 16,417

Ⓐ

Scope 2 – operational control boundary (full authority) 11,8 5 9 16,399 11,650 6,584 7,239

Scope 2 – applying enhanced reporting criteria

788 791 3,903 5,550 5,587

Total Scope 2 (market-based) 12,647 17,190 15,553 12,13 4 12,826

Ⓐ

Scope 1 and 2 – operational control boundary (full authority) 103,518 107,425 95,752 88,482 87,028

Scope 1 and 2 – applying enhanced reporting criteria

20,651 31,547 50,857 57,979 60,268

Total Scope 1 and 2 (location-based) 124,16 9 138,972 146,609 146,461 147, 296

Scope 1 and 2 – operational control boundary (full authority) 102,709 106,579 95,106 84,439 78,485

Scope 1 and 2 – applying enhanced reporting criteria

20,905 31,563 52,126 60,286 65,220

Total Scope 1 and 2 (market-based) 123,614 13 8,142 147, 23 2 144,725 143,705

Intensity (tCO

e/£m revenue

)

Scope 1 and 2 – operational control boundary (full authority) 11.9 14.2 11.7 12.3 10.2

Scope 1 and 2 – applying enhanced reporting criteria

64.8 99.8 50.4 20.7 22.8

Total Scope 1 and 2 intensity (location-based) 13.8 17.6 16.0 15.2 13.1

Ⓐ

Scope 1 and 2 – operational control boundary (full authority) 11.8 14.1 11.7 11.8 9.2

Scope 1 and 2 – applying enhanced reporting criteria

65.6 99.8 51.7 21.5 24.7

Total Scope 1 and 2 intensity (market-based) 13.8 17.5 16.1 15.0 12.8

Ⓐ

1 The Group’s Greenhouse Gas operational control boundary, metrics and descriptions can be found in the Balfour Beatty Sustainability Reporting Guidance: www.balfourbeatty.com/sustainabilityreporting

2 All emissions of certain joint operations and unincorporated joint ventures where neither party has operational control over the joint operation, but Balfour Beatty has a considerable influence over its operating

policies and purchasing decisions, have been included in the Group’s consolidated Scope 1 and 2 emissions (including intensity calculations) in line with enhanced reporting criteria. This is in addition to the

emissions for Group entities for which Balfour Beatty has full authority in line with the GHG protocol operational control approach. For more detail, please refer to the decision‑making process diagram on page 52.

3 To calculate the carbon intensity of the Group’s Scope 1 and 2 total emissions, an adjustment to the final revenue has been made from £10,015,332,508 to £11,203,986,731. This includes intercompany revenue

and the revenue of certain joint operations and unincorporated joint ventures over which the Group has a considerable influence over their operating policies and purchasing decisions in line with enhanced

reporting criteria and in addition to the revenue of entities which align fully to the GHG protocol operational control approach. To calculate the carbon intensity of the Group’s Scope 1 and 2 emissions from

entities which align fully to the GHG protocol operational control approach an adjustment to the final revenue has been made from £10,015,332,508 to £8,562,929,978, which includes intercompany revenue.

Ⓐ

Included within PwC LLP's limited assurance scope.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

5454

Climate change continued

Scope 3 emissions

Scope 3 emissions arise from Balfour Beatty’s

value chain and investments (including Gammon)

and are not directly controlled by the Group, as

set out in ‘Approach for Group carbon reporting’

on page 52. As Balfour Beatty has validated its

science‑based targets aligned to the Business

Ambition for 1.5°C campaign with the SBTi,

theGroup has prepared Scope 3 information

asdisclosed in the table below. Implementing a

business‑wide assessment, it was determined

that 13 of the 15 Scope 3 categories are relevant

to the Group’s operations. The exceptions are

Category 10: Processing of sold products and

Category 14: Franchises, as the Group does not

sell intermediate products that are processed by

downstream companies or operate franchises.

All relevant categories are calculated and included

in the Group’s Scope 3 GHG inventory. Scope 3

emissions are measured using the GHGProtocol

Corporate Value Chain (Scope3)Standard.

Scope 3 GHG emissions, baseline year (2020) to 2024

Assessment status

Baseline year

2020 2021 2022 2023 2024

Scope 3 emissions (tCO

Cat 1: Purchased goods and services Relevant, Calculated 2,836,477 3,076,315 3,023,913 3,432,952 5,326,854

Cat 2: Capital goods Relevant, Calculated 13,18 4 19,954 17,330 35,866 14,496

Cat 3: Fuel‑ and energy‑related activities (not

included in Scope 1 and 2) Relevant, Calculated 28,082 35,846 36,796 36,912 37,461

Cat 4: Upstream transportation and distribution Relevant, Calculated 164,572 154,240 62,013 110,016 121,096

Cat 5: Waste generated in operations Relevant, Calculated 2,538 5,228 1,551 2,460 1,829

Cat 6: Business travel Relevant, Calculated 2,023 2,589 2,628 7,072 5,653

Cat 7: Employee commuting Relevant, Calculated 1,055 2,110 2,137 2,091 2,225

Cat 8: Upstream leased assets Relevant, Calculated Included in Scope 1 and 2

Cat 9: Downstream transportation and distribution Relevant, Calculated Included in Cat: 4

Cat 11: Use of sold products Relevant, Calculated 118 137 235 244 156

Cat 12: End‑of‑life treatment of sold products Relevant, Calculated 16 18 16 17 10

Cat 13: Downstream leased assets Relevant, Calculated 1,434 1,225 1,565 1,834 1,000

Cat 15: Investments Relevant, Calculated 247,422 269,919 287,680 247,048 242,345

Total Scope 3 3,296,921 3,567,581 3,435,864 3,876,512 5,753,125

Total Scope 3 intensity tCO

e/£m revenue Relevant, Calculated 339 420 345 327 470

Biogenic emissions Relevant, Calculated 12,527 3,828 5,838 8,263 8,554

FLAG emissions Relevant, Calculated 646,198 859,15 8 390,158 1,079,492 274,904

1 To calculate the carbon intensity of the Group’s Scope 3 total emissions, an adjustment to the final revenue has been made from £10,015,332,508 to £12,271,546,592. In addition to the revenue figure of

£11,203,986,731 used for the Group’s Scope 1 and 2 total emissions (see Note 3 to the table on page 53) and in line with enhanced reporting criteria, this includes the Group’s proportional share of the revenue of:

(i)incorporated joint ventures and (ii) certain joint operations and unincorporated joint ventures where the Group does not have considerable influence over their operating policies or purchasing decisions.

SUSTAINABILITY CONTINUED

Approach for Scope 3 reporting

In 2023 Balfour Beatty stated its Scope 3

emissions inventory for the first time. We will

continue to state our Scope 3 inventory year on

year with a view to continuously improving our

reporting methodology to allow us to accurately

report on our Scope 3 emissions reduction

performance once the maturity of industry

datasets allows for ‘actual’ emissions reporting.

The spend methodology currently used does not

allow us to give an accurate picture of performance,

as it does not consider the actual embodied

carbon factors of the materials we are purchasing.

Improvements in data quality, moving from

established estimation methodologies to actual

data and more granular data, will allow Balfour

Beatty to focus its efforts on GHG reductions in

the Scope 3 categories over which the Group can

have the most impact. Primary data collection

with a higher degree of specificity allows the

Group to target the most material Scope 3

categories of Category 1: Purchased goods and

services and Category 15: Investments.

Lack of availability of primary data and corresponding

embodied carbon for Category 1: Purchased goods

and services continues to be a construction

industry‑wide issue. Not having the ability to

understand GHG emissions in a business’ value

chain is a potential barrier to embodied GHG

emissions reductions from high‑carbon products

such as steel, concrete and cement. Read about

how we are working with our supply chain to

decarbonise carbon‑intensive materials on page 61.

In 2024, the Group continued to improve its

approach to Scope 3, biogenic, and forest, land

and agriculture (FLAG) emissions, having

compiled a full GHG inventory from the 2020

baseline year that has now been validated by

theSBTi.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

55Balfour Beatty plc | Annual Report and Accounts 2024

Action

Achieving net zero emissions throughout the

Group’s entire supply chain will require effective

and co‑ordinated collaboration across diverse

stakeholders. The Group’s two most material

categories of Scope 3; Category 1: Purchased

goods and services and Category 15: Investments,

are the primary focus of its Scope 3 emissions

abatement measures.

Energy

In 2024, energy consumption (MWh) increased

by1% to628,374 MWh from 2023.

Balfour Beatty continues to focus on energy

efficiency and in 2024 the following measures

were implemented:

@ 66 EcoNet installations – reducing out of hours

energy use and enable downsizing

ofgenerators;

@ EcoSense cabins – 65% of cabin and welfare

units are energy efficient, using around 30%

less energy than traditional cabins; and

@ 69 battery hybrid generator setups which

enable the generator to stop running during

periods of low power demand, to reduce fuel

use and allow periods of quiet operation,

particularly overnight.

Through the deployment of renewable energy

generation solutions, Balfour Beatty generated

369 MWh of renewable energy in 2024. This

included the use of a hydrogen generator paired

with cabin mounted solar panels to provide power

to the satellite compound at Canvey Island flood

defence project in the UK.

The use of renewable energy also increased in 2024:

@ 34,474 MWh of REGO‑certified grid electricity

(up 23% from 2023); and

@ 138 MWh of green hydrogen‑generated energy.

Starting in April 2024, the Group transitioned its

utility procurement contract to Drax for zero‑carbon

electricity. Since a full calendar year has not yet

passed with this supplier, and the REGO retirement

period is incomplete, the associated REGOs have

not been retired. As a result, there are no Ofgem

public records as yet. However, the data has been

tested and confirmed as part ofthis tariff, allowing

us to state a zero‑carbon emission factor for

thiselectricity.

During 2023 and 2024 the Balfour Beatty Energy

Management Unit (EMU) audited all energy

consuming assets under UK operational control,

inline with the requirements of the Energy

Savings Opportunity Scheme (ESOS). The audit

covered temporary site compounds, permanent

property, construction plant and depots, and

identified 35MWh and £10.8 million of energy and

financial savings respectively. The recommendations

informed an energy action plan and several

strategic projects to support the plan, including:

@ the development, and introduction, of a Site

Energy Efficiency Dashboard to provide

operational teams with key energy efficiency

metrics across mobile plant, road fleet and site

temporary power supplies. See page 51 for

more information;

@ development of an automated energy demand

management system, currently under trial,

formodular accommodation deployed on

sitecompounds;

@ development of additional minimum energy

efficiency standards for solar and hybrid tower

lights, hybrid mobile accommodation units and

the hybridisation of diesel generators; and

@ ongoing development of digital energy

efficiency deployment tools, including the

introduction of a new dewatering pump

selection tool.

Energy use in MWh

Fuel MWh

Baseline year

2020 2021 2022 2023 2024

Electricity purchased – green tariff 12,536 15,812 16,096 26,627 34,474

Electricity purchased – other 35,258 48,846 46,423 34,877 35,247

Electricity (generated from

solarrenewables) 27 49 161 7 231

Electricity (generated from

greenhydrogen) – – 413 109 138

Total electricity 47,821 64,707 63,093 61,620 70,090

Diesel B7 143,687 131,719 348,137 419,783 422,947

Unleaded petrol 57,642 72,369 77, 298 74,161 75,149

Gas oil (red diesel) 236,750 268,115 100,515 48,181 30,878

Natural gas 8,147 14,861 13,10 6 12,341 12,329

GTL – 3,320 3,612 3,794 5,085

Industrial gases 2,990 2,592 3,021 3,500 2,764

Boiler fuel 410 426 380 497 737

E85 petrol 166 125 268 173 0

LPG 64 64 65 166 8,057

100% mineral diesel 534 340 438 129 143

HVO – 32 82 15 178

Diesel B20 55 – – 7 0

100% mineral petrol 2 6 – – 0

Biodiesel (first generation) – 27 – – 17

Total fuels 450,447 493,996 546,922 562,747 558,284

Global total 498,268 558,703 610,015 624,367

628,374

UK energy use % of global total 73% 72% 77% 80% 82%

Energy intensity

(MWh/£mrevenue) 55.4 70.8 66.6 64.8 56.1

1 The figures in this table include energy from the Group’s consolidated boundary aligned to the methodology referred to in Note 1 to the

Scope 1 and 2 GHG emissions table on page 53.

2 The MWh per £m revenue is calculated using the adjusted revenue figure disclosed in Note 3 to the Scope 1 and 2 GHG emissions table

on page 53.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

5656

For Balfour Beatty, a holistic approach is imperative

for a sustainable future. To address climate change

we must also tackle the degradation of the natural

world, including biodiversity loss. These crises are

deeply interconnected, each exacerbating the

other. Human activities that harm ecosystems

also drive climate change, while climate change

further degrades natural habitats.

In 2024, Balfour Beatty committed to protect and

enhance the natural environment in our Building

New Futures sustainability strategy. We also signed

the UK Business & Biodiversity Forum’s Nature

Positive Pledge, committing the UK business to

support the restoration of our planet’s life

supportsystems.

The Nature Positive goal is to globally halt and

reverse nature loss (as measured from a 2020

baseline), so that by 2030, nature is visibly and

measurably on the path of remediation and by

2050, it has recovered sufficiently to sustainably

support future generations.

The Nature Positive goal aligns with our Build

toLast Sustainable value: to act responsibly to

protect and enhance our planet and society.

Itisamindset that puts nature at the forefront

ofdecisions and actions. Nature Positive is an

approach for our business to operate with a better

understanding of our exposure to nature risks

anddependencies and to join in a collective

endeavour, to reverse nature loss.

Our pledge commits Balfour Beatty to:

@ applying the mitigation hierarchy across the

business, i.e. avoid, minimise, compensate;

@ generating long‑term benefits for nature;

@ ensuring Nature Positive actions are additional

towhat would have happened without

theseactions;

@ apply a precautionary approach where there

isalack of evidence or information;

@ develop and publish a Nature Positive Plan;

@ identify a nature baseline to assess impact

against; and

@ set SMART and costed targets to address the

business dependencies and impacts on nature.

The business risks associated with nature and

biodiversity loss are extensive: physical, regulatory,

commercial, reputational, financial, and social. For

Balfour Beatty, responsible risk management is a

cornerstone of our business. Extreme weather

events, widespread crop failures, food and resource

shortages, flooding, wildfires, mass migration,

civil and political unrest, shifting socio‑economic‑

political priorities, and supply chain and workforce

disruption are all forecast to increase with varying

levels of severity and frequency over the coming

years. By restoring and enhancing the natural

environment, we are supporting the healthy

ecosystems that are essential for the future

prosperity of communities and economies in

theUK and around the world.

Nature positive

Restoring woodlands at the Harewood Estate

The Harewood Estate in West Yorkshire is 4,000

acres of ancient and semi‑natural woodland,

wood pasture parkland, arable farmland, ponds,

lakes and wetlands, designed by Lancelot

‘Capability’ Brown in the 18th century. It has

been home to the Lascelles family since 1738,

with the Estate now managed by Ben Lascelles,

an ecologist by profession. As part of the Estate’s

ambitious conservation programme to restore

parklands and woodlands, 24 Balfour Beatty

volunteers successfully planted 1,500 trees in

just six hours, during a volunteering event that

took place in 2024. The conservation programme

not only aims to repair and preserve the

environment but also increase the biodiversity

and habitats for local wildlife.

The team’s efforts were greatly received

byHarewood Estate who shared the

followingfeedback:

We are writing to express our

gratitude for your exceptional

contribution this week at Harewood

Estate... We are truly fortunate to

havevolunteers like you who are

willing to invest time and energy

intoprojects that have a lasting

impact on our planet.”

Jay O’Donoghue

Forestry Foreman, Harewood Estate

SUSTAINABILITY CONTINUED

Focus areas:

SCAN OR CLICK TO EXPLORE

OUR BEST CASE STUDIES

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

57Balfour Beatty plc | Annual Report and Accounts 2024

Our early progress in this area has been driven

byour UK in‑house Natural Environment team of

ecology, biodiversity, and arboriculture specialists.

They have been working closely with our customers

to survey, analyse risks, and deliver mitigation

strategies to protect and enhance biodiversity

inand around the projects we deliver.

Across all our UK SCAPE framework projects,

weprovide every customer with a report detailing

project‑specific feasible options and available

measures to achieve biodiversity net gain (BNG),

on‑ or off‑site. In 2024, we worked in collaboration

with a remote sensing artificial intelligence

platform, AIDash, to significantly increase the

speed at which we can complete BNG options

reports for SCAPE and other projects that require

a BNG feasibility assessment. By integrating AI

systems into our site analysis, we can focus our

efforts on providing thoroughly researched

recommendations, tailored to each project and

itslandscape. This offers more efficient outcomes,

benefiting both customers and nature.

We are continuing to invest in building in‑house

technical capacity and developing internal training

programmes to ensure sufficient levels of business

expertise and for the successful delivery of nature

enhancements. Working on the M25 Junction 10/

A3 Wisley Interchange improvement scheme for

National Highways, we are providing the technical

expertise required to build the UK’s first heathland

green bridge. As part of the same scheme, in

2024, we delivered extensive heathland restoration,

woodland enhancement, ancient woodland soil

translocation, and acid grassland enhancement.

We are currently undertaking work to gain a

deeper understanding of the impacts we have

onnature across our value chain. As this work

progresses and our understanding matures, we

will set clear and measurable targets for our UK

business to halt and reverse net nature loss.

Environmental impacts and

riskmanagement

Balfour Beatty continues to maintain a robust

business management system for identifying

andmanaging environmental impacts and risks

atan organisational and project level.

In 2024, we refreshed our in‑house Environmental

Site Awareness training course to reinforce the

principles of our Environment What3Things – a

short, digestible summary of three key measures

that must be in place to manage environmental

impact from our operations over seven areas of

risk: pollution prevention, nuisance, waste

management, materials management, wildlife,

archaeology and cultural heritage, and working

near water. We also included environmental

incident performance reporting in our Bridging the

Gap action plans. Bridging the Gap is a framework

which has informed the action plans we have

developed with each of our Business Units to

focus our efforts where we can have the biggest

impact and chart a course to deliver our

commitments and targets.

Balfour Beatty was not subject to any prosecutions

by environmental regulators in 2024.

In our evolved Building New Futures sustainability

strategy, we set out our new approach to resource

efficiency. With the construction sector responsible

for an estimated one‑third of the world’s overall

waste and extracting nearly 40billion tonnes of

raw materials from the planet each year¹, it is

clear that we need to shift the dial from managing

the waste we produce to implementing design

driven circular economy principles that eliminate

waste and pollution and circulate products and

materials at their highestvalue.

Collaborate

Relentlessly Award

This category was for an individual who champions

collaboration to create high-performing teams.

Winner: Pippa Jordan

Ecology Technical Specialist, Highways

Pippa has played a crucial role in the M25 Junction 10 project. Her leadership

and collaboration have ensured strict adherence to environmental

legislation, balancing business and ecological needs. She has been

instrumental in implementing the Ecological Inspection Permit process,

co‑ordinating with stakeholders and leading innovative initiatives. Pippa’s

dedication has been key to the project’s success, managing complex

ecological commitments, overseeing sensitive site clearance, and

initiating habitat enhancement works. Her ability to collaborate, guide

teams,and navigate challenges has made heran exemplary environmental

professional,deserving recognition for her relentless commitment to

theproject’s environmental goals.

READ MORE ABOUT

OUR ICON AWARDS

EVENT ON p74

Above: Award presentation photo. (Left to right) Phil Clifton, Divisional CEO – Major Projects,

Highways and Ground Engineering, Pippa Jordan, Ecology Technical Specialist – Highways, and

Nicola Bell MBE Executive Director, Major Projects – National Highways.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

5858

Zero avoidable waste

Part of our new approach to resource efficiency

isto implement the Construction Leadership

Council’s zero avoidable waste routemap and to

support this, we have committed to:

@ eliminating non‑hazardous excavation waste

tolandfill by 2030;

@ achieving zero avoidable waste in the UK

by2040; and

@ achieving zero avoidable waste in the US

by2050.

Through the implementation of our Bridging the

Gap sustainability action plans, each Business

Unit sets resource efficiency improvement actions

based on the business’s waste profile and

performance.

Summary of 2024 performance

Non-hazardous waste

Total waste generated increased by 3% from

2023 to 2024, with the most significant increase

being non‑hazardous construction waste (29%).

Non‑hazardous construction waste intensity

(tonnes/£m) increased by 43%. Non‑hazardous

demolition waste increased slightly by 3%, while

non‑hazardous excavation waste decreased

by0.06%.

1 pubs.geoscienceworld.org/msa/elements/article‑

abstract/18/5/327/619766/Sustainable‑Sourcing‑of‑Raw‑

Materials‑for

Resource efficiency

Hazardous waste

Overall, hazardous waste decreased by 7% from

2023 to 2024.

Waste reporting methodology

Reported waste data is for UK operations. In line

with how we report GHG emissions, Balfour

Beatty now excludes the Gammon business from

waste reporting on the same operational control

basis that it is excluded from carbon reporting.

Refer to the ‘Approach for Group carbon reporting’

on page 52. US waste data is omitted until UK

and US datasets are comparable.

In the UK, information about the types and

quantities of waste generated by Balfour Beatty

activities is captured for each project via our

in‑house reporting tool using records of waste

removed from site by our waste supply chain and

subcontractors. Records of waste movements

from sites including types and quantities are

collated to generate overall waste performance

data. Waste data includes waste that is removed

from sites and premises and is managed off site.

Balfour Beatty reports waste under four categories:

construction, demolition, excavationand premises

waste, which includeswaste generated from

offices and manufacturing facilities.

Balfour Beatty engages a variety of waste contractors

and management routes across its operations and

works closely with them to identify opportunities

to implement sustainable waste management

solutions. The options available can be dependent

on local waste infrastructure.

All UK suppliers and subcontractors engaged by

Balfour Beatty to manage waste are subject to

Supplier Sustainability Conditions which require

full compliance with waste duty of care legislation

and for suppliers that make their own arrangements

for waste disposal to provide records of all waste

transfers. Balfour Beatty works with several waste

disposal contractors tomeet the needs of its

various operations.

Waste performance

Following the achievement of the 2030 target

bythe UK business to reduce tonnes of waste

generated per £m revenue by 40%, seven years

earlier than planned, we have reset our waste

baseline to 2023 and will be reporting the following

waste performance indicators that are aligned to

the principles of zero avoidable waste.

DEMOLITION WASTE (NON-HAZARDOUS) TONNES

EXCAVATION WASTE (NON-HAZARDOUS) TONNES

PREMISES WASTE (NON-HAZARDOUS) TONNES

CONSTRUCTION WASTE (NON-HAZARDOUS) TONNES

SUSTAINABILITY CONTINUED

SCAN OR CLICK TO EXPLORE

OUR BEST CASE STUDIES

Diverted from landfill Landfilled Tonnes/£m revenue

120,000

80,000

40,000

0.0

120,000

100,000

80,000

60,000

40,000

20,000

0.0

760,000

660,000

560,000

460,000

360,000

260,000

160,000

0.0

25,000

15,000

5,000

0.0

18.0

14.0

10.0

6.0

2.0

0.0

@ Tonnes of non‑hazardous construction waste

generated, and the proportion diverted from landfill.

@ Tonnes of construction waste per £m revenue

@ Tonnes of non‑hazardous demolition waste

generated, and the proportion diverted from landfill

@ Tonnes of non‑hazardous excavation waste

generated, and the proportion diverted

fromlandfill

@ Tonnes of non‑hazardous premises waste

generated, and the proportion diverted

fromlandfill

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

59Balfour Beatty plc | Annual Report and Accounts 2024

Sustainable packaging innovation at DunfermlineLearningCampus

The challenge: Balfour Beatty collaborated with

Whitecroft Lighting to address the ambitious

sustainability goals of the Dunfermline Learning

Campus project for Fife College. The partnership

aimed to eliminate single‑use packaging waste

while improving efficiency and safety on site.

The solution: Geopak System

The solution emerged through extensive

collaboration between Balfour Beatty, Whitecroft

Lighting, Cardiff University, and consultancy

PDR. Together, we developed Geopak, a reusable,

collapsible modular packaging system made

from polypropylene. Geopak features GPS

tracking for digital monitoring, ensuring secure

delivery and efficient logistics. Post‑use, the

packaging is collapsed and returned for reuse.

This innovation enables the transport of mixed

lighting products whilst optimising space and

reducing risks associated with waste on

construction sites.

Key achievements

@ Waste reduction: Geopak is projected to

prevent up to two tonnes of packaging waste

during the project.

@ Efficiency gains: GPS tracking reduces

therisk of lost items and streamlines

siteoperations.

@ Enhanced safety: eliminating single‑use

packaging reduces trip, fire, and

biohazardrisks.

Development and implementation

Jim Brannan, Balfour Beatty’s Head of Supply

Chain Development, led on the multi‑stage

development process, which involved two years

of prototyping, workshops, and stakeholder

collaboration. Early missteps in design were

overcome through persistent innovation,

culminating in a system that aligns with the

project’s energy and environmental goals.

Community and industry benefit

The initiative sets a standard for the wider

construction industry. By making the design

open‑source, going forward Balfour Beatty and

Whitecroft Lighting invite others in the sector to

adopt the system.

The successful implementation of Geopak has

inspired some of our other subcontractors to adopt

the solution within their own supply chains. This

initiative demonstrates the power of collaborative

innovation in achieving sustainable construction

goals and reshaping industry practices.

Thissystem is a huge

step forward. We

saidwe’d help design it

and bringit to market,

but this is a solution for

the construction industry,

not just for Whitecroft

and Balfour Beatty at

FifeCollege.”

Jim Brannan

Head of Supply Chain Development,

Balfour Beatty

Congratulations to

ourBalfour Beatty

team forleading the

wayand packing

innovation into our new

Fife College andCarnegie

Conference Centre.”

John McGee

Fife College’s Campus

Innovation Officer

Focus areas:

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Balfour Beatty plc | Annual Report and Accounts 2024

6060

Improving how we manage PPE

The manufacture and disposal of textiles pose a

significant environmental challenge, with only

1% of clothing effectively recycled globally.

In2024, we purchased c. 64,000 items of hi‑vis

PPE in the UK, highlighting the importance of

addressing this issue.

Focus on: the PPE lifecycle

On National Highway's A63 Castle Street

Scheme in Hull, we trialled a durable, washable

PPE range with a complete end‑of‑life recycling

solution. Operatives used two sets of PPE

alternately, sending one for laundering as

needed. Garments were cleaned, mended,

andsafety‑checked to ensure compliance.

RadioFrequency Identification tags enabled

precise tracking, facilitating data collection

oncarbon emissions and wash cycles.

Operatives praised the design and comfort,

though lower‑than‑expected washing

requirements limited the trial’s scale. Building

on this success, a larger trial is planned to

gather more data and refine the approach.

Focus on: collaborative success

Balfour Beatty hosted a sustainable innovation

event, bringing together our PPE supply chain

partner, tier 2 manufacturers, and key internal

stakeholders. Through ‘speed dating’ sessions

and roundtable discussions, participants explored

ways to enhance PPE sustainability, including

consolidating the range, expanding laundry

access and improving end‑of‑life management.

A PPE committee was formed to drive these

initiatives, ensuring Balfour Beatty continues to

lead in sustainable practices while aligning with

business‑wide goals.

This event clearly demonstrates our

approach to working hand in hand

with our supply chain partners to

drive meaningful change. Together,

we’re stronger, and together, we can

achieve truly sustainable and

impactful outcomes.”

Jo Potts

Sustainability Director, Responsible

Sourcing and Social Impact, Balfour Beatty

Balfour Beatty’s expert materials engineering team

Balfour Beatty employs a dedicated team of 100

materials engineering experts who provide

industry‑leading expertise and resources for our

UK projects. The Materials Engineering department

was first established in Balfour Beatty in the

1980s by the late Chief Materials Engineer,

John Ferguson. The team is an integral part of

our engineering community, offering

comprehensive materials solutions for projects

which support our zero avoidable waste targets.

By prioritising early contractor involvement and

through ongoing collaboration with our

customers, designers and our project teams,

we can optimise earthworks and strategies for

materials reuse and recycling. This approach

significantly minimises waste, reduces costs

and carbon emissions.

The team operates several testing laboratories

accredited to the internationally recognised

standard BS EN ISO 17025 (Competence of

Laboratories) offering a wide range of tests for

abroad range of construction materials. Balfour

Beatty is one of only a few organisations to be

granted Flexible Scope of Accreditation by

UKAS, the national accreditation body.

The Materials Engineering team regularly

contributes to several key industry bodies and

working groups, such as the BSI Committees,

Britpave Council, Quality Scheme for Ready

Mixed Concrete Board and UKAS Construction

Industry Technical Advisory Committee.

The teams key capabilities which support

resource efficiency are:

@ strategic planning at tender stage – our

Materials Engineering team collaborates early

in the tender process to develop materials

reuse and supply strategies, enabling best

value for our clients;

@ onsite compliance – our in‑house laboratories

deliver rapid material compliance feedback,

facilitating informed decision making and risk

management;

@ seamless integration with project teams –

engaged from preconstruction through to

project delivery, our team optimises materials

management, reducing excavation and

demolition waste;

@ expert materials management and

compliance – we provide materials

management plans, waste management

compliance, ongoing monitoring, and

verification, supporting both project and

hub‑and‑cluster approaches;

@ proactive standards review – early

assessment of material standards helps

identify barriers and enablers to maximise

recycling and reuse potential on site; and

@ nationwide expertise for projects of all sizes

– from small‑scale developments to complex,

major projects, our clients benefit from

company‑wide expertise that delivers optimal

solutions balancing cost, programme

efficiency, and environmental sustainability.

BELOW

M25 Junction 10 / A3 Wisely Interchange Improvement Scheme.

SUSTAINABILITY CONTINUED

Resource efficiency continued

Focus areas: Focus areas:

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

61Balfour Beatty plc | Annual Report and Accounts 2024

Supply chain integrity

Balfour Beatty is committed to building a sustainable,

ethical, and resilient supply chain that delivers

long‑term value for all stakeholders. Our supply

chain is crucial to achieving the targets set out in

our Building New Futures sustainability strategy,

driving industry‑wide transformation through

collaboration and innovation.

Supply chain integrity is supported by key

frameworks, including our Sustainable Procurement

Policy, Procurement Strategy, Supply Chain Code

of Conduct, Supplier Sustainability Conditions and

Modern Slavery Statement. Together these

articulate our expectations of our supply chain

partners, while enabling collaboration to address

shared sustainability challenges.

We empower our supply chain by building strong,

collaborative relationships that drive mutual

learning and progress. Sharing knowledge and

supporting innovation ensures our supply chain

partners meet our sustainability and ethical

expectations while contributing valuable expertise

and balancing social, environmental, and

economic needs.

Our activities are focused on three key areas:

@ carbon and materials: reducing the

environmental impact through sustainable

sourcing and innovative material use;

@ human rights: safeguarding ethical labour

practices and protecting individuals’ rights

across our supply chain; and

@ inclusive procurement: empowering diverse,

local, small and medium‑sized enterprises

(SMEs) and voluntary, community and social

enterprises (VCSEs) to strengthen local

economies and create social value that drives

sustainable progress.

The foundation of our approach is our Supply

Chain Sustainability Risk heat map which

integrates material sustainability considerations

into procurement systems and processes,

influencing what we buy and how we buy.

Carbon and materials

Balfour Beatty has set a SBTi verified target to

reduce emissions from Scope 3 purchased goods

and services, by 25% by 2030, based on a 2020

baseline. This target is integral to our net zero

target, aligning with global climate goals and

driving the transition to a low‑carbon supply chain.

Achieving this reduction will require close collaboration

with supply chain partners, innovative material

sourcing, and the adoption of low‑carbon

technologies across our supply chain.

Efforts to reduce Scope 3 emissions are focused

on sustainable procurement practices, carbon

reduction initiatives for key materials, and

embedding carbon management into

procurement processes.

Our Responsible Sourcing team has worked

closely with our Materials Engineering team

todevelop carbon and steel decarbonisation

roadmaps, outlining expectations to 2030 and

supporting both our carbon reduction targets

andour clients.

Decarbonising carbon-intensive materials

In 2024, Balfour Beatty undertook a comprehensive

review of approaches to decarbonising its use

of concrete and steel, two materials with high

carbon intensities. These materials are critical to

our operations and represent a key focus area in

our commitment to achieving a 25% reduction

in Scope 3 carbon emissions by 2030.

Cementitious materials

Our internal capabilities are critical to delivering

sustainable solutions. In 2024, we launched the

Concrete Knowledge course which now includes

training on low‑carbon concrete, as well as

practical sustainable measures which can be

implemented on our projects. This equips our

teams with the knowledge to challenge the

carbon intensity of concrete across our projects

and positions us to meet the growing demand

for sustainable construction solutions.

Following the closure of UK's last source of

Ground Granulated Blast Furnace Slag, which

has been instrumental in decarbonising concrete,

we are exploring alternative methods to

decarbonise the concrete used in our projects.

Balfour Beatty has signed an agreement with

advanced materials engineering group Versarien

to develop a range of low‑carbon, graphene‑

infused, 3D‑printable mortars suitable for civil

construction. This will include the development

of three mortars; one will be based on local

materials with two enhanced with Versarien’s

graphene admixture, Cementene™. This project

aims to demonstrate the performance, durability,

and cost effectiveness compared to traditional

construction materials.

Decarbonising steel production

We have taken proactive measures to

supportthe steel industry's transition toward

lower‑carbon production methods. In 2024, we

engaged with our supply chain and conducted

acomprehensive survey involving over 50 steel

suppliers to assess their decarbonisation

strategies. The survey revealed that a significant

portion of our supply chain is already adopting

Electric Arc Furnace (EAF) technology, which

reduces carbon intensity by 80% in comparison

to traditional Blast Furnace steel production¹.

To further our commitment to carbon reduction,

we have also initiated consultations with mills

aiming to introduce green steel to the market in

the coming years.

Low-carbon steel piles

In 2024, the Nuneham embankment, supporting

a key bridge over the River Thames, began to

show signs of failure due to movement in the

Victorian brick abutment, leading to the closure

of a major train route. To address this, our team

reinforced the embankment with EcoSheetPiles,

a low‑carbon alternative to traditional steel piling.

EcoSheetPiles were sourced for their

environmental benefits; manufactured using

Electric Arc Furnace technology, they produce

370kg CO

e per tonne, significantly lower than

the typical 2.3 tCO

e associated with traditional

steel. The product is made from 100% recycled

materials and produced with 100% renewable

electricity, reducing emissions by 30%

compared to conventional methods.

We significantly reduced the carbon footprint of

the project, demonstrating our commitment to

sustainable practices whilst meeting critical

infrastructure needs.

1 www.bcsa.org.uk/resources/sustainability/steel‑

sustainability‑faqs/

Focus areas:

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Balfour Beatty plc | Annual Report and Accounts 2024

6262

Supply chain integrity

continued

Target progress

For our data on Scope 3, Category 15

purchased goods and services, please refer

to page 54.

Human rights

Modern slavery supply chain audits

Throughout 2024, Balfour Beatty has continued

tofocus on upskilling our UK supply chain and

improving approaches to modern slavery across

the industry. Following a pilot of modern slavery

audits in 2023, we held an improvement workshop

to collate feedback from the supply chain to

enhance the process.

One of the key changes was creating a two‑stage

audit. Phase 1 consisted of a self‑assessment by

the supplier in advance, enabling them to work

through the questions, prepare their evidence and

build a picture of their own maturity. Phase 2 was

an in‑person audit to discuss the self‑assessment,

review the evidence and discuss maturity against

each audit section which resulted in an agreed

setof improvement actions. This two‑stage

process enabled more meaningful and

impactfulconversations.

Over the year 187 supply chain modern slavery

audits have been completed. Since starting the

audits in 2023, we have audited 308 of our supply

chain partners.

Following the audits, we developed a guidance

document which set out specific improvement

actions and signposted to further resources from

organisations like Supply Chain Sustainability

School, Design for Freedom and the Global Slavery

Index by WalkFree. In addition, we provided direct

support to 12 supply chain partners from the 2023

cohort to accelerate progress, and organised two

workshops that provided direct support for key

improvement areas.

By the end of the year, 100% of our pre‑qualified

Constructionline, supply chain partners had a

modern slavery statement or equivalent in place.

Inclusive procurement

Balfour Beatty is committed to continually

developing its approach to inclusive procurement,

creating social value and supporting the economic

resilience of local communities. By engaging a

diverse range of suppliers, including small and

medium‑sized enterprises (SMEs), voluntary,

community, and social enterprises (VCSEs), and

local businesses, the Company aims to contribute

to inclusive growth and ensure that opportunities

are accessible to all.

Inclusive procurement is integral to achieving

Balfour Beatty’s sustainability strategy targets,

with a focus on driving long‑term positive impacts

in the communities where projects are delivered.

The Company continues to work with a varied

supply chain, ensuring that procurement processes

are fair, transparent, and provide opportunities for

businesses of all sizes to thrive.

SUSTAINABILITY CONTINUED

Skill-based volunteering day with Nuneaton Signs

Balfour Beatty recognised an opportunity to

enhance the impact of their volunteer hours

through skill‑based volunteering. Social

enterprises**, such as Nuneaton Signs, often

face resource constraints, which can make it

difficult to fully dedicate efforts to sustainability

initiatives. Nuneaton Signs, the UK’s leading

road sign supplier that supports people with

disabilities into employment (66% of its

workforce have a disability), was eager to

advance its sustainability practices but lacked

the capacity to fully focus on this area.

To support, Balfour Beatty held a skill‑based

volunteering day at their premises. The Balfour

Beatty team conducted a thorough energy audit

to help Nuneaton Signs reduce its energy

consumption. They also held an interactive

session on carbon and responsible sourcing,

which included upskilling on climate change

and greenwashing, a discussion around carbon

scopes and science‑based targets, the

feasibility of EPDs for Nuneaton Signs, the

opportunity to utilise the circular economy,

addressing best practices around managing

modern slavery, and the sustainability impacts

of different areas of spend.

The training sparked valuable discussions on

how to enhance current practices. As a result,

Nuneaton Signs updated and improved its

modern slavery statement and began a

heatmapping exercise on the sustainability

impacts of different areas of spend.

Balfour Beatty also identified an opportunity to

increase its spend with Nuneaton Signs on a

range of recyclable signs, thus improving our

environmental and social impact.

The results

@ £4,242 of social value delivered

@ 42 hours of skilled volunteering delivered

@ Energy saving opportunities identified

@ Actionable sustainability improvements

identified

What a fantastic day we had

yesterday, courtesy of Balfour Beatty!

Its Responsible Sourcing and Energy

Management teams joined us for a

collaboration day and provided us

with advice on various topics such as

Carbon Literacy, Resource Efficiency

and Inclusive Procurement. A big

thank you to the teams – we thoroughly

enjoyed spending the day with you!”

Holly Hunter

Head of Social Value and Marketing,

Nuneaton Signs

** Based on NT15, 2022 TOMS proxy values.

Focus areas:

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63Balfour Beatty plc | Annual Report and Accounts 2024

Community engagement

Target progress

In 2021 Balfour Beatty set a target to deliver £3 billion in social value by 2030. In 2024 as part of the

evolved sustainability strategy this social value target was updated to be delivered five years early, in 2025.

Balfour Beatty projects delivered £990,606,415.14

Ⓐ

during 2024 and therefore exceeded the £3 billion

target during the year and since the target was set in 2021, social value data collected, verified and

reported totals £3,460,071,854.

UK breakdown: 2021 2022 2023 2024

Total since

targetset

Spend with local

suppliers £761,486,644 £892,762,951 £ 959,174,488 £914,457,867 £3,527,881,950

Spend with SMEs

Over £1bn Over £1.5bn Over £1.4bn Over £1.85bn Over £5.75bn

Employee

volunteering

hours 23,000 19,645 18,986 20,154 81,785

Volunteering

hours positively

impacting the

environment 872 2,572 2,968 4,225 10,637

From measuring social value

tomeasuring social impact

Social value refers to creating positive, lasting

benefits for society. We monetise it to demonstrate

the value that our business actions have on local

communities – whether that’s through supporting

the local economy, improving the lives of local

people, or benefiting the local environment. Since

there is no single standard for measuring social

value, it can sometimes be difficult to break down

exactly how this value is created or compare it to

other organisations. Over the past year, we have

focused on improving our data collection and

reporting to provide greater transparency on the

impact we’ve had in the communities where

weoperate.

SOCIAL VALUE GENERATED TO DATE

£3,460,071,854

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Measuring our social impact

Social impact is more focused on measuring

outcomes and changes brought about by specific

projects and initiatives such as improving people’s

lives, creating job opportunities, or addressing

specific community needs. In 2024, the Social

Impact team has focused on improving reporting

of social data across our projects. We know the

incredible impact our project teams have in local

communities, but without complete reporting,

valuable contributions can go unrecognised. This

year, through a concerted effort, we have increased

the number of projects capturing social impact

data helping us to better demonstrate the true

value of our work. As a result we have seen an

increase in the number of projects reporting data

that is not spend related.

Across the UK, we have provided:

@ 7,058 weeks of apprenticeships;

@ 691 weeks of paid work experience;

@ 585 weeks of training opportunities;

@ 8,418 hours of community project volunteering;

@ 421 hours of careers support; and

@ employed 1,055 local people (equivalent FTE).

In September 2024, Social Value Portal released a

new set of Themes, Outcomes and Measures

(TOMS) which we will introduce in 2025, where

our social value and social impact reporting will

have an even greater focus on transparency and

the impact we are having on people, planet and

local economies.

Balfour Beatty has partnered with the Social Value

Portal to measure, manage and report social value

for the UK business. Following a limited assurance

approach, the Social Value Portal validates the

social value data quarterly ensuring the methodology

that underpins the TOMs framework is

consistently applied.

2030: £3bn

(target)

2021: £717m

(total)

Baseline

year

2022: £816m

(total)

2023: £937m

(total)

2024: £991m

(total)

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Balfour Beatty plc | Annual Report and Accounts 2024

6464

Community engagement

continued

Measuring our social impact

continued

PwC LLP was engaged to undertake an

independent limited assurance engagement of

the social value generated in the UK, reporting to

Balfour Beatty plc, using the assurance standard

ISAE 3000 (Revised) on the social value data that

has been highlighted in this report with the symbol

Ⓐ

PwC LLP’s full statement is available at: www.

balfourbeatty.com/ILA_2024.

In order to reach its opinion, PwC LLP performed

a range of testing procedures over the social value

data. A summary of the work PwC LLP performed

is included within its assurance opinion. Non‑financial

performance information is subject to more

inherent limitations than financial information.

The limited assurance statement should be read

in the context of the reporting criteria as set out in

Balfour Beatty’s Global Sustainability Reporting

Guidance available at: www.balfourbeatty.com/

sustainabilityreporting

The guidance outlines the non‑financial KPIs

measured by the Group, their definitions and

evidence requirements.

Work experience and

schoolengagement

Providing work experience is a crucial part of

encouraging young people to consider a role in

the built environment. Balfour Beatty partners

with Industrial Cadets, which was developed

bythe Engineering Development Trust believes,

every young person should have the chance

toembrace science, engineering, technology

andmaths (STEM) learning opportunities.

Incollaboration with industry and educational

partners they developed the Industrial Cadets

pathway of programmes to help students access

4,642

HOURS OF SUPPORT TO

EDUCATIONALINSTITUTIONS

53,462

STUDENT INTERACTIONS

258

EDUCATIONAL INSTITUTIONS ENGAGED

SUSTAINABILITY CONTINUED

Balfour Beatty Communities Foundation awards

collegescholarships totalling over £92,000

This year, Balfour Beatty Communities awarded

scholarships totalling over US$119,000

(£92,000) to exceptional individuals across its

military housing, multifamily housing, and

student housing portfolios. These scholarships

aim to empower recipients in their pursuit of

higher education and community leadership.

Leslie Cohn, a Board Member of the Balfour

Beatty Communities Foundation said: “We are

thrilled to grant these scholarships. Empowering

individuals to pursue their educational dreams

not only enriches their lives but also strengthens

our communities. Through this programme, we

continue our steadfast commitment to fostering

growth, leadership, and academic excellence

among our residents".

This marks the 17th consecutive year of the

Balfour Beatty Communities Foundation

scholarship programme. Since its establishment

in 2007, the foundation has disbursed more than

US$1.7 million (£1.3 million) in scholarships to

deserving individuals.

Commenting on her scholarship, Annie Benson,

resident at The Broadview at Vanderbilt, said: “I

am deeply honoured and immensely grateful to

be a recipient of this scholarship.

“My educational journey would not be possible

without the generous support of programmes

like this. This scholarship affords me the opportunity

to pursue my master’s degree, enabling me to

fulfil my aspiration of contributing to the medical

field as an engineer specialising in surgical robotics.”

Focus areas:

STEM learning and experience the world of work.

In 2024 we provided 194 work experience weeks

for 140 students aged under 18. In addition, we

also trialled a new online work experience option,

Industry Insights, which is a week‑long interactive

programme offering structured virtual work

experience hosted within the classroom. This

newprogramme was trialled by 113 students

andfeedback was very positive enabling us to

offer a hybrid approach to work experience.

During 2024, a Balfour Beatty minimum standard

was developed for social impact delivery which

applies to all projects, irrespective of client

requirements. This is focused on improved

utilisation of volunteering days to support

educational outcomes and upskilling and

encouraging children of all ages to consider

careers within our industry. Our approach is

underpinned by two key considerations: identifying

locations where Balfour Beatty has a long‑term

presence and pipeline of work to create

meaningful employment opportunities for the

students we support; and prioritising those

locations and schools where social mobility

barriers are most pronounced, ensuring our

efforts have the greatest impact.

Charity, fundraising and volunteering

Throughout 2024, Balfour Beatty made charitable

contributions totalling £498,314 in the UK, including

fundraising by employees which accounted for

24% of the total. In the US, a donation of US$5,000

was made to Feeding America. We have seen an

increase in employee volunteering in 2024 which

totalled 20,154 hours. These initiatives ranged

from engaging with education to creating

community spaces and providing business

support to social enterprises.

During this year, as part of an annual festive

fundraising campaign we also allocated £26,000,

representing a £1 for each of our 26,000 employees

worldwide, to our Corporate Charity Partners: The

King’s Trust, Groundwork and Project RECCE CIO.

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65Balfour Beatty plc | Annual Report and Accounts 2024

Operator Skills Hub

In 2024, Balfour Beatty Flannery, a joint venture between Balfour

Beatty and Flannery Plant Hire, proudly trained its 1,000th student

at the Operator Skills Hub. This purpose‑built training facility,

established in Birmingham in 2021, plays a crucial role in addressing

the industry's significant skills shortage and provides trainees with

a direct pathway to employment.

2024 highlights

@ 649 people have completed the training

@ 32 (5%) served in the armed forces

@ 45 (7%) were female

@ 79 (12%) had a disability, learning difficulty or health problem

@ 34 (5%) declared they had a criminal conviction

@ 195 (30%) were Not in Education, Employment or Training (NEET)

@ Over £400,000 in social value was delivered

Abigail Cleverley, the 1,000th student, achieved the nationally

recognised accreditation to operate articulated dumper trucks and

rollers. She has since secured a role at Balfour Beatty VINCI’s

HS2contract.

Talking about her experience, Abigail Cleverley, Operator Skills Hub

Graduate, said: “Completing my training at the Operator Skills Hub

has been an incredible experience. The hands‑on approach and

state‑of‑the‑art equipment gave me the confidence and skills I

need to succeed in this industry now and in the future.

“Thanks to the training, I’ve not only gained a nationally recognised

qualification but also secured a role on one of the most exciting

infrastructure projects in the UK. I can’t wait to be part of such a

transformative scheme.”

Abigail received her certificate from Andy Ormerod, Managing

Director of Balfour Beatty’s Asset & Technology Solutions team,

andPatrick Flannery, Managing Director of Flannery Plant Hire.

Andy, said: “I’m incredibly proud of the work we’re doing here

inpartnership with Flannery. Together, we’re opening doors to

meaningful careers for people from all backgrounds – many of

whom might never have seen construction and infrastructure as

anexciting career path until they joined us.

“As we look ahead to the future, we’re committed to continuing

our work to close the industry’s skills gap, creating a diverse and

inclusive culture in our sector and providing a skilled and resilient

workforce that can deliver for the UK in the future.”

The Operator Skills Hub has

allowed us to provide an

opportunity to both new entrants

into the industry and those existing

plant operators looking to upskill

through our Skills Bootcamp in

Plant Operations. Along with a

diverse array of learners from

career changers to veterans we

have engaged with over 50

employers to secure meaningful

and sustainable employment

benefiting the wider industry.”

Patrick Flannery

Managing Director, Flannery Plant Hire

Focus areas:

ABOVE

(Left to right) Andy Ormerod, Managing Director, Asset & Technology Solutions, Abigail

Cleverley, Operator Skills Hub Graduate, and Patrick Flannery Managing Director, Flannery

Plant Hire.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Balfour Beatty plc | Annual Report and Accounts 2024

6666

Employee diversity, equity and inclusion

Creating a diverse and

inclusiveorganisation

A thriving, sustainable construction and infrastructure

industry depends on its people. That’s why Balfour

Beatty has incorporated diversity, equity, and

inclusion (DE&I) into its evolved Building New

Futures sustainability strategy. Addressing the

industry’s skills shortage means attracting and

retaining a diverse workforce, including the future

leaders who will shape our sector. Different

perspectives drive fresh thinking, innovation,

andbetter ways of working.

SUSTAINABILITY CONTINUED

'Women in Power' initiative

The concept for the women in power

initiative came from a LinkedIn post shared

by a project manager in our Power T&D

business. She posted about a 'Day in the

Life' of a female project manager at Balfour

Beatty and the positive experience she has

had. This post got significant traction.

To reach a broader audience two webinars

were held in 2024 to encourage and inspire

female talent to join Balfour Beatty with over

100 attendees joining. Our Power T&D

teamalso hosted a women‑only open day at

Raynesway, Derby, to share more about our

overhead lines work and the opportunities

available.

These initiatives have supported female

diversity in the Power T&D business unit – in

2024, over 25% of new starters were female.

As part of our attraction strategy, significant

work has been undertaken to ensure where

possible that roles can be flexible or part‑time,

and, in our more remote locations, ensure

smart working opportunities areavailable.

* Excluding international joint ventures in2020 andearlier years.

2122

2223

2324

2419

1920

8.8

2.3

11.0

2.8

3.0

12.4

13.0

1.5

6.2

1.7

7.3

1.9

UK ETHNIC MINORITY EMPLOYEES %FEMALE EMPLOYEES ACROSS

THEWORKFORCE %*

UK BLACK EMPLOYEES %

18.7

19.6

20.2

21.0

18.0

18.7

Progress towards diversity targets in three key areas:

FIND OUT HOW WE ARE DRIVING AN

INCLUSIVE CULTURE, READ OUR PEOPLE

SECTION ON PAGES 68 TO 73

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OUR BEST CASE STUDIES

Engaging with education is a key lever in this. By

inspiring the next generation to consider careers

in construction, we can attract a broader range of

talent, increase social mobility, and create clearer

pathways into the industry. This not only supports

more resilient communities but also secures the

skilled workforce needed to deliver the

infrastructure of tomorrow.

Within our early careers population, 2024 saw

strong progress on gender diversity, achieving

over 26% females in the UK and over 10%

females in Hong Kong. Ethnic diversity also

continues to be a firm focus within this population,

with over 60% minority ethnic hires in the US and

over 20% in the UK.

Increasing the diversity of the organisation

Increasing the diversity of experience and thinking

within our teams, to ensure that they reflect the

communities that we work within, remains a focus

across the Group. For the UK we have agreed a

series of targets to help drive progress on gender

and ethnic diversity. We also report our progress

as part of the FTSE Women Leaders Review and,

as required by the UK Parker Review, in 2024 we

set a 6% target for senior leadership ethnic diversity.

In setting this target, we considered the dynamics

impacting our business, hiring challenges particularly

at senior levels, and timescales. Balfour Beatty

also remains committed to the UK 2030 DE&I

targets set in 2022, consistently monitoring our

steady progress and reporting externally at key

points along the way.

Focus areas:

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67Balfour Beatty plc | Annual Report and Accounts 2024

Hong Kong

FEMALE %

BLACK AND MINORITY ETHNIC %*

Diversity of hires in 2024

26.76%

23.79%

20.83%

20.69%

59.99%

5.70%

Gender breakdown

At 31 December 2024 Male Female Total % Male % Female

Board 6 4 10 60.00% 40.00%

Senior managers

78 27 105 74.29% 25.71%

Directors and subsidiaries

not included above

33 14 47 70.21% 29.79%

Employees

21,689 5,622 27,311 79.42% 20.58%

1 Senior managers are employees of the Company, its subsidiaries and Gammon, who have responsibility for planning, directing or

controlling the activities of the Group, or a strategically significant part of it, excluding Directors of Balfour Beatty plc.

2 Directors of all subsidiaries have not been included as senior managers as this would not accurately reflect the Group’s executive pipeline.

3 All employees of the Company and its subsidiaries, together with all employees of Gammon, the Group’s 50:50 joint venture with

Jardine Matheson based in Hong Kong.

Focus areas: Focus areas:

Supporting employees

tothrive to sustain

ourfuture

In observance of Global Diversity Awareness

Month, Balfour Beatty hosted its fifth annual

‘Together Allies Summit’ in the US dedicated

to further embedding the Company’s

people‑first culture. The virtual summit took

place throughout October 2024 and included

a series of panel discussions on the positive

impact of fostering workplaces fuelled by

authenticity and belonging. Each panel

discussion saw over 500 attendees with one

of the sessions reaching over 700 individuals.

The summit theme ‘Sustaining Our Future’

highlighted how Balfour Beatty is embracing

the diverse nature of its workforce, celebrating

the experiences and backgrounds of its

employees, and ensuring success through

better optimisation of skillsets and talents.

As an Ambassador Sponsor of Construction

Inclusion Week, Balfour Beatty has

committed to creating a more welcoming

workplace environment for team members.

The continued partnership in this important

industry‑wide initiative aligns perfectly with

the goals of the Together Allies Summit and

underscores Balfour Beatty’s dedication to

fostering a workplace where everyone feels

seen and heard.

Exploring the role of

technology within

diversity, equity and

inclusion (DE&I)

Gammon hosted an event titled

‘Intersectionality: When DE&I Meets

Technology/AI’ to explore how various

aspects of a person’s identity, such as race,

gender, and socioeconomic status, interact

with disruptive technology, outlining both

opportunities and challenges.

Kevin O’Brien, Gammon’s Chief Executive,

made an inspiring speech, emphasising that

DE&I is essential for business success. The

keynote speaker, Puja Kapai (Associate Professor,

Faculty of Law, University of Hong Kong), also

shared insights on intersectionality, urging us

to build environments where everyone can

thrive. The panel discussion explored how

technology is reshaping DE&I, from recruitment

to AI’s role in making construction more

inclusive. The day concluded with an engaging

sign language session, showcasing the

power of inclusive communication.

* Based on the minority ethnic criteria in each geography.

Our strategic peoplepillars

Balfour Beatty plc | Annual Report and Accounts 2024

6868

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

OUR PEOPLE

Valued

experts

Balfour Beatty is dedicated to fostering a safe, inclusive and engaging

workplace where every employee can thrive and build a successful career.

Balfour Beatty’s reputation and

heritage, engineering and construction

capabilities, and exciting pipeline of

projects provide an attractive

environment for talented individuals

to work and develop their careers.

2024 has seen significant

recruitment in some of our core

growth markets, attracting talent

tobuild capacity to deliver the

opportunities we see ahead of us.

Against this backdrop, we are

passionate about providing

opportunities and fostering a

welcoming and dynamic environment

where employees can thrive and

reach their full potential.

For a number of years, our Group

people strategy has focused on the

four pillars of Attract, Retain, Grow

and Thrive. This strategy continues

to enable Balfour Beatty’s business

success, with each geography

tailoring their annual priorities to

their unique context and culture.

ATTRACT

Attracting and recruiting

the skilled individuals

weneed now, and for

thefuture.

RETAIN

Creating the right

environment to ensure

our great people want to

stay in the business.

GROW

Growing our own talent,

empowering our people

to build exceptional

careers that drive

business success.

THRIVE

Building an ethical and

inclusive culture where

people can bring

theirwhole self to work

and perform to their

highest ability.

Balfour Beatty’s broad and unrivalled

capability is a unique and powerful

proposition.

We continue to leverage this to focus on attracting

and recruiting the right people to meet resource

demands. We believe in nurturing the next generation

of talent, inspiring and investing in them to become

the change‑makers of tomorrow. Meaningful early

engagement is crucial to attracting people to our

industry, creating opportunities for young people to

consider the multifaceted construction industry as

an exciting and promising career path in the future.

We are increasingly investing in social engagement

through hosting careers fairs as well as site visits

for university students and utilising mentorship

programmes to offer opportunities and foster

connections with future talent.

We continue to have a strong focus on attracting

experienced talent and the capabilities that we

need to deliver today and for the future. Facing

ascarcity of skills in some locations, our people

strategy and strong brand have successfully

enabled us to attract and recruit the expertise and

resources needed for growth in our key markets.

Balfour Beatty is committed to providing an

engaging end‑to‑end candidate experience, from

investing in and leveraging our attraction strategies

through to an inspiring onboarding experience.

Leveraging the strength of our

brand toattract top talent

In 2024, we invested in our attraction strategies,

looking to amplify our strong brand to attract

different audiences to join Balfour Beatty. Looking

at our future pipeline of talent, we revamped our

early careers (apprentices, graduates, trainees

andindustrial placements) candidate attraction

campaign in the UK, bringing a bold new tone

ofvoice and imagery to connect with ayounger

audience. Capitalising on the scale of the great

projects at Balfour Beatty, we have created

engaging and relevant content to showcase the

incredible opportunities we offer that align with

the aspirations and valuesof the next generation.

This messaging supports our agile recruitment

approach which flexes according to business

needs, and follows through to our selection events.

These events enable the business to get to know

candidates better alongside showcasing the breadth

of opportunity available. This approach is particularly

important in areas of high growth, as well as high

volumes of similar job roles – facilitating quicker

decision making to meet demand. The early

careers campaign launched in September 2024,

and will continue to be shared across our social

channels and on our careers site into 2025.

Attract

BELOW

An example of the new early careers branding.

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Rising Star

Award

This category celebrated individuals who

will go on to achieve great things.

Winner: Megan Jones,

Senior Proposals Manager, Major Projects

Megan joined Balfour Beatty as a Graduate

Proposals Writer and has developed significantly

over a four‑year period into the role of Bids

and Proposals Manager following a

competence‑led development plan. Her

career progression has included chairing the

prestigious Highways Leadership Shadow

team and completing the Aspiring Leaders

Programme. She is now leading the technical

submissions for a highly complex multi‑

billion‑pound opportunity with our strategic

partners. Her influence and impact beyond

‘the day job’ is outstanding. Ilona Pak, Project

Engineer at Gammon, and Tulsi Patel, Senior

Supply Chain Manager in the UK, were also

recognised as Highly Commended for their

impressive contribution in their respective fields.

Above: Award presentation photo. (Left to right) Ilona Pak,

Project Engineer – Gammon, Tulsi Hall, Senior Supply Chain

Manager – Power T&D, Sir John Armitt – Chair of the UK

National Infrastructure Commission, Megan Jones, Senior

Proposals Manager – Major Projects, and Kevin O’Brien, Chief

Executive – Gammon.

READ MORE ABOUT OUR ICON

AWARDS EVENT ON p74

GammonUK US

4.6%

4.3%

5.3%

5.6%

5.4%

6.0%

6.2%

6.5%

7.4%

7.3%

21 22 24231615

4.0

5.5

4.5

6.0

5.0

6.5

7.0

7.5

191817 20

% OF OUR UK WORKFORCE IN

EARN AND LEARN POSITIONS

2024 EARLY CAREERS HIRES:

GRADUATES, APPRENTICES,

TRAINEES, INTERNS AND

INDUSTRIALPLACEMENTS

179

380

270

The broad range of roles at Balfour Beatty provides ample opportunity

for employees to build a meaningful career. Nowhere is this more true

than in one of our key growth areas, Power T&D, where we have a high

demand for skills and experience to enable us to deliver.

To support the recruitment of skilled workers in a competitive market,

the ‘You Complete the Connection’ candidate attraction campaign was

launched. This campaign is centred around the idea that by joining

Balfour Beatty, you can be part of something bigger and build your

career with us shaping the future landscape. This campaign helped

ushire over 500 individuals in 2024, further powering our progress.

BELOW

An example of our ‘You Complete the Connection’ candidate attraction campaign material.

We believe that people who enjoy

working at Balfour Beatty, in an

inclusive environment where they

feel valued and have the opportunity

to develop their careers, will want

to stay with the business long term.

For this reason, listening to our employees

andacting on their feedback is crucial to our

success.This focus has led to increased

retentionacross all geographies, and

improvedprogression opportunities.

In 2024, the Group’s employee engagement

index score increased for the seventh

consecutive year, demonstrating our strong

culture and ongoing commitment to making

Balfour Beatty a great place to work. Our focus

on fostering an inclusive culture is evidenced

through the steadily increasing employee

engagement scores in areas such as diversity

and inclusion and ethical behaviours. In the UK

and US, 95% of our employees feel cared for

and 90% can see themselves working at

Balfour Beatty in 12months.

These high engagement scores are further

evidenced by the significant fall in attrition

across the Group, with rate decreases of 2.01%

in the UK and 2.80% in Hong Kong. Particularly

notable progress has been demonstrated by

the US with attrition decreasing by 10.02%

and21.17% in US Civils and US

Investmentsrespectively.

Retain

EMPLOYEE ENGAGEMENT

SURVEY SCORES %

242120

22 23

84%

GROUP EMPLOYEE

ENGAGEMENT INDEX

SCORE

up 3% from 2023 and 11%

above Industry benchmark

19,500

COLLEAGUES COMPLETED

THE ANNUAL SURVEY

up 8% from the 2023

responserate

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Retaining our talented experts is a key part ofour people strategy; further high scores showgreat engagement

from our employees in the UK and the US.

90%

CAN SEE

THEMSELVES

WORKING HERE IN 12

MONTHS’ TIME

82%

FEEL MOTIVATED

AT WORK

85%

FEEL COMFORTABLE

THEY CAN BE

THEMSELVES AT

WORK

83%

FEEL STRONGLY

CONNECTED TO THEIR

TEAM AND

COLLEAGUES

OUR PEOPLE CONTINUED

We Care about reward

and recognition

Balfour Beatty Investments in the US

continues to drive action on employee

engagement through the ‘We Care’

initiative. ‘WeCare’ outlines eight

specific qualities andactions –

empathy, integrity, excellence,

communication, accountability,

appreciation, determination, and

teamwork – expected of all US Balfour

Beatty Investments employees.

One of the guiding principles within

this initiative is ‘We show appreciation

and celebrate success’. The BRAVO

rewards and recognition programme

was specifically created to offer

employees at every level anopportunity

to recognise and be recognised for

doing great work and contributing

toour culture through shout‑outs,

eCards and monetary rewards. In

2024, this has seen continued success

with 6,162 submissions, resulting in

80.30% of US Investments employees

engaged in the recognition approach.

You said, we did –

optimising the

resources needed

toget the job done

Following the 2023 employee

engagement survey, our colleagues said

they wanted even better systems and

resources to get the job done, so we:

@ Set out an ambitious multi‑year plan

to digitise and improve the HR

services we provide in the UK on

Balfour Beatty Support, a self‑service

portal, across the employee lifecycle,

reducing the number of forms by

nearly two‑thirds to provide colleagues

with an easier to use, more

intuitiveservice.

@ Upgraded the IT self‑service

experience on Balfour Beatty

Support andstarted exploring the

opportunities of AI, with a number

of pilots underway. For more

information on our digital and AI

journey, see pages 22 and 23.

The results from our 2024 survey have

shown a 5% increase in employees

feeling they have the systems/resources

they need to be productive at work.

BELOW

Examples of our 2023 employee engagement

survey ‘You said, we did’ posters.

Retain continued

US:

ENGAGEMENT

INDEX

87% (+2)

RESPONSE RATE

76% (+21)

UK:

ENGAGEMENT

INDEX

82% (+4)

RESPONSE RATE

77% (-3)

Hong Kong:

ENGAGEMENT

INDEX

85% (+1)

RESPONSE RATE

100% (+19)

In 2024, we ran our Group‑wide

#Foodforthought employee

engagement survey campaign

which saw an 8% increase in

participation on 2023 with over

19,500 colleagues – 82% of the

Company – completing the survey.

This was achieved through a

multi‑channel campaign approach

which included direct emails,

posters, TV slides, SMS messages

and situational marketing.

BELOW

Examples of the campaign marketing materials.

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Encourage Constantly

Award

This category celebrated an individual who

creates an environment that is supportive,

empowering, motivating and inspiring for others.

John McAllister

General Foreman

RegionalScotland

John’s encouragement of others

towork safely is admired and

appreciated by all those he works

with. He goes above and beyond

running the site to develop a

workforce of the future, shows

agrowth mindset by embracing

modern methods of construction,

supports supervisor development

programmes and NVQs, and offers

constructive feedback to others.

Cheryl Sutton

Regional Operations

Director,Balfour Beatty

Communities

When Cheryl took over the

responsibility of five Air Force

bases, she saw an opportunity for

transformation. Cheryl’s unwavering

optimism and dedication has

helped foster a positive culture

and ensure great customer service

and operational success.

Left: Award presentation

photo. (Left to right)

John McAllister, General

Foreman – Regional

Scotland, Evan Sutherland,

Chief Procurement

Officer, Cheryl Sutton,

Regional Operations

Director – Balfour Beatty

Communities, and Mark

Robinson, Group CEO

– SCAPE.

READ MORE ABOUT OUR ICON

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Professional capability and technical competence

have been a key focus across all geographies

– from over 1,000 individuals attending commercial

training in the UK, through to more specific areas

of focus relating to compliance or new legislation.

Balfour Beatty is also committed to enhancing

industry‑academia interaction to increase

opportunities for individuals to develop their

professional capabilities.

In 2024, Gammon became the first international

Corporate Partner of the Institution of Civil

Engineers, demonstrating its commitment to

nurturing local talent by providing training and

professional development for our engineers that

recognises them both locally and internationally.

Industry‑academia interaction is also a strong

focus in the UK, with 2024 seeing the graduation

of the first cohort of apprentices undertaking the

Construction Quantity Surveyor Degree Apprenticeship.

Launched in January 2021, this apprenticeship

was designed and delivered in collaboration with

Northumbria University to directly address a

known skills gap. Enabled through the connected

community of the cohort, and strong support from

line managers and the Learning and Development

team, this has led to 17 individuals achieving their

degrees. This programme continues to expand,

working with industry partners across the country

and cohort sizes increasing year on year.

5,000+

INDIVIDUALS ATTENDED PROFESSIONAL

DEVELOPMENT COURSES IN HONG KONG

2,000+

INDIVIDUALS ATTENDED PERSONAL

EFFECTIVENESS COURSES IN THE UK

Grow

At Balfour Beatty we continue to be

committed to our talent philosophy

to ‘Grow Our Own’.

This philosophy is crucial for enabling business

success through retaining key skills and knowledge,

preserving our culture and controls, and reducing

the need for external recruitment. It also benefits

employees by providing the opportunity for them

to develop their skills and have fulfilling careers

within the Group. This talent philosophy is evident

at all career levels – from our early careers

through to experienced talent – and there are

many examples across the Group of individuals

developing to the highest levels.

In 2024, we continued our investment at all levels

in training and development across leadership,

professional and technical domains. This included

early careers employees in the UK participating in

the Duke of Edinburgh Gold Award programme for

the 10th year running, through to running talent

programmes such as the Executive Leadership

Development and Propel programmes in the US

which saw a combined 70 attendees, and Aspiring

Leaders in the UK with 48 attendees, supporting

employees to transition into leadership levels and

strengthening our succession pipeline. In 2024,

project leadership was a specific focus in the UK

with a community set up to build the capability

ofexperienced project leaders to lead the most

complex and highest‑value infrastructure projects

of the future.

Balfour Beatty plc | Annual Report and Accounts 2024

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From labourer to leader

Emily Kay, President of Operations in California

for Balfour Beatty’s US Buildings business, has

a collection of hard hats, proudly displayed in

her father’s home, that is a testament to her 30

years in the construction industry – over half of

those years working with and for Balfour Beatty.

It tells the story of a professional who is

unafraid to try new things, always focused on

learning and development, and of a person with

a deep passion for working with people and

building enduring relationships.

Over her dynamic career, she worked her way up

the ladder from concrete labourer to her present

role as President of Operations in California for

Balfour Beatty’s US Buildings business. “I have

atenacious curiosity that has served me well.

Inever wanted to ask someone to do something

I hadn’t done myself, so I got out there to try it

all, running every piece of equipment and

spending time in every job role,” says Emily.

She has a distinct habit: she does whatever it

takes. This commitment to personal growth and

learning has been a key factor in her success.

“Having those traits and then working at a

company like Balfour Beatty that says, heck

yeah, if you’re willing to go the extra mile and

put in the effort, we will celebrate it, and we

will give you more opportunity and support you

along the way,” shared Emily.

However, she will happily tell you that building

highly effective teams gives her the most

satisfaction. Apeople‑first focus characterises

Emily’s leadership style and her most significant

contribution has been to the people who work

beside her. Despite living in Los Angeles, she

travels weekly to San Diego and other geographies

to meet with colleagues and frequently stays

intouch with other Balfour Beatty teammates

from coast to coast. Emily is committed to

empowering employees through fostering

alliances and networking, earning the type

ofinfluence where people will follow her.

Having worked my way through

the construction industry, I have

developed a solid understanding

ofthe need for timely and decisive

action, clear communication, and

apositive and proactive attitude.

Ultimately, what I love most about

this industry is that it is all about

building relationships and

establishing trust.”

OUR PEOPLE CONTINUED

From potential to

professional: focus

onproject management

In 2024, 25 individuals attended the fifth

cohort of the Gammon Project Management

programme.

The Project Management programme is

designed to enhance the skills of potential

Assistant Project Managers and Project

Managers through practical experience at

Gammon. Before the launch of this programme,

the typical lead time for promotion from

Project Manager to Senior Project Manager

was six years. However, this programme has

been instrumental in accelerating career

progression with one participant notably

advancing to Senior Project Manager in just

two years – demonstrating the programme’s

effectiveness in fast‑tracking talented

individuals and enhancing their readiness

forsenior roles.

We are committed to creating an

environment where every employee

can reach their full potential.

This includes fostering an ethical and inclusive

culture to ensure that all our people are equipped

to flourish in a fast‑changing world. As well as

working to ensure that all employees feel valued

and respected, we continue to focus on employee

wellbeing. Together this creates an environment

where the business and our customers benefit

from the diverse thinking and experiences of

ouremployees.

Employee diversity, equity and inclusion is a core

part of our Building New Futures sustainability

strategy; to learn more about the progress made

against our UK diversity targets set out in the

Value Everyone UK DE&I strategy, seepage 66.

Enabling an inclusive

andethicalculture

Balfour Beatty continues to demonstrate its

commitment to enabling an inclusive and ethical

culture through a number of awards and accreditations

These include achieving Disability Confident

Employer re‑accreditation and working towards

Clear Assured Silver accreditation in the UK and

inthe US, the Buildings division was named

‘BestPlace to Work’ by four business publications

in California for fostering a culture of innovation,

collaboration and people‑first. We have seen

continued success in our Right to Respect programme

in 2024 rolling out across the UK and US and

continuing to deliver into 2025, and in the UK,

thiswas recognised through winning the Inclusive

Culture Award at the enei Inclusivity Excellence

Awards. In Hong Kong, Gammon were also recently

recognised for their continued efforts by the Chief

Thrive

Grow continued

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Happiness Officer Association where they were

awarded three prestigious recognitions: CHO Best

Innovative Culture Award, CHO Employee Wellness

Award and Top 10 Happy Companies to Work For.

In 2024, 70 people attended our flagship career

development programmes, Empower and Thrive

in the UK. These programmes support and enable

career progression, and this is demonstrated

through the success of past attendees with

62.96% of female attendees being promoted,

and48.00% of minority ethnic attendees being

promoted in the last 36 months.

2024 has seen the introduction of new

employee‑led networks in support of employee

veterans, reservists, military members and allies

– the Mulberry Network in the UK and BRAVE –

Building Relentless Alliances for Veteran Employees

in the US, marking a significant step forward in

Balfour Beatty’s commitment to supporting military

veterans and their families in the construction industry.

Building on this commitment, this year also saw the

re‑signing of the Armed Forces Covenant in the UK,

marking nearly a decade of dedicated support since

the Company first pledged its commitment in 2015.

74%

FEEL DIVERSITY AND INCLUSION IS

TALKED ABOUT WHERE THEY WORK

87%

FEEL OUR CULTURE IS INCLUSIVE

TOALL PEOPLE REGARDLESS

OFDIFFERENCE

Setting the standard for

diversity and inclusion

progress

Our HS2 joint venture, Balfour Beatty VINCI

SYSTRA (BBVS), which is leading construction

for the Old Oak Common station, achieved

the prestigious Clear Assured Platinum

Accreditation by the Clear Company. The

project received praise for its approach to

embedding a safe, respectful and inclusive

culture through collaboration with its

partners. Initiatives to advance inclusive

leadership, social value and the health and

wellbeing of its workforce, were highlighted

as particular areas of success.

Steve O’Sullivan, Senior Project Director for

BBVS said: “Achieving this accreditation is

testament to the commitment and dedication

of our team to delivering sustainable

outcomes. Senior leadership support is

delivered by being proactive, authentic,

visible and accountable. Our team has

followed their lead to embed an inclusive

culture, which shapes and influences the

DE&I narrative both across the project and

inthe industry. This is part of the legacy that

HS2 will leave.”

Empowering the next

generation

To welcome the new intake of graduate

engineers in 2024, Gammon hosted an

inspiring orientation camp designed to ignite

the passion and potential of our future talent.

As part of this event, attendees participated

in a ‘Dialogue Experience’ session which

include experiences in darkness, a journey

ofsilence, and a Braille and sign language

workshop. This session highlighted Gammon’s

unwavering commitment to fostering an

inclusive culture through encouraging

inclusive communication, and promoting

empathy and understanding of the challenges

faced by those with visual and hearing

impairments – creating an environment

where everyone feels valued and included.

Value

Everyone

Award

This category recognised an individual

who celebrates difference and enables

othersto thrive regardless of their

identityor background.

Winner: Michelle Reiner

Vice President Operations, US Buildings

Michelle has been actively involved in driving

change and inclusivity at Balfour Beatty for

over a decade. Alongside managing her US

Buildings operations role, she established the

Connecting Women and Building Pride groups

in the USand for the last couple of years,

shehas spearheaded the US ‘Together Allies

Summit’. Michelle embodies the ‘Value Everyone’

behaviour by role modelling inclusive

behaviours, actively working to remove barriers,

and supporting engagementby valuing

different perspectivesand ways of thinking.

Above: Award presentation photo. (Left to right) Phil

Harrison, Chief Financial Officer, Michelle Reiner, Vice

President Operations – US Building, and Carl Trowell,

President, UK Strategic Infrastructure – National Grid.

READ MORE ABOUT OUR ICON

AWARDS EVENT ON p74

SCAN OR CLICK TO WATCH

THE EVENT VIDEO

7474

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Celebrating the best

of Balfour Beatty

1,700

NOMINEES

200

JUDGES

118

FINALISTS

ULTIMATE

ICONS

WORLD-CLASS

VENUE

It’s a fantastic opportunity to come

to a great venue but really to

celebrate all that Balfour Beatty

does throughout the UK and many

other countries in the world.

Balfour Beatty is a fantastic partner

for us in the energy transition and

it will be fordecades tocome.”

Alistair Phillips-Davies CBE

Chief Executive Officer, SSE

ICON AWARDS

On 25 September 2024, under the

gaze of the magnificent Raphael

paintings of the London V&A Museum,

we celebrated our inaugural Group-wide

Icon Awards. This prestigious event

brought together almost 400 colleagues

from across the UK, US and Hong

Kong alongside Board members, key

customers and partners, to honour

the very best of Balfour Beatty.

SCAN OR CLICK TO HEAR

LEO’S THOUGHTS ON OUR

INAUGURAL ICONAWARDS

Together, we paint skylines, build incredible

infrastructure, and shape communities. But just

as important as what we deliver, is how we

deliver; something that is driven by our culture,

underpinned by our behaviours.

The Icon Awards celebrated 26 winners over

16categories focused on our five behaviours –

Talk Positively, Collaborate Relentlessly, Encourage

Constantly, Make a Difference and Value Everyone

– and core programmes such as Zero Harm and

Right First Time. The Awards recognised and

shone a spotlight on our people and teams that

– all over the world – make amazing things happen.

From our rising stars to seasoned project leads,

their contributions are the foundation to our

continued success and what makes Balfour

Beatty a great place to work.

Look out for the Icon Award logo throughout

thereport to read our winner’s stories.

Leo on the

Icon Awards

SCAN OR CLICK TO WATCH

THE WRAP-UP VIDEO FROM

OUR ICON AWARDS

75Balfour Beatty plc | Annual Report and Accounts 2024

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SCAN OR CLICK TO FIND

OUT MORE ABOUT OUR

ICON AWARDS

1. BBC journalist and broadcaster Martine Croxall

expertly hosted our first ever Group‑wide

IconAwards.

2. The ceremony was held in the V&A’s

impressive Raphael Gallery.

3. The magnificent V&A Museum in the heart

ofLondon.

4. Balfour Beatty’s 2024 Icon Award winners.

5. The Icon Awards winner’s trophy.

6. The 1909 drink – to represent our founding

year and the year the V&A Museum

re‑opened.

7. Leo Quinn, Group Chief Executive, delivering

his opening remarks.

8. Welcome drinks hosted in The Dome under

Dale Chihuly’s contemporary central

glasssculpture.

Balfour Beatty plc | Annual Report and Accounts 2024

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MY CONTRIBUTION (MYC)

Enhancing performance

through employee ideas

My Contribution (MyC) continues to be a critical driver for business

innovation, empowering employees at alllevels to share and deliver

their ideas that can lead to substantial improvements and efficiencies.

Theprogramme’s successes in 2024 reflect a strong commitment to

fostering a culture of innovation, recognising employee contributions,

and leveraging technology to solve business challenges.

2024 highlights

@ MyC turns five: we celebrated MyC’s fifth

birthday since moving to Viva Engage, Balfour

Beatty’s employee social platform, with aseries

of fun events to showcase achievements, recognise

colleagues and encourage participation.

@ In-person engagement: MyC was on the

agenda at 18 internal conferences across

ourBusiness Units and Enabling Functions;

inspiring senior leaders, employees, and early

careers through presentations reaching over

2,940 employees.

@ MyC at Old Oak Common: Successfully

piloted MyC using Microsoft Teams at our

HS2Old Oak Common station project.

@ MyC employee engagement metric: As part

of our annual employee engagement survey we

ask our colleagues if they feel they can share

their ideas. In 2024, we achieved a 3% increase

in this metric, with 76% of people feeling they

can share ideas to improve the business.

@ US Civils launch: After a year‑long pilot in the

La Verne, California office, MyC officially rolled

out across the US Civils business in August.

2024 UK and US performance

Engaging our workforce

2,000

IDEAS SHARED

24%

OF EMPLOYEES COLLABORATING ON IDEAS

Creating value

£3.2m

ESTIMATED COST SAVINGS

£3.2m

ESTIMATED CASH IN

Driving change

490

IDEAS DELIVERED

466

TEAM MYC VOLUNTEERS

Great place to work

53,800

ESTIMATED HOURS SAVED

271

BETTER PLACE TO WORK IDEAS DELIVERED

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MyC Kudos Award

This category recognised those who have

revolutionised our ways of working by delivering

an ingenious idea that drives our values and

showcases remarkable teamwork, transformative

solutions and significant benefits.

14,000th idea milestone

Our 14,000th idea was submitted during a

local My Contribution (MyC) campaign on

theM25 Junction 10/A3 Wisley Interchange

project. Gemma Pilling, Technical Training

Co‑ordinator, proposed using an existing

training area on site and inviting an Operator

Skills Hub trainer to deliver a two‑day Advanced

Engineers course, reducing expenses and

enhancing efficiency as demand for the

accreditation grows.

Two successful courses have been

deliveredon site so far with another two

planned for 2025. The facility is also available

for other projects.

Howard Williams, Project Director, praised

Gemma’s idea for aligning perfectly with the

MyC campaign’s efficiency goals.

Shaping our journey:

MyCatOldOakCommon

In August 2024, we launched an early adopter pilot of MyC using

Microsoft Teams on our HS2 Old Oak Common station (OOC) project

inpartnership with HS2. The MyC programme has been tailored to the

project requirements, supporting the team to deliver on its goals and

HS2’s mission to deliver Britain’s new high‑speed railway safely and

ontime.

84 colleagues took part in the pilot to test the platform ‘at scale’ to

ensure we were creating a positive experience for all those taking part.

By the end of the pilot in December 2024, 122 ideas had been submitted

and five ideas delivered including, the introduction of smart sockets in

the office, road worker abuse signage, a new meeting room booking

system, onsite bicycle servicing and an Old Oak Common library.

Above: Award presentation photo. (Left to right) Melanie Page, Head of Group Innovation

Programmes, Mat Twiss, Senior Project Manager – HS2 Area North, and Eric Stenman,

President and Chief Executive Officer – US Buildings and Civils.

Above: Gemma Piling, Technical Training Co‑ordinator and

Howard Williams, Project Director.

READ MORE ABOUT OUR ICON

AWARDS EVENT ON p74

Winner: Mat Twiss

Senior Project Manager, HS2 Area North

Mat’s idea was to implement ‘smart sockets’ across HS2 Area North’s

operations representing a new approach to energy management. Smart

sockets leverage machine learning technology to reduce energy waste

and phantom load by automatically adjusting the power supply based

onreal‑time usage data. The smart sockets identify idle devices and

disconnect power, preventing unnecessary energy consumption.

The idea not only supports our sustainability goals through reducing

carbon emissions but also aligns with our commitment to innovative,

tech‑driven solutions, all whilst saving money in the process.

Balfour Beatty plc | Annual Report and Accounts 2024

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

The Big AI Challenge:

poweredbyMyContribution

In October, we hosted an AI hackathon in collaboration with

Microsoft. This event demonstrated our ability to leverage data

analytics and artificial intelligence (AI) to tackle critical business

challenges and enhance productivity across ouroperations.

The hackathon brought together diverse teams from Balfour

Beatty and Microsoft. Over a day and a half, 70 colleagues

worked intensively to explore innovative solutions for six

business‑generated ideas submitted through My Contribution

(MyC). The teams adopted Team MyC roles and responsibilities,

and utilised MyC’s idea stages to guide their projects from

inception to implementation.

Each team, driven by knowledge and competitive spirit, aimed

to develop prototypes and compete for prizes, showcasing the

significant impact of data, technology, AI, and teamwork on

our problem‑solving capacities.

Elaine Allen, Microsoft’s industry lead for the Built Environment,

and Jon Ozanne, Balfour Beatty’s Chief Information Officer,

selected two standout ideas – the UK Quality team’s auto‑generatio

of inspection and test plans (ITPs) and the Balfour Beatty

Living Places team’s Highways Repair ‘Clustering’.

All six teams produced exceptional outputs. Our next steps

involve working with the teams to develop each idea further

by mapping and planning resources, testing technologies,

andprogressing from proven concepts to scalable solutions.

My Contribution in the US

After a year‑long pilot in the La Verne, California office, MyC

officially rolled out across the US Civils business in August.

Since then, employees have submitted a total of 21ideas that

have had broad‑reaching impact on business performance

including revamped standard operating procedures (SOPs)

andthe evaluation and implementation of a new and

transformational jobsite safety management system.

In 2024, our US teams have significantly advanced the

embedment of MyC through communications and targeted

recruitment efforts for Team MyC membership. Our total

programme engagement (inclusive of ideas, comments

andlikes) was 2.4 times greater than in 2023.

A sustainable spark in Seattle

Balfour Beatty’s General Foreman Joel Babcock leveraged

the power and scale of MyC to deliver an innovative and

sustainable solution to re‑use door hinges. In addition to its

positive environmental impact, Joel’s idea reduces waste in

labour and cost and is estimated to save US$4,500 annually.

SCAN OR CLICK TOREAD MORE

ABOUT JOEL’S MY

CONTRIBUTION IDEA

Cross-Atlantic collaboration

Balfour Beatty’s Director of Construction Technology and

MyC Ambassador Elizabeth Angel represented the US

businesses in The Big AI Challenge. Bringing her extensive

knowledge of AI and the MyC programme, Elizabeth made

vital contributions to the hackathon. Her trip also included

collaboration opportunities with Balfour Beatty’s UK Building

Information Modelling team and diversity, equity and

inclusion leaders.

SCAN OR CLICK TOREAD MORE

ABOUT ELIZABETH’S TRIP TO

THE UK

MY CONTRIBUTION (MYC) CONTINUED

SCAN OR CLICK TO WATCH

OUR EVENT HIGHLIGHTS VIDEO

79Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT

This section of the Strategic report constitutes the Group’s Non‑financial and Sustainability Information Statement, produced to comply with Sections 414CA

and414CB of the Companies Act. The non‑financial information is contained within the various sections of the Strategic report and is cross‑referenced below to

help stakeholders find relevant information.

Reporting requirement Policies and standards which govern our approach Additional information necessary to understand

impact

Page

Anti-corruption and

briberymatters

Code of Ethics

Supplier Standards

Ethics and compliance p46

Human rights Modern Slavery Statement

Code of Ethics

Ethics and compliance p46

Employees Code of Ethics

Health and safety policy

Health, safety and wellbeing

Our people

Stakeholder value: employees

Ethics and compliance

p40

p68

p27

p46

Climate-related risks

and opportunities

Task Force on Climate‑related Financial

Disclosures (TCFD)

Climate change and Task Force on

Climate‑related Financial Disclosures

(TCFD)

p107

Environmental

matters

Our sustainability strategy –

BuildingNewFutures

Sustainability policy

Sustainable procurement policy

Environmental policy

ISO 14001:2014 and ISO 20400:2017

GHG Protocol

GHG reporting

Sustainability: Climate Change

Carbon Reduction Plan (PPN 06/21)

www.balfourbeatty.com/ILA_2024

p50

www.balfourbeatty.com/

carbonreductionplan

Social and community

matters

Our sustainability strategy – Building New

Futures

Social value policy

Code of Ethics

Social value reporting

Ethics and compliance

Stakeholder value: Communities

Sustainability: Community engagement

www.balfourbeatty.com/ILA_2024

p46

p29

p63

SCAN OR CLICK TO FIND

OUTMORE ABOUT THE

GROUP’SPOLICIES

Balfour Beatty plc | Annual Report and Accounts 2024

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

MEASURING OUR FINANCIAL PERFORMANCE

Providing clarity on

theGroup’s alternative

performance measures

The Group includes this section in its Annual Report and Accounts with

the aim of providing transparency and clarity on the measures adopted

internally to assess performance.

Following the issuance of the Guidelines on

Alternative Performance Measures (APMs) by

theEuropean Securities and Markets Authority

(ESMA) in June 2015, the Group has included this

section in its Annual Report and Accounts with

the aim of providing transparency and clarity on

the measures adopted internally to

assessperformance.

Throughout this report, the Group has presented

financial performance measures which are considered

most relevant to Balfour Beatty and are used to

manage theGroup’s performance.

These financial performance measures are chosen

to provide a balanced view of the Group’s operations

and are considered useful to investors as these

measures provide relevant information on the

Group’s past or future performance, position or

cash flows.

The APMs adopted by the Group are also commonly

used in the sectors it operates inand therefore

serve as a useful aid for investors to compare

Balfour Beatty’s performance to its peers.

The Board believes that disclosing these performance

measures enhances investors’ ability to evaluate

and assess the underlying financial performance

of the Group’s operations and the related key

business drivers.

These financial performance measures are also

aligned to measures used internally toassess

business performance in the Group’sbudgeting

process and when determiningcompensation.

Equivalent information cannot be presented by

using financial measures defined in the financial

reporting framework alone.

Performance measures used to

assess the Group’s operations

Underlying profit from operations (PFO)

Underlying PFO is presented before non‑underlying

items, finance costs and investment income and

is the key measure used to assess the Group’s

performance in the Construction Services and

Support Services segments. This is also a

common measure used by the Group’s peers

operating in thesesectors.

This measure reflects the returns to the Group

from services provided in these operations that

are generated from activities that are notfinancing

in nature and therefore an underlying pre‑finance

cost measure is more suited to assessing

underlying performance.

Underlying profit before tax (PBT)

The Group assesses performance in its Infrastructure

Investments segment using anunderlying PBT

measure. This differs fromthe underlying PFO

measure used to measure the Group’s Construction

Services and Support Services segments because

inaddition to margins generated from operations,

there are returns to the Investments business

which are generated from the financing element

of its projects.

These returns take the form of subordinated debt

interest receivable, interest receivable on PPP

financial assets and fair value gains on certain

investment assets, which are included in the

Group’s income statement in investment income.

These are then offset by the finance cost incurred

on the non‑recourse debt associated with the

underlying projects, fair value losses on certain

investment assets and any impairment of

subordinated debt andaccrued interest receivable,

which are included in the Group’s income

statement infinancecosts.

Operating cash flow (OCF)

The Group uses an internally defined measure of

OCF to measure the performance of its earnings‑

based businesses and subsequently to determine

the amount of incentive awarded to employees in

these businesses under the Group’s Annual

Incentive Plan (AIP). This measure also aligns to

one of the vesting conditions attributable to the

Group’s PSP awards. Refer topages 166 to 168.

Measuring the Group’s performance

The following measures are referred to in this

Annual Report and Accounts when reporting

performance, both in absolute terms and also in

comparison to earlier years.

Statutory measures

Statutory measures are derived from the Group’s

reported financial statements, whichhave been

prepared in accordance with UK‑adopted international

accounting standards (IFRS) and in conformity

with the requirements of the Companies Act 2006.

Where a standard allows certain interpretations to

be adopted, the Group has applied its accounting

policies consistently. These accounting policies

can be found onpages 199 to 206.

The Group’s statutory measures take into account

all of the factors, including those thatit cannot

influence (principally foreign currency fluctuations)

and also non‑recurring items which do not reflect

the ongoing underlying performance of the Group.

Performance measures

In assessing its performance, the Group has

adopted certain non‑statutory measures because,

unlike its statutory measures, these cannot be

derived directly from its financial statements.

The Group commonly uses the following

measures to assess its performance:

Readers of the Annual Report and Accounts

are encouraged to review thefinancial

statements in their entirety.

81Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

a) Order book

The Group’s disclosure of its order book is aimed

to provide insight into its pipeline of work and

future performance. The Group’s order book is

nota measure of past performance and therefore

cannot be derivedfrom its financial statements.

The Group’s order book comprises the

unexecuted element of orders on contracts that

have been secured. Where contracts are subject

to variations, only secured contract variations are

included in the reported orderbook.

Where contracts fall under framework

agreements, an estimate is made of orders to be

secured under that framework agreement. This is

based on historical trendsfrom similar framework

agreements delivered in the past and the estimate

of orders included in the order book is that which

is probable to besecured.

In accordance with IFRS 15 Revenue from

Contracts with Customers, the Group is required

to disclose the remaining transaction price allocated

to performance obligations not yet delivered. This

can be found in Note4.3. This is similar to the

Group’s order book disclosure, however itdiffers

for the following reasons:

@ the Group’s order book includes its share of

orders that are reported within its joint ventures

and associates. In line with section (e), the

Board believes that including orders that are

within the pipeline of its joint ventures and

associates better reflects the size of the

business and the volume of work to be carried

out in the future. This differs from the statutory

measure of transaction price to be allocated to

remaining performance obligations which is

only inclusive ofsecured revenue from the

Group’ssubsidiaries;

These are non‑underlying costs as they donot relate to the underlying performance of the Group.

From time to time, it may be appropriate todisclose further items as non‑underlying items in order

toreflect the underlying performance of the Group.

Further details of non‑underlying items are provided in Note 10.

A reconciliation has been provided on page 82 to show how the Group’s statutory results are adjusted to

exclude non‑underlying items and their impact on its statutory financial information, both as a whole and

in respect of specific line items.

Reconciliation of order book to transaction price to be allocated to remaining

performanceobligations

2024

£m

2023

£m

Order book (performance measure) 18,443 16,532

Less: Share of orders included within the Group’s joint ventures and

associates (2,322) (2,344)

Add: Transaction price allocated to remaining performance obligations in

Infrastructure Investments* 2,616 1,917

Transaction price allocated to remaining performance obligations for the

Group* (statutory measure) 18,737 16,10 5

* Refer to Note 4.3.

@ as stated above, for contracts that fall under

framework agreements, the Group includes in

its order book an estimate of what the orders

under these agreements will be worth. Under

IFRS 15, each instruction under the framework

agreement is viewed as a separate

performance obligation and is included in the

statutory measure of the remaining transaction

price when received but estimates for future

instructions are not;and

@ the Group’s order book does not include revenue

to be earned in its Infrastructure Investments

segment as the value of this part of the

business is driven by the Directors’ valuation of

the Investments portfolio. Refer to section (i).

b) Underlying performance

The Group adjusts for certain non‑underlying

items which the Board believes assists in

understanding the performance achieved

bytheGroup. These items include:

@ gains and losses on the disposal of businesses

and investments, unless thisispart of a programme

of releasing value from the disposal of similar

businesses orinvestments such as

infrastructure concessions;

@ costs of major restructuring and reorganisation

of existing businesses;

@ costs of integrating newly acquiredbusinesses;

@ acquisition and similar costs related tobusiness

combinations such as transactioncosts;

@ impairment and amortisation charges

onintangible assets arising on business

combinations (amortisation of acquired

intangible assets); and

@ impairment of goodwill.

Balfour Beatty plc | Annual Report and Accounts 2024

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Measuring the Group’s performance continued

Performance measures continued

b) Underlying performance continued

Reconciliation of 2024 statutory results to performance measures

Non‑underlying items Non‑underlying items

2024

statutory

results

£m

Intangible

amortisation

£m

Net release of

provisions

relating to Rail

Germany

£m

Recognition of

insurance for

rectification

works in

London

£m

Provision

recognised for

BSA claims

£m

Recognition of

charge for claim

on legacy

project in Texas

£m

2024

performance

measures

£m

2023

statutory

results

£m

Intangible

amortisation

£m

Provision for

rectification

works in

London

£m

2023

performance

measures

£m

Revenue including share of joint ventures and associates

(performance) 10,015 – – – – – 10,015 9,595 – – 9,595

Share of revenue of joint ventures and associates (1,781) – – – – – (1,781) (1,602) – – (1,602)

Group revenue (statutory) 8,234 – – – – – 8,234 7,993 – – 7,993

Cost of sales (7,8 83) – (26) (43) 83 52 (7,817) (7,593) – 12 (7,581)

Gross profit 351 – (26) (43) 83 52 417 400 – 12 412

Gain on disposals of interests in investments 43 – – – – – 43 24 – – 24

Amortisation of acquired intangible assets (4) 4 – – – – – (5) 5 – –

Other operating expenses (276)

– 5 – – – (271) (261) – – (261)

Group operating profit 114 4 (21) (43) 83 52 189 158 5 12 175

Share of results of joint ventures and associates 59 – – – – – 59 53 – – 53

Profit from operations 173 4 (21) (43) 83 52 248 211 5 12 228

Investment income 82 – – – – – 82 82 – – 82

Finance costs (41) – – – – – (41) (49) – – (49)

Profit before taxation 214 4 (21) (43) 83 52 289 244 5 12 261

Taxation (36) (1) (2) 11 (21) (13) (62) (50) (3) (3) (56)

Profit for the year 178 3 (23) (32) 62 39 227 194 2 9 205

Reconciliation of 2024 statutory results to performance measures bysegment

Non‑underlying items Non‑underlying items

Profit/(loss) from operations

2024

statutory

results

£m

Intangible

amortisation

£m

Net release of

provisions

relating to Rail

Germany

£m

Recognition of

insurance for

rectification

works in

London

£m

Provision

recognised for

BSA claims

£m

Recognition of

charge for claim

on legacy

project in Texas

£m

2024

performance

measures

£m

2023

statutory

results

£m

Intangible

amortisation

£m

Provision for

rectification

works in

London

£m

2023

performance

measures

£m

Segment

Construction Services 87 1 (21) (43) 83 52 159 143 1 12 156

Support Services 93 – – – – – 93 80 – – 80

Infrastructure Investments 32 3 – – – – 35 27 4 – 31

Corporate activities (39) – – – – – (39) (39) – – (39)

Total 173 4 (21) (43) 83 52 248 211 5 12 228

MEASURING OUR FINANCIAL PERFORMANCE CONTINUED

83Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

c) Underlying profit before tax

As mentioned on page 80, the Group’s Infrastructure Investments segment is assessed on an underlying

profit before tax (PBT) measure. Thisis calculated as follows:

2024

£m

2023

£m

Underlying profit from operations (section (b) and Note 5) 35 31

Add: Subordinated debt interest receivable* 17 34

Add: Interest receivable on PPP financial assets* 2 2

Less: Fair value loss on investment asset* (2) (1)

Less: Non‑recourse borrowings finance cost* (12) (11)

Add/(Less): Net impairment reversal/(impairment) of subordinated debt

andaccrued interest receivable* 14 (8)

Underlying profit before tax (performance) 54 47

Non‑underlying items (section (b) and Note 5) (3) (4)

Statutory profit before tax 51 43

* Refer to Note 8 and Note 9.

d) Underlying earnings per share

In line with the Group’s measurement of underlying performance, the Group also presents its earnings

per share (EPS) on an underlying basis. The table below reconciles this to the statutory earnings per share.

Reconciliation from statutory basic EPS to performance EPS

2024

Pence

2023

Pence

Statutory basic earnings per ordinary share 34.2 35.3

Amortisation of acquired intangible assets after tax 0.6 0.4

Other non‑underlying items after tax 8.8 1.6

Underlying basic earnings per ordinary share (performance) 43.6 37.3

e) Revenue including share of joint ventures and associates (JVAs)

The Group uses a revenue measure which is inclusive of its share of revenue generated from its JVAs.

As the Group uses revenue as a measure of the level of activity performed by the Group, the Board

believes that including revenue that is earned from its JVAs better reflectsthe size of the business

andthe volume of work carried out and more appropriately compares to PFO.

This differs from the statutory measure of revenue which presents Group revenue from its subsidiaries.

A reconciliation of the statutory measure of revenue to the Group’s performance measure is shown

inthe tables in section (b). A comparison ofthe growth rates in statutory and performance revenue

canbe found in section (j).

f) Operating cash flow (OCF)

The table below reconciles the Group’s internal performance measure of OCF to the statutory measure

of cash generated from operating activities as reported in the Group statement of cash flows (page 196).

Reconciliation from statutory cash generated from operations to OCF

2024

£m

2023

£m

Cash generated from operating activities (statutory) 265 285

Add back: Pension payments including deficit funding (Note 31.2) 30 28

Less: Repayment of lease liabilities (including lease interest payments)

(Note 29) (66) (63)

Add: Operational dividends received from joint ventures and associates

(Note 20.5) 71 59

Add back: Cash flow movements relating to non‑operating items 13 9

Less: Operating cash flows relating to non‑recourse activities (24) (8)

Operating cash flow (OCF) (performance) 289 310

The Group includes/excludes these items to reflect the true cash flows generated from or used in the

Group’s operating activities:

Pension payments including deficit funding (£30 million): the Group has excluded pension payments

which are included in the Group’s statutory measure of cash flows from operating activities from its

internal OCF measure as these primarily relate to deficit funding of the Group’s main pension fund,

Balfour Beatty Pension Fund (BBPF). The payments made for deficit funding are in accordance with

anagreed journey plan with the trustees of the BBPF and are not directly linked to the operational

performance ofthe Group.

Repayment of lease liabilities (including lease interest payments) (£66 million outflow): the payments

made for the Group’s leasing arrangements are included in the Group’s OCF measure as these

payments are made to third‑party suppliers for the lease of assets that are used to deliver services to

the Group’s customers, and hence to generate revenue. Under IFRS, these payments are excluded from

the Group’s statutory measure of cash flows from operating activities as these are considered debt in

nature under accounting standards.

Operational dividends received from joint ventures and associates (£71 million inflow): dividends received

from joint ventures and associates which are generated from non‑disposal activities are included in the

Group’s OCF measure as these are cash returns to the Group from cash flows generated from operating

activities within joint ventures and associates. Under IFRS, these returns are classified as investing activities.

Cash flow movements relating to non‑operating items (£13 million): the Group’s OCF measure excludes

certain working capital movements that are not directly attributable to the Group’s operating activities.

Operating cash flows relating to non‑recourse activities (£24 million): the Group’s OCF measure is

specifically targeted to drive performance improvement in the Group’s earnings‑based businesses and

therefore any operating cash flows relating to non‑recourse activities are removed from this measure.

Under IFRS, there is no distinction between recourse and non‑recourse cash flows.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Measuring the Group’s performance continued

Performance measures continued

g) Recourse net cash/borrowings

The Group also measures its performance based on its net cash/borrowings position at the year end.

This is analysed by excluding elements that are non‑recourse to the Group as well as lease liabilities.

Non‑recourse elements are cash and debt that are ring‑fenced within certain infrastructure concession

project companies and are excluded from the definition of net debt set out in the Group’s borrowing

facilities. In addition, lease liabilities which are deemed to be debt in nature under statutory measures

are also excluded from the Group’s definition of net cash/borrowings as these are viewed to be

operational in nature reflecting payments made in exchange for use of assets.

Net cash/borrowings reconciliation

2024

statutory

£m

Adjustment

£m

2024

performance

£m

2023

statutory

£m

Adjustment

£m

2023

performance

£m

Total cash within

theGroup 1,558 (265) 1,293 1,414 (306) 1,10 8

Cash and cash equivalents

– infrastructure

concessions 265 (265) – 306 (306) –

– other 1,293 – 1,293 1,108 – 1,108

Total debt within

theGroup (1,112) 762 (350) (979) 713 (266)

Borrowings

– non‑recourse loans (600) 600 – (570) 570 –

– other (350) – (350) (266) – (266)

Lease liabilities (162) 162 – (143) 143 –

Net cash 446 497 943 435 407 842

h) Average net cash/borrowings

The Group uses an average net cash/borrowings measure as this reflects its financing requirements

throughout the year. The Group calculates its average net cash/borrowings based on the average opening

and closing figures for each month through the year.

The average net cash/borrowings measure excludes non‑recourse cash and debt and lease liabilities,

andthis performance measure shows average net cash of £766 million for 2024 (2023: £700 million).

Using a statutory measure (inclusive of non‑recourse elements and the lease liabilities recognised)

givesaverage net cash of £441 million for 2024 (2023: £438 million).

MEASURING OUR FINANCIAL PERFORMANCE CONTINUED

i) Directors’ valuation of the Investments portfolio

The Group uses a different methodology to assess the value of its Investments portfolio. As described on

pages 38 and 39, the Directors’ valuation for most of the investments in the portfolio has been undertaken

using forecast cash flows for each project on an asset by asset basis, based on progress to date and market

expectations of future performance. These cash flows have been discounted using different discount rates

depending on project risk and maturity, reflecting secondary market transaction experience. As such, the

Board believes that this measure better reflects the potential returns to the Group from those investments.

The Directors have valued the Investments portfolio at £1.25 billion at year end (2023: £1.21 billion).

The Directors’ valuation will differ from the statutory carrying value of these investments, which are accounted

for using the relevant standards in accordance with IFRS rather than a discounted cash flow approach.

Reconciliation of the net assets of the Infrastructure Investments segment to the comparable

statutory measure of the Investments portfolio included in the Directors’ valuation

2024

£m

2023

£m

Net assets of the Infrastructure Investments segment (refer to Note 5.1) 626 596

Less: Net assets not included within the Directors’ valuation – Housing

division (60) (53)

Comparable statutory measure of the Investments portfolio under IFRS 566 543

Comparison of the statutory measure of the Investments portfolio to its performance measure

2024

£m

2023

£m

Statutory measure of the Investments portfolio (as above) 566 543

Difference arising from the Directors’ valuation being measured on a

discounted cash flow basis compared to the statutory measure primarily

derived using a combination of the following IFRS bases:

– historical cost

– amortised cost

– fair value 688 669

Directors’ valuation (performance measure) 1,254 1,212

The difference between the statutory measure and the Directors’ valuation (performance measure) of

the Group’s Investments portfolio is not equal to the gain on disposal that would result if the portfolio

was fully disposed at the Directors’ valuation. This is because the gain/loss on disposal would be

affected by the recycling of items which were previously recognised directly within reserves, which

arematerial and can alter the resulting gain/loss on disposal.

The statutory measure and the Directors’ valuation are fundamentally different due to the different

methodologies used to derive the valuation of these assets within the Investments portfolio.

As referred to in the Strategic report on pages 38 and 39, the Directors’ valuation for most investments

is calculated using discounted cash flows. Inderiving these cash flows, assumptions have been made

and different discount rates used which are updated at each valuation date.

85Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Unlike the Directors’ valuation, the assets measured under statutory measures using the appropriate IFRS accounting standards are valued using a combination of the following methods:

@ historical cost;

@ amortised cost; and

@ fair value for certain assets and liabilities within the PPP portfolio, for which some assumptions are set at inception and some are updated ateach valuation date.

There is also an element of the Directors’ valuation that is not represented by an asset in the Group’s balance sheet. This relates to the management services contracts within the Investments business that are

valued in the Directors’ valuation based on the future income stream expected from these contracts.

j) Constant exchange rates (CER)

The Group operates across a variety of geographic locations and in its statutory results, the results of its overseas entities are translated into the Group’s presentational currency at average rates of exchange for

theyear. The Group’s key exchange rates applied in deriving its statutory results are shown in Note 3.

To measure changes in the Group’s performance compared with the previous year without the effects of foreign currency fluctuations, the Group provides growth rates on a CER basis. These measures remove the

effects of currency movements by retranslating the prior year’s figures at the current year’s exchange rates, using average rates for revenue and closing rates for order book. A comparison of the Group’s statutory

growth rate to the CER growth rate is provided in the table below:

2024 statutory growth compared to performance growth

Construction Services

UK US Gammon Total

Support

Services

Infrastructure

Investments Total

Revenue (£m)

2024 statutory 3,011 3,619 – 6,630 1,210 394 8,234

2023 statutory 3,027 3,668 – 6,695 1,006 292 7,993

Statutory growth (1)% (1)% – (1)% 20% 35% 3%

2024 performance* 3,011 3,638 1,550 8,199 1,210 606 10,015

2023 performance retranslated* 3,027 3,594 1,324 7,9 45 1,006 498 9,449

Performance CER growth (1)% 1% 17% 3% 20% 22% 6%

Order book (£bn)

2024 6.2 7.1 1.9 15.2 3.2 – 18.4

2023 6.1 5.6 2.0 13.7 2.8 – 16.5

Growth 2% 27% (5)% 11% 14% – 12%

2024 6.2 7.1 1.9 15.2 3.2 – 18.4

2023 retranslated 6.1 5.7 2.1 13.9 2.8 – 16.7

CER growth 2% 25% (10)% 9% 14% – 10%

* Performance revenue is underlying revenue including share of revenue from joint ventures and associates as set out in section (e).

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CHIEF FINANCIAL OFFICER’S REVIEW

Profitable growth from earnings-based businesses

An explanation of the Group’s financial performance

measures and appropriate reconciliations to its

statutory measures are provided in the Measuring

Our Financial Performance section. Non‑underlying

items are the cause of the differences between

underlying and statutory profitability. Additionally,

revenue includes the Group’s share of revenue of

joint ventures andassociates.

Group financial summary

Balfour Beatty’s underlying results in 2024

showgood progress at a Group level. Revenue

increased by 4% (6% at CER) to £10,015 million

(2023: £9,595 million) driven by increases in

Gammon and Support Services. Statutory revenue,

which excludes joint ventures and associates,

was£8,234 million (2023: £7,993 million).

The underlying profit from operations for the year

increased to £248 million (2023: £228 million)

driven by an increase in PFO from the earnings‑based

businesses and higher gains on investment disposals,

partially offset by an underlying pre‑disposal loss

in Infrastructure Investments. Statutory profit from

operations was £173 million (2023: £211 million).

Net finance income of £41 million (2023: £33 million)

improved as a result of higher interest rates and

impairment write backs of subordinated debt.

Underlying pre‑tax profit was £289 million

(2023:£261 million). The taxation charge on

underlying profits increased to £62 million

(2023:£56 million). This resulted in underlying

profit after tax of £227 million (2023: £205 million).

Total statutory profit after tax for the year was

£178 million (2023: £194million), as a result of

thenet effect of non‑underlying items.

Philip Harrison

Chief Financial Officer

2024 PERFORMANCE

2024 delivered

profitable growth

@ 7% profit increase from

earnings-based

businesses

@ Increased net cash

andstrong order

bookgrowth

Outlook for

profitable growth

@ £18.4 billion high-quality

order book

@ Further growth in

earnings-based

businesses in 2025

and2026

Consistent

shareholder returns

@ Increased dividend

andfifth annual

sharebuyback

@ Total shareholder

returns of c. £188

million in 2025

Sustained profitable growth and continued shareholder returns

UNDERLYING PROFIT/(LOSS) FROMOPERATIONS

2024

£m

2023

£m

UK Construction 81 69

US Construction 40 51

Gammon 38 36

Construction Services 159 156

Support Services 93 80

Earnings‑based businesses 252 236

Infrastructure Investments pre‑disposaloperating(loss) / profit (8) 5

Infrastructure Investments gain on disposals 43 26

Corporate activities (39) (39)

Total underlying profit from operations 248 228

2 Before non‑underlying items (Note 10).

Underlying basic earnings per share were 43.6 pence (2023: 37.3 pence), which, along with a non‑underlying

loss per share of 9.4 pence (2023: 2.0 pence), gave a total basic earnings per share of 34.2 pence

(2023:35.3 pence). This included the benefit from the basic weighted average number of ordinary shares

reducing to 521 million (2023: 558 million) as a result of the Group’s share buyback programme.

87Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Non-underlying items

The Board believes non‑underlying items should

beseparately identified on the face of the income

statement to assist in understanding the underlying

financial performance achieved by the Group.

Non‑underlying items after taxation were a net

charge of £49 million for the year (2023: £11 million).

This included four significant items.

Firstly, a charge of £83 million has been recognised

in relation to the Group’s obligations under the UK

Building Safety Act (BSA). The BSA, which was

introduced in 2022, extends the limitation for

claims under the Defective Premises Act 1972

from 6 years to 30 years for dwellings completed

before 28 June 2022. Since the introduction of the

BSA, the Group has conducted investigations and

due diligence on claims received to establish

whether an obligation exists and if costs can be

reliably estimated. Previously, the charge relating

tothis provision has been recognised within the

Group’s underlying results as the amounts recognised

did not result in a distortion of the Group’s underlying

results. In 2024, following developments in the

legal landscape of the BSA and progression of the

Group’s investigations, the Group has reassessed

its provision for BSA claims resulting inan increase

in the provision of £83 million. The provision does

not include potential recoveries from third parties

and the resulting cash outflow is expected over a

number of years. This increase has been recognised

in non‑underlying due to its size and the nature of

the cost, which has arisen from a change in legislation.

The Group continues to recognise defects on

projects not covered by the BSA as part of its

underlying performance.

Secondly, a charge of £52 million has been recognised

in relation to a US Civils project completed in 2012.

The Group, through a joint operation formed with

Fluor Enterprises Inc. in whichthe Group owns a

40% share, completed a contract with the North

Texas Tollway Authority (NTTA) to provide design

and build services in relation to the extension of

NTTA’s President George Bush Turnpike Highway

(SH161 in Texas). InOctober 2022, NTTA served

the joint operation with a claim demanding damages

of an unquantified amount under various claims

relating to alleged breaches of contract and or

negligence in relation to retaining walls along the

project. In November 2024, through a jury verdict,

damages were awarded against the joint operation

in favour of NTTA amounting to $112m (Group’s share).

This jury verdict was substantially above the claim

presented to the court of $77m (Group’s share)

comprising $8m expended to date and $69m for

possible repair costs over the next 10 years. The

NTTA has moved to enter the verdict as a judgement

and is also requesting pre‑judgement interest of

$50m (Group’s share) plus legal costs. The joint

operation has opposed the NTTA’s motion and the

court has yet to issue a decision on that motion

with a court date set for 27 March 2025. The Group

believes that the jury verdict does not accurately

reflect the evidence at trial and is evaluating all

options to set aside or reduce the verdict and, if

necessary, appeal any final judgement. The appeal

would require a surety bond of $10m (Group share)

to be provided in place of settling the judgement.

However, in light of the jury verdict, the Group has

recognised a non‑underlying charge of £52m. This

charge, which is net of insurance recoveries of

£40m for which the Group has received confirmation

of cover from its insurers, represents the Group’s

best estimate of the probable damages to be

awarded. The Group maintains the view that these

damages are a result of design elements of the

contract which were performed by subcontractors

to the joint operation. The Group, together with its

joint operation partner, is pursuing recoveries from

these subcontractors, however at this stage, the

Group has not recognised any potential recoveries

from these parties.

Thirdly, the Group has recognised a credit of £43 million

for an insurance receivable relating to rectification

work, for which the cost had previously been

provided. In 2021, the Group recognised a provision

of £42 million within non‑underlying in relation to

rectification work to be carried out on a development

in London which was constructed by the Group

between 2013 and 2016. In 2023, the Group

increased this provision to £54 million following

areassessment of the rectification cost. The

additional charge to the income statement was

also recognised in non‑underlying. The Group’s

estimated provision did not include potential

recoveries from third parties. In 2024, rectification

work continued to progress and is expected to

complete in the first half of 2025. In July 2024,

theGroup received confirmation from its insurers that the rectification work qualifies for insurance coverage.

Upon assessment of the interim cost by the insurer’s loss adjusters as well as receipt of cash for the first

application for payment submitted by the Group for a portion of the cost incurred to date, the Group has

recognised an insurance recovery of £43 million. The Group has presented this income within non‑underlying

in line with the presentation adopted for the recognition of the provision.

Finally, a net credit of £21 million was recognised in the Group’s Rail Germany operations. In 2024, the two

remaining contracts held within Rail Germany reached the end of their warranty periods, resulting in the

release of warranty provisions held in respect of these contracts. This release has been credited to the

Group’s income statement within non‑underlying, net of provision increases relating to certain legacy

liabilities remaining within the business.

Further detail is provided in Note 10.

Cash flow performance

The Group’s net cash increased by £101 million in the year (2023: £27 million), resulting in a year end

netcash position of £943 million (2023: £842 million), excluding non‑recourse net borrowings and lease

liabilities. Cash from operations, which included a working capital inflow, was partially offset by shareholder

returns, while capital expenditure reduced in 2024 to a more normalised level following a peak year for

capital expenditure in 2023.

CASH FLOW PERFORMANCE

2024

£m

2023

£m

Operating cash flows before working capital movements and pension

deficitpayments 208 258

Working capital inflow / (outflow) 99 63

Pension deficit payments

(30) (28)

Cash from operations 277 293

Lease payments (including interest paid) (66) (63)

Dividends from joint ventures and associates

∞

71 59

Capital expenditure (28) (66)

Share buybacks (101) (151)

Dividends paid (61) (58)

Infrastructure Investments

– disposal proceeds 43 61

– new investments (28) (31)

Other (6) (17)

Net cash movement 101 27

Opening net cash* 842 815

Closing net cash* 943 842

* Excluding infrastructure investments (non‑recourse) net borrowings and lease liabilities.

+ Including £2 million (2023: £3 million) of regular funding.

∞ 2023 excludes £1 million (2024: nil) dividends received in relation to Investments asset disposals within joint ventures and associates.

Balfour Beatty plc | Annual Report and Accounts 2024

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WORKING CAPITAL

A working capital inflow of £99 million (2023: £63 million) was favourable to the outflow previously

expected for the year.

Working capital flows^

2024

£m

2023

£m

Inventories (34) (11)

Net contract assets 165 (48)

Trade and other receivables (225) (73)

Trade and other payables (6) 177

Provisions 199 18

Working capital inflow/(outflow)

99 63

^ Excluding impact of foreign exchange.

Including the impact of foreign exchange and non‑operating items, negative (i.e. favourable) current

working capital reduced slightly to £1,228 million (2023: £1,232 million). Negative working capital as

apercentage of revenue for 2024 was 14.9% (2023: 15.4%).

Net cash/borrowings

The Group’s average net cash increased to £766 million in 2024 (2023: £700 million). The Group’s year

end net cash position, excluding non‑recourse net borrowings and lease liabilities, was £943 million

(2023: £842 million).

Non‑recourse net borrowings, held in Infrastructure Investments entities consolidated by the Group,

were £335 million (2023: £264 million). The balance sheet also included £162 million for lease liabilities

(2023: £143 million). Statutory net cash at 31 December 2024 was £446 million (2023: £435 million).

Share buyback

On 2 January 2024, Balfour Beatty commenced an initial £50 million tranche of its 2024 share buyback

programme, which was subsequently increased, following the release of its 2023 full year results, to

£100 million on 13 March 2024. The Group completed the 2024 share buyback programme on 20

September 2024, having purchased 27.1 million shares, which were held in treasury. These shares were

subsequently cancelled on 31 October 2024. The Group commenced the initial £50 million tranche of its

2025 share buyback programme on 6 January 2025. As announced today, the Group intends to buyback

a total of £125 million of shares during the 2025 phase of its multi‑year share buyback programme.

Banking facilities

In the year, the Group extended its core Revolving Credit Facility (RCF) by one year, to June 2028, with

the support of the lending bank group. The facility was reduced to £450 million (2023: £475 million) in

the extension process. The RCF remains a Sustainability Linked Loan (SLL) and subsequent to the

extension, in July 2024 new SLL metrics and targets were agreed with the lending bank group.

TheGroup continues to be incentivised to deliver annual measurable performance improvement

inthreekey areas: Carbon Emissions, Social Value generation and an independent Environment,

SocialandGovernance (ESG) rating score. The RCF remained undrawn at 31 December 2024.

CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED

The Group retains an additional £30 million

bilateral committed facility that has materially the

same terms and conditions as the RCF. The facility

is also an SLL, including metrics that mirror the

RCF. In the second half of the year, the Group

triggered its extension option in respect of

thebilateral facility, to extend the maturity to

December 2027. As at 31 December 2024,

thefacility remained undrawn.

Debt refinancing

During 2024, the Group completed the early

refinancing of US$50 million of US Private

Placement (USPP) notes that were set to mature

in March 2025. The Group raised US$50 million of

new USPP notes, on terms and conditions that

mirror existing debt facilities, and used this new

funding to complete the early repayment of the

US$50 million 2025 USPP notes. The new debt is

comprised of US$25 million of 7‑year notes,

maturing in May 2031 at a fixed coupon of 6.71%,

and US$25 million of 12‑year notes, maturing in

May 2036 at a fixed coupon of 6.96%. The refinancing

exercise has extended the debt maturity profile of

the Group until 2036, with the next debt maturity

now in June 2027 (US$35 million USPP notes).

Going concern

The Directors have considered the Group’s

medium‑term cash forecasts and conducted

stress‑test analysis on these projections in order

to assess the Group’s ability to continue as a

going concern. Having also made appropriate

enquiries, the Directors consider it reasonable to

assume that the Group has adequate resources to

continue for the period of at least 12 months from

the date of approval of the financial statements

and, for this reason, have continued to adopt the

going concern basis in preparing the full year

Group financial statements. Further detail is

provided in Note 1.3 Going Concern.

Pensions

Balfour Beatty and the trustees of the Balfour Beatty

Pension Fund (BBPF) have agreed to a journey

plan approach to managing the BBPF whereby

theBBPF is aiming to reach self‑sufficiency by

2027. The Company and the trustees agreed the

31 March 2022 formal valuation in 2023 and, as a

result, Balfour Beatty paid deficit contributions to

the BBPF of £22 million in 2024 with a further

£6million payable in 2025. The next formal

triennial valuation of BBPF is due with effect

from31 March 2025.

The Company and trustees of the Railways

Pension Scheme (RPS) agreed the 31 December

2022 formal valuation in the first half of 2024 and,

as a result, Balfour Beatty agreed to continue

making deficit contributions of £6 million per

annum until February 2025. The next formal

triennial funding valuation of the RPS is due

witheffect from 31 December 2025.

The Group’s balance sheet includes net retirement

benefit assets of £2 million (2023: £69 million) as

measured on an IAS 19 basis, with the surplus on

the BBPF (£43 million) largely offset by deficits on

RPS (£7 million) and other schemes (£34 million).

Dividend

The Board is committed to a sustainable ordinary

dividend which is expected to grow over time,

targeted at a pay‑out ratio of 40% of underlying

profit after tax excluding gains on disposal of

Investments assets.

Following the 3.8 pence per ordinary share interim

dividend declared at the half year, the Board is

recommending a final dividend of 8.7 pence per

share, giving a total recommended dividend for

the year of 12.5 pence per share (2023: 11.5

penceper share).

Philip Harrison

Chief Financial Officer

11 March 2025

89Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

RISK MANAGEMENT

Navigating the future

Introduction

The Group’s risk management framework and associated

processes provide a consistent platform for monitoring and

responding to any potential exposures that may affect the

business and ensure key drivers that exist against core Group

risks are tracked effectively. 2024 saw a continuation of the

Group’s risk management process in tracking an evolving risk

profile, in a year where prolonged uncertainty within the economy

persisted, both for the construction sector and beyond. This was

caused by interest rates in core territories remaining high, the

residual impact being felt from high inflation and the backdrop of

additional uncertainty presented by two significant elections, with

subsequent administration change in both the UK and US. With

the Group’s focus on growth, and a shift into new markets, the

monitoring of key risk themes such as People, Economy, Supply

Chain, Contracting Terms and Conditions and Project Delivery was

a focus on 2024.

To improve insight into the Group risk profile in 2024, the biannual

risk reporting process issued to Strategic Business Units (SBUs)

was updated to request specific responses on how risks are

assessed at SBU level for the Group key risk themes, and any

movements, trends or change in conditions as reflected through

business‑level risk registers. This provided further supporting

analysis for reflecting exposure from these themes at Group level.

The Group’s risk process continues to provide a consistent

approach and taxonomy across the organisation. As the integration

of the Enterprise Risk Management (ERM) framework evolves,

and risk management maturity within the business improves, the

central Group Risk Management function maintains oversight to

ensure processes remain effective and continues to ensure Group

adherence to regulatory requirements and good practice in its approach

to identifying, assessing, responding to and monitoring risk.

Balfour Beatty’s risk management process

Consistent and simple Group‑wide application of the risk management process

IDENTIFY

@ Objective‑focused risk

identification linked to

operational, business

and Group objectives

@ Identification of core

drivers (causes) and

anticipated outcomes

(consequences)

@ Captures current

controlenvironment

anditseffectiveness

ASSESS

@ Assessment of the

impact of the risk and

the probability of it

occurring, using the

Group Probability Impact

(PI) Matrix

@ Assessment is based

onthe effectiveness of

current controls

@ Consistent assessment

utilising Group PI Matrix

allows risks and

opportunities to

beprioritised

1 2

RESPOND

@ Response type ‘Accept’

or ‘Manage Further’ is

assigned to each risk

and opportunity based

on current assessment

and appetite

@ Response of Manage

Further drives

identification of actions

@ Actions are assigned

ownership and due

dates and are tracked for

completion alongside

risk exposure

MONITOR

@ Risk environment

monitored to identify

change in, or emergence

of, causes and

consequences

@ Risk response is

reviewed in line with

current risk assessment

@ Completion of actions

and their effect on

reducing exposure

3 4

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Our risk management process

Balfour Beatty’s simple four‑step process ensures the consistent identification, assessment, response

to, and monitoring of risk across the organisation. Utilising this standard process from project operations

up to Group level ensures risks are captured, assessed and communicated concisely at each level of the

organisation. Embedding this process into operational and business environments ensures the

consideration of risk and opportunity remains central to making decisions.

PROJECTTEAMCUSTOMERGEOGRAPHY CONTRACTSUPPLY

CHAIN

CIRCLES OF RISK

Circles of Risk

Balfour Beatty’s Circles of Risk continues to act as

a core control designed to frame risk‑based

discussions early on in the Gated Business

Lifecycle review process, ensuring new pursuits

remain in line with our appetite around location,

customer, supply chain, project scope and

contractual terms, and align to the Group’s strategic

direction. The Gated Business Lifecycle is a

business‑wide method of reviewing, approving

and monitoring new business opportunities.

The Circles of Risk guidance supports work

winning teams in ensuring high‑level risks are

understood early in the pursuit of a project and

acts as a key control in highlighting any ‘show

stoppers’. It drives teams to consider the key risks

and sets out response types to such risks as the

opportunity evolves through approval gates.

The guidance reflects experience from past

delivery and lessons learnt across a diverse

customer base, with proposed controls aligned to

the Group’s operating and commercial principles.

Circles of Risk continues

to act as a core control

designed to frame risk-based

discussions early on in the

Gated Business Lifecycle

review process.”

RISK MANAGEMENT CONTINUED

This approach allows Balfour Beatty to make

decisions in the context of its risk appetite and

stay ahead of potential exposures by ensuring:

@ the opportunity aligns to Group objectives,

business growth strategies and defined

risktolerances;

@ all pursuits are assessed consistently so that

potential opportunities that do not fit with

approved business objectives are qualified

out;and

@ appropriate mitigation strategies are developed

in order to pursue the opportunity whilst

protecting the Group’s operating and

commercial principles.

91Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

The Balfour Beatty risk management framework

Ensuring risk management is embedded at each level of the organisation.

GROUP

RISK

Strategic Risk

OPERATIONAL RISK

Project/Contract/Asset Risk

EXEC RISK STEERING GROUP | ERM TEAM

Risk Process and Tools | Internal Control Effectiveness | Risk Management Operating

Standard Continuous Improvement | Risk Culture

Escalate

Cascade

BUSINESS RISK

Strategic Business Units/Business

Units/Enabling Functions

Governance and oversight

The Board maintains overall responsibility for risk management,

with oversight of the Group Risk Framework and its application

across the business. The Board also ultimately determines the

nature and extent of the risks the Company is willing to take in

thepursuit of its longer‑term strategic objectives. The Directors

continue to review the overall effectiveness of the risk management

framework and internal control systems, including the financial,

operational and compliance processes and controls that are in

place to prevent the occurrence or limit the impacts of risks. In

2024, the Group took steps to review and develop the risk

management and internal control process to improve the

consistency in how internal controls are documented, and how

each business reviews effectiveness of internal controls. The Board

reviews the Group risk profile at half and full year which includes a

review of Emerging and Principal risks faced by the Group, with

the Audit and Risk Committee providing independent oversight of

the effectiveness of the Group’s risk management and associated

internal control environment.

Group risk management

The Group’s risk management framework allows the Group

ChiefExecutive, alongside the Executive Committee (ExCom), to

monitor the risk profile of the business, supported by the half year

and full year review processes held with businesses and enabling

functions, and validated through the Executive Risk Steering

Group(ERSG).

Executive sponsorship for risk management is provided by the

ERSG, which provides valuable input to Group risk themes based

on profiles within their respective businesses and functions and

seeks to collectively validate any material changes to the Group

risk profile. Visibility of core and common themes identified

through the Operational and Business levels of the Group inform

half and full year reviews. In 2024, the half year and full year risk

reporting process integrated specific core risk trends that are being

tracked at Group level to ensure business unit‑specific updates and

any associated risk movements could be easily monitored, such as

economic uncertainty, commercial terms and conditions, people,

health and safety, sustainability, project delivery and work winning.

Business risk management

Balfour Beatty’s business units are distinct and diverse, meaning

risk profiles differ across operations. Having a consistent approach

in both UK and US‑based businesses is essential to gaining insight

into business risk and rolling this up to Group level. The inclusion of

tracking around specific key risk trends into the half year and full

year risk process served to improve the linkage between Strategic

Business Unit (SBU) risk profiles and the Group risk profile. The

use of the IRIS ERM system by all business units ensures

oversight of operational and business risk profiles to support

decision making in line with pursuit of strategies.

Operational risk

The Gated Business Lifecycle remains a fundamental control in the

management of Operational risk across Balfour Beatty’s operations.

The review of project risk profiles undertaken at each stage gate

review ensures the business understands risk profiles of both

current projects and future pursuits. Risk reporting has evolved

further in 2024 to provide the business with insight into operational

profiles and trends, aiding timely escalation of project risk to

business leadership, informing business and SBU risk profiles, and

prompting appropriate management response. The quality of risk

information continues to be key in ensuring this can be effectively

analysed, and potential trends identified early on. Realised risk data

is also fed back through businesses and included into risk libraries

where appropriate. The drive to improve data quality remains

continuous, supported by internal and operational audit activities

and championed by senior leadership manifested through clear

expectations on ‘management responsibility’ by the Risk function

and ExCom.

Risk Process

AUDIT AND RISK COMMITTEE | EXECUTIVE COMMITTEE

Governance and Oversight | Risk Policy Setting | Risk Appetite and Tolerance Setting | Risk Culture

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Group risk appetite

The Group’s risk appetite remains aligned to the

Build to Last strategy, ensuring that risk‑based

decision making supports the pursuit of objectives.

The Board, its sub‑committees and executive

management discuss and measure the nature

andextent of current and Emerging Risks faced

by the Group in achieving its long‑term strategic

objectives. This requires biannual review of the

effectiveness of the internal control environment

within the risk management structure outlined on

pages 146 to 152. The outcome of this assessment

represents the Group’s risk appetite and can be

set out in the context of the Group’s values as

shown below. Work is ongoing to establish risk

appetite at SBU level to better inform risks

requiring escalation to senior management in

thecontext of each SBU’s business objectives.

Build to Last strategy Risk attitude Appetite Related principal risks

Lean

We create

valuefor our

customers and

drive continuous

improvement

@ Balfour Beatty remains committed to challenging ways of working to improve outcomes

andbecome more competitive

@ The Group is prepared to accept a level of operational risk in its delivery of cost‑effective solutions

@ Such risks must not be at the expense of meeting customer requirements

@ The Group’s risk appetite for efficiency remains moderate

Remains

moderate

Expert

Our highly skilled

colleagues

andpartners

setusapart

@ Balfour Beatty continues to develop its expertise in engineering, computer science, robotics,

data analytics, electronics and electrical and mechanical engineering to deliver the very best

solutions to its customers

@ This drive for sustained innovation is undertaken with industry experts in managed and safe

environments to minimise risk

@ The Group continues to have a moderate appetite for expert risk

Remains

moderate

Trusted

We deliver on

our promises

and we do the

right thing

@ Balfour Beatty must deliver on its promises to stakeholders

@ Aligning delivery objectives to those of the customer is critical to ensuring successful

outcomes – the Group strives for Right First Time delivery

@ Ensuring integrity is embedded throughout the Group and its supply chain partners is key to

doing the right thing

@ The Group’s appetite for not meeting customer expectations remains low

Remains

low

Safe

We make

safetypersonal

@ Conducting business in a safe way and providing a Zero Harm environment for Balfour

Beatty’s people and stakeholders is paramount

@ The Group’s appetite for health and safety risk remains at zero

Remains

zero

Sustainable

We act

responsibly

toprotect and

enhance our

planet and

society

@ Balfour Beatty is committed to leaving a positive legacy for the society and communities

itserves

@ The Group seeks to minimise its impact on the environment, working with supply chain

partners, customers and communities to ensure its choices are sustainable, whilst

delivering customer objectives, and pursuing new initiatives and technologies to achieve this

@ The Group’s appetite for risk around sustainability is moderate

Remains

moderate

RISK MANAGEMENT CONTINUED

93Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

The Group remains prudent in ensuring any

exposure presented through economic uncertainty

and ongoing political and societal factors are well

understood and well managed. Reviews of the

Group risk profile have continued to monitor where

these drivers manifested within existing Group

risks, and the half year and full year process undertaken

with each business area has evolved to track

movements and drivers associated with specific

Group risk themes, aligning to Principal Risks.

Health and safety p94

Contracting terms and conditions p95

Project delivery p96

Joint ventures p97

Cybersecurity p98

People and talent p99

Sustaining focus on Build to Last strategy p100

Financial strength p101

Supply chain p102

Code of Ethics compliance p103

Legal and regulatory p103

Legacy pension liabilities p104

Economic uncertainty p105

Emerging Risks

The Group requests specific Emerging Risk

identification by each Strategic Business Unit

(SBU) and Enabling Function (EF) as part of the

Group’s biannual half year and full year risk

submissions. The functionality in IRIS to flag

Emerging Risks on respective strategic risk

registers enables greater visibility, allowing SBUs

and EFs to monitor Emerging Risks alongside

their existing review of current risks. This in turn

isused to inform where Emerging Risks are

relevant at Group level and should be formally

tracked alongside Group‑level risks.

Balfour Beatty considers Emerging Risks in relation

to their longer‑term impact and shorter‑term risk

velocity and examines them in the context of its

viability statement. The Group has defined

Emerging Risks as those risks faced by the

business that:

@ are likely to be of significant scale beyond a

three‑year timeframe;

@ have the velocity to significantly increase in

severity within the three‑year period; and/or

@ are not sufficiently defined or if there is not

enough information developed to enable an

informed assessment to be made of their

impact and whether they pose a threat or an

opportunity to the Group.

The discussion and review of Emerging Risks

includes ‘horizon scanning’ activities around

potential uncertainties that are not sufficiently

defined or developed to enable an informed

assessment to be made of their impact on the

ongoing viability of the Group and whether they

pose a threat or an opportunity.

Consistent assessment ofrisk

The Balfour Beatty Group PI Matrix supports a

consistent assessment of all risks identified in the

business in terms of their impact across delivery,

financial, and health, safety and sustainability

impact categories. This impact is assessed

alongside the likelihood of occurrence, providing

an overall rating that allows for the prioritisation

and comparison ofrisk and opportunity events.

This overall rating isassessed as the current risk

rating, which is based on controls that are in place

and effective for managing the risk. Response to

risks is determined based on the current risk

exposure, the anticipated effect of any additional

actions tomanage the risk and considered in line

with theGroups risk appetite.

The matrix is calibrated to cater for financial impacts

across the three tiers of the risk management

framework: Operational risk, Business risk and

Group risk, which allows the same matrix to be

utilised for common assessment whilst providing

a flexible, tailored approach for risks to be

measured in the context of project values or

business financial objectives and catering for

adjustment when rolled‑up to Group level.

The decision to revise risk assessments and

associated risk ratings for Group Risks is subject

to robust review and often, the reduction of an

overall risk rating will only be made following a

continued period of certainty whereby movements

of internal and external factors are less volatile,

and controls are known to be well‑established and

effective. The Group Internal Control framework

supports validation of current risk assessments

– ensuring that controls that are embedded and

operating effectively are used to inform

assessment made by risk owners.

Other Group risks

Failure to manage and mitigate climate change

remains identified as a risk on the Group register.

The business continues to acknowledge that

understanding the impact of climate change on

the organisation and deploying the right strategies

to mitigate any exposure is key. Efforts to further

the Groups understanding of the impact of

climate change on the business is undertaken

through a specific climate risk reporting

workstream, outlined on pages 107 to 115.

Delivering sustainability requirements also

continues to be tracked as a Group risk which

recognises the varying pace of change anticipated

across geographies and the need for the Group to

meet increasing, and potentially onerous, reporting

requirements and position itself to meet future

customer demands. There is also significant

opportunity presented by this as the business

expands its expertise and capability. Refreshed

in2024, the Building New Futures sustainability

strategy charts a course for how Balfour Beatty

plans to deliver carbon reduction measures across

its operations, outlined further in the Sustainability

section on pages 48 to 67.

Balfour Beatty plc | Annual Report and Accounts 2024

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DESCRIPTION AND IMPACT CAUSES MITIGATION

Health and safety

The Group works on and delivers complex and

potentially hazardous projects which require

continuous monitoring and management of

safety risks, and well as ensuring the health

and wellbeing of its employees and those it

works with.

What impact it might have

Failure to manage these risks presents the

potential for significant injury, or impact on health

and wellbeing of employees, subcontractor staff,

third parties or members of the public. It also

presents the threat of potential criminal

prosecutions, significant fines, debarring from

contract bidding and reputational damage.

FOR MORE INFORMATION PLEASE SEE ‘HEALTH,

SAFETY AND WELLBEING’ ON PAGES 40 TO 45

Common themes which drive health, safety and

wellbeing risks include:

@ inadequate risk identification/assessment;

@ failure to communicate and follow health and

safety procedures;

@ insufficient competence;

@ failure to eliminate or mitigate risk through

design and planning;

@ failure of established control measures;

@ lack of clear Zero Harm leadership, impacting

broader safety culture;

@ ineffective management and/or oversight of

subcontractors, JV partners and other third

parties; and/or

@ lack of focus on the wellbeing and mental

health of staff faced by daily work and

lifepressures.

The Group’s Zero Harm strategy is reviewed annually, with focused priorities

and business plans as key controls in managing the risks presented in the

industry and across the Group’s operations.

External certification and internal audits verify systems and business

compliance, with strategies and associated action plans, which are

additionally regularly reviewed and monitored by management and external

accreditation bodies.

Zero Harm by Design training and processes are in place across the business,

including regular review of lessons learned and introduction of digital rehearsals.

Experienced and competent health and safety professionals provide advice,

monitor onsite compliance and support continuing strengthening of a Zero

Harm culture.

The Safety and Sustainability Committee of the Board and business Health

and Safety executive leadership teams meet regularly through the year to

capture learning and innovation and promulgate a consistent approach to

health and safety best practice, with leading KPIs reported and closely monitored.

Training programmes, which also includes behavioural training and mental

health awareness, are in operation across the business.

Operational ownership of fatal risks through well‑established working groups

with managing director leadership.

Owner

Safety and Sustainability Committee

Risk movement

–

No movement

Health and safety risk continues to be managed by

well‑established controls and processes throughout

the Group and within operational DNA (including

partners) to represent a stable control environment.

Digital enhancements are serving to provide greater

control across the business. 2024 figures show a

continuing downward trend in injury incidence rates

for the Group.

Multiple contemporaneous failures within this

environment would be required for the risk to be realised.

RISK MANAGEMENT CONTINUED

Our Principal Risks

Balfour Beatty’s decision making remains centred on a comprehensive and detailed understanding

oftheexposures faced by the organisation, carried out through business‑level and Group‑level reviews.

Identifying risks that could impact on the achievement of business and strategic objectives, and

consistently assessing and responding to these, is essential to balancing risk taken in line with risk

appetite. The Group risks that link to strategic plans, as well as any Emerging Risks identified for the

business, are reviewed and, where required, assessed to enable the Board to undertake an assessment

of the overall profile of exposure faced by the Group. The Board considers whether this represents new,

increased or decreased threats and the level of response required to manage them. The risk profile

comprises both interconnected and discrete risks at strategic, business and operational level and

focuses on understanding the worst‑case scenarios that could threaten the Group’s strategy, business

model and ongoing viability; see pages 24, 8 and 106. The Group’s Principal Risks are described on pages

94 to 105.

95Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Contracting terms and conditions

The Group delivers high-profile, complex and

significant projects that carry specialised

deliverables combined with multifaceted, and

occasionally stringent, commercial terms.

Establishing the right contractual approach

and delivering customer obligations within

agreed terms alongside technical complexity

can pose a risk if not managed correctly.

Maintaining a balance to protect the interests

of all parties, including the supply chain,

whilst maintaining a profitable and sustainable

order book and delivering stakeholder value

requires competency, skilland, increasingly,

greater collaboration withclients.

What impact it might have

Failure to fully understand or manage complex

delivery in line with commercial terms across the

portfolio could potentially result in disputes,

leading to cost and time to resolve, as well as

potential losses or reduction in profitability and

damage to relationships with key customers,

supply chain or JV partners.

Failure to effectively engage and collaborate with

customers and supply chain partners in agreeing

contract terms could result in choosing not to

pursue certain works, limiting access to certain

target markets in the future, impacting on future

order book and growth targets.

Key causes that could drive this risk include:

@ lack of clearly defined bid strategy and

engagement plan;

@ misalignment between Balfour Beatty and

client approach;

@ working with new or unknown customers

andpartners, with no previously

establishedrelationship;

@ entering into new markets or use of new,

unfamiliar technology;

@ lack of supply chain capacity to accept and

manage back‑to‑back terms, resulting in

increased risk carried by Balfour Beatty;

@ failure to engage in an early collaborative

approach with the customer to fully

understand requirements;

@ clients taking a more risk‑ averse attitude,

driven by their own financial or market pressures

resulting in a less‑balanced approach to

allocation or sharing of risk; and/or

@ lack of early identification of a contracting

strategy between all parties.

The Group Tender and Investment Committee (GTIC) reviews and challenges

all proposals in line with minimum commercial expectations and the Circles of

Risk guidance.

Clear, defined delegated levels of authority are in place for approving all tender

and infrastructure investment decisions.

Customer adoption of the UK Government Construction Playbook steers an

approach towards increased collaboration, which results in reduced risk, and

an increased focus on quality of bid rather than being solely cost driven.

A ‘get left early’ attitude adopted prior to the procurement process enables

influence over contracting and procurement model. A shift to a ‘two‑stage’

tender approach supports an early collaborative, solution‑based approach

withcustomers and minimises risk on both sides – especially in new markets

or ‘first‑of‑a‑kind’ initiatives.

Ongoing work winning initiatives continue in place across the Group to drive

increased commercial and customer awareness and further embed an

understanding of expectations on margins and cost.

The Gated Business Lifecycle review process highlights key commercial

risksclosely aligned to Circles of Risk to ensure adequate challenge and

qualification of terms, and early mitigation of key exposures.

Monthly business reviews identify early indicators with potential for disputes

arising on contracts, including across the subcontractor base.

Owner

Group Tender andInvestment Committee

Risk movement

–

No movement

No change in risk assessment in 2024, reflecting the

importance that the business maintains in managing

this risk as it enters new markets, works with new

clients and monitors how customers respond to

continued market pressures. Controls aimed at

championing a more collaborative approach with

customers remain crucial in seeking fair terms

commensurate with risk profiles, particularly with

new, complex and in some cases, unfamiliar work

scopes. GTIC and Circles of Risk continue to ensure

the business doesn’t proceed with unacceptable

terms, such as accepting process risk.

Controls to challenge and scrutinise decision making

prevent the Group from bidding for unsustainable

work, limit potential exposure and lead to a more

risk‑balanced portfolio, with regular reporting of risk

profiles and associated mitigation strategies

throughout delivery remaining essential.

Close monitoring of this risk is ongoing as the Group

works closely with new and existing customers, and

with established and new supply chain partners.

Balfour Beatty plc | Annual Report and Accounts 2024

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Project delivery

Failure to deliver projects consistent with

customer expectations and required

specifications and/or quality, in line with

schedule and budget, and to minimise the risk

of increased costs, delay related damages and

defect liabilities.

What impact it might have

Failure to manage and/or deliver against customer

expectations, scope specifications and key

deliverables to time and budget could result in

exposures such as design issues, contract

disputes, liquidated damages, cost overruns and

failure to achieve anticipated customer savings

which in turn could reduce the Group’s profitability

and damage its reputation.

The Group may also be at risk of longer‑term

exposures including litigation and costs to rectify

defective or unsafe work, particularly given

increased liabilities under the Building Safety

Act2022.

Significant delivery failure on a project could result

in substantial reputational damage, and potentially,

debarment under the New Procurement Act 2023.

Failure to implement, maintain and challenge

operational and commercial controls (as detailed

within checklists at GBL reviews) could result in:

@ lack of comprehensive understanding of

contract obligations;

@ inadequate resource (people, plant and

materials inc. supply chain) or competency

verification of resource;

@ unrealistic project schedules;

@ unrealistic progress assessments and cost to

complete judgements which could arise due

to poor training, lack of supervision, or lack

ofaccountability;

@ overly optimistic claim recovery assumptions;

@ incomplete visibility and appreciation of scale

of commercial judgements;

@ failings in administering the contract terms to

safeguard or protect future claims, change

orders and extensions of time (EOTs);

@ inability to meet environmental or

sustainability commitments;

@ poor management, selection and governance

of subcontractors and supply chain partners;

and/or

@ lack of robust quality assurance processes

and systems.

Customer intervention and additional pressure

to complete could also be a driver to this risk.

The GBL process continues to ensure identification and reporting of risks,

including planning, programme accuracy, cost and cash forecasting and

resource reviews remain the focus of project governance and management

oversight.

Early engagement of integrated work winning and project delivery teams

across the GBL process ensures customer expectations are understood

and realistic early on.

Deployment and ongoing monitoring of strong commercial management and

contract administration processes are embedded through the project lifecycle.

Optimal scheduling of key staff and associated competencies within project

delivery and senior management teams, with ongoing and focused training

and development.

The site mobilisation hub facilitates early and effective start‑up on site.

Drive for Right First Time delivery including digital progressive assurance of

project delivery championed by UK Quality Leadership team with ExCom

sponsorship.

Pre‑qualification and competency/capacity verification of supply chain

partners, and close monitoring of subcontractor and supplier performance

throughout the project lifecycle.

Professional indemnity cover in place to provide further financial safeguards

to the business.

Owner

Group management

Risk movement

–

No movement

This management of project delivery risk remains a

key focus at Group and Business level and continues

to be managed through the consistent application of

operational reporting systems and diligent use of

short interval control processes across all stages of

project delivery, providing greater oversight for

management and certainty of operational outcomes.

Monitoring of how this risk evolves as the business

enters new markets and works with new technology

is key, as well as ensuring early collaboration with

customers in understanding technical requirements

and development of solutions.

The UK Quality Leadership team serves to champion

a consistent approach, improving quality awareness

and driving the organisation’s Right First Time

‘mantra’ to project delivery, with executive oversight

and sponsorship.

Ongoing verification of the effectiveness of controls

and GBL governance remains key to managing this

risk together with an enhanced focus on quality

performance.

RISK MANAGEMENT CONTINUED

Our Principal Risks continued

97Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Joint ventures

Failure to implement robust controls around

the selection of joint venture (JV) partners,

and/or to define a clear governance structure

to monitor delivery or establish a ‘one team’

culture may result in failure to deliver

expected returns and/or minimise the risk

ofunexpected liabilities.

What impact it might have

Inability to select the right JV partner, aligned to

Balfour Beatty’s culture and values, could result in a

mismatch of partner objectives, driving a knock‑on

impact on the effective delivery of contract

requirements, resulting in a significant impact to

profitability and reputational damage.

Any potential failure of a JV partner could expose

the Group to increased resourcing costs and

ongoing liability, and warranty risks.

Disputes with JV partners could impact the

Group’s ability to operate successfully and/or

expand within its chosen markets, as well as

tieupof management resources.

Failure to align and integrate with the Group’s

health and safety management expectations and

culture could present increased potential for injury

and/or fatality.

The risk could arise from:

@ ineffective assessment of JV partners

including liquidity, capacity and capability;

@ failure to ensure ‘fit for purpose’ terms with

the right JV partner;

@ lack of clarity on the delegated levels of

authority between partners;

@ delayed and fettered decision making

between partners;

@ segregation from central management

systems (financial and operational);

@ lack of aligned understanding of contract

requirements and expectations;

@ lack of oversight of JV reporting and

application of processes implemented across

the project; and/or

@ misalignment of Balfour Beatty and JV partner

cultures, values and practices.

The Group has broad capability to self‑deliver projects but recognises that

establishing the right partnership can be an opportunity to deliver work.

The GTIC process applies equally to all joint ventures, ensuring approval

andoversight.

Appointment of an appropriately constituted JV board acts as the main

governance vehicle for the Group.

The GBL process provides governance over JV partner selection, and

highlights partner‑related risks closely aligned to Circles of Risk including

those related to capacity, capability, previous experience with the Group

andliquidity.

Experienced project directors are appointed to manage JVs and provide an

ongoing assessment, and proposed mitigation of, operational delivery risk.

Good practice, including the use of joint reporting systems (where

appropriate), is shared between partners to embed the Group’s expectations

and culture across JV delivery teams.

Balfour Beatty monitors the performance of its JV partners throughout the

lifecycle of a project.

Owner

Group Tender and Investment Committee

Risk movement

–

No movement

Maintaining close oversight of delivery across current

significant JV partnerships remains a focus. The

business continues to focus on ensuring strong

governance controls that underpin decision making

and early partner selection are in place as it looks to

enter new market sectors and work with new partners

and alliances.

Monitoring of health and safety progress of existing

key and high‑profile JVs continues.

Balfour Beatty plc | Annual Report and Accounts 2024

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Cybersecurity

Failure to protect key Group and employee

data and other confidential information due to

a breach of system security and/or disruption

to delivery caused by system loss.

What impact it might have

@ reputational harm (loss of market and

customerconfidence);

@ loss of data, resulting in potential fines

andprosecution;

@ loss of intellectual property and competitive

advantage; and

@ operational impact restricting ability to carry

outbusiness‑critical activities (disruption to

business as usual).

There are several internal and external factors

that could contribute to the realisation of this

riskincluding:

@ poor internal governance;

@ failure to embed a preventative culture;

@ lack of, or inadequate staff training

andawareness;

@ increased exposure to phishing attacks and

ransomware due to new and emerging

techniques to bypass preventative controls,

with remote working and the emergence of AI

amplifying the sophistication of attacks;

@ failing to meet regulatory requirements;

@ operational failure including supply chain

attacks impacting the businesses ability

todeliver;

@ inconsistent approach to data security with

joint venture/external partners;

@ increased use of cloud services without

equivalent investment in modern threat

prevention; and/or

@ cyber‑attack – the increasing pace to patch or

mitigate vulnerabilities in the Group’s systems.

The risk is managed via the following controls:

@ network and endpoint protection, encryption, patching and data back‑up;

@ awareness training and internal testing, with mandated annual refresher in

place for all users;

@ data governance framework regularly reviewed, and supported by policies

and certifications;

@ incident management feedback mechanism (embeds lessons learnt);

@ partner and supplier controls including vendor risk management assessments

and established relationships with external security authorities;

@ information security actively monitoring for security incidents and

remediating wherenecessary;

@ access to all core systems subject to multi‑factor authentication;

@ systems are subject to 24/7 monitoring with review of core controls to

provide additional protection in areas that are potential new attack paths;

@ strong focus on supply chain partners to ensure they are resilient to fraud

and cyber‑attacks;

@ knowledge sharing initiatives with supply chain partners and wider industry;

@ enhancement of internet controls (web proxy); and

@ cybersecurity maturity assessment providing assurance and oversight of

the operation and effectiveness of cyber controls.

Owner

Group management

Risk movement

–

No movement

The sophistication of potential attacks, the role of AI,

andincreasing customer requirements continue to

present an ever‑evolving environment which requires

constant monitoring. Continuous improvement in the

control environment is essential to maintain pace with

thepotential risk, including increased training for staff

tomaintain a robust risk‑aware culture and reduce the

likelihood of a major incident. This includes collaborating

with key clients as well as supply chain partners

whererequired.

RISK MANAGEMENT CONTINUED

Our Principal Risks continued

99Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

People and talent

Attracting and retaining the required level of skilled and

competent people, including developing and growing expert

skills and capacity is essential to effectively deliver the

Group’s current portfolio of work and position the business for

future growth in target markets.

What impact it might have

Failure to recruit and retain appropriately skilled people or grow

in‑house talent could harm the Group’s ability to win or successfully

perform specific contracts, manage project cost increases, grow the

business and/or meet strategic objectives, including securing future

order book.

A high level of staff turnover or low employee engagement could

result in loss of competency and morale, and potentially present

increased health, safety and wellbeing risk. Not having the right

capability and capacity can reduce business confidence within the

market, lose stakeholder confidence and restrict the ability to drive

business growth or improvements.

FOR MORE INFORMATION PLEASE SEE ‘OUR PEOPLE’ ON PAGES 68 TO 73

Failure to effectively mitigate the Group’s

people risks may arise through:

@ overheating of market causing significant

increase in demand or competition for people,

specifically in certain sectors and regions;

@ overbidding or ineffective resource forecasting

in line with workload scheduling;

@ difficulty in accessing talent pools in remote

project locations;

@ lack of visibility of longer‑term pipeline or

perceived lack of career progression resulting

in talent leaving the Group or sector;

@ inability to recruit, retain and effectively

deploy strong performers within the business;

@ failure to maintain a culture of pride and

advocacy across the workforce;

@ ineffective and/or inadequate investment in

the development of existing skills and capabilities

;

@ lack of a diverse workforce;

@ labour supply issues including onerous/

changing immigration controls as well as a

draw for skillsets to geographical areas in

which the Group does not operate;

@ cost of living pressures and other economic

factors driving increase in attrition and people

movement; and/or

@ pressure from wage inflation and increase in

competitive offers from other infrastructure

opportunities – both inside and outside the

Group’s areas of operation.

Providing a positive working environment to support the development of

employees has been central to Build to Last.

Specific controls to mitigate this risk include:

@ HR strategy and plan, with associated measurement of KPIs to inform

decision making against budgets;

@ strategic workforce planning protocol to prevent resource conflicts in short

and longer term;

@ work winning and project delivery alignment to internal and external

recruitment activities, with early review of people and resourcing needs

toensure adequate capability and capacity prior to bidding;

@ competency frameworks within core job families identify and support the

development of key knowledge, skills and expertise;

@ internal mobility supports career development and redeployment

opportunities via Careers portal;

@ regular measurement and review of recruitment and retention rates,

withsuccession plans identified for core roles and disciplines;

@ annual OPR (people and talent reviews), with regular reviews of

remuneration and incentive arrangements and remuneration package

benchmarking against peers including participation in industry forums;

@ employee engagement surveys, with appropriate actions to address findings;

@ Balfour Beatty Academy established in the UK supports professional and

personaldevelopment;

@ training needs analysis competency tools identify capability requirements

and highlight development gaps to inform investment decision making;

@ strong employee communication channels to celebrate individual,

business and Group‑level successes and to increase future pipeline visibility;

@ Affinity Networks create a diverse and inclusive working environment; and

@ investment in emerging talent through strong graduate, apprenticeship,

and industrial placement/internship schemes.

Owner

The Board

Risk movement

–

No movement

Risk rating continues to be held at

current position as the business

focuses on workforce planning

andresourcing for medium‑term

projects innew markets and

geographical locations, as well

aspositioning for future pursuits.

Ensuring effective succession

planning for senior management

anddeveloping required talent pools

remains a key focus for business

unit leadership teams, alongside

maintaining sight of pipelines.

The results of the employee survey

conducted in 2024 provided a

positive metric into organisational

culture, reflecting a high level of

employee engagement across

theGroup.

Balfour Beatty plc | Annual Report and Accounts 2024

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Sustaining focus on Build to Last strategy

Failure by the Group to sustain and build upon the strong

foundation and culture created through its Build to Last

strategy, and supporting Cultural Framework.

What impact it might have

Inconsistency in working practices and siloed cultures across the

business could drive inefficiencies, increased costs and operational

errors which impact the Group’s ability to deliver on its purpose of

Building New Futures, and impact on its ability to deliver sustainable

and managed profitable growth resulting in reputational damage.

Delivering against the Group’s core values of Lean, Expert, Trusted,

Safe and Sustainable is integral to its ongoing success and purpose.

FOR MORE INFORMATION PLEASE SEE ‘OUR STRATEGY: BUILD TO LAST’ ON

PAGES 24 AND 25

Failure to deliver and/or demonstrate sustained

focus and momentum could arise from:

@ complacency and/or localised adaptations

within core disciplines or siloed cultures;

@ ineffective communication and/or reinforcement

of messaging through a lack of leadership;

@ inadequate resourcing (financial, physical

assets and people) with the right level of skill

and competency;

@ lack of joined up approach across our

geographies, markets and business units;

@ new systems and processes being used

without appropriate controls being in place

and/or tested; and/or

@ new people joining the organisation

(includingin leadership roles).

Ensuring Build to Last continues to drive business success is a strategic

priority for the Group and is led by the Group Chief Executive.

Controls include:

@ continuous measurement and reporting of KPIs aligned to Lean (cash flow

and profit from operations), Expert (employee engagement), Trusted

(customer satisfaction), Safe (Zero Harm) and Sustainable (carbon

emissions) within each business;

@ A Cultural Framework, which is embedded in the Group’s systems and

processes, aligning the UK and US under one unified approach and

reinforcing expected values and behaviours;

@ clear and frequent senior leadership engagement across the businesses

and functions;

@ upskilling, training, and business and development initiatives at key levels

throughout the business to reinforce Build to Last and the Cultural

Framework for all employees and in key job families i.e. commercial,

project management, engineering etc.;

@ induction, recognition and PDR approach aligned to Build to Last strategy

and Cultural Framework;

@ Zero Harm provides a consistent approach for the Group on the health and

safety agenda and delivery against the Safe value;

@ Building New Futures sustainability strategy provides a consistent

approach for the Group on the Sustainability agenda and delivery against

the Sustainable value; and

@ regular programme of communications to reinforce strategic priorities

across the Group.

Owner

The Board

Risk movement

–

No movement

The Build to Last strategy and the

supporting Cultural Framework

remains critical to the continuing

success of the business. Ensuring the

Build to Last strategy and Cultural

Framework underpin Balfour Beatty’s

operations will continue to be essential

to the success of the business.

RISK MANAGEMENT CONTINUED

Our Principal Risks continued

101Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Financial strength

The Group’s inability to maintain the financial strength

required to operate its business and deliver its objectives.

What impact it might have

Failure to protect and effectively maintain the required financial

strength could result in:

@ failure to meet financial covenant tests, as set out in financing

facility agreements, leading to a default event if not remedied

within a specific grace period;

@ failure to pass required tests that allow continued use of the going

concern basis of accounting in preparing financial statements;

@ the Group suffers a negative impact on profitability and loses the

confidence of its chosen markets and/or shareholders; and/or

@ loss of ability to compete for key long‑term contracts that are critical

to ongoing viability of the Group and delivery of longer‑term objectives.

Failure to manage financial risks (including

forecasting material exposures) and the

financialresources of the Group that underpin

itsability to:

@ meet ongoing liquidity obligations so that it

remains a going concern; and/or

@ meet financial covenants as set out in

financing facility agreements.

The Group continues to operate with a low level of financial risk as evidenced

by its robust average net cash position.

The Group operates with a centralised Treasury function, responsible for

managing key financial risks, cash resources and the availability of liquidity

and credit capacity.

The Group maintains significant undrawn term committed bank facilities with

a banking group of high credit quality to underpin the liquidity requirements

of the Group.

The Group maintains significant bank and surety bonding facilities to deliver

trade finance requirements of the Group on an ongoing basis.

The Group operates standardised reporting, forecasting and budgeting

financial processes. This allows monitoring of the impact of business

decisions on financial performance over future time horizons.

Owner

The Board

Risk movement

–

No movement

The Group Finance and Treasury

functions continue to maintain

well‑established controls and

demonstrate a clear ability to

manage existing and anticipated risk,

with a robust liquidity position held

throughout the year. In 2024, the

Group successfully extended the

revolving credit facility (RCF), which

extends to 2028, while continuing

toretain its strong average net

cashposition.

Balfour Beatty plc | Annual Report and Accounts 2024

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Supply chain

Supply chain partners fail to meet the Group’s operational

expectations and requirements in relation to capacity,

competency, quality, financial stability, safety, environmental,

social and ethical values.

What impact it might have

Failure to manage and monitor subcontractors or supplier

performance could impact on project delivery and may result in the

Group becoming involved in disputes, being forced to find alternative

providers or undertaking/ rectifying the work itself. This could result

in delays, business disruption, customer dissatisfaction, additional

costs or significant defects owing to lack of expertise or

competency.

Mistreatment of suppliers, subcontractors and their staff, or poor

ethical standards within the supply chain, could lead to disputes or

even legal proceedings and investigations resulting in business

disruption, losses, fines and penalties, reputational damage and, in

the worst case, debarment.

Legislation such as the Procurement Act, Criminal Finance Act and

Economic Crime and Corporate Transparency Act all place greater

emphasis on Balfour Beatty to have growing levels of visibility of

sub‑tier supply. This could result in greater supply chain disruption.

Lack of capacity, competency, stability or poor

behaviours within the Group’s supply chain may

arise through:

@ failure to embed the Group’s expectations and

values within the procurement process;

@ inadequate assessment of supply chain

partner capabilities, capacity and process

(including liquidity, quality, safety, ethics,

material management and governance over

compliance with labour laws);

@ lack of supplier resilience arising from rising

market pressures (e.g. global energy prices,

inflation, shipping delays, natural disaster,

global trade uncertainty, ongoing political

instability, etc);

@ failure to accurately assess project resource

requirements and key deliverables;

@ lack of adequate oversight, supervision or

management during delivery; and/or

@ unethical treatment (and associated lack of

adequate oversight) of the downstream

supply chain.

The Group continues to develop long‑term relationships with key supply

chain partners, working closely to understand their operations and

dependencies. This includes relationship mapping with strategic suppliers

and lessons learnt from previous projects together with briefing on order

book requirements.

The risk management framework and the GBL process allows for early

(pre‑award) and ongoing (delivery) assessment of the appropriateness of resource

allocation and dependencies and development of procurement strategies.

Pre‑qualification accreditation in place for core suppliers (validated in Gates

1–3), with oversight of supplier metrics and overall ‘health’.

Contingency plans address potential subcontractor failure, including

replacement supplier list.

Centralised systems track subcontractor assessment in relation to capacity,

compliance, performance and financial health, with market trends and

insights closely monitored and distributed to relevant businesses.

The Group obtains project retentions, bonds and/or letters of credit from

subcontractors, where appropriate, to mitigate the impact of any insolvency.

Group‑wide Code of Ethics cascaded to supply chain, with targeted training

programmes and related policies and procedures in place.

Detailed assessment process across supply chain following any major

natural disaster/ political incident to identify any disruption or discontinuation

of supply.

Owner

Group management

Risk movement

–

No movement

Prolonged economic uncertainty and

historic volatility seen in the market,

driven by inflation and rising energy

prices, have been key drivers to this

risk. The business however remains

vigilant in maintaining subcontractor

and supplier health oversight.

Additional controls that monitor

keyrisk indicators and track core

commodities is essential in managing

the risk. Ongoing monitoring of any

potential impacts from ongoing

political instability and global trade

uncertainty remain in place.

Our Principal Risks continued

RISK MANAGEMENT CONTINUED

103Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Code of Ethics compliance

Failure to comply with the Code of Ethics across the Group

including employees, joint venture partners, and within the

supply chain.

What impact it might have

Failure to comply with the Code of Ethics and Balfour Beatty values

could leave the Group exposed to:

@ instances of bribery and corruption;

@ fraud, deception, false claims or false accounting;

@ unfair competition practices;

@ human rights abuses, such as child and other labour standards

generally, illegal workers, human trafficking and modern slavery;

@ unethical treatment of and by the supply chain;

@ potential impact to staff morale and wellbeing; and/or

@ potential health and safety impact.

Any of these failures could result in legal investigations or disputes,

resulting in business disruption, losses, fines and penalties,

reputational damage and even debarment.

FOR MORE INFORMATION PLEASE SEE ‘ETHICS AND COMPLIANCE’ ON PAGE 46

Failure to comply with the Code of Ethics and

Balfour Beatty values could arise from:

@ failure to adopt a compliance risk approach;

@ failure to establish appropriate corporate

culture across the different businesses and

geographies in which the Group operates;

@ failure to embed the Company’s values and

behaviours across joint ventures and

throughout supply chain partners;

@ lack of an effective training programme to

reach all layers of personnel across the business;

@ failure to have a robust testing and compliance

monitoring programme in place;

@ ethics and values being compromised as a

result of commercial pressures;

@ failure to ensure awareness of whistleblowing

processes across the organisation and/or to

engender a safe ‘Speak Up’ working culture;

and/or

@ deliberate or reckless non‑compliance.

Code of Ethics and associated training programme deployed Group‑wide

with specific behaviours training deployed to targeted audiences. Related

policies, procedures and training refreshed as appropriate – with the initial

roll out of Right to Respect training in the UK nearing completion.

Ethics and compliance updates provided to the Audit and Risk Committee

biannually. Each Business Unit, supported by the Ethics and Compliance

function, is responsible for embedding the Code of Ethics and the

Company’s values and behaviours within its operations.

The Group has a range of operational controls (commercial, including

procurement, due diligence and risk assessment) that are designed to

identify and manage risks internally and with third parties. In 2024, a Fraud

Working Group was set up to ensure readiness for the coming into force of

the Economic Corporate Crime and Transparency Act 2023.

An independent third‑party whistleblowing helpline is in place and actively

promoted. All in‑scope complaints are independently investigated by the

Internal Audit and Compliance teams and appropriate action is taken,

wherenecessary.

Balfour Beatty works with a limited number of agents, all of whom are,

inaddition to the Group’s due diligence and approval process, subject to

specific contractual clauses, policies and agreements.

Centralised systems to track and permit enhanced supplier assessment in

relation to capacity, compliance and performance providing insight into

supplier internal operating processes, governance and values.

Owner

The Board

Risk movement

–

No movement

The Code of Ethics programme

continues to be promoted and

embedded across the Group. In

theUK the initial roll out of Right to

Respect training is nearing completion.

Controls deployed through both

internal and external systems allow

oversight of compliance with the

Code of Ethics and enable the

business to monitor and manage

anypotential breaches.

Legal and regulatory

The Group does not effectively respond to any change in

relevant legal, tax and regulatory requirements in a timely

manner or does not fully understand the implications of

certain regulatory changes resulting in a potential breach or

lack of business readiness.

What impact it might have

The Group could face legal proceedings, investigations or disputes

resulting in business disruption, losses, fines and penalties,

reputational damage and debarment.

Such action could also impact the valuation of assets within the

affected territory as well as have an impact on shareholder confidence.

Failure to recognise or adapt to potential impacts

arising from changes in applicable laws affecting

the Group’s businesses may result from:

@ lack of awareness of any changes in laws or

regulations made across the geographies and

jurisdictions within which the Group operates;

@ ineffective communication of the requirements

across relevant business units; and/or

@ entering into new markets and/ or sectors

with limited expertise and due diligence.

The Group actively monitors and responds to tax, legal and regulatory

developments and requirements in the territories in which it operates, with

dedicated legal resource assigned to specific business areas.

Changes in the law and the requirements arising from them are clearly

cascaded to all affected businesses.

Local legal and regulatory frameworks are considered as part of any decision

to conduct business in a new territory, as well as addressed as part of the

Circles of Risk.

Appropriate and responsive policies, procedures, training and risk

management processes are in place throughout the business.

Engagement of third‑party expertise where required on specific or localised

legislation andpolicy.

Owner

The Board

Risk movement

–

No movement

Unforeseen exposure to legal and

regulatory change is considered

extremely unlikely. Whilst the Group

moves to explore new market

sectors, the controls embedded

across the Group are considered to

remain effective in managing this risk.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Legacy pension liabilities

The Group is exposed to and must therefore effectively

monitor and manage significant defined benefit pension risks.

What impact it might have

Failure to manage these risks adequately could lead to the Group

being exposed to significant additional liabilities due to increased

pension deficits.

This has the potential to affect the longer‑term viability of the Group

as well as incur reputational harm.

The Group is unable to guarantee that the

trustees of the pension funds react effectively to

or manage:

@ changes in interest rates or outlook for inflation;

@ an increase in life expectancies;

@ regulatory intervention or legislative change;

@ prudent funding assumptions; and/or

@ investment performance of the funds’ assets.

The Group continues to constructively and regularly engage with the

trustees of the pension funds to ensure that they are taking appropriate

advice and the funds’ assets and liabilities are being managed appropriately.

This includes quarterly performance reporting and investment committee

meetings in which the Company is represented.

The funding and investment arrangements of the pension funds are subject

to an in‑depth triennial valuation and funding review with regular monitoring

in years between.

The Group’s two main UK funds have hedged in excess of 80% of their

exposure to interest rate and inflation movements and the largest of the UK

funds has hedged around 40% of its exposure to an increase in life expectancies.

Following completion of the 31 March 2022 triennial funding review of the

main UK fund in May 2023, a substantial amount of de‑risking was agreed

with the trustees and the majority of this was implemented by the end of

2023, with some additional de‑risking carried out in the first half of 2024.

Owner

The Board

Risk movement

–

No movement

No change in risk. The trade‑off

between risk and cost continues to

be subject to regular review and has

been scrutinised fully as part of the

2022 actuarial valuations of the

Group’s two main UK funds. Asset

de‑risking continued in 2024.

Ongoing monitoring of this risk

continues, with the next triennial

funding reviews planned for 2025.

Our Principal Risks continued

RISK MANAGEMENT CONTINUED

105Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DESCRIPTION AND IMPACT CAUSES MITIGATION

Economic uncertainty

The effects of national and international market trends

including political, societal or regulatory change, may cause

customers to re-evaluate existing or future infrastructure

expenditure and the procurement of services. It may also lead

to changes in the price and availability of labour, products and

services and impact on Group operating models.

What impact it might have

Any significant delay or reduction in the level of customer or local

authority spending or investment plans could adversely impact the

Group’s strategy and order book, reduce revenue or profitability in

the near or medium term, and negatively impact the longer‑term

viability of the Group.

Restrictions on the availability of skilled labour and competitively

priced materials could lead to increased costs, reduced margins, and

hence potentially a devaluation of the business.

Financial failure of a customer, including any government or public

sector body, as well as a key supply chain or joint venture partner

could result in increased financial exposure to counterparty risk.

Potentially negative impacts could be related to

the effects of:

@ customers postponing, reducing or changing

expenditure plans including any delays

associated with funding or planning

constraints or to meet ‘greener’ solutions;

@ impact of inflation arising from a multitude of

factors including rising global costs of energy,

strained supply chains, global trade

uncertainty and, rising demand and residual

impacts still being felt from the UK’s exit from

the EU;

@ pressure on public finances caused by

inflationary pressures and strained public

finances more generally;

@ increased competition e.g. in the UK from

foreign investors acquiring competitors;

@ political change or uncertainty;

@ recessionary pressures; and/or

@ increased supply chain risks (e.g. solvency,

people and materials).

The Group primarily operates across three geographies (UK, US and Hong

Kong) and three sectors (Construction Services, Support Services and

Infrastructure Investments). This balanced portfolio of projects provides

resilience and stability as the Group is less exposed to a downturn in a single

geography or sector.

The Group continues to actively monitor market trends and potential impacts

and is involved in government affairs activity to anticipate future direction of

government spend and collaborate with partners where possible.

The financial solvency and strength of counterparties and major supply chain

partners form part of key considerations before contracts are signed and

assessments are updated and reviewed whenever possible during the

project lifecycle. The business also seeks to ensure that it is not overly reliant

on any one counterparty, whether customer, joint venture partner or supply

chain partner.

The annual review of market forecasts continues to remain a core part of the

Group’s Budget and Plan processes, and a focus on medium‑term market

outlook is considered and presented by each Strategic Business Unit.

Owner

The Board

Risk movement

–

No movement

Economic uncertainty has continued

to present headwinds for the business,

driven by interest rates remaining

higher for longer and the residual

impact of inflation, presenting

ongoing financial constraints on both

public and private finances. In 2024,

these factors were against the

backdrop of elections and subsequent

administration change within both

the UK and US. The business however

continues to retain a strong order

book and has seen the award of

major projects in 2024. The Group

continues to closely monitor

economic drivers, including any

impact arising from global trade

uncertainty and remains cognisant of

potential uncertainties presented by

ongoing conflicts and international

political unrest.

Balfour Beatty plc | Annual Report and Accounts 2024

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

VIABILITY STATEMENT

In accordance with the requirements of the Code,

the Directors have assessed the Group’s

long‑term prospects and its viability over a

three‑year period to 31 December 2027.

Assessing the Group’s

long-termprospects

The Group operates primarily in the UK, US and

Hong Kong, specialising in multiple facets of the

construction and services industry. TheGroup also

maintains an Investments portfolio which provides

a strong underpin tothe Group’s balance sheet.

The Group has many elements necessary

forfuture business success – expertise in

technology and innovation, strong customer

relationships and a talented workforce. TheGroup

seeks to build on these strong foundations with

continued investment in technological advances,

not only to ensure that projects are delivered on

time and as efficiently as possible whilst maintaining

the utmost focus on safety, but also to remain

market leaders in the way construction is conducted

and to push the boundaries of innovation in line

with achieving industry‑leading margins.

Assessing the Group’s viability

The Directors have assessed the Group’s viability

over a three‑year period and consider this to be

appropriate because this is the period aligned to

the current order book andfor which there is a

good visibility of thepipeline of potential new

projects. This period also allows greater certainty

over the forecasting assumptions used in labour

and material pricing, skills and availability. There

isinherently limited visibility of contract bidding

opportunities beyond the three‑year period, and

the accuracy of any forecasting exercise is also

impeded by uncertainties around the costs

involved in delivering contracts. Consequently,

theGroup performs its medium‑term planning

over three years.

The Directors and the Executive Risk Steering

Group continue to monitor the principal risks

facing the Group, including those that would

threaten the execution ofits strategy, its business

model, future performance, solvency and liquidity.

Aspartof assessing the Group’s future viability,

the Directors have considered these principal

risks and the mitigations available to the Group.

These principal risks and the consequent impact

these might have on the Group as well as

mitigations that are in place are detailed on

pages94 to 105.

In their assessment of the Group’s viability, the

Directors have also considered the need to be

successful in focusing on the Group’s values of

Lean, Expert, Trusted, Safe and Sustainable

detailed on pages 24 and 25. TheGroup’s progress

in relation to Build to Last for continuous improvement

remains critical to future success, although

success isalso dependent on the Group’s ability

to selectively win new contracts which could

bepartly impacted by political changes.

At 31 December 2024, the Group’s only debt,

other than non‑recourse borrowings ring‑fenced

within certain concession companies, comprised

$208 million US private placement (USPP) notes.

The Group’s £450 million committed

sustainabilitylinked bank facility remained

undrawn at 31 December 2024 and is fully

available to the Group until June 2028. The

Group’s £30 million bilateral committed facility

also remained undrawn at 31December and

remains fully available to the Group until

December 2027.

The Group’s projections indicate that the

headroom provided by the Group’s strong liquidity

position, including its net cash position and the

debt facilities currently in place, is adequate to

support the Group over the next three years.

The Group’s projections have been stress‑tested

against key sensitivities which could materialise

as a result of crystallisation of one or a combination

of the Group’s principal risks with the aim of

stress‑testing the Group’s future viability against

severe but plausible scenarios. These scenarios

include:

@ failure to manage effectively any adverse

economic impact;

@ an operating event that damages the Group’s

reputation and results in significant penalty; and

@ failure to maintain progress made in relation

toBuild to Last.

The above scenarios result in: a reduction in

revenue; a reduction in margin; an increase in

operating costs; a slowdown in the Group’s

investments asset disposal programme; and/or

negative changes to working capital.

The Directors also assessed a ‘perfect storm’

scenario by combining multiple scenarios and

modelling the resulting downside to stress‑test

the Group’s viability if these cash flows were to

immediately and simultaneously come under

severe threat. This scenario is aimed totest the

viability of the Group if it was to experience a

catastrophic failure and toallow the Directors

toassess the mitigations available to avoid this.

In assessing the Group’s viability under

thesesevere but plausible scenarios (including in

the instance of a ‘perfect storm’), the Directors

have also considered the Group’s projected cash

position (which excludes cash that is not immediately

available to the Group), bank facilities and their

maturity profile and covenants, the borrowing

powers allowed under the Company’s Articles of

Association and thefact that the Group’s PPP

investments comprise reasonably realisable

securities which could be sold to meet funding

requirements if necessary.

It is unlikely, but not impossible, that the crystallisation

of a single risk would test the future viability of

the Group. However, it is possible to construct

scenarios where either multiple occurrences of

the same risk, or single occurrences of different

principal risks, could put pressure on the Group’s

ability to meet its financial covenants. The Directors

have considered the strength of the mitigations

available and whether these aresufficient to avoid

a catastrophic outcome to the Group’s viability

and believe that there are sufficient mitigations

immediately available to minimise this risk.

Based on the assessment undertaken to stress‑test

the Group’s viability against severe but plausible

scenarios, and taking into account the strength of

mitigations that are immediately available to the

Group, the Directors have concluded that there

isa reasonable expectation that the Group will

beable to continue in operation and meet its

liabilities as they fall due over the three‑year

period to 31December 2027.

Our 2024 Strategic report, from pages 1 to 115,

was approved by the Board on11 March2025.

Philip Harrison

Chief Financial Officer

11 March 2025

107Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

CLIMATE CHANGE AND TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)

Climate change has been identified as one of

sixfocus areas most critical to business success

withinthe Balfour Beatty Building New Futures

sustainability strategy, see page 49. This reflects the

importance that the Group places on addressing the

climate crisis, and the role the construction and

infrastructure sector stands to play to tackle this

global challenge.

The efforts made to date to understand the effects

of climate change on the business have focused on

the identification of climate‑related risks and

opportunities, and an initial assessment of impact or

potential outcomes to the business. Where possible,

consideration has also been given to business

response, in an effort to reflect how the Group both

adapts to, and mitigates risk, and promotes

opportunity through its business strategy.

The Group’s Climate‑risk Working Group (formerly

TCFD Working Group), established in 2021,

continues to provide a structured approach for

how the Group considers the impacts of climate

change and what this means to the organisation.

The Working Group supports the business in

considering the deepening effects of the climate

crisis and integrates the identification of

climate‑related risk and opportunity into existing

business risk reviews. The key activities Balfour

Beatty has undertaken to progress this agenda are

summarised in a timeline outlined on page 109.

The diverse nature of the Group’s operational

activities continues to present a challenge for the

development of robust and replicable methodologies

that can be applied business‑wide to accurately

quantify the financial impact of climate‑related risks

and opportunities at a Group‑wide level.

During 2024, the Group’s focus areas were to:

@ incorporate any new or updated knowledge

obtained through the 2023 workstream back

into the climate‑risk and opportunity master list;

@ revalidate and prioritise the most relevant

climate‑related risks and opportunities for

thebusiness by reapplying the Vulnerability

Advantage (VA) assessment against the

‘longlist’ of climate‑related risks and

opportunities; and

@ undertake a detailed analysis on the three

highest rated risks and opportunities identified

for the business.

Climate-related risk

andopportunity

Evolving the organisation’s understanding of the

impacts ofclimate change.

Detailed analysis of these events is intended to expand insight into the organisation‑wide impacts

ofclimate‑related risks and opportunities and focus on developing methodologies that will enable

theGroup to explore quantification of the nearer‑term events that carry a greater level of likelihood.

Pillar TCFD recommendation Section name Page

Governance a) Board oversight Division of responsibilities p132

b) Management role Audit risk and internal control p146

Sustainability p48

Strategy a) Risks and opportunities Division of responsibilities p132

b) Impact on organisation Audit risk and internal control p146

c) Resilience of strategy Sustainability p48

Risk

management

a) Risk identification and

assessment process

Risk management p89

b) Risk management process

c) Integration into overall risk

management

Metrics and

targets

a) Climate‑related metrics Sustainability p48

b) Scope 1, 2, and 3 GHG

emissions

c) Climate‑related targets

Compliance statement:

Balfour Beatty continues to set out its climate‑related risk and opportunity disclosures aligned

withthe 11 core elements of the TCFD guidance using the pillars of governance, strategy, risk

management, and metrics and targets. In doing so, it has considered Section C of the 2021 TCFD

Annex entitled Guidance for All Sectors and Section E of the TCFD Annex entitled Supplemental

Guidance for Non‑Financial Groups. The Group remains compliant with Financial Conduct Authority

(FCA) listing rule UKLR 6.6.6(8)R by applying the TCFD guidance; assessment of the climate‑related

impacts on the Group undertaken to date are largely qualitative and are yet to be fully integrated

into the longer‑term financial planning processes for the business. Development of methodologies

to determine quantitative impacts has progressed for 2024, however, the Group remains consistent

in only disclosing qualitative impacts. The Group’s operational complexity continues to present a

challenge for quantification considering the range of uncertainty in projections on the impacts of

climate‑related risks and opportunities. The table below outlines where elements of the TCFD

disclosure requirements are addressed within the report.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

CLIMATE CHANGE AND TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

Reporting framework horizon

Balfour Beatty awaits formal adoption into UK

reporting rules for listed companies, the International

Sustainability Standards Board (ISSB)’s first two

standards, IFRS S1 and IFRS S2, which fully

incorporate the TCFD’s recommendations. In 2024

a gap analysis was undertaken on these standards

to generate a roadmap integrating these into future

reporting plans.

Governance

Balfour Beatty’s governance structure and

organisation hierarchy underpin all Group activities

and ensure that the business is managed and

operated effectively (see page 132). This structure

enables the Board, its sub‑committees and senior

management to review risk profiles at operational

and business level that may include climate‑related

risks and opportunities that are considered

alongside other potential exposures.

Board oversight

The Board is responsible for setting the Cultural

Framework of the business including its purpose,

Build to Last strategy, values and behaviours.

Together with its sub‑committees, the Board

provides leadership and oversight of the system

of risk management which includes ensuring

climate‑related factors are being considered as

part of identification of risk for the overall business.

The Safety and Sustainability Committee (SSC)

reviews the Group’s sustainability strategy,

Building New Futures, and monitors progress on

the defined six focus areas. The Group Chief

Executive and three non‑executive Directors are

members of the SSC. The Group Chief Executive

has overall responsibility for climate‑related risks

and issues as well as setting Balfour Beatty’s

sustainability policy and overseeing how

Environmental, Social and Governance (ESG)

matters are managed.

The SSC agenda is separated into two specific

areas of focus: (i) health and safety; and (ii)

sustainability, allowing for more time and

emphasis on climate‑related matters.

Both the Group Chief Executive and Chief Financial

Officer have ESG‑related targets included as part

of their strategic business and personal objectives.

Examples include a measurable improvement in

UK social value annually from the previous year;

and a measurable improvement in both the quality

of carbon reporting and actual performance

against validated Science Based Targets (SBTi).

The Audit and Risk Committee supports the Board

in its oversight of all Group risks, which continues

to reflect two Group risks, mitigating and adapting

to climate change, and delivering sustainability

commitments. The Board, through the Audit and

Risk Committee, is apprised of the climate‑related

risks and opportunities on an annual basis, alongside

an overview of the climate‑related risk workstream

carried out throughout the year and an annual

disclosure summary.

Further information related to all Board meetings

held and attended can be found in the Division of

responsibilities section on page 132.

Management role

The Executive Committee’s (ExCom) responsibilities

include setting ambitions and targets in relation

toclimate‑related matters under the Building New

Futures sustainability strategy and supporting

businesses in establishing and implementing

Bridging the Gap sustainability action plans. ExCom

members are also responsible for monitoring any

climate‑related risks and opportunities identified

as relevant to their respective businesses or functions

alongside other operational and strategic risks.

Time horizons

Short term (0–3 years) Medium term (3–10 years) Long term (10–30 years)

Balfour Beatty’s current operations

and asset investments as well as

near‑term growth strategy.

Ongoing projects and contracts

as well as growth strategy and

asset investment decisions

driven by government policy,

infrastructure needs and

marketconditions.

Factors that could impact Balfour

Beatty’s business plans and

longer‑term strategy and

business resilience.

The Group Sustainability function is responsible

for understanding material sustainability considerations,

indicating related targets and ambitions, and enabling

the development of operational action plans.

The ExCom has overall responsibility for agreeing

the Group’s sustainability ambitions and targets.

Sustainability directors assigned across the Group

(supported by individual business sustainability

leads and project‑based teams) are responsible

for maintaining bespoke Bridging the Gap

sustainability action plans aligned to the Group’s

Building New Futures sustainability strategy.

The senior leadership of each business is

responsible for agreeing its Bridging the Gap

action plan and ensuring it is delivered and

adequately resourced. These plans detail how

projects should deliver sustainability at a local

level aligning to the Building New Futures six

focus areas. Risks and opportunities (including

where defined as Emerging Risks) are also

identified and tracked on business risk registers

where relevant.

Internal audit teams review the maturity of

Strategic Business Unit Bridging the Gap plans

against the Group’s sustainability strategy. This

includes checking that plans are tracked and

updated by the business.

PricewaterhouseCoopers LLP (PwC LLP) is engaged

by Balfour Beatty to provide limited assurance

over the reporting of selected sustainability data

including the Group’s Scope 1 and 2 greenhouse

gas emissions, emissions intensity and social value.

The Climate‑Risk Working Group, co‑led by the

Group Risk and Audit Director and Director of

Sustainability, includes representation from

Finance, Risk, and Sustainability functions, and

draws on functional support and expertise from

the wider business. It engages with business and

functional management across Balfour Beatty,

ensuring climate‑related risks and opportunities

are adequately identified and incorporated into

theGroup’s Enterprise Risk Management (ERM)

system. The Working Group oversees the

implementation of climate‑related risk

management processes and reporting.

The key objectives of the Working Group are to

grow the Group’s understanding of climate‑related

risk and opportunity and align these efforts to

evolving disclosure requirements, by:

@ building awareness of climate‑related risks

andopportunities that could impact the Group;

@ identifying, analysing and disclosing high‑priority

or potentially material climate‑related risks

andopportunities;

@ delivering ongoing review of climate‑related

risks and considerations and supporting how

these are integrated into risk management

processes; and

@ communicating the outputs and implications

ofthese reviews to key stakeholders within

thebusiness.

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2021 2022 2023 2024

Work stream

summary

Establishment of

theWorking Group

andintegration into

ERMframework

Vulnerability/ Advantage

(VA) assessment and top

10 risks defined

Strategic Business Unit

(SBU)-level impact and

applicabilityassessments

Revalidation and

prioritisation of the most

relevant climate-related

risks and opportunities

forthe business

Training and

upskilling

Delivered climate awareness session

to the Board

Delivered carbon literacy training

toExCom

Delivered TCFD training session to the

finance community, with SBU finance

directors identified as TCFD Champions

for each SBU

Upskilled a diverse stakeholder group through

engagement in a half‑day workshop to support

revalidation of the VA assessment

Climate scenario

setting

Determined climate scenarios as 2°C

and 4°C for the business and

commenced scenario analysis

Revised climate scenarios to

<2°C (Low Carbon) and ~2.7°C

(Limited Action)

Maintained climate scenarios as these are aligned to latest climate science

Identification and

assessment of

climate riskand

opportunities

@ Captured physical and transition

risks split across both scenarios

informed by data, analysis,

interpretation, and forecasts –

establishing a ‘long‑list’ master

climate register

@ Facilitation of workshops with

business representation to identify

additional relevant events and

prioritise – split across three

geographical locations

@ Consolidated workshop output

and high‑level qualitative analysis

of prioritised risks and

opportunities and ranked risks and

opportunities over the short,

medium and longer term

Development of VA to evaluate and

prioritise risks from 2021 and applied

the VA assessment to determine top

10 highest rated key climate‑related

risks and opportunities to take forward

for further analysis

@ SBU surveys conducted to

understand applicability and relevance

of top 10 risk and opportunity

events in the context of specific

business plans an objectives

@ Facilitation of individual workshops

for each SBU to explore the relevant

events in the context of their

specific business plans and

objectives – and understand

impacts and planned response

@ Confirmed existing list of climate‑related

risks and opportunities defined to ensure

relevancy to the Group

@ Validation/identification of highest rated

climate‑related risks and opportunities

for the Group. Agreed a single

consequence and likelihood rating

(consequence based on pre‑population

of the sensitive, exposure and adaptive

ratings already being assigned)

@ Identification of the highest rated risk

and opportunities to take forward for

more detailed analysis and development

of quantification methodologies

Detailed analysis

@ Identification of 500 site and asset

locations for physical data

modelling out to 2100, over both

climate scenarios to highlight

exposure to climate perils

@ Early development of financial

methodologies for top 10 risks and

opportunities allowing for the

identification of gaps in consistent

and comparable internal data

@ Analysed workshop and survey

findings to identify common insights

and validate risks and opportunities

as most relevant to business

operations

@ Collated information to present back

to SBUs for consideration and

incorporation into SBU risk profiles

(including as emerging risks) where

required, mitigation actions

integrated into Bridging the Gap

plans as part of strategic delivery

@ Based on the revised VA assessment

one opportunity and two risks were

carried forward for more focused

analysis

@ Development of draft quantification

methodologies for the following

three events:

– Increase in demand for renewable and

low‑carbon energy generation,

storage, transmission and distribution

increases awarded contracts

– Carbon pricing increases prices of

energy and raw materials

– Transitioning of owned plant, fleet,

and equipment to lower‑carbon options

Detail outlined on pages 113 to 115.

Strategy

The Build to Last strategy is fundamental to how

the organisation shapes a market‑leading Balfour

Beatty for the next 100 years. Build to Last is a

platform for sustainable growth and productivity

and is well placed to enable Balfour Beatty to

develop resilience against the impacts associated

with climate change over the short, medium and

long term.

‘Sustainable’ is identified as one of the five values

of the Build to Last strategy (see page 25). The

Building New Futures sustainability strategy sets

out the Group’s commitment to mitigate and

adapt to climate change; as signatories of the

business ambition to 1.5˚C with SBTi validated net

zero target of 2050 for Scopes 1, 2 and 3 and a

near‑term 42% reduction in Scope 1 and 2 GHG

emissions. The roadmap to achieve these reductions

is implemented through Bridging the Gap sustainability

action plans in 2024 which monitors progress

against the Building New Futures strategy targets.

Balfour Beatty’s diverse operating portfolio and

geographical spread mean that the likelihood of

anumber of climate‑related risks occurring at the

same time is low and they are unlikely to impact

the Group’s short‑term financial viability or ability

to operate in a business‑as‑usual state.

The nature of the Group’s business model at

present continues to provide an element of

protection from negative financial risk where

contractual mechanisms are in place. This will

continue to evolve in maturity in line with the

developing climate agenda as customers embed

and enhance more climate‑focused procurement

evaluation criteria and commercial

contractualclauses.

The Group considers climate‑related risks and

opportunities across different time horizons,

defined as the short, medium, and long term as

defined on page 108.

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Strategy continued

The Group deemed the retention of these time

horizons as the most appropriate due to the

nature of the construction sector’s project

lifecycles and longevity of ongoing work.

Setting climate scenarios

The Group has maintained the two scenarios

identified in the initial disclosure year, as they have

been determined by the Working Group as still the

most relevant and appropriate scenarios aligned

with climate science and the realities of the pace

of sectoral decarbonisation, labelled Low Carbon,

and Limited Action. ‘Limited Action’ was defined

as more appropriate as the term ‘business as

usual’ was not reflective of the Group’s commitment

to mitigating and adapting to climate change.

Under the Limited Action scenario, it is anticipated

that the global mean temperature will increase by

approximately 2.7°C, a mix of fossil fuels and

renewables will be adopted as energy sources,

carbon pricing will remain low, and legislation

willbe of a commensurate level of ambition in

comparison to the present, resulting in a medium

emissions future.

For physical scenarios, the IPCC AR6 SSP 2–4.5

Middle of the Road (Limited Action) and SSP1–2.6

Sustainable (Low Carbon) projections were utilised.

For transition scenarios, the IEA World Energy

Outlook 2021 Stated Policies Scenario (Limited

Action) and Sustainable Development Scenario

(Low Carbon) were utilised.

Impact and response to

climate-relatedevents

As highlighted previously, the ability to accurately

quantify the financial impacts from climate change

to the business presents a challenge. Balfour

Beatty’s operations are diverse, undertaking very

different work activities across a broad client

portfolio (both public and private), often under

differing contractual terms and profit margins

across distinct core geographies.

The approach adopted in 2023 to review the

impacts of climate change at an SBU level

provided better insight into potential outcomes

forthe business. By understanding the impact of

each risk and opportunity event in the context of

specific business plans and growth strategies,

themethodologies developed to financially assess

impacts could be informed by more accurate,

granular data on a business‑by‑business basis,

making it more relevant to that area of operation.

It also supported insight into the proposed adaptation

and mitigation strategies each business planned

to undertake in response to risks and opportunities

that were relevant to their respective businesses.

Whilst limitations remain, work has evolved to

progress this in 2024. The VA assessment was

revisited to first revalidate the highest rated risks

and opportunities, incorporating new data obtained

from the 2023 workstream. This enabled a revalidation

of the highest 10 risks and opportunities to then

identify those that could be taken forward to

CLIMATE SCENARIOS

Physical Transition

Scenario Warming by

2100

Future

emissions

Energy sources Policy narrative Rationale for scenario

Limited

Action

~2.7⁰C Medium Mix of fossil fuels

and renewable

energy

Achievement of Nationally

Determined Contributions (NDC)

under Paris Agreement and other

policy commitments

Represents possible future

risks if there is minimal

additional action

Most significant impacts from

physical risks

Low

Carbon

<2⁰C Low Mostly renewables

and low‑carbon fuels

Ambitious policy agenda

leadingtotransformation of

theenergy system

Many advanced economies reach

net zero emissions by 2050, with

the rest of the world reaching net

zero by 2070

Aligns with best‑case scenario

and current recommendation

from the IPCC

Most significant impacts from

transition risks

progress the development of a deeper dive

analysis and to develop draft quantification

methodologies. Detail on this is outlined further

on page 113.

The Group continues to disclose the anticipated

financial impact category associated with

eachevent.

The Group performs an assessment on TCFD

reporting requirements and considers areas of

thebusiness that could be impacted by climate

change. As a result of this assessment, the Group

does not anticipate a material impact from

climate‑related factors in the short term. The

Group considers climate change in its going

concern assessment biannually and viability

assessment annually (see page 106). As part of

this, consideration is given to whether existing

assets could be impaired.

It has been determined that the Group has an

in‑built resilience to the impacts of climate change

in the short term, due to the current level of

geographic and market diversity of its operations.

This enables the Group to pivot away from markets

more exposed to climate risk and expand into

existing and/or new markets presented by the

global response to climate change.

The potential financial impacts of the Group’s

positive and negative exposure to climate risks

and opportunities require many assumptions to be

made in respect of factors such as low‑carbon

technology forecasts, energy consumption,

carbon pricing forecasts, and others, which are

subject to high variability.

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The analysis conducted to date shows that

theoverarching business strategy would not

beimpacted, and importantly, mitigating actions

arealready in place for certain risks, which

significantly reduces potential negative financial

impacts. There will be opportunities to continue

toiterate the analysis as the volume and type of

relevant data and assumptions becomes available,

both internally and externally to support and

inform further quantitative assessment.

To support future assessments of materiality in

the context of climate‑related impacts over the

medium and longer term, the Group continues to

engage with stakeholders.

Risk management

The Group maintains its approach to integrate

climate‑related risk identification into the existing

ERM framework, which ensures consideration at

Group, business and operational levels. Mitigation

of, and adaptation to, climate change is identified as

a risk on the Group risk register. This risk is

monitored by the ExCom as part of the half year and

full year reviews of the Group’s risk profile (see page

89). Current management plans remain largely

focused on exploring and understanding the full

impacts of risks to develop appropriate mitigation

and adaptation strategies which, where possible

and relevant, are incorporated as part of Bridging the

Gap action plans. Mitigation also includes the role of

the Working Group in progressing the assessment

and response to this risk.

A mapping exercise is conducted to identify where

climate change may be a cause or driver to other

Group risks, and/ or where it may further compound

impacts. The Balfour Beatty risk management

process to identify, assess, respond to, and

monitor risk (outlined on page 89) is applied by

the business to identify climate‑related risks and

opportunities alongside other risks. Whilst this

ensures a consistent process is applied when

identifying and reviewing all risks, there are some

specific additional considerations that differ for

climate‑related risk that should be considered.

Additional guidance has been developed to

highlight the differences (and in some cases,

limitations) when addressing climate‑related

considerations at each stage of the risk process.

The key differences in the time horizons over

which the business traditionally identifies and

assesses risk are also highlighted as part of this

guidance. A high‑level summary is provided in the

Climate scenarios table on page 110. Reviewing

climate‑related risks and opportunities alongside

existing strategic risks will support more targeted

responses to manage these over the medium and

longer term. Balfour Beatty’s IRIS ERM system

captures risk data at each level outlined in the

ERM framework and includes climate change as

aspecific category, providing insight to trends

onoperational and business‑level risk data. The

highest rated risks have also been incorporated

into the IRIS Risk Library, allowing businesses

theability to copy high‑level detail in relation

tothe risk or opportunity and to amend in the

context of their own businesses – whether as

anopen or emerging risk. Utilisation of the Risk

Library can be tracked, as well as the ability to

monitor trends for risks or opportunities that

havebeen categorised as climate change in IRIS.

The work undertaken in 2024 to revalidate the

VAassessment for climate‑related risks and

opportunities sought collective input from

business representatives, including the Asset &

Technology Solutions team, and commercial and

financial SBU representation. The outcomes of

this exercise allowed the business to confirm the

highest rated risks and opportunities and to take

forward those most relevant in the shorter term

toundergo more detailed analysis, which includes

the development of draft quantification methodologies

with third‑party specialist support. The details of

this are outlined further on page 113.

Metrics and targets

Full details of climate‑related metrics and targets,

including Scope 1, 2 and 3 emissions, can be

found in the Sustainability section on pages 50 to

55. Balfour Beatty’s GHG abatement actions are

aligned to the GHG reduction targets contained

within its science‑based targets, supported by a

robust and credible GHG reduction pathway. For

more information on Balfour Beatty’s commitment

and progress on science‑based targets, see page 50.

Transition plan

The Group will continue to monitor timelines of

implementation pending outputs of UK Government

consultations on the introduction of UK Sustainability

reporting standards in line with the Transition Plan

Taskforce (TPT) framework. Balfour Beatty

acknowledges the TPT release of final outputs,

including a disclosure framework, implementation

guidance and its proposed development of sector

specific guidance documents. The Group will work

towards adopting the TPT disclosure framework

guidance as it continues to integrate its own

transition plan into the Group’s strategic goals.

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CLIMATE CHANGE AND TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

Assessing and mitigating physical risk eventstothebusiness

The most relevant physical climate risks identified by Balfour Beatty were validated through the VA assessment, and are reflected within the 10 highest rated risks and opportunities. In conducting a deeper review with the business, it was recognised that the approach by which to

assess and manage each of these physical risks would be similar due to the businesses operating model and contracting principles. Whilst the likelihood of individual weather events will differ based on future time horizons, climate scenarios, geographical locations and work activity

type, generally it was agreed that the impact on day‑to‑day project delivery risk will manifest as disruption or delay (resulting in potential time and cost), potential damage to assets, and risk to the safety and wellbeing of our people and other stakeholders that we work with. Balfour

Beatty mitigates the physical risks posed by building in contingencies within project schedules for weather‑related delays and has contractual mechanisms that mitigate against extreme weather events (often considered compensation events). Weather data as part of estimating and

planning is utilised in developing project programmes and determining of contingencies. The business continues to review and monitor how to mitigate this exposure as Balfour Beatty and clients adapt commercial solutions in response to an increase in frequency and intensity of

extreme weather events and chronic changes in heat and precipitation patterns.

Vulnerability/ Advantage assessment

The Vulnerability/ Advantage (VA) assessment is utilised to determine the level of disruption or benefit the business could be exposed to

and the resources required to mitigate or promote it. The assessment considers criteria across Sensitivity, Exposure and Adaptive Capacity.

Prioritised physical risks

Potential impacts and

outcomestobusiness

Potential adaptation and

mitigation strategies

@ Risk 6 – Extreme heat leads to

damages to physical assets and

disruption at own sites

@ Risk 7 – Severe storms lead to

damages to physical assets and

disruption at own sites

@ Risk 8 – High‑speed wind leads

to damageto physical assets and

disruption atown sites

@ Increased costs as extreme weather event

classification may not beprovisioned for within

contractual clauses

@ Challenging or unsafe working conditions

foremployees

@ Delays to project delivery from stand‑down of

sites and/or to rectify damage caused by

weatherdamage

@ Reduction in horizon opportunities for planned

major infrastructure schemes as projects become

too costly to fund due to weather‑driven

costincreases

@ Impact on valuation of assets in known extreme

weather zones (flood zones, high‑speed wind zones)

@ Close monitoring of weather

forecasts to ensure employee

safety and adequate preparation

@ Utilising third‑party expertise for

support with climate modelling to

understand physical risk impacts as

relevant to certain geographical

areas of operation

@ Increase resilience of sites to

extreme weather events by

implementing contingency plans

@ Considering relocation of

manufacturing activities

2. ASSESS1. IDENTIFY 3. RESPOND 4. MONITOR

Activities

@ Assess risks and

opportunities, by

considering size of

potential Impact,

and overall

Likelihood of event

to occur, based on

current controls in

place to manage

Activities

@ Identify material

risk/opportunity

events, causes and

consequences

@ Identify current

relevant

controlsinplace

Activities

@ Accept risks and

opportunity and

continue to

monitor;or

@ Manage further by

developing SMART

Actions to reduce

or eliminate impact

and/or likelihood

Activities

@ Monitor

outstanding

Actions and

effectiveness of

Controls, and

re‑assess as

actions are

implemented.

@ Escalation of the

most critical risks

Considerations and limitations when considering

climate-relatedevents

@ Longer time horizons and the continuous evolution of

climate science and associated models cause increased

uncertainty on both impact and likelihood

@ Limited or inconsistent data to accurately quantify at a Group

level. Detailed methodologies with data validation and

limited third‑party assurance would be required for any

financial assessment calculated for Group level events

@ Impacts are more qualitative in nature – VA assessment

utilised as a tool at Group level to consider Exposure,

Sensitivity and Adaptive Capacity ratings as part of overall

Consequence Rating

@ Impacts identified at Project level can still be quantified in

the short term in relation to time and cost, where relevant.

Business level impacts may be quantified where known

e.g.pursuit of a very new opportunity in relation to climate

change but substantiation and robust assessment rationale

isrequired

Considerations and limitations

when considering

climate-relatedevents

@ Events span longer time

horizons and may not occur

in the current business

planning period (more risks

captured asemerging)

@ Due to timeframes, current

controls tend to be

longer‑term strategic

planning and innovative

thinking, that will become

more specific and targeted

over time

@ Events need to be considered

in different possible futures

(Low Carbon or Limited

Action scenarios)

Considerations and limitations

when considering

climate-relatedevents

@ Responses to Manage Further

can include better

understanding of, adapting to,

or mitigating the impacts of

climate risk, and the

promotion or pursuit of

opportunities

@ Examples could be

establishing indicators

tobetter understand the

likelihood of possible climate

futures, and building the

capability to adapt to risk

andtake advantage

ofopportunities

Considerations and limitations

when considering

climate-relatedevents

@ Often, risks and opportunities

have unknown or

approximated impacts and

arecaptured and tracked

asEmerging

@ Key Risk (and Opportunity)

Indicators will be leveraged

totrack progression

Integration of climate-related considerations into theexistingBalfour Beatty risk process

Climate-related risks and opportunities span from short term to long termTraditional risk time horizon– 3 years

@ Sensitivity – considers the impact of a physical or transition risk

event in terms of disruption to operations or core functions and the

severity of this impact. For opportunities, it considers the potential

financial gain to the business.

@ Exposure – considers the portion of the business that is physically

located or directly impacted by a risk event or that could be related

to the opportunity.

@ Adaptive Capacity – considers the Group's ability to adjust to the

projected impact, considering potential cost and intervention or

investment. This also considers any cost or business model

changes needed to exploit or pursue an opportunity.

Exposure

Adaptive

Capacity

Sensitivity

SEE PAGE 89 FOR MORE

INFORMATION ON OUR RISK

MANAGEMENT PROCESS

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Highest rated climate-related risks and opportunities

The principal activity undertaken for Balfour Beatty’s climate risk

and opportunity assessments during2024was the re‑validation

and assessment of the highest rated risks and opportunities

defined inthe prioryears’workstreams.

The approach in 2024 amended the Vulnerability/ Advantage (VA)

assessment methodology, previously, anassessment was made

against Exposure, Adaptive Capability and Sensitivity and the overall

assessment was formed through a weighted formula. In 2024, this

was revised to still consider an assessment against the three

criteria, but with a single consequence rating determined

overall. This was then assessed alongside the likelihood to

provide an overall rating for each risk and opportunity. This

simplified the assessment process, allowing the subject matter

experts engaged in the workshop to collectively agree and

validate an overall rating. From the risks and opportunities

highlighted through this process, three events were taken forward

as the most significant to the Group in the shorter term,

adetailed analysis and draft quantification methodologies

areoutlined in this section on page 115.

Through the VA assessment workshop, highest rated risks and

opportunities were updated and streamlined to incorporate

impacts/outcomes to the business, potential adaptation and

mitigation/promotion strategies and relevance to operations

gathered from SBUs in the 2023 workstream.

Outcome of review: precipitation as a risk is now integrated

into the broader category of storms. The risk event previously

labelled as ‘Increase in efficiency reduces energy consumption

and material use’, has been updated with the title ‘Resource

efficiency through energy and material use’. The risk of droughts

has been replaced with extreme heat as thiswas shown to be

a more relevant risk to Balfour Beatty when discussed with

stakeholders. The opportunity event ‘Increase in demand for

green, energy‑efficient, and Net Zero buildings/ infrastructure

increases awarded contracts’ when assessed fell outside the

top 10, granting the risk event ‘Allowing establishment of/

increased number of regulations on material use and activities

in the long‑term’ to enter the top 10 list.

TOP 10 HIGHEST RATED CLIMATE-RELATED RISKS AND OPPORTUNITIES

Number Type Name

Opportunity Increase in demand for renewable and low‑carbon energy

generation, storage, transmission and distribution increases

awarded contracts

Transition Risk Carbon pricing increases prices of energy and raw materials

Transition Risk Transitioning of owned plant, fleet, and equipment to

lower‑carbon options

Opportunity Increase in demand for climate disaster adaptation/climate

resilient infrastructure increases awarded contracts

Opportunity Resource efficiencies through energy and material use

Physical Risk Extreme heat leads to damages to physical assets and

disruption at own sites

Physical Risk Severe storms lead to damages to physical assets and

disruption at own sites

Physical Risk

High‑speed wind leads to damage to physical assets and

disruption at own sites

Physical Risk Insurance premiums increase/become unavailable due to higher

cost of adaptation measures or more stringent insurance policies

Transition Risk Establishment of/increased number of regulations on material

use and activities in the long‑term

* Selected for ‘deep dive’

Increase in demand for renewable and low-carbon energy generation, storage, transmission and distribution increases awarded contracts

There is a record capital investment in energy infrastructure driven by a growing demand for clean and secure energy and increase in renewable energy (see pages 14 to 17), all of which contribute toBalfourBeatty being well positioned to pursue

opportunities in the markets of nuclear, grid upgrades, net zero power generation, and carbon capture schemes (CCS) projects in the UK.

Potential impacts and

outcomes to business

@ Increased revenue from a focused pursuit

of opportunities related to nuclear, grid

upgrades, net zero power generation and

CCS projects.

@ Opportunity to expand business

capability and skillsets.

@ Collaboration with design partners to

develop low‑carbon solutions.

@ Support transition to lower‑carbon economy.

@ Collaboration with new and

sustainablecustomers.

@ Positive impact on ESG scores.

Potential adaptation and

promotion mitigation

@ Enhanced collaboration and dialogue with

value chain members.

@ Promotion of research and development

in green infrastructure technologies.

@ Creation of partnerships to promote new

green infrastructure.

@ Increased focus on climate‑related

opportunities through integration of

climate‑related opportunities into

business growth strategies and work

winning activities.

Approach to quantification

Balfour Beatty has already conducted a financial assessment

ofprioritised opportunities from 2025 out to 2030 and for the

foreseeable project opportunities beyond 2030. To build upon this

in the context of climate‑related opportunities, data sources were

utilised for the UK energy market transition strategy highlighting

the capital investment trends and energy‑related opportunities

until 2050 as well as the serviceable addressable market (portion

of market that can be captured by Balfour Beatty). For more

information on how the Group are capitalising on high‑growth

markets where theGroup has the capabilities and aproven track

record to secure newopportunities see pages 14 to 21. 2024

momentum in the UK energy transition and security market

demonstrates the scale of the opportunity and relevance to

Balfour Beatty operations such as the awarded contract of the

first phase of the Skye 132kV reinforcement project for Scottish

and Southern Electricity Networks (SSEN) Transmission. Work

was undertaken in 2024 to further understand this opportunity by:

@ Undertaking a ‘SWOT’ analysis on this opportunity based on

stakeholder interviews. Finding that, the overall strength

was in the Support Services businesses in the UK having

well placed strategic positioning, enabling the business to

capitalise on opportunities arising in this market. However,

this rapid growth has been identified as having limitation

andthe key ‘weakness’ in this SWOT analysis, requiring

theGroup to add resources and expertise to maintain

high‑quality services. The principal opportunity is that in

2024, the UK Government has outlined a clear political

commitment to invest in clean energy solutions including

onshore and offshore wind, nuclear power, carbon capture

and storage, and other energy transition and security

schemes, government efforts to increase clean energy

production will create numerous opportunities for Balfour

Beatty in power transmission, nuclear, and grid decarbonisation

sectors. Although the key ‘threats’ in this analysis were

long‑term project horizon uncertainty and price controls

oncore clientele.

@ Producing analysis across both climate scenarios of

‘low‑carbon’ and ‘limited action’ as nuclear, grid upgrades,

net zero power generation, and CCS projects are expected

to increase in all future energy scenarios that achieve net

zero in the UK.

Financial impact

category

Anticipated time

horizons

Increased

revenue

Short term

Medium term

Balfour Beatty plc | Annual Report and Accounts 2024

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Highest rated climate-related risks and opportunities continued

CLIMATE CHANGE AND TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

Carbon pricing increases prices of energy and raw materials

Carbon pricing will affect both project delivery and the supply chain by increasing costs of essential goods and services fundamental to operational delivery. Balfour Beatty’s exposure

from carbon pricing focuses primarily on impact on high‑carbon material prices. Cement and steel were identified to be the two most exposed materials to carbon pricing.

Potential impacts and

outcomes to business

@ Increased cost to the business,

supplychain and to customers.

@ Potential reduction in future projects

horizon if major infrastructure projects

become too costly to fund.

Potential adaptation and

promotion mitigation

@ Monitoring of current carbon pricing to

determine impact on the business and

supply chain across geographies.

@ Ensure where possible protection

fromincreased cost through contractual

mechanisms.

@ Implementing efficient use of the

products and services we procure.

@ Avoiding, minimising or replacing

carbon‑intensive products and services

for lower‑carbon alternatives.

Approach to quantification

@ Balfour Beatty’s exposure from carbon pricing focuses

primarily on impact on high‑carbon material prices. Cement

and steel were identified to be the two most exposed materials

to carbon pricing. Beyond increasing carbon prices, a major

development that is expected to impact cement and steel

prices is expected phase out of free allowances. Currently

the level of free allowances for cement and steel means

producers only pay carbon price on 10 – 20% of the emissions.

Within EU ETS, these free allowances are expected to be

phased out by 2034 leading to a significant increase in the

prices of cement and steel.

@ Analysis highlights that even with a higher level of carbon

pricing in the short term, high‑carbon cement and steel are

still expected to be cheaper than lower emission alternatives.

In the medium‑long term, with reducing free allowances and

increasing carbon prices, low‑carbon alternatives become

cost competitive with high‑carbon steel and cement. Failure

to switch to low‑carbon alternatives within a medium‑long

term timeline, therefore will pose a risk from carbon pricing

to Balfour Beatty.

@ Many of the Group’s contracts currently have the provision

to track material prices through various indices and pass

higher costs to customers. Any gradual changes in material

prices due to increase in carbon pricing is therefore mitigated

if captured by the indices. In addition to this, compensation

events also exist to safeguard against changes in material

prices driven by changes in legislation. This allows Balfour

Beatty to manage the costs of carbon pricing. However,

riskcan manifest if material price indices incorporated

withinproject contracts do not incorporate changes from

carbon pricing.

@ Analysis focuses solely on the impact of changing carbon

price regulation on high‑carbon cement and steel prices

while assuming all other costs remain the same. For comparison

with low‑carbon alternatives, levelised cost of lowest cost

production route for cement (Oxyfuel Combustion) and steel

(Electric Arc Furnace) was chosen. This analysis assumes

that producers do not charge a price premium for low‑carbon

alternatives to recover R&D and first‑of‑a‑kind technology

implementation costs.

@ This analysis was taken into the proposed calculation

methodology under development to assess impact of carbon

pricing (seeleft).

Current price of material

Future price of material

Carbon pricing impact

Avg. emissions intensity

ofmaterial

Avg emissions intensity

ofmaterial

Future price of material

Current carbon price

Future carbon price

Current price of material

Levelised cost of production

of material

Levelised cost of production

of material

Volume of procurement

Other costs

Future Carbon price

Current free allowances

Future free allowances

Additional analysis was undertaken to compare the future price of high‑carbon materials with low‑carbon alternatives to identify timeline in which the latter reach parity with high‑carbon materials.

This acts as a mitigation measure to reduce exposure to carbon pricing in the long term.

Calculated outputs

Internal inputs

Sensitivity inputs

External inputs

This methodology is also used to estimate the cost of low‑carbon alternatives which have different

levelised cost of production and emissions intensity.

1 Other costs are calculated retrospectively based the

remaining share of cost after subtracting carbon pricing and

levelised cost of production from the current price of

material. It is assumed to be constant across time frames

and production routes (i.e., other costs of EAF steel are

assumed to be the same as for blast furnace steel)

Financial impact

category

Anticipated time

horizons

Proposed methodology

under development

Increased

OPEX

Short term

Medium term

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Transitioning of owned plant, fleet, and equipment to low-carbon options

Across the Group, there is growing demand both internally and from our customers for low‑carbon options for equipment. Asset and Technology Solutions (ATS) is a specialist in‑house team which provides comprehensive plant, vehicle

and equipment services to Balfour Beatty across the UK. Strategic asset services include in‑house solutions such as HGVs, tower and crawler cranes, piling equipment, fire and security services, suction excavation, modular buildings

and driver risk. Across all these asset types the challenges of availability and commercial viability of low‑carbon options for equipment and machinery, and the extent of EV charging infrastructure, have the potential to impact the Group’s

ability to fulfil customer climate‑related ambitions.

Potential impacts and

outcomes to business

@ Higher capital expenditures to purchase

lower‑carbon alternatives.

@ Potential under‑utilisation of the asset

due to low uptake (due to high cost, lack

of infrastructure etc.) leading to lower

return on investment.

@ Failure to keep pace with

customerdemand.

@ Increased research, innovation and

implementation costs may present risks

associated with bringing new technologies

to market, resulting in new skills development

and training required to deploy

low‑emission technology alternatives.

@ Lifecycle of existing assets may be

reduced resulting in early impairment

andretirement, or write‑off of plant,

equipment and fleet assets. Investment

in newer replacement assets earlier

thanplanned.

@ Low‑carbon technology for high‑impact

equipment does not innovate as fast as

required in order to meet milestones of

planned carbon reduction targets.

@ A disparity grows between geographies

and regions with more robust EV charging

or hydrogen supply infrastructure in

comparison to lagging jurisdictions

wherethis technology is not available

toimplement at all or at scale.

Potential adaptation and

promotion mitigation

@ Assess the viability of construction

projects that utilise low‑carbon

emissiontechnology.

@ Enable capability by providing training for

low‑carbon design optioneering and use

of new technologies.

@ Strong collaboration with supply chain to

ensure low‑carbon asset requirements

are met, and implemented through the

Asset and Technology Solutions team.

@ Continue to implement ‘Eco‑operator’

training to ensure lean driver behaviours

and more effective asset management to

deliver fuel efficiencies for plant

andequipment.

Approach to quantification

Balfour Beatty’s near‑term SBTi commitments require Scope 1

and 2 emissions to be reduced by 42% by 2030. For UK and

certain US operations, Balfour Beatty owns a significant asset

base of diesel‑based fleet and construction equipment that

contribute to these emissions. The need to transition assets

tolower‑carbon alternatives has been identified as a pathway

inwhich to meet the Group’s Scope 1 and 2 targets.

Transitioning to low‑carbon assets requires higher capital

expenditure than diesel alternatives. To assess this risk,

apreliminary analysis was performed to identify the impact of

additional investment necessary to transition three key Balfour

Beatty owned assets: HGVs, LCVs and piling rigs.

To further explore these impacts:

@ Cost impact for customers associated with transitioning

electric/ H2 assets was evaluated alongside the impact of

under‑utilisation on asset return on investment (ROI).

@ A preliminary quantification exercise was performed on the

total cost of hiring incurred by our customers for electric

piling rigs vs diesel piling rigs based on current and future

trends of piling rig CAPEX, fuel costs and supporting

infrastructure necessary to mobilise these assets. Piling

rigswere chosen as this activity undertaken in the Group’s

operations is both carbon‑intensive and key specialist

business workstream for the Group. A proposed calculation

methodology for this quantification exercise is presented

below. This considers the current age and replacement

frequency of piling rigs owned by the Group as well as

CAPEX inputs based on analysis on expected CAPEX

requirements of low‑carbon piling rigs drawing from public

literature on CAPEX trends (ICCT

) under both ‘low‑carbon’

and ‘limited action’ climate scenarios.

Proposed methodology underdevelopment

Evaluate cost impact for customers associated with transitioning to electric/H2 assets and impact of under-utilisation on asset ROI

using piling rigs as a case study

While purchasing electric/H2 assets financial riskarises due to under‑utilisation due to highercosts and failure to meet performancestandards

Compared with daily charge rate

fordiesel assets to understand risk

ofunder‑utilisation

External inputs

Sensitivity inputs

Internal inputs

Calculated outputs

Assess how ROI changes based on

utilisation rate

CAPEX (Electric)

Weighted

Average Cost of

Capital (WACC)

Fixed OPEX

Asset life

Daily rate to be charged

for electric piling for

positive net present

value(NPV)

Utilisation rate

Financial impact

category

Anticipated time

horizons

Increased

CAPEX

Short term

Medium term

Long term

1 Assessment of Light‑duty electric vehicle

costs and consumer benefits in the

United States in the 2022 – 2035

Timeframe by International Council of

Clean Transportation (ICCT).

116

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GOVERNANCE

Promoting

the long-term,

sustainable

success of

theCompany

Board leadership and

Company purpose

@ Group Chair’s introduction

@ Leading with experience

@ Board activities

@ Promoting a positive culture

@ Stakeholder engagement

@ Report of the Workforce EngagementLead

p117

Division of

responsibilities

@ A robust governance framework

p132

Composition, succession

and evaluation

@ Board composition

@ Board succession

@ Board evaluation

p136

Nomination

Committee

@ Report of the Nomination CommitteeChair

@ Board composition and succession

@ Diversity and inclusion

p140

Safety and Sustainability

Committee

@ Report of the Safety and Sustainability

Committee Chair

@ Safety performance and Zero Harm

@ Environment and sustainability

p144

Audit and Risk Committee

@ Report of the Audit and RiskCommittee Chair

@ Financial reporting

@ External auditor

@ Risk management and internalcontrol

p146

Remuneration Committee

@ Report of the Remuneration Committee Chair

@ Remuneration at a glance

@ Annual report on remuneration

p153

Directors’ report

p175

IN THIS SECTION

GOVERNANCE

117Balfour Beatty plc | Annual Report and Accounts 2024

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Group Chair’s

introduction

BOARD LEADERSHIP AND COMPANY PURPOSE

Dear Shareholder

On behalf of the Board, I am

delighted to present the 2024

Corporate Governance report. The

report provides an overview of our

governance framework, a summary

of the Board’s activities throughout

the year, and our priorities and focus

for 2025.

The Board oversees the Group’s purpose, values

and strategy, ensuring that these are aligned to

the culture of the business. Throughout 2024,

the Board continued to focus on the delivery of

our Build to Last strategy, which is underpinned

by strong governance and internal controls.

Board activities

Substantial items that featured on the 2024

Board agenda include:

@ Board succession planning and recruitment;

@ oversight (through the Audit and Risk

Committee) of a programme to implement

anenhanced Group‑wide Internal Control

Framework (ICF) in anticipation of compliance

with Provision 29 of the 2024 UK Corporate

Governance Code;

@ the results of the external Board

performancereview;

@ a review of employee engagement survey data

and other workforce engagement data and insights;

@ updates on key projects; and

@ oversight of the compliance monitor’s reports

in respect of the US Military Housing business.

Changes to the Board in 2024

Throughout 2024, the Board underwent

anumber of changes:

@ With the support of executive search firm

Odgers Berndtson, Robert MacLeod and

Gabby Costigan MBE were appointed to the

Board as Independent Non‑executive Directors

on 8 March 2024.

@ At the conclusion of the 2024 AGM,

DrStephen Billingham CBE and Stuart

Doughty CMG both retired from the Board.

@ Anne Drinkwater was appointed as Senior

Independent Non‑executive Director (replacing

Dr Stephen Billingham CBE).

@ Committee membership was updated to

ensure a balanced mix of skills, experience

andknowledge across each BoardCommittee.

@ With the support of executive search firm

Heidrick & Struggles, Rudy Wynter was

appointed to the Board as Independent

Non‑executive Director on 1 December 2024.

Diversity and inclusion:

theBoardand beyond

As a result of the Board appointments highlighted

above, the Board have continued to comply with

the targets set by the FTSE Women Leaders

Review, and for the first time, complied with the

target set by the Parker Review, to have at least

one Director from an ethnic minority background.

We are proud to be a diverse Board, and hope

toleverage our diversity to successfully lead

theGroup and support the delivery of workforce

diversity and inclusion initiatives.

Change to the Board in 2025

As announced in March 2025, Philip Hoare will

join the Company as Group Chief Executive Officer

in September 2025. Leo Quinn will remain with

the Group for several months beyond this to

ensure a seamless transition. Philip’s appointment

is in accordance with the Board’s succession

plan which included an extensive search process

led by Odgers Berndtson. Details about this

process will be set out in the report of the

Nomination Committee in 2025.

Board performance review

In 2024, the Board underwent an externally

facilitated Board performance review conducted

by Egon Zehnder. The review concluded thatthe

Board and its Committees continued to operate

effectively throughout 2024. Please refer to

pages 137 to 139 for more details onthe scope

of the review as wellas a summary ofthe key

actions to be undertaken in 2025.

Dividend

At the 2025 AGM, due to be held on 8 May 2025,

the Board proposes a resolution, subject to

shareholder approval, to pay a final dividend

of8.7 pence per share.

Our approach this year continues to strike a

balance between investing in our business and

providing returns for shareholders, with the aim

of delivering against our Build to Last strategy

and promoting the long‑term sustainable success

of the Group.

Charles Allen

Lord Allen of Kensington, CBE

Non-executive Group Chair

11 March 2025

118

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Governance at a glance

KEY ACTIONS FROM 2024

@ Carried out searches for three new

Independent Non‑executive Directors

@ Oversaw the induction process of

newlyappointed Independent

Non‑executive Directors

@ Reviewed progress against the military

housing business’ response to the

independent compliance monitor’s initial

and first follow‑up report and resulting

action plans

@ Undertook an externally facilitated

Boardperformance review in Q4 2024

@ Reviewed preparations for compliance

with the 2024 UK Corporate Governance

Code, and oversaw the development of

an enhanced Internal Control

Framework(ICF)

@ Conducted succession planning for

theBoard, Executive Committee,

andsenior management

PRIORITIES FOR 2025

@ Complete the actions arising from

the2024 Board performance review

@ Review Board balance and composition

and conduct Board and Executive

Committee succession planning

@ Maintain oversight of the progress

madeagainst the Compliance Monitor’s

recommendations and action plans

inrespect of the US military

housingbusiness

@ Monitor the progress and implementation

of the ICF across the Group with respect

to material controls

@ Review and implement the 2024 UK

Corporate Governance Code reforms

@ Deliver a comprehensive induction and

handover to the incoming Group Chief

Executive, Philip Hoare, who joins the

Board in September 2025

BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

INDICATION OF

RELATIVE TIME SPENT

IN BOARD AND

COMMITTEE

MEETINGS

Board 58%

Remuneration Committee 10%

Audit and Risk Committee 19%

Safety and Sustainability Committee 10%

Nomination Committee 3%

How the Board spent its time during 2024

INDICATION OF

TIME SPENT IN

BOARDMEETINGS

Strategy, performance and operations 69%

Reviewing matters discussed at

Committee meetings 12%

Governance and other matters 19%

BOARD AND COMMITTEE SCHEDULED MEETINGS DURING THE YEAR

B B B B B B B B

A A A A

N N

R R R R

S S

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

119Balfour Beatty plc | Annual Report and Accounts 2024

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Board composition and diversity

UKCorporate

GovernanceCode

During the year, the Company was subject to the Financial

Reporting Council’s 2018 UK Corporate Governance Code,

which can be found at: www.frc.org.uk.

This report, together with the reports from the Audit

andRisk, Nomination, Remuneration, and Safety and

Sustainability Committees, provide details of how the

Company has applied the spirit of the principles of the

Code (pages 117 to 178).

In 2024, the Company complied with all the provisions

ofthe UK Corporate Governance Code.

1. Board Leadership and Company Purpose

Page(s)

A. Effective Board 137‑139

B. Purpose, values and culture 117‑178

C. Governance framework 132‑135

D. Stakeholder engagement 127‑131

E. Workforce policies and practices 77, 142

2. Division of Responsibilities

F. Role of the Chair 133

G. Independence 136

H. External commitments and conflicts of interest 136

I. Board resources 132‑139

3. Composition, Succession and Evaluation

J. Appointment to the Board 136‑137

K. Board skills, experience and knowledge 120‑121, 136

L. Annual Board evaluation 137‑139

4. Audit, Risk and Internal Control

M. External Auditor and Internal Auditor 150‑152

N. Fair, balanced and understandable review 149‑150, 178

O. Internal financial controls and risk management 146‑155

5. Remuneration

P. Linking remuneration to purpose and strategy 153‑160

Q. Remuneration Policy review 155, 158‑160

R. Performance outcomes in 2024/25 161‑174

DIVERSITY OF

NATIONALITIES

NON-EXECUTIVE

DIRECTORS’

TENURE

AGE DIVERSITY

31 DEC 24

UK 7

US 2

Australia 1

31 DEC 24

0-3y 5

4-6y 1

7-9y 2

31 DEC 24

45-54 1

55-64 4

65+ 5

31 DEC 24

Female 40%

Male

60%

BOARD GENDER

DIVERSITY

BOARD

INDEPENDENCE

31 DEC 24

Executive Directors 2

Independent Non-

executive Directors 7

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

120120

Leading with

experience

The Directors hold the necessary skills and

experience relevant to the sectors in which

theGroup operates, enabling the Board to

effectively set the strategic direction and

purpose of the Group and promote its

long-term sustainable success.

Key

Committee Chair

Audit and Risk Committee

Nomination Committee

Remuneration Committee

Safety and Sustainability Committee

* Tenure as at 31 December 2024

PHILIP HARRISON

Chief Financial Officer

Appointed 1 June 2015

Nationality British

Tenure 9 years, 7 months

Board Attendance 100%

Experience

Philip has considerable financial expertise

and extensive experience of working in

large multinational manufacturing and

services businesses. Philip was appointed

as Chief Financial Officer in June 2015,

having previously served as Group Finance

Director at Hogg Robinson Group plc, and

as Group Finance Director at VT Group

plc. Prior to that, he was VP Finance at

Hewlett‑Packard (Europe, Middle East

and Africa regions) and was a member

ofits EMEA board.

Philip’s earlier career included senior

international finance roles at Compaq,

Rank Xerox and Texas Instruments. Philip

is a fellow of the Chartered Institute of

Management Accountants.

Key external appointments

Philip is a Non‑executive Director and

Chairof the Audit Committee of Dowlais

Group plc.

CHARLES ALLEN, LORD ALLEN

OF KENSINGTON, CBE

Non‑executive Group Chair

Appointed 13 May 2021

Nationality British

Tenure 3 years, 7 months

Board and Committee

Attendance 100%

Experience

Lord Allen has extensive corporate

experience across a range of sectors,

most notably in support services and

media. His previous positions include

Chair of ISS A/S, Executive Chair of EMI

Music, Chief Executive of ITV plc, Chief

Executive of Compass Group, Chief

Executive of Granada Group and Chief

Adviser to the British Home Office.

Charles was awarded a CBE in 2002, was

knighted in 2012 and was ennobled in 2013.

Key external appointments

Lord Allen sits in the House of Lords

andcurrently holds positions as Chair

ofTHG PLC, Chair of Global Media and

Entertainment Ltd, and Chair of the

Invictus Games Foundation.

BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

LEO QUINN

Group Chief Executive

Appointed 1 January 2015

Nationality British

Tenure 10 years

Board and Committee

Attendance 100%

Experience

Leo has strong leadership expertise and

significant experience of successfully

delivering transformation strategies for large

companies. Leo is a civil engineer with an

MSc in Management Science. Leo has held

a number of leadership roles, including

Group Chief Executive of QinetiQ Group plc,

Chief Executive Officer of De La Rue plc,

and Chief Operating Officer of Invensys

plc’s production management business.

Leoalso held a number of senior

management roles with Honeywell Inc.

Leo was also previously a Non‑executive

Director of Betfair Group plc and Tomkins plc.

Key external appointments

Leo is the founder of The 5% Club,

adynamic movement of employers

committed to ‘earn and learn’ as part of

building and developing the workforce

needed for a socially mobile, prosperous

and cohesive nation.

Succession

As announced in March 2025, after

10years in the role, Leo Quinn will step

down from the Board later this year, to

besucceeded by Philip Hoare.

ANNE DRINKWATER

Senior Independent

Non‑executiveDirector

Appointed 1 December 2018

Nationality British

Tenure 6 years, 1 month

Board and Committee

Attendance

Full attendance, except for the 11 March

Board meeting due to a conflict with a

prior commitment.

Experience

Anne has significant experience in heavy

industry including multiple large capital

expenditure projects with infrastructure

considerations and knowledge of doing

business in the UK and US. She was at BP

plc for over 30 years, holding a number of

senior strategic and operational roles across

multiple jurisdictions including the US,

Norway, Indonesia, the Middle East and

Africa culminating in the role of President

and CEO of the Canadian business. Anne

was previously a Non‑executive Director

atAker Solutions A.S.A. and at UK listed

Tullow Oil plc, where she served on a

number of board committees. She was

previously Oil and Gas Adviser to the

Falkland Islands Government.

Key external appointments

Anne is Non‑executive Deputy Chair

ofEquinor A.S.A. where she is also Chair

of the Audit Committee and a member

ofthe Safety, Sustainability and

EthicsCommittee.

R S S N

121Balfour Beatty plc | Annual Report and Accounts 2024

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MICHAEL LUCKI

Independent Non‑executive Director

Appointed 1 July 2017

Nationality American

Tenure 7 years, 6 months

Board and Committee

Attendance 100%

Experience

Michael has over 40 years of business

andleadership experience in the US and

internationally in the engineering and

construction sector. He has held a number

of leadership and finance roles, including

that of Chief Financial Officer, Executive

Vice President and board member at CH2M

HILL. He was formerly an Audit Partner at

Ernst & Young LLP and its global industry

leader for infrastructure, construction and

engineering practices. He has recently

acted as a strategic adviser to companies

and private equity firms in the engineering

and construction industry.

Key external appointments

Michael is Independent Board member,

Chair of the Audit Committee of Zhibao

Technology Inc. Michael is also a board

member and Chair of the Compensation

Committee of Psomas Corporation, and a

board member and Chair of the Audit and

Risk Committee of Bernards Construction

and HMC Architects, Inc. Michael is a

member of the Board of Governors of The

California State University Foundation, and

aboard member of Walker Consultants.

A R

BARBARA MOORHOUSE

Independent Non‑executive Director

Appointed 1 June 2017

Nationality British

Tenure 7 years, 7 months

Board and Committee

Attendance 100%

Experience

Barbara has extensive leadership

experience across the private, public

andregulated sectors. She was Group

Finance Director at Morgan Sindall plc,

Regulatory Director at South West Water

and Chief Finance Officer for two

international listed IT companies – Kewill

Systems plc and Scala Business Solutions

NV. Latterly, she was Director General at

the Ministry of Justice and the Department

for Transport. Her most recent executive

appointment was as Chief Operating

Officer at Westminster City Council.

Sheis a fellow of the Chartered Institute

of Management Accountants and an

associate member of the Association

ofCorporate Treasurers.

Key external appointments

Barbara is Independent Chair of the

Agility Trains Group. Barbara is also

Senior Independent Non‑executive

Director and Chair of the Remuneration

Committee of Aptitude Software Group plc.

A N R

LOUISE HARDY

Independent Non‑executive Director

and Workforce Engagement Lead

Appointed 1 April 2022

Nationality British

Tenure 2 years, 9 months

Board and Committee

Attendance 100%

Experience

Louise has over 30 years of business and

leadership experience in the construction

and built engineering industry. A civil

engineer, she has held a range of senior

roles at London Underground, Bechtel,

AECOM and Laing O’Rourke, and as

infrastructure director responsible for the

portfolio of projects for the London 2012

Olympic Games.

Louise has also held a number of

non‑executive roles in the public sector

and FTSE 250. Louise is a Fellow of the

Institution of Civil Engineers, the Chartered

Management Institute and the Women’s

Engineering Society. Louise won the

European Women in Construction and

Engineering, Lifetime Achievement in

Construction Award, 2019.

Key external appointments

Louise is currently a Non‑executive

Director of Crest Nicholson Holdings plc

and Travis Perkins plc. Louise is also

Independent Chair of Oriel. She is also a

STEM Ambassador and Diversity Champion.

A S

RUDOLPH (RUDY) WYNTER

Independent Non‑executive Director

Appointed 1 December 2024

Nationality American

Tenure 1 month

Board and Committee

Attendance 100%

Experience

Rudy has a Bachelor’s in Mechanical

Engineering from Pratt Institute and a

Master of Business Administration from

Fordham University in the US. He has

over 35 years’ experience in the gas and

electricity industry where he has served

in many leadership and senior operational

roles. His most recent role was as President

National Grid New York, leading the

company’s regulated energy delivery

portfolio. Prior to this, Rudy was Chief

Operating Officer of National Grid’s

Wholesale Networks & Capital

Deliverybusiness.

Key external appointments

Rudy is currently a Non‑executive

Director and Chair of the Nominating

andCorporate Governance Committee at

EnerSys Inc (NYSE:ENS) and an independent

board member of El Paso Electric, the

energy provider engaged in generation,

transmission and distribution services.

GABRIELLE (GABBY)

COSTIGANMBE

Independent Non‑executiveDirector

Appointed 8 March 2024

Nationality Australian

Tenure 10 months

Board and Committee

Attendance

Full attendance, except for 12 November

Nomination Committee, due to a conflict

with a prior commitment.

Experience

Gabby is an Aeronautical Engineer with

adiverse international career including

21years in the Australian Army. She was

previously Chief Executive Officer of the

logistics business, Linfox International

Group. In 2017, she joined BAE Systems

plc as Chief Executive Officer of BAE

Systems Australia before being promoted

to her current role of Group Managing

Director, Business Development and a

member of the Executive Committee.

Key external appointments

Gabby is currently the Group Managing

Director of Business Development for

BAE Systems.

S N

ROBERT MACLEOD

Independent Non‑executive Director

Appointed 8 March 2024

Nationality British

Tenure 10 months

Board and Committee

Attendance 100%

Experience

Robert is a highly experienced Chief

Executive Officer and Chief Financial

Officer and brings strong strategic,

financial, and commercial experience

tothe Board.

A Chartered Accountant by background,

he was formerly Chief Executive Officer

of Johnson Matthey plc from 2014 to

2022 and Chief Financial Officer from

2009 to 2014. Prior to this, he worked at

WS Atkins PLC, serving as Chief Financial

Officer for six years. Robert was a

Non‑executive Director of Aggreko plc

from 2007 to 2016.

Key external appointments

Robert is currently a Non‑executive

Director and Chair of the Remuneration

Committee of RELX plc and a Non‑executive

Director of Vesuvius plc.

A R N S

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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

Q&A with our

newDirectors

As Chair of the Safety and

Sustainability Committee,

how would you describe

Balfour Beatty’s culture of

sustainability?

I think to test whether sustainability

has truly penetrated the culture

of an organisation you need to

assess whether employees see

sustainability as a part of their

everyday role and take real

responsibility for it.

At Balfour Beatty, this can be

clearly seen and evidenced

through the My Contribution

(MyC) platform. The MyC platform

actively encourages all employees

to propose and implement their

own ideas for business change

with the hope of realising

benefits for the business

(e.g.to save money, save time

and eliminate waste). The

sustainability‑themed ideas

that have been proposed and

delivered through the MyC

platform in 2024 illustrate that

employees not only care

about sustainability, butthey

are also willing toown it and

deliver itthemselves.

As a woman who has worked

in male-dominated industries

throughout your career, what

has your experience been?

And how will that experience

shape your role and the voice

of women on the Board?

In my experience, careers for

women in male‑dominated

industries like construction

orengineering (which is my

background) require a lot of hard

work, perseverance, courage,

resilience and self‑belief. But it

is my belief that women belong

in those industries and have a

real part to play in their success.

Throughout my career I have

faced a number of challenges,

including toxic workplace culture,

gender bias and inequality in

recognition and career advancement

opportunities compared to my

male counterparts. These have

been tough moments to overcome,

but these experiences have

provided me with a toolkit,

thatIbelieve, will help

womento succeed in any

male‑dominated industry.

Some of the most important

tools are to:

@ Be visible. Make your

contributions known and share

your achievements.

@ Know your worth. and use that

to negotiate confidently.

@ Don’t be intimidated.

Alwayscall out behaviours that

are offensive and breach your

company’s ethical and

culturalvalues.

@ Develop a support network,

particularly with otherwomen.

As a woman on the Board, and

particularly as a member of the

Nomination Committee, it is

vital that we oversee a gender‑

diverse pipeline ofsuccession

tosenior leadership roles and

support the career development

of women during their Balfour

Beatty career. It is our role as

aBoard to establish a culture

where women are encouraged

to flourish within the

construction industry.

Gabby

Costigan

Independent

Non-executive

Director

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Robert MacLeod

Independent

Non-executiveDirector

How has your induction at Balfour

Beatty prepared you for your role

asan Independent Non-executive

Director and Chair of the Audit and

Risk Committee?

My induction programme has been really

interesting and varied. I have undertaken

a number of site visits, including visits to

the Automated People Mover project at

Los Angeles International Airport and

the Cyberport Expansion Project in Hong

Kong. These site visits have been highly

informative and really bring to life the

scale and complexity of the infrastructure

projects the Group delivers for its clients.

To help build my understanding of the

Group, and in particular the areas of

keyrelevance to my role as Chair of the

Audit and Risk Committee, my induction

included a series of meetings with key

stakeholders, including members of the

Board of Directors, the Company Secretary,

our Statutory Auditor (KPMG), and key

individuals within the Finance, Internal

Audit, and Risk functions.

As Chair of the Audit and Risk

Committee, what are your

prioritiesfor 2025?

The Committee’s core areas of focus

for2025 are to:

@ conduct the tender process for

selection of an external audit firm

by31 December 2026;

@ maintain the Committee’s oversight

ofthe compliance monitor’s

recommendations in respect of the

USMilitary Housing business following

the 2024 first follow‑up report, ensuring

it regularly features on the agenda and

receives adequate time and focus; and

@ oversee the development and

implementation of amatured

Group‑wide Internal Control

Framework (ICF) in preparation

forcompliance with Provision 29 of

the 2024 UK Corporate Governance

Code in the 2026 financial year.

What has your induction process

covered so far?

Since joining the Board in December,

Ihave had the opportunity, through a

comprehensive and tailored induction

programme, to meet with the Group

Chair, the Board of Directors, members

of the Executive Committee, and senior

management across different Business

Units and layers of the organisation.

As an American I have experience in

senior leadership roles and non‑executive

Director roles for US companies. As this

is my first UK‑based appointment, my

induction has included meetings and

advice and guidance from the Group

Company Secretary on UK corporate

governance matters, such as compliance

with the UK Corporate Governance

Code, the UK’s Listing Regime, and the

Disclosure and Transparency Rules.

My induction programme has thus far

provided me with an understanding of

Balfour Beatty’s operations, notably its

strengths, principal and emerging risks,

and key opportunities and challenges.

This has enabled me to engage

quicklywith the business and hit

theground running in my role.

What attracted you to the

BalfourBeattyplcBoard?

The global energy market is changing.

The demand for electricity is only

expected to rise, and the drive to

achieve net zero will also require heavier

reliance on alternative and renewable

energy sources. Thisrequires that

critical energy infrastructure will be

ableto accommodate energy from

anarray of renewablesources.

For over a century, Balfour Beatty has

been at the forefront of delivering

powerinfrastructure across the UK and

internationally. In the UK we are one

ofthe largest providers of technical

engineering solutions for the

electricitygrid.

In joining the Board, Ihope to leverage

my knowledge and expertise from

mythirty six year career at National Grid,

and its predecessor companies in the

US, to support the Group to realise its

ambitions, and deliver vital infrastructure

that supports secure, affordable,

decarbonised energy across our

keymarkets.

Rudy Wynter

Independent

Non-executiveDirector

Q Q QQ

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124124

BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

Board activities in2024

@ Reviewed routine reports from the Executive

Directors on performance

@ Reviewed Group strategy and approved the

Group’s budget

@ Approved the Company’s Annual Report and

Accounts, financial results, trading updates

andancillary documents relating to the

AnnualGeneral Meeting

@ Reviewed the capital allocation framework and

its application

@ Approved matters where required in accordance

with the matters reserved for the Board

@ Received ‘deep dive’ presentations and

reportson significant matters, key contracts

andprojects

@ Received updates on control improvements at

the US military housing business

@ Reviewed reports from the Group’s brokers

LEAN

EXPERT

@ Shareholders

@ Customers

@ Suppliers

@ Partners

@ Communities

@ Employees

@ Shareholders

@ Employees

@ Partners

@ Communities

@ Shareholders

@ Employees

@ Suppliers

LEAN

SAFE

SUSTAINABLE

LEAN

TRUSTED

@ Received verbal updates from the Safety and

Sustainability Committee following each

Committee meeting

@ Received routine Group health, safety, wellbeing

and sustainability reports where aSafety and

Sustainability Committee meetingwas not

scheduled in the same cycle ofmeetings

@ Reviewed changes to the Group’s strategies,

policies and procedures in relation to health,

safety, wellbeing and sustainability

@ Reviewed the environmental impact and

sustainability of the Group’s operations,

andthestrategies and policies of the Group

@ Received verbal updates from the Audit and Risk

Committee following each Committee meeting

@ Received reports on financial and accounting

issues and contract and commercial issues

@ Approved the going concern statement and

assessment of viability, the Directors’ valuation

of the Investments portfolio and principal and

emerging risks

@ Approved recommendations from the Audit

andRisk Committee relating to the fee and

appointment of the external auditor

@ Received reports from the external auditor

inrespect of full and half year results

@ Reviewed and monitored the Group’s risk

profile, including a robust review of principal

andemerging risks

@ Reviewed the effectiveness of the systems

ofrisk management and internal control

PERFORMANCE

HEALTH, SAFETY, WELLBEING

ANDSUSTAINABILITY

AUDIT AND RISK

1 42 73 8 9 13

2 113 8

2024 has been a

crowning year for

Balfour Beatty following

a decade of remarkable

transformation. The

Company has solidified

itsleadership in the

industry, strengthened

its brand, and delivered

strong financial results.”

Charles Allen

Lord Allen of Kensington CBE

Non-executive Group Chair

Link to

values

Link to

principal risks

Stakeholders

considered

p24

p94

p26

125Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

@ Employees

@ Communities

@ Partners

@ Investors

@ Employees

@ Communities

@ Shareholders

@ Customers

@ Employees

@ Shareholders

@ Partners

@ Suppliers

TRUSTED

SAFE

EXPERT

TRUSTED

SUSTAINABLE

TRUSTED

@ Monitored the Company’s purpose, values

andbehaviours

@ Monitored engagement with key stakeholder

groups and reviewed the effectiveness of

stakeholder engagement mechanisms

@ Received reports from the Directors on

workforce engagement activity, as well as

management information on workforce

matters,including analyses of employee

surveyresults

@ Received updates on business integrity

including reports on Speak Up, the Group’s

whistleblowing service

@ Received updates from the Group’s Affinity

Networks and individuals participating in the

reverse mentoring programme

@ Approved the Group’s 2024 Modern

SlaveryStatement

@ Reviewed the effectiveness of the Board’s

approach to workforce engagement activities

and reporting

@ Received verbal updates from the Remuneration

Committee following each Committee meeting

@ Received updates and supported workforce

diversity and inclusion initiatives

@ Received an annual update on pensions

@ Updated the Board Diversity and Inclusion Policy

@ Considered the new Listing Rules on Diversity

and Inclusion

@ The Board and its Committees undertook an

external performance review, conducted by

Egon Zehnder

@ Conducted succession planning for the Group

Chief Executive, Senior Independent Non‑executive

Director andCommittee Chairs

@ The Board appointed three new Independent

Non‑executive Directors, who joined the Board

in 2024 (Gabby Costigan MBE, Robert MacLeod

and Rudy Wynter)

@ Conducted succession planning for the

Executive Committee to support the

development of a diverse pipeline of candidates

@ Reviewed conflicts of interest of the Directors

@ Reviewed the formal matters reserved for the

Board and terms of reference for each of the

Board Committees

@ Convened sub‑committees of the Board where

necessary to deal with specific matters

CULTURE PEOPLE GOVERNANCE

61 75 10 11

6 10 12

6 11

Rudy Wynter’s site visit to

Old Oak Common station

Rudy Wynter, Independent Non‑executive

Director, undertook a site visit to Old Oak

Common station in London as part of his

induction to the Board. As pictured above,

he was escorted by Stephen Tarr (Divisional

CEO, Power, Transmission & Distribution,

Rail and Balfour Beatty Kilpatrick; Group

Sector Lead, UK Energy), who provided

Rudy with a site tour and an introduction to

the site team. When complete, the station

will be one of the best connected in the UK,

with six underground platforms and eight

surface‑level platforms.

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126126

Culture on the ground

How does the Board seek

tounderstand what life is like

forBalfour Beatty employees?

Analysis of employee engagement

survey data enables the Board to

understand the employee experience.

This provides the Board with insights

into working environments, employee

behaviours and attitudes, as well as

the workforce’s understanding of the

Group’s culture. It also enables the

Board to assess how working

practices and behaviours align with

the purpose, values and strategy of

the Group.

Workforce engagement

How does the Board engage

directly with employees to

understand working culture

withinthe Group?

The Board undertakes a number of

site visits, participates in employee

events, and meets with employee

groups such as the Affinity Networks.

The Directors report back to the full

Board following each engagement

activity to share any insights gained.

Workforce engagement provides the

Board with direct insights into working

environments, employee attitudes,

behaviours and practices, and the

practical application of policies and

standards on the ground.

Sharing experiences of workforce

engagement activities as a Board

facilitates broader exposure for each

Director than would otherwise be

possible due to the range and scale

ofthe Group’s operations across

different sectors and geographies.

Internal Audit

How does the Internal Audit

function support the Board’s

oversight of culture?

The Audit and Risk Committee

reviews the outcomes of internal

audits judged to be less than

satisfactory, providing a direct line of

sight into areas of practice, policy and

behaviours that were not at the

desired standard (as well as any

corrective actions taken).

Whistleblowing

How does the Board monitor

breaches of the Group’s cultural

and ethical values?

The Audit and Risk Committee and

the wider Board review Speak Up

statistics, as well as details of any

serious cases raised through the

Speak Up helpline and the progress

ofrelated investigations.

Speak Up reports provide the Board

with a view of the nature of employee

concerns and trends in behaviours of

the workforce.

Modern slavery

How does the Board ensure

working practices uphold a culture

of high ethical standards designed

to protect employees?

The Board reviews and approves the

Group’s Modern Slavery Statement.

This provides the Board with:

@ a broad understanding of practices

and behaviours across the Group,

and how these align with the

purpose, values and strategy of

theGroup; and

@ oversight of steps taken to prevent

modern slavery and human trafficking

within the Group and its supply chain.

BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

Q&A: How the Board

monitored culture in 2024

Q Q

Health and safety culture

How does the Safety and

Sustainability Committee

monitorsafety culture?

The Committee receives safety

management information,

whichincludes:

@ statistics and trends of Lost Time

Injury Rates;

@ metrics on safety observations

reported by employees; and

@ employee engagement survey data

This enables the Committee to assess

the effectiveness of health, safety and

wellbeing practices and behaviours,

and evidences the extent of individual

responsibility taken by employees to

proactively report safety concerns.

The Board is committed

to building pathways for

constructive two-way

dialogue with the workforce,

enabling the employee

voice to be present and

heard withinthe boardroom,

and part of the decision-

making process.”

Louise Hardy

Independent Non-executive Director

andWorkforceEngagement Lead

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The Board designs the framework within which

stakeholder engagement takes place, and shapes

how relationships with key stakeholders are

developed and maintained. The Board understands

the importance of maintaining an ongoing interactive

dialogue with key stakeholders, appreciating that

this is crucial to supporting well‑informed and

high‑quality decision making that creates value

for all stakeholders and promotes the long‑term

sustainable success of the Group.

The Board undertakes engagement initiatives

throughout the year in order to understand the

interests of the Group’s key stakeholders,

specifically its customers, workforce, supply

chain and strategic partners, communities,

governments and investors. The Board takes

abalanced view of the complementary and

divergent interests in discussions and decision

making. The Board on its own, however, cannot

engage meaningfully with every single stakeholder.

To address this, stakeholder engagement is

supplemented by a network of mature executive

and business‑led stakeholder relationships across

the Group. Feedback on wider stakeholder

engagement is reported to theBoard to support

effective decision making and a timely recognition

of emerging stakeholderissues.

Report of the Board’s

WorkforceEngagement Lead

I am pleased to present my 2024 Workforce

Engagement report.

The Board recognises that the workforce is the

Group’s most valuable resource and is pivotal

tobuilding its long‑term sustainable success.

TheBoard is therefore committed to building

pathways for constructive two‑way dialogue with

the workforce, enabling the employee voice to be

present and heard within the boardroom, and

embedded within the decision‑making process.

To ensure Balfour Beatty remains an employer

ofchoice that fosters a culture and working

environment where all employees feel safe,

respected, and valued, and are given the tools

todevelop and succeed throughout their careers,

the Board must listen and engage meaningfully

with employees.

Under my remit as the Board’s Workforce

Engagement Lead, I am tasked with establishing

and shaping the Group workforce engagement

strategy and reporting to the Board on outcomes

and insights. Further details of the workforce

strategy can be found on page 128.

Throughout 2024, the Board took the following

key actions to enhance workforce engagement:

@ All engagement activities are recorded

centrally and reported to the Board periodically

to ensure balanced coverage across the

Group’s Business Units.

@ Key employee groups are identified through

the output of the employee engagement

survey, and these groups are then targeted

forfuture Board engagement.

@ Key findings from engagement activities are

reported to the Board and discussed to ensure

that any required actions are taken, to ensure

lessons learned are applied, and to ensure

anyfollow‑up engagement is diarised for

theBoard.

Louise Hardy

Independent Non-executive Director and

Workforce Engagement Lead

11 March 2025

The Board endeavours to take a balanced view of stakeholder needs and interests

in all Board discussions and throughout the decision-making process, with a view

to promote the long-term sustainable success of the Balfour Beatty Group.

Stakeholder engagement

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128128

Workforce engagementstrategy

@ Topics of engagement: The Workforce

Engagement Lead will identify annual topics

ofengagement for the Board, and keep the

Board informed of the outcomes of engagement

surveys and various engagement activities.

@ Targeted engagement: The Workforce

Engagement Lead will conduct analysis of

theemployee base to identify which groups

ofemployees should be engaged to ensure

agood cross‑representation coverage

oftheGroup.

@ Wider Board engagement: With the support

and direction of the Workforce Engagement

Lead, the wider Board will continue to conduct

workforce engagement initiatives, for example

through training workshops, talent activities,

site visits, town halls and contract award meetings.

Non‑executive Directors will continue to ensure

they devote sufficient time to engage meaningfully

with employees, especially those from

under‑represented groups.

@ Board reporting: The Board receives updates

on workforce engagement, specifically to set

out the focused topics of engagement, the

proposed programme of engagement activities,

and a thematic analysis of the findings.

Furthermore, each Director is required to

report on insights and outcomes of their

engagement activities at each meeting.

@ Effectiveness review: The Board evaluates

the effectiveness of workforce engagement

onan annual basis, predominantly by:

– assessing the outcomes of engagement

activities undertaken;

– analysing the employee engagement

surveyresults and other KPIs analysing

theworkforce experience; and

– reviewing feedback from the workforce

onthe Board’s approach to engagement.

Key workforce engagement

actionstakenin 2024

During 2024, the Board carried out a full schedule

of site visits and in‑person engagement activities

with an array of employees across the Group.

These visits provided invaluable opportunities for

the Board to gain insights into ongoing projects

across the business, engage directly with the

workforce, and deepen the Directors’ understanding

of the culture of the organisation as well as

challenges and opportunities faced by the workforce.

Leo Quinn, Philip Harrison, Louise Hardy, Gabby

Costigan MBE, Barbara Moorhouse and former

Independent Non‑executive Director Stuart Doughty

CMG all attended the Balfour Beatty Group’s

Icon Awards, hosted at the V&A Museum in

London. The Directors presented awards to

some of the night’s winners, and took the

opportunity to engage with employees from

across the UK, US and Hong Kong and share

intheir success in honouring their contribution

tothe business. More information on the Icon

Awards can be found on page 74.

The Directors visited a number of sites across

the UK including HS2 Old Oak Common station

and Hinkley Point C nuclear power station.

In September 2024, the Board visited Hong

Kong, where Gammon, the Group’s 50:50 joint

venture with Jardine Matheson, is based. They

undertook site visits to the Hong Kong International

Airport Terminal 2 expansion works, visiting the

Automated People Mover and the baggage handling

tunnels, as well as visiting the Cyberport Project

and the Lyric Theatre project. The Board took the

opportunity to meet with many Gammon colleagues,

as well as representatives of Jardine, and

Gammon’s clients.

Following engagement activities, Board members

report on their findings to the rest of the Board.

Whilst undertaking engagement activities, they

discuss and gather feedback on topics such as:

@ health and safety;

@ environment and sustainability;

@ diversity and inclusion;

@ leadership and engagement;

@ culture and morale;

@ resources and personal development;

@ understanding of Group strategy, values

andbehaviours; and

@ Directors’ remuneration, and its alignment

withworkforce remuneration.

In addition to first‑hand engagement, the Board

obtains feedback across the breadth of the employee

population through the employee survey.

Both engagement tools continue to provide

insightful data on workforce views and experiences.

Reporting on key performance indicators such

asvoluntary attrition rates, safety observations,

engagement, and participation rates for My

Contribution (Balfour Beatty’s employee‑led

change programme), all help to build a strong

picture of life as a Balfour Beatty employee and

support robust and considered Board decision

making that creates value for ourworkforce.

Investors

Investors play a valuable role in the corporate

governance of the Company. The Board is

committed to maintaining an open dialogue

withits investors, which is achieved through a

programme of structured engagement, including

one‑to‑one meetings and conference attendance.

A selection of investor events that took place in

the year can be found within the investor

calendar on page 131.

Institutional investors

The Group Chair, Group Chief Executive, and

Chief Financial Officer held meetings with

individual institutional investors throughout 2024.

In addition, the Executive Directors conducted

analyst presentations following the announcements

of the Group’s financial results.

Either on request by investors or at Company

presentations and one‑to‑one meetings,

Committee Chairs will engage with investors on

matters specific to the remit of their respective

Committees. The Senior Independent

Non‑executive Director is also available to

shareholders as a separate channel to report

anyother views or concerns. In addition,

management engages with proxy advisory

firmsto support them in their reporting to

theirmembers. The outcomes of engagement

activities are reported back to the full Board.

The Board receives biannual reports from the

Head of Investor Relations summarising analyst

research briefings and changes to institutional

shareholdings, as well as ad hoc reports on share

price movements.

BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

Stakeholder engagement continued

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Engaging directly with shareholders is integral

toeffective Board decision making that promotes

shareholder and wider stakeholder value. It provides

an opportunity for candour, insight, and the means

to build relationships with key shareholders. The

Board concluded that the key benefits arising from

its direct shareholder engagement initiatives held

throughout the year included theopportunity to:

@ build transparency and trust;

@ provide greater clarity over Board decisions

and the decision‑making process;

@ showcase the Board’s skills, experience, and

diversity, enabling shareholders to assess the

composition and effectiveness of the Board as

a decision‑making unit; and

@ enhance the Board’s self‑awareness and

understanding of shareholder expectations.

Considerations following

the2024AGM

Comments from shareholders at, or in relation

to,the AGM are considered by the Board, and

where relevant, its Committees. Following the

2024 AGM, feedback from shareholders focusedon

the re‑election of the Group Chair, who received

85.23% votes in favour and 14.77% votes against.

The Board acknowledges shareholders’ calls for

a more diverse Board and has taken steps

throughout 2024 to make progress on Board

succession planning andrecruitment:

@ The Board is compliant with the gender diversity

targets set by both the FTSE Women Leaders

Review and the Listing Rules and Disclosure

Guidance and Transparency Rules (DTRs).

@ In 2024 the Board, for the first time, complied

with the diversity targets set by both the

Parker Review and the Listing Rules and DTRs,

having at least one member of the Board from

a minority ethnic background.

Our Icon Awards

brought together

almost 400 colleagues

from the UK, the US

and Hong Kong, to

celebrate the very

bestof Balfour Beatty.

It was a remarkable

evening, and a

wonderful reminder

ofthe Company we

are today and an

endorsement of our

leading place in the

industry, the strength

of our brand and the

power of our culture.’’

Leo Quinn

Group Chief Executive

Make a Difference Award

This category was for an individual that makes every day

count and makes our business better.

Above: Award presentation photo. (Left to right) Gavin Russell,

Chief Executive Officer – Infrastructure Investments, Jen

Rounding‑Brewin, Assistant Business Manager, Asset &

Technology Solutions, and Louise Hardy, Balfour Beatty

Independent Non‑executive Director.

READ MORE ABOUT OUR ICON

AWARDS EVENT ON p74

Winner: Jen Rounding-Brewin

Assistant Business Manager

Asset & Technology Solutions

Jen supported Asset & Technology

Solutions team with its Right to Respect roll

out across the business – her input, time

and effort was invaluable. She has been

pivotal in leading monthly support calls for

line managers, which includes pulling

together a pack on completion stats and

feedback from completed surveys. Jen

excels in everything she puts her mind to

and continues to make a difference, but this

support has been outstanding.

More information on Board diversity and

inclusion can be found in the Nomination

Committee Chair’s report on page 141.

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130130

Our approach to stakeholder engagement

Investors play a vital

role in our corporate

governance and hold

the Company and its

Directors to account.

The Board remains

committed to

maintaining an open

and honest dialogue

with its investors.”

Charles Allen

Lord Allen of Kensington CBE

Non-executive Group Chair

STAKEHOLDER

ENGAGEMENT

BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED

DEFINE ENGAGEMENT

APPROACH

IDENTIFY KEY

STAKEHOLDERS

REPORT INSIGHTS

AND OUTCOMES

ASSESS STAKEHOLDER

VIEWS

COMMUNICATE

DECISIONS MADE

EMBED STAKEHOLDER

VIEWS INTO DECISION

MAKING

ENGAGE

Stakeholder engagement continued

Approach to shareholder

engagement

Retail investors

The Company’s website has a section dedicated

to investors where a range of valuable information

can be found, including:

@ published Annual Reports and results

announcements;

@ a financial calendar of events;

@ details on the Company’s corporate

governance arrangements;

@ Board and Executive Committee member profiles;

@ the Group’s sustainability strategy, Building

New Futures; and

@ regulatory news announcements.

The information available on our website enables

retail investors to keep equally as informed as

institutional investors. Retail investors are also

encouraged to raise any questions or queries

they may have with the Company Secretary,

whowill arrange for an appropriate response

tobe provided.

Investors are consulted on an ongoing basis

toensure that the Group has a full and clear

understanding of their views.

Annual General Meeting (AGM)

The AGM provides an opportunity for investors

toengage directly with the Board in person.

131Balfour Beatty plc | Annual Report and Accounts 2024

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CALENDAR OF SHAREHOLDER EVENTS

January 2024

@ Liberum Industrials and Support

ServicesConference

March 2024

@ Full year results presentation

@ London roadshow

@ Berenberg UK Corporate

Conference

@ Jefferies Pan‑European

Mid‑CapConference

April 2024

@ Annual Report and Accounts

published

@ Group Chair’s investor meetings

@ North America roadshow –

NewYork,Boston, Montreal

@ HSBC UK Corporate &

InvestorConference

May 2024

@ Annual General Meeting

@ Trading update

@ UBS Pan‑European Small and

Mid‑Cap Conference

June 2024

@ Private client fund manager Jersey

roadshow

@ Peel Hunt FTSE 250 Conference

August 2024

@ Half year results presentation

September 2024

@ UK roadshow

@ US virtual roadshow

@ Hong Kong roadshow

October 2024

@ Liberum fire side chat

November 2024

@ Private client fund manager

roadshow–Scotland

@ Investec CEO conference

December 2024

@ Trading update

The Board joins the Gammon team to visit the expansion

works at Hong Kong International Airport

In September 2024 the Board undertook a site

visit to Hong Kong International Airport.

Gammon has contributed significantly to the

expansion works at Hong Kong International

Airport, specifically on the tunnel structure of

the Automatic People Mover (APM), the

Baggage Handling System (BHS) and Terminal

2 Expansion Works projects; including the

tunnel beneath the runway and taxiways,

essential infrastructure for air traffic control,

and viaduct and roadsystems.

It also completed the façade and roof works

and achieved water tightness of the Terminal 2

building, all integral parts of the Airport

Authority Hong Kong’s Master Programme.

The Board met with the Gammon project delivery

team as part of their annual workforce engagement

plan, and were able to take away key learnings

and insights from colleagues working under

the Hong Kong‑based joint venture.

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132132

The Board is the principal decision‑making body

of the Company, with authority for specific

matters being delegated to Committees of the

Board. Responsibility for the day‑to‑day operation

of the Group is formally delegated by the Board

to the Group Chief Executive who manages the

operational running of the business through the

Executive Committee.

The members of the Executive Committee each

have responsibility for particular Business Units

and Enabling Functions, with authority being

further delegated to appropriate individuals

throughout the Group based on their role

andseniority.

The framework set out here provides a high‑level

summary of the Group’s governance framework,

illustrating the flow of authority as it is delegated

throughout the Group.

Nomination Committee

@ Oversees the structure and

composition of the Board

@ Conducts succession planning

@ Oversees the appointment and

induction processes of new Directors

@ Makes recommendations regarding

Directors’ independence against

the Code’s criteria

Remuneration Committee

@ Reviews the Remuneration Policy

for Directors and Executive

Committee members

@ Approves the remuneration of

theGroup Chair, the Executive

Directors and Executive

Committeemembers

@ Oversees the implementation of

the Remuneration Policy

Audit and Risk Committee

@ Reviews the form, content and

process for preparing the

financialstatements

@ Reviews principal risks and internal

controls, and the effectiveness of

the risk management framework

@ Monitors the independence and

effectiveness of the Internal Audit

function and external auditor

Safety and Sustainability

Committee

@ Reviews strategies, policies and

performance in relation to health,

safety and sustainability

@ Reviews the environmental

impactand sustainability of

theGroup’s operations

@ Reviews in detail incidents where

significant harm has occurred

Finance and General Purposes Committee

@ Approves borrowings, banking arrangements, management of interest rate and

foreign exchange rate exposures, contract financing, bonding and leasing

matters and guarantees

Group Tender and Investment Committee

@ Responsible for the content, maintenance and operation of the Gated Business

Lifecycle which forms the core process for evaluating and monitoring the

governance of operational projects

Construction Services

@ Our Construction Services

businesses operate across

infrastructure and buildings

markets in the UK, the US and

through the Gammon joint venture

in HongKong

Support Services

@ Our Support Services businesses

operate principally in the UK,

designing, upgrading, managing

and maintaining critical national

infrastructure

Enabling Functions

@ Bring together shared services

(Legal, Finance, IT, Procurement,

Communications, HR, Health,

Safety and Wellbeing, and

Sustainability) to support the

delivery of business objectives

Infrastructure Investments

@ Our Infrastructure Investments

business develops and finances

both public and private infrastructure

projects in the UK and the US

Executive Committee

@ The Group Chief Executive manages the operational running of the Group through the Executive Committee, members of which are responsible for particular Business Units

and Enabling Functions. TheExecutive Committee oversees the implementation of Group strategy, and matters relating to health and safety, sustainability, employee matters

(including succession and remuneration), legal and governance, technology and innovation, and communications and investor relations

@ Responsibility for the day‑to‑day running of each of the Strategic Business Units and enabling functions is delegated to individual members of the Executive Committee

Balfour Beatty plc Board of Directors

@ Establishes the Company’s strategic direction,

purpose and values

@ Assesses and monitors Company culture and

promotes the long‑term success of the Company

@ Approves the Company’s financial statements

andbudget

@ Ensures maintenance of a framework of prudent

and effective controls

@ Ensures effective engagement with stakeholders

including employees

@ Approves matters relating to the composition

oftheBoard and Committees

A robust

governance

framework

DIVISION OF RESPONSIBILITIES

SCAN OR CLICK TO VIEW THE MATTERS

RESERVED FOR THE BOARD AND BOARD

COMMITTEE TERMS OF REFERENCE

133Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

This section sets out the defined roles

and responsibilities of Board members

and outlines the support the Directors

receive to assist them in discharging

their duties in accordance with the

Companies Act, and their

responsibilities under the UK

Corporate Governance Code.

Role of the Board

In accordance with Principle A of the UK Corporate

Governance Code, the primary role of the Board is to

effectively lead the Group by promoting the long‑term

sustainable success of the Company, generating

value for shareholders and contributing to wider society.

Each Director has a defined role with individual

duties, with a clear division of responsibilities,

particularly between the Group Chair (leadership

ofthe Board) and the Group Chief Executive

(leadership of the Company’s business). The

balance of responsibilities at Board level set out

here supports a balanced approach to decision

making, ensuring that no one individual has

unfettered powers.

Throughout the year the Board met sufficiently

frequently to fully discharge its duties. The Board

held eight scheduled meetings in the year, as well

asad hoc and Board sub‑committee meetings to

manage matters arising outside the formal schedule

of meetings.

Time commitment of Directors

The Board recognises the importance of individual

members having sufficient time to discharge

theirduties effectively. On an annual basis, each

Director declares their external appointments and

commitments to the Board aspart of the conflicts

of interest declaration. Any additional external

appointments are subject to Board approval

inorder to mitigate the risk of overboarding

andensure they do not impact the capacity of

Directors to discharge their duties.

Leadership

Oversight

Governance

Independent Non-executive Director meetings

The Independent Non‑executive Directors, led by the Group Chair, hold regular scheduled meetings without the executive Directors present prior to, or following

Board meetings. The Independent Non‑executive Directors meet annually, led by the Senior Independent Non‑executive Director and without the Group Chair

present, as part of the Board effectiveness review to discuss the Group Chair’s performance.

Company Secretary

The Board is supported by the Company Secretary who, in accordance with Principle I of the UK Corporate Governance Code, ensures that the Board is able to

function effectively and efficiently, and is available to all Directors, maintaining dialogue with each of them on an individual basis.

In addition to providing logistical support for Board and Committee meetings, the Company Secretary is responsible for advising the Board on all corporate

governance matters, supporting the annual Board effectiveness review, managing policies and processes related to the Board, supporting induction and ongoing

training and development of the Directors, and ensuring that the Directors receive accurate, timely information required for them to discharge their duties.

Senior Independent Non-executive

Director

@ Acts as sounding board for the Group Chair

@ Assumes the role of intermediary for the Group

Chief Executive, non‑executive Directors and

shareholders as required

@ Leads the review of the Group Chair’s performance

@ Chairs the Nomination Committee when the Group

Chair’s succession is considered

@ Available to meet with shareholders

Workforce Engagement Lead

@ Oversees and monitors the workforce

engagementstrategy

@ Identifies topics of engagement for Board approval

@ Conducts ongoing analysis of the employee base

toidentify targeted engagement activities

@ Provides opportunity for two‑way feedback from

the workforce

Independent Non-executive

Directors

@ Oversee the Company’s strategy and provide

guidance and expert advice to management

@ Monitor Group performance against objectives,

andhold management to account

@ Review management proposals

@ Provide constructive challenge to management

@ Serve on Board Committees which are responsible

for specified governance roles

Group Chief Executive

@ Responsible for the day‑to‑day

management of the Group and the

Group’s performance

@ Enables planning and execution of the

Company’s strategy, purpose and values

set by the Board

@ Leads the Group

@ Drives the cultural tone of the Group

@ Ensures the Board is kept abreast of the

views of the workforce, and any

divergent views amongst members of

the Executive Committee

Non-executive Group Chair

@ Leads the Board and demonstrates

objective judgement

@ Encourages high standards of

corporate governance

@ Sets the Board agenda and drives

Board effectiveness

@ Promotes a culture of constructive

debate, mutual respect and openness

@ Ensures that Directors receive

accurate, timely and clear information

@ Leads shareholder and wider

stakeholder engagement

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134134

The Company is listed on the London Stock

Exchange and is therefore subject to the UK

Corporate Governance Code. A copy of the

Codecan be found on the FRC’s website at:

www.frc.org.uk.

THE COMPANY’S COMPLIANCE

WITH THE CODE IS SET OUT ON

PAGE 119

The Board

The role of the Board is summarised on page

132. Principally, the Board establishes the strategic

direction of the Group and assesses the basis

upon which the Company sustainably generates

and preserves value over the long term. The

Board also sets and monitors culture and leads

by example to set the right cultural tone from

thetop as to how the Company will achieve its

strategic goals and purpose.

The Group’s governance framework is designed

to facilitate effective, resilient and prudent

management of the business, which helps

toensure that the Board’s decision making is

considered, long term in its nature, and takes

intoaccount the desirability of maintaining high

standards of business conduct and the need to

act fairly between members.

One of the primary responsibilities of the Board

is to ensure that the Company preserves value

over the long term in a sustainable manner,

taking into consideration both value derived for

the Company’s stakeholders and the Company’s

contribution to wider society. In setting, monitoring

and delivering the Group’s Build to Last strategy,

and its drive towards the targets and ambitions

outlined in the Building New Futures sustainability

strategy, the Board ensures that risks and

opportunities facing the Group are identified and,

where appropriate, mitigated appropriately.

SCAN OR CLICK TO REVIEW

MATTERS RESERVED FOR

THEBOARD

Board and Committee meetings

TheGroup Chair sets a structured agenda for

each Board meeting in consultation with the

Group Chief Executive and Company Secretary.

Capacity is maintained on the agenda for each

meeting to allow for the timely consideration of

matters as they arise during the year. The Group

Chair seeks a consensus at Board meetings, but,

if necessary, decisions are taken by majority.

Ifany Director has concerns on any issues that

cannot be resolved, such concerns are noted

inthe Board minutes. No such concerns arose

in2024.

The key activities of the Board in 2024 are

detailed on pages 124 and 125. These activities

are discussed under the value pillars of Lean,

Expert, Trusted, Safe and Sustainable which

underpin the Board’s decision‑making process.

As referenced above, the Board has a formal

schedule of matters reserved for its decision

making and has delegated certain responsibilities

to Board Committees, each with separate Terms

of Reference. There are four main Board Committees:

Audit and Risk, Nomination, Remuneration, and

Safety and Sustainability. Theprincipal activities

of each Committee during the year are set out in

the Committee reports on pages 140, 144, 146,

and 153.

DIVISION OF RESPONSIBILITIES CONTINUED

Corporate governance framework

The Company’s governance framework operates to support the delivery of

its strategy by ensuring that business is conducted within a framework of

robust principles and procedures and in an orderly fashion.

The Group Chair encourages all Directors to

attend all Committee meetings, with the

exception of instances where there is a conflict

of interest. Additional attendees are invited to

attend Board and Committee meetings at the

discretion of the relevant Chair.

Risk and internal control

Risk management

The Board is responsible for undertaking a robust

assessment of the principal risks facing the

Group, as described on pages 94 to 105 of the

Strategic report, and ensuring that appropriate

mitigating actions are in place to manage them.

This includes those risks that would threaten the

Group’s business model, future performance,

solvency and liquidity.

The Group’s approach to risk management,

described in more detail on pages 89 to 105,

ensures that principal and emerging risks to the

Group’s objectives are identified, assessed, and

managed on an ongoing basis.

The Business Management System (BMS), which

forms the basis of the Group’s internal control

framework, contains all policies, procedures and

controls. The BMS is regularly updated to reflect

the output and effectiveness of risk and assurance

activity to ensure that there is continuous

improvement to the control environment.

Internal control

The Board has overall responsibility for the

Group’s systems of risk management and internal

control and regularly reviews their effectiveness.

The Audit and Risk Committee has undertaken

this review throughout the financial year. Further

details can be found on page 152 of the Audit

and Risk Committee report.

The Group uses the Enterprise Risk Management

framework across thebusiness to ensure

consistency in application of risk systems and

controls and that exposure tosignificant risks is

managed effectively. TheBoard is cognisant of

the fact that such a system can only manage

rather than eliminate the risk of failure to achieve

business objectives and can only provide reasonable,

but not absolute, assurance against material

misstatement or loss.

The Group’s independent Internal Audit function

undertakes an annual programme of risk‑based

audits across the Group’s operations. All audit

reports are shared with the relevant business unit

management who are accountable for implementing

appropriate measures to address any risks or

control weaknesses. The results of key internal

audit activities are shared with the Group Chief

Executive, Chief Financial Officer, and external

auditor and scrutinised by the Audit and Risk

Committee on a regular basis. Further details

canbe found on pages 146 to 152 of the Audit

and Risk Committee report.

Throughout 2024, in accordance with the new

requirements set out under Provision 29 of the

updated 2024 UK Corporate Governance Code,

the Audit and Risk Committee has overseen the

continued development of a matured Internal

Control Framework (ICF) which comprises the

Group’s material controls, including financial,

operational, reporting and compliance controls.

Throughout the year, key activities have included:

@ collation of the Group’s key controls from

various sources across the Group;

@ validation of the controls with key stakeholders

throughout the Group;

@ a review to assess which of the controls are

material; and

@ an initial year end self‑assessment of material

controls within the updated framework.

135Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Responsibilities Actions undertaken

BOARD

@ Establishment of a framework of

prudent and effective controls to

enable risk to be assessed, monitored

and mitigated

@ Determine Group appetite for and

attitude to risk in pursuit of its

strategic objectives

@ Reviewed the Group’s risk landscape profile, principal

and emerging risks, and required responses

@ Reviewed the effectiveness of the Group’s

whistleblowing (Speak Up) processes and

procedures, and other channels for raising

concernsabout Code of Ethics breaches

AUDIT AND RISK COMMITTEE

@ Review significant accounting

judgements

@ Review the effectiveness of Group

internal controls, including systems

toidentify, assess, manage and

monitor risks

@ Review and assess the effectiveness

of the Internal Audit function, and the

Internal Audit workplan

@ Received regular reports on internal and external

audit and other assurance activities

@ Reviewed the effectiveness of Group risk

management and internal control systems

@ Oversaw the ongoing implementation of a matured

Internal Control Framework (ICF)

SAFETY AND SUSTAINABILITY COMMITTEE

@ Review main risks in relation to health

safety, and wellbeing and the Group’s

overall sustainability

@ Received regular reports on risks in relation to safety

@ Received regular risk reports on matters impacting

the environment

GROUP TENDER AND INVESTMENT COMMITTEE

@ Review and approve tenders and

investments, triggered by certain

financial thresholds or other risk factors

@ Critically appraised significant tender and investment/

divestment proposals, with a specific focus on risk

Risk management: responsibilities and actions

Responsibilities Actions undertaken

GROUP MANAGEMENT

@ Strategic leadership

@ Review and implementation of the

Group risk management policy

@ Ensure appropriate actions are taken

to manage strategic risks and other

key risks

@ Reviewed the strategic plan and annual budget process

@ Produced and monitored Group risk register

@ Reviewed risk management and assurance activities

and processes

@ Monthly/quarterly finance and performance reviews

STRATEGIC BUSINESS UNIT MANAGEMENT

@ Maintain an effective system of risk

management and internal control

within its businesses

@ Ensure that business units’

responsibilities are discharged

@ Reviewed key risks and mitigation plans

@ Reviewed and challenged Business Units’ internal

control environment

@ Reviewed results of internal control testing

@ Escalated key risks to Group management and

theBoard

ENABLING FUNCTION MANAGEMENT

@ Maintain an effective system of risk

management and internal control

within its enablingfunctions

@ Maintained and regularly reviewed enabling function

risk registers

@ Reviewed mitigation plans

@ Planned, executed and reported on internal control testing

@ Escalated key risks to Group management and the Board

BUSINESS UNIT MANAGEMENT

@ Maintain a robust and effective

system of risk management and

internal control within its business

units and projects

@ Maintained and regularly reviewed Business Unit and

project risk registers

@ Reviewed mitigation plans

@ Planned, executed and reported on internal control testing

@ Escalated key risks to Strategic Business

Unitmanagement

Balfour Beatty plc | Annual Report and Accounts 2024

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136136

COMPOSITION, SUCCESSION AND EVALUATION

The Board’s cognitive diversity fosters insightful

and constructive debate, which in turn leads to

considered, balanced and risk‑adjusted decision

making that promotes long‑term shareholder and

stakeholder value.

The Board’s diverse array of technical skills,

experience, and balance of independence,

fosters creative thinking and innovative problem

solving, which facilitates the Board’s ability to

convert risks into opportunities.

The range of skills and experience within the

Board is demonstrated in the skills matrix opposite,

which was produced by Egon Zehnder as part of

the 2024 external Board performance review.

RudyWynter, who joined the Board on the

1December 2024, did not take part in the 2024

Board performance review given his very limited

time in role when the review was undertaken

(and hence is not included in the skills matrix

opposite). Rudy has extensive experience in the

development and construction of large‑scale

complex engineering and capital energy projects,

making him a strong new addition to the Board.

As at 31 December 2024, the Board consisted

of10 members, comprising the Non‑executive

Group Chair, two Executive Directors, the Senior

Independent Non‑executive Director, and six

further Independent Non‑executive Directors.

Biographies of the Board Directors are set out

onpages 120 and 121.

Maintaining an

appropriate balance

The Board diversified its composition in 2024 to ensure that it remained appropriately

balanced, representative of the workforce, and fully equipped with the skills and

knowledge to promote the long-term sustainable success of the Group.

KEY SKILLS AND EXPERIENCE OFDIRECTORS

Skills and

experience

Non‑executives Executives

Charles

Allen

Barbara

Moorhouse

Michael

Lucki

Anne

Drinkwater

Louise

Hardy

Robert

MacLeod

Gabby

Costigan

Leo

Quinn

Philip

Harrison

CAPEX heavy

organisations

Major

contracting

Risk

management

People &

remuneration

Finance & Audit

UK market

experience

Health & Safety

Government

engagement

Construction

sector

CEO experience

ESG

US market

experience

Hong Kong

market

experience

Digital &

Technology

Expert Advanced General Limited

Conflicts of interest

andindependence

The Board has a number of processes and

procedures in place to assess conflicts of interest

and the independence of Non‑executive Directors

against the criteria set out in the Code:

@ each Director has a duty to disclose any actual

or potential conflict of interest for consideration

and approval, if appropriate, by the Board;

@ Directors are requested to declare any conflicts

at the start of all Board and Committee meetings;

@ the Nomination Committee conducts an annual

review of the Conflicts of Interest Register and

seeks confirmation from each Director of any

changes to their external appointments; and

@ there is also a formal process in place for the

approval of all new external appointments of

Directors. In considering such appointments,

the Board will consider any conflicts of interest

that may arise, as well as the Directors’ capacity

to continue discharging their duties effectively

in order to mitigate the risk of overboarding.

The Nomination Committee and the Board have,

after completing all of the processes detailed

above, confirmed the continuing independence

andobjective judgement of each Independent

Non‑executive Director, and the overall

independence of the Board in line with

therecommendations of the Code.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

The Board is compliant

with the diversity targets

set by both the Parker

Review and the FTSE

Women Leaders Review.”

Charles Allen

Lord Allen of Kensington CBE

Non-executive Group Chair

Board succession

Board and Executive Committee succession

plans are based on merit and assessed against

objective criteria, whilst also being managed

through the lens of promoting cognitive diversity

as well as diversity of gender, ethnicity, experience

and skills. Succession plans are reviewed

annually by the Nomination Committee. Each

individual on the succession plan has a development

plan in place to support their personal and

professional development.

At the conclusion of the 2024 AGM, Dr Stephen

Billingham CBE and Stuart Doughty CMG retired

as Independent Non‑executive Directors having

served nine years on the Board. Succession

planning and the review of Board composition

resulted in the appointment of Robert MacLeod

and Gabby Costigan MBE as Independent

Non‑executive Directors from 8 March 2024.

Further to this, the Board recruited Rudy Wynter

on 1 December 2024 as an Independent

Non‑executive Director. For further information

on the newly appointed Directors, please refer

totheir introductory Q&A on pages122 and 123.

The Board is compliant with the diversity targets

for gender and ethnic minority board representation

set by the FTSE Women Leaders Review and the

Parker Review. We are delighted that the boardroom

in 2024 and 2025 is now more representative of

our workforce, our clients and our supply chains,

and the Nomination Committee will maintain its

focused oversight of diversity and inclusion

initiatives across the Group to ensure that all

employees are afforded the opportunity to

succeed at Balfour Beatty.

The Board is also committed to supporting and

developing a diverse pipeline of candidates for

senior manager and subsidiary director roles

within the Group. For further information on

active diversity initiatives within the Group

pleaserefer to pages 72 and 73.

Director reappointment

All Independent Non‑executive Directors undertake

a fixed term of three years subject to annual

re‑election by shareholders. The fixed term can

beextended and, consistent with best practice,

would not go beyond nine years unless exceptional

circumstances were deemed to exist. Thecurrent

tenure of each Board members are included within

their biographies onpages 120 and 121.

Training and development

The Board receives a full programme of briefings

and updates annually across all areas of the

Company’s business from the executive Directors,

members of the Executive Committee, senior

executives, and advisers. In addition, training and

development sessions are arranged on specific

areas during the year as required. Examples of

training and development in 2024 included,

amongst others, sustainability, corporate governance

digital and cyber security, contract trends, and the

infrastructure financinglandscape.

Any Director can request further information to

support the fulfilment of their individual duties or

collective Board role and, throughout the year,

the Group Chair maintains dialogue with individual

Directors to identify any specific training requirements.

Where appropriate, such training is integrated

into Board meetings to ensure all Directors can

benefit. Alternatively, training sessions may be

conducted through formal presentations,

one‑on‑one meetings, or site visits, providing

opportunities to delve deeper into specific

initiatives or projects.

Information and support

During the year, the Company Secretary advised

the Board on matters related to governance,

ensuring Board procedures were followed and

relevant statutory and regulatory requirements

were complied with. The Company Secretary has

responsibility for facilitating the timely distribution

of information between the Board and its

Committees and the Board of Directors.

The Directors have direct access to the Company

Secretary for advice, who can arrange, at the

Company’s expense, for the Directors to receive

independent professional advice where appropriate.

Board performance review

In line with best practice, the performance and

effectiveness of the Board, its Committees and

individual Directors are assessed annually via a

formal performance review. The Board and

Committee performance review process follows a

three‑year cycle, with the 2024 Board performance

review being undertaken externally in accordance

with the UK Corporate Governance Code.

Process – Board and Committee

performancereview

Egon Zehnder was appointed to conduct the

external Board performance review. They

commenced the review by meeting with the

Group Chair and the Company Secretary to

review the results and actions undertaken by

thetwo previous internal Board performance

reviews, to understand the context, strategy and

purpose of the Board, and agree the scope for

the 2024 Board performance review. Following

this, Egon Zehnder proposed to undertake the

review through a combination of:

@ quantitative insights (with data obtained from

questionnaires completed by each Board member);

@ qualitative insights (through observations of

Board and Board committee meetings, as well

as one‑to‑one meetings with the Group Chair,

the Board of Directors and the Company

Secretary); and

@ a review of the quality and timeliness of Board

and Committee packs.

Egon Zehnder presented the results of their

review to the Board in February 2025, together

with a series of recommendations to enhance

the Board’s effectiveness.

The scope of the performance review

The external review included a review of:

@ the performance and effectiveness of the

Group Chair;

@ the performance and contribution of each

ofthe Board’s Directors;

@ the performance and contribution of the

Company Secretary;

@ the composition and balance of skills,

experience and knowledge across the Board,

and within each of the Board’s Committees;

@ the performance and effectiveness of the

Board, and each of its Committees; and

@ the quality and timeliness of Board

andCommittee packs.

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138138

COMPOSITION, SUCCESSION AND EVALUATION CONTINUED

Board performance review process

@ Evaluation co‑ordinated internally by

Group Chair, Committee Chairs and

Company Secretary

@ Separate questionnaires prepared

on a range of issues related to the

Board and Board Committees

@ One‑to‑one meetings held between

Group Chair and each Director to

review responses and for individual

appraisal. The Senior Independent

Non‑executive Director leads the

review of the Group Chair

@ Group discussion at a Board

meeting and actions agreed

@ Outcomes from previous

performance review and progress

against each action reviewed

@ Internal evaluation questionnaires

prepared by Group Chair and

Company Secretary, taking account

of areas of concern in previous year

@ One‑to‑one meetings held between

Group Chair and each Director to

review responses and for individual

appraisal. Senior Independent

Non‑executive Director leads the

review of the Group Chair

@ Group discussion at a Board

meeting and actions agreed

@ Independent external performance

reviewer appointed (EgonZehnder)

@ Performance reviewer works with

the Group Chair to define the scope

of review

@ Review conducted by means of

questionnaires and interviews with

Board Directors, observations of

Board meetings, and a review of

Board and Committee packs

@ Report on review discussed with

Group Chair and tabled for

discussion at a Board meeting

@ Outcomes and actions agreed

Year 1

(2022)

Internal

assessment

Year 2

(2023)

Internal

assessment

Year 3

(2024)

External

assessment

Board performance review continued

Findings

The findings of the external performance review

concluded that the Board and Committees

continued to function effectively. The review

identified the following strengths:

@ business performance: the Group’s

consistent strong performance since Egon

Zehnder’s previous 2021 external performance

review (reflected in the share price) is the

result of a strong leadership from both the

Board and management;

@ Board composition: new hires in 2024 have

enriched the Board’s overall skill set and

diversity of perspectives in the boardroom;

@ Board efficiency: Board and Committee

meetings are efficient, striking the right

balance between presentations and

discussion; and

@ Board culture: the Board’s open and

honestculture promotes constructive

debateand challenge.

Performance action plan and progress

Led by the Group Chair, with support from the

Company Secretary, the Board approved and

implemented a 2025 action plan to address the

findings of the 2024 external Board performance

review. A summary of the key actions can be

found on page 139.

Complementing this, is a summary of the action

plan from the previous internal performance

review undertaken in 2023, which includes a

summary of the key recommendations, agreed

actions, and the progress and outcomes

delivered in 2024.

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2024 BOARD PERFORMANCE REVIEW ACTION PLAN

2023 Recommendations 2024 Action Plan Actions Taken / Outcomes

Ensure continued

improvements in information

gathering relating to strategy,

competitors, and

addressable markets.

@ Continue to enhance the strategic review of the Group.

@ Carry out an annual competitor and industry update.

@ Consider addressable markets as appropriate.

The Board received industry and competitor updates to support the monitoring of theGroup’sBuild

toLast strategy.

Support initiatives on

employeeengagement.

@ Independent Non‑executive Directors to attend ad hoc meetings

ofthe Group Tender and Investment Committee (GTIC)

throughout2024.

@ Independent Non‑executive Directors to attend at least two site visits

per year.

The following Independent Non‑executive Directors attended GTICs throughout 2024 to givethem

visibility and an understanding of the tender process for large‑scale projects, and theopportunity to

engage with project delivery teams across the Group:

@ Anne Drinkwater (attended 16)

@ Michael Lucki, Robert MacLeod, Louise Hardy (each attended 2); and

@ Barbara Moorhouse and Gabby Costigan (each attended 1).

The Board also undertook a programme of thematic workforce engagement initiatives, including site

visits throughout 2024, please see page 128 for more detail.

Support Board and talent

development and

succession.

@ Carry out a skills and experience review of the Board.

@ Carry out a talent review of the Executive Directors, Executive

Committee members and other senior managers as appropriate.

@ Continue to monitor succession plans for the Executive

Directors,Executive Committee members and other senior

managers as appropriate.

The Board undertook a full skills and experience review as part of the external Board performance

review with Egon Zehnder, following which the Board have agreed to undertake a number of actions

toenhance Board effectiveness in 2025 (see 2025 action plan below).

Succession planning and a talent review of the Executive Committee and business‑critical senior

management was undertaken in November 2024 by the Nominations Committee. The review set out

apipeline of talent for business‑critical roles, and detailed tailored plans to support key staff in their

ascension of the career ladder at Balfour Beatty.

Progress the diversity

andinclusion agenda for

theGroup.

@ Regularly monitor the diversity and inclusion performance of the

Group and set a plan to address the gender and ethnicity diversity on

the Board, its Committees, the Executive Committee, and across

the wider Group.

Board succession planning and recruitment in 2024 has enabled the Board to comply with the diversity

targets set by the FTSE Women Leaders Review and the Parker Review. The Board also oversees and

monitors the performance of Group diversity and inclusion initiatives.

2024 Recommendations 2025 Action Plan

Enhance the succession

planning processes.

@ Consider how to enhance internal candidates by considering opportunities for individuals to move into stretch roles.

@ Allow and encourage the Board to have greater visibility and exposure to the layers below the Executive Committee.

@ Encourage increased opportunities for senior managers to present to the Board.

@ Consider how strategy impacts the structure and capabilities of the management team.

Allocate more time for

strategy to be considered

bythe Board.

@ Increase the opportunities for strategy to be considered by the Board.

@ Provide more time for blue sky, longer‑term, top‑down thinking separate to the business planning processes.

Review processes for the

Board monitoring project

performance.

@ Agree what operational and project reporting is required by the Board.

@ Continue to encourage Independent Non‑executive Directors to attend GTIC meetings (where the bid amount is below the £1 billion threshold normally required for Non‑executive attendance).

@ Continue to hone the orientation and onboarding process for new Independent Non‑executive Directors and encourage site visits to accelerate industry learning.

@ Consider how to use remuneration metrics to enhance performance and improve retention.

Clarify rules of engagement

in Committee meetings.

@ Clarify rules of engagement of non‑committee members during committee meetings and decision‑making responsibility.

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140140

Nomination

Committee

COMMITTEE REPORTS

Report of the Nomination Committee

I am pleased to present the report of

the Nomination Committee, setting

out the key activities undertaken

throughout 2024 and the priorities

for 2025.

During the year, the Committee continued to

focus on the long‑term succession planning for

the Board, its Committees, and the Executive

Committee. The Committee remained mindful of

the importance of diversity within the Board, its

Committees and senior management, and the

recommendations set out in the FTSE Women

Leaders Review, the Parker Review, and the

diversity criteria set out in the Listing Rules.

The Board underwent a number of changes in

the first half of 2024:

@ at the conclusion of the 2024 AGM, Dr

Stephen Billingham CBE and Stuart Doughty

CMG both retired;

@ with the support of executive search firm,

Odgers Berndtson, Robert MacLeod and

Gabby Costigan MBE were appointed as

Independent Non‑executive Directors on

8March 2024;

@ Robert MacLeod was appointed as Chair of

the Audit and Risk Committee, and Gabby

Costigan MBE was appointed as Chair of the

Safety and Sustainability Committee; and

@ Anne Drinkwater was appointed as the Senior

Independent Non‑executive Director.

Following the above changes to the Board’s

composition, together with the results of the

2023 internal Board performance review, the key

priorities of the Nomination Committee in 2024were:

@ to support the induction of Robert MacLeod

and Gabby Costigan MBE, and ensure both

Directors received a comprehensive handover

from their respective predecessors;

@ to support Anne Drinkwater’s induction

intoher new role of Senior Independent

Non‑executive Director;

@ to establish a separate working group to

identify a shortlist of candidates for a new

Independent Non‑executive Director role; and

@ undertake succession planning and a talent

review of the Board, Executive Committee,

senior management, and business‑critical

project leaders.

The search for a new Independent

Non-executive Director

A separate offline working group was established

to identify a shortlist of candidates for a new

Independent Non‑executive Director role. The

working group was comprised of the Chair of

theNomination Committee, the Group Human

Resources Director, and executive search firm

Heidrick & Struggles. The independent and

impartial search process focused on addressing

skills and knowledge gaps on the Board to deliver

against the Group’s Build to Last strategy. Italso

considered Board and Board Committee

composition, balance of skills and diversity of

perspectives. The search concluded with the

appointment of Rudolph (Rudy) Wynter, who

joinedthe Board on 1December 2024.

Rudy brings with him a wealth of knowledge

andexperience obtained from his long and

illustrious career at National Grid New York,

where he retired as President and Chief

Executive of National Grid plc in September

2024. Rudy’s background in mechanical

MEMBERSHIP

Charles Allen (Committee Chair)

Anne Drinkwater

Robert MacLeod

Barbara Moorhouse

KEY ACTIONS FROM 2024

@ Completed a search for two new

Independent Non‑executive Directors in

Q1 (Robert MacLeod and Gabby

Costigan).

@ Completed a search for a new

Independent Non‑executive Director in Q4

(Rudy Wynter).

@ Oversaw the induction programmes for

the newly appointed Directors.

@ Reviewed Board balance, composition

and diversity.

@ Reviewed succession plans for the

Board,its Committees and the

ExecutiveCommittee.

PRIORITIES FOR 2025

@ Review the Board’s succession plans.

@ Review the Executive Committee’s

succession plans and the progress of

professional development programmes

underway to support a diverse pipeline

ofcandidates.

@ Oversee the induction of Rudy Wynter.

@ Review Board balance, composition and

diversity against the short, medium and

long‑term needs of the Company.

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ROLES AND RESPONSIBILITIES

OFTHECOMMITTEE

@ Make recommendations to the Board

onthe appointment, reappointment,

retirement or continuation of any Director.

@ Propose and oversee induction plans

fornewly appointed Board members.

@ Make recommendations regarding

Directors’ independence.

@ Monitor the balance, composition,

diversity, structure, and size of the

Boardand Committees.

@ Conduct and monitor Board and Executive

Committee succession planning.

Main activities of the Committee during the year

Committee composition

The Committee comprises of two Independent

Non‑executive Directors, the Senior Independent

Non‑executive Director, and the Non‑executive

Group Chair.

Board composition andsuccession

Board composition is shaped and informed by:

@ succession planning activities undertaken by

the Committee;

@ ongoing assessments of the skills, experience

anddiversity required on the Boardto deliver

against the Group’s strategy, purpose and values;

@ insights derived from the Board performance

review; and

@ shareholder feedback.

The perspectives, skills and experience on the

Board are mapped to the needs of the business

and aligned to the Group’s strategy, purpose and

values. The Committee considers the length of

service of the members of the Board as a whole,

as well as the need for the Board to remain agile

and responsive to the evolving needs of the

Group and an ever‑changing external environment.

Biographies of the Directors who served

throughout 2024, including details of their

backgrounds and experience, can be found

onpages 120 and 121.

Time commitment

The anticipated time commitments of the Group

Chair and Independent Non‑executive Directors

are agreed and set out in their respective letters

ofappointment. To ensure each Director has

sufficient time to conduct their duties effectively,

and mitigate the risk of Director overboarding, the

Committee takes the following preventative steps:

@ prior to appointment, the Committee considers

and assesses any existing external commitments

on an individual’s time. This is necessary to

confirm their capacity to take on the role

anddischarge their duties effectively; and

@ any additional external appointments are

subject to Board approval to ensure Directors

can continue to devote the necessary time to

their duties.

Committee performance review

In 2024, the Board and its Committees

undertook an external performance review led

byEgon Zehnder. For more information on the

scope and outcomes of the review, please refer

to pages 137 to 139.

Election and re-election ofDirectors

All Independent Non‑executive Directors

undertake a fixed term of three years, subject to

annual re‑election by shareholders at the AGM.

The fixed term can be extended, but would not

normally exceed nine years, unless the Board

deemed there to be exceptional circumstances

that merit an extension beyond nine years.

Governance

In 2024 the Committee reviewed and updated its

terms of reference.

engineering and his experience in strategic

planning and leadership atNational Grid has no

doubt strengthened the Board’s capability to

deliver against our Build to Last strategy at a

timewhere the UK energy market is transitioning

towards electric and renewable technologies.

For more information on the newly appointed

Independent Non‑executive Directors, please

refer to their introductory Q&A on pages 122

and123.

Diversity and inclusion on the Board

The Board is compliant with the gender diversity

targets set by both the FTSE Women Leaders

Review, and the Listing Rules and Disclosure

Guidance & Transparency Rules (DTRs).

The Balfour Beatty Board is also compliant

withthe recommendations set by the Parker

Review and the Listing Rules and DTRs to

haveat least one Board Director from an ethnic

minority background.

The Committee continues to actively enhance

diversity through the Group’s ongoing succession

planning of both the Board and senior management.

Robert, Gabby and Rudy have all been welcome

additions to the Board in 2024, all utilising their

experience and skills to provide fresh ideas and

meaningful contributions to the Board and their

respective Committees. This was emphasised in

the findings of the Board’s external performance

review, which concluded that Board recruitment

in 2024 had enhanced the diversity of perspectives

within the boardroom, and in turn promoted

constructive debate and challenge.

I would like to thank the Committee and the

wider Board for their support and engagement

with succession planning and recruitment

throughout 2024.

Charles Allen

Chair of the Nomination Committee

11 March 2025

ALLOCATION

OF TIME

Performance, balance and

compositionreviews 50%

Governance and other matters 50%

SCAN OR CLICK TO VIEW THE

NOMINATION COMMITTEE’S

TERMS OF REFERENCE

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142142

COMMITTEE REPORTS CONTINUED

Main activities of the

Committee during the year

continued

Election and re-election ofDirectors

continued

Following this review and considerations of the

Directors’ tenure, the Committee unanimously

recommends the re‑election of each of Charles

Allen, Leo Quinn, Philip Harrison, Anne Drinkwater,

Louise Hardy, Michael Lucki, Barbara Moorhouse,

Robert MacLeod, and Gabby Costigan at the

2025 AGM; and the election of Rudy Wynter

following his appointment on 1 December 2024.

Diversity and inclusion

As Balfour Beatty continues to navigate through

macroeconomic headwinds, an ever‑changing

risk environment, and the global challenge to

achieve net zero and operational sustainability,

the Board needs to ensure it has the right balance

of skills, experience, and perspectives inthe

boardroom to face those challenges head on.

Therefore, diversity must be embraced and

embedded into the business, and that starts

withthe Board. While diversity is a key factor,

the Board continues to appoint on merit,

basedon the skills and experience required

formembership, while considering all forms

ofdiversity and independence.

In February 2025, the Committee recommended

the Board Diversity and Inclusion Policy for

approval by the Board in compliance with Disclosure

and Transparency Rule 7.2.8AR. The updated

policy applies specifically to the Board and its

Committees. The policy codifies the Group’s

ultimate goal of obtaining female and male parity

on the Board and its Committees and its goal

ofhaving no less than 40% male or female

representation and having a Director from an

ethnic minority background on the Board, while

recognising that periods of transition and change

in Board composition may result in temporary

periods when this balance is not achieved.

Further to this, the Committee will regularly

review the structure, size and composition

oftheBoard and its Committees, and make

recommendations to the Board with regard

tochanges that are deemed necessary.

The Board’s definition of diversity covers gender,

ethnicity, and age (as well as other protected

characteristics set out by the 2010 Equalities Act).

Gender diversity

As at 31 December 2024, Balfour Beatty held a

minimum of 40% female representation on the

Board, and had a female Director occupying a

senior Board role (Anne Drinkwater, Senior

Independent Non‑executive Director), therefore

the Board was compliant with the gender diversity

recommendations set out by the FTSE Women

Leaders Review, and the Listing Rules and DTRs.

The Committee considers that diversity on the

Board is fundamental to setting the tone for the

Group as it seeks to foster inclusivity and create

a dynamic environment that nurtures innovation

and sustainable growth. Balfour Beatty is dedicated

to actively promoting gender diversity and

empowering women in the construction industry.

For insights into the Group’s initiatives aimed at

advancing gender diversity and supporting

women’s career progression, please refer to

pages 72 and 73.

The Committee is cognisant that it remains

imperative that gender parity in senior management,

particularly on the Executive Committee, is also

diverse. To achieve this, Balfour Beatty is actively

engaged in succession planning and prioritising

the professional development of its existing

female workforce, enabling them to progress

tomore senior positions with the Group.

DIRECTOR APPOINTMENT PROCESS

When making a new appointment, the Committee takes the following steps:

See page 117 for details relating to the Board’s

most recent appointments.

DEFINE

RECRUITMENT

CRITERIA

Identify and articulate

objectives and criteria based

on its Board composition

reviews and succession

planning.

INSTRUCT EXTERNAL

CONSULTANT

Engage an executive search

consultant to provide a

diverse array of candidates

for consideration.

RECOMMEND

Agree a recommendation

for appointment to the Board,

taking account of matters

such as gender, social and

ethnic backgrounds and

cognitive and personal

strengths.

ASSESS

Assess each candidate’s

existing skills, experience and

time commitments, as well

as any potential for actual

conflicts of interest.

SHORTLIST AND

INTERVIEW

Shortlist candidates and

conduct interviews.

Nomination Committee continued

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Induction programmes are varied and include a selection of:

Meetings with the Board

@ One‑to‑one meetings with the Executive Directors,

Independent Non‑executive Directors, and the Group

General Counsel and Company Secretary.

Meetings with the Executive

Committee and senior

management

@ One‑to‑one meetings with members of the Executive

Committee, as well as meetings with key members of

senior management from a variety of departments and

business units, with the content of meetings varying

depending on the Director being inducted and their

background and individual experience.

Meetings with the auditors

@ Meetings with the Group Director of Risk and Audit and

the External Auditor.

Self-study

@ Documents provided via the electronic Board portal

covering key information relating to the Group including

financial performance, Board policies and procedures

and governance matters.

Site visits and workforce

engagements

@ Visits to key operational sites offer the Directors the

opportunity to meet with the workforce and gain

valuable insight into operations and Company culture.

Meetings with key shareholders

and stakeholders

@ Supported by the Group Chair and the Company

Secretary, the induction programme will, as appropriate,

include a schedule of meetings with major shareholders

and key stakeholders in order to support newly

appointed Directors’ understanding of shareholder and

stakeholder views, and the discharge of their Directors’

duties under Section 172 of the Companies Act 2006.

Education and training

@ If any gaps in skills or experience are identified within

the interview process, internal and external training will

be provided and tailored to the needs of theDirector.

For a breakdown of gender demographics across

the Group, please refer to the Sustainability

section on page 67. In compliance with LR

9.8.6R(10) additional diversity analysis can be

found on page175.

Ethnic diversity

The Committee acknowledges the significance

of the Parker Review, which provides guidance

and targets for increasing ethnic diversity within

the Board and senior leadership positions. As of

1 December 2024, the Board was compliant with

the Parker Review following the appointment of

Rudy Wynter as a Independent Non‑executive

Director. Rudy has been a welcome addition to the

Board, bringing with him a fresh perspective and

years of experience and expertise from his long

standing and illustrious career at National Grid

New York. Please see his biography on page 121

for further information.

The Committee recognises the importance of

ethnic diversity on the Board, and acknowledges

that for the Group to develop a truly diverse and

inclusive culture, the Board needs to:

@ set the right top‑down example;

@ be a more proportionate representation of the

Group’s workforce, the communities in which

it operates, and society at large; and

@ foster a culture that embraces and celebrates

diversity and inclusion.

As a business, Balfour Beatty must make every

effort to attract and retain a diverse talent and

break down the barriers that stifle recruitment

and progression of ethnic minorities within the

industry. With the support of the HR function,

the Group drives a number of initiatives to

support career development of ethnic minorities

within the workforce. Details of such initiatives

can be found in the People section on pages 72

and 73.

Listing Rules and Disclosure Guidance

andTransparency Rules

As at 31 December 2024, the Board was

compliant with the diversity targets by Listing

Rule 9.8.6R(9)(a), as the Board:

@ had 40% female representation (22.2% on the

Executive Committee);

@ had at least one senior board position occupied

by a female Director (Anne Drinkwater was

appointed as Senior Independent

non‑executive Director); and

@ at least one board member was from a minority

ethnic background (although there are currently

no Executive Committee members from an

ethnic minority background).

Data on these targets in the required standardised

form can be found in the Directors’ report on

page 175.

The Board and the Committee remains committed

to diversifying the workforce at all levels by

supporting a diverse succession pipeline at

senior management level and supporting and

monitoring Group‑wide diversity and inclusivity

policies and initiatives designed to promote

diversity across the construction sector.

Director induction

Following appointment, all Directors receive a

comprehensive and tailored induction programme.

All newly appointed Directors are required to

devote the time required to complete the induction

programme. The time commitments

are set out in

their respective letters of appointment. Induction

programmes are designed by the Company

Secretary in conjunction with the Group Chair,

Senior Independent Non‑executive Director and

Group Chief Executive.

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144144

Safety and

Sustainability

Committee

COMMITTEE REPORTS CONTINUED

Report of the Safety and

Sustainability Committee

I am pleased to present my first

Safety and Sustainability Committee

report having taken over as Chair of

the Committee from Stuart Doughty

CMG who retired from the Board

following the Company’s 2024 AGM.

The Committee met three times in 2024 and

itsmeetings were regularly attended by other

members of the Board as well as the Health,

Safety and Wellbeing Director, Lee Hewitt, and

the Group Director of Sustainability, Jo Gilroy, both

of whom provide expertise and support to the

Committee on their relevant subject matters.

Other key individuals are invited to meetings

ofthe Committee to support the Committee

inunderstanding particular matters.

Rudy Wynter joined the Committee in February

2025 following his appointment to the Board on

1December 2024.

Health, safety and wellbeing

I am delighted to share that Balfour Beatty delivered

its best health and safety performance to date in

2024. Balfour Beatty’s ‘Make Safety Personal’

culture, supported by our Zero Harm strategy

andDigital Safety and Engagement initiatives

collectively supported the Group to record:

@ no fatalities recorded in 2024;

@ Lost Time Incident Rates (LTIR) fell to 0.09

(2023: 0.11), the lowest figure ever achieved

across the Group;

@ the major injury rate remained at 0.02 in 2024,

maintaining the strong performance of 2023; and

@ a Group record of 470,506 safety observations

were submitted by employees.

The Group continued its positive work supporting

the mental health of employees in 2024. The

health of employees is viewed as a key component

of the Zero Harm initiative as the focus on ‘Be Fit

for Work’ explores physical, emotional, and mental

health. In 2024, the Group furthered its efforts by

renewing its partnership with construction industry

charity Mates in Mind, in a bid to promote positive

mental health and wellbeing in the construction sector.

The Group is expanding its use of innovative

digital solutions and AI to enhance its safety

culture and deliver against its Zero Harm strategy.

The use of animations to deliver lessons learned,

and human form recognition technologies are

serving to keep our employees safe.

For further information on health, safety and

wellbeing please refer to page 40 to 45.

Sustainability

In 2024, we evolved and relaunched our

sustainability strategy. This established new

commitments and targets in key areas, including:

climate change, nature positive, resource efficiency,

supply chain integrity, community engagement,

and employee diversity, equity and inclusion.

The Company has developed science‑based

targets to set a clearly defined path to reduce

emissions in line with the Paris Agreement goals.

The targets were submitted to the Science Based

Targets initiative (SBTi) for validation in line with

the most recent SBTi criteria. Following SBTi

validation, the Company will publish those targets

on its website and will disclose each year the

Group’s emissions and progress against targets.

Gabby Costigan MBE

Chair of the Safety and Sustainability Committee

11 March 2025

MEMBERSHIP

Gabby Costigan (Committee Chair)

Anne Drinkwater

Louise Hardy

Leo Quinn

Rudy Wynter

KEY ACTIONS FROM 2024

@ Support the onboarding of Gabby Costigan

MBE, as the new Committee Chair.

@ Received reports on the implementation

of Group health, safety, and wellbeing and

sustainability initiatives.

@ Reviewed findings from incidents and

near misses and ensured learnings were

embedded across the Group.

@ Implemented and monitored the Building

New Futures commitments.

@ Received updates on regulatory

developments across health, safety,

wellbeing and sustainability matters.

PRIORITIES FOR 2025

@ Monitor progress towards the Group’s

Building New Futures targets for net zero,

resource efficiency, nature positive,

community impact and DE&I.

@ Focus on a culture of Zero Harm and

Group‑wide sustainability.

@ Continued focus on targeted risk elimination.

@ Monitor progress against the Group’s

SBTi trajectory for net zero.

@ Oversee the development of a US‑specific

Sustainability Plan.

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ROLES AND RESPONSIBILITIES

OFTHECOMMITTEE

@ Reviewing strategies, policies and procedures

of the Group in relation to health, safety,

andwellbeing and sustainability matters.

@ Monitoring and updating the Group’s

control processes where appropriate.

@ Approving health and safety targets and

key performance indicators, monitoring

the Group’s performance against them

and taking corrective action where necessary.

@ Monitoring the Group’s performance against

the main health, safety, wellbeing and

sustainability risk groups, and implementing

strategies to mitigate such risks.

@ Reviewing the environmental and

sustainability performance of the Group,

including but not limited to energy and carbon

emissions, materials and waste management

and social and community matters.

@ Approving environmental and sustainability

targets and key performance indicators,

monitoring the Group’s performance

againstthem and taking corrective action

where necessary.

Main activities of the

Committeeduring the year

Safety performance and ZeroHarm

The Health, Safety and Wellbeing (HS&W)

Director issued regular reports to the Committee

throughout 2024 on the Group’s performance

against various health and safety KPIs including

data covering fatalities, injuries, serious and

minor events, near misses and health and safety

observation reporting. Following a strong

performance in 2023, the Group continued to

receive a record number of workforce safety

observations, indicating strong employee

engagement in respect of health and safety

matters. Positive employee engagement results

also confirmed the continued strong Zero Harm

culture within the business. Further details on

Zero Harm can be found on pages 40 to 45.

Reports were received regarding progress on

Group initiatives, including:

@ US Civils building safety;

@ progress against Zero Harm and priorities; and

@ incident overview and actions.

Notable incidents and fatalities

No fatalities were recorded in 2024. The Committee

continued to receive regular reports on learnings

and actions arising from incidents or near misses

that had high potential of serious injury.

Environment and sustainability

In 2024 the Group launched an updated

sustainability strategy across its UK operations,

intended to simplify, prioritise, and consolidate

the Group’s approach to sustainability and the

adoption of a uniform approach to delivering

sustainability ambitions.

The Committee received regular updates

throughout the year on the Company’s

performance on sustainability and environmental

targets, including waste management and carbon

performance. The Committee also monitored the

Group’s social impacts and creation of social

value for local communities.

Performance was monitored in 2024 and key

takeaways of performance against focus areas

were identified which in turn assisted with the

development of a tailored plan of action. The

Company believes this strategy demonstrates

alignment with the Sustainable Development

Goals set by the United Nations and allows for

consistency across the business.

Governance

During the year, the Committee reviewed its

Terms of Reference, which can be found on the

Company’s website.

The Committee monitored the resourcing of

boththe HS&W and Sustainability functions, and

reviewed the appropriateness and effectiveness

of the governance framework for HS&W and

sustainability matters.

Committee performance review

In 2024, the Board and its Committees undertook

an external performance review led by Egon Zehnder.

For more information on the scope and outcomes

of the review, please refer to page 137 to 139.

ALLOCATION

OFTIME

Health and safety updates 42%

Environment and sustainability updates 44%

Governance and other matters 14%

Talk

Positively

Award

This category was for an individual who talks

withpride andenthusiasm about our business,

ourcolleagues, ourindustry, and our future.

Winner: Summer Boron

Vice President, US Buildings

Summer has long been one of the people

inthe US Northwest Division that has a

significant positive impact on Balfour Beatty’s

culture and work experience in the US. Her

impact on the business started within the

Marketing team where her positive energy

and personality made her an ideal candidate

for working with colleagues within the business

to produce top quality winning proposals.

READ MORE ABOUT

OUR ICON AWARDS

EVENT ON p74

Above: Award presentation photo. (Left to right):

GabbyCostigan MBE, Balfour Beatty Independent

Non‑executive Director, Summer Boron, Vice President

– US buildings, and Richard Robinson, President AMEA

(Asia, Middle East, Australia) – AtkinsRéalis.

SCAN OR CLICK TO VIEW THE SAFETY

AND SUSTAINABILITY COMMITTEE’S

TERMS OF REFERENCE

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Audit

andRisk

Committee

MEMBERSHIP

Robert MacLeod (Committee Chair)

Louise Hardy

Michael Lucki

Barbara Moorhouse

KEY ACTIONS FROM 2024

@ Supported the induction of Robert

MacLeod as the new Chair, and Louise

Hardy as a new Committee member.

@ Continued to monitor developments in

thecontrol environment in the US

MilitaryHousing business, and reviewed

progresson the implementation of the

recommendations set out in the independent

compliance monitor’s initial and first

follow‑up report.

@ Reviewed and challenged management’s

judgements on significant accounting

issues including key contract judgements

and management’s assessment of claims

including those relating to the Building

Safety Act.

@ Continued to monitor risk management

and internal control frameworks.

@ Reviewed and monitored the development

and ongoing implementation of a new

Internal Control Framework (ICF) in

preparation for compliance with the

Provision 29 of the 2024 Corporate

Governance Code in 2026.

@ Continued to monitor and review employee

training and development, and conducted

investment risk assessments and ethics

and compliance risk assessments.

Report of the Audit

andRiskCommittee

I am pleased to present my first

report of the Audit and Risk

Committee. I took over as Chair in

May 2024 following the departure

ofDr Stephen Billingham CBE who

stepped down from the Board and

the Committee at the end of his

nine-year tenure.

This report is intended to provide shareholders

with an insight into key areas considered by the

Committee, together with an explanation of how

the Committee discharged its responsibilities and

provided assurance on the integrity of the 2024

Annual Report and Accounts.

The Audit and Risk Committee assists the Board

in fulfilling its responsibilities related to Group

financial statements, risk management and

financial controls, and overseeing the Internal

Audit function and the external auditor.

The Committee held four meetings in 2024,

allofwhich were fully attended. All Independent

Non‑executive Directors are encouraged to attend

Committee meetings and meetings were also

regularly attended by the Group Chair, Group Chief

Executive, Chief Financial Officer, Group Risk and

Audit Director, UK Head of Internal Audit, Group

Financial Controller, Group General Counsel and

Company Secretary and representatives of the

external auditor, including the lead audit partner.

There were further ad hoc attendees who joined

Committee meetings for specific agenda items.

PRIORITIES FOR 2025

@ Review and monitor the ongoing

implementation of the matured Internal

Control Framework (ICF).

@ Conduct the tender process for the

selection of an external audit firm for

the31 December 2026 year end.

@ Continue to monitor developments in

thecontrol environment within the US

Military Housing business and continue

toassess the implementation of further

recommendations from the independent

compliance monitor.

@ Continue to support the training and

development appointed Committee

members in respect of audit and risk matters.

@ Continue to review and challenge

management’s judgements on significant

accounting issues including key contract

judgements.

@ Conduct robust reviews of the detailed

drivers and mitigation activities of the

Group’s principal risks.

COMMITTEE REPORTS CONTINUED

147Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

ROLES AND RESPONSIBILITIES OF THE COMMITTEE

@ Monitoring the integrity of the Group’s

financial statements, including providing

advice (where requested by the Board) on

whether the Annual Report, taken as a

whole, is fair, balanced and understandable,

and provides the information necessary for

shareholders to assess the Company’s

position and performance, business model

and strategy.

@ Reviewing any significant financial issues and

judgements related to the Group’s financial

statements, including the Investments

portfolio valuations.

@ Ensuring management has effective systems

of risk management and internal control in place.

@ Monitoring the effectiveness of the Internal

Audit function.

@ Overseeing the relationship with the external

auditor, including annual approval of the external

audit plan, review of audit opinions, setting of

external auditor remuneration, and reporting

the results of external audits to theBoard.

@ Responsible for the appointment of the

external auditor, and overseeing audit tenders

when these take place.

@ Monitoring the effectiveness, objectivity and

independence of the external auditor, including

factors related to the provision of non‑audit

services.

@ Reviewing the Company’s carbon emissions

data, related emissions intensity data, and

social value disclosures included in the 2024

Annual Report.

Internal Control Framework (ICF)

An area of focus during 2024 was further developing

the maturity of the Internal Control Framework (ICF)

in preparation for compliance with Provision 29 of

the 2024 UK Corporate Governance Code in 2026.

Throughout 2024, the Audit and Risk Committee has

overseen the ongoing progress towards building a

more mature Group‑wide Internal Control

Framework (ICF), which has included:

@ working with subject matter experts to

understand control owners, the control

designand the verification process;

@ establishing a standardised template for

documenting internal controls in the ICF

andestablish a tiering system aligned to

organisational hierarchy;

@ developing a set of materiality criteria to help

the Board identify and categorise material

controls; and

@ seeking feedback from the Audit and Risk

Committee on the design of the proposed

assurance process.

US Military Housing

The Committee received regular updates on

theBalfour Beatty Communities’ Compliance

Programme throughout the year. In 2024,

Itookthe opportunity to meet the independent

compliance monitor in person. Regular meetings

with senior management and the independent

compliance monitor took place throughout the

year which provided an opportunity for all sides:

@ to review the progress against responding

tothe Monitor’s recommendations;

@ to assess the timescales of the action plan put

in place to implement the recommendations;

@ to review the resourcing of the team required

to deliver the plan; and

@ to confirm that the implementation team

receives the support necessary to ensure the

monitorship process is successful and delivers

the desired outcomes.

In 2024, the independent compliance monitor

published their first follow‑up report and attended

the Committee in November to present their

findings. The follow‑up report issued a number

offurther recommendations (in addition to the

recommendations arising from their first report).

For more information on the Committee’s oversight

of the US Military Housing business, please refer

to page 150.

Governance

The Committee annually reviews and approves

its Terms of Reference, which can be viewed by

scanning or clicking on the QR Code on the left

hand side.

In accordance with its Terms of Reference, the

Committee remained focused on monitoring the

integrity of the Group’s financial and risk reporting

and continued to discharge its duties to the

Board. Further detail on the Committee’s

activities throughout the year is set out on

thefollowing pages.

Robert MacLeod

Chair of the Audit and Risk Committee

11 March 2025

ALLOCATION

OFTIME

Financial reporting and external audit 50%

Internal audit, risk management and

internal control 39%

Governance and other matters 11 %

SCAN OR CLICK TO VIEW THE

AUDIT AND RISK COMMITTEE’S

TERMS OF REFERENCE

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Main activities of the Committeeduring the year

Committee activities during 2024

The Committee has a substantial remit and cycle of actions to complete throughout the year. The Committee Chair, with the support of the Group Company Secretary, ensures the Committee fully discharges

itsresponsibilities in accordance with its terms of reference, whilst maintaining sufficient time for discussion of ad hoc items that arise throughout the year.

MAR MAY AUG NOV

Group financial statements

Received reports on financial and accounting, contract and commercial issues and litigation

Approved financial results regulatory announcements and the Annual Report and Accounts to be put to the Board

Approved the Group’s viability and going concern statements

Reviewed Directors’ valuation of the Investments portfolio

Approved greenhouse gas emissions representation letter to PwC

External auditor

Reviewed the external auditor’s report on the Company’s full year and half year financial statements

Reviewed the external auditor’s assessment of its objectivity and independence including a review of non‑audit services (and associated

fees) provided by the external auditor

Reviewed management representation letters related to the Company’s full year and half year financial statements

Reviewed the external auditor’s half year review plan and audit strategy

Reviewed the effectiveness of the external auditor

Reviewed the briefing document prepared by management on the external audit tender process due to commence in 2025

Approved the external auditor’s fees

Risk management and

financial controls (including

the Internal Audit function)

Conducted assessments of the Group’s systems of risk management and internal control, including a robust assessment of principal and

emerging risks

Approved internal audit plans and received updates on internal audit and risk

Received updates on US military housing controls and compliance (attended by the independent compliance monitor)

Received the half year risk and controls report

Other matters

Received updates on Group tax and insurance

Received updates on Group ethics and compliance, including whistleblowing reports

Reviewed the annual update to the Ethics and Compliance Programme charter

Terms of reference review

Held private meetings between the non‑executive Directors, Group Risk and Audit Director and KPMG

COMMITTEE REPORTS CONTINUED

Audit andRisk Committee continued

149Balfour Beatty plc | Annual Report and Accounts 2024

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Significant issues and other accounting judgements

The following sets out all significant issues reviewed by the Committee throughout the year, being

those requiring management to exercise the highest level of judgement or estimation. The Committee

assesses these judgements or estimates to determine if they are reasonable and appropriate.

Committee composition

The Committee is chaired by Robert MacLeod.

Inaccordance with the UK Corporate Governance

Code, the Board has determined that Robert has

recent and relevant financial experience, and the

Committee as a whole has the required skills and

expertise to discharge their duties.

The Committee Chair is supported by the other

Committee members in delivering the Committee’s

governance responsibilities. Committee members

possess a range of experience relevant to the

sector within which the Company operates, and

also in relation to financial management, audit and

risk. The Committee members’ full biographical

details can be found on pages 120 and 121.

Evaluation of the Committee

In 2024, the Board and its Committees undertook

an external performance review led by Egon

Zehnder. For more information on the scope and

outcomes of the review, please refer to pages

137 to 139.

Financial reporting

A key responsibility of the Committee is to

monitor and oversee the integrity of the Group’s

published financial statements. This responsibility

is discharged in part through the review and

evaluation of the Company’s full year and half

yearfinancial statements.

REVENUE AND MARGIN RECOGNITION

Given the nature of the Group’s operations,

these elements are central to how it values

its work. Having reviewed detailed reports

and met with management, the Committee

considered contract and commercial issues

on projects which have an elevated level of

exposure to both revenue and margin

recognition risks based on certain risk

parameters set by management. As a key

area of audit focus, the Committee also

received a detailed written report from the

external auditor setting out the results of its

work in relation to key contract estimates.

NON-UNDERLYING ITEMS

The key judgement is whether items relate to

underlying trading or not and whether they

have been presented in accordance with the

Group’s accounting policy. The Committee

conducted a review of each of the non‑underlying

items, receiving written reports from

management and the external auditor as

totheir quantum and nature.

CONTRACT PROVISIONS

The Committee reviewed the significant

estimates of the quantum and timing of

liabilities relating to contract provisions

(including those relating to fire safety),

aswell as litigation and other risks. The

Committee received detailed reports

including relevant legal advice.

RETIREMENT BENEFIT OBLIGATIONS

The key judgement relates to the assumptions

underlying the valuation of retirement benefit

obligations. The Committee received reports

from management outlining the assumptions

used, including input from the Group’s

actuaries, in particular in relation to discount

rates, inflation and mortality, which were

evaluated against external benchmarks and,

in relation to which, the external auditor also

provided reports.

GOING CONCERN AND VIABILITY

STATEMENT

In order to satisfy itself that the Group has

adequate resources to continue in operation

for the foreseeable future and that there are

no material uncertainties that could lead to

significant doubt as to the Group’s ability to

continue as a going concern, the Committee

considered the Group’s viability statement,

cash position (both existing and projected),

bank facilities and covenants (including

bonding lines) and the borrowing powers

allowed under the Company’s Articles of

Association. The Committee subsequently

recommended to the Board the adoption

ofthe going concern statement and the

viability statement for inclusion in the

AnnualReport and Accounts. More details

ongoing concern and the viability statement

are contained in Note 1 on page 198 and

onpage 106 respectively.

DIRECTORS’ VALUATION OF THE

INVESTMENTS PORTFOLIO

The Committee assessed the methodology

used to value the assets in terms of the

discount rates applied. It also critically

appraised the output of the Directors’

valuation exercise.

The Committee has full access to management,

in order to ask questions and gain further insights

where necessary and receives reports from

members of the Finance and Internal Audit

teamsand the external auditor.

The Committee assesses whether the annual

financial statements provide a ‘fair, balanced and

understandable’ view of the Group’s position and

performance, business model and strategy, as

well as:

@ assessing whether the accounting policies

applied, and judgements (including key contract

judgements), estimates and assumptions

made, by management are reasonable and

appropriate based on information available

(further details are in Note 2 on pages 206

to296); and

@ assessing whether the Company has complied

with relevant financial reporting standards and

other regulatory requirements, including the

UK Corporate Governance Code and European

Securities and Markets Authority Guidelines on

Alternative Performance Measures.

Going concern and viabilitystatement

As part of the Board’s wider responsibility for

assessing the Group’s principal and other risks (see

pages 94 to 105), the Committee was presented

with management’s assessments of the Group’s

viability over a three‑year period to 31 December

2027; and, its going concern basis for the period of

at least 12 months from the date of approval of the

financial statements.

The Committee assessed these analyses and

assumptions, taking into account cash flows,

current levels of debt and the availability of future

finance if required. The viability and going concern

assessments, including the severe but plausible

downside scenarios modelled, were discussed and

the Committee concluded that the assessments

were appropriate.

150150

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Going concern and viabilitystatement

The Committee also continued to consider the

impact of climate change on the Group’s viability.

The Committee subsequently approved the

viability statement and the going concern

disclosures for inclusion in the Annual Report

andAccounts 2024.

The viability statement and the going concern

disclosure can be found on page 106 and in

Note1 on page 198 respectively.

US Military Housing

During the year the Committee received regular

updates from senior leaders on the work within

Balfour Beatty Communities to improve the

control environment within the Military Housing

business. The Committee and senior management

continued to monitor and assess improvement

activities being undertaken to deliver the Compliance

Programme and enhance internal controls.

In 2024, the independent compliance monitor,

appointed by the US Department of Justice,

issued their first follow‑up report, which included

a number of new recommendations (in addition

to the recommendations set out in their first

report). The recommendations included adopting

a new and holistic approach to programme

implementation, and that Balfour Beatty Communities

establish a Compliance Combined Action Team

(the CCAT) to deliver the programme. The

independent compliance monitor presented

theirnew recommendations to the Committee

inNovember.

In November 2024, Balfour Beatty Communities

and the independent compliance monitor agreed

to extend the most recent implementation

periodto enable the delivery of the additional

recommendations set out in the first follow‑up

report and agreed to commence the second

follow‑up review period in March 2025.

Building safety provisions

The Committee received regular updates from

management in respect of the process to identify

and confirm building safety liabilities.

The UK Building Safety Act (BSA) extends the

limitation for claims under the Defective Premises

Act 1972 from 6 years to 30 years for dwellings

completed before 28 June 2022. Since the

introduction of the BSA, the Group has conducted

investigations and due diligence on claims received

to establish whether an obligation exists and if

costs can be reliably estimated, and these have

been reviewed by the Committee. The Group has

recognised a provision where a probable obligation

has been established and cost associated with

the claim can be reliably estimated.

In 2024, following further developments and

clarifications in the legal landscape of the BSA,

progression of the Group’s investigation and due

diligence, as well as adjudications on claims

received to date, the Group has reassessed its

provision for BSA claims resulting in an increase

in the provision of £83 million. The provision does

not include potential recoveries from third parties.

This increase has been recognised in non‑underlying

due to its size and the nature of the cost, which

has arisen from a change in legislation.

Based on its review and discussions with

management and the external auditor, the

Committee concluded that the level of the

provision and the treatment as a non‑underlying

item was appropriate.

Claim relating to legacy project in Texas

The Committee assessed management’s

treatment of the claim relating to a legacy project

in Texas which completed in 2012. Further details

are available in Note 10.2.4.

In light of the jury verdict delivered in November

2024 on this claim, the Group has recognised a

non‑underlying charge of £52 million. This charge,

which is net of insurance recoveries of £40 million

for which the Group has received confirmation of

cover from its insurers, represents the Group’s best

estimate of the probable damages to be awarded.

The Group maintains the view that these damages

are a result of design elements of the contract

which were performed by subcontractors to the

joint operation. The Group, together with its joint

operation partner, is pursuing recoveries from

these subcontractors, however at this stage,

theGroup has not recognised any potential

recoveries from these parties.

Based on its review and discussions with

management and the external auditor, the

Committee concluded that the level of the

provision together with the recognition of

insurance recoveries, and the treatment as

anon‑underlying item was appropriate.

External auditor

Rotation and reappointment

The Company’s external auditor is KPMG LLP.

KPMG’s appointment was first approved by

shareholders at the 2016 AGM, following an audit

tender process in 2015. KPMG replaced Deloitte,

the incumbent for the preceding 14 years.

Pursuant to the provisions of the Revised Ethical

Standard 2019, the Company has adopted a policy

that no external auditor, appointed following the

implementation of the Revised Ethical Standard

2019 (as summarised below), can remain in post

for longer than 20 years. TheCompany has adopted

a policy that the Committee will lead an audit

tender process every 10 years and that this will

apply to the current incumbent, KPMG. Consequently

the next external audit tender is anticipated to

take place following the completionof KPMG’s

audit for the year ended 31 December 2024.

The Audit and Risk Committee’s

role in ensuring the financial

statements taken as a whole are

fair, balanced and understandable

As part of the Committee’s assessment as

towhether the annual financial statements

provide a ‘fair, balanced and understandable’

view, the Committee has oversight of and

reviews the effectiveness of the following

processes implemented by management:

@ comprehensive guidance issued to

allcontributors;

@ verification of the factual content of the

financial statements;

@ review of the disclosures made by the

contributors to each section; and

@ comprehensive reviews by senior

management to ensure consistency and

overall balance.

In addition to the above, the Committee also

undertakes a review to determine if the entire

financial statements are representative of the

Group’s performance in the year and challenges

management on the overall balance of the

report prior to recommending approval of the

financial statements to theBoard.

COMMITTEE REPORTS CONTINUED

Audit andRisk Committee continued

Main activities of the Committeeduring the year continued

151Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

The Committee considers that the external

auditor relationship is appropriate and productive

and the Committee is satisfied with KPMG’s

effectiveness. Mike Barradell completed his

second year as lead audit partner for the year

ended 31 December 2024. The external auditor

is required to rotate the lead partner every five

years – such changes are planned carefully to

ensure business continuity, whilst avoiding the

introduction of undue risk of inefficiencies and

any impact to audit quality.

The key aspects of the Revised Ethical Standard

2019 include the following:

@ audit firms should have a maximum tenure

of10 years, although the UK Government

proposes to allow an extension of:

– up to an additional 10 years where a public

tender is carried out after 10 years; or

– by up to an additional 14 years where more

than one audit firm is appointed to carry out

the audit;

@ audit firms are prohibited from providing

certain non‑audit services;

@ where permitted non‑audit services are

provided by a group’s auditor, they will be

subject to a fees cap; and

@ restrictions within any contract limiting a

group’s choice of auditor are prohibited.

The disclosures provided within this report

constitute the Company’s statement of

compliance with the requirements of the

Statutory Audit Services for Large Companies

Market Investigation (Mandatory Use of

Competitive Tender Processes and Audit

Committee Responsibilities) Order 2014.

Audit tender

In anticipation of the audit tender to be

conducted following the completion of KPMG’s

audit for the year ended 31 December 2024,

theCommittee has been preparing for the tender

and has outlined its proposed timetable below.

The process is anticipated to commence in

earnest once the request for proposal is issued in

April 2025. The Committee has currently invited

a shortlist of audit firms to participate, including

KPMG. Thisshortlist follows an assessment

carried out identifying firms that have the

experience, track record and capacity to perform

a robust audit. In assessing this shortlist, the

Committee has reviewed the Financial Reporting

Council’s (FRC) assessment of each firm’s audit

quality, including quality scores from the latest

FRC Audit Quality Reports. The Committee has

also sought confirmation of independence from

each firm and confirmation that conflict of

interest checks have been performed.

The Committee intends to conclude the audit

tender process by July 2025 with the selected

audit firm appointed at the Company’s AGM in

2026 for the external audit firm to be in place to

conduct the Group’s half year review for 2026.

KPMG will remain in place for the Group’s

31December 2025 audit.

Independence

A formal review of the external auditor’s

independence is conducted by the Committee

annually. The most recent review took place in

March 2025, when the Committee considered

aletter submitted by KPMG which sets out:

@ any relationships that bear on its objectivity

and independence and the safeguards

implemented to address any consequent

threats to independence; and

@ considerations related to the provision of

non‑audit services, including a comparison

forthe prior year (further detail below).

Following review of this letter, the Committee

satisfied itself that KPMG remained sufficiently

independent in accordance with the relevant

professional ethical standards.

EXTERNAL AUDITOR TENDER TIMETABLE

2016

May–June

2025

2023 2024

April

2025

July

2025

July

2025

May

2026

AGM

KPMG appointed as

external auditor at

2016 AGM, replacing

Deloitte as

incumbent auditor

Management

meetings with

audit firms take

place

Mike Barradell

replaces Paul Sawdon

as KPMG lead audit

partner following

Paul’s completion of

his fifth year as lead

audit partner

Shortlist of audit firms

confirmed with

chosen audit firms

confirming

independence

Request for

proposal delivered

to audit firms

Presentations by

audit firms to

Audit

Committee’s

sub‑committee

Recommendations

to the Audit

Committee

Appointment of

external auditor by

shareholders

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Main activities of the

Committeeduring the year

continued

External auditor continued

Non-audit work

The Company maintains a Non‑Audit Services

Policy governing the provision of non‑audit

services. The policy sets out:

@ specific services that the external auditor

isprohibited from providing to the Group;

@ details of any characteristics that could

potentially make a service prohibited; and

@ a requirement for the Chief Financial Officer to

approve non‑prohibited services where the fee

is below £50,000, and for the Chair of the

Audit and Risk Committee to approve

non‑prohibited services where the fee

exceeds£50,000.

KPMG also operates its own internal policy that

prohibits it from providing non‑audit services,

other than one closely related to an audit, to any

FTSE 350 company.

These provisions help to safeguard the external

auditor’s objectivity and independence, and

mitigate the risk that the external auditor will:

@ audit its own work;

@ make management decisions on behalf of

theGroup;

@ act as advocate for the Group; and/or

@ create a mutuality of interest with the Group.

In accordance with the policy for the provision of

non‑audit services, and in line with the Financial

Reporting Council’s ethical standards, the aggregated

spend on non‑audit services with the external

auditor must not exceed 60% of the Group audit

fee, unless exceptional circumstances exist, with

a three‑year rolling average not exceeding 70%

ofthe Group audit fee.

During 2024, there were fees of £0.6 million

(2023: £0.5 million) paid to KPMG for non‑audit

services. 2024 non‑audit services provided by

KPMG primarily related to the review of the

Group’s half year results.

Audit fees for 2024 were £5.2 million

(2023:£5.1million). Further details are

includedin Note 6.2 on page 213.

65% of non‑audit‑related work provided by

international accounting firms in 2024 was

carried out by firms other than KPMG.

Effectiveness

As part of the Committee’s annual cycle of activities,

the Committee conducts an effectiveness review

of the external auditor, assesses the appropriateness

of the external audit plan, and assesses the external

auditor’s professional scepticism. From this review,

the Committee assessed that the audit was

effective and recommendations for improvement

were identified and communicated to the external

auditor where necessary. Committee members

meet privately with the external auditor and

management throughout the year in order to

gainfeedback to support these assessments.

Risk management and

internal control

The Board assumes ultimate responsibility for

the effective management of risk and internal

control across the Group. However, the

Committee assists the Board in monitoring the

Group’s internal financial controls, and internal

control and risk management systems, and

monitoring and reviewing the work and

effectiveness of the Internal Audit function.

Internal Audit

The Internal Audit function plays an integral

rolein the Company’s governance structure,

providing independent assurance and advice

tohelp the Group achieve its strategic priorities.

The half yearly internal audit plans were approved

by the Committee and provided an assessment

of the adequacy of the budget and resources.

Each audit plan is based on risk, strategic priorities

and consideration of the strength of the control

environment. The Committee monitors progress

against the plan and reviews the results of internal

audit reports during each meeting. Management

is responsible for ensuring that issues raised in

internal audit reports are addressed within the

agreed timetable and their timely completion is

reviewed by the Committee. Where internal or

external circumstances give rise to an increased

level of risk, the audit plan is modified accordingly.

The effectiveness of the Internal Audit function

isassessed by the Committee by evaluating

internal audit reports and at meetings without

management present. The Committee also

reviewed the resources and skills of the Internal

Audit function and concluded that they are

appropriate for its activities. Accordingly, the

Committee is satisfied that the quality, experience

and expertise of the Internal Audit function is

appropriate for the business.

Internal control and risk

Details of the Group’s internal controls and risk

management framework are set out more fully

on pages 89 to 93 in the Strategic report and

pages 134 and 135 in the Governance report.

TheGroup’s principal risks are set out on pages

94 to 105.

The Committee has evaluated the effectiveness

of the internal control systems operated within

the Group pursuant to the FRC’s guidance on

internal controls.

Theevaluation covered:

@ all material financial, operational and

compliance controls;

@ management confirmation reports;

@ reports on controls;

@ reports on fraud perpetrated against the Group;

@ the Group’s approach to anti‑bribery and

corruption and whistleblowing; and

@ reports from both the Internal Audit function

and the external auditor.

The review did not identify any significant

weaknesses in the system of internal control

andrisk management.

Furthermore, the Committee has overseen

theongoing development of a new Group‑wide

Internal Control Framework (ICF) in preparation

for compliance with Provision 29 of the 2024 UK

Corporate Governance Code from 1 January 2026.

Whistleblowing and fraud

Throughout 2024 the Committee, on behalf of

the Board, considered the Group’s confidential

reporting and whistleblowing procedures and

remains satisfied that these procedures are

sufficiently robust and appropriate. TheCommittee

tracks any Speak Up reportsreceived, and

monitors any investigations undertaken and any

restorative actions taken bythe Group. The

Committee also reviews any instances of fraud

perpetrated against the Groupand the action

taken by management toprevent recurrences.

COMMITTEE REPORTS CONTINUED

Audit andRisk Committee continued

153Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Remuneration

Committee

MEMBERSHIP

@ Anne Drinkwater (Chair of the Committee)

@ Michael Lucki

@ Robert MacLeod

@ Barbara Moorhouse

KEY ACTIONS FROM 2024

The Committee’s time in 2024 was focused

on overseeing the implementation of the current

Remuneration Policy. Key actions included:

@ considered ongoing developments in

external corporate governance and best

practice including the effective use of

environmental, social and governance

(ESG) measures within incentive arrangements

;

@ ensured the current Remuneration Policy

was implemented in alignment with

business strategy and culture; and

@ reviewed and monitored senior management

and wider workforce demographics and

remuneration across the Group’s operations

to ensure alignment with culture and as

broader context for remuneration policy.

PRIORITIES FOR 2025

@ Conduct a full review of Remuneration

Policy to ensure it remains effective and

aligned to the Group’s strategic objectives.

This will include ongoing shareholder

consultation in advance of the 2026 AGM

policy vote.

@ Further consider how to effectively incorporate

measures within incentive arrangements.

@ Continue to ensure the Remuneration

Policy is implemented in alignment with

business strategy and culture.

@ Continue to review and monitor wider

workforce demographics and remuneration

across the Group’s operations to ensure

alignment with culture and as broader

context for Remuneration Policy.

Report of the Remuneration

Committee

As Chair of the Remuneration Committee, I am

pleased to present our Directors’ remuneration

report for the year ended 31 December 2024.

At the AGM in 2023, the Remuneration Policy

wasapproved by over 81% of shareholders and

asummary of the policy and how this will be

implemented for the year ending 31 December 2025

is included in the Remuneration At A Glance

section on page 157. The remainder of the report

sets out the Annual Report on Remuneration

detailing how the current Remuneration Policy was

applied over the year ended 31 December 2024.

Strategic and business context

As set out in this Annual Report:

@ Balfour Beatty has delivered another year

ofstrong operational performance in 2024,

resulting in the Group growing earnings,

average cash and order book. Improvement

inunderlying profit was driven by the

earnings‑based businesses, increased gains

onInvestments disposals and higher net

finance income.

@ Attracting new talent and retaining existing

experts to support growth opportunities

remains an important area of focus. We

continue to invest in colleagues at all levels,

from a focus on early careers development to

targeted development aimed to strengthen our

succession pipeline and enable transition into

leadership roles. In the UK, early careers roles

now represent 7.3% of the workforce.

@ Colleague engagement, measured through the

annual survey, was particularly strong in 2024

showing a further improvement to 84% in the

Group score, an increase of 3 percentage points

from last year and 11 percentage points above

industry average.

@ Balfour Beatty continues to demonstrate

itscommitment to enabling an inclusive and

ethical culture through the ongoing success

inour Right to Respect programme in

2024across the UK and US. In the UK the

programme was recognised through winning

the Inclusive Culture Award at the enei

Inclusivity Excellence Awards. The Value

Everyone UK Diversity, Equity & Inclusion

(DE&I) strategy and action plan continues to

show steady progress with increased

representation acrosskey measures.

@ The Group and Committee remain mindful

ofthe cost of living on colleagues despite

aneasing in inflation rates during 2024 and

enhancements to employee benefits which

aim tofurther support colleague wellbeing.

Furtherdetails are included within the

widerworkforcesection on page 156.

Incentive outcomes for 2024

The outcomes of the Annual Incentive Plan

(AIP)for the executive Directors reflected

thefollowing (with further detail provided on

pages162 to 165).

@ Stretching financial targets were set at the start

ofthe year. In line with last year, the cash flow

targets have incorporated additional stretch

following our review of historic targets and

outperformance. Cash performance remained

very strong, exceeding Maximum and profit

exceeded Target performance. The formulaic

assessment of the AIP indicated 88.5% of

maximum in respect of the financial targets for

the executive Directors.

@ Objectives set for the executive Directors

incorporated a number of consistent strategic

business objectives together with role‑specific

personal objectives. Leo Quinn and Philip

Harrison performed strongly against these

objectives resulting in 96% of maximum for

Leo Quinn and 100% of maximum for Philip

Harrison for this element.

Anne Drinkwater

Chair of the Remuneration

Committee

154154

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@ Philip Harrison has also demonstrated strong

leadership across the business. He has gained

agreement to updated metrics in the revolving

credit facility which align to the sustainability

strategy, successfully completed an extension

to the CCB loan facility and improved prompt

payment performance further in 2024. Further

details of Philip Harrison’s strategic business

and personal objectives are set out on page 165.

@ In line with good practice, the Remuneration

Committee reviewed the overall outcome for the

executive Directors and considered this reflective

of the strong performance of the Group in 2024,

including very strong safety performance and

good progress against sustainability targets, not

warranting any discretionary adjustment against

the formulaic outcomes. Overall, 90.4% of

maximum is to be paid to Leo Quinn and 91.4%

of maximum to Philip Harrison. In line with the

Policy, 50% of the pay‑out will be deferred into

shares for three years.

The performance conditions relating to the 2022

Performance Share Plan (PSP) awards measured

performance over the three years ended

31December 2024. TSR performance over the

period was above upper quartile, operating cash

flow exceeded maximum and EPS was close to

the top end of the target range. This results in

these awards vesting strongly at 99.5% of

maximum. In assessing the appropriateness

ofthis outcome, the Remuneration Committee

considered the overall performance of the

Company over the performance period and

shareholder experience, and considered the

outcome reflective of the strong achievement.

Given this strong performance the share price

has also increased over this period. Whilst the

Remuneration Committee is conscious of

potential windfall gains from significant increases

of share price, the Committee is satisfied the

share price at grant was not depressed and

thegrowth reflects the sustained underlying

performance of the Company.

Board changes

We announced on 5 March 2025 that, after over

10 years leading the business, Leo Quinn will

step down from the Board as Group Chief

Executive. Following an international search,

Philip Hoare, Chief Operating Officer, AtkinsRéalis

has been chosen by the Board to succeed him.

Departure terms for Leo Quinn

Leo Quinn will remain in post as Group Chief

Executive and an executive Director of the

Company until Philip Hoare joins the Group.

Leowill continue to be employed in an advisory

capacity for several months to ensure a

seamlesstransition.

Leo received his normal remuneration for 2024

(details of which are included in the single total

figure in the remuneration table on page 161).

Hewill also be eligible for a pro‑rated annual

bonus in respect of his active service for 2025.

Reflecting his long service and contribution to

the business, the Committee exercised its

discretion to grant ‘Good Leaver’ status for

thepurpose of Balfour Beatty’s share plans.

Outstanding deferred bonus share awards will

vest on cessation of employment in line with the

Remuneration Policy. Outstanding PSP awards,

subject to pro‑rating for time and to the

satisfaction of the applicable performance

targets, will vest on their normal vesting dates.

The post holding period relating to Leo’s PSP

awards, will continue to apply as per the plan

rules. Full details are provided on page 167.

Appointment terms for Philip Hoare

We are delighted Philip will join the Board as

Group Chief Executive Officer. The selection

process made clear that his depth of industry

knowledge and his experience in delivering a

profitable growth strategy across multiple

geographies make him the ideal person to drive

forward the Group’s success in our chosen

markets. Details of his remuneration package is

set out below:

ROLES AND RESPONSIBILITIES

OFTHECOMMITTEE

SCAN OR CLICK TO FIND OUTMORE

ABOUT THE REMUNERATION

COMMITTEE’S TERMS OF REFERENCE

The Committee’s terms of reference were

reviewed during the year to ensure

compliance with the Code.

ALLOCATION

OFTIME

Workforce Remuneration 12%

Remuneration of Directors and Executive

Committee members 55%

Governance and other matters 33%

@ Philip will receive a base salary of £840,000

and a pension allowance of 7% of salary

(aligned with the wider workforce), along with

other benefits offered to the wider workforce.

It is intended that his salary will next be

reviewed in July 2026;

@ Philip’s maximum annual bonus will be 150%

of base salary. For 2025, his bonus will be

pro‑rated to reflect the period of service during

the year; and

@ Philip will also be granted a PSP award of

200% of base salary.

In line with usual practice, Philip will also receive

awards to partially compensate for remuneration

he is forfeiting on leaving his previous employer

and joining Balfour Beatty. We applied the following

principles in agreeing these buy‑out awards:

@ the buy‑out awards will not exceed the actual

value forfeited;

@ we are not compensating Philip for the

AtkinsRéalis share options forfeited on joining

Balfour Beatty;

@ 2025 buy‑out awards: we may compensate

Philip for amounts payable for vesting in 2025

based on the actual amounts forfeited;

@ 2026 and 2027 buy‑out awards: we may

compensate

Philip, in part, for amounts payable

or vesting in March and April 2026 and March

2027 in respect of cash and share‑based

awards granted by his former employer. The

quantum of the 2026 and 2027 buy‑out awards

will be capped at up to 75% of the time pro‑rated

and performance tested cash bonus due to be

paid in April 2026, and up to 75% of the target

share‑based awards granted;

@ where the buy‑out is to replace an AtkinsRéalis

share award, it will be delivered as an award

over Balfour Beatty shares;

@ the awards will vest no earlier than the same

timescales as the forfeited awards;

Incentive outcomes for 2024 continued

@ Demonstrated by performance against his

strategic business and personal objectives,

Leo Quinn has continued to show strong

leadership, with improvements in key metrics

for safety, engagement and diversity. He has

overseen the validation of carbon reduction

targets with the Science Based Targets

initiative (SBTi), with reductions achieved in

2024 on carbon emissions intensity. Further

details of Leo Quinn’s strategic business and

personal objectives are set out on pages 163

and 164.

COMMITTEE REPORTS CONTINUED

Remuneration Committee continued

155Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

@ buy‑out awards remain subject to performance

conditions where appropriate. The 2026 and

2027 replacement performance share plan

awards will be subject to the performance

conditions applicable to Balfour Beatty 2023

and 2024 PSP awards;

@ to ensure ongoing alignment with Balfour

Beatty shareholders, Philip will be required

toretain shares he acquires from the buy‑out

share awards (net of any sale of vested Balfour

Beatty shares which are required to meet

applicable tax withholdings) in satisfaction of

the shareholding requirements in our Directors’

Remuneration Policy;

@ the 2026 and 2027 buy‑out awards will be

subject to continued employment until the

vesting date; and

@ all buy‑out awards are subject to the malus and

clawback conditions as approved in our current

Remuneration Policy. Furthermore, we have

discretion to clawback any buy‑out award in

the event of Philip’s resignation from the

Company within 12 months of joining.

Further information in relation to the buy‑out

awards will be disclosed in the 2025

Remuneration Report.

Remuneration for 2025

On 1 July 2024, in line with the normal salary

review date, the Committee awarded a circa 4%

increase to the Group Chief Executive and Chief

Financial Officer, in line with wider workforce. At

the same time, the non‑executive Directors’ base

fees and the Chairman’s fee were also increased

in line with the wider workforce. Leo Quinn will

not receive a base salary increase on 1 July 2025.

The Remuneration Committee has reviewed the

base salary and overall remuneration package for

Chief Financial Officer, Philip Harrison, in light of

increased responsibilities taken on during the

year and the key role in supporting the transition

to a new Group Chief Executive. The Remuneration

Committee were also mindful that his current

package is positioned below sector peers of

asimilar size and complexity and, whilst the

Committee does not set its Remuneration Policy

to directly align to these benchmarks, it is appropriate

to factor this into the review. To reflect this, Philip

Harrison’s base salary was increased to £598,000

with effect from 1 February 2025. Philip Harrison

will also be granted a 2025 PSP award at 200%

of base salary.

No changes are proposed to the structure of the

performance measures to be used in the Annual

Incentive Plan for 2025. It will continue to be

based primarily on challenging Profit Before Tax

(50%), Group Total Cash Flow (25%) and

strategic business and personal objectives (25%).

These objectives will be disclosed in the 2025

Remuneration report and include measurable

objectives aligned to delivering on our Environmental,

Social and Governance, Safety, People and

Quality commitments. The executive Directors

will be able to earn a maximum bonus of 150%

of base salary. As noted above, for Leo Quinn

and Philip Hoare the annual bonus earned will be

pro‑rated to reflect active service during the year.

The PSP awards to be granted in 2025 will be based

on the achievement of three performance measures

EPS (33.3%); Operating Cash Flow (33.3%) and

TSR relative to the FTSE 250 excluding investment

trusts (33.3%). The Committee is satisfied that the

balance of measures remains appropriate and

supports the long‑term business strategy. Leo

Quinn will not be granted a 2025 PSP award. As

noted above, Philip Hoare and Philip Harrison will

begranted a PSP award of shares worth 200% of

base salary. Vested shares under PSP awards will

be subject to the normal post‑vesting holding period.

The Remuneration Committee will continue to be

mindful of the importance of setting appropriately

stretching targets for both the AIP and PSP to

ensure that the incentive out‑turns are

commensurate with the performance delivered,

wider stakeholder experience and the long‑term

sustainable success of the Group. Given the

commercial sensitivity, the 2025 AIP targets will

be disclosed on a retrospective basis in the 2025

Remuneration report. The EPS and Operating

Cash Flow targets for the 2025 PSP are disclosed

prospectively on page 159.

Remuneration Policy review

The current Remuneration Policy was approved

by shareholders at the 2023 AGM. In advance of

the 2026 AGM policy vote, the Committee will

be conducting a full review to ensure that the

policy remains effective and aligned to the

Group’s strategic objectives. As part of the

review, the Committee will consider continuing

developments in corporate governance and best

practice. The Committee will also be reviewing

the appropriateness and operation of the

performance measures for the AIP and PSP.

Shareholder consultation is an ongoing process and

past consultation informed the Remuneration Policy

put to shareholders for approval at the 2023 AGM

and we intend to consult shareholders during 2025

as part of our review prior to putting forward the

Remuneration Policy for approval at the 2026 AGM.

Gender Pay Gap

Balfour Beatty’s UK gender pay gap narrowed

again in 2024 when compared to 2023 across

both median and mean measures, continuing the

trend seen in recent years. Since the introduction

of gender pay gap reporting in Balfour Beatty, the

gap has reduced by over 7% in both measures.

The analysis of reported trends furthers our

understanding of the gender pay gap and,

together with looking beyond the numbers, helps

us to continue to focus on the underlying cause,

informing key activities implemented through the

Value Everyone UK DE&I action plan which

remains pivotal to narrowing the gap.

The Group Chief Executive to average UK

employee pay ratio increased for 2024 when

compared to 2023, reflecting the fact that the

out‑turn of the AIP in 2024 was higher when

compared to 2023, and the greater proportion of

executive Director pay linked to this incentive plan.

Conclusion

We believe that implementation of the

Remuneration Policy will continue to deliver

arobust link between strategy, reward and

performance, supporting Balfour Beatty’s

drivetodeliver profitable managed growth and

sustainable cash generation. The Company’s

remuneration policies have been, and will

continue to be, implemented rigorously, aligned

with the Group’s strategic goals and culture.

Wehope you will support the Remuneration

report atthe 2025 AGM.

Wider workforce remuneration

Balfour Beatty’s commitment to enabling an

inclusive and ethical culture was demonstrated

through a number of awards and accreditations

in2024 including the US Buildings division being

named ‘Best Place to Work’ by five business

publications in California. Enhancements to

colleague benefits included the introduction

offinancial coaching in the UK following a

successful pilot, adding to the broad benefits

offered tocolleagues.

In addition to the executive Directors, the

Committee reviewed both the level and structure

of remuneration for members of the Executive

Committee andreceives regular updates on

Company‑wide pay and benefits for the wider

workforce and takes these into account when

reviewing executive and senior management

remuneration. A summary of the typical updates

shared with the Committee are included in the

table on page 156.

156156

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COMMITTEE REPORTS CONTINUED

Remuneration Committee continued

Wider workforce remuneration continued

Review of level and structure of remuneration for the members of the Executive Committee Receive regular updates on the wider workforce demographic, pay and benefits across the Group

Review and approve:

@ Annual review of base pay levels;

@ Annual Incentive Plan structure, target ranges and alignment to strategy

andculture;

@ Payments for Annual Incentive Plans, considering overall business

performance; and

@ Performance Share Plan participation levels and performance conditions for

plan launch and achievement against performance conditions of vesting plans.

@ Highlight remuneration practice across the wider workforce and how this relates to the business and HR strategic objectives.

@ Overview of distribution of annual base pay review including diversity and grade analysis, deployment of annual incentive plans

and participation in all‑employee and discretionary share plans.

@ Compliance with statutory minimum pay levels including Balfour Beatty’s positioning against the voluntary UK Real Living Wage.

@ Summary of benefits provision and alignment to health, wellbeing and engagement plans.

@ Review of latest UK gender pay gap calculation and progression in reducing the gap, together with Group Chief Executive to

average UK employee pay ratio.

@ Developments in employment policy requirements and updates to Balfour Beatty policies.

@ Involvement in a variety of live events, forums and conferences held during the year enabling impactful engagement across theGroup.

A summary of the remuneration arrangements across the wider workforce in 2024, compared with the executive Directors, is included in the table below.

Executive Directors Executive Committee & Wider Workforce

Annual base salary review effective 1 July 2024.

Increase of 4% approved by the Committee for

Executive Directors.

Salary Main salary review effective 1 January 2024, Total UK budget of 5% with 4% available for allocation January 2024 in line with

review guidelines.

Award ranges based on earnings levels, performance and market positioning. Continued focus on lower paid roles, taking the

voluntary UK Real Living Wage level into consideration when setting pay and implementation guidelines in UK.

4% median increase to Executive Committee, effective 1 July 2024.

All employees eligible for a bonus. Performance

measures aligned to Group / business unit.

Annual Incentive Plans Executive Committee and other eligible grades qualify for a bonus. Performance measures aligned to Group/ Business Unit.

Deferral of proportion of annual bonus paid for

threeyears.

Eligible to participate in long‑term incentive plan

andall‑employees Share Incentive Plan (SIP).

Shareholding requirements in place.

Share-based

incentive plans

Deferral of proportion of annual bonus paid for three years for UK Executive Committee and senior managers.

Executive Committee and some senior management are nominated for inclusion in a long‑term incentive plan.

All UK employees eligible to participate in all‑employees SIP. Shareholding requirements in place for ExecutiveCommittee

based in UK.

Executive Director pension provision of 7%. Pension UK Employer contribution average of 7% of base salary.

Anne Drinkwater

Chair of the Remuneration Committee

11 March 2025

157Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

REMUNERATION AT A GLANCE

Ahead of the Annual report on remuneration, we have summarised below the key remuneration outcomes for 2024, the key

elements of the Remuneration Policy approved at the 2023 AGM and how we intend to implement itin2025. The Committee

confirms that the Remuneration Policy operated as intended throughout 2024. The full Remuneration Policy can be found in

theDirectors’ Remuneration report for the year ended 31December 2022 available on our website.

AIP metrics and outcomes

PROFIT BEFORE TAX TOTAL SHAREHOLDER RETURN

TSR against the 115 remaining companies ranked 51–200

in the FTSE All Share Index (excluding investment trusts)

EARNINGS PER SHARE

Underlying basic earnings per share from continuing operations

CASH

Operating cash flow (OCF)

PSP OUT-TURN

STRATEGIC BUSINESS AND PERSONALOBJECTIVES AIP OUT-TURN

GROUP TOTAL CASH FLOW

ACTUAL

£201m

>100%

of maximum

ACTUAL

£289.6m

82.7%

of maximum

ACTUAL

>Max

100%

of maximum

ACTUAL

43.6p

98.5%

of maximum

ACTUAL

£289m

100%

of maximum

Actual £289.6m

Actual Above Upper Quartile

Actual 43.6p

Actual £289m

Actual £201m

Maximum £299.0m

Maximum Upper Quartile

Maximum 43.9p

Maximum £204m

Target £271.8m

Target —

Target £185m

CFO 99.5% of Maximum

Threshold £217.4m

Threshold Median

Threshold 28.7p

Threshold £130m

CEO 99.5% of Maximum

ACTUAL

96%

of maximum

ACTUAL

90.4%

of maximum

ACTUAL

100%

of maximum

ACTUAL

91.4%

of maximum

Target £(40)m

Threshold £(50)m

Maximum £60m

PSP metrics and outcomes

Group Chief

Executive

Group Chief

Executive

Chief Financial

Officer

Chief Financial

Officer

A reconciliation of the Group’s performance measures to its statutory results is provided in the Measuring our financial performance section.

1 Group total cash flow of £201 million is the movement

between opening and closing net cash adjusted for £100 million

share buyback.

2 Operating cash flow of £289 million is defined in the

Measuring our financial performance section.

3 Underlying basic earnings per share from continuing operations.

4 Group Chief Executive’s and Chief Financial Officer’s

remuneration scenarios are calculated on base salaries

at1January 2024 of £861.1k and £499.2k respectively.

5 In line with the Investors Association (IA) guidelines,

calculations shown include shares beneficially owned at

31December 2024 plus unvested shares which are not

subject to a further performance condition, on a net of tax

basis, calculated using base salary at 31 December 2024.

EXECUTIVE DIRECTORS’

SHAREHOLDING GUIDELINES

(% of base salary held)

EXECUTIVE DIRECTOR

REMUNERATION SCENARIOS

PSP

AIP

Fixed pay

1,857%

200%

515%

150%

Actual Actual

Group Chief

Executive

Guideline Guideline

Chief Financial

Officer

Actual Actual

Group Chief

Executive

On-target On-target

£4,896k

£2,449k

Chief Financial

Officer

£2,605k

£1,360k

35%

26%

39%

51%

27%

22%

32%

28%

40%

20%

25%

55%

Vesting >100% of maximum

Vesting 98.5% of maximum

Vesting >100% of maximum

158158

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DIRECTORS’ REMUNERATION POLICY

Summary of Remuneration Policy and proposed implementation in 2025

Remuneration Policy Our approach for 2025

Base salary To attract and retain high‑calibre individuals.

To provide a competitive salary relative to comparable companies

interms of size and complexity.

During the year the Committee reviewed the market positioning for remuneration of the Group Chief Executive and

Chief Financial Officer.

On 1 July 2024, in line with the normal salary review date, the Committee awarded a c.4% increase for both the

Group Chief Executive from £861.1k to £895.5k and for the Chief Financial Officer from £499.2k to £519.15k, in line

with the wider workforce.

Leo Quinn will not receive a base salary increase on 1 July 2025.

The Remuneration Committee has reviewed the base salary and overall remuneration package for Chief Financial

Officer, Philip Harrison, in light of increased responsibilities taken on during the year and the key role in supporting the

transition to a new Group Chief Executive. The Remuneration Committee were also mindful that his current package

is positioned below sector peers of a similar size and complexity and whilst the Committee does not set its

Remuneration Policy to directly align to these benchmarks, it is appropriate to factor this into the review. To reflect

this, Philip’s base salary was increased to £598,000 with effect from 1 February 2025. Philip’s next base salary

reviewdate is 1 July 2026.

Pension and

benefits

Executive Directors can elect for Balfour Beatty to contribute to a

defined contribution pension or receive a cash equivalent that will

not exceed the level of contribution available to the wider workforce.

Benefits are provided that are appropriate to the role and which take

into account typical practice, the nature and location of the role and

individual circumstances.

The pension provision for executive Directors is aligned to the level of the wider workforce, currently 7% of base salary.

Annual Incentive

Plan (AIP)

Bonuses are subject to the achievement of stretching key performance

measures without encouraging excessive risk. Each year the

Committee selects performance measures that are aligned with the

Company’s strategy and reflect the change needs of the business.

At least 50% is based on financial measures.

A proportion of any bonus earned is deferred into shares to

facilitateshare ownership, aid retention and provide further

alignment with shareholders.

No changes are proposed to the structure of the performance measures to be used in the AIP for 2025. The executive

Directors will be able to earn a maximum bonus of 150% of base salary, based on the achievement of three

performance measures:

@ profit before tax (50%);

@ cash (25%); and

@ strategic business and personal objectives (Environmental, Social and Governance, Safety, People and Quality) (25%).

The three elements are measured and calculated independently of each other and 50% of any bonus earned will be

deferred for three years in shares.

While the Committee has chosen not to disclose in advance the performance targets for 2025 as these include items

which the Committee considers commercially sensitive, retrospective disclosure of the targets and performance

against them will be presented in the Remuneration report for 2025.

Annual bonus earned by Leo Quinn and Philip Hoare will be pro‑rated to reflect active service during the year.

159Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Remuneration Policy Our approach for 2025

Long-term incentive Incentivise and reward delivery of long‑term

performance linked to the Company’s strategy and

further facilitate share ownership and alignment

withshareholders.

Vesting, subject to performance, on the third

anniversary of the grant followed by a two‑year

holding period, with a minimum of 30% based on

relative total shareholder return. The balance of any

award may be based on financial and/or non‑financial

metrics provided that at least 75% of the award is

based on financial and/or TSR measures.

For 2025, Philip Hoare and Philip Harrison will be granted a Performance Share Plan (PSP) award of shares worth 200%

of base salary. Leo Quinn will not be granted a 2025 PSP award.

The PSP awards to be granted in 2025 will be based on the achievement of three performance measures: EPS (33.3%), cash

(33.3%) and relative TSR (33.3%).

The TSR peer group will be FTSE 250 companies (excluding investment trusts).

Metric Measure Threshold Target Maximum

Total shareholder return TSR ranking Median Upper quartile

Cash

Operating cash flow (OCF) £186m £266m £316m

EPS Underlying basic EPS from continuing operations 36.8p 56.5p

The Committee considers that the performance measures are aligned to long‑term business strategy and appropriately

stretching reflecting the current environment.

Shareholding guidelines Shareholding guidelines apply to executive

Directorstoalign their long‑term interests with

thoseof shareholders.

The Group Chief Executive and Chief Financial Officer

must accumulate a shareholding to the value of 200%

and 150% of base salary respectively (200% of base

salary for all new executive Directors).

New executive Directors will be required to hold

thelower of 100% of their in‑post share ownership

requirement or their actual holding on departure,

fortwo years post‑cessation of employment.

200% of base salary for the Group Chief Executive and 150% of base salary for the Chief Financial Officer.

The post‑vesting holding condition applying to PSP awards requires the vested shares (net of tax) to be held until the fifth

anniversary of grant and will continue to apply post‑cessation of employment.

Non-executive Directors Fees are set at a level to attract and retain high‑quality

and experienced non‑executive Directors.

The Company’s approach to setting non‑executive Directors’ fees is by reference to fees paid at similar companies and

reflects the time commitment and responsibilities of each role. At the annual review on 1 July 2024, non‑executive

Directors’ fees were increased in line with the wider workforce. The next review date is 1 July 2025.

1 July 2023 (£) 1 July 2024 (£)

Group Chair 312,150 324,600

Base fee 69,950 72,750

SID fee 10,400 10,800

Committee Chair fee 15,600 16,250

Louise Hardy also receives a fee of £10.4k per annum in respect of her responsibility as Workforce Engagement Lead.

All non‑executive Directors may be paid a travel allowance for intercontinental travel on Company business (excluding

travel within home continent).

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Summary of Remuneration Policy and proposed implementation in 2025 continued

Alignment with provision 40 of the Corporate Governance Code

Code requirements Our approach

Simplicity and clarity

Remuneration arrangements should be transparent and promote effective engagement

with shareholders and the workforce. Remuneration structures should avoid complexity

and their rationale and operation should be easy to understand.

The remuneration framework is made up of three key elements: fixed pay (including base salary, pension and

benefits), annual bonus (AIP) and a separate long‑term incentive (PSP).

The framework is simple to understand for both participants and shareholders and the incentive elements are aligned

to the strategic priorities for the business.

Risk

Remuneration arrangements should ensure reputational and other risks from excessive

rewards, and behavioural risks that can arise from target‑based incentive plans, are

identified and mitigated.

Identified risks have been mitigated as follows:

@ Variable remuneration targets are set at levels which reward high performance but which do not encourage inappropriate

business risk;

@ Deferral of part of any bonus earned under the AIP into shares and the holding period applied to any PSP award ensure

variable remuneration is linked to sustainable performance and discourages short‑term behaviours;

@ All AIP and PSP awards to executive Directors include provisions for malus and clawback; and

@ The Committee has the discretion to vary formulaic outcomes for incentive vesting should outcomes not reflect the

underlying performance of the Company.

Predictability

The range of possible values of rewards to individual Directors and any other limits

ordiscretions should be identified and explained at the time of approving the policy.

In the 2022 Directors’ remuneration report the potential remuneration in future periods was set out under several

performance scenarios for the Group Chief Executive and the Chief Financial Officer in respect of awards to be made

in 2025 under the proposed Remuneration Policy.

The Committee is comfortable that the discretions available to it are sufficient.

Proportionality

The link between individual awards, the delivery of strategy and the long‑term performance

of the Company should be clear. Outcomes should not reward poor performance.

A significant proportion of an executive Director’s reward is linked to performance through the incentive framework,

with a clear line of sight between performance and the delivery of long‑term shareholder value.

Performance measures and the underlying targets are reviewed regularly by the Committee to ensure that they are

directly aligned to the Group’s strategic priorities, and targets are calibrated to reward for strong performance over

the performance period.

Executive Directors are required to build material shareholdings in the Company and are subject to a post‑cessation

shareholding requirements which will ensure that their interests are aligned to the Group’s long‑term performance.

Alignment to culture

Incentive schemes should drive behaviours consistent with Company purpose, values

and strategy.

The Committee is focused on ensuring that the Company’s cultural framework, with its values and behaviours, is

reflected across the entire business and believes that the executive Directors are rewarded on both what they deliver

and how that is delivered.

DIRECTORS’ REMUNERATION POLICY CONTINUED

161Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Annual report on

remuneration

This part of the Remuneration report sets out

how the Remuneration Policy was implemented

over the year ended 31 December 2024. The

Committee confirms that the Remuneration

Policy operated as intended throughout 2024.

Details of the remuneration earned by Directors

and the outcomes ofincentive schemes,

including details of relevant links to Company

performance, are also provided in this part.

The following sections have been audited by

KPMG: Remuneration received by Directors for

the year ended 31 December 2024 including

related notes (page 161); Outstanding share

awards (page 167), PSPawards granted during

the year (page 168); AIP awards for the year

ended 31December 2024 (page 162), AIP

metrics and outcomes (pages 162 to 165),

PSPmetrics and outcomes, payments to past

Directors andpayments for loss of office

(pages168 and 169); and statement of Directors’

shareholdings and share interests (page 169).

Remuneration received by Directors

for the year ended 31 December 2024

The table to the right sets out the Directors’

remuneration for the year ended 31 December

2024 (or for performance periods ended in that

year in respect of long‑term incentives) together

with comparative figures for the year ended

31December 2023.

Fixed pay Variable pay

Year

Base salary

and fees

Taxable

benefits

2,3

Pension cash

allowance

Sub‑total

Annual

incentive

cash

Annual

incentive

deferred

Long‑term

incentives

Sub‑total

Other

Total

Executive Directors

Philip Harrison 2024 509,175 14,980 35,642 559,797 355,877 355,877 1,333,196 2,044,950 – 2,604,747

2023 489,600 14,904 34,272 538,776 295,027 295,027 9 59,143 1,5 49,197 – 2,087,973

Leo Quinn 2024 878,300 20,980 61,481 960,761 607,149 607,149 2,720,815 3,935,113 – 4,895,874

2023 844,550 20,904 59,118 924,572 502,452 502,452 2,015,933 3,020,837 – 3,945,409

Independent Non-executive Directors

Charles Allen

2024 318,375 19,679 – 338,054 – – – – – 338,054

2023 306,150 15,217 – 321,367 – – – – – 321,367

Stephen Billingham 2024 30,687 284 – 30,971 – – – – – 30,971

2023 83,913 3,394 – 87,307 – – – – – 87,3 07

Gabrielle Costigan

2024 68,674 3,213 – 71,887 – – – – – 71,887

2023 – – – – – – – – – –

Stuart Doughty

2024 30,785 197 – 30,982 – – – – – 30,982

2023

83,913 7,133 – 91,046 – – – – – 91,046

Anne Drinkwater

2024 94,172 21,165 – 115,337 – – – – – 115,337

2023 83,913 12,874 – 96,787 – – – – – 96,787

Louise Hardy 2024 81,550 4,118 – 85,668 – – – – – 85,668

2023 78,613 4,139 – 82,752 – – – – – 82,572

Michael Lucki 2024 71,350 21,720 – 93,070 – – – – – 93,070

2023 68,613 19,389 – 88,002 – – – – – 88,002

Robert MacLeod

2024 68,674 6,220 – 74,894 – – – – – 74,894

2023 – – – – – – – – – –

Barbara Moorhouse 2024 71,350 7,358 – 78,708 – – – – – 78,708

2023 68,613 6,502 – 75,115 – – – – – 75,115

Rudolph Wynter

2024 6,063 – – 6,063 – – – – – 6,063

2023 – – – – – – – – – –

1 Base salary and fees were those paid in respect of the period of the year during which the individuals were Directors.

2 Taxable benefits are calculated in terms of UK taxable values. Leo Quinn received private medical insurance for himself and his spouse and received a car allowance of £20,000 per annum. Philip Harrison

received private medical insurance for himself and his spouse and received a car allowance of £14,000 per annum. Charles Allen is eligible for a contribution to his reasonable business expenses

receiving £14,123, taxable travel expenses of £2,556 and a taxable travel allowance of £3,000.

3 The non‑executive Directors received taxable travel expenses and/or travel allowances which are shown in the taxable benefits column. The Group Chair and non‑executive Directors are also eligible to

receive assistance with the preparation of tax returns.

4 AIP 2024: further details of these awards are set out on pages 162 to 165. For 2023, details of the AIP awards were set out in the 2023 Remuneration report.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Remuneration received by Directors

for the year ended 31 December 2024

continued

5 For 2024, this relates to the 2022 PSP award for which the

performance period ends in 2025, with the valuation of

vesting shares calculated on a three‑month average share

price to 31 December 2024 of 443.5p. This compares to the

259.5p average middle market price for the three dealing

dates before the PSP award date which was used for

calculating the number of shares granted, so there is a benefit

relating to share price appreciation since award of 184.0p per

share and a value of £1,128,816 and £553,119 for Leo Quinn

and Philip Harrison respectively. Further details of the 2022

PSP awards are set out on pages 166 and 167. For 2023, this

relates to the 2021 PSP award for which the performance

period ended in 2023, details of which were set out in the

2023 Remuneration report. For 2023, the valuation of the

vesting shares for the 2021 PSP has been adjusted from the

valuation included in the 2023 Remuneration report to reflect

the actual valuation on the 19 March 2024 vesting date, based

on a share price of 373.2p. This compares to 296.2p average

middle market price for the three dealing days before the PSP

award date (which was used to calculate the number of

shares granted), so there was a benefit relating to share price

appreciation since award of 77p per share and a value of

£415,935 and £197,894 for Leo Quinn and Philip Harrison

respectively. Under the rules of the PSP, participants may

receive an award of shares in lieu of the value of dividends

paid over the vesting period on vested shares. For the 2021

PSP award this was 46,087 shares for Leo Quinn and 21,926

shares for Philip Harrison with a valuation of £171,997 and

£81,828 respectively calculated on the share price on 19

March 2024 of 373.2p.

6 Total figures and long‑term incentive figures for 2023 have

been adjusted from the figures included in the 2023 Remuneration

report to reflect the actual valuation on 19 March 2024

vesting date of shares vesting under the 2021 PSP.

7 Stuart Doughty and Stephen Billingham retired from the

Board effective 9 May 2024. In addition to the amount

disclosed above, Stuart Doughty earned £53,772 as an

adviser in the period following his retirement from the Board.

8 Gabrielle Costigan and Robert MacLeod were appointed to

the Board effective 8 March 2024.

9 Rudolph Wynter was appointed to the Board effective 1

December 2024.

10 Anne Drinkwater was appointed Senior Independent Director

effective 9 May 2024.

PROFIT BEFORE TAX AND

NON-UNDERLYING ITEMS

GROUP TOTAL CASH FLOW

STRATEGIC BUSINESS AND

PERSONAL OBJECTIVES

Maximum

£299.0m

Maximum

£60m

AIP OUT-TURN

Threshold

£217.4m

Threshold

£(50)m

Target

£271.8m

Target

£(40)m

Group total cash flow of £201 million is the movement between opening and closing total net cash adjusted for the £100 million share buyback.

A reconciliation of the Group’s performance measures to its statutory results is provided in the Measuring our financial

performancesection.

Group Chief

Executive

Group Chief

Executive

Chief

Financial

Officer

Chief

Financial

Officer

£289.6m

actual

£201m

actual

82.7%

of max.

100 %

of max.

96%

of max.

90.4%

of max.

100%

of max.

91.4%

of max.

AIP awards for the year ended 31December 2024

For 2024, the AIP for the executive Directors was a maximum bonus of 150% of base salary based on

the achievement of three performance measures:

@ profit before tax (50%);

@ cash (25%); and

@ strategic business and personal objectives (25%).

The three elements are measured and calculated

independently of each other and 50% of the

bonus earned is deferred for three years in the

form of Balfour Beatty shares. For the profit

before tax element, 20% of the award would

vest for threshold performance, increasing to

50% vesting of that element at target performance

and then to 100% of that element at maximum

performance or above. For the Group total cash

flow element, 20% of that element would vest

for threshold performance, increasing to 50%

vesting of that element at target performance

and then to 100% of that element at maximum

performance or above.

AIP metrics and outcomes

The formulaic assessment of the Annual Incentive

Plan indicated 90.4% of maximum is to be paid

to Leo Quinn and 91.4% of maximum to Philip

Harrison. In line with good practice, the

Remuneration Committee reviewed the overall

outcome for the executive Directors and considered

this reflective of the strong performance of the

Group in 2024, including very strong safety

performance and good progress against sustainability

targets, and not warranting any discretionary

adjustment against the formulaic outcomes.

DIRECTORS’ REMUNERATION POLICY CONTINUED

Annual report on remuneration continued

163Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Performance against the 2024 AIP strategic business and personal objectives as it relates to the executive Directors was:

CEO – strategic business and personal objectives 2024

Objective Weight Outcome and comments Achievement

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

Social value Progress towards 2030 target of achieving

£3 billion social value, demonstrating

measurable increase in total social value

generated across the UK in 2024 versus 2023.

20% Very strong progress with £990 million of social value generated in 2024 versus £937 million in 2023, an increase of

£53million. Social value achieved since 2021 totals £3.4 billion, already exceeding the 2030 target of £3 billion.

20%

Safety Continue progress towards Zero Harm

goals, demonstrating safety leadership

and improving overall safety culture and

performance in 2024 versus 2023.

Identify opportunities for investment to

support continuous improvement

movingforward.

20% Demonstrated strong safety leadership and performance across a range of activities which have improved health, safety,

wellbeing culture and performance.

Further progression in safety performance in 2024, building on the progress made in 2023 across the key Group metrics, including:

@ LTIR: 0.09 (improved versus 0.11 in 2023 and 0.15 in 2022); and

@ observations: 475,000 (improved versus 400,000 in 2023 and 380,000 in 2022).

@ Continued investment to support safety improvement plans, in particular good progress with the embedding of digital

permitting (contributing to a 25% year‑on‑year reduction in service strikes) and the development of digital solutions including

human form recognition, digital rehearsals and lessons learned animation.

20%

Environment To make progress against targets validated

by Science Based Targets initiative (SBTi).

Support embedding and continual

development of carbon reporting

arrangements across thebusiness.

20% Significant progress, demonstrated by performance against targets and improved awareness:

@ near and long‑term carbon reduction targets, along with abatement plans, validated and endorsed by the SBTi;

@ Group achieved a 13% reduction on carbon emissions intensity, and a <1% reduction in absolute carbon emissions for

Scopes 1 and 2 against 2023 carbon emissions performance. The reduction in emissions intensity is the most significant

improvement in energy efficiency achieved by the Group since 2020;

@ carbon budgets, reflecting overall SBTi carbon reduction target, established for UK construction Business Units; and

@ established standardised carbon reporting including ‘shadow price of carbon’ report, shared with Board and senior

management teams, coupled with mandatory training to relevant employees.

20%

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Objective Weight Outcome and comments Achievement

ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED

People Continue to develop and improve

employee engagement across the Group.

Improve diversity of the workforce in 2024

versus 2023,promoting activities to

improve inclusion.

Detailed succession plans for senior

executives and key roles presented to

theBoard.

20% Group employee engagement index scores showed further improvement:

@ Group EIS increased to 84% in 2024 (versus 81% in 2023) with an increased participation rate of 82% (versus 77% in 2023); and

@ Group EIS index score was 11 percentage points above industry average.

2024 2023

UK EIS 82% 78%

US EIS 87% 86%

HK EIS 85% 84%

Steady progress against key measures with strong overall performance in the delivery of activities and processes to develop culture:

@ UK female representation increased to 21.8% in 2024 (from 20.9% in 2023), UK minority ethnic increased to 13.3%

(from12.4% in 2023) and UK Black increased to 3.2% (from 2.9% in 2023), monitored against 2030 UK Diversity, Equity &

Inclusion targets;

@ increased diversity across early careers hires, with 27% of UK hires female and 21% from a minority ethnic background; 21%

of US early careers hires female and 62% minority ethnic; and

@ employees in ‘earn and learn’ roles continues to exceed the The 5% Club target of 5%, ending the year at 7.3% achieving

Gold membership for the fourth consecutive year.

Progressive roll out of ‘Right to Respect’ programme in 2024 across the UK and US, winning the Inclusive Culture Award at the enei

Inclusivity Excellence Awards in UK.

Diverse talent reviews and measures established.

Comprehensive presentation of senior role succession plans held with Board, highlighting key successors and associated

development plans.

16%

Quality Continue to drive digital

evolution,encouraging new opportunities

leveraged from use of AI, which will

improve the quality of delivery in areas

including construction methodology,

safety and administration.

20% Clear digital strategy embedded into safety culture, shared across the UK, US and Hong Kong, and with some UK clients.

Invested in CoPilot AI feasibility arrangements.

20%

Total 100% 96%

DIRECTORS’ REMUNERATION POLICY CONTINUED

Annual report on remuneration continued

AIP metrics and outcomes continued

165Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

CFO – strategic business and personal objectives 2024

Objective Weight Outcome/comments Achievement

Capital

restructure

Gain agreement for updated SLL

metrics in the revolving credit facility,

aligned to sustainability strategy.

Complete extension of the CBB loan

facility on no worse terms.

Evaluate refinancing options for the

$50 million USPP.

Maximise investments returns on

cash under management within

robust treasury framework.

30% Agreed updated SSL metrics in the revolving credit facility, aligning with the Company sustainability strategy.

Extension of £30 million CBB loan facility successfully completed.

Successful execution of new $50 million USPP loans and liability management exercise.

Maximised investment returns on cash management with increased interest income delivered versus prior year.

30%

Safety

Improve overall safety culture and

performance in 2024 versus 2023.

10% Key member of senior management team supporting continual development of safety culture with positive leadership in

performanceimprovement.

Safety performance metrics demonstrate strong, progressive performance across a range of health, safety and wellbeing initiatives

with improvements in 2024 versus 2023 across the key Group metrics, including:

@ LTIR: 0.09 (improved versus 0.11 in 2023 and 0.15 in 2022); and

@ observations: 475,000 (improved versus 400,000 in 2023 and 380,000 in 2022).

10%

Environment

Demonstrate progress against the

targets as validated by Science Based

Targets initiative (SBTi).

Continual development of carbon

reporting arrangements across

thebusiness.

10% Led the enhancement of scenarios for measuring the financial impact of climate change on the Group.

Significant progress, demonstrated by performance against targets and improved awareness:

@ near and long‑term carbon reduction targets, along with abatement plans, validated and endorsed by the SBTi;

@ Group achieved a 13% reduction on carbon emissions intensity, and a <1% reduction in absolute carbon emissions for Scopes 1 and

2 against our 2023 carbon emissions performance. The reduction in emissions intensity is the most significant improvement in

energy efficiency achieved by the Group since 2020;

@ standardised carbon reporting established including ‘shadow price of carbon’ report, shared with Board and senior management teams; and

@ carbon budgets, reflecting overall SBTi carbon reduction target established for UK Construction Business Units.

10%

People

Show further progression during 2024

in Group employee engagement, and

specifically within the Finance

function, measured against the

employee engagement index score.

Improve diversity of the workforce in

2024 versus 2023,promoting

activities toimprove inclusion.

20% Strong performance with employee engagement index scores showing further improvement:

@ Group EIS increased to 84% in 2024 (versus 81% in 2023) with an increased participation rate of 82% (versus 77% in 2023);

@ Group EIS index score was 11 percentage points above industry average; and

@ EIS for the UK Finance function increased to 86% (from 84% in 2023).

Steady progress against key measures, promoting improved inclusion activities to develop culture:

@ UK female representation increased to 21.8% in 2024 (from 20.9% in 2023), UK minority ethnic increased to 13.3% (from 12.4% in

2023) and UK Black increased to 3.2%(from 2.9% in 2023), monitored against 2030 UK Diversity, Equity & Inclusion targets.

20%

Quality

Continue to improve processes and

systems to maintain prompt payment

gains from 2023.

30% Strong performance with improvement and changes including:

@ exceeding the Government Procurement Policy Notice to pay 95% of UK invoices within 60 days, with 98% achievement (H2 2024),

a 1% increase over the same period in 2023; and

@ 73% achievement in 30 day pay metric in 2024, a 2 percentage point improvement over prior year, with process and system

improvements implemented.

30%

Total 100% 100%

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Vesting of PSP awards for the year

under review

The PSP awards granted on 1 April 2022 were

based on a performance period for the three

years ended 31 December 2024. The performance

conditions applying to one‑third of each award

were comparative total shareholder return measured

versus the companies ranked 51–200 by market

capitalisation in the FTSE All Share Index (excluding

investment trusts), operating cash flow and

earnings per share. 25% of each of the total

shareholder return and earnings per share parts

of the award would vest for threshold performance

increasing to 100% of each part of the award

vesting for maximum performance or above.

Forthe operating cash flow part, 25% of that part

would vest for threshold performance, increasing

to 50% vesting of that part at target performance

and then to 100% of that part at maximum

performance or above.

In assessing the appropriateness of the

formulaicoutcomes of the performance targets,

the Remuneration Committee considered the

underlying performance of the Group over the

three‑year period and, on balance, the Committee

considered the vesting outcome appropriately

reflected the Group’s underlying performance.

Whilst the Remuneration Committee is conscious

of potential windfall gains from significant increases

of share price, the Committee is satisfied the

share price at grant was not depressed and the

growth reflects the sustained underlying

performance of the Company.

Details of the PSP awards vesting for the year

under review are therefore as shown in the

following table.

PSP metrics and outcomes

Metric

Performance condition

Measure Threshold Target Maximum Actual Vesting %

Total shareholder

return

TSR against the

115 remaining

companies ranked

51–200 in the

FTSE All Share

Index (excluding

investment trusts)

TSR ranking 58 or above – 29.5 or above 7 100%

Cash Operating cash

flow (OCF)

£130m £185m £204m £289m 100%

Earnings per share Underlying basic

earnings per

share from

continuing

operations

28.7p – 43.9p 43.6p 98.5%

Total vesting 99.5%

Name of Director Type of award Vesting date

Number

of shares

at grant

Number

of shares

to vest

Number

of shares

to lapse

Value of

vesting

Philip Harrison 2022 conditional 1 April 2025 302,119 300,608 1,511 £1,333,196

Leo Quinn 2022 conditional 1 April 2025 616,570 613,487 3,083 £2,720,815

1 Valuation of vesting shares calculated on a three‑month average share price to 31 December 2024 of 443.5p. This compares to the 259.5p average middle market price for the three dealing dates before the

PSP award date which was used for calculating the number of shares granted, so there is a benefit relating to share price appreciation of 184.0p per share since award.

DIRECTORS’ REMUNERATION POLICY CONTINUED

Annual report on remuneration continued

167Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

OPERATING CASH FLOW

(OCF)



MAXIMUM

£204M

THRESHOLD

£130M

TARGET

£185M

£289m

ACTUAL

OF MAX.

100%

TOTAL SHAREHOLDER

RETURN

MAXIMUM:

UPPER

QUARTILE

THRESHOLD:

MEDIAN

ACTUAL

Above upper

quartile

OF MAX.

100%

EARNINGS

PER SHARE

MAXIMUM

43.9P

THRESHOLD

28.75P

ACTUAL

43.6p

OF MAX.

98.5%

1 Operating cash flow of £289 million is

defined in the Measuring our financial

performance section.

2 Underlying basic earnings per share.

A reconciliation of the Group’s

performance measures to its

statutory results is provided in

the Measuring our financial

performance section.

PSP OUT-TURN

GROUP CHIEF

EXECUTIVE

CHIEF FINANCIAL

OFFICER

99.5%

OF MAX.

99.5%

OF MAX.

Outstanding share awards

Maximum number of shares subject to award

Name of Director Share award Date granted

1 January

2024

Awarded

during the

year

Vested

during the

year

Lapsed

during the

year

31 December

2024 Exercisable and/or vesting from

Philip Harrison PSP

1,5,6

19 March 2021 257,0 05 – 257,005 – – 19 March 2024

PSP

2,5,6

1 April 2022 302,119 – – – 302,119 1 April 2025

PSP

3,5,6

3 April 2023 224,418 – – – 224,418 3 April 2026

PSP

4,5,6.7

26 March 2024 – 231,111 – – 231,111 26 March 2027

DBP

8,10,11

31 March 2021 65,617 – 65,617 – – 31 March 2024

DBP

8,9 ,11,13

31 March 2022 116,625 3,534 – – 120,159 31 March 2025

DBP

8,9 ,11,13

31 March 2023 96,350 2,918 – – 99,268 31 March 2026

DBP

8,9 ,11,12,13

28 March 2024 – 79,739 – – 79,739 28 March 2027

Leo Quinn PSP

1,5,6

19 March 2021 540,175 – 540,175 – – 19 March 2024

PSP

2,5,6

1 April 2022 616,570 – – – 616,570 1 April 2025

PSP

3,5,6

3 April 2023 442,425 – – – 442,425 3 April 2026

PSP

4,5,6,7

26 March 2024 – 455,608 – – 455,608 26 March 2027

DBP

8,10,11

31 March 2021 128,266 – 128,266 – – 31 March 2024

DBP

8,9 ,11,13

31 March 2022 208,261 6,310 – – 214,571 31 March 2025

DBP

8,9 ,11,13

31 March 2023 162,779 4,932 – – 167,711 31 March 2026

DBP

8,9 ,11,12,13

28 March 2024 – 135,801 – – 135,801 28 March 2027

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Outstanding share awards continued

1 2021 PSP award: This award vested in full on 19 March 2024. Details of the Company’s performance against the performance conditions were set out in the 2023 Remuneration report. Philip Harrison and Leo Quinn also received 21,926 and 46,087 shares respectively in

lieu of the dividends which would have been payable on the shares which vested. The closing middle market price of ordinary shares on the vesting date was 373.2p.

2 2022 PSP award: Further details of this award are set out on pages 166 and 167.

3 2023 PSP award: This award is subject to three performance targets over a three‑year performance period commencing 1 January 2023. TSR part (33.3% weighting), measured against the companies of the FTSE 250 (excluding investment trusts), no vesting below median

ranking, 25% vesting of this part at median, rising to 100% vesting at upper quartile performance or better. No portion of the cash part (33.3%) will vest unless the 2025 year end operating cash flow (OCF) is greater than £242 million. 25% to 50% will vest for OCF between

£242 million and £346 million, rising to full vesting for OCF of £396 million or more. For the EPS part (33.3%), no vesting unless 2023 EPS is 33.0p, 25% vesting of this part at 33.0p, rising to full vesting at 50.7p or more.

4 2024 PSP award: Details are set out on page 168.

5 The average middle market price of ordinary shares in the Company for the three dealing dates before the PSP award dates, which was used for calculating the number of shares granted, was 296.2p for the 2021 award, 259.5p for the 2022 award, 374.3p for the 2023

award and 378.0p for the 2024 award respectively. The closing middle market price of ordinary shares on the date of the awards was 298.0p, 256.8p, 371.2p, and 382.6p respectively.

6 All PSP awards are granted for nil consideration and are in respect of 50p ordinary shares in Balfour Beatty plc. It is the Company’s current intention that awards will be satisfied by shares purchased in the market.

7 A maximum of 2,467,740 conditional shares were awarded for all participants in the PSP in 2024, which are exercisable on 26 March 2027.

8 All DBP awards are granted for nil consideration and are in respect of 50p ordinary shares in Balfour Beatty plc. It is the Company’s current intention that awards will be satisfied by shares purchased in the market.

9 The DBP awards made on 31 March 2022, 31 March 2023 and 28 March 2024 will vest on 31 March 2025, 31 March 2026 and 28 March 2027 respectively, providing the participant is still employed by the Group at the vesting date (unless specified leaver conditions are

met, in which case early vesting may be permitted).

10 The DBP awards made on 31 March 2021 vested on 31 March 2024. The closing middle market price of ordinary shares in the Company on the vesting date was 382.20p.

11 The shares subject to the DBP awards made on 31 March 2021, 31 March 2022, 31 March 2023 and 28 March 2024 were purchased at average prices of 300.8p, 261.3p, 373.8p and 381.2p.

12 On 28 March 2024, for all participants in the DBP, a maximum of 595,706 conditional shares were awarded which will normally be released on 28 March 2027.

13 On 3 July 2024 and 6 December 2024 a further 45,130 conditional shares and 17,038 conditional shares were granted in lieu of entitlements to the final 2023 and interim 2024 dividend respectively for all participants in the DBP. These shares were allocated at prices of

369.2p and 449.6p respectively, the closing market price on prior day to grant on 2 July 2024 and 5 December 2024 respectively.

The closing market price of the Company’s ordinary shares on 31 December 2024 was 454.8p. During the year, the highest and lowest closing market prices were 462.0p and 316.4p respectively.

PSP awards granted during the year

On 26 March 2024, the following PSP awards were granted to executive Directors:

Executive Type of award

Basis of award

granted

Share price

applied at

date of grant

Number of shares over

which award

was granted

Face value

of award

% of face value that

would vest

at threshold

performance

Vesting determined

by performance

over three

years to Vesting date

Philip Harrison Conditional 175% of salary of £499,200 378.0p 231,111 £873,600 25% 31 December 2026 26 March 2027

Leo Quinn Conditional 200% of salary of £861,100 378.0p 455,608 £1,722,200 25% 31 December 2026 26 March 2027

Awards will vest to executives after three years, subject to the achievement of three independently measured performance conditions as set out below:

Metric Performance condition Threshold Target Maximum

One‑third relative TSR Relative TSR against the constituents of the FTSE 250 Index (excluding investment trusts);

straight‑line vesting between points

Median

(25% vests)

– Upper quartile (100%

vests)

One‑third cash Group’s Operating Cash Flow from continuing operations; straight‑line vesting between points £255m

(25% vests)

£364m

(50% vests)

£414m

(100% vests)

One‑third EPS Group’s EPS; straight‑line vesting between points 36.5p

(25% vests)

– 56.0p

(100% vests)

For these PSP awards, a post‑vesting holding period will apply requiring the shares (net of tax) to be retained for two years.

Payments to past Directors and payments for loss of office

Leo Quinn will remain in post as Group Chief Executive and as an executive Director of the Company until Philip Hoare joins the Group. Leo will continue to be employed in an advisory capacity for several

months to ensure a seamless transition.

DIRECTORS’ REMUNERATION POLICY CONTINUED

Annual report on remuneration continued

169Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Details of the remuneration payments made or to be made to Leo Quinn are set out below. These terms

and his treatment as a ‘Good Leaver’ under the Company’s incentive plans were the subject of careful

consideration by the Remuneration Committee and are in line with Company’s Directors’ Remuneration

Policy, which was approved by shareholders at the 2023 Annual General Meeting on 12 May 2023.

@ Salary and benefits: Leo Quinn will receive his salary and benefits during the remainder of his

employment in accordance with his contract and the Directors’ Remuneration Policy. There will be

nopayment in lieu of notice.

@ Annual Incentive Plan (AIP): Leo Quinn will be eligible for a pro‑rated 2025 bonus for active service

inthe year. This will be pro‑rated for time and is subject to performance. The 2025 bonus is payable

in March 2026 and will be paid wholly in cash in line with the Directors’ Remuneration Policy.

@ Deferred Bonus Plan (DBP): Outstanding awards will vest on cessation of employment.

@ Performance Share Plan (PSP): Leo Quinn’s 2022 PSP award will vest on 31 March 2025 at 99.5%

further to the performance assessment described earlier in this report. Leo Quinn’s 2023 and 2024

PSP awards (vesting April 2026 and March 2027) will, subject to pro‑rating for time and to satisfaction

of the applicable performance targets, vest on their normal vesting dates. Vested shares under PSP

awards will be subject to the normal post‑vesting holding period.

@ Leo Quinn will not be granted a 2025 PSP award.

@ Professional Costs: Leo Quinn will receive a contribution of up to £27,000 (excluding VAT) towards

legal fees incurred in connection with his departure.

There were no other payments to past Executive Directors or payments for loss of office made during 2024.

Executive Directors’ shareholding guidelines

The Group Chief Executive and Chief Financial Officer are required under the Company’s shareholding

guidelines to hold shares in the Company worth 200% and 150% of base salary respectively and must

retain no fewer than 50% of the shares, net of taxes, vesting under their outstanding DBP and PSP

awards until the required shareholding is met.

In line with the Investors Association guidelines, the calculations shown in the chart include shares

beneficially owned at 31 December 2024 plus unvested shares, which are not subject to a further

performance condition (outstanding DBP awards), on a net of tax basis. Both executive Directors’

share interests met the Company’s shareholding guidelines at 31 December 2024.

EXECUTIVE DIRECTORS’ SHAREHOLDING GUIDELINES

(% of base salary held)

Group Chief Executive Chief Financial Officer

200%

150%

Performance graph

As in previous reports, the Remuneration Committee has chosen to compare the TSR on the Company’s

ordinary shares against the FTSE 250 Index (excluding investment trusts) principally because this is a

broad index of which the Company is a constituent member. The values indicated in the graph show the

share price growth plus reinvested dividends from a £100 hypothetical holding of ordinary shares in

Balfour Beatty plc and in the index and have been calculated using 30‑day average values.

TOTAL SHAREHOLDER RETURN (TSR)

Value (£) (rebased)

Balfour Beatty plc

31/12/13 31/12/14 31/12/15 31/12/16 31/12/17 31/12/18 31/12/19 31/12/20 31/12/21 31/12/22 31/1

2/23

Source: Thomson Reuters Datastream

350

200

150

100

300

250

FTSE 250 (excluding Investment Tr usts)

KEY

Actual

Guidance

1,857% 515%

Statement of Directors’ shareholdings and share interests

The interests of the Directors and connected persons (including, amongst others, members of the

Director’s immediate family) in the share capital of Balfour Beatty plc and its subsidiary undertakings

during the year are set out below:

Directors

Beneficially owned at

1 January 2024

1,2

Beneficially owned at

31 December 2024

2,3,4

Outstanding

PSPawards

Outstanding

DBP awards

Philip Harrison 846,886 429,252 757,6 4 8 29 9,16 6

Leo Quinn 3,470,498 3,381,580 1,514,603 518,083

Charles Allen 100,000 107,44 3

Stephen Billingham 44,495 44,495

Gabrielle Costigan – –

Stuart Doughty 7,325 7,325

Anne Drinkwater 4,500 4,500

Louise Hardy – –

Michael Lucki – –

Robert MacLeod – 17,674

Barbara Moorhouse 4,000 4,000

Rudolph Wynter – –

1 Or date of appointment, if later.

2 Includes any shares held in the Company’s all‑employee Share Incentive Plan.

3 Or date of stepping down from the Board, if earlier.

4 As at 11 March 2025, the latest practicable date prior to the date of this report, there had been no changes to the above. The closing

market price of the Company’s ordinary shares as at 31 December 2024, 454.8p, was used to calculate the value of shares for the

purposes of the executive Directors’ shareholding guidelines shown on this page.

170170

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Group Chief Executive’s remuneration table

The total remuneration figures for the Group Chief Executive during each of the last 10 financial years are shown in the table below. The total remuneration figure includes the AIP award based on that year’s

performance and the PSP award based on the three‑year performance period ending in the relevant year. The AIP pay‑out and PSP vesting level as a percentage of the maximum opportunity are also shown for

each of these years.

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Total remuneration

1,2,3

£1,442,070 £1,445,250 £4,124,104 £2,982,121 £3,066,624 £2,254,806 £2,942,943 £4,404,747 £3,945,409 £4,895,874

AIP (%) 47.0% 47.5% 97.0% 69.06% 96.25% 59.25% 85% 95% 77.8% 90.4%

PSP (%) 0% 0% 88.6% 6 4.17% 60.92% 33.33% 60.3% 100% 100% 99.5%

1 The figures from 2015 onwards relate to Leo Quinn.

2 Total remuneration for 2023 has been adjusted from the total figure included in the 2023 Remuneration report to reflect the actual valuation on the 19 March 2024 vesting date of shares vesting under the 2021 PSP.

3 The figures for 2017 and 2018 exclude the vesting of awards made under the recruitment terms for the Group Chief Executive. Full details of these were included in the 2018 Remuneration report.

Percentage change in Directors’ remuneration compared with all UK employees

The table below shows the percentage change in the remuneration of the Directors undertaking the roles of Group Chief Executive and Chief Financial Officer and the non‑executive Directors between the financial

years, compared with the percentage increase for the same years for all UK employees of the Group where UK employees have been selected as the most appropriate comparator. Charles Allen was not a Director

until 13 May 2021 and therefore his percentage change between 2021 and 2022 is shown in the table on an annualised basis. Louise Hardy was not a Director until 1 April 2022 and therefore the percentage change

between 2022 and 2023 is shown on an annualised basis. Stephen Billingham and Stuart Doughty stepped down as Directors on 9 May 2024 and therefore the percentage changes between 2023 and 2024 are also

shown on an annualised basis. Gabrielle Costigan and Robert MacLeod were appointed as Directors on 9 May 2024 and Rudolph Wynter was appointed as a Director on 1 December 2024.

% change between 2023 and 2024 % change between 2022 and 2023

Base

salary Benefits

Annual

bonus

Total

remuneration

Base

salary Benefits

Annual

bonus

Total

remuneration

Leo Quinn, Group Chief Executive 4% 3% 21% 13% 4% (57)% (15)% (17)%

Philip Harrison, Chief Financial Officer 4% 3% 21% 13% 6% (54)% (16)% (14)%

Charles Allen, Non‑executive Group Chair 4% 29% – 5% 4% (38)% – 7%

Stephen Billingham, SeniorIndependent Non‑executive Director

(63)% (92)% – (65)% 3% 176% – 6%

Gabrielle Costigan, Independent Non‑executive Director

– – – – – – – –

Stuart Doughty, Independent Non‑executive Director

(63)% (97)% – (66)% 3% 302% – 10%

Anne Drinkwater, SeniorIndependent Non‑executive Director

12% 64% – 19% 3% 1% – 3%

Louise Hardy, Independent Non‑executive Director 4% (1)% – 4% 45% 239% – 49%

Michael Lucki, Independent Non‑executive Director 4% 12% – 6% 4% 54% – 12%

Robert MacLeod, Independent Non‑executive Director – – – – – – – –

Barbara Moorhouse, Independent Non‑executive Director 4% 13% – 5% 4% 96% – 8%

Rudolph Wynter, Independent Non‑executive Director

– – – – – – – –

All UK employees 13% 7% 37% 13% 5% – (5)% 5%

1 Stuart Doughty and Stephen Billingham retired from the Board effective 9 May 2024.

2 Gabrielle Costigan and Robert MacLeod were appointed to the Board effective 8 March 2024.

3 Anne Drinkwater was appointed Senior Independent Non‑executive Director effective 9 May 2024.

4 Rudolph Wynter was appointed to the Board effective 1 December 2024.

DIRECTORS’ REMUNERATION POLICY CONTINUED

Annual report on remuneration continued

171Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

% change between 2021 and 2022 % change between 2020 and 2021

Base

salary Benefits

Annual

bonus

Total

remuneration

Base

salary Benefits

Annual

bonus

Total

remuneration

Leo Quinn, Group Chief Executive 2% 2% 16% 9% 3% 3% 43% 21%

Philip Harrison, Chief Financial Officer 5% 4% 22% 14% 11% 8% 57% 30%

Charles Allen, Non‑executive Group Chair 31% 2,930% – 34% – – – –

Stephen Billingham, SeniorIndependent Non‑executive

Director 2% 817% 3% 6% (42)% – 6%

Gabrielle Costigan, Independent Non‑executive Director – – – – – – – –

Stuart Doughty, Independent Non‑executive Director 2% 13% – 2% 6% 77% – 7%

Anne Drinkwater, Senior Independent Non‑executive Director 3% 1,802% – 18% 5% (87)% – (1)%

Louise Hardy, Independent Non‑executive Director – – – – – – – –

Michael Lucki, Independent Non‑executive Director 3% – – 22% 7% (100)% – (9)%

Robert MacLeod, Independent Non‑executive Director – – – – – – – –

Barbara Moorhouse, Independent Non‑executive Director 3% 198% – 6% 7% (5)% – 7%

Rudolph Wynter, Independent Non‑executive Director – – – – – – – –

All UK employees 7% 13% 11% 7% (2)% 5% 122% 0%

% change between 2019 and 2020

Base

salary Benefits

Annual

bonus

Total

remuneration

Leo Quinn, Group Chief Executive (3)% (3)% (38)% (22)%

Philip Harrison, Chief Financial Officer (2)% 1% (39)% (22)%

Charles Allen, Non‑executive Group Chair – – – –

Stephen Billingham, SeniorIndependent Non‑executive

Director (1)% (29)% – (1)%

Gabrielle Costigan, Independent Non‑executive Director – – – –

Stuart Doughty, Independent Non‑executive Director (1)% (52)% – (2)%

Anne Drinkwater, SeniorIndependent Non‑executive Director 6% (12)% – 5%

Louise Hardy, Independent Non‑executive Director – – – –

Michael Lucki, Independent Non‑executive Director (3)% (39)% – (10)%

Robert MacLeod, Independent Non‑executive Director – – – –

Barbara Moorhouse, Independent Non‑executive Director (3)% 34% – (2)%

Rudolph Wynter, Independent Non‑executive Director – – – –

All UK employees 0% 3% (44)% 0%

Note: Benefits for non‑executive Directors relate to taxable travel expenses and/or travel expenses which are shown in the taxable benefits column of the Remuneration received by Directors for the year ended 31 December 2024 table on page 161. The reported percentage increases in

benefits in 2022 from 2021 have been impacted significantly by COVID‑19 restrictions on travel in 2021.

Note: In response to the COVID‑19 pandemic, the executive Directors and non‑executive Directors took a voluntary 20% reduction in salary/fees in April and May 2020.

172172

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Pay ratio of Group Chief Executive to average employee

The Regulations require certain companies to disclose the ratio of the Chief Executive’s pay, using the amount set out in the single total figure table, to that of the median, 25th and 75th percentile total

remuneration of full‑time equivalent UK employees.

The table below shows the relevant data for Balfour Beatty’s UK employees for 2024, together with the 2019 to 2023 data, calculated using Option A as set out in the legislation.

25th percentile pay ratio Median pay ratio 75th percentile pay ratio

Year Method of calculation adopted (Group Chief Executive: UK employees) (Group Chief Executive: UK employees) (Group Chief Executive: UK employees)

2024 Option A 125:1 87:1 62:1

2023 Option A 98.1 69:1 50:1

2022 Option A 115:1 81:1 59:1

2021 Option A 84:1 57:1 40:1

2020 Option A 64:1 45:1 32:1

2019 Option A 92:1 65:1 45:1

Pay details for the Group Chief Executive and individuals whose 2024 remuneration is at the median, 25th percentile and 75th percentile amongst UK‑based employees are as follows:

Group Chief Executive 25th percentile Median 75th percentile

Salary £895,500

£32,498 £44,043 £61,800

Total pay and benefits £4,895,874 £39,207 £56,098 £79,229

1 Group Chief Executive base salary at 31 December 2024.

The median, 25th percentile and 75th percentile figures used to determine the above ratios were calculated by reference to the full‑time equivalent annualised remuneration (comprising salary, benefits, pension,

annual bonus and long‑term incentives) of all UK‑based employees of the Group as at 31 December 2024 (i.e. ‘Option A’ under the Regulations). The Committee selected this calculation methodology as it was

felt to produce the most statistically accurate result.

The Committee considers that the median pay ratio for 2024 that is disclosed in the above table is consistent with the pay, reward and progression policies for Balfour Beatty’s UK employees as a whole. It

reflects the fact that a greater proportion of executive Director pay is linked to annual performance through a higher annual incentive plan opportunity (a percentage of which is subject to deferral into shares) and

a long‑term incentive plan. The increase in pay ratios for 2024 when compared to 2023 reflect the higher out‑turn of the AIP in 2024 when compared to 2023.

Relative importance of spend on pay, dividends and underlying pre-tax profit

The following table shows the Company’s actual spend on pay for all Group employees relative to dividends and underlying pre‑tax profit:

2023 2024 % change

Staff costs (£m)

1,318 1,398 6%

Dividends (£m) 58 61 5%

Underlying pre‑tax profit (£m) 261 289 11%

1 Staff costs include base salary, benefits and bonuses for all Group employees (excluding joint ventures and associates).

Directors’ pension allowances

No Directors were contributing members of the Balfour Beatty Pension Fund during 2024. The executive Directors were in receipt of a cash allowance in lieu of pension equivalent to 7% of base salary, in line

with the wider workforce, as disclosed in the Directors’ remuneration table on page 161.

DIRECTORS’ REMUNERATION POLICY CONTINUED

Annual report on remuneration continued

173Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

External appointments of executive Directors

At the discretion of the Board, executive Directors are allowed to act as non‑executive Directors of other companies and retain any fees relating to those posts. Philip Harrison was appointed a non‑executive

director and chair of the audit committee of Dowlais Group plc in February 2023.

Service contracts

Executive Directors’ contracts are on a rolling 12‑month basis and are subject to 12 months’ notice when terminated by the Company and six months’ notice when terminated by the Director.

The current non‑executive Directors, including the Chair, do not have a service contract and their appointments, whilst for a term of three years, may be terminated with three months’ notice (six months’ notice

for the Group Chair) by either party. All non‑executive Directors have letters of appointment and their appointment and subsequent reappointment is subject to annual approval by shareholders.

Name Commencement date Unexpired term remaining

Leo Quinn, Group Chief Executive 1 January 2015 Terminable on 12 months’ notice

Philip Harrison, Chief Financial Officer 1 June 2015 Terminable on 12 months’ notice

Charles Allen, Non‑executive Group Chair 13 May 2021 Fixed term expiring on 12 May 2027 (subject to renewal) and terminable on six months’ notice

Stephen Billingham, Senior Non‑executive Independent Director 1 June 2015 Retired from Board effective 9 May 2024

Gabrielle Costigan, Independent Non‑executive Director 8 March 2024 Fixed term expiring on 7 March 2027 (subject to renewal) and terminable on three months’ notice

Stuart Doughty, Independent Non‑executive Director 8 April 2015 Retired from Board effective 9 May 2024

Anne Drinkwater, Senior Non‑executive Independent Director 1 December 2018 Fixed term expiring on 30 November 2027 (subject to renewal) and terminable on three months’ notice

Louise Hardy, Independent Non‑executive Director 1 April 2022 Fixed term expiring on 31 March 2025 (subject to renewal) and terminable on three months’ notice

Michael Lucki, Independent Non‑executive Director 1 July 2017 Fixed term expiring on 30 June 2026 (subject to renewal) and terminable on three months’ notice

Robert MacLeod, Independent Non‑executive Director 8 March 2024 Fixed term expiring on 7 March 2027 (subject to renewal) and terminable on three months’ notice

Barbara Moorhouse, Independent Non‑executive Director 1 June 2017 Fixed term expiring on 31 May 2026 (subject to renewal) and terminable on three months’ notice

Rudolph Wynter, Independent Non‑executive Director 1 December 2024 Fixed term expiring on 30 November 2027 (subject to renewal) and terminable on three months’ notice

Consideration by the Directors of matters relating to Directors’ remuneration

The members of the Remuneration Committee are independent non‑executive Directors, as defined under the Corporate Governance Code. No member of the Committee has conflicts of interest arising from

cross‑directorships and no member is involved in the day‑to‑day executive management of the Group. During the year under review, the members of the Committee were as follows:

@ Anne Drinkwater (Committee Chair);

@ Michael Lucki;

@ Barbara Moorhouse; and

@ Robert MacLeod (appointed 8 March 2024).

The Committee also receives advice from several sources, namely:

@ the Group Chief Executive and the Group HR Director, who are invited to attend meetings of the Committee but are not present when matters relating directly to their own remuneration are discussed; and

@ Deloitte LLP.

At regular intervals the Committee reviews the appropriateness and independence of the advice received from remuneration consultants. As the result of a competitive tender process in 2020, Deloitte LLP was

appointed as independent remuneration consultants to the Committee. Deloitte LLP is a member of the Remuneration Consultants Group and, as such, voluntarily operates under its Code of Conduct in relation

to executive remuneration consulting in the UK.

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Consideration by the Directors of matters relating to Directors’ remuneration continued

During the year, the Committee’s remuneration consultants provided a range of advice to the Committee, including:

@ analysis of market practice and corporate governance update;

@ provision of benchmark data for senior management and Non‑executive Director remuneration;

@ assistance with the implementation of the Remuneration Policy;

@ assistance with the drafting of the Remuneration report; and

@ calculation of vesting levels under the TSR element of the PSP awards.

During 2024, Deloitte LLP received fees amounting to £65,000 excluding VAT (£51,250 excluding VAT in 2023) in respect of advice given to the Committee. Deloitte also provided tax and legal services to

theGroup related to the operation of the Group’s share plans. Other than as disclosed above, Deloitte LLP has no connection with the Company or individual Directors. The Committee is satisfied the advice

provided by Deloitte LLP is independent.

Terms of reference

During the period, the Committee has agreed a number of changes to be made to its terms of reference, as part of the annual review. Full terms of reference can be found in the Investors section

oftheCompany’s website at: www.balfourbeatty.com/investors/governance/board‑committees/.

Statement of shareholder voting at the AGM

At the AGM on 9 May 2024, the resolution to approve the Annual report on remuneration received the following votes from shareholders:

Total number of votes % of votes cast

For 387,412,981 95.76%

Against 17,154,779 4.24%

Total votes cast 404,567,760 100%

Abstentions 68,970

The resolution to approve the Remuneration Policy was approved at the AGM on 12 May 2023 and received the following votes from shareholders:

Total number of votes % of votes cast

For 364,512,799 81.11%

Against 84,890,014 18.89%

Total votes cast 449,402,813 100%

Abstentions 1,065,800

By order of the Board

Anne Drinkwater

Chair of the Remuneration Committee

11 March 2025

DIRECTORS’ REMUNERATION POLICY CONTINUED

Annual report on remuneration continued

175Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

DIRECTORS’ REPORT

The Directors of Balfour Beatty plc present

theirreport, together with the audited financial

statements for the year ended 31 December 2024.

For the purpose of the Financial Reporting

Council’s Disclosure Guidance and Transparency

Rule (DTR) 4.1.8R, the Directors’ report is also

the Management report for the year ended

31December 2024.

As permitted by Section 414 C(11) of the

Companies Act 2006, some matters required to

be included in the Directors’ report have instead

been included in the Strategic report. These

disclosures are incorporated by reference in

theDirectors’ report. The Strategic report can

befound on pages 1 to 115.

Corporate governance

The Governance section on pages 116 to 178,

forms part of this Directors’ report.

The Company complied with all the provisions

ofthe UK Corporate Governance Code during

theyear ended 31 December 2024.

Directors and their interests

The Directors as at 31 December 2024 were

Charles Allen, Lord Allen of Kensington CBE,

LeoQuinn, Philip Harrison, Anne Drinkwater,

Robert MacLeod, Gabby Costigan MBE, Rudy

Wynter, Barbara Moorhouse, Michael Lucki,

andLouise Hardy. Further details and individual

biographies for of the Directors can be found

onpages 120 and 121 and information relating to

their connected persons in the Company’s shares

(as notifiable to the Company under Article 19 of

the Market Abuse Regulation) are set out on

page 169.

Any related party transaction are included in

Note40 to the accounts on page 254.

Listing Rule 6.6.6R(10)

Data on the diversity of the individuals on

theBoard and in executive management as at

31December 2024, as required by Listing Rules

is set out on the right. The data is collated by

self‑disclosure from the individuals concerned.

Further narrative surrounding Listing Rule

6.6.6R(10) and compliance with the targets set

out can be found in the Nomination Committee

report on pages 140 to 143.

Disclosure Guidance and

Transparency Rules (DTRS) 6.6.6R(9)

The Company is compliant with DTRS 6.6.6R(9).

Further information on Board Diversity and

Inclusion can be found on the Nomination

Committee report on page 142 and 143.

Directors’ indemnities and insurance

The Group maintains directors’ and officers’

liability insurance which provides appropriate

cover for legal action brought against its Directors.

Qualifying third‑party indemnity provisions were

in force during 2024 and as at the date of this

report for the benefit of certain employees who

are directors of a subsidiary company.

Qualifying pension scheme indemnity provisions

(as defined by Section 235 of the Companies Act

2006) were in force during the year ended 31

December 2024 for the benefit of the trustee

directors of the Balfour Beatty Pension Fund.

Articles of Association

The Company has not adopted any special rules

regarding the appointment and replacement of

Directors or the amendment of the Articles of

Association, other than as provided for under

UKcompany law.

As at 31 December 2024

Number of Board

members

Percentage of the

Board

Number of senior

positions on the

Board (Chair, CEO,

CFO and SID)

Number in

executive

management

Percentage in

executive

management

Female 4 40% 1 2 20%

Male 6 60% 3 8 80%

Not specified/prefer

not to say – – – – –

Total 10 100.0% 4 10 100.0%

As at 31 December 2024

Number of Board

members

Percentage of the

Board

Number of senior

positions on the

Board (Chair, CEO,

CFO and SID)

Number in

executive

management

Percentage in

executive

management

White British or

other White

(including minority

White groups) 9 90.0% 4 9 100.0%

Mixed/multiple

ethnicity groups – – – – –

Asian/Asian British – – – – –

Black/African/

Caribbean/Black

British 1 10.0% – – –

Other ethnic group,

including Arab – – – – –

Not specified/prefer

not to say – – – – –

176176

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Share capital

Details of the share capital of the Company as at

31 December 2024, including the rights attaching

to the shares, are set out in Note 32 on page

245. No shares were issued during 2024.

The powers of the Directors to issue or buy back

the Company’s shares are determined by the

Companies Act 2006 and the Articles of

Association. The Directors are authorised to

issue and allot shares and to buy back shares

subject to annual shareholder approval at the

AGM. Such authorities were granted by shareholders

at the 2024 AGM and they will be proposed at

the 2025 AGM that the Directors be granted new

authorities to issue, allot and buy back shares.

Under the authority provided at the 2023 AGM,

the Company commenced its 2024 share buyback

programme on 2 January 2024. Further authority

for share buybacks was approved at the 2024

AGM and the 2024 share buyback programme

was completed on 20 September 2024. Under

this programme, the Company purchased 27,123,782

ordinary shares of 50 pence each, for a total

consideration of £100,000,000 (exclusive of

expenses) and these shares were held in treasury

with no voting or dividend rights. On 31 October 2024,

all 27,123,782 treasury shares were cancelled,

resulting in a balance of zero treasury shares

heldas at 31 December 2024. The Company

commenced the initial tranche of its 2025 share

buyback programme on 6 January 2025. As at

10March 2025 (the latest practicable date prior

to the date of this document), the Company had

purchased 5,514,793 ordinary shares of 50 pence

each, for a total consideration of £25,000,000

(exclusive of expenses) and these shares are

heldin treasury with no voting or dividend rights.

Throughout 2024, the Company’s issued share

capital was publicly listed on the London Stock

Exchange and it remains so as at the date of this

report. There are no specific restrictions on the

size of a shareholding which is governed by the

Articles of Association and the prevailing law.

Other than in respect of shares that vest under

the Company’s share schemes and are subject to

a two‑year holding period, there are no specific

restrictions on the transfer of shares which are

governed by both the Articles of Association

andthe prevailing law. The Directors are not

aware of any agreements between holders of the

Company’s shares that may result in restrictions

on the transfer of shares or on voting rights.

No person has special rights of control over the

Company’s share capital and all issued shares

arefully paid. Shares held by the Balfour Beatty

Employee Share Ownership Trust rank pari passu

with the ordinary shares in issue and have no

special rights. Voting rights and rights of acceptance

of any offer relating to the shares held in this

trust rest with the trustees, who may take account

of any recommendation from the Company.

Voting rights are not exercisable by the employees

on whose behalf the shares are held in trust.

Dividends are waived by the trustees in relation

to the shares held in trust. Details of shares held

by the Balfour Beatty Share Ownership Trust in

relation to the Company’s share schemes can be

found in Note 33.3 on page 249.

Major shareholders’ interests

Notifications provided to the Company by major

shareholders in accordance with the DTR are

published via a Regulatory Information Service

and on the Company’s website.

The Company has been notified of the following

interests in voting rights in its shares as at

31December 2024 and as at the date of this

report. Please note that percentages provided

areas at the date of notification.

Shareholder

Percentage of

voting rights (%)

as at

31 December 2024

Percentage of

voting rights (%)

as at

10 March 2025

Schroders plc 5.10 5.10

BlackRock, Inc 5.00 5.00

Dividends

An interim dividend of 3.8 pence (2023: 3.5 pence)

was paid on 6 December 2024. A final dividend

of 8.7 pence per share (2023: 8.0 pence) has

been recommended by the Board for shareholder

approval at the 2025 AGM, giving total dividends

per ordinary share of 12.5 pence for 2024

(2023:11.5 pence).

The Directors will continue to offer a Dividend

Reinvestment Plan, which allows holders of

ordinary shares to reinvest their cash dividends

inthe Company’s shares through a specially

arranged share dealing service.

Branches

As the Group is an international business,

thereare activities operated through branches

incertain jurisdictions.

Auditor

KPMG LLP has indicated its willingness to

continue as auditor to the Company and a

resolution for its reappointment will be

proposedat the 2025 AGM.

Company Secretary

Tracey Wood is Company Secretary at the

dateofthis report and was Company Secretary

throughout the year ended 31 December 2024.

Innovation, future development

andresearch and development

Information concerning innovation, future

development and research and development is

set out on pages 22 and 23 and forms part of the

Directors’ report disclosures.

Sustainability

A full description of the Group’s approach

tosustainability, including information on

itscommunity engagement programme,

appearsonpages 48 to 67.

Policies

The Group’s Code of Ethics and other published

policies, including: Speak Up; health and safety;

conflicts of interest, sustainability; sustainable

procurement; social value; environment; supply

chain media, PR and marketing; quality; and

information security, remain in place and can

beaccessed on the Company’s website,

www.balfourbeatty.com.

Engagement with supply chain

suppliers and customers

Details of the Company’s approach to stakeholder

engagement, including engagement with

customers and supply chain suppliers can

befound on pages 26 to 29.

Greenhouse gas emissions

Details of Balfour Beatty’s greenhouse gas

emissions and the actions which the Group is

taking to reduce them are set out on pages 50 to

and form part of the Directors’ report disclosures.

DIRECTORS’ REPORT CONTINUED

177Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Employment

The Balfour Beatty Group operates across a

number of geographies and end‑markets. Balfour

Beatty provides a Human Resources framework

for promoting diversity, ethical behaviour and

learning and development as well as continuing

to fulfil its commitments in relation to regulation

and corporate governance.

The Group provides fair and flexible employment

policies and practices that respond to the different

needs of its people. Information concerning

employee diversity is set out on pages 66 and 67

and forms part of the Directors’ report disclosures.

Balfour Beatty strives to provide employment,

training and development opportunities for the

disabled community wherever possible, does not

discriminate, and is committed to supporting

employees who become disabled during

employment, and helping disabled employees

make the best use of their skills, expertise and

potential, consistent with any other employee.

The Company operates an employee Share

Incentive Plan (SIP) which enables UK‑based

employees to acquire the Company’s ordinary

shares on a potentially tax‑favourable basis, in

order to encourage employee share ownership

and provide additional alignment between the

interests of employees and shareholders. Participants

in the SIP are the beneficial owners of shares but

not the registered owners, and the voting rights

to such shares are exercised by the trustee of

theSIP at the discretion of the participants.

Further information on how Directors have

engaged with employees and how they have

hadregard to employee interests can be found

on pages 127 and 128.

Employees

Details on the average number of employees

within the Group can be found in Note 7.1 on

page 214.

Diversity and inclusion

Details on the Board’s Diversity and Inclusion

Policy can be found in the Nomination

Committee report on pages 142 and 143.

Details of the Group’s approach to diversity and

inclusion can be found on pages 72 and 73.

Disclosures required under Listing

Rule 6.6.1

There are no disclosures required to be made

under Listing Rule 6.6.1. Details of long‑term

incentive plans can be found in the Remuneration

report on pages 153 to 174.

Events after the reporting date

Philip Hoare will join the Board as Group Chief

Executive in September 2025. He will succeed

Leo Quinn who will step down from the Board

after more than 10 years in role.

Events after the reporting date are set out in

Note 39 on page 253.

Political donations

At the 2024 AGM, shareholders granted

authority, for the purposes of Part 14 of the

Companies Act 2006, for the Company and its

subsidiaries to make donations to political

organisations up to a maximum aggregate

amount of £25,000. This approval is a precautionary

measure in view of the broad definition of these

terms in the Companies Act. No such expenditure

or donations were made during 2024 and shareholder

authority will be sought again at the 2025 AGM.

In the US, corporate political contributions

totalling US$2,500 were made to a Political

Action Committee during 2024. These contributions

are not covered by Part 14 of the Companies Act

2006. Any such contributions or donations are

tightly controlled and must be approved in advance

in accordance with the Company’s internal

procedures and must also adhere strictly to the

Company’s Code of Ethics.

Capitalised interest

Details of the Group’s capitalised interest can be

found in Note 15 and Note 16 on pages 219 and 220.

Financial instruments

The Group’s financial risk management

objectives and policies (including its hedging

policy) and its exposure to the following risks –

liquidity, foreign currency, interest rate, price and

credit – are detailed in Note 41 on pages 257 to 259.

Going concern and viability

The Group’s going concern statement is detailed

in Note 1 on page198.

The Group’s long‑term viability statement is set

out on page 106.

Change of control provisions

The Group’s bank facility and surety agreements

contain provisions that, where the parties are

unable to agree the implications of any change of

control, on notice being given to the Group, the

lenders and sureties may exercise their discretion

to require prepayment of any loans or outstanding

bonds and cancel all commitments under the

agreement concerned.

The Group’s US private placement arrangements

require the Company, promptly upon becoming

aware that a change of control of the Company

has occurred (and in any event within 10 business

days), to give written notice of such fact to all

noteholders and make an offer to prepay the

entire unpaid principal amount of the notes,

together with accrued interest.

A number of joint venture, client contracts and

contract bond agreements include provisions

which become exercisable by a counterparty on

a change of control. These include the right of a

counterparty to request additional security and

toterminate an agreement.

Some other commercial agreements, entered

into in the normal course of business, include

change of control provisions. The Group’s share

and incentive plans include usual provisions

relating to change of control. There are no

agreements providing for compensation for the

Directors or employees on a change of control.

Annual General Meeting

All resolutions continue to be put to a poll rather

than a show of hands. Each substantially separate

issue is proposed via a separate resolution and

proxy forms provide for shareholders to vote for,

vote against or withhold their vote on each resolution.

All Board members typically attend the AGM

andare available to answer questions during

theformal part of the meeting as well as being

present for informal discussion over refreshments

after the AGM.

The 2025 AGM will be held at The Curve, Axis

Business Park, Hurricane Way, Langley SL3 8AG,

United Kingdom on Thursday 8 May 2025

commencing at 10 am.

178178

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Statement of Directors as to

disclosure of information to the

Company’s auditor

We confirm that to the best of our knowledge:

@ each of the persons who are Directors at the

time when this Directors’ report is approved

confirms that, so far as they are aware, there

isno relevant audit information of which the

Company’s auditor is unaware and that they

have taken all the steps that they ought to have

taken as a Director to make themselves aware

of any relevant audit information and to establish

that the Company’s auditor is aware of that

information.

Statement of Directors’

responsibilities in respect of

theAnnual Report and the

financialstatements

The Directors are responsible for preparing

theAnnual Report and the Group and Parent

Company financial statements in accordance

with applicable law and regulations.

Company law requires the Directors to prepare

Group and Parent Company financial statements

for each financial year. Under that law they are

required to prepare the Group financial statements

in accordance with UK‑adopted international

accounting standards and applicable law and

have elected to prepare the Parent Company

financial statements in accordance with UK

accounting standards and applicable law, including

FRS 101 Reduced Disclosure Framework.

Under company law the Directors must not

approve the financial statements unless they are

satisfied that they give a true and fair view of the

state of affairs of the Group and Parent Company

and of the Group’s profit or loss for that period. In

preparing each of the Group and Parent Company

financial statements, the Directors are required to:

@ select suitable accounting policies and then

apply them consistently;

@ make judgements and estimates that are

reasonable, relevant, reliable, and prudent;

@ for the Group financial statements, state whether

they have been prepared in accordance with

UK‑adopted international accounting standards;

@ for the Parent Company financial statements,

state whether applicable UK accounting

standards have been followed, subject to any

material departures disclosed and explained in

the Parent Company financial statements;

@ assess the Group and Parent Company’s ability

to continue as a going concern, disclosing, as

applicable, matters related to going concern; and

@ use the going concern basis of accounting

unless they either intend to liquidate the Group

or the Parent Company or to cease operations,

or have no realistic alternative but to do so.

The Directors are responsible for keeping

adequate accounting records that are sufficient

to show and explain the Parent Company’s

transactions and disclose with reasonable

accuracy at any time the financial position of the

Parent Company and enable them to ensure that

its financial statements comply with the Companies

Act 2006. They are responsible for such internal

control as they determine is necessary to enable

the preparation of financial statements that are

free from material misstatement, whether due to

fraud or error, and have general responsibility for

taking such steps as are reasonably open to them

to safeguard the assets of the Group and to

prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors

are also responsible for preparing a Strategic

report, Directors’ report, Directors’ remuneration

report and Corporate governance statement that

complies with that law and those regulations.

The Directors are responsible for the maintenance

and integrity of the corporate and financial

information included on the Company’s website.

Legislation in the UK governing the preparation

and dissemination of financial statements may

differ from legislation in other jurisdictions.

Responsibility statement of the

Directors in respect of the Annual

Financial Report

We confirm that to the best of our knowledge:

@ the financial statements, prepared in accordance

with the applicable set of accounting standards,

give a true and fair view of the assets, liabilities,

financial position and profit or loss of the

Company and the undertakings included in

theconsolidation taken as a whole; and

@ the Strategic report includes a fair review

ofthe development and performance of the

business and the position of the Company and

the undertakings included in the consolidation

taken as a whole, together with a description

of the principal risks and uncertainties that

they face.

We consider the Annual Report and Accounts,

taken as a whole, is fair, balanced, and understandable

and provides the information necessary for

shareholders to assess the Group’s position

andperformance, business model and strategy.

This confirmation is given and should be interpreted

in accordance with the provisions of Section 418

of the Companies Act 2006.

By order of the Board

Tracey Wood

Group General Counsel and Company

Secretary

11 March 2025

Registered Office: 5 Churchill Place, Canary

Wharf, London E14 5HU Registered in England

and Wales, registered number 395826

DIRECTORS’ REPORT CONTINUED

179Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BALFOUR BEATTY PLC

1 Our opinion is unmodified

We have audited the financial statements of Balfour Beatty plc (the Company) for the year ended

31December 2024 which comprise the Group Income Statement, Group Statement of Comprehensive

Income, Group Statement of Changes in Equity, Company Statement of Changes in Equity, Group

andCompany Balance Sheets, Group Statement of Cash Flows, and the related notes, including the

accounting policies in note 2. The commentary provided by the Directors on pages 189, 191, 192, 195

and 197 does not form part of the financial statements.

In our opinion:

@ the financial statements give a true and fair view of the state of the Group’s and of the parent

Company’s affairs as at 31 December 2024 and of the Group’s profit for the year then ended;

@ the Group financial statements have been properly prepared in accordance with UK‑adopted

international accounting standards;

@ the parent Company financial statements have been properly prepared in accordance with UK

accounting standards, including FRS 101 Reduced Disclosure Framework; and

@ the financial statements have been prepared in accordance with the requirements of the Companies

Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities are described below. We believe that the audit evidence we have

obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our

report to the Audit and Risk committee.

We were first appointed as auditor by the Company’s shareholders on 19 May 2016. The period of total

uninterrupted engagement is for the nine financial years ended 31 December 2024. We have fulfilled

our ethical responsibilities under, and we remain independent of the Group in accordance with, UK

ethical requirements including the FRC Ethical Standard as applied to listed public interest entities.

Nonon‑audit services prohibited by that standard were provided.

2 Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance

inthe audit of the financial statements and include the most significant assessed risks of material

misstatement (whether or not due to fraud) identified by us, including those which had the greatest

effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts

ofthe engagement team. We summarise below the key audit matters (unchanged from 2023), in

decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit

procedures to address those matters and, as required for public interest entities, our results from those

procedures. These matters were addressed, and our results are based on procedures undertaken, in

the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in

forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide

aseparate opinion on these matters.

FINANCIAL STATEMENTS

180

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BALFOUR BEATTY PLC

CONTINUED

2 Key audit matters: our assessment of risks of material misstatement continued

The risk Our response

Contract accounting: Construction Services ‑ revenue £6,630m (2023: £ 6,695m), contract assets £116m (2023: £203m), contract liabilities (current) £506m (2023: £506m), and loss provisions included within

contract provisions (current) £213m (2023: £187m).

Risk vs 2023:

Refer to page 149 (Audit and Risk Committee report), note 2.4 (Principal accounting policies – Revenue recognition), note 2.28(a) (Judgements and key sources of estimation uncertainty – Revenue and margin

recognition)

Subjective estimates

The recognition of revenue and margin within the Construction Services

segment relies on estimates in relation to the forecast total costs of each

contract. Cost contingencies may be included in these estimates to take

account of specific uncertain risks or disputed claims against the Group

arising within each contract. Where a contract has become, or is expected

to be, loss‑making, a provision is recognised using these estimates. The

Group will also make estimates in recognising provisions associated with

defects arising on certain completed contracts.

Further estimation uncertainty exists in relation to assessing the amount of

variable consideration that should be included on a contract‑by‑contract

basis for variations and claims. The Group has to estimate the amount they

expect to receive and assess whether it is highly probable such that a

significant reversal in the amount of cumulative revenue recognised will not

occur.

Professional standards require us to make a rebuttable presumption that

the fraud risk associated with revenue recognition is a significant risk. The

potential incentives and pressures to achieve bonus targets and meet profit

targets could increase the risk of fraudulent revenue recognition in relation

to the Construction Services segment revenue, as well as the risk of

fraudulent margin recognition in relation to contract loss provisions in the

segment.

The effect of these matters is that, as part of our risk assessment, we

determined that contract revenue within the Construction Services

segment and the related contract balances have a high degree of

estimation uncertainty, with a potential range of reasonable outcomes

greater than our materiality for the Group financial statements as a whole,

and possibly many times that amount. Therefore, auditor judgement is

required to assess whether the Directors’ estimates for total forecast costs

and variable consideration, and therefore the amount of revenue, margin

and related contract balances recognised, fall within acceptable ranges.

The financial statements (note 2.28(a)) disclose the nature and the extent

of the estimation uncertainty estimated by the Group.

We performed the tests below rather than seeking to rely on the Group’s controls because the nature of the balances is such that

we would expect to obtain audit evidence primarily through the detailed procedures described.

Using a variety of quantitative and qualitative criteria we selected a sample of contracts to assess and challenge the most

significant and complex contract estimates. We obtained the project review papers prepared by the Group which explained the

estimates made and challenged the judgements underlying those papers with operational, legal, commercial and financial

management.

Our procedures on the contracts selected included:

@ Historical comparisons: assessing the Group’s ability to accurately forecast end‑of‑life contract margins by comparing the total

forecast costs and variable consideration previously recognised to final outcomes;

@ Customer and subcontractor correspondence scrutiny: analysing correspondence with customers and subcontractors

around variations and claims to challenge the estimates of variations, claims, forecast costs and defects made by the Group;

@ Legal correspondence scrutiny: where relevant, analysing correspondence with lawyers and other legal advice obtained by

the Group relating to variations, claims and defects;

@ Test of detail: in respect of fixed‑price contracts, analysing the end‑of‑life contract margins forecasts and challenging the total

cost estimates within the forecasts by considering the amounts already procured, the amounts still to be procured, the site and

time related cost forecasts against programme and run rates, and any contingency held;

@ Test of detail: inspecting contracts for key clauses; identifying relevant contractual mechanisms such as pain/gain shares,

disallowed costs, liquidated damages, inflation related clauses and success fees, and assessing whether these key clauses have

been appropriately reflected in the amounts recognised in the financial statements;

@ Site visits: for certain higher risk or larger value contracts, and a haphazard selection of other contracts, attending in‑person site

visits or holding video conference calls where we inspected the physical progress of the project and discussed the project with

site personnel. Our own construction industry specialists attended a selection of these site visits;

@ Use of our own specialists: utilising our own industry specialists for certain contracts where specific risk factors were

identified to assist with identifying the risks and opportunities associated with the contract and assist in developing a range of

possible outcomes for specific assumptions. This assisted us in challenging the appropriateness of revenue recognised and,

where applicable, provisions held in relation to these contracts; and

@ Assessing transparency: considering the adequacy of the Group’s disclosures around the degree of estimation uncertainty

involved in recognising revenue and related contract balances in the Construction Services segment.

Our results:

We consider the amount of revenue and the related contract assets, contract liabilities and loss provisions recognised within the

Construction Services segment to be acceptable (2023: acceptable).

181Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

The risk Our response

Certain legacy contract-related provisions: provisions £82m for Building Safety Act (2023: £21m), and £92m (2023: £nil) for the SH161 project in Texas. Non‑underlying items £83m for the Building Safety

Act (2023: £nil), and £52m (2023: £nil) for the SH161 project in Texas. Insurance recoveries £40m relating to SH161 project in Texas (2023: £nil).

Risk vs 2023:

Refer to pages 149-150 (Audit and Risk Committee report), note 2.23 (Principal accounting policies – provisions), note 2.28(d) (Judgements and key sources of estimation uncertainty – Contract provisions

(estimate), note 10 (Non-underlying items), note 27 (Provisions)

Subjective estimates

The recognition of provisions for certain legacy contracts is subjective

andinherently judgemental in nature and therefore results in a risk of error

and fraud.

On the SH161 project in Texas, the Group is subject to damages as a result

of defects on a historical contract which is beyond what is customary in the

normal course of business.

Furthermore, the Group is exposed to claims that could arise under the

Building Safety Act, that allege fire safety issues for completed residential

buildings constructed by the Group which could sit with either the

customer or the Group as the prime contractor.

We note that the KAM in relation to Certain legacy contract‑related

provisions is new in the current year, following specific events arising in the

reporting period which has increased the estimation uncertainty.

We performed the tests below rather than seeking to rely on the Group’s controls because the nature of the balances is such that

we would expect to obtain audit evidence primarily through the detailed procedures described.

Our procedures included:

@ Test of detail: for the specific provisions made we critically assessed the Group’s assumptions made in calculating the provision

considering cost estimates, historical experience and third‑party evidence where appropriate.

@ Personnel interviews: in respect of open matters of litigation, we held enquiries with Management, including the Group’s

in‑house legal counsel and inspected relevant correspondence and considered against provisions made;

@ Assessing transparency: considered the adequacy of the Group’s disclosures around the degree of estimation

uncertaintyinvolved in recognising certain legacy contract‑related provisions and the appropriateness of charges presented

asnon‑underlying items.

Our procedures over the SH161 project included:

@ Test of detail: inspected correspondence with the insurer to assess the recoverability of reimbursement assets recognised

andchallenge whether they meet the IFRS recognition criteria.

Our results:

We consider the amount provided for in relation to the specific historical contract and the Building Safety Act to be acceptable.

2 Key audit matters: our assessment of risks of material misstatement continued

182

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

The risk Our response

Recoverability of the parent Company’s investment in subsidiaries

Investment in subsidiaries £1,753m (2023: £1,745m)

Risk vs 2023:

Refer to note 21.2 (Investments)

Low risk, high value

The carrying amount of the parent Company’s investment in subsidiaries

represents 68% of the parent Company’s total assets. Their recoverability

is not at a high risk of significant misstatement or subject to significant

judgement. However, due to their materiality in the context of the parent

Company financial statements, this is considered to be the area that had

the greatest effect on our overall parent Company audit.

In particular, we have spent more time on the recoverability of the

investment in Balfour Beatty Investment Holdings Limited (BBIHL)

asavalue‑in‑use model has been used to support the investment’s

carryingamount.

We performed the tests below rather than seeking to rely on any of the Company’s controls because the nature of the balance

issuch that we would expect to obtain audit evidence primarily through the detailed procedures described.

Our procedures included:

@ Tests of detail: comparing the carrying amount of 100% of investments (2023: 100%) with the relevant subsidiaries’ draft

balance sheets to identify whether their net assets, being an approximation of their minimum recoverable amount, were in

excess of their carrying amount.

@ Assessing subsidiary audits: Assessed the work performed by the subsidiary audit teams on the subsidiaries and

considering the results of that work, on those subsidiaries’ profits and net assets.

The below procedures were performed over the investment in BBIHL only.

@ Our knowledge of the entity and environment: critically assessing the profit from operations and long‑term growth rate

assumptions underlying the cash flow forecast with reference to historical forecasting accuracy, and our knowledge of the

entity and the sector in which it operates.

@ Benchmarking assumptions: challenging the assumptions used by the Company in the calculation of BBIHL’s discount rates

and the long‑term growth rates by comparisons with external data sources;

@ Sensitivity analysis: performing our own sensitivity analysis over BBIHL’s value‑in‑use, including a reasonably possible

reduction in assumed long‑term growth rates and profit from operations and consideration of the possible impacts of current

economic uncertainty, to identify the most sensitive disclosures.

Our results:

We found the Company’s conclusion that there is no impairment of its investment in subsidiaries to be acceptable (2023: acceptable).

2 Key audit matters: our assessment of risks of material misstatement continued

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BALFOUR BEATTY PLC

CONTINUED

3 Our application of materiality and an overview of the scope of our audit

Our application of materiality

Materiality for the Group financial statements as a whole was set at £23.0m (2023: £22.0m),

determined with reference to a benchmark of Group revenue, of which it represents 0.28% (2023: 0.28%).

We consider total revenue to be the most appropriate benchmark due to the focus on revenue by

investors and the differing nature of the investments business (an asset‑based business) compared to

the contracting businesses (profit orientated entities). Whilst the contracting businesses are focused

on profit measures, there has been significant volatility in recent years which has impacted the Group’s

profit before tax without any reduction in the scale of the contracting businesses. In setting our materiality,

we have also given consideration to the Group’s profit before tax normalised for a range of factors

including contract write‑downs.

Materiality for the parent Company financial statements as a whole was set at £19.0m (2023: £18.0m),

determined with reference to a benchmark of Company total assets of which it represents 0.74%

(2023: 0.75%).

In line with our audit methodology, our procedures on individual account balances and disclosures

were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level

the risk that individually immaterial misstatements in individual account balances add up to a material

amount across the financial statements as a whole.

Performance materiality for the Group and parent Company was set at 75% (2023: 75%) of materiality

for the financial statements as a whole, which equates to £17.2m (2023: £16.5m) for the Group and

£14.2m (2023: £13.5m) for the parent Company. We applied this percentage in our determination of

performance materiality because we did not identify any factors indicating an elevated level of risk.

183Balfour Beatty plc | Annual Report and Accounts 2024

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3 Our application of materiality and an overview of the scope of our audit

continued

Our application of materiality continued

We agreed to report to the Audit and Risk Committee any corrected or uncorrected identified

misstatements exceeding £1.2m (2023: £1.1m), in addition to other identified misstatements that

warranted reporting on qualitative grounds.

Overview of the scope of our audit

This year, we applied the revised group auditing standard in our audit of the consolidated financial

statements. The revised standard changes how an auditor approaches the identification of components,

and how the audit procedures are planned and executed across components.

In particular, the definition of a component has changed, shifting the focus from how the entity

prepares financial information to how we, as the group auditor, plan to perform audit procedures to

address group risks of material misstatement (RMMs). Similarly, the group auditor has an increased

role in designing the audit procedures as well as making decisions on where these procedures are

performed (centrally and/or at component level) and how these procedures are executed and supervised.

As a result, we assess scoping and coverage in a different way and comparisons to prior period

coverage figures are not meaningful. In this report we provide an indication of scope coverage on

thenew basis.

We performed risk assessment procedures to determine which of the Group’s components are likely

to include risks of material misstatement to the Group financial statements and which procedures to

perform at these components to address those risks.

In total, we identified 23 components, having considered our evaluation of the following factors

andour ability to perform audit procedures centrally:

@ the Group’s operational structure;

@ the Group’s legal structure;

@ the existence of common information systems;

@ the existence of common risk profile across entities/business units/functions/business activities;

@ geographical locations; and

@ the presence of key audit matters.

Of those, we identified three quantitatively significant components which contained the largest percentages

of either total revenue or total assets of the Group, for which we performed audit procedures.

We also identified two components as requiring special audit consideration, owing to risks relating

toContract Accounting.

Additionally, having considered qualitative and quantitative factors, we selected six components

withaccounts contributing to the specific RMMs of the Group financial statements.

GROUP REVENUE GROUP TOTAL ASSETS GROUP PROFIT BEFORE TAX

98% 96% 83%

Accordingly, we performed audit procedures on 11 components, of which we involved component auditors

in performing the audit work on 5 components. We also performed the audit of the parent Company.

The Group auditor instructed component auditors as to the significant areas to be covered, including

the relevant risks and the information to be reported back.

The Group also operates a shared service centre that is relevant to our audit in the UK. This service

centre performs accounting and reporting activities alongside related controls. This service centre

processes a substantial portion of the Group’s transactions over purchases and payroll, the outputs of

which relate to financial information of the reporting components it services and therefore it is not a

separate reporting component. This service centre is subject to specified risk‑focused audit procedures,

predominantly the testing of transaction processing and review controls. We also performed audit

procedures over the significant accounts of the entities or business units that use the service centre.

We set the component materialities, ranging from £4m to £15m, having regard to the mix of size

andrisk profile of the Group across the components.

Our audit procedures covered 98% of Group revenue.

We performed audit procedures in relation to components that accounted for 83% of Group profit

before tax and 96% of Group total assets.

Group auditor oversight

As part of establishing the overall Group audit strategy and plan, we conducted the risk assessment

and planning discussion meetings with component auditors to discuss Group audit risks relevant to

thecomponents, including the key audit matter in respect of Contract Accounting.

We visited all component auditors in the UK, USA & Hong Kong to assess the audit risks and strategy.

Video and telephone conference meetings were also held with these component auditors throughout

the audit. At these visits and meetings, the results of the planning procedures and further audit

procedures communicated to us were discussed in more detail, and any further work required by

uswas then performed by the component auditors.

We inspected the work performed by the component auditors for the purpose of the Group audit

andevaluated the appropriateness of conclusions drawn from the audit evidence obtained and

consistencies between communicated findings and work performed, with a particular focus on

workrelated to Contract Accounting and the risk of management override of controls.

184

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BALFOUR BEATTY PLC

CONTINUED

3 Our application of materiality and an overview of the scope of our audit

continued

Impact of controls on our group audit

The Group utilises a diverse range of IT systems across its operating businesses. For all of the components

where audit procedures are performed, we obtained an understanding of the relevant IT systems for

the purposes of our audit work. Given the diverse nature of the Group’s information systems and

general IT controls, as well as having considered the efficiency and effectiveness of approaches to

gaining the appropriate audit evidence, we did not plan to rely on the Group’s general IT controls in

ouraudit.

We tested operating effectiveness and placed reliance on manual controls in some transactional areas

of the audit, but not in respect of the key audit matters. These transactional areas included treasury,

payroll, revenue billing, and purchases. This led to a reduction in sample sizes for substantive testing

inthese areas.

We assessed the design of controls in the significant risk areas relevant to our audit, although we did

not seek to rely on controls in these areas as the nature of the related balances is such that we would

expect to obtain audit evidence primarily through substantive procedures. Accordingly, our audit of the

significant risks, was fully substantive.

4 The impact of climate change on our audit

In planning our audit, we considered the potential impacts of climate change on the Group’s business

and its financial statements.

The Group has set out in its Strategic Report its ambition to go Beyond Net Zero Carbon by 2045

andother climate‑related targets, as well as the potential climate risks to the Group.

As stated in note 1 to the financial statements, whilst the Group has set these targets and considered

the climate risks identified in the TCFD disclosure, the Directors do not believe that there is a material

impact on the financial reporting judgements and estimates from these matters as of 31 December 2024.

As a part of our audit, we have performed a risk assessment, including enquiries of management, to

understand how the impact of commitments made by the Group in respect of climate change, as well

as the physical or transition risks of climate change, may affect the financial statements and our audit.

We also held discussions with our own climate change professionals to challenge our risk assessment.

There was no impact of this on our key audit matters.

We did not identify any significant risk in the current period of climate change having a material

impacton the Group’s significant accounting estimates. For contract accounting, as well as contract

provisions, this is due to a range of factors including the shorter‑term nature of this estimate (the majority

of contracts will substantially complete within two years of the Balance Sheet date) and contract

mechanisms in place which limit risk (e.g. either where risk remains with the customer or is passed to

the supply chain). For other estimates, this is due to a range of factors including the use of market‑

based estimates, and the nature of the estimate (retirement benefit obligations, retirement benefit

assets, financial assets measured through OCI, employee and other provisions).

We have read the disclosure of climate‑related information in the front half of the Annual Report

andconsidered consistency with the financial statements and our audit knowledge.

5 Going concern

The Directors have prepared the financial statements on the going concern basis as they do not intend

to liquidate the Group or the Company or to cease their operations, and as they have concluded that

the Group’s and the Company’s financial position means that this is realistic. They have also concluded

that there are no material uncertainties that could have cast significant doubt over their ability to

continue as a going concern for at least a year from the date of approval of the financial statements

(the going concern period).

We used our knowledge of the Group, its industry, and the general economic environment to identify

the inherent risks to its business model and analysed how those risks might affect the Group’s and

Company’s financial resources or ability to continue operations over the going concern period. The risk

that we considered most likely to adversely affect the Group’s and Company’s available financial resources

and metrics relevant to debt covenants over this period was a deterioration in contract profitability due

to economic conditions, unforeseen operational challenges or commercial disputes, or a combination

of these, leading to a sustained medium‑term decline in profits, delays to planned disposals of PPP

financial assets and delays to the start date of contracts leading to a reduction in revenue.

We also considered less predictable but realistic second order impacts, such as a unique one‑off event

including the financial consequences of a major health and safety breach.

We considered whether these risks could plausibly affect the liquidity or covenant compliance in

thegoing concern period by assessing the Directors’ sensitivities over the level of available financial

resources and covenant thresholds indicated by the Group’s financial forecasts taking account of

severe but plausible adverse effects that could arise from these risks individually and collectively.

Our procedures also included:

@ critically assessing assumptions in the base case and downside scenarios, particularly in relation to

contract profitability and its impact on forecast liquidity and covenant compliance, by comparing to

historical trends, overlaying knowledge of the entity’s plans based on approved budgets, as well as

our knowledge of the Group and the sector in which it operates;

@ comparing past budgets to actual results to assess the Directors’ track record of budgeting accurately;

@ Inspecting the confirmation from the lender of the level of committed financing, and the associated

covenant requirements; and

@ considering whether the going concern disclosure in note 1 to the financial statements gives a full

and accurate description of the Directors’ assessment of going concern, including the identified

risks, and related sensitivities.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

5 Going concern continued

Our conclusions based on this work:

@ we consider that the Directors’ use of the going concern basis of accounting in the preparation of

the financial statements is appropriate;

@ we have not identified, and concur with the Directors’ assessment that there is not, a material

uncertainty related to events or conditions that, individually or collectively, may cast significant doubt

on the Group’s or Company’s ability to continue as a going concern for the going concern period;

@ we have nothing material to add or draw attention to in relation to the Directors’ statement in note 1

to the financial statements on the use of the going concern basis of accounting with no material

uncertainties that may cast significant doubt over the Group and Company’s use of that basis for the

going concern period, and we found the going concern disclosure in note 1 to be acceptable; and

@ the related statement under the Listing Rules set out on page 88 is materially consistent with the

financial statements and our audit knowledge.

However, as we cannot predict all future events or conditions and as subsequent events may result in

outcomes that are inconsistent with judgements that were reasonable at the time they were made,

theabove conclusions are not a guarantee that the Group or the Company will continue in operation.

6 Fraud and breaches of laws and regulations – ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (fraud risks) we assessed events or conditions that

could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our

risk assessment procedures included:

@ Enquiring of Directors, the Audit and Risk Committee, internal audit and compliance officers and

inspection of policy documentation as to the Group’s high‑level policies and procedures to prevent

and detect fraud, including the internal audit function, and the Group’s channel for ‘whistleblowing’,

as well as whether they have knowledge of any actual, suspected or alleged fraud.

@ Reading Board and all relevant Committee minutes.

@ Considering remuneration incentive schemes (primarily the annual incentive plan) and performance

targets for management and Directors, including underlying profit from operations targets for

management remuneration.

@ Using analytical procedures to identify any unusual or unexpected relationships; and

@ Using our own forensic specialists to assist us in identifying fraud risks based on discussions

ofthecircumstances of the Group and the Company.

We communicated identified fraud risk factors throughout the audit team and remained alert to any

indications of fraud throughout the audit. This included communication from the Group audit team to

component audit teams of relevant fraud risks identified at the Group level and requests to all component

audit teams to report to the Group audit team any instances of fraud that could give rise to a material

misstatement to the Group.

As required by auditing standards, and taking into account possible pressures to achieve bonus targets

and meet profit targets and our overall knowledge of the control environment, we performed procedures

to address the risk of management override of controls and the risk of fraudulent revenue recognition,

in particular:

@ the risk that Group and component management may be in a position to make inappropriate

accounting entries; and

@ the risk of bias in accounting estimates such as the forecast costs and the recognition of variable

consideration in relation to the Construction Services segment revenue and the certain legacy

contract‑related provisions.

Further detail in respect of revenue recognition in the Construction Services segment, including the

estimation of forecast costs and variable consideration, is set out in the Contract Accounting key audit

matter disclosure in section 2 of this report.

However, on this audit we do not believe there is a fraud risk related to revenue recognition in the

Support Services segment due to the size of its revenue and the nature of contracts operated in this

segment. We also do not believe there is a fraud risk related to revenue recognition in the Infrastructure

Investments segment based on the contractual nature of the segment’s revenue with no significant

judgement or estimation required in recognising revenue.

Further detail in respect of the risk of bias in the certain legacy contract‑related provisions estimates

isset out in the key audit matter disclosure in section 2 of this report.

We did not identify any additional fraud risks.

We performed procedures including:

@ Identifying journal entries and other adjustments to test for all quantitatively significant components

and components requiring special audit consideration, based on specific risk‑based criteria and

comparing the identified entries to supporting documentation. These included those posted with

unusual account pairings.

@ Assessing significant accounting estimates for bias.

Identifying and responding to risks of material misstatement due to non-compliance with

laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect

on the financial statements from our general commercial and sector experience, through discussion

with the Directors and other management (as required by auditing standards), and from inspection

ofthe Group’s regulatory and legal correspondence and discussed with the Directors and other

management the policies and procedures regarding compliance with laws and regulations.

As the Group is regulated, our assessment of risks involved gaining an understanding of the control

environment including the entity’s procedures for complying with regulatory requirements.

We communicated identified laws and regulations throughout our team and remained alert to any indications

of non‑compliance throughout the audit. This included communication from the Group audit team to

component audit teams of relevant laws and regulations identified at the Group level, and a request for

component auditor teams to report to the Group audit team any instances of non‑compliance with laws

and regulations that could give rise to a material misstatement at the Group.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BALFOUR BEATTY PLC

CONTINUED

6 Fraud and breaches of laws and regulations – ability to detect continued

Identifying and responding to risks of material misstatement due to non-compliance with

laws and regulations continued

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Group is subject to laws and regulations that directly affect the financial statements

including financial reporting legislation (including related company legislation), distributable profits

legislation, pension legislation, and taxation legislation. We assessed the extent of compliance with

these laws and regulations as part of our procedures on the related financial statement items.

Secondly, the Group is subject to many other laws and regulations where the consequences of

non‑compliance could have a material effect on amounts or disclosures in the financial statements,

forinstance through the imposition of fines or litigation or the loss of the Group’s licence to operate.

We identified the following areas as those most likely to have such an effect: health and safety, data

protection laws, anti‑bribery, employment law, environmental law, building safety, contract legislation

and certain aspects of company legislation recognising the nature of the Group’s activities. Auditing

standards limit the required audit procedures to identify non‑compliance with these laws and

regulations to enquiry of the Directors and other management and inspection of regulatory and legal

correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or

evident from relevant correspondence, an audit will not detect that breach.

We discussed with the Audit and Risk Committee matters related to actual or suspected breaches

oflaws or regulations, for which disclosure is not necessary, and considered any implications for

ouraudit.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have

detected some material misstatements in the financial statements, even though we have properly

planned and performed our audit in accordance with auditing standards. For example, the further

removed non‑compliance with laws and regulations is from the events and transactions reflected

inthefinancial statements, the less likely the inherently limited procedures required by auditing

standards would identify it.

In addition, as with any audit, there remained a higher risk of non‑detection of fraud, as this may

involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal

controls. Our audit procedures are designed to detect material misstatement. We are not responsible

for preventing non‑compliance or fraud and cannot be expected to detect non‑compliance with all laws

and regulations.

7 We have nothing to report on the other information in the Annual Report

The Directors are responsible for the other information presented in the Annual Report together with

the financial statements. Our opinion on the financial statements does not cover the other information

and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of

assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our

financial statements audit work, the information therein is materially misstated or inconsistent with the

financial statements or our audit knowledge. Based solely on that work we have not identified material

misstatements in the other information.

Strategic report and Directors’ report

Based solely on our work on the other information:

@ we have not identified material misstatements in the strategic report and the Directors’ report;

@ in our opinion the information given in those reports for the financial year is consistent with the

financial statements; and

@ in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared

in accordance with the Companies Act 2006.

Disclosures of emerging and principal risks and longer-term viability

We are required to perform procedures to identify whether there is a material inconsistency between

the Directors’ disclosures in respect of emerging and principal risks and the viability statement, and the

financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or draw attention to in relation to:

@ the Directors’ confirmation within the viability statement on page 106 that they have carried out a

robust assessment of the emerging and principal risks facing the Group, including those that would

threaten its business model, future performance, solvency, and liquidity;

@ the Emerging and Principal Risks disclosures on page 94‑105 describing these risks and how

emerging risks are identified, and explaining how they are being managed and mitigated; and

@ the Directors’ explanation in the viability statement of how they have assessed the prospects of the

Group, over what period they have done so and why they considered that period to be appropriate,

and their statement as to whether they have a reasonable expectation that the Group will be able

tocontinue in operation and meet its liabilities as they fall due over the period of their assessment,

including any related disclosures drawing attention to any necessary qualifications or assumptions.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

7 We have nothing to report on the other information in the Annual Report

continued

Disclosures of emerging and principal risks and longer-term viability continued

We are also required to review the viability statement, set out on page 106 under the Listing Rules.

Based on the above procedures, we have concluded that the above disclosures are materially

consistent with the financial statements and our audit knowledge.

Our work is limited to assessing these matters in the context of only the knowledge acquired during

our financial statements audit. As we cannot predict all future events or conditions and as subsequent

events may result in outcomes that are inconsistent with judgements that were reasonable at the time

they were made, the absence of anything to report on these statements is not a guarantee as to the

Group’s and Company’s longer‑term viability.

Corporate governance disclosures

We are required to perform procedures to identify whether there is a material inconsistency between

the Directors’ corporate governance disclosures and the financial statements and our audit knowledge.

Based on those procedures, we have concluded that each of the following is materially consistent with

the financial statements and our audit knowledge:

@ the Directors’ statement that they consider that the Annual Report and financial statements taken as

a whole is fair, balanced and understandable, and provides the information necessary for

shareholders to assess the Group’s position and performance, business model and strategy;

@ the section of the Annual Report describing the work of the Audit Committee, including the

significant issues that the Audit Committee considered in relation to the financial statements,

andhow these issues were addressed; and

@ the section of the Annual Report that describes the review of the effectiveness of the Group’s risk

management and internal control systems.

We are required to review the part of the Corporate Governance Statement relating to the Group’s

compliance with the provisions of the UK Corporate Governance Code specified by the Listing Rules

for our review. We have nothing to report in this respect.

8 We have nothing to report on the other matters on which we are required

to report by exception

Under the Companies Act 2006, we are required to report to you if, in our opinion:

@ adequate accounting records have not been kept by the parent Company, or returns adequate

forouraudit have not been received from branches not visited by us; or

@ the parent Company financial statements and the part of the Directors’ Remuneration Report

tobeaudited are not in agreement with the accounting records and returns; or

@ certain disclosures of Directors’ remuneration specified by law are not made; or

@ we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

9 Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 178, the Directors are responsible for: the

preparation of the financial statements including being satisfied that they give a true and fair view; such

internal control as they determine is necessary to enable the preparation of financial statements that

are free from material misstatement, whether due to fraud or error; assessing the Group and parent

Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern; and using the going concern basis of accounting unless they either intend to liquidate the

Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue our opinion in an

auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an

audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are considered material if, individually or in

aggregate, they could reasonably be expected to influence the economic decisions of users taken

onthe basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/

auditorsresponsibilities.

The Company is required to include these financial statements in an annual financial report prepared

under Disclosure Guidance and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report provides

no assurance over whether the annual financial report has been prepared in accordance with those requirements.

10 The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part

16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the

Company’s members those matters we are required to state to them in an auditor’s report and for no

other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to

anyone other than the Company and the Company’s members, as a body, for our audit work, for this

report, or for the opinions we have formed.

Mike Barradell (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London

E14 5GL

11 March 2025

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

GROUP INCOME STATEMENT

For the year ended 31 December 2024

				2024			2023
				Non-			Non‑
				underlying			underlying
			Underlying	items		Underlying	items
			items 1	(Note 10)	Total	items 1	(Note 10)	Total
		Notes	£m	£m	£m	£m	£m	£m
Revenue including share of joint ventures and associates			10, 015	–	10, 015	9, 59 5	–	9, 59 5
Share of revenue of joint ventures and associates		20.2	(1, 7 8 1)	–	(1 , 7 8 1)	(1,602)	–	(1,602)
Group revenue		4	8, 23 4	–	8, 2 34	7, 9 9 3	–	7, 9 9 3
Cost of sales			(7, 8 1 7)	(6 6)	(7, 8 8 3)	( 7, 5 8 1)	(12)	(7 ,593)
Gross profit/(loss)			417	(6 6)	3 51	412	(12)	400
Gain on disposals of interests in investments		35.2/35.3	43	–	43	24	–	24
Amortisation of acquired intangible assets		15	–	(4)	(4)	–	(5)	(5)
Other operating expenses			(2 7 1)	(5)	(276)	(2 6 1)	–	(2 6 1)
Group operating profit/(loss)			18 9	(7 5)	11 4	17 5	(17)	15 8
Share of results of joint ventures and associates excluding gain on disposals of interests in investments			59	–	59	51	–	51
Gain on disposals of interests in investments		35.2/35.3	–	–	–	2	–	2
Share of results of joint ventures and associates		20.2	59	–	59	53	–	53
Profit/(loss) from operations		6	248	(75)	17 3	228	(17)	2 11
Investment income		8	82	–	82	82	–	82
Finance costs		9	(4 1)	–	(41)	(4 9)	–	(4 9)
Profit/(loss) before taxation			289	(7 5)	214	261	(17)	24 4
Taxation		11	(6 2)	26	(3 6)	(5 6)	6	(50)
Profit/(loss) for the year			227	(4 9)	17 8	205	(11)	19 4
Attributable to Equity holders			227	(4 9)	17 8	208	(11)	19 7
Non‑controlling interests			–	–	–	(3)	–	(3)
Profit/(loss) for the year			227	(4 9)	17 8	205	(11)	19 4
1	Before non‑underlying items (Notes 2.10 and 10).
							2024	2023
						Notes	Pence	Pence
Earnings per share
– basic						12	34.2	35. 3
– diluted						12	3 3 .7	3 4.8
Dividends per share proposed for the year						13	12 . 5	11. 5

189Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Commentary on the Group income statement*

Total profit before taxation for 2024 was £214m (2023: £244m), which is inclusive of a non-underlying

loss before tax of £75m (2023: £17m). The total profit after tax was £178m (2023: £194m).

Background

The Group income statement includes the majority of the Group’s income and expenses for the year

with the remainder being recorded within the Group statement of comprehensive income. The Group’s

income statement is presented showing the Group’s underlying and non‑underlying results separately

on the face of the income statement to assist in understanding the underlying financial performance

achieved by the Group.

The income statement shows the revenue and results of continuing operations. There were no discontinued

operations in either year.

Revenue

Revenue from operations including the Group’s share of joint ventures and associates increased by 4%

to £10,015m (2023: £9,595m), largely driven by increases in Gammon and Support Services. During 2024,

Gammon delivered an increased volume of work in major civils, with the automatic people mover and

Terminal 2 expansion projects at Hong Kong International Airport. Within Support Services, revenue

increased by 20% to £1,210m (2023: £1,006m), mainly due to higher volumes in the road maintenance

business, which included the first full years of the major contracts at Buckinghamshire and East Sussex,

and increased power transmission and distribution activity.

Share of results of joint ventures and associates

Joint ventures and associates are those entities over which the Group exercises joint control or has significant

influence and whose results are generally incorporated using the equity method whereby the Group’s

share of the post‑tax results of joint ventures and associates is included in the Group’s operating profit.

The Group’s underlying profit generated from its share of joint ventures and associates increased to

£59m (2023: £53m), primarily driven by increased profitability in Gammon.

Underlying profit from operations

The underlying profit from operations for the year increased to £248m (2023: £228m), driven by higher

volumes within Support Services contributing to £13m of the increase. Infrastructure Investments saw

a modest increase in underlying profit of £4m primarily driven by a higher gain on disposal offset by

increased monitor costs in the US and capitalised bidding costs being written off in the UK following

the cancellation of a student accommodation project for which it had been awarded preferred bidder

status. Group underlying profit increased to £189m (2023:£175m).

Non-underlying items

Non‑underlying items in 2024 amounted to a charge of £75m (2023: £17m).

In 2024, the two remaining contracts held within Rail Germany, which the Group presents in non‑underlying

since 2014, reached the end of their warranty periods resulting in the release of warranty provisions

held in respect of these contracts. This release has been credited to the Group’s income statement

within non‑underlying, net of provision increases relating to certain legacy liabilities remaining within the

business. This net credit of £21m was recognised in the Construction Services segment.

In addition to this, rectification work continued to progress in relation to a development in London for

which the costs associated with this were recognised in non‑underlying and is expected to complete in

the first half of 2025. In July 2024, the Group received confirmation from its insurers that the rectification

work qualifies for insurance coverage. Upon assessment of the interim cost by the insurer’s loss

adjusters as well as receipt of cash for the first application for payment submitted by the Group for

aportion of the cost incurred to date, the Group has recognised an insurance recovery of £43m.

TheGroup has presented this income within non‑underlying in line with the presentation adopted

forthe recognition of the provision.

Following further developments and clarifications in the legal landscape of the BSA, progression of the

Group’s investigation and due diligence as well as adjudications on claims received to date, the Group

has reassessed its provision for BSA claims resulting in an increase in the provision of £83m in 2024.

The provision does not include potential recoveries from third parties. This increase has been recognised

in non‑underlying due to its size and the nature of the cost, which has arisen from a change in legislation.

The Group, through a joint operation with Fluor Enterprises Inc, also recognised a charge of £52m

within non‑underlying which relates to a claim received on a legacy project in Texas which completed

in 2012. Refer to Note 10.2.4. In October 2022, NTTA served the joint operation with a claim

demanding damages of an unquantified amount under various claims relating to alleged breaches of

contract and or negligence in relation to retaining walls along the project. In November 2024, through a

jury verdict, damages were awarded against the joint operation in favour of NTTA amounting to $112m

(Group’s share). The joint operation has opposed the NTTA’s motion and the court has yet to issue a

decision on that motion with a court date set for 27 March 2025. The Group believes that the jury

verdict does not accurately reflect the evidence at trial and is evaluating all options to set aside or

reduce the verdict and, if necessary, appeal any final judgement. However, in light of the jury verdict,

the Group has recognised a non‑underlying charge of £52m. This charge, which is net of insurance

recoveries of £40m for which the Group has received confirmation of cover from its insurers,

represents the Group’s best estimate of the probable damages to be awarded.

Within non‑underlying tax there was a £26m credit (2023: £6m) relating to the items above.

Net finance income

Net finance income of £41m increased from £33m in 2023. The increase was primarily driven by higher

interest income on cash deposits of £40m (2023: £33m) and a net impairment reversal recognised on

the Group’s subordinated debt and accrued interest receivable from joint ventures and associates of

£14m compared to a net impairment charge of £8m in 2023. These increases were partially offset by

areduction in subdebt interest receivable of £17m and a reduction in net finance income on pension

assets and obligations of £8m.

Taxation

The Group’s underlying profit before tax from subsidiaries of £227m (2023: £208m) resulted in an

underlying tax charge of £62m (2023: £56m).

Earnings per share

Basic earnings per share were 34.2p (2023: 35.3p). Underlying basic earnings per share were 43.6p

(2023: 37.3p).

* The commentary forms part of the Chief Financial Officer’s review on pages 86 to 88 and does not form part of the financial statements.

190

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2024

				2024			2023
				Share of joint			Share of joint
				ventures and			ventures and
			Group	associates	Total	Group	associates	Total
		Notes	£m	£m	£m	£m	£m	£m
Profit for the year			11 9	59	17 8	141	53	19 4
Other comprehensive (loss)/income for the year
Items which will not subsequently be reclassified to the income statement
Actuarial losses on retirement benefit assets/liabilities		33.1	(10 2)	–	(1 0 2)	(19 7)	(1)	(19 8)
Fair value revaluations of investments in mutual funds measured at fair value through OCI		3 3.1	2	–	2	1	–	1
Tax on above		33.1	26	–	26	49	–	49
			(74)	–	(74)	(147)	(1)	(14 8)
Items which will subsequently be reclassified to the income statement
Currency translation differences		33.1	6	3	9	(17)	(13)	(30)
Fair value revaluations	– PPP financial assets	33.1	(2)	(4 8)	(50)	–	20	20
	– cash flow hedges	33.1	1	10	11	–	2	2
Recycling of revaluation reserves to the income statement on disposal ^		35.3	–	–	–	–	(3)	(3)
Tax on above		33.1	–	10	10	(1)	(5)	(6)
			5	(2 5)	(2 0)	(18)	1	(17)
Total other comprehensive loss for the year			(6 9)	(2 5)	(9 4)	(16 5)	–	(16 5)
Total comprehensive income/(loss) for the year		33.1	50	34	84	(24)	53	29
Attributable to Equity holders					84			32
Non‑controlling interests					–			(3)
Total comprehensive income for the year		33.1			84			29

^ Recycling of revaluation reserves to the income statement on disposal has no associated tax effect.

191Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Commentary on Group statement of comprehensive income*

Total comprehensive income for 2024 was £84m comprising a total profit after tax of £178m

and other comprehensive loss after tax of £94m.

Background

The Group statement of comprehensive income is presented on a total Group basis. Other comprehensive

income (OCI) is categorised into items which will affect the profit and loss of the Group in subsequent

periods when the gain or loss is realised and those which will not be recycled into the income statement.

Items which will not subsequently be reclassified to the income statement

Actuarial movements on retirement benefit assets/liabilities are increases or decreases in the present

value of the pension balances because of:

@ differences between the previous actuarial assumptions and what has actually occurred; or

@ changes in actuarial assumptions used to value the obligations.

Actuarial losses for the Group (excluding joint ventures and associates) totalled £102m in 2024 compared

to a £197m loss in 2023. Refer to Note 31.

Items which will subsequently be reclassified to the income statement

Currency translation differences

The Group operates in a number of countries with different local currencies. Currency translation

differences arise on translation of the balance sheet and results from the local functional currency

intothe Group’s presentational currency, sterling.

Fair value revaluations – PPP financial assets

Assets constructed by PPP concession companies are classified principally as financial assets

measured at fair value through OCI. Inthe operational phase fair value is determined by discounting

the future cash flows allocated to the financial asset using discount rates based on long‑term gilt rates

adjusted for the risk levels associated with the assets, with market‑related fair value movements

recognised in OCI. During the year, gilt rates have increased resulting in fair value losses including

jointventures and associates of £50m being taken through OCI (2023: £20m gains).

Fair value revaluations – cash flow hedges

Cash flow hedges are principally interest rate swaps to manage the interest rate and inflation rate risks

in Infrastructure Investments’ subsidiary, joint venture and associate companies which are exposed by

their long‑term contractual agreements. The fair value of derivatives changes in response to prevailing

market conditions. During the year, SONIA movements resulted in fair value gains on the interest rate

swaps of £1m (2023: £nil) within the Group’s subsidiaries and £10m (2023: £2m) within the Group’s

joint ventures and associates being recognised in OCI.

Recycling of revaluation reserves to the income statement on disposal

Fair value gains and losses and currency translation differences recognised in OCI are transferred to

the income statement upon disposal of the asset. No gains (2023: £3m gain) were recycled to the

income statement from OCI and included in the gain on disposal.

There is no associated tax on the amounts recycled to the incomestatement.

* The commentary forms part of the Chief Financial Officer’s review on pages 86 to 88 and does not form part of the financial statements.

192

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2024

					Share of joint
					ventures’
					and
			Share	Capital	associates’	Other		Non‑
		Called‑up	premium	redemption	reserves	reserves µ	Retained	controlling
		share capital	account	reserve	(Note 20.6)	(Note 33.1)	profits	interests	Total
	Notes	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2023		294	17 6	52	(20)	17 0	70 6	5	1, 3 8 3
Total comprehensive income/(loss) for the year	3 3.1	–	–	–	53	(17)	(4)	(3)	29
Ordinary dividends	13	–	–	–	–	–	(5 8)	–	(58)
Joint ventures’ and associates’ dividends	20.1	–	–	–	(6 0)	–	60	–	–
Purchase of treasury shares	33.1	–	–	–	–	–	(15 1)	–	(15 1)
Cancellation of ordinary shares	33.1	(2 2)	–	22	–	–	–	–	–
Movements relating to share‑based payments +		–	–	–	–	4	(7)	–	(3)
Capital contribution		–	–	–	–	–	–	8	8
At 31 December 2023		272	17 6	74	(27)	15 7	546	10	1, 2 0 8
Total comprehensive income for the year	33.1	–	–	–	34	7	43	–	84
Ordinary dividends	13	–	–	–	–	–	(61)	(1)	(6 2)
Joint ventures’ and associates’ dividends	20.1	–	–	–	(71)	–	71	–	–
Purchase of treasury shares	33.1	–	–	–	–	–	(1 0 1)	–	(10 1)
Cancellation of ordinary shares	33.1	(13)	–	13	–	–	–	–	–
Movements relating to share‑based payments +		–	–	–	–	(2)	3	–	1
At 31 December 2024		259	17 6	87	(6 4)	16 2	501	9	1 ,1 3 0

µ Other reserves include £2 2m of special reserve (2023: £2 2m).

Movements relating to share‑based payments include £4m tax credit (2023: £nil) recognised directly within retained profits.

Commentary on Group statement of changes inequity*

Total equity was £1,130m at 31 December 2024.

Background

The Group statement of changes in equity includes the total comprehensive income/(loss) attributable

to equity holders of the Company and non‑controlling interests and also discloses transactions which

have been recognised directly in equity and not through the income statement.

Dividends

The Board is recommending a final dividend of 8.7p. Dividends paid in the year comprised £42m for

the final 2023 dividend 8.0p and £19m for the interim 2024 dividend 3.8p.

Joint ventures’ and associates’ dividends

Dividends of £71m (2023: £60m) were received in the year from joint ventures and associates (JVA),

resulting in a transfer of this amount between JVA reserves and Group retained profits.

Purchase of treasury shares

In 2024 the Company commenced the fourth phase of its share buyback programme, which

completed on 20 September 2024. TheCompany purchased 27.1m (2023: 43.3m) shares for a total

consideration of £100m (2023: £150m) and held these in treasury withno voting rights. The purchase

of these shares, together with associated fees and stamp duty amounting to £1m (2023: £1m), utilised

£101m (2023: £151m) of the Company’s distributable profits.

Cancellation of ordinary shares

On 31 October 2024, the Company cancelled the 27.1m treasury shares purchased through the 2024

phase of its share buyback programme (2023: 43.3m). This resulted in a decrease in called‑up share

capital of £13m and a corresponding increase in the capital redemption reserve (2023: £22m).

Reserves

Other reserves comprise: hedging reserves £(4)m (2023: £(5)m); PPPfinancial assets revaluation

reserve £(1)m (2023: £1m); currency translation reserve £121m (2023: £115m); special reserve £22m

(2023: £22m); and other reserves £24m (2023: £24m ).

* The commentary forms part of the Chief Financial Officer’s review on pages 86 to 88 and does not form part of the financial statements.

193Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Notes

Called‑up

share capital

£m

premium

account

£m

Capital

redemption

reserve

£m

Other

reserves

(Note 33.2)

∆

£m

Retained

profits

£m

Total

£m

At 1 January 2023 294 176 52 136 618 1,276

Total comprehensive income for the year 33.2 – – – 1 265 266

Ordinary dividends 13 – – – – (58) (58)

Purchase of treasury shares 33.2 – – – – (151) (151)

Cancellation of ordinary shares 33.2 (22) – 22 – – –

Movements relating to share‑based payments

– – – 12 (15) (3)

At 31 December 2023 272 176 74 149 659 1,330

Total comprehensive income for the year 33.2 – – – – 137 137

Ordinary dividends 13 – – – – (61) (61)

Purchase of treasury shares 33.2 – – – – (101) (101)

Cancellation of ordinary shares 33.2 (13) – 13 – – –

Movements relating to share‑based payments

– – – 8 (11) (3)

At 31 December 2024 259 176 87 157 623 1,302

∆ Other reserves include £22m of special reserve (2023: £22m).

+ Movements relating to share‑based payments include £nil tax credit (2023: £nil) recognised directly within retained profits.

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2024

194

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

BALANCE SHEETS

At 31 December 2024

			Group		Company
			2024	2023	2024	2023
		Notes	£m	£m	£m	£m
Non-current assets
Intangible assets	– goodwill	14	854	8 45	–	–
	– other	15	268	288	–	–
Service concession contract asset		16	69	–	–	–
Property, plant and equipment		17	13 6	141	–	–
Right‑of‑use assets		18	15 3	13 5	–	–
Investment properties		19	10 1	66	–	–
Investments in joint ventures
andassociates		20	385	389	–	–
Investments		21	24	28	1,753	1,745
PPP financial assets		22	21	24	–	–
Trade and other receivables		25	326	308	370	283
Retirement benefit assets		31	43	10 4	–	–
Deferred tax assets		30	200	18 8	8	5
			2,580	2 , 516	2,131	2,033
Current assets
Inventories		23	15 8	12 4	–	–
Contract assets		24	229	30 0	–	–
Trade and other receivables		25	1, 0 9 9	894	1	1
Cash and cash equivalents
– infrastructure investments		28	26 5	306	–	–
– other		28	1, 2 9 3	1 ,1 0 8	418	368
Current tax receivable			8	16	20	13
Derivative financial instruments		41	–	1	–	–
			3,0 52	2 , 74 9	439	382
Total assets			5,6 32	5,26 5	2,570	2,415

On behalf of the Board

Leo Quinn Philip Harrison

Director Director

11 March 2025

		Group		Company
		2024	2023	2024	2023
	Notes	£m	£m	£m	£m
Current liabilities
Contract liabilities	24	(6 97)	(6 00)	–	–
Trade and other payables	26	(1, 7 7 8)	(1,7 3 4)	(658)	(591)
Provisions	27	(239)	(216)	–	–
Borrowings
– non‑recourse loans	28	(11)	(9)	–	–
– other	28	(1 8 5)	(10 4)	(171)	(58)
Lease liabilities	29	(57)	(50)	–	–
Current tax payable		(13)	(6)	–	–
		(2, 9 8 0)	(2 ,7 19)	(829)	(649)
Non-current liabilities
Contract liabilities	24	(2)	(2)	–	–
Trade and other payables	26	(8 8)	(12 2)	(274)	(274)
Provisions	27	(3 78)	(2 0 1)	–	–
Borrowings
– non‑recourse loans	28	(5 8 9)	(5 6 1)	–	–
– other	28	(1 6 5)	(16 2)	(165)	(162)
Lease liabilities	29	(1 0 5)	(9 3)	–	–
Retirement benefit liabilities	31	(41)	(35)	–	–
Deferred tax liabilities	30	(1 5 3)	(16 0)	–	–
Derivative financial instruments	41	(1)	(2)	–	–
		(1, 5 2 2)	(1, 3 3 8)	(439)	(436)
Total liabilities		(4, 5 02)	(4,057)	(1,268)	(1,085)
Net assets		1 ,1 3 0	1, 20 8	1,302	1,330
Equity
Called‑up share capital	32	259	272	259	272
Share premium account	33	17 6	17 6	176	176
Capital redemption reserve	33	87	74	87	74
Share of joint ventures’ and associates’ reserves	33	(6 4)	(27)	–	–
Other reserves	33	162	15 7	157	149
Retained profits	33	501	5 46	623	659
Equity attributable to equity
holders of the Parent		1 ,1 2 1	1 ,1 9 8	1,302	1,330
Non‑controlling interests	33	9	10	–	–
Total equity		1 ,1 3 0	1, 20 8	1,302	1,330

195Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Commentary on the Group balance sheet*

Total assets of £5,632bn were 7% higher than last year and total liabilities of £4,502bn increased

by 11%. Net assets decreased to £1,130bn primarily driven by the Group’s actuarial losses

impacting the Group’s net retirement benefit assets and the Group’s share buyback programme.

Background

The Group’s balance sheet shows the Group’s assets and liabilities as at 31 December 2024 in

accordance with IAS 1 Presentation of Financial Statements.

Goodwill

The goodwill on the Group’s balance sheet at 31 December 2024 increased to £854m (2023: £845m),

solely due to foreign currency movements.

Investments in joint ventures and associates

Investments in joint ventures and associates have remained relatively flat at £385m. Share of joint

venture and associates profits of £59m as well as impairment reversals on loans to joint ventures and

associates of £14m was offset by dividends of £71m.

Working capital

Net movements in working capital are discussed in the statement of cash flows commentary on page 197.

Service concession contract asset

Service concession contract asset of £69m relates to a student accommodation project which features

demand risk under IFRIC 12 Service Concession Arrangements. Construction of the asset commenced in

December 2023 and is anticipated to complete in 2028. This asset was previously presented within Intangible

assets – Other in 2023 and has not been re‑presented as the Directors do not consider this to be material.

Borrowings

Borrowings excluding non-recourse loans

As at 31 December 2024, the Group had £480m of undrawn committed bank facilities, comprising a

£450m sustainability linked revolving credit facility (RCF) and an additional bilateral committed bank

facility of £30m. The purpose of these facilities is to provide liquidity to support Balfour Beatty’s

ongoing activities.

In June 2024, the Group extended its core RCF by one year, to June 2028, with the support of the

lending bank group. The facility was reduced from £475m to £450m in the extension process. The RCF

remains a Sustainability Linked Loan (SLL) and subsequent to the extension in July 2024, new SLL

metrics and targets were agreed with the lending bank group. The Group continues to be incentivised

to deliver annual measurable performance improvement in three key areas: carbon emissions, social

value generation and an independent Environment, Social and Governance (ESG) rating score. The RCF

remained undrawn at 31 December 2024.

The Group retains an additional £30m bilateral committed facility that has materially the same terms

and conditions as the RCF. The facility is also a SLL, including metrics that mirror the RCF. In the

second half of the year, the Group triggered its extension option in respect of the bilateral facility to

extend the maturity to December 2027. As of 31 December 2024, the facility remained undrawn.

At 31 December 2024, the Group held $208m of USPP notes. In May 2024, the Group completed the

early refinancing of US$50m of US Private Placement (USPP) notes that were set to mature in March

2025. The Group raised US$50m of new USPP notes on terms and conditions that mirror existing

notes and used this new funding to complete the early repayment of US$50m of USPP notes that

were due to expire in March 2025. The new debt is comprised of US$25m of 7‑year notes, maturing in

May 2031, and US$25m of 12‑year notes, maturing in May 2036. The refinancing exercise extended

the debt maturity profile of the Group until 2036, with the next debt maturity of US$35m now in June 2027.

Non-recourse loans

In addition, the Group has non‑recourse facilities in companies engaged in certain infrastructure

concession projects. At 31 December 2024, the Group’s share of these non‑recourse net borrowings

amounted to £1,041m (2023: £1,362m), comprising £1,376m (2023: £1,098m) in relation to joint

ventures and associates as disclosed in Note 20.2 and £335m (2023: £264m) on the Group balance

sheet in relation to subsidiaries as disclosed in Note 28.

Retirement benefit assets and liabilities

The Group’s balance sheet includes net retirement benefit assets of £2m (2023: £69m) representing

net surpluses in the Group’s pension schemes, as measured on an IAS 19 basis. The movement in

pension surplus in the year is primarily due to actuarial losses of £102m (2023: £197m losses), partially

offset by ongoing deficit funding of £28m (2023: £25m). Any surplus of deficit contributions would be

recoverable by way of a refund as, according to the relevant trust deed and rules documents, the

Group has the unconditional right to the surplus and controls the run‑off of the benefit obligations

onceall other obligations of the schemes have been settled.

Other

In addition to the liabilities on the balance sheet, in the normal course of its business, the Group

arranges for financial institutions to provide customers with guarantees in connection with its contracting

activities, commonly referred to as bonds. These bonds provide a customer with a level of financial

protection in the event that a contractor fails tomeet its commitments under the terms of a contract.

They are customary or mandatory in many of the markets in which the Group operates. In return for

issuing the bonds, the financial institutions receive a fee and a counter‑indemnity from the Company.

As at 31December 2024, contract bonds in issue by financial institutions covered £5.0bn (2023: £4.3bn)

of the contract commitments of theGroup.

Equity commitments

During 2024, the Group invested £28m (2023: £31m) in a combination of equity and shareholder loans

to Infrastructure Investments’ project companies and at the end of the year had committed to provide

a further £74m from 2024 onwards, inclusive of £21m expected for projects at preferred bidder stage.

£42m of this is expected to be invested in 2025, as disclosed in Note 42(f).

* The commentary forms part of the Chief Financial Officer’s review on pages 86 to 88 and does not form part of the financial statements.

196

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

GROUP STATEMENT OF CASH FLOWS

For the year ended 31 December 2024

			2024	2023
		Notes	£m	£m
Cash flows from operating activities
Cash from operations		3 4.1	277	293
Income taxes paid			(1 2)	(8)
Net cash from operating activities			265	285
Cash flows from investing activities
Dividends received from:
– joint ventures and associates – infrastructure investments		20.5	26	24
– joint ventures and associates – other		20.5	45	36
– other investments		21	1	3
Interest received – infrastructure investments – joint ventures		20.5	7	7
Interest received subsidiaries:
– infrastructure investments			11	4
– other Purchases of:			40	33
– intangible assets	– infrastructure investments	15	–	(3 0)
– service concession contract asset	– infrastructure investments	16	(56)	–
– property, plant and equipment		17	(2 8)	(66)
– investment properties		19	(3 6)	(42)
– other investments		21	–	(2)
Investments in and long‑term loans to joint ventures
andassociates		20.5	(20)	(14)
Return of equity from joint ventures and associates		20.5	–	4
PPP financial assets cash expenditure		22	(5)	(2)
PPP financial assets cash receipts		22	8	6
Disposals of:
– investments in joint ventures – infrastructure investments		20.5	43	56
– property, plant and equipment – other			5	4
– other investments		21	5	12
Net cash from investing activities			46	33

		2024	2023
	Notes	£m	£m
Cash flows used in financing activities
Purchase of ordinary shares	33.3	(1 2)	(18)
Purchase of treasury shares	32	(1 0 1)	(151)
Proceeds from new loans relating to:
– infrastructure investments assets	34.3	36	336
– other Repayments of loans relating to:	34.3	39	28
– infrastructure investments assets	34.3	(9)	(8)
– other	34.3	(4 0)	(19 7)
Repayment of lease liabilities	29	(5 9)	(57)
Ordinary dividends paid	13	(61)	(58)
Other dividends paid – non‑controlling interests		(1)	–
Capital contribution – non‑controlling interests		–	8
Interest paid – infrastructure investments		(12)	(11)
Interest paid – other		(31)	(3 0)
Net cash used in financing activities		(2 5 1)	(15 8)
Net increase in cash and cash equivalents		60	16 0
Effects of exchange rate changes		3	(29)
Cash and cash equivalents at beginning of year		1, 310	1,17 9
Cash and cash equivalents at end of year	34.2	1, 3 7 3	1, 3 10

197Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Commentary on the Group statement of cash flows*

Cash and cash equivalents increased during the year to £1,373m. The Group generated cash

from operating activities in the year of £265m compared to £285m in the prior year.

Background

The Group statement of cash flows shows the cash flows from operating, investing and financing

activities during the year.

Working capital

Working capital includes: inventories; contract assets and liabilities; trade and other receivables; trade

and other payables; and provisions. Where the net working capital balance is in an asset position, i.e.

the inventories and receivables balances are greater than the payables and provisions, this is referred

to as unfavourable/positive working capital. Where this is not the case, this is referred to as favourable/

negative working capital.

Cash used in operations

Cash inflow from operations of £277m (2023: £293m) included a profit from operations of £173m

(2023: £211m), a working capital inflow of £99m (2023: £63m) and the following significant adjustment

items: share of results of joint ventures and associates £59m (2023: £53m); depreciation and amortisation

charges £129m (2023: £114m); gain on disposal of interests in investments of £43m (2023: £24m);

andpension payments including deficit funding of £30m (2023: £28m).

Working capital movements

The movement of the individual working capital balances on the balance sheet will not be reflective

ofthe underlying movement of working capital due to the balance sheet being affected by foreign

currency movements and disposals.

Working capital movements are disclosed in Note 34.1.

Changes in the Group’s working capital position during the year resulted in a cash inflow of £99m

(2023:£63m inflow). The working capital inflow is largely in line with increases in revenue.

Cash flows from investing activities

The Group received dividends of £71m (2023: £60m) from joint ventures and associates during the year.

The Group continued to invest in Infrastructure Investments assets, acquiring The Leonard in Denton,

Texas for £36m. Construction at West Slope student accommodation project for the University of Sussex

also continued into 2024, incurring £56m of capitalised costs in service concession contract assets.

The Group also continued to invest in its Infrastructure Investments joint ventures and associates,

contributing £20m (2023: £14m) in theyear. £6m of this was attributable to the Group’s acquisition

ofan additional 17% stake in DTO (refer to Note 35.1).

One disposal was completed in 2024, with the Group reducing its stake in the Northside student

accommodation project at the University of Texas in Dallas. The transaction delivered £43m of cash

ondisposal.

Cash flows used in financing activities

On 20 September 2024 the Company completed its 2024 share buyback programme resulting in 27.1m

(2023: 43.3m) shares purchased for a total consideration of £101m (2023: £151m), including associated

fees and stamp duty amounting to £1m (2023: £1m).

In May 2024, the Group used the funds raised through the issue of US$50m of new USPP notes to

repay US$50m (£40m) of its USPP notes early that were due to mature in March 2025. The make

whole of these notes included no early repayment settlement charges.

The Group has total committed bank facilities of £480m, including the £450m sustainability linked

revolving credit facility (RCF) extended in June 2024. Under the terms of these Sustainability Linked

Loan (SLL) facilities, the Group is incentivised to deliver annual measurable performance improvement

in three key areas: Carbon Emissions, Social Value generation and an independent Environment, Social

and Governance (ESG) rating score – these areas of performance and the associated metrics have

been reviewed and updated by the banking Group as of June 2024. All committed bank facilities

wereundrawn at 31 December 2024.

Interest payments amounted to £43m (2023: £41m) during the year, of which £12m (2023: £11m)

related to infrastructure investments, £10m (2023: £12m) related to the USPP, £7m (2023: £6m)

related to the interest paid on lease liabilities and £14m (2023: £12m) related to other finance charges.

* The commentary forms part of the Chief Financial Officer’s review on pages 86 to 88 and does not form part of the financial statements.

198

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

NOTES TO THE FINANCIAL STATEMENTS

1 Basis of accounting

Going concern

The Directors consider it reasonable to assume that the Group has adequate resources to continue for

the foreseeable future and, for this reason, have continued to adopt the going concern basis in

preparing the financial statements.

The key financial risk factors for the Group remain largely unchanged. The Group’s principal risks and

the consequent impact these might have on the Group as well as mitigations that are in place are

detailed on pages 94 to 105.

The Group’s US private placement and committed bank facilities contain certain financial covenants,

such as the ratio of the Group’s EBITDA to its net debt which needs to be less than 3.0 and the ratio of

its EBITA to net borrowing costs which needs to be in excess of 3.0. These covenants are tested on a

rolling 12‑month basis as at the June and December reporting dates. At 31 December 2024, both

these covenants were passed as the Group had net cash and net interest income from a covenant

test perspective.

The Directors have carried out an assessment of the Group’s ability to continue as a going concern for

the period of at least 12 months from the date of approval of the financial statements. This assessment

has involved the review of medium‑term cash forecasts of each of the Group’s operations. The

Directors have also considered the strength of the Group’s order book which amounted to £18.4bn

at 31 December 2024 and will provide a pipeline of secured work over the going concern assessment

period. These base case projections indicate that the headroom provided by the Group’s strong cash

position and the debt facilities currently in place is adequate to support the Group over the going

concern assessment period.

At 31 December 2024, the Group’s only debt, other than non‑recourse borrowings ring‑fenced within

certain concession companies, comprised $208m US private placement (USPP) notes.

The Group’s £450m committed sustainability linked bank facility remained undrawn at 31 December

2024 and is fully available to the Group until June 2028. The Group’s £30m bilateral committed facility,

which was entered into in December 2022, also remained undrawn at 31 December and remains fully

available to the Group until December 2027.

The Directors have stress‑tested the Group’s base case projections of both cash and profit against

key sensitivities which could materialise as a result of adverse changes in the economic environment

including a deterioration in commercial or operational conditions. The Group has sensitised its

projections against severe but plausible downside scenarios which include:

@ elimination of a portion of unsecured work assumed within the Group’s base case projections

and a delay of six months for any awarded but not yet contracted work;

@ a deterioration of contract judgements and restriction of a portion of the Group’s margins; and

@ delay in the disposal of Investments assets by 12 months.

In the severe but plausible downside scenarios modelled, the Group continues to retain sufficient

headroom on liquidity throughout the going concern period. Through these downside scenarios, the

Group is still expected to be in a net cash position and to remain within its banking covenants through

the going concern assessment period.

Based on the above and having made appropriate enquiries, the Directors consider it reasonable to assume

that the Group and the Company have adequate resources to continue for the going concern period and,

for this reason, have continued to adopt the going concern basis in preparing the financial statements.

Consideration of climate change

In preparing the financial statements, the Directors have considered the impact of climate change,

particularly in the context of the risks identified in the TCFD disclosure on pages 107 to 115. There has

been no material impact identified on the financial reporting judgements and estimates. In particular,

the Directors considered the impact of climate change in respect of the following areas:

@ contract judgements made on the Group’s Construction Services and Support Services contracts;

@ going concern and viability of the Group over the next three years;

@ cash flow forecasts used in the impairment assessments of non‑current assets including the

Group’s intangible assets such as customer contracts and goodwill;

@ cash flow forecasts used in the impairment assessments of the Group’s infrastructure investments assets;

@ carrying value and useful economic lives of property, plant and equipment; and

@ the valuation of assets held within the Group’s pension schemes.

As current legislation stands, there is currently no material medium‑term impact expected from climate

change due to the contractual mechanisms and insurance arrangements in place. The Directors are

however aware of the ever‑changing risks attached to climate change and will regularly assess these

risks against judgements and estimates made in preparation of the Group’s financial statements.

Basis of preparation

The annual financial statements have been prepared in accordance with UK‑adopted international

accounting standards and in conformity with the requirements of the Companies Act 2006 (the Act).

The financial statements have been prepared under the historical cost convention, except as described

under Note 2.27. The functional and presentational currency of the Company and the presentational

currency of the Group is sterling.

199Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

1 Basis of accounting continued

Basis of preparation continued

The separate financial statements of the Company are presented as required by the Act and have been

prepared in accordance with FRS 101 Reduced Disclosure Framework. In preparing these financial

statements, the Company applies the recognition, measurement and disclosure requirements of

UK‑adopted international accounting standards, but makes amendments where necessary in order to

comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure

exemptions has been taken.

As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available

under that standard in relation to share‑based payments, financial instruments, capital management,

presentation of a cash flow statement, related party transactions and comparative information. Where

required, equivalent disclosures are given in the consolidated financial statements.

In addition to the application of FRS 101, the Company has taken advantage of Section 408 of the Act

and, consequently, its statement of comprehensive income (including the profit and loss account) is

not presented as part of these financial statements.

2 Principal accounting policies

2.1 Accounting standards

Adoption of new and revised standards

The following accounting standards, interpretations and amendments have been adopted by the Group

in the year ended 31 December 2024:

@ Amendments to the following standards:

@ IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures – Supplier

Finance Arrangements

@ IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non‑current

@ IAS 1 Presentation of Financial Statements: Non‑current Liabilities with Covenants

@ IFRS 16 Leases: Lease Liability in a Sale and Leaseback

These amended standards did not have a material effect on the Group or the Company.

Accounting standards not yet adopted by the Group

The following accounting standards, interpretations and amendments have been issued by the IASB

but had either not been adopted by the UK or were not yet effective in the UK at 31 December 2024:

@ IFRS 18 Presentation and Disclosure in Financial Statements

@ IFRS 19 Subsidiaries without Public Accountability: Disclosures

@ Amendments to the following standards:

@ IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability

@ IFRS 9 and IFRS 7: Classification and Measurement of Financial Instruments

@ IFRS 9 and IFRS 7: Contracts Referencing Nature‑dependent Electricity

@ Annual Improvements to IFRS Accounting Standards Volume 11

The Directors do not expect these new and amended standards to have a material effect on the Group

or the Company and have chosen not to adopt any of the above standards and interpretations earlier

than required.

2.2 Basis of consolidation

The Group financial statements include the results of the Company and its subsidiaries, together with

the Group’s share of the results of joint ventures and associates, drawn up to 31 December each year.

a) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to,

or has rights to, variable returns from its involvement with the entity and has the ability to affect those

returns through its power over the entity.

The results of subsidiaries are consolidated from the date that control commences until the date that

control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the

Group. On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at

their fair values at the date of acquisition. Any excess of the fair value of the cost of acquisition over

the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the

cost of acquisition below the fair values of the identifiable net assets acquired (discount on acquisition)

is credited to the income statement in the period of acquisition. The interest of non‑controlling equity

holders is stated at the non‑controlling equity holders’ proportion of the fair value of the assets and

liabilities recognised.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference

between: (i) the aggregate of the fair value of the consideration received and the fair value of any retained

interest less direct costs of the transaction; and (ii) the previous carrying amount of the assets (including

goodwill) less liabilities of the subsidiary. The fair value of any investment retained in the former subsidiary

at the date when control is lost is regarded as the fair value on initial recognition for subsequent

accounting under IFRS 9 Financial Instruments or, when applicable, the cost on initial recognition

of an investment in an associate or jointly controlled entity. Amounts previously recognised in other

comprehensive income in relation to the subsidiary are accounted for in the same manner as would

be required if the relevant assets or liabilities were disposed of (i.e. reclassified to profit or loss or

transferred directly to retained earnings).

200

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2 Principal accounting policies continued

2.2 Basis of consolidation continued

a) Subsidiaries continued

Any acquisition or disposal which does not result in a change in control is accounted for as a transaction

between equity holders. The carrying amounts of the controlling and non‑controlling interests are

adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the

fair value of the consideration paid or received and the amount by which the non‑controlling interests

are adjusted is recognised directly in equity and attributed to the owners of the Parent.

Accounting policies of subsidiaries are adjusted where necessary to ensure consistency with those

used by the Group. All intra‑Group transactions, balances, income and expenses are eliminated on

consolidation.

b) Joint ventures and associates

Joint ventures are those entities over whose activities the Group has joint control, whereby the Group

has rights to the net assets of the entity, rather than rights to its individual assets and obligations for

its individual liabilities.

Associates are those entities over whose financial and operating policies the Group has significant

influence, but not control or joint control.

The results, assets and liabilities of joint ventures and associates are incorporated in the financial

statements using the equity method of accounting except when classified as held for sale. The equity

return from the military housing joint ventures of the Group is contractually limited to a maximum

level of return, beyond which the Group does not share in any further return. Therefore the Group’s

investment in these projects is recognised at initial equity investment plus the value of the Group’s

accrued preferred return from the underlying projects.

Any excess of the fair value of the cost of acquisition over the Group’s share of the fair values of the

identifiable net assets of the joint venture or associate entity at the date of acquisition is recognised

as goodwill. Any deficiency of the fair value of the cost of acquisition below the Group’s share of the

fair values of the identifiable net assets of the joint venture or associate at the date of acquisition

(discount on acquisition) is credited to the income statement in the period of acquisition.

Investments in joint ventures and associates are initially carried in the balance sheet at cost (including

goodwill arising on acquisition) and adjusted by post‑acquisition changes in the Group’s share of net

assets of the joint venture or associate, less any impairment in the value of individual investments.

Losses of joint ventures and associates in excess of the Group’s interest in those joint ventures and

associates are only recognised to the extent that the Group is contractually liable for, or has a

constructive obligation to meet, the obligations of the joint ventures and associates.

Unrealised gains and losses on transactions with joint ventures and associates are eliminated

to the extent of the Group’s interest in the relevant joint venture or associate.

c) Joint operations

The Group’s share of the results, assets and liabilities of contracts carried out in conjunction with

another party are included under each relevant heading in the income statement and balance sheet.

The results of a small number of joint operations are drawn up to a date other than 31 December,

typically in the last two weeks of December. Adjustments are made for any significant transactions

between such date and 31 December.

2.3 Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange

at the reporting date. Significant exchange rates used in the preparation of these financial statements

are shown in Note 3.

For the purpose of presenting consolidated financial statements, the results of foreign subsidiaries,

associates and joint venture entities are translated at average rates of exchange for the year, unless the

exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of

transactions are used. Assets and liabilities are translated at the rates of exchange prevailing at the

reporting date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are

treated as assets and liabilities of the foreign entity and translated at the rates of exchange at the

reporting date. Currency translation differences arising are transferred to the Group’s foreign currency

translation reserve and are recognised in the income statement on disposal of the underlying investment.

In order to hedge its exposure to certain foreign exchange risks, the Group may enter into forward foreign

exchange contracts. Refer to Note 2.27(b) for details of the Group’s accounting policies in respect of such

derivative financial instruments.

2.4 Revenue recognition

The Group recognises revenue when it transfers control over a product or service to its customer.

Revenue is measured based on the consideration specified in a contract with a customer and excludes

amounts collected on behalf of third parties. Where consideration is not specified within the contract

and is therefore subject to variability, the Group estimates the amount of consideration to be received

from its customer. The consideration recognised is the amount which is highly probable not to result

in a significant reversal in future periods.

Where a modification to an existing contract occurs, the Group assesses the nature of the modification

and whether it represents a separate performance obligation required to be satisfied by the Group or

whether it is a modification to the existing performance obligation.

The Group does not expect to have any contracts where the period between the transfer of the promised

goods or services to the customer and payment by the customer exceeds one year. As a consequence,

the Group does not adjust its transaction price for the time value of money.

The Group’s activities are wide ranging, and as such, depending on the nature of the product or service

delivered and the timing of when control is passed onto the customer, the Group will account for revenue

over time and at a point in time. Where revenue is measured over time, the Group uses the input method

to measure progress of delivery.

201Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

2 Principal accounting policies continued

2.4 Revenue recognition continued

Revenue is recognised as follows:

@ revenue from construction and services activities is recognised over time and the Group uses

the input method to measure progress of delivery;

@ revenue from manufacturing activities is recognised at a point in time when title has passed

to the customer; and

@ dividend income in the Parent Company is recognised when the equity holders’ right to receive

payment is established.

2.5 Construction and services contracts

When the outcome of individual contracts can be estimated reliably, contract revenue is recognised by

reference to the measure of progress at the reporting date using the input method. Costs are recognised as

incurred and revenue is recognised on the basis of the proportion of total costs at the reporting date to the

estimated total costs of the contract.

Estimates of the final out‑turn on each contract may include cost contingencies to take account of the

specific risks within each contract that have been identified during the early stages of the contract. The

cost contingencies are reviewed on a regular basis throughout the contract life and are adjusted where

appropriate. However, the nature of the risks on contracts are such that they often cannot be resolved

until the end of the project and therefore may not reverse until the end of the project. The estimated

final out‑turns on contracts are continuously reviewed and, in certain limited cases, recoveries from

insurers are assessed, and adjustments made where necessary.

No margin is recognised until the outcome of the contract can be estimated with reasonable certainty.

Provision is made for all known or expected losses on individual contracts once such losses

are foreseen.

Revenue in respect of variations to contracts and incentive payments is recognised when there is an

enforceable right to payment and it is highly probable it will be agreed by the customer. Variable

consideration is assessed on a contract‑by‑contract basis according to the facts, circumstances and

terms of each project and only recognised to the extent that it is highly probable not to significantly

reverse in the future. Revenue in respect of claims is recognised only if it is highly probable not to reverse

in future periods. Profit for the year includes the benefit of claims settled in the year to the extent not

previously recognised on contracts completed in previous years.

2.6 Segmental reporting

The Group considers its Board of Directors to be the chief operating decision maker and therefore the

segmental disclosures provided in Note 5 are aligned with the monthly reports provided to the Board of

Directors. The Group’s reporting segments are based on the types of services provided. Operating

segments with similar economic characteristics have been aggregated into three reportable segments

which reflect the nature of the services provided by the Group. A description of each reportable

segment is provided in Note 5. Further information on the business activities of each reportable

segment is set out on pages 207 to 213.

Operating segments are aggregated on the basis of the nature of the services provided and the

manner in which returns are earned by the Group. Further information on the nature of services

provided within each segment is included in Note 4.

Working capital is the balance sheet measure reported to the chief operating decision maker. The profitability

measure used to assess the performance of the Group is underlying profit from operations.

Segment results represent the contribution of the different segments after the allocation of attributable

corporate overheads. Transactions between segments are conducted at arm’s‑length market prices.

Segment assets and liabilities comprise those assets and liabilities directly attributable to the segments.

Corporate assets and liabilities include cash balances, bank borrowings, tax balances and dividends

payable. Non‑recourse net borrowings are directly attributable to Infrastructure Investments and

therefore not included within Corporate activities.

Major customers are defined as customers contributing more than 10% of the Group’s external revenue.

2.7 Pre-contract bid costs and recoveries

Pre‑contract costs are expensed as incurred until preferred bidder status is awarded at which point

further costs are capitalised as there is a high probability that the Group would be able to recover these

costs. Amounts subsequently recovered in respect of pre‑contract costs that have been written off

before preferred bidder status was awarded are recognised in full in the income statement when they

are received in cash.

2.8 Profit from operations

Profit from operations is stated after the Group’s share of the post‑tax results of equity accounted joint

venture entities and associates and other operating expenses, which mainly consist of admin expenses,

but before investment income and finance costs.

2.9 Investment income and finance costs

Interest income is accrued on a time basis using the effective interest method by reference to the

principal outstanding and the effective interest rate, which is the rate that exactly discounts estimated

future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Finance costs of debt, including premiums payable on settlement and direct issue costs, are charged

to the income statement on an accruals basis over the term of the instrument, using the effective

interest method. Finance costs also include interest cost on the discount unwind of lease liabilities and

impairment of loans to joint ventures and associates and accrued interest thereon.

2.10 Non-underlying items

Non‑underlying items are items of financial performance which the Group believes should be presented

separately on the face of the income statement to assist in understanding the underlying financial

performance achieved by the Group. Such items will not affect the absolute amount of the results for

the period and the trend of results. The Group’s underlying results exclude non‑underlying items.

202

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2 Principal accounting policies continued

2.10 Non-underlying items continued

Non‑underlying items include:

@ gains and losses on the disposal of businesses and investments, unless this is part of a

programme of releasing value from the disposal of similar businesses or investments such as

infrastructure concessions;

@ costs of major restructuring and reorganisation of existing businesses;

@ costs of integrating newly acquired businesses;

@ acquisition and similar costs related to business combinations such as transaction costs;

@ impairment and amortisation charges on intangible assets arising on business combinations

(amortisation of acquired intangible assets); and

@ impairment of goodwill.

These are examples, however, from time to time it may be appropriate to disclose further items as

non‑underlying items in order to highlight the underlying performance of the Group. Refer to Note 10.

2.11 Taxation

The tax charge comprises current tax and deferred tax, calculated using tax rates that have been

enacted or substantively enacted by the reporting date. Current tax and deferred tax are charged or

credited to the income statement, except when they relate to items charged or credited directly to

equity, in which case the relevant tax is also accounted for within equity. Current tax is based on the

profit for the year.

Deferred tax is provided, using the liability method, on temporary differences arising between the

tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax

on such assets and liabilities is not recognised if the temporary difference arises from the initial

recognition of goodwill or from the initial recognition (other than in a business combination) of other

assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be

available against which the temporary differences can be utilised. The carrying amount of deferred tax

assets is reviewed at each reporting date.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, joint ventures

and associates, except where the timing of the reversal of the temporary difference can be controlled

by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same

taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

2.12 Intangible assets

a) Goodwill

Goodwill arises on the acquisition of subsidiaries and other businesses, joint ventures and associates

and represents the excess of the fair value of consideration over the fair value of the identifiable assets

and liabilities acquired. Goodwill on acquisitions of subsidiaries and other businesses is included in

non‑current assets. Goodwill on acquisitions of joint ventures and associates is included in investments

in joint ventures and associates.

Goodwill is reviewed annually for impairment and is carried at cost less accumulated impairment

losses. Goodwill is included when determining the profit or loss on subsequent disposal of the

business to which it relates.

Goodwill arising on acquisitions before the date of transition to IFRS (1 January 2004) has been

retained at the previous UK GAAP amounts subject to being tested for impairment. Goodwill written

off or discount arising on acquisition credited to reserves under UK GAAP prior to 1998 has not been

reinstated and is not included in determining any subsequent profit or loss on disposal.

b) Other intangible assets

Other intangible assets are stated at fair value or cost less accumulated amortisation and impairment

losses. Amortisation charges in respect of software and Infrastructure Investments intangibles are included

in underlying items.

c) Research and development

Internally generated intangible assets developed by the Group are recognised only if all the following

conditions are met: an asset is created that can be identified; it is probable that the asset created will

generate future economic benefits; and the development cost of the asset can be measured reliably.

Other research expenditure is written off in the period in which it is incurred.

2.13 Service concession contract asset

Service concession contract asset is stated at cost less impairment losses and includes concession

assets that are accounted for under IFRIC 12 Service Concession Arrangements. These assets are

classified as service concession contract assets whilst in the construction phase. Once construction

is complete and the asset enters the operational phase, it is reclassified to intangible assets or PPP

assets depending on whether the asset features demand risk.

2.14 Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses.

Cost includes expenditure associated with bringing the asset to its operating location and condition.

Refer to Note 17 for further detail.

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2 Principal accounting policies continued

2.15 Investment properties

The Group classifies land and buildings which it holds to generate capital appreciation and/or to earn

rental income as investment properties. The Group has chosen to state its investment properties at

cost less accumulated depreciation and impairment losses. The Group depreciates its investment

properties over 25 years. Land is not depreciated.

2.16 Leasing

As a lessee, the Group assesses whether a contract is, or contains, a lease at the inception of a

contract. A lease exists if the contract conveys the right to control the use of an identified asset for a

period of time in exchange for consideration. To assess if a lease exists, the Group assesses whether:

(i) the contract involves the use of an identified asset; (ii) the Group has the right to obtain substantially

all of the economic benefits from the use of the asset throughout the lease term; and (iii) the Group

has the right to direct the use of the asset. In order to determine if the contract involves the use of an

identified asset, the Group exercises judgement to assess if the supplier has a substantive substitution

right over the asset. An asset is not identified if it has been determined that the supplier has

substantive substitution rights.

The Group recognises a right‑of‑use asset and a lease liability at the lease commencement date.

The right‑of‑use asset is initially measured at cost and subsequently depreciated over the lease term.

The lease liability is measured at the present value of the lease payments that are not paid at the

commencement date, discounted using the interest rate implicit in the lease, or if that rate cannot

be readily determined, the Group’s incremental borrowing rate. The Group has elected to apply the

practical expedient which allows the Group to use a single discount rate for a portfolio of leases with

similar characteristics.

The Group has elected not to recognise right‑of‑use assets and lease liabilities for short‑term leases of

less than 12 months and leases of low value assets. Instead, the Group recognises the lease payments

associated with these leases as an expense on a straight‑line basis over the lease term.

2.17 Impairment of assets

Assets that have an indefinite useful life (such as goodwill arising on acquisitions) are reviewed at least

annually for impairment. Other intangible assets, property, plant and equipment and right‑of‑use assets

are reviewed for impairment whenever there is any indication that the carrying amount of the asset

may not be recoverable.

If the recoverable amount of an asset is less than its carrying amount, an impairment loss is recognised.

Recoverable amount is the higher of fair value less costs to sell and value‑in‑use. Value‑in‑use is

assessed by discounting the estimated future cash flows that the asset is expected to generate. For

this purpose assets, including goodwill, are grouped into cash‑generating units representing the level

at which they are monitored by the Board of Directors for internal management purposes. Goodwill

impairment losses are not reversed in subsequent periods. Reversals of other impairment losses are

recognised in income when they arise.

2.18 Investments

Investments are recognised and derecognised on the trade date where a purchase or sale of an

investment is under a contract whose terms require delivery of the investment within the timeframe

established by the market concerned, and are initially measured at cost, including transaction costs.

Investments in mutual funds are measured at fair value. Gains and losses arising from changes in the

fair value of these investments are recognised in other comprehensive income. Investments that are

held until they reach maturity are measured at amortised cost.

Investments in subsidiaries are recognised and held at cost and subsequently tested for impairment on

an annual basis. Where an impairment is identified, a provision for impairment is recorded against the

carrying value of the investment.

2.19 Government grants

Government grants are recognised when there is a reasonable assurance that the Group will be able

to comply with the conditions attached to the grant and that the grant will be received. Grants are

recognised in the income statement on a systematic basis as a deduction from the related category

of cost in the periods in which the expenses are recognised.

2.20 Inventories

Inventories are valued at the lower of cost and net realisable value.

Cost includes an appropriate proportion of manufacturing overheads incurred in bringing inventories to

their present location and condition and is determined using the first‑in first‑out method. Net realisable

value represents the estimated selling price less all estimated costs of completion and costs to be

incurred in marketing, selling and distribution.

2.21 Trade receivables and contract retention receivables

Trade and contract retention receivables are initially recorded at fair value and subsequently measured

at amortised cost as reduced by allowances for estimated irrecoverable amounts and expected credit losses.

2.22 Trade payables and contract retention payables

Trade and contract retention payables are not interest bearing and are stated at cost.

2.23 Provisions

Provisions for insurance liabilities retained in the Group’s captive insurance arrangements, legal claims,

defects and warranties, environmental restoration, onerous leases and other onerous commitments

are recognised at the best estimate of the expenditure required to settle the Group’s liability.

Provisions are recognised when: (i) the Group has a present legal or constructive obligation as a result

of a past event; (ii) it is probable that an outflow of resources will be required to settle the obligation;

and (iii) the amount of the obligation can be estimated reliably. Provisions are discounted where appropriate.

204

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2 Principal accounting policies continued

2.24 Borrowings

Interest‑bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue

costs. Premiums payable on settlement or redemption and direct issue costs are included in the

carrying amount of the instrument and are charged to the income statement on an accruals basis using

the effective interest method together with the interest payable.

2.25 Retirement benefit costs

The Group, through trustees, operates a number of defined benefit and defined contribution retirement

and other long‑term employee benefit schemes, the largest of which are of the defined benefit type

and are funded. Defined benefit contributions are determined in consultation with the trustees, after

taking actuarial advice.

For defined benefit pension schemes, the cost of providing benefits recognised in the income

statement and the defined benefit obligations are determined at the reporting date by independent

actuaries, using the projected unit credit method. The liability recognised in the balance sheet

comprises the present value of the defined benefit pension obligations, determined by discounting

the estimated future cash flows using the market yield on a high‑quality corporate bond, less the fair

value of the scheme assets. Actuarial gains and losses are recognised in the period in which they

occur in the statement of comprehensive income.

Contributions to defined contribution pension schemes are charged to the income statement as they

fall due.

Any surplus of deficit contributions to the Balfour Beatty Pension Fund (BBPF) and the Railways

Pension Scheme (RPS) would be recoverable by way of a refund as, according to the relevant trust

deed and rules documents, the Group has the unconditional right to the surplus and controls the

run‑off of the benefit obligations once all other obligations of the BBPF and RPS have been settled.

2.26 Share-based payments

Employee services received in exchange for the grant of equity‑settled and cash‑settled awards are

charged to the income statement on a straight‑line basis over the vesting period, based on the fair

values of the awards at the date of grant.

The credits in respect of the amounts charged are included within separate reserves in equity for

equity‑settled awards or within accruals for cash‑settled awards until such time as the awards are

exercised, when the shares are transferred or cash payments made to employees.

2.27 Financial instruments

Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group

becomes a party to the contractual provisions of the instrument.

a) Classification of financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual

arrangements. An equity instrument is any contract that evidences a residual interest in the assets of

the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded

at the proceeds received, net of direct issue costs.

b) Derivative financial instruments and hedge accounting

The Group uses derivative financial instruments to manage interest rate risk and to hedge exposures to

fluctuations in foreign currencies in accordance with its risk management policy. The Group does not

use derivative financial instruments for speculative purposes. A description of the Group’s objectives,

policies and strategies with regard to derivatives and other financial instruments is set out in Note 41.

Derivatives are initially recognised in the balance sheet at fair value on the date the derivative

transaction is entered into and are subsequently re‑measured at their fair values.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are

recognised in the income statement together with any changes in the fair value of the hedged item

that are attributable to the hedged risk.

Changes in the fair value of the effective portion of derivatives that are designated and qualify as cash

flow hedges are recognised in other comprehensive income (OCI). Changes in the fair value of the

ineffective portion of cash flow hedges are recognised in the income statement. Amounts originally

recognised in OCI are transferred to the income statement when the underlying transaction occurs or,

if the transaction results in a non‑financial asset or liability, are included in the initial cost of that asset

or liability.

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are

recognised in the income statement as they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated,

or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss

on the hedging instrument recognised in OCI is retained in equity until the hedged transaction occurs.

If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in

OCI is transferred to the income statement for the period.

Derivatives embedded in other financial instruments or other host contracts are treated as separate

derivatives and recorded in the balance sheet at fair value when their risks and characteristics are not

closely related to those of the host contract. Changes in the fair value of those embedded derivatives

recognised in the balance sheet are recognised in the income statement as they arise.

c) PPP concession companies

Assets constructed by PPP concession companies are classified principally as financial assets

measured at fair value through OCI.

In the construction phase, income is recognised by applying an attributable profit margin to the

construction costs representing the fair value of construction services performed. In the operational

phase, income is recognised by allocating a proportion of total cash receivable over the life of the

project to service costs by means of a deemed rate of return on those costs. The residual element of

projected cash is allocated to the financial asset using the effective interest rate method, giving rise

to interest income.

Due to the nature of the contractual arrangements, the projected cash flows can be estimated with

a high degree of certainty.

205Balfour Beatty plc | Annual Report and Accounts 2024

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2 Principal accounting policies continued

2.27 Financial instruments continued

c) PPP concession companies continued

In the construction phase, the fair value of the Group’s PPP financial assets is determined by applying

an attributable profit margin to the construction costs representing the fair value of construction

services performed. In the operational phase, fair value is determined by discounting the future cash

flows allocated to the financial asset using discount rates based on long‑term gilt rates adjusted for the

risk levels associated with the assets, with market‑related movements in fair value recognised in OCI.

In both instances, the fair value is reduced by allowances for estimated irrecoverable amounts and

expected credit losses. Amounts originally recognised in OCI are transferred to the income statement

upon disposal of the asset.

2.28 Judgements and key sources of estimation uncertainty

The preparation of consolidated financial statements under IFRS requires management to make

judgements, estimates and assumptions that affect amounts recognised for assets and liabilities at the

reporting date and the amounts of revenue and expenses incurred during the reporting period. Actual

outcomes may differ from these judgements, estimates and assumptions.

The judgements, estimates and assumptions that have the most significant effect on the carrying

value of assets and liabilities of the Group as at 31 December 2024 are discussed below.

a) Revenue and margin recognition (estimate)

The Group’s revenue recognition and margin recognition policies, which are set out in Notes 2.4

and 2.5, are central to how the Group values the work it has carried out in each financial year.

These policies require forecasts to be made of the outcomes of long‑term construction services and

support services contracts, which require estimates to be made of both cost and income recognition

on each contract. On the cost side, estimates of forecasts are made on the final out‑turn of each contract

in addition to potential costs to be incurred for any maintenance and defects liabilities. On the income

side, estimates are made on variations to consideration which typically include variations due to

changes in scope of work, recoveries of claim income from customers, and potential liquidated

damages that may be levied by customers. On cost reimbursable contracts there are also estimates

required on the level of disallowable costs which requires an assessment of whether costs are

recoverable under the terms of the contract and therefore should be recognised as income.

Estimates are reviewed regularly throughout the contract life based on latest available information

and adjustments are made where necessary. The Group continues to regularly assess these estimates.

As at 31 December 2024, the Group’s contract assets, contract liabilities and contract provisions amounted

to £229m, £699m and £617m respectively as set out in Notes 24 and 27. The Group has considered the

nature of the estimates involved in deriving these balances and concluded that it is possible, on the

basis of existing knowledge, that outcomes within the next financial year may be different from the

Group’s assumptions applied as at 31 December 2024 and could require a material adjustment to the

carrying amounts of these assets and liabilities in the next financial year. However, due to the level of

uncertainty, combination of cost and income variables and timing across a large portfolio of contracts

(in excess of 1,000) at different stages of their contract life, it is impracticable to provide a quantitative

analysis of the aggregated estimates that are applied at a portfolio level.

Within this portfolio, there are a limited number of long‑term contracts where the Group has incorporated

significant estimates over contractual entitlements relating to recoveries of claim income from customers,

suppliers and liquidated damages levied by the customer. This is in the Construction Services segment.

These recoveries have been recognised at the amount that is considered highly probable not to

significantly reverse. However, there are a host of factors affecting potential outcomes in respect of

these entitlements which could result in a range of reasonably possible outcomes on these contracts

in the following financial year, ranging from a gain of £71m to a loss of £(42)m. The Directors have

assessed the range of reasonably possible outcomes on these limited number of contracts based on

facts and circumstances that were present and known at the balance sheet date. As with any contract

applying long‑term contract accounting, these contracts are also affected by a variety of uncertainties

that depend on future events, and so often need to be revised as contracts progress.

b) Non-underlying items (judgement)

Non‑underlying items are items of financial performance which the Group believes should be

presented separately on the face of the income statement to assist in understanding the underlying

financial performance achieved by the Group. Determining whether an item is part of underlying items

or non‑underlying items requires judgement. A total non‑underlying loss after tax of £10m (2023: £11m)

was charged to the income statement for the year ended 31 December 2024. Refer to Note 10.

c) Financial assets measured at fair value through OCI (estimate)

At 31 December 2024, £1,120m (2023: £1,173m) of PPP financial assets constructed by the Group’s

subsidiary, joint venture and associate companies were classified as financial assets measured at fair

value through OCI. In the operational phase the fair value of these financial assets is measured at each

reporting date by discounting the future value of the cash flows allocated to the financial asset. A range

of discount rates is used from 5.2% to 63.4% (2023: 4.3% to 17.4%), which reflects the prevailing

risk‑free interest rates and the different risk profiles of the various concessions. These represent key

sources of estimation uncertainty. Refer to Note 41.

A £50m loss was taken to other comprehensive income in 2024 (2023: £20m gain) and a cumulative fair

value gain of £148m had arisen on these financial assets as a result of market‑related movements

in the fair value of these financial assets at 31 December 2024 (2023: £198m).

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2 Principal accounting policies continued

2.28 Judgements and key sources of estimation uncertainty continued

d) Contract provisions (estimate)

Contract provisions are liabilities of uncertain timing or amount and therefore in making a reliable

estimate of the quantum and timing of liabilities estimates are applied and re‑evaluated at each

reporting date. The range of potential outcomes on contract provisions as a result of uncertain

future events could result in a materially positive or negative swing to profitability and cash flow.

The Group has considered the nature of these estimates and concluded that it is possible, on the basis

of existing knowledge, that outcomes within the next financial year may be different from the Group’s

assumptions applied as at 31 December 2024 and could require a material adjustment to the carrying

amounts of assets and liabilities in the next financial year. As disclosed in Note 27, the majority of the

Group’s provision balance relates to contract provisions, which include loss provisions, defect and

warranty provisions, where estimates are made around forecast costs, timing and whether it is

probable there will be an outflow of future economic benefit. Contract loss provisions may also include

estimates around variable consideration as disclosed in Note 2.28(a). However, due to the level of

uncertainty, combination of variables and timing across a large portfolio of complex contracts at

different stages of their contract life, it is impracticable to provide a quantitative analysis of the

aggregated estimates that are applied at a portfolio level.

To the extent that the sensitivities disclosed in Note 2.28(a) affect a loss‑making contract, this will

have an impact on the Group’s provisions in the next financial year.

The Group also continues to provide for a number of fire safety‑related claims received by the Group

as part of its defects provision. A provision is made when there is a probable obligation and outflow,

and the Group can reliably estimate the cost relating to its obligation. If costs are considered possible

or cannot be reliably estimated, then they are considered to be contingent liabilities (see Note 38).

Provisions of this nature are inherently uncertain as the estimated costs are based on a number of key

estimates and assumptions which include, but are not limited to, the extent of defects that may exist,

the cost of rectifying these defects and the consideration of what was considered to comply with

building safety regulations at the time these buildings were constructed. These estimates are also

inherently uncertain due to the highly complex and bespoke nature of each building. The Directors have

used various externally available information and internal assessments as a basis for the estimated

remedial costs for the fire safety claims received to date. The actual costs will ultimately be subject to

the progression of investigative works, remedial works carried out, settlements of ongoing claims,

and the evolution of current legislation and regulation which will impact the scope of any remediation

works required and therefore it is impracticable to provide a quantitative analysis of the aggregated

estimates across the Group for these fire safety‑related claims. There are also potential avenues to

recovering a portion of these costs from third parties, which have not been recognised by the Group

at this stage.

Within the fire defect population, there are claims received under the retrospective Building Safety Act

(BSA) legislation introduced in 2022 (refer to Note 10.2.3) ) for which the Group is carrying a defect

provision amounting to £82m at 31 December 2024 (2023: £21m). If the forecast remediation costs

relating to BSA claims received to date were 15% higher / lower than provided, the pre‑tax

non‑underlying charge in the Group’s income statement would increase / decrease by £12m. However,

if further BSA claims are notified, this could also increase the required provision, but the potential

quantity and timing of this change cannot be readily determined without further claims being made

against the Group and, subsequently, the necessary investigative work being conducted on these

claims. The scope of buildings and remediation works to be considered may also change as legislation

and regulations continue to evolve relating to BSA.

Included within contract provisions is the Group’s provision of £93m, excluding insurance recoveries,

relating to the claim recognised within non‑underlying items for the SH161 project in Texas, which was

completed in 2012. Refer to Note 10.2.4 for further information. The final outcome of the cost of the

claim to the Group will depend on the result of the court hearing scheduled for 27 March 2025,

settlement negotiations or the outcome of any appeals that are launched, as well as potential recoveries

from other third parties that the Group may receive. As such, within non‑underlying items there is a

range of reasonably possible outcomes in the following financial year, ranging from a gain of £53m to

a loss of £(37)m.

The Group continues to regularly assess these estimates.

e) Retirement benefit obligations (estimate)

Details of the Group’s defined benefit pension schemes are set out in Note 31, including tables

showing the sensitivity of the pension scheme obligations and assets to different actuarial

assumptions.

At 31 December 2024, the net retirement benefit assets recognised on the Group’s balance sheet

were £2m (2023: £69m). The effects of changes in the actuarial assumptions underlying the schemes’

obligations (including inflation and mortality) and discount rates and the differences between expected

and actual returns on the schemes’ assets are classified as actuarial gains and losses. During 2024, the

Group recognised net actuarial losses of £102m (2023: £198m) in OCI, including its share of the

actuarial gains and losses arising in joint ventures and associates.

3 Exchange rates

The following key exchange rates were applied in these financial statements:

Average rates
£1 buys	2024	2023	Change
US$	1.28	1.24	3.2%
HK$	9.98	9.73	2.6%

Closing rates
£1 buys	2024	2023	Change
US$	1.25	1.27	(1.6)%
HK$	9.73	9.95	(2.2)%

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4 Revenue

4.1 Nature of services provided

4.1.1 Construction Services

The Group’s Construction Services segment encompasses activities in relation to the physical construction of assets provided to public and private customers. Revenue generated in this segment is measured

over time as control passes to the customer as the asset is constructed. Progress is measured by reference to the cost incurred on the contract to date compared to the contract’s end of job forecast (the input

method). Payment terms are based on a schedule of value that is set out in the contract and fairly reflect the timing and performance of service delivery. Contracts with customers are typically accounted for as

one performance obligation (PO).

Types of assets	Typical contract length	Nature, timing of satisfaction of performance obligations and significant payment terms
Buildings	12 to 36 months	The Group constructs buildings which include commercial, healthcare, education, retail and residential assets. As part of its construction services,
		the Group provides a range of services including design and/or build, mechanical and electrical engineering, shell and core and/or fit‑out and interior
		refurbishment. The Group’s customers in this area are a mix of private and public entities.
		The contract length depends on the complexity and scale of the building and contracts entered into for these services are typically fixed price.
		In most instances, the contract with the customer is assessed to only contain one PO as the services provided by the Group, including those where
		the Group is also providing design services, are highly interrelated. However, for certain types of contracts, services relating to fit‑out and interior
		refurbishment may sometimes be assessed as a separate PO.
Infrastructure	1 to 3 months for small‑scale	The Group provides construction services for three main types of infrastructure assets: highways, railways and other large‑scale infrastructure assets
	infrastructure works	such as waste, water and energy plants.
	24 to 60 months for large‑scale	Highways represent the Group’s activities in constructing motorways in the UK, US and Hong Kong. This includes activities such as design and
	complex construction	construction of roads, widening of existing motorways or converting existing motorways. The main customers are government bodies.
		Railway construction services include design and managing the construction of railway systems delivering major multi‑disciplinary projects, track work,
		electrification and power supply. The Group serves both public and private railways including high‑speed passenger railways, freight and mixed traffic
		routes, dense commuter networks, metros and light rail.
		Other infrastructure assets include construction, design and build services on large‑scale complex assets predominantly servicing the waste, water and
		energy sectors.
		Contracts entered into relating to these infrastructure assets can take the form of fixed‑price, cost‑plus or target‑cost contracts with shared pain/gain
		mechanisms. Contract lengths vary according to the size and complexity of the asset build and can range from a few months for small‑scale
		infrastructure works to four to five years for large‑scale complex construction works.
		In most cases, the contract itself represents a single PO where only the design and construction elements are contracted. In some instances, the contract
		with the customer will include maintenance of the constructed asset. The Group assesses the maintenance element as a separate PO and revenue from
		this PO is recognised in the Support Services segment. Refer to Note 4.1.2.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

4 Revenue continued

4.1 Nature of services provided continued

4.1.2 Support Services

The Group’s work in this segment supports existing assets through maintaining, upgrading and managing services across utilities and infrastructure assets. Revenue generated in this segment is measured

over time as control passes to the customer as and when services are provided. Progress is measured by reference to the cost incurred on the contract to date compared to the contract’s end of job forecast

(the input method). Payments are structured as milestone payments set out in the respective contracts.

Types of assets	Nature, timing of satisfaction of performance obligations and significant payment terms
Utilities	Within the Group’s services contracts, the Group provides support services to various types of utility assets.
	For contracts servicing power transmission and distribution assets, the Group constructs and maintains electricity networks, including replacement or new build of overhead lines,
	underground cabling, cable tunnels and offshore wind farm maintenance. Contracts entered into are fixed‑price, cost‑plus or target cost with shared pain/gain mechanisms. Contract
	lengths can vary from 12 to 36 months. Each contract is normally assessed to contain one PO. However, where a contract contains both a construction phase and a maintenance
	phase, these are assessed to contain two separate POs.
Infrastructure	The Group provides maintenance, asset and network management and design services in respect of highways, railways and other publicly available assets. The customer in this area
	of the Group is mainly government bodies. Types of contract include a fixed schedule of rates, fixed‑price, target‑cost arrangements and cost‑plus.
	Contract terms range from 1 to 25 years. Where contracts include a lifecycle element, this is accounted for as a separate PO and recognised when the work is delivered.

4.1.3 Infrastructure Investments

The Group invests directly in a variety of assets, predominantly consisting of infrastructure assets where there are opportunities to manage the asset upon completion of construction. The Group also invests in

real estate type assets, in particular private residential and student accommodation assets. Revenue generated in this segment is from the provision of construction, maintenance and management services and

also from the recognition of rental income. The Group’s strategy is to hold these assets until optimal values are achieved through disposal of mature assets.

Types of services	Nature, timing of satisfaction of performance obligations and significant payment terms
Service concessions	The Group operates a UK and US portfolio of service concession assets comprising assets in the roads, healthcare, student accommodation, biomass and waste and offshore transmission
	sectors. The Group accounts for these assets under IFRIC 12 Service Concession Arrangements.
	Where the Group constructs and maintains these assets, the two services are deemed to be separate performance obligations and accounted for separately. If the maintenance phase
	includes a lifecycle element, this is considered to be a separate PO.
	Contract terms can be up to 40 years. The Group recognises revenue over time using the input method. Consideration is paid through a fixed unitary payment charge spread over the
	life of the contract.
	Revenue from this service is presented across Buildings, Infrastructure or Utilities in Note 4.2.
Management services	The Group provides real estate management services such as property development and asset management services. Contract terms can be up to 50 years. The Group recognises revenue
	over time as and when service is delivered to the customer.
	Revenue from this service is presented within Buildings in Note 4.2.
Housing development	The Group also develops housing units on land that is owned by the Group. Revenue is recognised on the sale of individual units at the point in time when control of the asset is
	transferred to the purchaser. This is deemed to be when an unconditional sale is achieved.
	Revenue from this service is presented within Buildings in Note 4.2.

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4 Revenue continued

4.2 Disaggregation of revenue

The Group presents a disaggregation of its revenue according to the primary geographical markets in which the Group operates as well as the types of assets serviced by the Group. The nature of the various

services provided by the Group is explained in Note 4.1. This disaggregation of revenue is also presented according to the Group’s reportable segments as described in Note 5.

For the year ended 31 December 2024
				Revenue by primary geographical markets				Revenue by types of assets serviced
		United	United	Rest of
		Kingdom	States	world	Total	Buildings	Infrastructure	Utilities	Other	Total
		£m	£m	£m	£m	£m	£m	£m	£m	£m
Construction	Revenue including share of joint ventures and associates	3,010	3,638	1,551	8,199	4,178	3,465	417	139	8,199
Services	Group revenue	3,010	3,619	1	6,630	3,420	2,657	414	139	6,630
Support Services	Revenue including share of joint ventures and associates	1,209	–	1	1,210	12	782	385	31	1,210
	Group revenue	1,209	–	1	1,210	12	782	385	31	1,210
Infrastructure	Revenue including share of joint ventures and associates	201	401	4	606	445 +	153	8	–	606
Investments	Group revenue	99	295	–	394	390 +	4	–	–	394
	Revenue including share of joint ventures
Total revenue	and associates	4,420	4,039	1,556	10,015	4,635	4,400	810	170	10,015
	Group revenue	4,318	3,914	2	8,234	3,822	3,443	799	170	8,234

+ Includes rental income of £48m including share of joint ventures and associates or £26m excluding share of joint ventures and associates.

			Timing of revenue recognition
	Construction	Support	Infrastructure
	Services	Services	Investments	Total
	£m	£m	£m	£m
Over time	8,194	1,209	587	9,990
At a point in time	5	1	19	25
Revenue including share of joint ventures and associates	8,199	1,210	606	10,015
Over time	6,625	1,209	375	8,209
At a point in time	5	1	19	25
Group revenue	6,630	1,210	394	8,234

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

4 Revenue continued

4.2 Disaggregation of revenue continued

For the year ended 31 December 2023

				Revenue by primary geographical markets				Revenue by types of assets serviced
		United	United	Rest of
		Kingdom	States	world	Total	Buildings	Infrastructure	Utilities	Other	Total
		£m	£m	£m	£m	£m	£m	£m	£m	£m
Construction	Revenue including share of joint ventures and associates	3,025	3,697	1,359	8,081	3,954	3,440	595	92	8,081
Services	Group revenue	3,025	3,669	1	6,695	3,284	2,738	581	92	6,695
Support Services	Revenue including share of joint ventures and associates	1,003	–	3	1,006	9	661	326	10	1,006
	Group revenue	1,003	–	3	1,006	9	661	326	10	1,006
Infrastructure	Revenue including share of joint ventures and associates	164	338	6	508	346 +	146	16	–	508
Investments	Group revenue	63	228	1	292	289 +	3	–	–	292
	Revenue including share of joint ventures and
Total revenue	associates	4,192	4,035	1,368	9,595	4,309	4,247	937	102	9,595
	Group revenue	4,091	3,897	5	7,9 9 3	3,582	3,402	907	102	7,993

+ Includes rental income of £53m including share of joint ventures and associates or £21m excluding share of joint ventures and associates.

4.2.1 Timing of revenue recognition

			Timing of revenue recognition
	Construction	Support	Infrastructure
	Services	Services	Investments	Total
	£m	£m	£m	£m
Over time	8,076	1,002	496	9,574
At a point in time	5	4	12	21
Revenue including share of joint ventures and associates	8,081	1,006	508	9,595
Over time	6,690	1,002	280	7,972
At a point in time	5	4	12	21
Group revenue	6,695	1,006	292	7,993

4.3 Transaction price allocated to the remaining performance obligations (excluding joint ventures and associates)

			2027
	2025	2026	onwards	Total
	£m	£m	£m	£m
Construction Services	5,808	3,397	3,684	12,889
Support Services	851	559	1,822	3,232
Infrastructure Investments	201	99	2,316	2,616
Total transaction price allocated to remaining performance obligations	6,860	4,055	7,822	18,737

The total transaction price allocated to the remaining performance obligations represents the contracted revenue to be earned by the Group for distinct goods and services which the Group has promised to

deliver to its customers. These include promises which are partially satisfied at the period end or those which are unsatisfied but which the Group has committed to providing. In deriving this transaction price,

any element of variable revenue is estimated at a value that is highly probable not to reverse in the future. The transaction price above does not include any estimated revenue to be earned on framework

contracts for which a firm order or instruction has not been received from the customer.

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5 Segment analysis

Reportable segments of the Group:

@ Construction Services – activities resulting in the physical construction of an asset;

@ Support Services – activities which support existing assets or functions such as asset maintenance and refurbishment; and

@ Infrastructure Investments – acquisition, operation and disposal of infrastructure assets such as roads, hospitals, student accommodation, military housing, multifamily residences, offshore transmission

networks, waste and biomass and other concessions. This segment also includes the Group’s housing development division.

5.1 Total Group

			2024					2023
	Construction	Support	Infrastructure	Corporate		Construction	Support	Infrastructure	Corporate
	Services	Services	Investments	activities	Total	Services	Services	Investments	activities	Total
Income statement – performance by activity	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue including share of joint ventures and associates	8,199	1,210	606	–	10,015	8,081	1,006	508	–	9,595
Share of revenue of joint ventures and associates	(1,569)	–	(212)	–	(1,781)	(1,386)	–	(216)	–	(1,602)
Group revenue	6,630	1,210	394	–	8,234	6,695	1,006	292	–	7,9 93
Group operating profit/(loss) 1	118	93	17	(39)	189	120	80	14	(39)	175
Share of results of joint ventures and associates	41	–	18	–	59	36	–	17	–	53
Profit/(loss) from operations 1	159	93	35	(39)	248	156	80	31	(39)	228
Non‑underlying items:
– net release of provisions relating to Rail Germany	21	–	–	–	21	–	–	–	–	–
– recognition of insurance recovery / (provision) in relation
to rectification works on a development in London	43	–	–	–	43	(12)	–	–	–	(12)
– provision recognised in relation to claims made under the Building Safety Act	(83)	–	–	–	(83)	–	–	–	–	–
– charge recognised in relation to a legacy claim received
for a project completed in 2012 in Texas	(52)	–	–	–	(52)	–	–	–	–	–
– amortisation of acquired intangible assets	(1)	–	(3)	–	(4)	(1)	–	(4)	–	(5)
	(72)	–	(3)	–	(75)	(13)	–	(4)	–	(17)
Profit/(loss) from operations	87	93	32	(39)	173	143	80	27	(39)	211
Investment income					82					82
Finance costs					(41)					(49)
Profit before taxation					214					244

1 Before non‑underlying items (Notes 2.10 and 10).

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

5 Segment analysis continued

5.1 Total Group continued

			2024						2023
	Construction	Support	Infrastructure	Corporate			Construction	Support	Infrastructure	Corporate
	Services	Services	Investments	activities	Total		Services	Services	Investments	activities	Total
Assets and liabilities by activity	£m	£m	£m	£m	£m		£m	£m	£m	£m	£m
Contract assets	116	70	43	–	229		203	69	28	–	300
Contract liabilities – current	(506)	(188)	(3)	–	(697)		(506)	(90)	(4)	–	(600)
Inventories	47	48	63	–	158		45	25	54	–	124
Trade and other receivables – current	939	99	22	39	1,099		768	73	33	20	894
Trade and other payables – current	(1,470)	(198)	(59)	(51)	(1,778)		(1,491)	(176)	(48)	(19)	(1,734)
Provisions – current	(213)	(6)	(3)	(17)	(239)		(187)	(4)	(7)	(18)	(216)
Working capital *	(1,087)	(175)	63	(29)	(1,228)	(1,16	8)	(103)	56	(17)	(1,232)
Total assets	2,209	520	1,309	1,594	5,632		2,168	459	1,260	1,378	5,265
Total liabilities	(2,635)	(524)	(683)	(660)	(4,502)		(2,484)	(385)	(664)	(524)	(4,057)
Net assets	(426)	(4)	626	934	1,130		(316)	74	596	854	1,208

* Includes non‑operating items and current working capital.

			2024					2023
	Construction	Support	Infrastructure	Corporate		Construction	Support	Infrastructure	Corporate
	Services	Services	Investments	activities	Total	Services	Services	Investments	activities	Total
Other information	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Capital expenditure on property, plant and equipment (Note 17)	7	18	–	3	28	8	47	–	11	66
Capital expenditure on intangible assets (Note 15)	–	–	–	–	–	–	–	30	–	30
Capital expenditure on service concession contract assets (Note
16)	–	–	56	–	56	–	–	–	–	–
Depreciation (Note 17, Note 18 and Note 19)	23	57	3	9	92	28	48	2	9	87
Gain on disposals of interests in investments (Note 35.2/35.3)	–	–	43	–	43	–	–	24	–	24
Gain on disposals of interests in investments within joint ventures
and associates (Note 35.2/35.3)	–	–	–	–	–	–	–	2	–	2

		2024				2023
	United	United	Rest of		United	United	Rest of
	Kingdom	States	world	Total	Kingdom	States	world	Total
	2024	2024	2024	2024	2023	2023	2023	2023
Performance by geographic destination	£m	£m	£m	£m	£m	£m	£m	£m
Revenue including share of joint ventures and associates	4,420	4,039	1,556	10,015	4,192	4,035	1,368	9,595
Share of revenue of joint ventures and associates	(102)	(125)	(1,554)	(1,781)	(101)	(138)	(1,363)	(1,602)
Group revenue	4,318	3,914	2	8,234	4,091	3,897	5	7,9 9 3

Major customers

Included in Group revenue are revenues of £2,291m (2023: £1,981m) from the US Government and £3,475m (2023: £3,198m) from the UK Government, which are the Group’s two largest customers,

through multiple central and regional bodies. These revenues are included in the results across all three reported segments.

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5 Segment analysis continued

5.2 Infrastructure Investments

		2024			2023
		Share of joint			Share of joint
		ventures and			ventures and
		associates			associates
	Group	(Note 20.2) +	Total	Group	(Note 20.2) +	Total
	2024	2024	2024	2023	2023	2023
	£m	£m	£m	£m	£m	£m
Underlying profit/(loss) from operations 1
UK ^	(2)	9	7	(1)	3	2
North America	2	9	11	7	12	19
Gain on disposals of interests in investments (Note 35.2/35.3)	43	–	43	24	2	26
	43	18	61	30	17	47
Bidding costs and overheads	(26)	–	(26)	(16)	–	(16)
	17	18	35	14	17	31
Net assets/(liabilities)
UK ^	478	105	583	412	121	533
North America	193	185	378	152	175	327
	671	290	961	564	296	860
Non‑recourse borrowings net of associated cash and cash equivalents (Note 28)	(335)	–	(335)	(264)	–	(264)
Total Infrastructure Investments net assets	336	290	626	300	296	596

+ The Group’s share of the results of joint ventures and associates is disclosed net of investment income, finance costs and taxation.

^ Including Ireland

1 Before non‑underlying items (Notes 2.10 and 10).

6 Profit/(loss) from operations

6.1 Profit/(loss) from operations is stated after charging/(crediting)

	2024	2023
	£m	£m
Depreciation of property, plant and equipment	31	28
Depreciation of right‑of‑use assets	60	57
Depreciation of investment properties	1	2
Amortisation of other intangible assets	10	12
Amortisation of contract fulfilment assets	27	15
Net (credit)/charge of trade receivables impairment provision	(6)	5
Profit on disposal of property, plant and equipment	(2)	(2)
Government grant income	(9)	(6)
Cost of inventory recognised as an expense	141	222
Auditor’s remuneration	6	6

6.2 Analysis of auditor’s remuneration

	2024	2023
	£m	£m
Services as auditor to the Company	0.8	0.8
Services as auditor to Group subsidiaries	4.4	4.3
Total audit fees	5.2	5.1
Audit‑related assurance fees	0.6	0.5
Total non-audit fees	0.6	0.5
Total fees in relation to audit and other services	5.8	5.6

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

7 Employee costs

7.1 Group

	2024	2023
Employee costs during the year	£m	£m
Wages and salaries	1,398	1,318
Redundancy costs	5	6
Social security costs	101	97
Pension costs (Note 31)	59	58
Share‑based payments (Note 36)	26	24
	1,589	1,503

	2024	2023
Average number of Group employees	Number	Number
Construction Services	11,971	12,069
Support Services	4,751	4,375
Infrastructure Investments	1,695	1,636
Corporate	151	146
	18,568	18,226

Detailed disclosures of items of remuneration, including those accruing under the Company’s

equity‑settled share‑based payment arrangements can be found within the Remuneration report on

pages 153 to 174.

7.2 Company

The Company did not have any employees and did not incur any employee costs in the year (2023:

£nil). Balfour Beatty Group Employment Ltd, which was established in February 2013, remains the

employing entity for the Balfour Beatty Group’s UK employees.

8 Investment income

	2024	2023
	£m	£m
Subordinated debt interest receivable	17	34
Interest receivable on PPP financial assets (Note 22)	2	2
Interest received on bank deposits	40	33
Other interest receivable and similar income	2	–
Impairment reversal of joint ventures and associates
– loans	17	–
– accrued interest	–	1
Net finance income on pension scheme assets and obligations (Note 31.2)	4	12
	82	82

9 Finance costs

	2024	2023
	£m	£m
Non‑recourse borrowings
– bank loans and overdrafts	12	11
US private placement
– finance cost	10	12
Interest on lease liabilities (Note 29)	7	6
Fair value loss on investment asset (Note 21)	2	1
Other interest payable
– committed facilities	2	3
– letter of credit fees	1	2
– other finance charges	4	5
Impairment of joint ventures and associates
– loans	2	9
– accrued interest	1	–
	41	49

The net impairment reversal of loans to joint ventures and associates and accrued interest receivable of

£14m (2023: £8m net impairment) relates to expected credit loss assessments performed. All of the

net impairment reversals relate to subordinated debt and accrued interest receivable from joint

ventures and associates held within the Infrastructure Investments segment.

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10 Non-underlying items

		2024	2023
		£m	£m
Items (charged against)/credited to profit
10.1	Amortisation of acquired intangible assets	(4)	(5)
10.2	Other non‑underlying items:
	– net release of provisions relating to Rail Germany	21	–
	– recognition of insurance recovery / (provision) in relation to rectification works on a development in London	43	(12)
	– provision recognised in relation to claims made under the Building Safety Act	(83)	–
	– charge recognised in relation to a claim received for a legacy project completed in 2012 in Texas	(52)	–
	Total other non‑underlying items	(71)	(12)
Charged against profit before taxation		(75)	(17)
10.3	Tax credit:
	– tax on amortisation of acquired intangible assets	1	3
	– tax on other items above	25	3
	Total tax credit	26	6
Charged against profit for the year		(49)	(11)

10.1 The amortisation of acquired intangible assets comprises: customer contracts £3m (2023: £4m); and customer relationships £1m (2023: £1m).

The charge was recognised in the following segments: Construction Services £1m (2023: £1m); and Infrastructure Investments £3m (2023: £4m).

10.2.1 In 2014, Rail Germany was reclassified from discontinued operations and has since been presented as part of the Group’s non‑underlying items within continuing operations in line with the Group’s

continued commitment to exit this part of the business.

In 2024, the two remaining contracts held within Rail Germany reached the end of their warranty periods resulting in the release of warranty provisions held in respect of these contracts. This release has been

credited to the Group’s income statement within non‑underlying, net of provision increases relating to certain legacy liabilities remaining within the business. This net credit of £21m was recognised in the

Construction Services segment.

10.2.2 In 2021, the Group recognised a provision of £42m within non‑underlying in relation to rectification work to be carried out on a development in London which was constructed by the Group between 2013

and 2016. The rectification work includes the replacement of stone panels affixed to the façade of the development to meet performance requirements as well as an estimate of any potential consequential

disruption to the development as a result of these rectification works. In 2023, the Group increased this provision to £54m following a reassessment of the rectification cost. The additional charge to the income

statement was also recognised in non‑underlying. The Group’s estimated provision did not include potential recoveries from third parties.

In 2024, rectification work continued to progress and is expected to complete in first half of 2025. In July 2024, the Group received confirmation from its insurers that the rectification work qualifies for insurance

coverage. Upon assessment of the interim cost by the insurer’s loss adjusters as well as receipt of cash for the first application for payment submitted by the Group for a portion of the cost incurred to date, the

Group has recognised an insurance recovery of £43m. The Group has presented this income within non‑underlying in line with the presentation adopted for the recognition of the provision.

Both the provision for the rectification work and the insurance coverage have been recognised within the Construction Services segment.

10.2.3 The Building Safety Act (BSA), which was introduced in 2022, extends the limitation for claims under the Defective Premises Act 1972 from 6 years to 30 years for dwellings completed before 28 June 2022.

Since the introduction of the BSA, the Group has conducted investigations and due diligence on claims received to establish whether an obligation exists and if costs can be reliably estimated. The Group has

recognised a provision where a probable obligation has been established and costs associated with the claim can be reliably estimated. Previously, the charge relating to this provision has been recognised

within the Group’s underlying results as the amounts recognised did not result in a distortion of the Group’s underlying results.

In 2024, following further developments and clarifications in the legal landscape of the BSA, progression of the Group’s investigation and due diligence as well as adjudications on claims received to date, the

Group has reassessed its provision for BSA claims resulting in an increase in the provision of £83m. The provision does not include potential recoveries from third parties. This increase has been recognised in

non‑underlying due to its size and the nature of the cost, which has arisen from a change in legislation.

This charge has been recognised in the Construction Services segment.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

10 Non-underlying items continued

10.2.4 In 2012, the Group, through a joint operation formed with Fluor Enterprises Inc. in which the

Group owns a 40% share, completed a contract with the North Texas Tollway Authority (NTTA) to

provide design and build services in relation to the extension of NTTA’s President George Bush

Turnpike Highway (SH161 in Texas). In October 2022, NTTA served the joint operation with a claim

demanding damages of an unquantified amount under various claims relating to alleged breaches of

contract and/or negligence in relation to retaining walls along the project. In November 2024, through a

jury verdict, damages were awarded against the joint operation in favour of NTTA amounting to $112m

(Group’s share). This jury verdict was substantially above the claim presented to the court of $77m

(Group’s share) comprising $8m expended to date and $69m for possible repair costs over the next 10

years. The NTTA has moved to enter the verdict as a judgement and is also requesting pre‑judgement

interest of $50m (Group’s share) plus legal costs. The joint operation has opposed the NTTA’s motion

and the court has yet to issue a decision on that motion with a court date set for 27 March 2025. The

Group believes that the jury verdict does not accurately reflect the evidence at trial and is evaluating all

options to set aside or reduce the verdict and, if necessary, appeal any final judgement. The appeal

would require a surety bond of $10m (Group share) to be provided in place of settling the judgement.

However, in light of the jury verdict, the Group has recognised a non‑underlying charge of £52m. This

charge, which is net of insurance recoveries of £40m for which the Group has received confirmation of

cover from its insurers, represents the Group’s best estimate of the probable damages to be awarded.

The Group maintains the view that these damages are a result of design elements of the contract

which were performed by subcontractors to the joint operation. The Group, together with its joint

operation partner, is pursuing recoveries from these subcontractors, however at this stage, the Group

has not recognised any potential recoveries from these parties.

This charge has been recognised in the Construction Services segment and has been included within

the Group’s non‑underlying results due to the size of the provision.

10.3.1 The amortisation of acquired intangible assets gave rise to a tax credit of £1m (2023: £3m credit).

10.3.2 The remaining non‑underlying items recognised in the Group’s operating profit gave rise to a

current tax credit of £25m (2023: £3m), of which £2m credit relates to net provision releases relating to

Rail Germany, £11m charge relates to the insurance recovery for rectification works on a development

in London, £21m credit relates to the increase in provision for BSA claims and £13m credit relates to

the charge recognised in relation to a claim received for a legacy project completed in 2012 in Texas.

11 Income taxes

11.1 Income tax charge/(credit)

		2024		2023
		Non-underlying
	Underlying	items
	items 1	(Note 10)	Total	Total
	£m	£m	£m	£m
Total UK tax	39	(10)	29	35
Total non‑UK tax	23	(16)	7	15
Total tax charge/(credit) x	62	(26)	36	50
UK current tax
– current tax	17	(10)	7	4
– adjustments in respect of previous periods	5	–	5	–
Non-UK current tax	22	(10)	12	4
– current tax	14	–	14	1
– adjustments in respect of previous periods	2	–	2	(3)
	16	–	16	(2)
Total current tax	38	(10)	28	2
UK deferred tax
– origination and reversal of temporary differences	22	–	22	30
– UK corporation tax rate change	–	–	–	2
– adjustments in respect of previous periods	(5)	–	(5)	(1)
Non-UK deferred tax	17	–	17	31
– origination and reversal of temporary
differences	10	(16)	(6)	16
– adjustments in respect of previous periods	(3)	–	(3)	1
	7	(16)	(9)	17
Total deferred tax	24	(16)	8	48
Total tax charge/(credit) x	62	(26)	36	50

x Excluding joint ventures and associates.

1 Before non‑underlying items (Notes 2.10 and 10).

The Group has recognised a £26m tax credit (2023: £6m) within non‑underlying items in the year.

Refer to Note 10.3.1 and 10.3.2.

The Group tax charge excludes amounts for joint ventures and associates (refer to Note 20.2),

except where tax is levied at the Group level.

In addition to the Group tax charge, tax of £36m has been credited (2023: £43m) directly to Group

other comprehensive income, comprising: a tax credit of £26m for subsidiaries (2023: £48m); and a

tax credit in respect of joint ventures and associates of £10m (2023: £5m charge). A tax credit of £4m

(2023: £nil) has been recognised directly in Group equity relating to share‑based payments comprising

a current tax credit of £2m (2023: £2m credit) and a deferred tax credit of £2m (2023: £2m charge).

Refer to Note 33.1.

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11 Income taxes continued

11.2 Income tax charge/(credit) reconciliation

	2024	2023
	£m	£m
Profit before taxation including share of results from joint ventures
and associates	214	244
Less: share of results of joint ventures and associates	(59)	(53)
Profit before taxation	155	191
Add: non‑underlying items charged excluding share of joint ventures
and associates	75	17
Underlying profit before taxation for subsidiaries 1	230	208
Tax on underlying profit before taxation at standard UK corporation tax
rate of 25% (2023: 23.5%)	58	49
Adjusted for the effects of:
Expenses not deductible for tax purposes and other permanent items	–	7
Non‑taxable disposals	–	(6)
Tax levied at Group level on share of joint ventures’ and associates’ profits #	3	3
Utilisation of other losses not previously recognised	(1)	(1)
Current year losses not recognised	1	–
Effect of tax rates in non‑UK jurisdictions	2	3
Recognition of UK deferred tax at 25%	–	2
Adjustments in respect of previous periods	(1)	(1)
Total tax charge on underlying profit	62	56
Add: tax credit in non‑underlying items (Note 10.3)	(26)	(6)
Total tax charge on profit from operations	36	50

# These are mainly in connection with US joint ventures and associates where tax is levied at the Group level rather than within the

share of joint ventures and associates.

1 Before non‑underlying items (Notes 2.10 and 10).

The Organisation for Economic Co‑operation and Development’s (OECD) released Pillar Two model

rules in December 2021 introducing a global minimum tax rate of 15% to address the tax concerns

about uneven profit distribution and tax contributions of large multinational corporations.

The Pillar Two top‑up tax rules were substantially enacted in the UK in 2023 with application from

1 January 2024. Having carried out a detailed assessment of the Pillar 2 rules and its application,

the Group has determined that no top‑up is owed for any of its operations globally, as it is subject

to taxes exceeding the global minimum in every jurisdiction in which it operates.

The Group has applied the temporary mandatory relief from deferred tax accounting for the impacts

of any top‑up tax and accounts for it as a current tax when it is incurred.

12 Earnings per share

Earnings

		2024		2023
	Basic	Diluted	Basic	Diluted
	£m	£m	£m	£m
Earnings	178	178	197	197
Amortisation of acquired intangible assets –
including tax credit of £1m (2023: £3m credit)	3	3	2	2
Other non‑underlying items – including tax
credit of £25m (2023: £3m credit)	46	46	9	9
Underlying earnings	227	227	208	208

		2024		2023
	Basic	Diluted	Basic	Diluted
	m	m	m	m
Weighted average number of ordinary shares	521	528	558	566

The basic earnings per ordinary share is calculated by dividing the profit for the year attributable

to equity holders by the weighted average number of ordinary shares outstanding during the year,

excluding treasury shares and shares held in the Employee Share Ownership Trust.

The diluted earnings per ordinary share uses an adjusted weighted average number of shares and

includes shares that are potentially outstanding in relation to the equity‑settled share‑based payment

arrangements detailed in Note 36.

Potential dilutive effect of ordinary shares issuable under equity‑settled share‑based payment

arrangements is 7m (2023: 8m).

Earnings per share

		2024		2023
	Basic	Diluted	Basic	Diluted
	pence	pence	pence	pence
Earnings per ordinary share	34.2	33.7	35.3	34.8
Amortisation of acquired intangible assets
after tax	0.6	0.6	0.4	0.4
Other non‑underlying items after tax	8.8	8.7	1.6	1.6
Underlying earnings per ordinary share	43.6	43.0	37.3	36.8

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

13 Dividends

		2024		2023
	Per share	Amount	Per share	Amount
	Pence	£m	Pence	£m
Proposed dividends for the year
Interim – current year	3.8	19	3.5	19
Final – current year	8.7	44 &	8.0	43
	12.5	63	11.5	62
Recognised dividends for the year
Final – prior year		42		39
Interim – current year		19		19
		61		58

& Amount dependent on number of shares on the register on 16 May 2025.

Subject to approval at the Annual General Meeting on 8 May 2025, the final 2024 dividend will be paid

on 2 July 2025 to holders on the register on 16 May 2025 by direct credit or, where no mandate has

been given, by cheque posted by 2 July 2025. The ordinary shares will be quoted ex‑dividend on

15 May 2025. The last date for Dividend Reinvestment Plan (DRIP) elections will be 11 June 2025.

14 Intangible assets – goodwill

			Accumulated
			impairment	Carrying
		Cost	losses	amount
		£m	£m	£m
At 1 January 2023	1,10	6	(230)	876
Currency translation differences		(37)	6	(31)
At 31 December 2023		1,069	(224)	845
Currency translation differences		5	4	9
At 31 December 2024		1,074	(220)	854

Carrying amounts of goodwill by segment

		2024			2023
	United	United		United	United
	Kingdom	States	Total	Kingdom	States	Total
	£m	£m	£m	£m	£m	£m
Construction
Services	260	468	728	260	460	720
Support Services	73	–	73	73	–	73
Infrastructure
Investments	–	53	53	–	52	52
Group	333	521	854	333	512	845

Carrying amounts of goodwill by cash-generating unit (CGU)

	2024		2023
		Pre-tax		Pre‑tax
		discount rate		discount rate
	£m	%	£m	%
UK Regional and Engineering Services	248	10.8%	248	10.7
Balfour Beatty Construction Group Inc	445	11.2%	437	11.1
Rail UK	68	11.2%	68	11.0
Balfour Beatty Investments US	53	11.2%	52	11.3
Other	40	10.9%	40	11.0
Group total	854		845

The recoverable amount of goodwill is based on value‑in‑use, a key input of which is forecast cash

flows. The Group’s cash flow forecasts are based on the expected future revenues and margins of

each CGU, giving consideration to the current level of confirmed and anticipated orders. Cash flow

forecasts for the next three years are based on the Group’s Three‑Year Plan, which covers the period

from 2025 to 2027. The cash flow forecasts for each CGU were compiled from each of its constituent

business units as part of the Group’s annual financial planning process.

The other key inputs in assessing each CGU are its long‑term growth rate and discount rate. The

discount rates have been calculated using the Weighted Average Cost of Capital (WACC) method,

which takes account of the Group’s capital structure (financial risk) as well as the nature of each CGU’s

business (operational risk). Long‑term growth rates are assumed to be the estimated future GDP

growth rates based on published independent forecasts for the country or countries in which each

CGU operates, less 1.0% to reflect current economic uncertainties and their consequent estimated

effect on public sector spending on infrastructure.

In the derivation of each CGU’s value‑in‑use, a terminal value is assumed based on a multiple of

earnings before interest and tax. The multiple is applied to a terminal cash flow, which is the

normalised cash flow in the last year of the forecast period. However, due to the long‑term nature

and the degree of predictability of some contracts within Balfour Beatty Investments US, the forecast

period used in the derivation of this CGU’s value‑in‑use extends beyond the Group’s three‑year cash

flow forecast period in line with the duration of the contracts disclosed in Note 42(e). The EBIT multiple

is calculated using the Gordon Growth Model and is a factor of the discount rate and growth rate for

each CGU. The nominal terminal value is discounted to present value.

219Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

14 Intangible assets – goodwill continued

		2024			2023
			Nominal			Nominal
			long-term			long‑term
		Real growth	growth rate		Real growth	growth rate
	Inflation rate	rate	applied x	Inflation rate	rate	applied x
	%	%	%	%	%	%
UK Regional and Engineering Services	2.4	1.2	3.6	2.8	1.1	3.9
Balfour Beatty
Construction Group
Inc	2.2	1.7	3.9	2.2	1.7	3.9
Rail UK	2.4	1.2	3.6	2.8	1.1	3.9
Balfour Beatty
Investments US	2.2	1.7	3.9	2.2	1.7	3.9
Other	2.3	1.5	3.8	2.6	1.3	3.9

x These nominal long‑term growth rates are reduced by 1.0% when performing goodwill assessments to reflect current economic

uncertainties and their consequent estimated effect on public sector spending on infrastructure.

Sensitivities

The Group’s impairment review is sensitive to changes in the key assumptions used. The major

assumptions that result in significant sensitivities are the discount rate and the long‑term growth rate,

and for certain CGUs, changes to underlying cash projections.

A reasonable possible change in key assumptions would not give rise to an impairment in any of the

Group’s CGUs.

15 Intangible assets – other

				Infrastructure
	Customer	Customer	Brand	Investments	Software
	contracts	relationships	names	intangibles	and other	Total
	£m	£m	£m	£m	£m	£m
Cost or valuation
At 1 January 2023	244	55	3	237	129	668
Currency translation
differences	(14)	(3)	–	–	(1)	(18)
Additions	–	–	–	30	–	30
Fair value movement
on loan associated
with intangible asset	–	–	–	(19)	–	(19)
At 31 December 2023	230	52	3	248	128	661
Currency translation
differences	4	1	–	–	–	5
Reclassified to service
concession contract
asset (Note 16)	–	–	–	(11)	–	(11)
At 31 December 2024	234	53	3	237	128	655
Accumulated
amortisation
At 1 January 2023	(189)	(48)	(3)	(13)	(123)	(376)
Currency translation
differences	11	3	–	–	1	15
Charge for the year	(4)	(1)	–	(5)	(2)	(12)
At 31 December 2023	(182)	(46)	(3)	(18)	(124)	(373)
Currency translation
differences	(3)	(1)	–	–	–	(4)
Charge for the year	(3)	(1)	–	(5)	(1)	(10)
At 31 December 2024	(188)	(48)	(3)	(23)	(125)	(387)
Carrying amount
At 31 December 2024	46	5	–	214	3	268
At 31 December 2023	48	6	–	230	4	288

Intangible assets are amortised on a straight‑line basis over their expected useful lives, which are one

to four years for customer contracts, three to ten years for customer relationships, three to seven years

for software, and up to five years for brand names, except for customer contracts and relationships

relating to Balfour Beatty Investments North America which are amortised on a basis matching the

returns earned over the life of the underlying contracts and relationships of up to 50 years.

The Infrastructure Investments intangible assets are amortised on a straight‑line basis over the life

of the projects, which is 50 years.

Other intangible assets are amortised over periods up to 10 years.

220

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

16 Service concession contract asset

	Total cost
	£m
Reclassified from intangible assets – other (Note 15)	11
Additions	56
Reclassify arrangement fee to borrowings (Note 34.3)	(3)
Amortisation of fair value adjustment on service concession
loan (Note 34.3)	5
At 31 December 2024	69

Service concession contract asset of £69m relates to University of Sussex’s West Slope student

accommodation project which features demand risk under IFRIC 12 Service Concession Arrangements.

This has been classified as a service concession contract asset whilst the asset is in the construction

phase. Construction of the student accommodation commenced in December 2023 and is anticipated

to complete in 2028. In the year, construction spend was £56m (2023: £30m).

In 2023, a fair value movement of £19m was recognised against the value of the asset, which will

unwind over the course of the construction phase. The unwind in 2024 amounted to £5m.

This service concession asset was previously presented within Intangible assets – Other in 2023 and

has not been re‑presented in the comparative period as the Directors do not consider this to be material.

17 Property, plant and equipment

			Assets in
	Land and	Plant and	the course of
	buildings	equipment	construction	Total
	£m	£m	£m	£m
Cost or valuation
At 1 January 2023	57	277	1	335
Currency translation differences	(1)	(5)	–	(6)
Transfers	–	1	(1)	–
Additions	4	48	14	66
Reclassified from right‑of‑use assets (Note 18)	4	–	–	4
Removal of fully depreciated assets/assets
scrapped	(3)	(5)	–	(8)
Disposals	–	(15)	–	(15)
At 31 December 2023	61	301	14	376
Currency translation differences	1	1	–	2
Transfers	–	4	(4)	–
Additions	2	19	7	28
Removal of fully depreciated assets/assets scrapped	(1)	(5)	–	(6)
Disposals	–	(16)	–	(16)
At 31 December 2024	63	304	17	384
Accumulated depreciation
At 1 January 2023	(43)	(188)	–	(231)
Currency translation differences	1	3	–	4
Charge for the year	(4)	(24)	–	(28)
Removal of fully depreciated assets/assets
scrapped	3	5	–	8
Reclassified from right‑of‑use assets (Note 18)	(1)	–	–	(1)
Disposals	–	13	–	13
At 31 December 2023	(44)	(191)	–	(235)
Currency translation differences	–	(1)	–	(1)
Charge for the year	(4)	(27)	–	(31)
Removal of fully depreciated assets/assets scrapped	1	5	–	6
Disposals	–	13	–	13
At 31 December 2024	(47)	(201)	–	(248)
Carrying amount
At 31 December 2024	16	103	17	136
At 31 December 2023	17	110	14	141

Except for land and assets in the course of construction, the costs of property, plant and equipment

are depreciated on a straight‑line basis over their expected useful lives. Buildings are depreciated at

2.5% per annum and plant and equipment is depreciated at 4% to 33% per annum.

221Balfour Beatty plc | Annual Report and Accounts 2024

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18 Right-of-use assets

	Land and	Plant and	Motor
	buildings	equipment	vehicles	Total
	£m	£m	£m	£m
Cost or valuation
At 1 January 2023	95	46	106	247
Currency translation differences	(3)	(1)	–	(4)
Additions	11	16	47	74
Removal of fully depreciated assets/assets scrapped	(6)	(4)	(14)	(24)
Reclassified to property, plant and equipment
(Note 17)	(4)	–	–	(4)
Lease modification	–	–	(1)	(1)
Disposals	(4)	(2)	(10)	(16)
At 31 December 2023	89	55	128	272
Currency translation differences	1	–	–	1
Additions	15	19	47	81
Removal of fully depreciated assets/assets scrapped	(11)	(7)	(12)	(30)
Transfers	–	15	(15)	–
Disposals	(2)	(2)	(12)	(16)
At 31 December 2024	92	80	136	308
Accumulated depreciation
At 1 January 2023	(40)	(20)	(60)	(120)
Currency translation differences	1	1	–	2
Charge for the year	(18)	(11)	(28)	(57)
Removal of fully depreciated assets/assets scrapped	6	4	14	24
Reclassified to property, plant and equipment
(Note 17)	1	–	–	1
Disposals	4	1	8	13
At 31 December 2023	(46)	(25)	(66)	(137)
Charge for the year	(15)	(13)	(32)	(60)
Removal of fully depreciated assets/assets scrapped	11	7	12	30
Transfers	–	(10)	10	–
Disposals	1	1	10	12
At 31 December 2024	(49)	(40)	(66)	(155)
Carrying amount
At 31 December 2024	43	40	70	153
At 31 December 2023	43	30	62	135

19 Investment properties

		Accumulated	Carrying
	Cost	depreciation	amount
	£m	£m	£m
At 1 January 2023	35	(8)	27
Currency translation differences	(1)	–	(1)
Additions	42	–	42
Depreciation charge for the year	–	(2)	(2)
At 31 December 2023	76	(10)	66
Additions	36	–	36
Depreciation charge for the year	–	(1)	(1)
At 31 December 2024	112	(11)	101

Investment properties are held by the Group to generate rental income and capital appreciation.

The Group has chosen to account for its investment property assets under the cost method. In 2024,

the Group acquired a new student accommodation property in Denton, Texas, for £36m. The Group

has non‑recourse project‑specific financing amounting to £73m (2023: £48m), which is secured

through floating charges over the properties.

Once a property is ready for use, the Group ceases capitalisation of interest cost and commences

depreciation on the property, on a straight‑line basis over 25 years. The Group generated £10m (2023: £7m)

of rental income from its investment properties.

222

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

20 Investments in joint ventures and associates

20.1 Movements

	Net
	assets +	Loans ^	Total
	£m	£m	£m
At 1 January 2023	320	106	426
Currency translation differences	(16)	–	(16)
Income recognised	53	–	53
Fair value revaluation of PPP financial assets (Note 33.1)	20	–	20
Fair value revaluation of cash flow hedges (Note 33.1)	2	–	2
Actuarial movements on retirement benefit assets/liabilities
(Note 33.1)	(1)	–	(1)
Tax on items taken directly to other comprehensive income
(Note 33.1)	(5)	–	(5)
Dividends	(60)	–	(60)
Additions	14	–	14
Disposal of Gloucester Waste (Note 35.3)	(7)	(24)	(31)
Return of equity	(4)	–	(4)
Impairment of loans to joint ventures and associates (Note 9)	–	(9)	(9)
At 31 December 2023	316	73	389
Currency translation differences	4	–	4
Income recognised	59	–	59
Fair value revaluation of PPP financial assets (Note 33.1)	(48)	–	(48)
Fair value revaluation of cash flow hedges (Note 33.1)	10	–	10
Tax on items taken directly to other comprehensive income
(Note 33.1)	10	–	10
Dividends	(71)	–	(71)
Additions	15	–	15
Acquisition of DTO (Note 35.1)	6	–	6
Transfer movement in negative investment in joint venture
to provisions (Note 27)	(3)	–	(3)
Loans repaid	–	(1)	(1)
Net impairment reversal of loans to joint ventures and associates (Note 8)	–	15	15
At 31 December 2024	298	87	385

+ Includes goodwill and intangible assets arising on acquisition of the Group’s interests in investments in joint ventures and

associates.

^ Loans include subordinated debt receivable from joint ventures and associates within the Infrastructure Investments segment.

The principal joint ventures and associates are shown in Note 42.

The amount of the Group’s share of borrowings of joint ventures and associates which was supported

by the Group and the Company was £nil (2023: £nil).

The non‑recourse borrowings of joint venture and associate entities relating to infrastructure

concessions projects are repayable over periods extending up to 2057. The non‑recourse borrowings

arise under facilities taken out by project‑specific joint venture and associate concession companies.

The borrowings of each concession company are secured by a combination of fixed and floating

charges over that concession company’s interests in its project’s assets and revenues and the shares

in the concession company held by its immediate parent company. A significant part of these loans has

been swapped into fixed rate debt by the use of interest rate swaps.

As disclosed in Note 42(f), the Group has committed to provide its share of further equity funding of

joint ventures and associates in Infrastructure Investments’ projects and military housing concessions.

Further, in respect of a number of these investments the Group has committed not to dispose of its

equity interest until construction is complete. As is customary in such projects, banking covenants

restrict the payment of dividends and other distributions.

223Balfour Beatty plc | Annual Report and Accounts 2024

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20 Investments in joint ventures and associates continued

20.2 Share of results and net assets of joint ventures and associates

				2024						2023
				Infrastructure Investments						Infrastructure Investments
	Construction	Support		North			Construction	Support		North
	Services	Services	UK ^	America	Total	Total	Services	Services	UK ^	America	Total	Total
Income statement	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	1,569	–	104	108	212	1,781	1,386	–	103	113	216	1,602
Operating profit excluding gain on disposals of interests in investments	40	–	33	17	50	90	33	–	2	21	23	56
Gain on disposals of interests in investments	–	–	–	–	–	–	–	–	–	2	2	2
Operating profit	40	–	33	17	50	90	33	–	2	23	25	58
Investment income	9	–	66	15	81	90	10	–	74	16	90	100
Finance costs	(1)	–	(61)	(23)	(84)	(85)	(1)	–	(73)	(25)	(98)	(99)
Profit before taxation	48	–	38	9	47	95	42	–	3	14	17	59
Taxation	(7)	–	(11)	–	(11)	(18)	(6)	–	–	–	–	(6)
Profit after taxation from joint
ventures and associates	41	–	27	9	36	77	36	–	3	14	17	53
Adjustment for expected credit losses
at Group level	–	–	(18)	–	(18)	(18)	–	–	–	–	–	–
Profit after taxation	41	–	9	9	18	59	36	–	3	14	17	53

^ Including Ireland.

224

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

				2024							2023
				Infrastructure Investments							Infrastructure Investments
	Construction	Support		North			Construction	Support			North
	Services	Services	UK ^	America	Total	Total	Services	Services		UK ^	America	Total		Total
Balance sheet	£m	£m	£m	£m	£m	£m	£m	£m		£m	£m	£m		£m
Non-current assets
Intangible assets
– Infrastructure Investments	–	–	13	–	13	13	–	–		14	–	14		14
– other	9	–	11	1	12	21	–	–		12	–	12		12
Property, plant and equipment	24	–	–	39	39	63	21	–		–	–	–		21
Investment properties	–	–	–	173	173	173	–	–		–	232	232		232
Investments in joint ventures
and associates	4	1	–	–	–	5	7	–		–	–	–		7
Money market funds	–	–	–	1	1	1	–	–		–	44	44		44
PPP financial assets	–	–	833	266	1,099	1,099	–	–		905	244	1,149	1,14	9
Military housing projects	–	–	–	116	116	116	–	–		–	113	113		113
Other non‑current assets	115	–	23	8	31	146	107	–		24	13	37		144
Current assets
Cash and cash equivalents	334	–	158	24	182	516	340	–		146	20	166		506
Other current assets	395	–	87	2	89	484	310	3		55	5	60		373
Total assets	881	1	1,125	630	1,755	2,637	785	3	1,15	6	671	1,827		2,615
Current liabilities
Borrowings – non‑recourse	–	–	(35)	–	(35)	(35)	–	–		(36)	–	(36)		(36)
Other current liabilities	(607)	(1)	(172)	(5)	(177)	(785)	(549)	(3)		(158)	(30)	(188)		(740)
Non-current liabilities
Borrowings – non‑recourse	(104)	–	(750)	(438)	(1,188)	(1,292)	(94)	–		(767)	(461)	(1,228)		(1,322)
Other non‑current liabilities	(116)	–	(149)	–	(149)	(265)	(90)	–		(147)	(5)	(152)		(242)
Total liabilities	(827)	(1)	(1,106)	(443)	(1,549)	(2,377)	(733)	(3)		(1,108)	(496)	(1,604)		(2,340)
Net assets	54	–	19	187	206	260	52	–		48	175	223		275
Goodwill	32	–	–	–	–	32	31	–		–	–	–		31
Reclassify negative investment
to provisions	7	–	–	–	–	7	10	–		–	–	–		10
Loans to joint ventures and associates	–	–	86	–	86	86	–	–		73	–	73		73
Total investment in joint ventures
and associates	93	–	105	187	292	385	93	–		121	175	296		389

^ Including Ireland.

The Group’s investment in military housing joint ventures’ and associates’ projects is recognised at its remaining equity investment plus the value of the Group’s accrued returns from the underlying projects.

The military housing joint ventures and associates have total non‑recourse net borrowings of £2,053m (2023: £2,090m). Note 42(e) details the Group’s military housing projects.

20 Investments in joint ventures and associates continued

20.2 Share of results and net assets of joint ventures and associates continued

225Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

20 Investments in joint ventures and associates continued

20.2 Share of results and net assets of joint ventures and associates continued

On certain Infrastructure Investments concessions where net fair value revaluations of PPP financial

assets and cash flow hedges resulted in the Group’s carrying value of these investments being

negative, the Group has not recognised losses beyond the carrying value of its investments. This is

because the Group has not committed to provide any further funding to these investments and the

borrowings within these concessions are non‑recourse to the Group. At 31 December 2024, the

unrecognised cumulative net fair value charges to other comprehensive income amounted to £56m

(2023: £66m).

20.3 Aggregate information of joint ventures and associates

		2024			2023
	Joint			Joint
	ventures	Associates	Total	ventures	Associates	Total
	£m	£m	£m	£m	£m	£m
The Group’s share of profit from operations	47	12	59	42	11	53
The Group’s share of other comprehensive income	(25)	–	(25)	2	(2)	–
Aggregate carrying amount of the Group’s interest	269	116	385	276	113	389

20.4 Details of material joint ventures

	Gammon China Ltd			Connect Plus (M25) Ltd
	2024	2023	2024	2023
	£m	£m	£m	£m
Proportion of the Group’s ownership
interest in the joint venture	50%	50%	15%	15%
Income statement
Revenue	3,099	2,715	223	231
Underlying operating profit^	74	65	20	20
Investment income	19	21	149	146
Finance costs	(2)	(3)	(99)	(101)
Income tax charge	(13)	(12)	(18)	(15)
Profit	78	71	52	50
Total other comprehensive(loss)/income	(2)	–	(58)	18
Total comprehensive income/(loss) (100%)	76	71	(6)	68
Group’s share of total comprehensive income/(loss)	38	36	(1)	10
Dividends received by the Group during the year	39	36	5	5

	Gammon China Ltd			Connect Plus (M25) Ltd
	2024	2023	2024	2023
Balance sheet	£m	£m	£m	£m
Non-current assets	289	270	1,556	1,682
Current assets
Cash and cash equivalents	632	654	128	123
Other current assets	775	613	78	74
	1,407	1,267	206	197
Current liabilities
Trade and other payables	(1,010)	(897)	(59)	(64)
Provisions	(45)	(49)	–	–
Borrowings – non‑recourse	–	–	(19)	(19)
Other current liabilities	(79)	(101)	(14)	(10)
	(1,134)	(1,047)	(92)	(93)
Non-current liabilities
Trade and other payables	(172)	(126)	–	–
Provisions	(39)	(33)	–	–
Borrowings – non‑recourse	(209)	(189)	(1,097)	(1,137)
Other non‑current liabilities (including
shareholder loans)	(21)	(20)	(382)	(419)
	(441)	(368)	(1,479)	(1,556)
Net assets (100%)	121	122	191	230
Reconciliation of the above summarised financial
information to the carrying amount of the interest in the above joint ventures recognised in the consolidated financial statements:
Net assets of joint venture (100%)	121	122	191	230
Group’s share of net assets	61	61	29	35
Add: Group’s interest in shareholder loans	–	–	26	26
Goodwill	32	31	–	–
Carrying amount of the Group’s interest
in the joint venture	93	92	55	61

^ Includes depreciation charge of £14m (2023: £18m) and amortisation charge of £12m (2023: £12m) for Gammon China Ltd.

There were no depreciation or amortisation charges for Connect Plus (M25) Ltd (2023: £nil).

226

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

20 Investments in joint ventures and associates continued

20.5 Cash flow from/(to) joint ventures and associates

		Infrastructure Investments				Infrastructure Investments
		North				North
	UK ^	America	Other	Total	UK ^	America	Other	Total
	2024	2024	2024	2024	2023	2023	2023	2023
Cash flows from investing activities	£m	£m	£m	£m	£m	£m	£m	£m
Dividends from joint ventures and associates	10	16	45	71	9	15 +	36	60
Subordinated debt interest received	7	–	–	7	7	–	–	7
Investments in and loans to joint ventures and associates	(1)	(13)	(6)	(20)	(9)	(5)	–	(14)
Equity	(2)	(13)	–	(15)	(9)	(5)	–	(14)
Acquisition of DTO (Note 35.1)	–	–	(6)	(6)	–	–	–	–
Subordinated debt repaid	1	–	–	1	–	–	–	–
Return of equity from joint ventures and associates	–	–	–	–	–	4 +	–	4
Net cash flow from joint ventures and associates	16	3	39	58	7	14	36	57

^ Including Ireland.

+ In 2023, dividends and return of equity from joint ventures and associates included £1m and £4m respectively of proceeds generated from the disposal of Moretti Apartments.

20.6 Share of reserves of joint ventures and associates

			PPP	Currency
	Accumulated	Hedging	financial	translation	Total
	profit/(loss)	reserve	assets	reserve	(Note 33.1)
	£m	£m	£m	£m	£m
At 1 January 2023	(34)	(30)	(14)	58	(20)
Currency translation differences	–	–	–	(13)	(13)
Income recognised	53	–	–	–	53
Fair value revaluation of PPP financial assets	–	–	20	–	20
Fair value revaluation of cash flow hedges	–	2	–	–	2
Actuarial movements on retirement benefit assets/liabilities	(1)	–	–	–	(1)
Tax on items taken directly to other comprehensive income	–	(1)	(4)	–	(5)
Dividends	(60)	–	–	–	(60)
Recycling of revaluation reserves to the income statement on disposal	–	(9)	6	–	(3)
At 31 December 2023	(42)	(38)	8	45	(27)
Currency translation differences	–	–	–	3	3
Income recognised	59	–	–	–	59
Fair value revaluation of PPP financial assets	–	–	(48)	–	(48)
Fair value revaluation of cash flow hedges	–	10	–	–	10
Tax on items taken directly to other comprehensive income	–	(2)	12	–	10
Dividends	(71)	–	–	–	(71)
At 31 December 2024	(54)	(30)	(28)	48	(64)

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

21 Investments

21.1 Group

	Corporate	Investments in
	bonds	mutual funds	Other	Total
	£m	£m	£m	£m
At 1 January 2023	2	20	18	40
Additions	–	–	2	2
Fair value gains/(losses)	–	1	(1)	–
Maturities	(2)	–	(7)	(9)
Interest accrued	–	1	–	1
Benefits paid	–	(3)	–	(3)
Dividends	–	–	(3)	(3)
At 31 December 2023	–	19	9	28
Currency translation differences	–	1	–	1
Fair value gains/(losses)	–	2	(2)	–
Interest accrued	–	1	–	1
Disposals	–	–	(2)	(2)
Benefits paid	–	(3)	–	(3)
Dividends	–	–	(1)	(1)
At 31 December 2024	–	20	4	24

The investments in mutual funds comprise holdings in a number of funds, based on employees’

investment elections, in respect of the deferred compensation obligations of the Group as disclosed in

Note 31.2. The fair value of these investments is £19m (2023: £19m), determined by the market price

of the funds at the reporting date.

Other investments relate to the Group’s interest in two Limited Partnerships (LPs) incorporated in Bermuda.

The principal activity of the two LPs is to receive carried interest from a fund. Carry interest refers to a

performance fee payable once the performance of the fund exceeds agreed hurdles. During the year,

the Group recognised £2m fair value loss in relation to its carry interest (2023: £1m). The fund matured

in January 2025, with one remaining asset to be disposed. All gains will be realised by the final

maturity date. Dividends of £1m were received from the fund in the year (2023: £3m).

21.2 Company

	2024	2023
	£m	£m
Investment in subsidiaries	1,779	1,771
Provisions	(26)	(26)
	1,753	1,745

The increase of investment in subsidiaries of £8m (2023: £12m) relates to new capital injected into the

Company’s existing subsidiaries. Including provisions recognised to date, the Directors have assessed

the Company’s investment in subsidiaries to be fully recoverable.

22 PPP financial assets

	Economic	Social
	infrastructure	infrastructure	Total
	£m	£m	£m
At 1 January 2023	21	5	26
Income recognised in the income statement:
– interest income (Note 8)	2	–	2
Other movements:
– cash expenditure	2	–	2
– cash received	(6)	–	(6)
At 31 December 2023	19	5	24
Income recognised in the income statement:
– interest income (Note 8)	2	–	2
Losses recognised in the statement of comprehensive income:
– fair value movements	(1)	(1)	(2)
Other movements:
– cash expenditure	3	2	5
– cash received	(6)	(2)	(8)
At 31 December 2024	17	4	21

Assets constructed by PPP subsidiary concession companies are classified as financial assets

measured at fair value through OCI and are denominated in sterling. The maximum exposure to credit

risk at the reporting date is the fair value of the PPP financial assets.

There were no impairment provisions in 2024 or 2023.

228

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

23 Inventories

	2024	2023
	£m	£m
Raw materials and consumables	95	69
Development and housing land and work in progress	63	54
Finished goods and goods for resale	–	1
	158	124

24 Contract balances

The timing of revenue recognition, billings and cash collection results in trade receivables (billed

amounts), contract assets (unbilled amounts) and customer advances and deposits (contract liabilities)

on the Group’s balance sheet. For services in which revenue is earned over time, amounts are billed in

accordance with contractual terms, either at periodic intervals or upon achievement of contractual

milestones. The timing of revenue recognition is measured in accordance with the progress of delivery

on a contract which could either be in advance or in arrears of billing, resulting in either a contract asset

or a contract liability.

24.1 Contract assets

	£m
At 1 January 2023	300
Currency translation differences	(4)
Transfers from contract assets recognised at the beginning of the year to receivables	(241)
Increase related to services provided in the year	265
Reclassified from contract liabilities (Note 24.2)	(11)
Impairments on contract assets recognised at the beginning of the year	(9)
At 31 December 2023	300
Currency translation differences	3
Transfers from contract assets recognised at the beginning of the year to receivables	(220)
Increase related to services provided in the year	168
Reclassified from contract liabilities (Note 24.2)	(16)
Impairments on contract assets recognised at the beginning of the year	(6)
At 31 December 2024	229

24.2 Contract liabilities

	£m
At 1 January 2023	(665)
Currency translation differences	19
Revenue recognised against contract liabilities at the beginning of the year	561
Increase due to cash received, excluding amounts recognised as revenue during the year	(528)
Reclassified to contract assets (Note 24.1)	11
At 31 December 2023	(602)
Currency translation differences	(6)
Revenue recognised against contract liabilities at the beginning of the year	537
Increase due to cash received, excluding amounts recognised as revenue during the year	(644)
Reclassified to contract assets (Note 24.1)	16
At 31 December 2024	(699)

The amount of revenue recognised in the year from performance obligations satisfied (or partially

satisfied) in previous periods amounted to £2m (2023: £4m).

229Balfour Beatty plc | Annual Report and Accounts 2024

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25 Trade and other receivables

	Group	Group	Company	Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Current
Trade receivables	616	484	–	–
Less: provision for impairment of trade
receivables	(2)	(8)	–	–
	614	476	–	–
Due from joint ventures and associates	16	16	–	–
Due from joint operation partners	5	4	–	–
Contract fulfilment assets	17	19	–	–
Contract retentions receivable	242	227	–	–
Accrued income	12	13	–	–
Prepayments	65	57	–	–
Other receivables +	128	82	1	1
	1,099	894	1	1
Non-current
Due from subsidiaries	–	–	367	279
Due from joint ventures and associates	123	111	1	1
Contract fulfilment assets	34	40	–	–
Contract retentions receivable	102	150	–	–
Other receivables +	67	7	2	3
	326	308	370	283
Total trade and other receivables	1,425	1,202	371	284
Comprising
Financial assets (Note 41)	1,360	1,145	371	284
Non‑financial assets – prepayments	65	57	–	–
	1,425	1,202	371	284

+ Includes insurance recoveries recognised in relation to rectification works on a development in London (Note 10.2.2) and in relation

to a claim received for a legacy project completed in 2012 in Texas (Note 10.2.4).

Based on prior experience, an assessment of the current economic environment and a review of

the financial circumstances of individual customers, the Directors believe no further credit risk

provision is required in respect of the financial assets above.

The Directors consider that the carrying values of current and non‑current trade and other receivables

approximate their fair values.

Amounts due from subsidiaries of the Company are repayable on demand and have been adjusted

for expected credit losses, which are not material.

Maturity profile of impaired trade receivables and trade receivables past due but not impaired

	Impaired			Past due but not impaired
	Group	Group	Group	Group
	2024	2023	2024	2023
	£m	£m	£m	£m
Up to three months	–	4	36	26
Three to six months	–	–	7	7
Six to nine months	–	1	4	6
Nine to 12 months	–	1	1	5
More than 12 months	2	2	28	10
	2	8	76	54

At 31 December 2024, trade receivables of £76m (2023: £54m) were past due but not impaired.

These relate to a number of individual customers where there is no reason to believe that the

receivable is not recoverable.

230

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

26 Trade and other payables

	Group	Group	Company	Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Current
Trade and other payables	625	602	–	–
Accruals	813	788	3	3
Contract retentions payable	230	213	–	–
VAT, payroll taxes and social security	108	131	–	–
Due to joint ventures and associates	2	–	–	–
Due to subsidiaries	–	–	655	588
	1,778	1,734	658	591
Non-current
Accruals	10	9	–	–
Contract retentions payable	75	104	–	–
Due to joint ventures and associates	3	9	–	3
Borrowings from subsidiaries	–	–	274	271
	88	122	274	274
Total trade and other payables	1,866	1,856	932	865
Comprising
Financial liabilities (Note 41)	1,734	1,708	932	865
Non‑financial liabilities:
– accruals not at amortised cost	24	17	–	–
– VAT, payroll taxes and social security	108	131	–	–
	1,866	1,856	932	865

Borrowings from subsidiaries include a loan to the Company from Balfour Beatty Overseas Investments Limited. The loan matures in December 2033 and bears interest at 1.35% plus SONIA. Amounts due to

the Company’s subsidiaries are repayable on demand.

Maturity profile of the Group’s non-current financial liabilities at 31 December

			2024				2023
		Contract	Due to joint			Contract	Due to joint
		retentions	ventures and			retentions	ventures and
	Accruals	payable	associates	Total	Accruals	payable	associates	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Due within one to two years	5	39	1	45	5	81	3	89
Due within two to five years	5	36	1	42	4	23	1	28
Due after more than five years	–	–	1	1	–	–	5	5
	10	75	3	88	9	104	9	122

The Directors consider that the carrying values of current and non‑current trade and other payables and contract retentions payable approximate their fair values. The fair value of non‑current trade and other

payables and contract retentions payable has been determined by discounting future cash flows using yield curves and exchange rates prevailing at the reporting date.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

27 Provisions

	Contract	Employee	Other
	provisions	provisions	provisions	Total
	£m	£m	£m	£m
At 1 January 2023	335	33	33	401
Currency translation differences	(3)	–	(1)	(4)
Charged/(credited) to the income statement:
– additional provisions	170	9	4	183
– unused amounts reversed	(59)	(2)	–	(61)
Utilised during the year	(91)	(7)	(4)	(102)
At 31 December 2023	352	33	32	417
Currency translation differences	1	–	–	1
Reclassified to accruals	1	–	1	2
Transfers	(10)	–	10	–
Charged/(credited) to the income statement:
– additional provisions	365	9	13	387
– unused amounts reversed	(54)	(3)	(7)	(64)
Utilised during the year	(113)	(7)	(3)	(123)
Transfer movement in negative investment in joint venture to provisions (Note 20.1)	–	–	(3)	(3)
At 31 December 2024	542	32	43	617

			2024				2023
	Contract	Employee	Other		Contract	Employee	Other
	provisions	provisions	provisions	Total	provisions	provisions	provisions	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Due within one year	214	7	18	239	190	8	18	216
Due within one to two years	196	6	5	207	97	4	7	108
Due within two to five years	105	6	12	123	49	10	4	63
Due after more than five years	27	13	8	48	16	11	3	30
	542	32	43	617	352	33	32	417

Contract provisions include construction insurance liabilities, principally in the Group’s self‑insurance arrangements, which cover claims relating to contractors all risk, public liability and professional indemnity.

Contract provisions also include loss provisions, and defect and warranty provisions on contracts, primarily construction contracts, that have reached practical completion. There is a latent defect period for

which the provision is held, but where there are known identified issues then the provision may be required to cover rectification work over a more extended period. Contract provisions also include provisions

made for Building Safety Act claims received (refer to Note 10.2.3) and the provision in relation to the claim relating to a legacy project completed in 2012 in Texas (refer to Note 10.2.4). These provisions are also

subject to significant estimation uncertainties with regards to quantum and timing (refer to Note 2.28(d)).

Employee provisions are principally liabilities relating to employers’ liability insurance retained in the Group’s self‑insurance arrangements.

Other provisions principally comprise: motor and other insurance liabilities in the Group’s self‑insurance arrangements; legal claims and costs, where provision is made for the Directors’ best estimate of known

legal claims, investigations and legal actions in progress; and environmental provisions.

The Group takes actuarial advice when establishing the level of provisions in the Group’s self‑insurance arrangements and certain other categories of provision. Insurance‑related provisions within these

categories were £71m (2023: £70m) as follows: Contract provisions £50m (2023: £49m); Employee provisions £15m (2023: £16m); and Other, mainly motor, provisions £6m (2023: £5m).

232

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

28 Cash and cash equivalents and borrowings

28.1 Group

		2024				2023
	Current	Non-current	Total		Current	Non‑current	Total
	£m	£m	£m		£m	£m	£m
Unsecured borrowings at amortised cost
– bank overdrafts	(185)	–	(185)		(104)	–	(104)
– US private placement (Note 28.2)	–	(165)	(165)		–	(162)	(162)
	(185)	(165)	(350)		(104)	(162)	(266)
Cash and deposits at amortised cost	1,084	–	1,084		890	–	890
Term deposits at amortised cost	209	–	209		218	–	218
Cash and cash equivalents (excluding infrastructure concessions)	1,293	–	1,293	1,10	8	–	1,108
	1,108	(165)	943		1,004	(162)	842
Non‑recourse infrastructure concessions project finance loans at amortised cost with final maturity between 2025 and 2072	(11)	(589)	(600)		(9)	(561)	(570)
Infrastructure concessions cash and cash equivalents	265	–	265		306	–	306
	254	(589)	(335)		297	(561)	(264)
Net cash/(borrowings)	1,362	(754)	608		1,301	(723)	578

The Company, together with certain of its UK and US subsidiaries, operates notional pooling facilities with main relationship UK and US clearing banks where overdraft balances are offset with cash balances and

interest is calculated on a net basis. During the year ended 31 December 2024, the Group maintained a net cash position on these pooling facilities, so there was no interest payable to the bank in respect of

these bank overdrafts. Overdraft balances and cash held at these banks have been reported gross in the Group balance sheet at 31 December 2024 as there was no legal right of offset and no intention to settle

the bank overdrafts at that date.

The loans relating to project finance arise under non‑recourse facilities taken out by project‑specific subsidiary companies. The loans of each company are secured by a combination of fixed and floating charges

over that company’s interests in its project’s assets and revenues and the shares in the company held by its immediate parent company.

Term deposits are held on a short‑term basis and are readily accessible to the Group at any time with insignificant break costs.

Included in cash and cash equivalents is restricted cash of £16m (2023: £12m) held by the Group’s self‑insurance company, Delphian Insurance Company Ltd, which is subject to Isle of Man insurance

solvency regulations.

Cash and cash equivalents also include: £158m (2023: £77m) within construction project bank accounts which is used for project‑specific expenditure; £382m (2023: £369m) in relation to the Group’s share

of cash held by joint operations which is used for expenditure within the joint operation projects; and £265m (2023: £306m) relating to maintenance and other reserve accounts in Infrastructure Investments

subsidiaries, of which £234m (2023: £277m) is reserved for the construction of University of Sussex’s West Slope student accommodation project.

Maturity profile of the Group’s borrowings at 31 December

		2024			2023
	Non-recourse			Non‑recourse
	project	Other		project	Other
	finance	borrowings	Total	finance	borrowings	Total
	£m	£m	£m	£m	£m	£m
Due on demand or within one year	(11)	(185)	(196)	(9)	(104)	(113)
Due within one to two years	(56)	–	(56)	(10)	(39)	(49)
Due within two to five years	(166)	(91)	(257)	(181)	(27)	(208)
Due after more than five years	(367)	(74)	(441)	(370)	(96)	(466)
	(600)	(350)	(950)	(570)	(266)	(836)

233Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

28 Cash and cash equivalents and borrowings continued

28.1 Group continued

The carrying values of the Group’s borrowings are equal to the fair values at the reporting date.

The fair values are determined by discounting future cash flows using yield curves and exchange

rates prevailing at the reporting date.

Undrawn Group committed borrowing facilities at 31 December in respect of which all

conditions precedent were satisfied

		2024			2023
	Non-recourse			Non‑recourse
	project	Other		project	Other
	finance	borrowings	Total	finance	borrowings	Total
	£m	£m	£m	£m	£m	£m
Expiring in one year
or less	–	–	–	–	30	30
Expiring in more than one year but not more than two years	–	–	–	–	–	–
Expiring in more than two years	–	480	480	–	475	475
	–	480	480	–	505	505

In June 2024, the Group extended its core Revolving Credit Facility (RCF) by one year, to June 2028,

with the support of the lending bank group. The facility was reduced from £475m to £450m in the

extension process. The RCF remains a Sustainability Linked Loan (SLL) and, subsequent to the

extension in July 2024, revised SLL metrics and targets were agreed with the lending bank group.

The Group continues to be incentivised to deliver annual measurable performance improvement in

three key areas: carbon emissions, social value generation and an independent Environment, Social

and Governance (ESG) rating score.

The Group retains an additional £30m bilateral committed facility that has materially the same terms

and conditions as the RCF. The facility is also a SLL, including metrics that mirror the RCF. In the

second half of the year, the Group triggered its extension option in respect of the bilateral facility,

to extend the maturity to December 2027.

The RCF and the £30m bilateral committed facility were both undrawn at 31 December 2024.

28.2 US private placement

In June 2022, the Group raised US$158m (£130m) of debt in the form of new US private placement

(USPP) notes on terms and conditions materially the same as the existing USPP notes. This debt

comprises US$35m of notes maturing in June 2027 at a fixed coupon of 6.31%, US$80m of notes

maturing in June 2029 at a fixed coupon of 6.39% and US$43m of notes maturing in June 2032 at

a fixed coupon of 6.45%.

In May 2024, the Group completed the early refinancing of US$50m of USPP notes that were set to

mature in March 2025 and were the final notes from the 2013 tranche of notes. The Group raised

US$50m of new USPP notes, on terms and conditions that mirror existing debt facilities, and used this

new funding to complete the early repayment of its existing US$50m USPP notes which were due to

expire in March 2025. The new debt is comprised of US$25m maturing in May 2031 at a fixed coupon

of 6.71%, and US$25m maturing in May 2036 at a fixed coupon of 6.96%. The refinancing exercise

has extended the debt maturity profile of the Group until 2036, with the next debt maturity now in

June 2027 for US$35m.

At 31 December 2024, the US$208m USPP notes have an average coupon of 6.5% per annum

and a remaining average maturity of 5.8 years.

28.3 Company

		2024			2023
	Current	Non-current	Total	Current	Non‑current	Total
	£m	£m	£m	£m	£m	£m
Cash	218	–	218	150	–	150
Term deposits	200	–	200	218	–	218
Bank overdrafts	(171)	–	(171)	(58)	–	(58)
US private placement
(Note 28.2)	–	(165)	(165)	–	(162)	(162)
Net cash/
(borrowings)	247	(165)	82	310	(162)	148

234

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

29 Lease liabilities

29.1 Movements

	Land and	Plant and	Motor
	buildings	equipment	vehicles	Total
	£m	£m	£m	£m
At 1 January 2023	58	27	47	132
Currency translation differences	(2)	–	–	(2)
Additions	11	17	47	75
Lease modification	–	–	(1)	(1)
Payments made for lease liabilities +	(20)	(13)	(30)	(63)
Disposals	(1)	(1)	(2)	(4)
Interest on lease liabilities	3	1	2	6
At 31 December 2023	49	31	63	143
Additions	15	19	47	81
Payments made for lease liabilities +	(17)	(14)	(35)	(66)
Transfers	–	5	(5)	–
Disposals	–	(1)	(2)	(3)
Interest on lease liabilities	2	2	3	7
At 31 December 2024	49	42	71	162

+ Payments made for lease liabilities include an interest element of £7m (2023: £6m).

29.2 Maturity analysis – contractual undiscounted cash flows

		2024					2023
	Land and	Plant and	Motor		Land and	Plant and	Motor
	buildings	equipment	vehicles	Total	buildings	equipment	vehicles	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Due within one year	(15)	(13)	(29)	(57)	13	10	27	50
Due within one to two years	(11)	(10)	(24)	(45)	10	7	19	36
Due within two to five years	(19)	(19)	(21)	(59)	17	14	20	51
Due after more than five years	(12)	(3)	–	(15)	13	4	–	17
Total undiscounted cash flows	(57)	(45)	(74)	(176)	53	35	66	154

29.3 Amounts recognised in the income statement

	2024	2023
	£m	£m
Interest on lease liabilities	7	6
Expenses relating to short‑term leases	125	123

235Balfour Beatty plc | Annual Report and Accounts 2024

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30 Deferred tax

30.1 Group

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same tax

authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Net deferred tax position at 31 December

	Group	Group
	2024	2023
	£m	£m
Deferred tax assets	200	188
Deferred tax liabilities	(153)	(160)
	47	28

Movement for the year in the net deferred tax position

	Group
	£m
At 1 January 2023	24
Currency translation differences	9
Charged to income statement	(48)
Credited to other comprehensive income	48
Charged to equity	(2)
Research and development tax credits	(3)
At 31 December 2023	28
Currency translation differences	(1)
Charged to income statement	(8)
Credited to other comprehensive income	26
Credited to equity	2
At 31 December 2024	47

The table below shows the deferred tax assets and liabilities before being offset where they relate to

income taxes levied by the same tax authority.

Net deferred tax position

	Depreciation
	in excess		Unrelieved					Research and
	of capital	Retirement	trading	Share‑based		Fair value	Other GAAP	development
	allowances	benefits	losses	payments	Provisions	adjustments	differences	credits	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2023	26	(60)	199	7	51	(104)	(98)	3	24
Currency translation differences	1	–	–	–	(3)	6	5	–	9
(Charged)/credited to income statement	(24)	(11)	6	1	(24)	–	4	–	(48)
Credited/(charged) to other comprehensive income	–	49	–	–	–	(1)	–	–	48
Charged to equity	–	–	–	(2)	–	–	–	–	(2)
Research and development tax credits	–	–	–	–	–	–	–	(3)	(3)
At 31 December 2023	3	(22)	205	6	24	(99)	(89)	–	28
Currency translation differences	–	–	–	–	–	(1)	–	–	(1)
(Charged)/credited to income statement	(4)	(8)	(12)	(1)	10	–	7	–	(8)
Credited to other comprehensive income	–	26	–	–	–	–	–	–	26
Credited to equity	–	–	–	2	–	–	–	–	2
At 31 December 2024	(1)	(4)	193	7	34	(100)	(82)	–	47

As a result of the adoption of the amendment to IAS 12 in relation to Deferred Tax related to Assets and Liabilities arising from a Single Transaction, the Group has provided further disclosure below to show the

assets and liabilities to which the depreciation in excess of capital allowances relate.

236

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

30 Deferred tax continued

30.1 Group continued

Net deferred tax position continued

				Depreciation
	Property,			in excess
	plant and	Right‑of‑use		of capital
	equipment	assets	Lease liabilities	allowances
	£m	£m	£m	£m
At 1 January 2023	25	(8)	9	26
Currency translation differences	1	–	–	1
(Charged)/credited to income statement	(25)	3	(2)	(24)
At 31 December 2023	1	(5)	7	3
(Charged)/credited to income statement	(4)	2	(2)	(4)
At 31 December 2024	(3)	(3)	5	(1)

At the balance sheet date, the Group had unused trading tax losses of £1,136m (2023: £1,207m) available for offset against future profits, of which £807m (2023: £828m) arose in the UK, £5m (2023: £37m)

in the US and £324m (2023: £342m) in other jurisdictions.

A deferred tax asset has been recognised in respect of £767m (2023: £821m) of such losses, of which £763m (2023: £786m) have been recognised in the UK and £4m (2023: £35m) in the US. In considering

the amount of deferred tax asset to be recognised for UK and US tax losses, the potential use of those losses based on the latest current and forecast business performance was assessed, and losses were

recognised where it is probable that they will be utilised. No deferred tax asset has been recognised in respect of the losses of £369m (2023: £386m) where it is considered that it is not probable that they will

be utilised due to restrictions in use and unpredictability of future profitability.

Of the Group’s tax losses, £6m (2023: £7m) will expire within 20 years after the year in which they arose, using losses incurred in earlier years before those incurred in later years. Other losses will be carried

forward indefinitely.

In addition to the losses referred to above, at 31 December 2024 the Group had UK capital losses available to carry forward of £1.4bn (2023: £1.4bn). No deferred tax assets have been recognised in respect

of these losses as there are no capital profits forecast against which these losses can be utilised.

Deferred tax liabilities on fair value adjustments of £100m (2023: £99m) relate to temporary differences arising on goodwill and intangibles. Deferred tax liabilities on other GAAP differences of £82m

(2023: £89m) relate to temporary differences on joint ventures.

At the reporting date, undistributed reserves of non‑UK subsidiaries, joint ventures and associates for which deferred tax liabilities have not been recognised were £637m (2023: £607m) in respect of subsidiaries and

£41m (2023: £42m) in respect of joint ventures and associates. No liability has been recognised in respect of these differences because either no temporary difference arises or the timing of any distribution is

under the Group’s control and no distribution which gives rise to taxation is contemplated.

Deferred tax asset of £5m (2023: £12m) on other temporary differences has not been recognised.

30.2 Company

The table below shows the deferred tax assets and liabilities before being offset where they relate to income taxes levied by the same tax authority.

	Unrelieved		Total
	trading	Share‑based	deferred
	losses	payments	tax assets
	£m	£m	£m
At 1 January 2023	1	1	2
Credited to income statement	3	–	3
At 31 December 2023	4	1	5
Credited to income statement	3	–	3
At 31 December 2024	7	1	8

237Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

31 Retirement benefit assets and liabilities

31.1 Introduction

The Group, through trustees, operates a number of defined contribution and defined benefit pension schemes.

Defined contribution schemes are those where the Group’s obligation is limited to the amount that

it contributes to the scheme and the scheme members bear the investment and actuarial risks.

Defined benefit schemes are schemes other than defined contribution schemes where the Group’s

obligation is to provide specified benefits on retirement.

IAS 19 Employee Benefits (IAS 19) prescribes the accounting for defined benefit schemes in the

Group’s financial statements. Obligations are calculated using the projected unit credit method and

discounted to a net present value using the market yield on high‑quality corporate bonds. The pension

expense relating to current service cost is charged to contracts or overheads based on the function of

scheme members and is included in cost of sales and net operating expenses. The net finance income

arising from the expected interest income on plan assets and interest cost on scheme obligations is

included in investment income. Actuarial gains and losses are reported in the statement of

comprehensive income. The IAS 19 accounting valuations are set out in Note 31.2.

A different calculation is used for the formal triennial funding valuations undertaken by the scheme

trustees to determine the future Company contribution level necessary so that over time the scheme

assets will meet the scheme obligations. The principal difference between the two methods is that

under the funding basis the obligations are discounted using a rate of return reflecting the composition

of the assets in the scheme, rather than the rate of return on high‑quality corporate bonds as required

by IAS 19 for the financial statements. Details of the latest formal triennial funding valuations are set

out in Note 31.3.

The assets of the schemes do not include any direct holdings of the Group’s financial instruments,

nor any property occupied by, or other assets of, the Group.

Principal schemes

The Group’s principal schemes are the Balfour Beatty Pension Fund (BBPF), which includes defined

contribution and defined benefit sections, and the Balfour Beatty Shared Cost Section of the Railways

Pension Scheme (RPS). The defined benefit sections of both schemes are funded and closed to new

members with the exception of employees where employment has transferred to the Group under

certain agreed arrangements. Pension benefits for defined benefit schemes are based on employees’

pensionable service and their pensionable salary.

The schemes operate under trust law and are managed and administered by trustees on behalf of the

members in accordance with the terms of the trust deed and rules and relevant legislation. Defined

benefit contributions are determined in consultation with the trustees, after taking actuarial advice.

The trustees are responsible for establishing the investment strategy and ensuring that there are

sufficient assets to meet the cost of current and future benefits.

These schemes expose the Group to investment and actuarial risks where additional contributions may

be required if assets are not sufficient to pay future pension benefits:

@ investment risk: the investment portfolio is subject to a range of risks typical of the investments

held, for example, credit risk on corporate bond holdings; and

@ actuarial risk: the ultimate cost of providing pension benefits is affected by inflation rates and

members’ life expectancy. The net present value of the obligations is affected by the market yield

on high‑quality corporate bonds used to discount the obligations.

Changes in the principal actuarial assumptions based on market data, such as inflation and the discount

rate, and experience, such as life expectancy, expose the Group to fluctuations in the net IAS 19

liability and the net finance cost.

Balfour Beatty Pension Fund

The investment strategy of the BBPF is to hold assets of appropriate liquidity and marketability to

generate income and capital growth. The BBPF invests partly in a diversified range of assets including

corporate bonds, equities and hedge funds in anticipation that, over the longer term, they will grow in

value faster than the scheme’s obligations. The BBPF has been undertaking a phased withdrawal from

equities and hedge funds. The only residual equities held are a very small amount of emerging market

equities held via pooled funds. The remaining BBPF assets are principally fixed and index‑linked bonds

and derivatives, providing protection against movements in inflation and interest rates and hence

enhancing the resilience of the funding level of the scheme. The performance of the assets is

measured against market indices.

The BBPF’s defined benefit section is exposed to a number of liability related risks, namely changes

in gilt yields, inflation and the longevity of the scheme’s members.

With respect to interest rate and inflation risks, the trustee seeks to mitigate the majority of these risks

through its liability hedging portfolio. This is a segregated portfolio of hedging assets which includes

physical gilts, gilt repurchase agreements and interest rate and inflation swaps. The current objective of

the portfolio is to hedge 100% of the impact that changes in interest rates and inflation can have on the

funding position.

The BBPF’s Fiduciary Manager and Investment Committee closely monitor the collateral being held

within the liability hedging portfolio to ensure that the scheme holds sufficient collateral to support

its liability hedging programme.

With respect to longevity risk the BBPF has a longevity swap contract as part of the investment

portfolio which will provide income in the event that pensions are paid out for longer. The fair value

of the longevity swap has been included as part of the fair value of plan assets.

The Group operates a Scottish Limited Partnership (SLP) structure which holds the Group’s 40%

interest in the Birmingham Hospital PFI investment and the Group’s 15% share of the Connect Plus

(M25) asset. The BBPF is a partner in the SLP and is entitled to a share of the income of the SLP.

In accordance with IFRS 10 Consolidated Financial Statements, the SLP is deemed to be controlled

by the Group, which retains the ability to substitute the investment in the Birmingham Hospital PFI

investment and the Connect Plus (M25) asset for other investments from time to time.

238

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

31 Retirement benefit assets and liabilities continued

31.1 Introduction continued

Balfour Beatty Pension Fund continued

Under IAS 19, the investment held by the BBPF in the SLP does not constitute a plan asset and therefore

the pension surplus presented in these financial statements does not reflect the BBPF’s interest in the

SLP. Distributions from the SLP to the BBPF will be reflected in the Group’s financial statements as

pension contributions on a cash basis. In 2024, the BBPF received distributions of £2m from the SLP

(2023: £2m).

Balfour Beatty and the trustees of the BBPF have reconfirmed their commitment to a journey plan

approach to managing the BBPF with the aim of reaching self‑sufficiency by 2027. The Company and

trustees have agreed the 31 March 2022 formal valuation and as a result Balfour Beatty made deficit

contributions to the BBPF of £22m in 2024 (2023: £19m) and has agreed to pay deficit contributions to

the BBPF of £6m in 2025. The next formal triennial funding valuation is due with effect from 31 March 2025.

This agreement constitutes a minimum funding requirement (MFR) under IFRIC 14 IAS 19: The Limit

on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The Group has not

recognised any liabilities in relation to this MFR as any surplus of deficit contributions to the BBPF

would be recoverable by way of a refund and the Group has the unconditional right to the surplus and

controls the run‑off of the benefit obligations once all other obligations of the BBPF have been settled.

Railways Pension Scheme

The RPS is a shared cost scheme. The legal responsibility of the Group in the RPS is approximately 60%

of the scheme’s assets and liabilities based on the relevant provisions of the trust deed and rules and

trustee guidelines regarding future surplus apportionments and deficit financing.

The assumed cost of providing future service benefits is split between the Group and the members

in the ratio 60:40.

Because of a declining population of active members, it has become less likely that the Group’s costs

of meeting any deficits would be capped in line with its strict legal obligation of 60% as members

might only be able to afford to fund a small proportion of the scheme deficit. It has therefore been

assumed that the Group will be responsible for 100% of any deficit and the balance sheet assets

and obligations disclosed, therefore, are equal to 100% of the total scheme assets and obligations.

The RPS invests in a range of pooled investment funds intended to generate a combination of capital

growth and income and, as determined by the trustee, taking account of the characteristics of the

obligations and the trustee’s attitude to risk. The majority of the RPS’s assets that are intended to

generate additional returns, over the rate at which the obligations are expected to grow, are invested

in a single pooled growth fund. This fund is invested in a wide range of asset classes and the fund

manager Railpen has the discretion to vary the asset allocation to reflect its views on the relative

attractiveness of different asset classes at any time. The remaining assets in the RPS are principally

fixed and index‑linked bonds.

The RPS is exposed to a number of liability related risks, namely changes in gilt yields, inflation and the

longevity of the scheme’s members. With respect to interest rate and inflation risks, the strategic

asset allocation was reviewed and amended in 2023 to mitigate these risks by increasing the allocation

to fixed and index‑linked bond pooled funds. The current objective of the portfolio is to hedge around

100% of the impact that changes in interest rates and inflation can have on the funding position.

The formal triennial funding valuation of the RPS as at 31 December 2022 was completed in March

2024, with the Company agreeing to continue to make fixed deficit contributions of £6m per annum

until February 2025. This agreement constitutes a MFR under IFRIC 14 IAS 19: The Limit on a Defined

Benefit Asset, Minimum Funding Requirements and their Interaction. The Company has not recognised

any liabilities in relation to this MFR as any surplus of deficit contributions to the RPS would be recoverable

by way of a refund and the Group has the unconditional right to the surplus and controls the run‑off

of the benefit obligations once all other obligations of the RPS have been settled. The next formal

triennial funding valuation is due with effect from 31 December 2025.

Other schemes

Other schemes comprise unfunded post‑retirement benefit obligations in Europe, the majority of which

are closed to new entrants, and deferred compensation schemes in North America, where an element

of employees’ compensation is deferred and invested in investments in mutual funds (as disclosed in

Note 21.1) in a trust, the assets of which are for the ultimate benefit of the employees but are available

to the Group’s creditors in the event of insolvency.

The Group also participates in The Plumbing & Mechanical Services Industry Pension Scheme

(Plumbers Scheme), which is an industry‑wide non‑associated multi‑employer defined benefit scheme.

As the Plumbers Scheme does not segregate assets and liabilities between the different participating

employers, the Group’s only obligation to the Plumbers Scheme is to pay the contributions requested

by the scheme trustees as they fall due. In accordance with IAS 19, this obligation has been accounted

for on a defined contribution basis and any employer contributions paid are charged to the income

statement. To confirm, there have been no such contributions over 2024.

239Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

31 Retirement benefit assets and liabilities continued

31.1 Introduction continued

Membership of the principal schemes

			Balfour Beatty Pension Fund 2024			Railways Pension Scheme 2024	Balfour Beatty Pension Fund 2023			Railways Pension Scheme 2023
		Defined			Defined			Defined			Defined
	Number	benefit	Average	Number	benefit	Average	Number	benefit	Average	Number	benefit	Average
	of	obligations	duration	of	obligations	duration	of	obligations	duration	of	obligations	duration
	members	£m	Years	members	£m	Years	members	£m	Years	members	£m	Years
Defined benefit
– active members	1	1	11	61	25	15	1	1	12	70	26	17
– deferred pensioners	8,223	912	16	896	80	15	8,770	1,007	18	972	90	16
– pensioners, widow(er)s
and dependants	16,656	1,335	8	1,948	182	10	16,764	1,493	9	1,904	204	10
Defined contribution	16,619	–	–	–	–	–	15,512	–	–	–	–	–
Total	41,499	2,248	11	2,905	287	12	41,047	2,501	12	2,946	320	12

31.2 IAS 19 accounting valuations

Principal actuarial assumptions for the IAS 19 accounting valuations of the Group’s principal schemes

		2024		2023
	Balfour Beatty	Railways	Balfour Beatty	Railways
	Pension	Pension	Pension	Pension
	Fund	Scheme	Fund	Scheme
	%	%	%	%
Discount rate	5.55	5.55	4.65	4.65
Inflation rate – RPI	3.25	3.25	3.15	3.15
– CPI	2.75	2.90	2.60	2.75
Future increases in pensionable salary	2.75	2.90	2.60	2.75
Rate of increase in pensions in payment (or such other rate as is guaranteed)	3.05	2.95	2.95	2.85

The BBPF actuary undertakes regular mortality investigations as part of the formal triennial valuation (the last such valuation being in 31 March 2022) based on the experience exhibited by pensioners of the

BBPF and due to the size of the membership of the BBPF is able to make comparisons of this experience with the mortality rates set out in the various published mortality tables. The actuary is also able to

monitor changes in the exhibited mortality over time. This research is taken into account in the BBPF’s mortality assumptions. The mortality assumptions as at 31 December 2024 are consistent with those

adopted at the previous year end, which reflect the experience of BBPF pensioners for the period to 30 September 2021, with the exception that the future improvements assumptions have been updated to

reflect the most recent model available, with the Group setting future improvements in line with the Continuous Mortality Investigation (CMI) 2023 core projections model.

Similarly, the RPS actuary also undertakes regular mortality investigations as part of the formal triennial valuation based on the experience exhibited by pensioners of the RPS, with the last such analysis being

completed as part of the 31 December 2022 valuation, which was used in updating the mortality assumption at the previous year end. Similar to the BBPF, the mortality assumptions as at 31 December 2024

are consistent with whose adopted at the previous year end, with the exception that the future improvements assumptions has been updated to reflect the most recent model available.

Following the completion of the BBPF’s 31 March 2022 triennial valuation, the future improvements assumption adopted for the BBPF and RPS has also been updated for 2024 to reflect the most recent model

available, with the Group setting future improvements in line with the Continuous Mortality Investigation (CMI) 2023 core projections model.

240

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

31 Retirement benefit assets and liabilities continued

31.2 IAS 19 accounting valuations continued

BBPF life expectancies

		2024		2023
		Average life expectancy		Average life expectancy
		at 65 years of age		at 65 years of age
	Male	Female	Male	Female
Members in receipt of a pension	21.3	23.0	21.3	23.0
Members not yet in receipt of a pension (current age 50)	22.2	23.9	22.2	23.9

RPS life expectancies

		2024		2023
		Average life expectancy		Average life expectancy
		at 65 years of age		at 65 years of age
RPS life expectancies	Male	Female	Male	Female
Members in receipt of a pension	20.8	22.7	20.8	22.7
Members not yet in receipt of a pension (current age 50)	21.6	23.6	21.6	23.6

Amounts recognised in the income statement

The BBPF defined contribution employer contributions paid and charged to the income statement have been separately identified in the table below and the defined contribution section assets and liabilities

amounting to £803m (2023: £710m) have been excluded from the tables on pages 241 to 244. Defined contribution charges for other schemes include contributions to multi‑employer pension schemes.

		2024					2023
	Balfour				Balfour
	Beatty	Railways			Beatty	Railways
	Pension	Pension	Other		Pension	Pension	Other
	Fund	Scheme	schemes	Total	Fund	Scheme	schemes	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Group
Current service cost	(1)	(1)	(1)	(3)	(2)	(1)	(1)	(4)
Defined contribution charge	(50)	–	(6)	(56)	(48)	–	(6)	(54)
Included in employee costs (Note 7)	(51)	(1)	(7)	(59)	(50)	(1)	(7)	(58)
Interest income	118	15	–	133	130	16	–	146
Interest cost	(113)	(15)	(1)	(129)	(118)	(14)	(2)	(134)
Net finance income/(cost) (Note 8)	5	–	(1)	4	12	2	(2)	12
Total (charged)/credited to income statement	(46)	(1)	(8)	(55)	(38)	1	(9)	(46)

241Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

31 Retirement benefit assets and liabilities continued

31.2 IAS 19 accounting valuations continued

Amounts recognised in the statement of comprehensive income

		2024				2023
	Balfour				Balfour
	Beatty	Railways			Beatty	Railways
	Pension	Pension	Other		Pension	Pension	Other
	Fund	Scheme	schemes	Total	Fund	Scheme	schemes	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Actuarial movements on pension scheme obligations	207	29	(1)	235	(70)	(21)	–	(91)
Actuarial movements on pension scheme assets	(292)	(45)	–	(337)	(85)	(21)	–	(106)
Total actuarial movements recognised in the statement of comprehensive income (Note 33.1)	(85)	(16)	(1)	(102)	(155)	(42)	–	(197)
Cumulative actuarial movements recognised in the statement of comprehensive income	(421)	(34)	(23)	(478)	(336)	(18)	(22)	(376)

The actual return on plan assets was a loss of £204m (2023: £40m gain).

Amounts recognised in the balance sheet

		2024				2023
	Balfour				Balfour
	Beatty	Railways			Beatty	Railways
	Pension	Pension	Other		Pension	Pension	Other
	Fund	Scheme	schemes †	Total	Fund	Scheme	schemes †	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Present value of obligations	(2,248)	(287)	(34)	(2,569)	(2,501)	(320)	(35)	(2,856)
Fair value of plan assets	2,291	280	–	2,571	2,602	323	–	2,925
Asset/(liabilities) in the balance sheet	43	(7)	(34)	2	101	3	(35)	69

†

Investments in mutual funds of £20m (2023: £19m) are held to satisfy the Group’s deferred compensation obligations (Note 21.1).

The defined benefit obligations comprise £34m (2023: £35m) arising from wholly unfunded plans and £2,535m (2023: £2,821m) arising from plans that are wholly or partly funded.

The BBPF saw a significant increase in corporate bond yields over 2024, which led to a corresponding increase in the IAS 19 discount rate. Whilst this has been offset in part by a small increase in future

inflationary expectations, this has led to an overall decrease in the present value of obligations from 31 December 2023 to 31 December 2024. The BBPF has also seen a similar reduction of the scheme’s

assets (excluding the value of the longevity hedge) due to changes in market conditions over the year, which is to be expected given the level of hedging in place. However, as the BBPF hedges against a

different funding basis, it is expected that there may be some differences in the movement of the assets and liabilities during significant market movements, with assets decreasing by a greater amount than

the liabilities due to market conditions in this case.

In June 2023, the High Court handed down a decision in the case of Virgin Media Limited v NTL Pension Trustees II Limited and others relating to the validity of certain historical pension changes due to the lack

of actuarial confirmation required by law. In July 2024, the Court of Appeal dismissed the appeal brought by Virgin Media Ltd against aspects of the June 2023 decision. This case may have implications for other

UK defined benefit plans. The Company and pension trustees are considering the implications of the case for the Balfour Beatty Pension Fund and the Balfour Beatty section of the Railways Pension Scheme.

Legal advice provided confirms that all relevant confirmations are in place for the Balfour Beatty section of the Railways Pension Scheme. For the Balfour Beatty Pension Fund, legal advice provided confirms

the vast majority of relevant confirmations are in place. Additional work is needed to investigate more historic pension changes where it is not known at this stage whether the relevant confirmations had been

provided at the time and to investigate the position in respect of previous merges or bulk transfers into the Balfour Beatty Pension Fund. The defined benefit obligations for both schemes have been calculated

on the basis of the pension benefits currently being administered, and at this stage we do not consider it necessary to make any adjustments as a result of the Virgin Media case. The Group will continue to

monitor this position.

242

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

31 Retirement benefit assets and liabilities continued

31.2 IAS 19 accounting valuations continued

Movement in the present value of obligations

		2024				2023
	Balfour Beatty	Railways			Balfour Beatty	Railways
	Pension	Pension	Other		Pension	Pension	Other
	Fund	Scheme	schemes	Total	Fund	Scheme	schemes	Total
	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January	(2,501)	(320)	(35)	(2,856)	(2,464)	(300)	(39)	(2,803)
Currency translation differences	–	–	1	1	–	–	2	2
Current service cost	(1)	(1)	(1)	(3)	(2)	(1)	(1)	(4)
Interest cost	(113)	(15)	(1)	(129)	(118)	(14)	(2)	(134)
Actuarial movements from reassessing the difference between RPI and CPI	(2)	–	–	(2)	(2)	(2)	–	(4)
Actuarial movements from changes in demographic assumptions	3	1	–	4	17	(1)	–	16
Other financial actuarial movements	214	28	(1)	241	(85)	(16)	–	(101)
Experience losses	(8)	–	–	(8)	–	(2)	–	(2)
Total actuarial movements	207	29	(1)	235	(70)	(21)	–	(91)
Benefits paid	160	20	3	183	153	16	5	174
At 31 December	(2,248)	(287)	(34)	(2,569)	(2,501)	(320)	(35)	(2,856)

Movement in the fair value of plan assets

		2024			2023
	Balfour Beatty	Railways		Balfour Beatty	Railways
	Pension	Pension	Total	Pension	Pension
	Fund	Scheme	2024	Fund	Scheme	Total
	£m	£m	£m	£m	£m	£m
At 1 January	2,602	323	2,925	2,689	337	3,026
Interest income	118	15	133	130	16	146
Actuarial movements	(292)	(45)	(337)	(85)	(21)	(106)
Contributions from employer
– regular funding	1	1	2	2	1	3
– ongoing deficit funding	22	6	28	19	6	25
Benefits paid	(160)	(20)	(180)	(153)	(16)	(169)
At 31 December	2,291	280	2,571	2,602	323	2,925

243Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

31 Retirement benefit assets and liabilities continued

31.2 IAS 19 accounting valuations continued

Fair value of the assets held by the schemes at 31 December

		2024			2023
		Railways			Railways
	Balfour Beatty	Pension		Balfour Beatty	Pension
	Pension Fund	Scheme †	Total	Pension Fund	Scheme †	Total
	£m	£m	£m	£m	£m	£m
Return‑seeking	285	105	390	276	110	386
– Developed nation equities #	95	–	95	92	–	92
– Hedge funds #	101	–	101	168	–	168
– Return‑seeking growth pooled funds $	–	105	105	–	110	110
– Other return‑seeking assets #@	89	–	89	16	–	16
Liability‑matching bond‑type assets	1,740	172	1,912	1,822	212	2,034
– Corporate bonds	954	–	954	776	–	776
– Fixed interest gilts ^	844	–	844	496	–	496
– Index‑linked gilts ^	6	113	119	554	137	691
– Currency hedging	(18)	–	(18)	15	–	15
– Liability‑matching pooled funds ~	–	59	59	–	75	75
– Interest and inflation rate swaps	(46)	–	(46)	(19)	–	(19)
Property #	29	–	29	40	–	40
Secure income assets # %	100	–	100	153	–	153
Fair value longevity swap &	(25)	–	(25)	1	–	1
Cash and other	162	3	165	310	1	311
Total	2,291	280	2,571	2,602	323	2,925

† The amounts represent 100% of the scheme’s assets.

^ Fixed interest gilts and index‑linked gilts totalling £113m (2023: £137m) are assets held in pooled investment vehicles with underlying securities that have quoted prices in active markets. The remaining assets that are neither quoted nor traded on an active market are stated at fair

value estimates provided by the manager of the investment or fund.

# Level 3 assets with valuations based on unobservable inputs held by the BBPF include hedge funds, property funds, developed nation equities, secure income assets, other return‑seeking assets and £172m of corporate bonds, and total £527m (2023: £610m). These are

pooled investments stated at fair value provided by the fund managers, of which £170m (2023: £130m) have been valued on September 2024 valuations and £13m (2023: £181m) on November 2024 valuations, for which valuations were adjusted for cash movements that

occurred in the last quarter of the year as a result of December 2024 valuations not being available as at the reporting date. The Directors consider these values to be a fair approximation for these assets at 31 December 2024.

@ Other return‑seeking assets are alternative beta assets, which provide exposure to a range of risk premia that are intended to diversify portfolio returns from traditional equity and credit markets.

Secure income assets reflect more illiquid investments that offer long term contractual cash flows that can be used for the payment of pensions.

$ The RPS return‑seeking growth pooled funds assets are the Growth Pooled Fund, Illiquid Growth Pooled Fund and the Private Equity Pooled Fund which are HMRC‑approved pooled funds.

The RPS liability‑matching pooled funds are Long‑Term Income Pooled Funds which are HMRC‑approved pooled funds.

The fair market value of the longevity swap is calculated by taking the present value of the expected cashflows from the floating leg using a market‑related discount rate and current best‑estimates of market mortality assumptions and risk fees, less the corresponding

present value of the fixed leg cashflows that are required under the contract. As at 31 December 2024, the fair value has been calculated using the cashflows from the experience collateral calculations performed by Zurich Assurance Limited as at 1 October 2024

(with the floating leg reflecting member mortality experience up to this date), rolled forward and adjusted to allow for the relevant assumptions at 31 December 2024.

244

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

31 Retirement benefit assets and liabilities continued

31.2 IAS 19 accounting valuations continued

Estimated contributions expected to be paid to the Group’s principal defined benefit schemes during 2025

		Railways
	Balfour Beatty	Pension
	Pension Fund	Scheme	Total
	2025	2025	2025
	£m	£m	£m
Regular funding *	4	1	5
Ongoing deficit funding	5	1	6
Total contributions	9	2	11
Estimated BBPF running costs to be funded from deficit contributions	–	–	–
Estimated total cash contributions	9	2	11

* Includes company contribution toward investment management expenses from April 2025.

The sensitivity analysis below has been determined based on reasonably possible changes in key assumptions occurring at the end of the reporting period. In each case the relevant change in assumption

occurs in isolation from potential changes in other assumptions. In practice more than one variable is likely to change at the same time. The sensitivities have been calculated using the projected unit credit method.

Sensitivity of the Group’s retirement benefit obligations at 31 December 2024 to different actuarial assumptions

			Sensitivity to increase in assumption			Sensitivity to decrease in assumption
		(Decrease)/	(Decrease)/		Increase/	Increase/
		increase in	increase in		(decrease) in	(decrease) in
	Percentage	obligations	obligations	Percentage	obligations	obligations
Assumptions	points/years	%	£m	points/years	%	£m
Discount rate	0.5%	(5.2)%	(132)	(0.5)%	5.7%	145
Market expectation of RPI inflation	0.5%	3.6%	90	(0.5)%	(3.7)%	(94)
Salary growth	0.5%	<0.1%	–	(0.5)%	<(0.1)%	–
Life expectancy	1 year	3.7%	95	(1 year)	(3.8)%	(96)

Sensitivity of the Group’s retirement benefit assets at 31 December 2024 to changes in market conditions

		(Decrease)/	(Decrease)/
		increase	increase
	Percentage	in assets	in assets
	points	%	£m
Increase in interest rates	0.5%	(5.0)%	(127)
Increase in market expectation of RPI inflation	0.5%	3.4%	88

The asset sensitivities only take into account the impact of the changes in market conditions on bond‑type assets. The value of the schemes’ return‑seeking assets is not directly correlated with movements in

interest rates or RPI inflation.

245Balfour Beatty plc | Annual Report and Accounts 2024

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31 Retirement benefit assets and liabilities continued

31.2 IAS 19 accounting valuations continued

Year end historical information for the Group’s retirement defined benefit schemes

	2024	2023	2022	2021	2020
	£m	£m	£m	£m	£m
Present value of obligations	(2,569)	(2,856)	(2,803)	(4,201)	(4,317)
Fair value of assets	2,571	2,925	3,026	4,432	4,406
Surplus	2	69	223	231	89
Experience adjustment for obligations	(8)	(2)	21	1	5
Experience adjustment for assets	(337)	(106)	(1,368)	87	392
Total deficit funding	28	25	41	39	15

31.3 Latest formal triennial funding valuations

		Railways
	Balfour Beatty	Pension
	Pension Fund	Scheme
	£m	£m
Date of last formal triennial funding valuation	31/03/2022	31/12/2022
Scheme deficit
Market value of assets	4,426	342
Present value of obligations	(4,414)	(342)
Surplus in defined benefit scheme	12	–
Funding level	100.3%	100.0%

32 Share capital

		2024		2023
	Million	£m	Million	£m
Called‑up share capital in issue	517	259	544	272

All issued ordinary shares are fully paid. Ordinary shares have a nominal value of £0.50 each and carry no right to fixed income but each share carries the right to one vote at general meetings of the Company.

No ordinary shares were issued during the current or prior year.

In 2024 the Company commenced the fourth phase of its share buyback programme, which completed on 20 September 2024. The Company purchased 27.1m (2023: 43.3m) shares for a total consideration

of £100m (2023: £150m) and held those shares in treasury with no voting rights. The purchase of those shares, together with associated fees and stamp duty amounting to £1m (2023: £1m), utilised £101m

(2023: £151m) of the Company’s distributable profits.

On 31 October 2024, the Company cancelled the 27.1m treasury shares purchased through the 2024 phase of its share buyback programme (2023: 43.3m). This cancellation resulted in a decrease in called‑up

share capital in issue of £13m (2023: £22m) and a corresponding increase in the capital redemption reserve.

246

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

33 Movements in equity

33.1 Group

				Share of joint			Other reserves
				ventures’
		Share	Capital	and associates’		PPP	Currency			Non-
	Called-up	premium	redemption	reserves	Hedging	financial	translation		Retained	controlling
	share capital	account	reserve	(Note 20.6)	reserves	assets	reserve	Other µ	profits	interests	Total
	2024	2024	2024	2024	2024	2024	2024	2024	2024	2024	2024
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2024	272	176	74	(27)	(5)	1	115	46	546	10	1,208
Profit for the year	–	–	–	59	–	–	–	–	119	–	178
Currency translation differences	–	–	–	3	–	–	6	–	–	–	9
Actuarial movements on retirement benefit assets/liabilities	–	–	–	–	–	–	–	–	(102)	–	(102)
Fair value revaluations
– PPP financial assets	–	–	–	(48)	–	(2)	–	–	–	–	(50)
– cash flow hedges	–	–	–	10	1	–	–	–	–	–	11
– investments in mutual funds measured at fair value through OCI	–	–	–	–	–	–	–	2	–	–	2
Tax on items recognised in other comprehensive income	–	–	–	10	–	–	–	–	26	–	36
Total comprehensive income/(loss) for the year	–	–	–	34	1	(2)	6	2	43	–	84
Ordinary dividends	–	–	–	–	–	–	–	–	(61)	(1)	(62)
Joint ventures’ and associates’ dividends	–	–	–	(71)	–	–	–	–	71	–	–
Purchase of treasury shares	–	–	–	–	–	–	–	–	(101)	–	(101)
Cancellation of ordinary shares	(13)	–	13	–	–	–	–	–	–	–	–
Movements relating to share‑based payments +	–	–	–	–	–	–	–	(2)	3	–	1
At 31 December 2024	259	176	87	(64)	(4)	(1)	121	46	501	9	1,130

Other reserves include £22m of special reserve.

Movements relating to share‑based payments include a £4m tax credit recognised directly within retained profits.

247Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

33 Movements in equity continued

33.1 Group continued

				Share of joint		Other reserves
				ventures’ and
		Share	Capital	associates’		PPP	Currency			Non‑
	Called‑up share	premium	redemption	reserves	Hedging	financial	translation		Retained	controlling
	capital	account	reserve	(Note 20.6)	reserves	assets	reserve	Other µ	profits	interests	Total
	2023	2023	2023	2023	2023	2023	2023	2023	2023	2023	2023
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2023	294	176	52	(20)	(4)	1	132	41	706	5	1,383
Profit/(loss) for the year	–	–	–	53	–	–	–	–	144	(3)	194
Currency translation differences	–	–	–	(13)	–	–	(17)	–	–	–	(30)
Actuarial movements on retirement benefit assets/liabilities	–	–	–	(1)	–	–	–	–	(197)	–	(198)
Fair value revaluations
– PPP financial assets	–	–	–	20	–	–	–	–	–	–	20
– cash flow hedges	–	–	–	2	–	–	–	–	–	–	2
– investments in mutual funds measured at fair value through OCI	–	–	–	–	–	–	–	1	–	–	1
Recycling of revaluation reserves to the income
statement on disposal @	–	–	–	(3)	–	–	–	–	–	–	(3)
Tax on items recognised in other comprehensive income	–	–	–	(5)	(1)	–	–	–	49	–	43
Total comprehensive income/(loss) forthe year	–	–	–	53	(1)	–	(17)	1	(4)	(3)	29
Ordinary dividends	–	–	–	–	–	–	–	–	(58)	–	(58)
Joint ventures’ and associates’ dividends	–	–	–	(60)	–	–	–	–	60	–	–
Purchase of treasury shares	–	–	–	–	–	–	–	–	(151)	–	(151)
Cancellation of ordinary shares	(22)	–	22	–	–	–	–	–	–	–	–
Movements relating to share‑based payments +	–	–	–	–	–	–	–	4	(7)	–	(3)
Capital contribution	–	–	–	–	–	–	–	–	–	8	8
At 31 December 2023	272	176	74	(27)	(5)	1	115	46	546	10	1,208

Other reserves include £22m of special reserve.

Movements relating to share‑based payments include £nil tax charge recognised directly within retained profits.

248

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

33 Movements in equity continued

33.2 Company

	Called‑up	Share	Capital	Other reserves
	share	premium	redemption			Retained
	capital	account	reserve	Special reserve	Other	profits	Total
	£m	£m	£m	£m	£m	£m	£m
At 1 January 2023	294	176	52	22	114	618	1,276
Profit for the year	–	–	–	–	1	261	262
Currency translation differences	–	–	–	–	–	4	4
Total comprehensive profit for the year	–	–	–	–	1	265	266
Ordinary dividends	–	–	–	–	–	(58)	(58)
Purchase of treasury shares	–	–	–	–	–	(151)	(151)
Cancellation of ordinary shares	(22)	–	22	–	–	–	–
Movements relating to share‑based payments +	–	–	–	–	12	(15)	(3)
At 31 December 2023	272	176	74	22	127	659	1,330
Profit for the year	–	–	–	–	–	135	135
Currency translation differences	–	–	–	–	–	2	2
Total comprehensive profit for the year	–	–	–	–	–	137	137
Ordinary dividends	–	–	–	–	–	(61)	(61)
Purchase of treasury shares	–	–	–	–	–	(101)	(101)
Cancellation of ordinary shares	(13)	–	13	–	–	–	–
Movements relating to share‑based payments +	–	–	–	–	8	(11)	(3)
At 31 December 2024	259	176	87	22	135	623	1,302

Movements relating to share‑based payments include £nil tax credit (2023: £nil) recognised directly within retained profits.

As permitted under Section 408 of the Companies Act 2006, the Company has elected not to present its statement of comprehensive income (including the profit and loss account) for the year. Balfour Beatty

plc reported a profit for the financial year ended 31 December 2024 of £135m (2023: £262m).

During the year, £101m of the Company’s distributable profits were utilised for the purchase of shares into treasury (2023: £151m) and 27.1m (2023: 43.3m) treasury shares were cancelled. See Note 32.

The majority of the retained profits of Balfour Beatty plc are distributable. By special resolution on 13 May 2004, confirmed by the court on 16 June 2004, the share premium account was reduced by £181m and

the £4m capital redemption reserve was cancelled, effective on 25 June 2004, and a special reserve of £185m was created. This reserve becomes distributable to the extent of future increases in share capital

and share premium account, of which £nil occurred in 2024 (2023: £nil).

249Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

33 Movements in equity continued

33.3 Balfour Beatty Employee Share Ownership Trust

The retained profits in the Group and the retained profits of the Company are stated net of investments

in Balfour Beatty plc ordinary shares acquired by the Group’s employee discretionary trust, the Balfour

Beatty Employee Share Ownership Trust, to satisfy awards under the Performance Share Plan, the

Deferred Bonus Plan and the Restricted Share Plan. In 2024, 2.9m (2023: 5.1m) shares were purchased

at a cost of £12m (2023: £18m). The market value of the 5.9m (2023: 7.5m) shares held by the trust

at 31 December 2024 was £26.8m (2023: £25.0m). The carrying value of these shares was £21.2m

(2023: £23.1m).

Following confirmation of the performance criteria at the end of the performance period in the case

of the Performance Share Plan, and at the end of the vesting period in the case of the Deferred Bonus

Plan and the Restricted Share Plan, the appropriate number of shares will be unconditionally transferred

to participants. In 2024, 2.5m shares were transferred to participants in relation to the March 2021

and June 2021 awards under the Performance Share Plan (2023: 3.2m shares were transferred to

participants in relation to the March 2020 and June 2020 awards under the Performance Share Plan),

0.5m shares were transferred to participants in relation to awards under the Deferred Bonus Plan

(2023: 1.0m shares) and 1.2m shares were transferred to participants in relation to awards under the

Restricted Share Plan (2023: 0.9m).

The trustees have waived the rights to dividends on shares held by the trust. Participants in the

schemes receive an award of shares to represent the dividends which would have been payable

on the shares since the date of grant.

Other reserves in the Group and Company include £10.2m (2023: £12.2m) relating to unvested

Performance Share Plan awards, £3.8m (2023: £4.4m) relating to unvested Restricted Share Plan

awards and £3.3m (2023: £2.7m) relating to unvested Deferred Bonus Plan awards.

34 Notes to the statement of cash flows

34.1 Cash from/(used in) operations

			2024
			Non-
		Underlying	underlying
		items 1	items		2023
	Notes	£m	£m	£m	£m
Profit/(loss) from operations		248	(75)	173	211
Share of results of joint ventures
and associates	20	(59)	–	(59)	(53)
Depreciation of property, plant
and equipment	17	31	–	31	28
Depreciation of right‑of‑use assets	18	60	–	60	57
Depreciation of investment properties	19	1	–	1	2
Amortisation of other intangible assets	15	6	4	10	12
Amortisation of contract fulfilment assets		27	–	27	15
Pension deficit payments, including
regular funding	31.2	(30)	–	(30)	(28)
Movements relating to equity‑settled
share‑based payments		10	–	10	15
Gain on disposal of interests	35.2/
in investments	35.3	(43)	–	(43)	(24)
Profit on disposal of property, plant
and equipment		(2)	–	(2)	(2)
Other non‑cash items		–	–	–	(3)
Operating cash flows before movements
in working capital		249	(71)	178	230
Decrease in operating working capital				99	63
Inventories				(34)	(11)
Contract assets				74	(4)
Trade and other receivables				(225)	(73)
Contract liabilities				91	(44)
Trade and other payables				(6)	177
Provisions				199	18
Cash from operations				277	293

1 Before non‑underlying items (Notes 2.10 and 10).

250

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

34 Notes to the statement of cash flows continued

34.2 Cash and cash equivalents

	2024		2023
	Group	Company	Group	Company
	£m	£m	£m	£m
Cash and deposits	1,084	218	890	150
Term deposits	209	200	218	218
Cash balances within infrastructure
concessions	265	–	306	–
Bank overdrafts	(185)	(171)	(104)	(58)
	1,373	247	1,310	310

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short‑term,

highly liquid investments with original maturities of less than three months.

34.3 Analysis of movements in borrowings

	Infrastructure
	concessions		Bilateral
	non‑recourse	US private	committed	Bank
	project finance	placement	facility	overdrafts	Total
	£m	£m	£m	£m	£m
At 1 January 2023	(261)	(345)	–	–	(606)
Currency translation differences	–	14	–	–	14
Proceeds of loans	(336)	–	(28)	(104)	(468)
Repayments of loans	8	169	28	–	205
Fair value adjustment to loan	19	–	–	–	19
At 31 December 2023	(570)	(162)	–	(104)	(836)
Currency translation differences	(1)	(4)	–	–	(5)
Proceeds of loans	(36)	(39)	–	(185)	(260)
Repayments of loans	9	40	–	104	153
Arrangement fees	3	–	–	–	3
Amortisation of fair value
adjustment on loan	(5)	–	–	–	(5)
At 31 December 2024	(600)	(165)	–	(185)	(950)

In June 2024, the Group extended its core Revolving Credit Facility (RCF) by one year, to June 2028,

with the support of the lending bank group. The facility was reduced from £475m to £450m in the

extension process. The RCF remains a Sustainability Linked Loan (SLL) and subsequent to the

extension in July 2024, new SLL metrics and targets were agreed with the lending bank group.

The Group continues to be incentivised to deliver annual measurable performance improvement in

three key areas: carbon emissions, social value generation and an independent Environment,

Social and Governance (ESG) rating score. The RCF remained undrawn at 31 December 2024.

The Group retains an additional £30m bilateral committed facility that has materially the same terms

and conditions as the RCF. The facility is also a SLL, including metrics that mirror the RCF. In the

second half of the year, the Group triggered its extension option in respect of the bilateral facility,

to extend the maturity to December 2027. As of 31 December 2024, the facility remained undrawn.

In May 2024, the Group completed the early refinancing of US$50m of US private placement (USPP)

notes that were set to mature in March 2025. The Group raised US$50m of new USPP notes, on

terms and conditions that mirror existing notes, and used this new funding to complete the early

repayment of US$50m USPP notes that were due to expire in March 2025. The new debt is comprised

of US$25m of 7‑year notes, maturing in May 2031 and US$25m of 12‑year notes, maturing in May 2036.

The refinancing exercise extended the debt maturity profile of the Group until 2036, with the next debt

maturity of US$35m now in June 2027.

251Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

35 Acquisitions and disposals

35.1 Current and prior year acquisitions

On 9 December 2024, the Group acquired an additional 17% of Denver Transit Operators LLC (DTO), an existing joint venture of the Group, for a purchase price of £6m, which increased the Group’s holding

in this joint venture to 50%. The Group continues to apply equity‑method accounting for DTO and has recognised a customer contract intangible asset of £9m as a result of this acquisition. Refer to Note 20.2.

There were no other acquisitions in 2024 (2023: £nil).

35.2 Current year disposals

During the year, the Group partially disposed of one of its portfolio of Infrastructure Investments assets as detailed below. The gain recognised from the disposal is recorded within the Group’s gain on disposal

of interests in investments.

				Percentage	Cash	Net assets	Amount recycled	Underlying
				disposed	consideration	disposed	from reserves	gain
Notes	Disposal date	Entity/asset	Structure of sale	%	£m	£m	£m	£m
35.2.1	16 December 2024	Northside at UTD Phases 1 – 4 #	Equity interest sale	5% – 65%	43	–	–	43
					43	–	–	43

# Disposal of joint venture.

35.2.1 On 16 December 2024, the Group disposed of 5%, 5%, 65% and 60% of its interests respectively in the four phases of its Northside at UTD portfolio, which is located in Richardson (Dallas), Texas,

for a cash consideration of £43m. The Group retains a 5% interest in all the entities within this portfolio. The disposal resulted in an underlying gain of £43m.

35.3 Prior year disposals

During 2023, the Group disposed of several Infrastructure Investments assets as detailed below. The gain recognised from the disposal of assets that were held within joint venture entities of the Group was

recognised within the Group’s share of results of joint ventures and associates.

				Percentage	Cash	Net assets	Amount recycled	Underlying
				disposed	consideration	disposed	from reserves	gain
Notes	Disposal date	Entity/asset	Structure of sale	%	£m	£m	£m	£m
35.3.1	28 September 2023	Moretti Apartments ^	Asset sale	n/a	5	(3)	–	2
35.3.2	8 November 2023	Gloucester Waste	Equity interest sale	49.5	56	(35)	3	24
					61	(38)	3	26

^ Disposal of asset within a joint venture entity.

35.3.1 On 28 September 2023, the Group disposed of its Moretti Apartments multifamily property asset located in Homewood, Alabama, and received total cash consideration of £5m. The asset disposal

resulted in an underlying gain of £2m being recognised in the Group’s share of joint ventures and associates.

35.3.2 On 8 November 2023, the Group disposed of its entire 49.5% interest in UBB Waste (Gloucestershire) Holdings Limited (Gloucester Waste) for a cash consideration of £56m. The disposal included the

Group’s share of joint venture net assets of £31m and £4m of accrued interest receivable and resulted in a net gain of £24m being recognised in underlying operating profit, including a loss of £6m in respect

of PPP financial asset reserves and a gain of £9m in respect of hedging reserves recycled to the income statement on disposal.

252

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

36 Share-based payments

The Company operates three equity‑settled share‑based payment arrangements, namely the Performance Share Plan (PSP), the Deferred Bonus Plan (DBP) and the Restricted Share Plan (RSP). The Group

recognised total expenses relating to equity‑settled share‑based payment transactions of £10m (2023: £15m). Refer to the Remuneration report for details of the PSP and DBP schemes.

The Company also operates three cash‑settled share‑based payment arrangements, namely the Shadow PSP (SPSP), the Shadow RSP (SRSP) and the Shadow Deferred Bonus Plan (SDBP). These share‑based

payment arrangements mirror the conditions of the equity‑settled PSP, RSP and DBP plans, the only difference being they are settled in cash. The Group recognised total expenses relating to cash‑settled

share‑based payment transactions of £16m (2023: £9m).

Movements in share plans

Equity-settled share-based payment awards

		2024			2023
	PSP	DBP	RSP	PSP	DBP	RSP
	conditional	conditional	conditional	conditional	conditional	conditional
Number of awards	awards	awards	awards	awards	awards	awards
Outstanding at 1 January	8,224,917	2,053,723	3,379,603	9,616,845	2,301,915	3,600,926
Granted during the year	2,467,740	595,706	743,784	2,625,626	752,862	839,532
Awards in lieu of dividends	–	62,168	87,033	–	65,684	79,471
Forfeited during the year	(626,202)	(124,033)	(230,607)	(776,896)	(108,696)	(279,134)
Exercised during the year	(2,522,453)	(547, 502)	(1,232,730)	(3,240,658)	(958,042)	(861,192)
Outstanding at 31 December	7,544,0 02	2,040,062	2,747,083	8,224,917	2,053,723	3,379,603
Exercisable at 31 December	–	–	–	–	–	–
Weighted average remaining contractual life (years)	1.1	1.1	1.4	1.2	1.4	1.4
Weighted average share price at the date of exercise for awards exercised in the year	376.8	370.1	396.9	370.4	371.2	340.5

The principal assumptions, including expected volatility determined from the historical weekly share price movements over the three‑year period immediately preceding the award date, used by the consultants

in the stochastic model for the 33.3% of the PSP awards granted in 2024 subject to market conditions, were:

			Closing				Calculated
			share	Expected	Expected	Risk-free	fair value
			price on	volatility of	term of	interest	of an
		Number of	award date	shares	awards	rate	award
Award date	Name of award	awards	Pence	%	Years	%	Pence
26 March 2024	PSP award	2,467,740	378.0	25.78%	3.0	4.13	257.0

For the 66.7% of the PSP awards granted in 2024 subject to non‑market conditions and for the DBP and RSP awards granted in 2024, the fair value of the awards is the closing share price on the date of grant.

253Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

36 Share-based payments continued

Movements in share plans continued

Cash-settled share-based payment awards

		2024				2023
	SPSP	SDBP		SRSP	SPSP	SDBP	SRSP
	conditional	conditional		conditional	conditional	conditional	conditional
Number of awards	awards	awards		awards	awards	awards	awards
Outstanding at 1 January	6,488,988	1,250,240		1,235,902	8,383,533	1,598,936	1,346,825
Granted during the year	2,203,042	259,366		365,500	2,278,123	308,417	435,869
Awards in lieu of dividends	–	35,778		36,404	–	38,015	31,159
Forfeited during the year	(13,483)	–		(90,617)	(875,764)	(94,174)	(160,708)
Exercised during the year	(2,070,826)	(327,486)		(342,956)	(3,296,904)	(600,954)	(417,	24 3)
Outstanding at 31 December	6,607,721	1,	217,898	1,204,233	6,488,988	1,250,240		1,235,902
Exercisable at 31 December	–		–	–	–	–		–
Weighted average remaining contractual life (years)	1.18		0.94	1.59	1.2	1.3		1.7
Weighted average share price at the date of exercise for awards exercised in the year	380.9		382.9	367.44	341.0	341.2		320.9

As at 31 December 2024, the Group’s liability in respect of outstanding cash‑settled share‑based payment awards amounted to £21m (2023: £21m). This liability has been recorded within accruals.

37 Commitments

Capital expenditure authorised and contracted for which has not been provided for in the financial statements amounted to £11m (2023: £12m) in the Group and £nil (2023: £nil) in the Company.

The Group has committed to provide its share of further equity funding and subordinated debt in Infrastructure Investments projects which have reached financial close. Refer to Note 42(f).

38 Contingent liabilities

The Company and certain subsidiary undertakings have, in the normal course of business, given guarantees and entered into counter‑indemnities in respect of bonds relating to the Group’s own contracts and given

guarantees in respect of their share of certain contractual obligations of joint ventures and associates and certain retirement benefit liabilities of the Balfour Beatty Pension Fund and the Railways Pension Scheme.

Guarantees are treated as contingent liabilities until such time as it becomes probable payment will be required under the terms of the guarantee.

Provision has been made for the Directors’ best estimate of known legal claims, investigations and legal actions in progress. This includes, but is not limited to, any new claims that may arise relating to fire

safety regulations under the Building Safety Act. The Group assesses the likelihood of success of claims, actions or ongoing investigations, taking into consideration any legal advice received. No provision is

made where the Directors consider that the action is unlikely to succeed, or that the Group cannot make a sufficiently reliable estimate of the potential obligation. However, in certain cases where assessments

are ongoing and the Group cannot yet conclude whether it is probable the claim is valid, a possible obligation may exist at 31 December 2024. In respect of these cases, it is not practicable to estimate the

financial effect based on the current status of the assessments.

39 Events after the reporting date

In the period from 1 January 2025 to 10 March 2025 (the latest practicable date prior to the date of this Annual Report and Accounts), the Company purchased 5.5m ordinary shares, which are held in treasury

with no voting rights, for a total consideration of £25m (including stamp duty and fees).

On 17 January 2025, the Group reached agreement to dispose of Omnicom Balfour Beatty, its specialist rail measurement hardware and intelligent software business, for a consideration of £24m

(subject to adjustment for working capital) to Hitachi Rail. The disposal is subject to various conditions and completion is anticipated to be in the first half of 2025. The carrying value of Omnicom Balfour Beatty

at 31 December 2024 was £(2)m. Profit on disposal, net of disposal costs, will be recognised once completion is achieved within the Group’s non‑underlying results.

There were no other material post balance sheet events arising after the reporting date.

254

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

40 Related party transactions

Joint ventures and associates

The Group has contracted with, provided services to, and received management fees from, certain

joint ventures and associates amounting to £438m (2023: £445m). These transactions occurred in the

normal course of business at market rates and terms. In addition, the Group procured equipment and

labour on behalf of certain joint ventures and associates which were recharged at cost with no mark‑up.

The amounts due from or to joint ventures and associates at the reporting date are disclosed in Notes

25 and 26 respectively.

Transactions with non-Group members

The Group also entered into transactions and had amounts outstanding with related parties which are not

members of the Group as set out below. This company was a related party as it was controlled, jointly

controlled or under significant influence by a Director of Balfour Beatty plc.

	2024	2023
	£m	£m
Site Assist Software Limited
Purchase of services	1	1

All transactions with this related party were conducted on normal commercial terms, equivalent to

those conducted with external parties. No guarantees have been given or received. No expense has

been recognised in the year for bad or doubtful debts in respect of amounts owed by this related party.

Compensation of key management personnel of the Company

	2024	2023
	£m	£m
Short‑term benefits	3.409	3.10 3
Share‑based payments	2.420	3.866
	5.829	6.969

Key management personnel comprise the executive Directors who are directly responsible for the

Group’s activities and the non‑executive Directors. The compensation included above is in respect

of the period of the year during which the individuals were Directors. Further details of Directors’

emoluments, post‑employment benefits and interests are set out in the Remuneration report on

pages 153 to 174.

During 2024, a member of the Group’s staff was seconded on a full‑time basis to The 5% Club, a charity

which is a dynamic movement of employer‑members working to create a shared prosperity across the

UK by driving ‘earn and learn’ skills training. The expense for the salary cost was borne by the Group

and no consideration was received in return.

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

41 Financial instruments

Capital risk management

The Group manages its capital to ensure its ability to continue as a going concern and to maintain an optimal capital structure to reduce the cost of capital. The components of capital are as follows: equity

attributable to equity holders of the Company comprising issued ordinary share capital, reserves and retained earnings as disclosed in Notes 32 and 33; US private placement as disclosed in Note 28; and cash

and cash equivalents and borrowings as disclosed in Note 28.

The Group maintains or adjusts its capital structure through the payment of dividends to equity holders, issue of new shares and buyback of existing shares, and drawdown of new borrowings and repayment of

existing borrowings. The policy of the Group is to ensure an appropriate balance between cash, borrowings (other than the non‑recourse borrowings of companies engaged in Infrastructure Investments projects),

working capital and the value in the Infrastructure Investments investment portfolio.

The overall capital risk management strategy of the Group remains unchanged from 2023.

In 2024 the Company commenced the fourth phase of its share buyback programme, which completed on 20 September 2024. The Company purchased 27.1m (2023: 43.3m) shares for a total consideration

of £100m (2023: £150m) and held these shares in treasury with no voting rights. The purchase of these shares, together with associated fees and stamp duty amounting to £1m (2023: £1m), utilised £101m

(2023: £151m) of the Company’s distributable profits.

share capital in issue of £13m (2023: £22m) and a corresponding increase in the capital redemption reserve.

Categories of financial instruments

			2024					2023
	Loans and					Loans and
	receivables at		Financial	Financial		receivables at		Financial	Financial	Financial
	amortised	Financial	assets at	assets at		amortised	Financial	assets at	assets at	assets at
	cost, cash	liabilities at	fair value	fair value		cost, cash	liabilities at	fair value	amortised	fair value
	and deposit	amortised cost	through OCI	through P&L	Derivatives	and deposits	amortised cost	through OCI	cost	through P&L	Derivatives
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Financial assets
Mutual funds	–	–	20	–	–	–	–	19	–	–	–
Other investment assets	–	–	–	4	–	–	–	–	2	7	–
PPP financial assets	–	–	21	–	–	–	–	24	–	–	–
Cash and deposits	1,558	–	–	–	–	1,414	–	–	–	–	–
Trade and other receivables	1,360	–	–	–	–	1,145	–	–	–	–	–
Derivatives	–	–	–	–	–	–	–	–	–	–	1
Total	2,918	–	41	4	–	2,559	–	43	2	7	1
Financial liabilities
Trade and other payables	–	(1,734)	–	–	–	–	(1,708)	–	–	–	–
Unsecured borrowings	–	(350)	–	–	–	–	(266)	–	–	–	–
Infrastructure concessions non‑recourse term loans	–	(600)	–	–	–	–	(570)	–	–	–	–
Derivatives	–	–	–	–	(1)	–	–	–	–	–	(2)
Total	–	(2,684)	–	–	(1)	–	(2,544)	–	–	–	(2)
Net	2,918	(2,684)	41	4	(1)	2,559	(2,544)	43	2	7	(1)
Current year comprehensive income/(loss) excluding
share of joint ventures and associates	63	(29)	2	(2)	1	63	(33)	4	–	(1)	–

256

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

41 Financial instruments continued

Derivatives

	Financial liabilities 2024			Financial assets/(liabilities) 2023
	Current	Non-current	Total	Current	Non‑current	Total
	£m	£m	£m	£m	£m	£m
Fuel hedges
Held for trading at fair value through income statement	–	–	–	1	–	1
Forward exchange contracts
Held for trading at fair value through income statement	–	(1)	(1)	–	(1)	(1)
Interest rate swaps
Designated as cash flow hedges	–	–	–	–	(1)	(1)
	–	(1)	(1)	1	(2)	(1)

Non-derivative financial liabilities gross maturity

The following table details the remaining contractual maturity for the Group’s non‑derivative financial liabilities. The table reflects the undiscounted contractual maturities of the financial liabilities including interest

that will accrue on those liabilities except where the Group is entitled to and intends to repay the liability before its maturity. The discount column represents the possible future cash flows included in the

maturity analysis, such as future interest, that are not included in the carrying value of the financial liability.

Maturity profile of the Group’s non-derivative financial liabilities at 31 December

			2024								2023
				Total non-							Total non‑
	Non-recourse		Other	derivative				Non‑recourse		Other	derivative
	project	Other	financial	financial		Carrying		project	Other	financial	financial		Carrying
	finance	borrowings	liabilities	liabilities	Discount	value		finance	borrowings	liabilities	liabilities	Discount	value
	£m	£m	£m	£m	£m	£m		£m	£m	£m	£m	£m	£m
Due on demand or within one year	(19)	(185)	(1,655)	(1,859)	8	(1,851)		(15)	(104)	(1,593)	(1,712)	6	(1,706)
Due within one to two years	(65)	–	(36)	(101)	9	(92)		(18)	(39)	(82)	(139)	8	(131)
Due within two to five years	(197)	(91)	(42)	(330)	31	(299)		(221)	(27)	(28)	(276)	40	(236)
Due after more than five years	(921)	(74)	(1)	(996)	554	(442)		(934)	(96)	(5)	(1,035)	564	(471)
	(1,202)	(350)	(1,734)	(3,286)	602	(2,684)	(1,18	8)	(266)	(1,708)	(3,162)	618	(2,544)
Discount	602	–	–	602				618	–	–	618
Carrying value	(600)	(350)	(1,734)	(2,684)				(570)	(266)	(1,708)	(2,544)

257Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

41 Financial instruments continued

Derivative financial liabilities gross maturity

The following table details the Group’s expected maturity for its derivative financial liabilities. The table

reflects the undiscounted net cash inflows/(outflows) on the derivative instruments that settle on a net

basis (interest rate swaps) and undiscounted gross inflows/(outflows) for those derivatives that are

settled on a gross basis (foreign exchange contracts). When the amount payable or receivable is not

fixed, the amount disclosed has been determined by reference to the projected interest rates, using

the yield curves at the reporting date.

Maturity profile of the Group’s derivatives at 31 December

		2024			2023
	Payable	Receivable	Net payable	Payable	Receivable	Net payable
	£m	£m	£m	£m	£m	£m
Due on demand or within one year	(37)	36	(1)	(14)	15	1
Due within one to two years	(7)	6	(1)	(31)	30	(1)
Due within two to five years	–	–	–	(7)	6	(1)
Total	(44)	42	(2)	(52)	51	(1)

Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk; credit risk; and liquidity risk.

The Group’s financial risk management strategy seeks to minimise the potential adverse effect of

these risks on the Group’s financial performance.

Financial risk management is carried out centrally by Group Treasury under policies approved by the

Board. Group Treasury liaises with the Group’s business units to identify, evaluate and hedge financial

risks. The Board provides written principles for overall financial risk management, as well as written

policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of

derivative financial instruments and non‑derivative financial instruments, and the investment of excess

liquidity. Compliance with policies and exposure limits is monitored through the Group’s internal audit

and risk management procedures. The Group uses derivative financial instruments to hedge certain

risk exposures. The Group does not trade in financial instruments, including derivative financial

instruments, for speculative purposes.

(a) Market risk

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange

rates and interest rates. The Group enters into a variety of derivative financial instruments to manage its

exposure to interest rate and foreign currency risk, including:

@ forward foreign exchange contracts to hedge the exchange rate risk arising on trading activities

transacted in a currency that is not the functional currency of the business unit; and

@ interest rate swaps to mitigate the cash flow variability in non‑recourse project finance loans arising

from variable interest rates on borrowings.

There has been no material change to the Group’s exposure to market risks and there has been no

change in how the Group manages those risks since 2023.

(i) Foreign currency risk management

The Group operates internationally and is exposed to foreign exchange risk arising from exposure to various

currencies, primarily to US dollars, euros and Hong Kong dollars. Foreign exchange risk arises from future

trading transactions, assets and liabilities and net investments in foreign operations.

Group policy requires business units to manage their transactional foreign exchange risk against their

functional currency. Whenever a current or future foreign currency exposure is identified with sufficient

reliability, Group Treasury enters into forward contracts on behalf of business units to cover 100% of foreign

exchange risk above materiality levels determined by the Chief Financial Officer.

As at 31 December 2024, the notional principal amounts of foreign exchange contracts in respect of foreign

currency transactions where hedge accounting is not applied was £42m (2023: £51m) receivable and £44m

(2023: £52m) payable with related cash flows expected to occur within two years (2023: three years). The

foreign exchange gains or losses resulting from fair valuing these unhedged foreign exchange contracts will

affect the income statement throughout the same periods.

The Group has not designated any forward exchange contracts as cash flow hedges in 2023 and 2024.

The Group’s investments in foreign operations are exposed to foreign currency translation risks. The Group

does not enter into forward foreign exchange or other derivative contracts to hedge foreign currency

denominated net assets.

At 31 December 2024, the Group held US$208m of debt in the form of US private placement (USPP)

notes. The USPP notes are designated as a net investment hedge against changes in the value of the

Group’s US net assets due to exchange movements. The Group reassessed the US$208m hedge at 31

December 2024 and concluded that the hedge continued to be effective. Exchange movements in the year

led to a £4m increase in the carrying amount of the liability on the Group’s balance sheet (2023: £14m

decrease). A 5% increase/decrease in the US dollar to sterling exchange rate would lead to a £8m decrease

(2023: £8m)/£9m increase (2023: £9m) in the carrying amount of the liability on the Group’s balance sheet,

with the movement recognised in other comprehensive income.

The hedging policy is reviewed periodically. At the reporting date there had been no change to the hedging

policy since 2023.

(ii) Interest rate risk management

Interest rate risk arises in the Group’s non‑recourse project companies which borrow funds at both floating

and fixed interest rates and hold financial assets measured at fair value through OCI. Floating rate

borrowings expose the Group to cash flow interest rate risk. The Group’s policy to manage this risk is to

swap floating rate interest to fixed rate, using interest rate swap contracts.

In an interest rate swap, the Group agrees to exchange the difference between fixed and floating rate

interest amounts calculated on agreed notional principal amounts. The net effect of a movement in interest

rates on income would be immaterial. The fair value of interest rate swaps is determined by discounting the

future cash flows using the yield curve at the reporting date.

258

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

41 Financial instruments continued

Financial risk factors continued

(a) Market risk continued

(ii) Interest rate risk management continued

During 2024 and 2023, the Group’s non‑recourse project subsidiaries’ borrowings at variable rates of

interest were denominated in sterling. The notional principal amounts of the subsidiaries’ interest rate

swaps outstanding at 31 December 2024 totalled £17m (2022: £17m) with maturities that match the

maturity of the underlying borrowings of seven years. At 31 December 2024, the fixed interest rate was

5.1% (2023: 5.1%) and the principal floating rates are SONIA plus a fixed margin. A 50 basis point increase/

decrease in the interest rate on floating rate borrowings for interest rate swaps would lead to a £nil increase

(2023: £nil)/£nil decrease (2023: £nil) in amounts taken directly to other comprehensive income by the

Group in relation to the Group’s exposure to interest rates on the PPP financial assets and cash flow hedges

of its Infrastructure Investments subsidiaries.

Interest rate risk also arises on the Group’s cash and cash equivalents, term deposits and other borrowings.

Other than the non‑recourse project subsidiaries’ borrowings at variable rates of interest, all the debt of the

Group is held at fixed interest rates. A 50 basis point increase/decrease in the interest rate of each currency

in which these financial instruments are held would lead to a £7m decrease (2023: £5m)/£7m increase

(2023: £5m) in the Group’s net finance cost.

(iii) Price risk management

The Group’s principal price risk exposure arises in its Infrastructure Investments concessions. At the

commencement of the concession, an element of the unitary payment by the customer is indexed to

offset the effect of inflation on the concession’s costs. The Group is exposed to price risk to the extent

that inflation differs from the index used.

(b) Credit risk

Credit risk is the risk that a counterparty will default on its contractual obligations, resulting in financial

loss. Credit risk arises from cash and deposits, derivative financial instruments, loans provided to joint

ventures and associates and credit exposures to customers, including outstanding receivables and

committed transactions. The Group has a policy of assessing the creditworthiness of potential

customers before entering into transactions set by the Board for the Group.

For cash and deposits and derivative financial instruments, the Group has a policy of only using

counterparties that are independently rated with a minimum long‑term credit rating of BBB‑ and at

31 December 2024 this criterion was met (2023: BBB‑). The credit rating of a financial institution will

determine the amount and duration for which funds may be deposited under individual risk limits set

by the Board for the Group and subsidiary companies. Management monitors the utilisation of these

credit limits regularly.

For trade and other receivables, credit evaluation is performed on the financial condition of accounts

receivable using independent ratings where available or by assessment of the customer’s credit quality

based on its financial position, past experience and other factors. The Group’s most significant

customers are public or regulated industry entities which generally have high credit ratings or are of

a high credit quality due to the nature of the customer. As such, the Group does not expect material

credit losses to occur on balances owed to the Group by its public or regulated customers. This is

in line with the Group’s experience in the past of recovering balances owed by these customers.

The Group is exposed to credit risk on loans provided to joint ventures and associates and accrued

interest on those loans, as the repayment of these amounts is contingent on the performance of the

underlying concession or operation. In the Infrastructure Investments segment the concessions are

typically financed by a combination of non‑recourse external borrowings and subordinated loans

provided by the joint venture partners. The Group assesses any expected credit losses on its loans

provided to joint ventures and associates by comparing the carrying value of the relevant investment

in joint venture or associate balance (which includes the loans provided and any accrued interest)

to future cash flows expected to be received from the joint venture or associate, discounted

where appropriate.

The maximum exposure to credit risk in respect of the above at the reporting date is the carrying value

of financial assets recorded in the financial statements, net of any allowance for losses.

There has been no material change to the Group’s exposure to credit risks and there has been no

change in how the Group manages those risks since 2023.

The Group manages liquidity risk by maintaining adequate cash balances and banking facilities,

continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial

assets and liabilities. Details of undrawn committed borrowing facilities are set out in Note 28.1.

The maturity profile of the Group’s financial liabilities is set out on page 256.

There has been no material change to the Group’s exposure to liquidity risks and there has been

no change in how the Group manages those risks since 2023.

Fair value estimation

The Group holds certain financial instruments on the balance sheet at their fair values. The following

hierarchy classifies each class of financial asset or liability in accordance with the valuation technique

applied in determining its fair value.

There have been no transfers between these categories during 2024 or 2023.

Level 1 – The fair value is calculated based on quoted prices traded in active markets for identical assets

or liabilities.

The Group holds investments in mutual funds measured at fair value through OCI which are traded in

active markets and valued at the closing market price at the reporting date.

Level 2 – The fair value is based on inputs other than quoted prices included within Level 1 that are

observable for the asset or liability, either directly or indirectly.

The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows

utilising yield curves at the reporting date and taking into account own credit risk. Own credit risk for

Infrastructure Investments’ swaps is not material and is calculated using the following credit valuation

adjustment (CVA) calculation: loss given default multiplied by exposure multiplied by probability of default.

259Balfour Beatty plc | Annual Report and Accounts 2024

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41 Financial instruments continued

Financial risk factors continued

Fair value estimation continued

The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the reporting date and yield curves derived from quoted interest rates matching the maturities of the

foreign exchange contracts. Own credit risk for the other derivative liabilities is not material and is calculated by applying a relevant credit default swap (CDS) rate obtained from a third party.

Level 3 – The fair value is based on unobservable inputs.

The fair value of the Group’s PPP financial assets is determined in the construction phase by applying an attributable profit margin by reference to the construction margin on non‑PPP projects reflecting

the construction risks retained by the construction contractor, and fair value of construction services performed. In the operational phase it is determined by discounting the future cash flows allocated to the

financial asset at a discount rate which is based on long‑term gilt rates adjusted for the risk levels associated with the assets, with market‑related movements in fair value recognised in other comprehensive

income and other movements recognised in the income statement. Amounts originally recognised in other comprehensive income are transferred to the income statement upon disposal of the asset.

A change in the discount rate would have a significant effect on the value of the asset and a 50 basis point increase/decrease, which represents management’s assessment of a reasonably possible change in

the risk‑adjusted discount rate, would lead to a £nil decrease (2023: £1m)/£nil increase (2023:£1m) in the fair value of the assets taken through equity. Refer to Note 22 for a reconciliation of the movement from

the opening balance to the closing balance.

For PPP financial assets held in joint ventures and associates, a change in the discount rate by a 50 basis point increase/decrease, which represents management’s assessment of a reasonably possible

change in the risk‑adjusted discount rate, would lead to a £21m decrease (2023: £25m)/£21m increase (2023: £26m) in the fair value of the assets taken through equity within the share of joint ventures’

and associates’ reserves.

		2024				2023
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Financial instruments at fair value	£m	£m	£m	£m	£m	£m	£m	£m
Investments in mutual fund financial assets	20	–	–	20	19	–	–	19
PPP financial assets	–	–	21	21	–	–	24	24
Other investment assets	–	–	4	4	–	–	7	7
Financial assets – fuel hedges	–	–	–	–	–	1	–	1
Total assets measured at fair value	20	–	25	45	19	1	31	51
Financial liabilities – infrastructure
concessions interest rate swaps	–	–	–	–	–	(1)	–	(1)
Financial liabilities – forward exchange contracts	–	(1)	–	(1)	–	(1)	–	(1)
Total liabilities measured at fair value	–	(1)	–	(1)	–	(2)	–	(2)

260

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

42 Principal subsidiaries, joint ventures and associates

(a) Principal subsidiaries

	Country of
	incorporation
	or registration
Construction and support services
Balfour Beatty Group Ltd
Balfour Beatty Construction Group Inc	US
Balfour Beatty Infrastructure Inc	US
Infrastructure Investments
Balfour Beatty Communities LLC	US
Balfour Beatty Infrastructure Investments Ltd*
Balfour Beatty Investments Inc	US
Balfour Beatty Campus Solutions LLC	US
Balfour Beatty Developments Inc	US
Other Balfour Beatty Holdings Inc	US

(b) Principal joint ventures and associates

	Country of	Ownership
	incorporation	interest
	or registration	%
Construction and support services
Gammon China Ltd	Hong Kong	50.0
Infrastructure Investments
Connect Plus (M25) Ltd		15.0

The Group carries out a number of its larger contracts in joint arrangements with other contractors so as

to share resources and risk. The principal joint projects in progress during the year are shown below.

	Country of	Ownership
	incorporation	interest
	or registration	%
M25 Maintenance		52.5
HS2 – Area North		50.0
Central Rail Systems Alliance		80.0
Old Oak Common		42.0
Gilbane/Balfour Beatty Eccles 1951	US	50.0
Skanska/Balfour Beatty	US	50.0
Driscoll/Balfour Beatty	US	35.0
Andres/Balfour Beatty	US	55.0
Kjellstrom+Lee/Balfour Beatty	US	50.0
LAX Integrated Express Solutions	US	30.0
LBJ East	US	45.0

Notes

(i) Subsidiaries, joint ventures and associates whose results did not, in the opinion of the Directors, materially affect the results or net

assets of the Group are not shown.

(ii) Unless otherwise stated, 100% of the equity capital is owned and companies are registered in England and Wales and the principal

operations of each company are conducted in the country of incorporation.

* Indicates held directly by Balfour Beatty plc.

A full list of the Group’s related undertakings is included in Note 44.

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42 Principal subsidiaries, joint ventures and associates continued

(d) Balfour Beatty Investments UK

Roads

Balfour Beatty is a promoter, developer and investor in 12 road and street lighting projects to construct new roads, to upgrade and maintain existing roads and to replace and maintain street lighting. The principal

contract is the project agreement with the governmental highway authority. All assets transfer to the customer at the end of the concession.

		Total debt
		and equity
		funding		Method of	Financial	Duration	Construction
Concession company (i)	Project	£m	Shareholding	accounting	close	years	completion
Connect M1‑A1 Ltd (ii)	30km road	290	20%	JV	March 1996	30	1999
Connect A50 Ltd (ii)	57km road	42	25%	JV	May 1996	30	1998
Connect A30/A35 Ltd (ii)	102km road	127	20%	JV	July 1996	30	2000
Connect M77/GSO plc (ii)	25km road	167	85%	JV	May 2003	32	2005
Connect Roads Sunderland Ltd (ii)	Streetlighting	27	20%	JV	August 2003	25	2008
Connect Roads South Tyneside Ltd (ii)	Streetlighting	28	20%	JV	December 2005	25	2010
Connect Roads Derby Ltd	Streetlighting	36	100%	Subsidiary	April 2007	25	2012
Connect Plus (M25) Ltd (ii)	J16 – J23, J27 – J30 and
	A1(M) Hatfield Tunnel	1,309	15%	JV	May 2009	30	2012
Connect CNDR Ltd (ii)	Carlisle Northern
	Development Route	176	25%	JV	July 2009	30	2012
Connect Roads Coventry Ltd (ii)	Streetlighting	56	20%	JV	August 2010	25	2015
Connect Roads Cambridgeshire Ltd (ii)	Streetlighting	51	20%	JV	April 2011	25	2016
Connect Roads Northamptonshire Ltd (ii)	Streetlighting	64	20%	JV	August 2011	25	2016

Notes

(i) Registered in England and Wales and the principal operations of each company are in England and Wales, except Connect M77/GSO plc which is registered, and conducts their principal operations, in Scotland.

(ii) Due to the shareholders’ agreement between Balfour Beatty and the other shareholder requiring unanimity of agreement in respect of significant matters related to the financial and operating policies of this company, the Directors have accounted for its interest in this company

as a joint venture.

Healthcare

Balfour Beatty is a promoter, developer and investor in two healthcare projects to build hospital accommodation and to provide certain non‑medical facilities management services over the concession period.

The principal contract for Birmingham is the project agreement between the concession company and the NHS Trust and for the Irish primary care centres, the project agreement is with the Irish Government.

All assets transfer to the customer at the end of the concession.

		Total debt
		and equity
		funding		Method of	Financial	Duration	Construction
Concession company (i)(ii)	Project	£m	Shareholding	accounting	close	years	completion
Consort Healthcare (Birmingham) Ltd	Teaching hospital and mental health hospital	553	40%	JV	June 2006	40	2011
Healthcare Centres PPP Ltd	Primary health care centres	158	40%	JV	May 2016	26	2019

Notes

(i) Registered in England and Wales and the principal operations of each company are in England and Wales, except Healthcare Centres PPP Ltd which is registered, and conducts its principal operations, in Ireland.

as a joint venture.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

42 Principal subsidiaries, joint ventures and associates continued

(d) Balfour Beatty Investments UK continued

Student accommodation

Balfour Beatty is a promoter, developer and investor in five student accommodation projects. On Holyrood, Aberystwyth and two Sussex projects, the principal agreement is between the concession company and the

university and the assets transfer to the customer at the end of the concession. On Glasgow Residences the building is owned outright by Balfour Beatty and rooms are let to individual students.

		Total debt
		and equity
		funding		Method of	Financial	Duration	Construction
Concession company (i)	Project	£m	Shareholding	accounting	close	years	completion
Holyrood Student Accommodation SPV Ltd (ii)	Edinburgh	82	20%	JV	July 2013	50	2016
Aberystwyth Student Accommodation Ltd	Aberystwyth	51	100%	Subsidiary	July 2013	35	2015
Glasgow Residences (Kennedy Street) LLP	Glasgow	40	100%	Subsidiary	April 2016	n/a	2017
East Slope Residencies Student Accommodation LLP	Sussex	218	80%	Subsidiary	March 2017	50	2020
West Slope Residencies LLP	Sussex	343	81%	Subsidiary	December 2023	50	2028

Notes

(i) Registered in England and Wales and the principal operations of each company are in England and Wales, except Holyrood Student Accommodation SPV Ltd and Glasgow Residences (Kennedy Street) LLP which are registered, and conduct their principal operations, in Scotland.

as a joint venture.

Other concessions

Pevensey Coastal Defence Ltd (PCDL) has a 25‑year contract with the Environment Agency to maintain a shingle bank sea defence in East Sussex. Thanet involves the operation of transmission assets for the 300MW

offshore wind farm project located off the Kent coast. Gwynt y Môr involves the operation of transmission assets for the 576MW offshore wind farm in the Irish Sea. Humber involves the operation of transmission

assets for the 219MW offshore wind farm in the North Sea. Thanet, Gwynt y Môr and Humber operate and maintain the transmission assets under the terms of perpetual licences granted by Ofgem which

contain the right to be paid a revenue stream over a 20‑year period on an availability basis. Welland Bio Power involves the design, construction, financing, operation and maintenance of a 10.4MW waste wood

gasifier located at Pebble Hall Farm, Thredingworth. The East Wick and Sweetwater development is a London Legacy Development Corporation project, being carried out in phases, which will result in the

creation of two communities, East Wick and Sweetwater, at the Queen Elizabeth Olympic Park in London. With the exception of the Welland Bio Power plant and the Eastwick and Sweetwater project, all

assets transfer to the customer at the end of the relevant concession.

		Total debt
		and equity
		funding		Method of	Financial	Duration	Construction
Concession company (i)(ii)	Project	£m	Shareholding	accounting	close	years	completion
Pevensey Coastal Defence Ltd	Sea defences	3	25%	JV	July 2000	25	n/a
East Wick and Sweetwater Projects (Phase 1) Ltd	Property development	99	50%	JV	January 2019	6	2021
East Wick and Sweetwater Projects (Phase 2) Ltd	Property development	76	50%	JV	August 2023	3	2026
Thanet OFTO Ltd	Offshore transmission	197	20%	JV	December 2014	20	n/a
Gwynt y Môr OFTO plc	Offshore transmission	256	60%	JV	February 2015	20	n/a
Welland Bio Power Ltd	Waste wood gasifier	17	29.2%	JV	March 2015	n/a	2018
Humber Gateway OFTO Ltd	Offshore transmission	187	20%	JV	September 2016	20	n/a

Notes

(i) Registered in England and Wales and the principal operations of each company are in England and Wales.

companies as a joint venture.

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42 Principal subsidiaries, joint ventures and associates continued

(e) Balfour Beatty Investments North America

Military housing

Summary Balfour Beatty through its subsidiary Balfour Beatty Communities LLC is a manager, developer, and investor in a number of US military privatisation projects associated with a total of 55 US

Government military bases which include 55 military family housing communities and one unaccompanied personnel housing community that are expected to contain approximately 43,000 housing units once

development, construction and renovation are complete.

The projects comprise 11 military family housing privatisation projects with the United States Department of the Army (Army), seven projects with the United States Department of the Air Force (Air Force) and two

projects with the United States Department of the Navy (Navy). In addition, there is one unaccompanied personnel housing (UPH) project with the Army at Fort Stewart.

Contractual arrangements The first phase of the project, known as the initial development period, covers the period of initial construction or renovation of military housing on a base, typically lasting three

to eight years. With respect to Army and Navy projects, the Government becomes a member or partner of the project entity (Project LLC); the Air Force is not a named partner or member in Balfour Beatty

Communities’ Project LLCs, however it contributes a commitment to provide a Government direct loan to the Project LLC and has similar rights to share in distributions and cash flows of the Project LLC. On each

project, the Project LLC enters into a ground lease with the Government, which provides the Project LLC with a leasehold interest in the land and title to the improvements on the land for a period of 50 years.

Each of these military housing privatisation projects includes agreements covering the management, renovation, and development of existing housing units, as well as the development, construction, renovation

and management of new units during the term of the project, which, in the case of the Army, could potentially extend for up to an additional 25 years. The 50‑year duration of each project calls for continuous

renovation, rehabilitation, demolition and reconstruction of housing units. At the end of the ground lease term the Project LLC’s leasehold interest terminates and all project improvements on the land generally

transfer to the Government.

Preferred returns The projects will typically receive, to the extent that adequate funds are available, an annual minimum preferred return. On most existing projects, this annual minimum preferred return ranges

from 9% to 12% of Balfour Beatty Communities’ initial equity contribution to the project.

Allocation of remaining operating cash flow Operating cash flow remaining after the annual minimum preferred return is paid is shared between Balfour Beatty Communities and the reinvestment account

held by the project for the benefit of the Government. On most of the existing projects, the total amount that Balfour Beatty Communities is entitled to receive (inclusive of the preferred return) is generally

capped at an annual modified rate of return, or cash‑on‑cash return, on its initial equity contribution to the project. Historically, these caps have ranged between approximately 9% to 18% depending on the

particular project and the type of return (annual modified rates of return or cash‑on‑cash). However, in some of the more recent projects, there are either no annual caps or lower projected annual rates of return.

The total capped return generally will include the annual minimum preferred return. The reinvestment account is an account established for the benefit of the military, but funds may be withdrawn for

construction, development and renovation costs during the remaining life of a privatisation project upon approval by the applicable military service.

Return of equity Generally, at the end of a project term, any monies remaining in the reinvestment account are distributed to Balfour Beatty Communities and the Army, Navy or Air Force, in a predetermined

order of priority. Typically these distributions will have the effect of providing the parties with sufficient funds to provide a minimum annual return over the life of the project and a complete return of the initial capital

contribution. After payment of the minimum annual return and the return of a party’s initial contribution, all remaining funds will typically be distributed to the applicable military service.

		Total project
		funding	Financial	Duration	Construction
Military concession company (i)	Projects	US$m	close	years	completion
Military family housing
Fort Carson Family Housing LLC	Army base	176	November 2003	46	2004
– Fort Carson expansion		130	November 2006	43	2010
– Fort Carson GTA expansion		99	April 2010	39	2013
– Fort Carson GTA II expansion		68	June 2015	34	2018
Stewart Hunter Housing LLC	Two Army bases	374	November 2003	50	2012
Fort Hamilton Housing LLC	Army base	61	June 2004	50	2009
Fort Detrick/Walter Reed Army Medical Center Housing LLC	Two Army bases	112	July 2004	50	2008
Northeast Housing LLC	Seven Navy bases	496	November 2004	50	2010

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

42 Principal subsidiaries, joint ventures and associates continued

(e) Balfour Beatty Investments North America continued

Military housing continued

		Total project
		funding	Financial	Duration	Construction
Military concession company (i)	Projects	US$m	close	years	completion
Fort Eustis/Fort Story Housing LLC	Two Army bases	175	March 2005	50	2011
– Fort Eustis expansion		8	July 2010	45	2011
– Fort Eustis – Marseilles Village		26	March 2013	42	2015
Fort Bliss/White Sands Missile Range Housing LP	Two Army bases	427	July 2005	50	2011
– Fort Bliss expansion		46	December 2009	46	2011
– Fort Bliss GTA expansion phase I		156	July 2011	44	2014
– Fort Bliss GTA expansion phase II		146	November 2012	43	2016
Fort Eisenhower Housing LLC	Army base	159	May 2006	50	2012
Carlisle/Picatinny Family Housing LP	Two Army bases	84	July 2006	50	2011
– Carlisle Heritage Heights phase II		21	October 2012	44	2014
AETC Housing LP	Four Air Force bases	359	February 2007	50	2012
Southeast Housing LLC	11 Navy bases	558	November 2007	50	2013
Vandenberg Housing LP	Air Force base	155	November 2007	50	2012
Leonard Wood Family Communities LLC	Army base	231	Acquired June 2008	47	2014
AMC West Housing LP	Three Air Force bases	428	July 2008	50	2015
West Point Housing LLC	Army base	220	August 2008	50	2016
Fort Jackson Housing LLC	Army base	181	October 2008	50	2013
Lackland Family Housing LLC	Air Force base	105	Acquired December 2008	50	2013
Western Group Housing LP	Four Air Force bases	328	March 2012	50	2017
Northern Group Housing LLC	Six Air Force bases	427	August 2013	50	2019
ACC Group Housing LLC	Two Air Force bases	56	June 2014	50	2018
Military unaccompanied personnel housing
Stewart Hunter Housing LLC		36	January 2008	50	2010

Note

(i) Registered in the US and the principal operations of each project are conducted in the US.

The Group evaluated each of its interests in the military housing projects to determine if the entities should be consolidated. This analysis included, but was not limited to, identifying the activities that most

significantly impact an entity’s economic performance, which party or parties control those activities and the risks associated with these entities. Decision‑making power over key facets of the contracts was

evaluated when determining which party or parties had control over the activities that most significantly impacted a project’s economics. Based on this review, the Directors consider that the Group does not

have the power to direct these activities and does not have control and therefore the Group does not consolidate the military housing projects and accounts for these projects as investments in associates.

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42 Principal subsidiaries, joint ventures and associates continued

(e) Balfour Beatty Investments North America continued

Aviation

Summary

Balfour Beatty is a developer, operator and investor in an automated people mover at Los Angeles International Airport. The people mover will be a 2.25‑mile above ground airport transport system.

Contractual arrangements The principal contract is the project agreement between the concession partnership and the airport authority. All assets transfer to the authority at the end of the concession.

		Total project
		funding		Method of	Financial	Duration	Construction
Concession company	Project	US$m	Shareholding	accounting	close	years	completion
LAX Integrated Express Solutions LLC (i)(ii)	LINXS	2,828	27%	JV	June 2018	30	2024

Notes

(i) Registered in the US and the principal operations of the project are conducted in the US.

as a joint venture.

Residential investments

Summary Balfour Beatty is a developer, operator and investor in nine multifamily residential projects.

Contractual arrangements Balfour Beatty has acquired residential apartment buildings for nine multifamily residential projects. For all residential projects, the entities have entered into agreements with

Balfour Beatty Communities LLC to perform the operations and renovation work.

	Total project
	funding		Method of	Financial	Renovation
Residential investments (i)(ii)	US$m	Shareholding	accounting	close	completion
Carolina Cove (Wilmington) Owner LLC (North Carolina)	48	50%	JV	December 2017	2022
Lexington (Ridgeland) Owner, LLC (Jackson, Mississippi)	27	50%	JV	August 2018	2025
Landings (Jacksonville) Owner, LLC (Florida)	48	50%	JV	August 2019	2025
Retreat at Schillinger (Mobile) Owner, LLC (Alabama)	33	50%	JV	December 2019	2026
Paces Brook (Columbia) Owner, LLC (South Carolina)	27	50%	JV	December 2019	2026
Chenal Pointe (Little Rock) Owner, LLC (Arkansas)	34	50%	JV	October 2020	2027
San Mateo (Kissimmee) Owner, LLC (Florida)	81	50%	JV	August 2021	2027
View SA LLC (San Antonio, Texas)	76	87%	JV	June 2022	2025
Mt Laurel, LLC (New Jersey)	80	31%	JV	June 2024	2025

Notes

(i) Registered in the US and the principal operations of each project are conducted in the US.

(ii) Due to the shareholders’/partnership agreement between Balfour Beatty and the other shareholder/partner requiring unanimity of agreement in respect of significant matters related to the financial and operating policies of this undertaking, the Directors have accounted

for its interests in these undertakings as a joint venture.

Student accommodation

Summary Balfour Beatty is also a developer and owner of seven student accommodation projects.

Contractual arrangements The principal contracts in the student accommodation projects are the ground leases, development leases and operating agreements with the state universities setting out the

obligations for the construction, operation and maintenance of the student accommodation including lifecycle replacement during the concession period. The Tallahassee and Denton projects are investments

in existing off‑campus student housing communities which are structured as subsidiaries.

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

42 Principal subsidiaries, joint ventures and associates continued

(e) Balfour Beatty Investments North America continued

Student accommodation continued

	Total project					Construction/
	funding		Method of	Financial	Duration	renovation
Concession company (i)(ii)	US$m	Shareholding	accounting	close	years	completion
Northside Campus Partners LP (Texas Dallas)	54	5%	JV	March 2015	61	2016
Northside Campus Partners 2, LP (Texas Dallas)	67	5%	JV	February 2017	61	2018
Northside Campus Partners 3, LP (Texas Dallas)	36	5%	JV	June 2019	61	2020
Northside Campus Partners 4, LP (Texas Dallas)	70	5%	JV	December 2019	61	2021
Swiftsure Housing Partners, LLC (Vanderbilt)	154	23%	JV	April 2021	45	2023
Oktiv (Tallahassee) Owner, LLC (Florida)	53	100%	Subsidiary	June 2023		2025
Leonard (Denton) Owner, LLC (Texas)	45	100%	Subsidiary	December 2024		2026

Notes

(i) Registered in the US and the principal operations of each project are conducted in the US.

for its interests in these undertakings as a joint venture.

(f) Balfour Beatty Investments UK and North America

Total future committed equity and debt funding for Infrastructure Investments’ project companies

				2028
	2025	2026	2027	onwards	Total
Concessions	£m	£m	£m	£m	£m
UK
Student accommodation	–	–	19	13	32
Other concessions	5	–	–	–	5
	5	–	19	13	37
North America
Aviation	21	–	–	–	21
Residential investments	16	–	–	–	16
	37	–	–	–	37
	42	–	19	13	74
Projects at financial close	21	–	19	13	53
Projects at preferred bidder stage	21	–	–	–	21
Total	42	–	19	13	74

43 Audit exemptions taken for subsidiaries

The following subsidiaries are exempt from the requirements under the Companies Act 2006 relating to the audit of individual financial statements by virtue of Section 479A of the Act.

	Company registration number
Education Investments Holdings Ltd	6863458
Consort Healthcare Infrastructure Investments Ltd	6859623
Manchester Residences (New Cross) Ltd	112015 9 6
South Cambridgeshire Investments Holdings Limited	12843704

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44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024

In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates and joint ventures, including the principal activity, the country of incorporation and the effective

percentage of equity owned as at 31 December 2024 is disclosed below. Unless otherwise stated, all interests are in the ordinary share capital or shares of common stock in the entity and are held indirectly by

the Company, and all entities operate principally in their country of incorporation. All subsidiaries had a reporting period ended 31 December 2024 and are wholly owned and consolidated into the Group’s results,

except where indicated.

Subsidiary undertakings incorporated in the United Kingdom
Entity	Principal activity
Q14 Quorum Business Park, Benton Lane, Newcastle upon
Tyne NE12 8BU
Aberystwyth Student	Infrastructure Concession
Accommodation Ltd
Balfour Beatty Infrastructure	Investment Holding Company
Investments Ltd (i)
Balfour Beatty Infrastructure	Dormant
Partners Member Ltd
Balfour Beatty Infrastructure	Investment Holding Company
Projects Investments Ltd
Balfour Beatty Investments Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty OFTO	Investment Holding Company
Holdings Ltd
Balfour Beatty Rail Corporate	Agent of Balfour Beatty Group Ltd
Services Ltd
Balfour Beatty WorkSmart Ltd	Agent of Balfour Beatty Group Ltd
BBI Holdings Australia Ltd	Dormant
BBPF LLP (iii)	Investment Partnership
Connect Roads Derby	Investment Holding Company
Holdings Ltd
Connect Roads Derby Ltd	Infrastructure Concession
Connect Roads Infrastructure	Investment Holding Company
Investments Ltd
Consort Healthcare	Investment Holding Company
Infrastructure Investments Ltd
East Slope Residencies Facilities Infrastructure Concession
Management Ltd
East Slope Residencies	Investment Holding Company
Holdings Ltd
East Slope Residencies	Investment Holding Company
Partner Ltd
East Slope Residencies plc (ii)	Infrastructure Concession
East Slope Residencies Student	Infrastructure Concession
Accommodation LLP (ii)(iii)
Education Investments	Investment Holding Company
Holdings Ltd

Entity	Principal activity
Initial GP1 Ltd	Investment Holding Company
Manchester Residences	Infrastructure Concession
(New Cross) Ltd
South Cambridgeshire	Investment Holding Company
Investments Holdings Ltd
Urban Fox Networks (UK) Ltd (vi)	Infrastructure Concession
West Slope Residencies	Infrastructure Concession
Facilities Management Ltd
West Slope Residencies	Infrastructure Concession
Finance Ltd
West Slope Residencies	Investment Holding Company
Holdings Ltd (v)
West Slope Residencies	Infrastructure Concession
LLP (iii)(v)
West Slope Residencies	Investment Holding Company
Partner Ltd
West Stratford Developments	Investment Holding Company
Ltd (iv)
5 Churchill Place, Canary Wharf, London E14 5HU
Avatar Ltd	Dormant
Balfour Beatty Build Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Building Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty CE Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Civil	Agent of Balfour Beatty Group Ltd
Engineering (SW) Ltd
Balfour Beatty Civil	Agent of Balfour Beatty Group Ltd
Engineering Ltd
Balfour Beatty Civils Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Const Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Construction	Agent of Balfour Beatty Group Ltd
(SW) Ltd
Balfour Beatty Construction	Agent of Balfour Beatty Group Ltd
International Ltd
Balfour Beatty Construction	Agent of Balfour Beatty Group Ltd
Northern Ltd

Entity	Principal activity
Balfour Beatty Engineering	Agent of Balfour Beatty Group Ltd
Services (HY) Ltd
Balfour Beatty Engineering Ltd	Dormant
Balfour Beatty Group	Employer For UK Workforce
Employment Ltd
Balfour Beatty Group Ltd	Construction & Support Services
Balfour Beatty Homes Ltd	Agent of Manring Homes Ltd
Balfour Beatty International Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Investment	Investment Holding Company
Holdings Ltd (i)
Balfour Beatty Management Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Nominees Ltd	Nominee Company
Balfour Beatty Overseas	Investment Holding Company
Investments Ltd
Balfour Beatty Overseas Ltd	Investment Holding Company
Balfour Beatty Property Ltd (i)	Agent of Balfour Beatty plc
Balfour Beatty Rail	Agent of Balfour Beatty Group Ltd
Infrastructure Services Ltd
Balfour Beatty Rail Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Rail Projects Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Rail	Agent of Balfour Beatty Group Ltd
Technologies Ltd
Balfour Beatty Rail Track	Agent of Balfour Beatty Group Ltd
Systems Ltd
Balfour Beatty	Agent of Balfour Beatty Group Ltd
Refurbishment Ltd
Balfour Beatty Regional	Agent of Balfour Beatty Group Ltd
Construction Ltd
Balfour Beatty Utility	Agent of Balfour Beatty Group Ltd
Solutions Ltd
Balfour Kilpatrick Ltd	Dormant
BB Indonesia Ltd	Support Services
Balvac Ltd	Agent of Balfour Beatty Group Ltd
Bical Construction Ltd	Agent of Balfour Beatty Group Ltd
Bignell & Associates Ltd	Agent of Balfour Beatty Group Ltd

268

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Entity	Principal activity
Birse Group Ltd	Investment Holding Company
Birse Metro Ltd	Dormant
Bnoms Ltd (i)	Nominee Company
BPH Equipment Ltd	Agent of Balfour Beatty Group Ltd
Cowlin Group Ltd	Dormant
Devonshire House Dormant	Dormant
Three Ltd
Guinea Investments Ltd	Investment Holding Company
G. N. Haden & Sons Ltd	Dormant
Haden Building Services Ltd	Dormant
Haden Young Ltd (i)	Dormant
Hall & Tawse Western Ltd	Dormant
Laser Rail Ltd	Agent of Balfour Beatty Group Ltd
Lounsdale Electric Ltd	Dormant
Manring Homes Ltd (i)	Property Investment
Multibuild (Construction &	Agent of Balfour Beatty Group Ltd
Interiors) Ltd
Office Projects (Interiors) Ltd	Agent of Balfour Beatty Group Ltd
Raynesway Construction Ltd	Agent of Balfour Beatty Group Ltd
Strata Construction Ltd	Dormant
Hereford Steel Works, Holmer Road, Hereford HR4 9SW
Painter Brothers Ltd	Agent of Balfour Beatty Group Ltd
Kings Business Park, Kings Drive, Prescot, Merseyside L34 1PJ
Balfour Beatty Pension Trust	Pension Fund Trustee
Ltd (i)
C/O Mc Griggors LLP, Arnott House, 12–16 Bridge Street, Belfast BT1 1LS, Northern Ireland
Balfour Kilpatrick Northern	Dormant
Ireland Ltd
The Curve Building, Axis Business Park, Hurricane Way, Langley, Berkshire SL3 8AG
Balfour Beatty Ground	Agent of Balfour Beatty Group Ltd
Engineering Ltd
Balfour Beatty Infrastructure	Agent of Balfour Beatty Group Ltd
Services Ltd
Balfour Beatty Living Places Ltd	Agent of Balfour Beatty Group Ltd
Sunderland Streetlighting Ltd	Agent of Balfour Beatty Group Ltd
Testing and Analysis Ltd	Agent of Balfour Beatty Group Ltd

Entity	Principal activity
Maxim 7, Maxim Office Park, Parklands Avenue, Eurocentral,
Holytown ML1 4WQ
Balfour Beatty Construction Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Construction	Agent of Balfour Beatty Group Ltd
Scottish & Southern Ltd
Balfour Beatty Kilpatrick Ltd	Agent of Balfour Beatty Group Ltd
Balfour Beatty Rail Residuary Ltd Agent of Balfour Beatty Group Ltd
Balfour Beatty Regional Civil	Agent of Balfour Beatty Group Ltd
Engineering Ltd
BBPFS LP (iii)	Investment Partnership
Glasgow Residences (Kennedy	Investment Holding Company
Street) Holdings Ltd
Glasgow Residences (Kennedy	Infrastructure Concession
Street) LLP (iii)
Glasgow Residences (Kennedy	Infrastructure Concession
Street) SPV Ltd
Hall & Tawse Ltd	Dormant
Initial Founder Partner GP1 Ltd	Investment Holding Company
Midmill Business Park, Tumulus Way, Kintore, Aberdeenshire
AB51 0TG
Balfour Beatty Engineering	Agent of Balfour Beatty Group Ltd
Services (CL) Ltd
Tower Bridge House, St Katharine’s Way, London E1W 1DD
Balfour Beatty Power	Dormant
Construction Ltd
Balfour Beatty Power Networks	Dormant
(Distribution Services) Ltd
Branlow Ltd	Dormant – In liquidation
Mansell Maintenance Ltd	Dormant
30 Old Bailey, London EC4M 7AU
Birse Construction Ltd	Investment Holding Company –
	In Liquidation
Edgar Allen Engineering Ltd	Dormant – In Liquidation
Mansell plc	Investment Holding Company –
	In Liquidation
West Service Road, Raynesway, Derby DE21 7BG
Balfour Beatty Plant & Fleet	Agent of Balfour Beatty Group Ltd
Services Ltd

Entity		Principal activity
C/O Mazars LLP, 100 Queen Street, Glasgow G1 3DN Scotland
Balfour Beatty Engineering		Dormant – In liquidation
Services (LEL) Ltd
Lumina Building, 40 Ainslie Road, Hillington Park, Glasgow
G52 4RU
Shaw‑Petrie Ltd		Dormant
42-44 Clarendon Road, Watford, Hertfordshire WD17 1DR
Barlow & Young, Ltd		Dormant
Haden International Ltd		Dormant
Fourth Floor, 130 Wilton Road, London SW1V 1LQ
00158345	Ltd	Dormant
0119 8171	Ltd	Dormant
BICC Dormant One Ltd		Dormant
Devonshire House Dormant		Dormant
One Ltd
Third Floor Devonshire House, Mayfair Place, London W1X 5FH
BICC Thermoheat Ltd		Dormant

Notes

(i) Held directly by Balfour Beatty plc.

(ii) 80% owned.

(iii) Partnership interests held.

(iv) 31 March year end.

(v) 81% owned.

(vi) The Group holds a 77.8% direct interest in Urban Fox Networks (UK) Ltd and an

indirect interest of 5.6% through the Group interest in Urban Electric Networks Ltd .

44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024 continued

Subsidiary undertakings incorporated in the United Kingdom continued

269Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Entity		Principal activity
Australia
Level	12, 680	George Street, Sydney, NSW 2000
Balfour Beatty Australian		Holding company
Limited Partnership (ii)
Level	12, 680	George Street, Sydney, NSW 2000
Balfour Beatty Australia Pty Ltd		Construction & Support Services
Bahamas
The Alexander Corporate Group Limited, One Millars Court, P.O. Box N-7117, Nassau
Balfour Beatty Bahamas Ltd		Dormant – In liquidation
Canada
Borden Ladner Gervais LLP, 22 Adelaide Street West, Suite
34	00, Toronto, ON, M5H 4E3
BB Group Canada Inc		Investment Holding Company
Taylor McCaffrey LLP, 900-400 St. Mary Avenue, Winnipeg, MB, R3C 4K5
Balfour Beatty Communities		Infrastructure Investment
GP, Inc
Balfour Beatty Communities, LP (ii)		Infrastructure Investment
Balfour Beatty Construction, LP (ii)		Construction Services
Balfour Beatty Construction		Construction Services
GP, Inc
Balfour Beatty Investments		Infrastructure Investment
GP, Inc
Balfour Beatty Investments, LP (ii) Infrastructure Investment
Germany
Garmischer Strasse 35, 81373 Munich
Balfour Beatty Rail GmbH		Dormant
BICC Holdings GmbH		Dormant
Schreck‑Mieves GmbH		Dormant
Hong Kong
5/F, Manulife Place348 Kwun Tong Road Kowloon Hong Kong
Balfour Beatty Hong Kong Ltd		Construction & Support Services

Entity	Principal activity
India
6th Floor, N-1 Balsa Block, Manyata Embassy Business Park, Nagavara, Rachenahalli Village, Bangalore – 560045, India
Balfour Beatty Infrastructure	Engineering Design Consultancy
India Pvt. Ltd
Ireland
3 Dublin Landings, North Wall Quay, Dublin 1, D01 C4E0
Balfour Beatty Ireland Ltd	Support Services
Isle of Man
Tower House, Loch Promenade, Douglas IM1 2LZ, Isle of Man
Delphian Insurance Company	Insurance Company
Ltd (i)
Jersey
12 Castle Street, St. Helier, Jersey
Balfour Beatty Employees	Employee Trust
Trustees Ltd (i)
Malaysia
12th Floor, Menara symphony, No 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200	Petaling Jaya, Selangor
Balfour Beatty Rail Design	Support Services
International Sdn Bhd
Netherlands
Rapenburgerstraat 177/B, 1011 VM Amsterdam
Balfour Beatty Netherlands B.V.	Investment Holding Company
Romania
23 General Ernest Brosteanu Street, 1st District, 010527, Bucharest
S.C. Balfour Beatty Rail S.R.L.	Dormant ‑ In Liquidation
Sri Lanka
Phase 3 Investment Promotion Zone, Katunayake, Colombo, Western Province
Balfour Beatty Ceylon	Support Services
(Private)Ltd
Thailand
9 Soi Santisuk, Sithisarn Road, Huay Kwang, Bangkok
Asia Trade Development Co Ltd	Dormant

Entity	Principal activity
Balfour Beatty Construction	Dormant
(Thailand) Co Ltd
Balfour Beatty Holdings	Dormant
(Thailand) Co Ltd
Balfour Beatty Thai Ltd	Dormant
Linwood Co Ltd	Dormant
United States
1011	Centre Road, Suite 310, Wilmington DE 19805
Balfour Beatty Holdings Inc	Investment Holding Company
Balfour Beatty LLC	Investment Holding Company
300	Galleria Parkway, Suite 2050, Atlanta, GA 30339
National Engineering &	Construction Services
Contracting Company
Balfour Beatty Infrastructure, Inc	Construction Services
Corporation Service Company, 1127 Broadway Street NE, Suite 310, Salem OR 97301
Balfour Beatty Rock Springs, LLC	Construction Services
Corporation Service Company, 1703 Laurel Street, Columbia, SC 29201
National Casualty and Assurance, Inc	Insurance Company
Corporation Service Company, 251 Little Falls Drive, Wilmington DE 19808
Balfour Beatty Campus	Infrastructure Holding Company
Solutions, LLC
Balfour Beatty Communities, LLC	Infrastructure Investment
Balfour Beatty Construction	Construction Services
D.C., LLC
Balfour Beatty Construction, LLC	Construction Services
Balfour Beatty Developments	Infrastructure Investment
Holdo, LLC
Balfour Beatty Developments, Inc	Construction Services

44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024

Subsidiary undertakings incorporated outside the United Kingdom

270

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Entity	Principal activity
Balfour Beatty Equipment, LLC	Construction Services
Balfour Beatty Investments, Inc	Investment Company
Balfour Beatty Management Inc	Business Services
Balfour Beatty/Benham	Infrastructure Investment
Military Communities LLC (v)
Balfour Beatty/PHELPS Military	Infrastructure Investment
Communities LLC (iv)
Balfour Beatty Military Housing	Infrastructure Investment
Development LLC
Balfour Beatty Military Housing	Investment Holding Company
Investments LLC
Balfour Beatty Military Housing	Infrastructure Investment
Management LLC
Balfour Beatty – Worthgroup, LLC	Construction Services
BBC AF Housing Construction	Infrastructure Investment
LLC
BBC AF Management/	Infrastructure Investment
Development LLC
BBC Independent Member I, Inc	Infrastructure Investment
BBC Independent Member II, Inc	Infrastructure Investment
BBC Military Housing – ACC	Infrastructure Investment
Group, LLC
BBC Military Housing – AETC	Infrastructure Investment
General Partner LLC (iii)
BBC Military Housing – AETC	Infrastructure Investment
Limited Partner LLC (iii)
BBC Military Housing – AMC	Infrastructure Investment
General Partner LLC
BBC Military Housing – AMC	Infrastructure Investment
Limited Partner LLC
BBC Military Housing – Bliss/	Infrastructure Investment
WSMR General Partner LLC
BBC Military Housing – Bliss/	Infrastructure Investment
WSMR Limited Partner LLC
BBC Military Housing – Carlisle/	Infrastructure Investment
Picatinny General Partner LLC
BBC Military Housing – Carlisle/	Infrastructure Investment
Picatinny Limited Partner LLC

Entity	Principal activity
BBC Military Housing – FDWR	Infrastructure Investment
LLC (v)
BBC Military Housing – Fort	Infrastructure Investment
Carson LLC
BBC Military Housing – Fort	Infrastructure Investment
Eisenhower LLC
BBC Military Housing – Fort	Infrastructure Investment
Hamilton LLC
BBC Military Housing – Fort	Infrastructure Investment
Jackson LLC
BBC Military Housing – Hampton	Infrastructure Investment
Roads LLC
BBC Military Housing – Lackland	Infrastructure Investment
LLC
BBC Military Housing – Leonard	Infrastructure Investment
Wood LLC
BBC Military Housing – Navy	Infrastructure Investment
Northeast LLC (v)
BBC Military Housing – Navy	Infrastructure Investment
Southeast LLC
BBC Military Housing – Northern	Infrastructure Investment
Group, LLC
BBC Military Housing – Stewart	Infrastructure Investment
Hunter LLC
BBC Military Housing –	Infrastructure Investment
Vandenberg General Partner LLC
(v)
BBC Military Housing –	Infrastructure Investment
Vandenberg Limited Partner LLC
(v)
BBC Military Housing – West	Infrastructure Investment
Point LLC
BBC Military Housing – Western	Infrastructure Investment
General Partner, LLC
BBC Military Housing – Western	Infrastructure Investment
Limited Partner, LLC
BBC Multifamily Holdings, LLC	Infrastructure Investment
BBCS – Northside Campus LLC	Infrastructure Investment
BBCS Development, LLC	Infrastructure Investment

Entity	Principal activity
BB Developments Sub Holdco,	Infrastructure Investment
LLC
BICC Cables Corporation	Business Services
Leonard (Denton) Owner, LLC	Infrastructure Investment
Northside Campus Limited	Infrastructure Concession
Partner, LLC
River Pointe (Conrow) Owner, LLC	Infrastructure Investment
Oktiv (Tallahassee) Owner, LLC	Infrastructure Investment
Corporation Service Company, 300 Deschutes Way SW, Suite
304, Tumwater WA 98501
Howard S. Wright	Construction Services
Construction Co
HSW, Inc	Construction Services
CSC – Nevada, C/O CSC Services of Nevada, Inc., 502 East
John Street Carson City, Nevada 89706
Balfour Beatty‑Golden	Construction Services
Construction Company
Balfour Beatty Construction	Construction Services
Company, Inc
Balfour Beatty Construction	Construction Services
Group, Inc

Notes

(i) Held directly by Balfour Beatty plc.

(ii) Partnership interests held.

(iii) 80% interest held.

(iv) 89% interest held.

(v) 90% interest held .

44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024 continued

Subsidiary undertakings incorporated outside the United Kingdom continued

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Joint ventures incorporated in the United Kingdom

		% held by the
Entity		Group	Principal activity
Q14 Quorum Business Park, Benton Lane, Newcastle Upon Tyne, England, England, NE12 8BU
BBDE Orbital Holdings, LLP (iii)	(v)	37.5	Investment Holding Company
Connect A30/A35 Holdings Ltd (iv)		20	Investment Holding Company
Connect A30/A35 Ltd (iv)		20	Infrastructure Concession
Connect A50 Ltd (iv)		25	Infrastructure Concession
Connect CNDR Holdings Ltd (iv)		25	Investment Holding Company
Connect CNDR Intermediate Ltd (iv)		25	Infrastructure Concession
Connect CNDR Ltd (iv)		25	Infrastructure Concession
Connect M1‑A1 Holdings Ltd (i)(iv)		20	Investment Holding Company
Connect M1‑A1 Ltd (iv)		20	Infrastructure Concession
Connect M77/GSO Holdings Ltd (ii)(iv)		85	Investment Holding Company
Connect M77/GSO plc (ii)(iv)		85	Infrastructure Concession
Connect Roads Cambridgeshire Holdings Ltd		20	Investment Holding Company
Connect Roads Cambridgeshire Intermediate Ltd		20	Infrastructure Concession
Connect Roads Cambridgeshire Ltd		20	Infrastructure Concession
Connect Roads Coventry Holdings Ltd		20	Investment Holding Company
Connect Roads Coventry Intermediate Ltd		20	Infrastructure Concession
Connect Roads Coventry Ltd		20	Infrastructure Concession
Connect Roads Ltd (iv)		25	Investment Holding Company
Connect Roads Northamptonshire Holdings Ltd		20	Investment Holding Company
Connect Roads Northamptonshire Intermediate Ltd		20	Infrastructure Concession
Connect Roads Northamptonshire Ltd		20	Infrastructure Concession
Connect Roads South Tyneside Holdings Ltd		20	Investment Holding Company
Connect Roads South Tyneside Ltd		20	Infrastructure Concession
Connect Roads Sunderland Holdings Ltd		20	Investment Holding Company
Connect Roads Sunderland Ltd		20	Infrastructure Concession
East Wick and Sweetwater Projects (Holdings) Ltd (iv)		50	Infrastructure Concession
East Wick and Sweetwater Projects (Phase 1) Ltd (iv)		50	Infrastructure Concession

44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024 continued

	% held by the
Entity	Group	Principal activity
East Wick and Sweetwater Projects (Phase 2) Ltd (iv)	50	Infrastructure Concession
East Wick and Sweetwater Projects (Phase 3) Ltd (iv)	50	Infrastructure Concession
East Wick and Sweetwater Projects (Phase 4) Ltd (iv)	50	Infrastructure Concession
East Wick and Sweetwater Projects (Phase 5) Ltd (iv)	50	Infrastructure Concession
East Wick and Sweetwater Projects (Phase 7A) Ltd (iv)	50	Infrastructure Concession
East Wick and Sweetwater Projects (Phase 7) Ltd (iv)	50	Infrastructure Concession
East Wick and Sweetwater Finance (Holdings) Ltd (iv)	50	Investment Holding Company
East Wick and Sweetwater Projects (Finance) Ltd (iv)	50	Infrastructure Concession
Gwynt y Môr OFTO Holdings Ltd (ii)(iv)	60	Investment Holding Company
Gwynt y Môr OFTO Intermediate Ltd (ii)(iv)	60	Infrastructure Concession
Gwynt y Môr OFTO plc (ii)(iv)	60	Infrastructure Concession
Humber Gateway OFTO Holdings Ltd (iv)	20	Investment Holding Company
Humber Gateway OFTO Intermediate Ltd (iv)	20	Infrastructure Concession
Humber Gateway OFTO Ltd (iv)	20	Infrastructure Concession
South Cambridgeshire Projects LLP (v)	50	Infrastructure Concession
Thanet OFTO Holdco Ltd (iv)	20	Investment Holding Company
Thanet OFTO Intermediate Ltd (iv)	20	Infrastructure Concession
Thanet OFTO Ltd (iv)	20	Infrastructure Concession
Connect Plus House, St Albans Road, South Mimms, Hertfordshire EN6 3NP
Connect Plus (M25) Holdings Ltd (iii)(iv)	15	Investment Holding Company
Connect Plus (M25) Intermediate Ltd (iii)(iv)	15	Infrastructure Concession
Connect Plus (M25) Issuer plc (iii)(iv)	15	Infrastructure Concession
Connect Plus (M25) Ltd (iii)(iv)	15	Infrastructure Concession
Maxim 7, Maxim Office Park, Parklands Avenue, Eurocentral, Holytown ML1 4WQ
Holyrood Holdings Ltd	20	Investment Holding Company
Holyrood Student Accommodation Holdings Ltd	20	Infrastructure Concession
Holyrood Student Accommodation Intermediate Ltd	20	Infrastructure Concession
Holyrood Student Accommodation plc	20	Infrastructure Concession
Holyrood Student Accommodation SPV Ltd	20	Infrastructure Concession

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

	% held by the
Entity	Group	Principal activity
Westminster House, Crompton Way, Segensworth West, Fareham, Hampshire PO15 5SS
Pevensey Coastal Defence Ltd	25	Infrastructure Concession
C/O Pario Ltd, 18 Riversway Business Village, Navigation Way, Preston PR2 2YP
Consort Healthcare (Birmingham) Funding plc	40	Infrastructure Concession
Consort Healthcare (Birmingham) Holdings Ltd	40	Investment Holding Company
Consort Healthcare (Birmingham) Intermediate Ltd	40	Infrastructure Concession
Consort Healthcare (Birmingham) Ltd	40	Infrastructure Concession
9 Amberside House Wood Lane, Paradise Industrial Estate, Hemel Hempstead, Hertfordshire, England HP2 4TP
Pebblehall Bio Power Ltd	29.2	Investment Holding Company
Urban Electric Networks Ltd	25	Infrastructure Concession
Welland Bio Power Ltd	29	Infrastructure Concession

Notes

(i)

Held directly by Balfour Beatty plc.

(ii)

Due to the shareholders’ agreement between Balfour Beatty and the other shareholders requiring unanimity of agreement in

respect of significant matters related to the financial and operating policies of the company, the Directors consider that the Group

does not control the company and it has been accounted as a joint venture.

(iii)

The Group owned a 37.5% partnership interest in BBDE Orbital Holdings LLP at 31 December 2022. Connect Plus (M25) Holdings

Ltd and its subsidiaries are 40% owned by BBDE Orbital Holdings LLP.

(iv)

31 March year end.

(v)

Partnership interests held.

Joint ventures incorporated outside the United Kingdom

	% held by the
Entity	Group	Principal activity
Bermuda
Clarendon House, 2 Church Street, Hamilton HM 11
CP Bay Carry A LP (iii)	20	Infrastructure Concession
CP Bay Carry B LP (iii)	20	Infrastructure Concession
British Virgin Islands
Vistra Corporate Services Centre, Wickhams Cay II Road Town, Tortola VG1110
Gammon Asia Ltd	50	Management Company
Gammon Construction Holdings Ltd	50	Investment Holding Company
Canada
Taylor McCaffrey LLP, 900-400 St. Mary Avenue, Winnipeg, MB, R3C 4K5
CWH Facilities Management,LP (iii)	50	Infrastructure Concession
CWH FM GP Inc	50	Infrastructure Investment
CWH Design – Build GP (iii)	50	Infrastructure Investment
China
Hong Kong Avenida da Praia Grande, n°429, 25° andar D, em Macau
BBE&M (Macau) Ltd	50	Electrical and Mechanical
		Contracting
Gammon Building Construction (Macau) Ltd	50	Building Construction
No. 457, Shatian Section, Ganggang Avenue, Shatian Town, Dongguan City, Guangdong Province
Dongguan Pristine Metal Works Ltd	50	Manufacturing Services
25th Floor, Jardine House, 1 Connaught Place, Central, Hong Kong
Sanfield‑Gammon Construction JV Company Ltd	50	Construction Services
22/F, Tower 1, The Quayside, 77 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong
AsiaBuild Ltd	50	Dormant
Balfour Beatty E&M Ltd	50	Dormant
Digital G Ltd	50	Technology and Innovation
Entasis Ltd	50	General Contractor
Gammon Building Construction Ltd	50	Building Construction
Gammon Capital Ltd	50	Dormant
Gammon Capital Management Ltd	50	Dormant

44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024 continued

Joint ventures incorporated in the United Kingdom

continued

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

	% held by the
Entity	Group	Principal activity
Gammon China Ltd	50	Investment Holding Company
Gammon Concrete Services Ltd	50	Dormant
Gammon Construction (China) Ltd	50	Building Construction
Gammon Construction (Vietnam) Holdings Ltd	50	Construction and Project
		Management
Gammon Construction Consultants (Shenzhen) Ltd	50
Gammon Construction Ltd (ii)	50	Engineering and Construction
Gammon E&M Ltd	50	Engineering Services
Gammon Engineering & Construction Company Ltd	50	Engineering and Construction
Gammon Engineering Ltd	50	Dormant
Gammon Finance Ltd	50	Finance and Investment
Gammon Interiors Ltd	50	Dormant
Gammon Management Services Ltd	50	Construction Management
		Services
Gammon Plant Ltd	50	Plant and Equipment Hire and
		Maintenance
Gold Tactics Investment Ltd	50	Dormant
Into G Ltd	50	Interior Fit‑Out and Contracting
Lambeth Associates Ltd	50	Management and Consultancy
		Services
Pristine Metal Works Ltd	50	Investment Holding Company
7/F & 8/F Tower A, Sunhope E Metro, 7018 Caitian Road, Futian District, Shenzhen, People’s
Republic of China
Gammon Construction Consultants (Shenzhen) Ltd	50	Support Services
Ireland
3 Dublin Landings, North Wall Quay, Dublin 1, D01 C4E0
Balfour Beatty CLG Ltd	50	Support Services
C/O Pario SPV Management Limited, Suite 54, Morrison Chambers, 32 Nassau St, Dublin 2, D02 AP29
Healthcare Centres PPP Holdings Ltd	40	Investment Holding Company

		% held by the
Entity		Group	Principal activity
Healthcare Centres PPP Ltd		40	Infrastructure Concession
Malaysia
Unit B-9-7, Level 9, Capital 2, Oasis Square, No.2 Jalan PJU 1A/7A, Ara Damansara, 47301
Petaling Jaya, Selangor, Malaysia
Gammon Sdn Bhd		50	Dormant
Pesaka Gammon Construction Sdn Bhd		15	Dormant
Philippines
G/F Makati Stock Exchange, Ayala Avenue, Makati City, Metro Manila, Philippines
Gammon Philippines, Inc.		40	General Construction
MG Construction Ventures Holdings, Inc.		33	Property Investment
Singapore
239	Alexandra Road, 159930
Digital G (Singapore) Pte. Ltd		50	Equipment Services
Gammon Construction and Engineering Pte. Ltd		50	Construction Services
Gammon Construction Holdings (S) Pte. Ltd		50	Investment Holding Company
Gammon Pte. Ltd		50	Engineering and Construction
Lambeth Associates Design & Consultancy Pte Ltd		50	Management and Consultancy
			Services
Thailand
21st Floor, Times Square Building, 246 Sukhumvit Road, Klongtoey Sub-District, Klongtoey
District, Bangkok 10110, Thailand
Gammon (Thailand) Ltd		49	Dormant
23rd Floor, Times Square Building, 246 Sukhumvit Road, Klongtoey Sub-District, Klongtoey
District, Bangkok 10110, Thailand
Gammon Construction (Thailand) Ltd		24.5	Dormant
Thai Gammon Ltd		24.5	Dormant
United States
Corporation Service Company, d/b/a CSC-Lawyers, Incorporating Service Company, 211 E. 7th
Street, Suite 620, Austin TX 78701-3218
Northside Campus Partners, LP (iii)		5	Infrastructure Concession
Northside Campus Partners 2,LP (iii)		5	Infrastructure Investment
Northside Campus Partners 3, LP (i)(iii)		5	Infrastructure Concession
Northside Campus Partners 4, LP (i)(iii)		5	Infrastructure Concession

44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024 continued

Joint ventures incorporated outside the United Kingdom

continued

274

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

	% held by the
Entity	Group	Principal activity
Northside Campus General Partner, LLC	50	Infrastructure Concession
Corporation Service Company, 251 Little Falls Drive, Wilmington DE19808
BBC – ApexOne Carolina Cove, LLC	50	Infrastructure Investment
BBC – ApexOne Chenal Pointe, LLC	50	Infrastructure Investment
BBC – ApexOne Landings, LLC	50	Infrastructure Investment
BBC – ApexOne Lexington, LLC	50	Infrastructure Investment
BBC – ApexOne Paces Brook, LLC	50	Infrastructure Investment
BBC – ApexOne Retreat, LLC	50	Infrastructure Investment
BBC – ApexOne San Mateo, LLC	50	Infrastructure Investment
BBC – ApexOne Southwind, LLC	50	Infrastructure Investment
BBC Army Integrated, LLC	10	Infrastructure Investment
Carolina Cove (Wilmington) Owner, LLC	50	Infrastructure Investment
Chenal Pointe (Little Rock) Owner, LLC	50	Infrastructure Investment
LAX Integrated Express Solutions Holdco, LLC	27	Infrastructure Concession
LAX Integrated Express Solutions, LLC	27	Infrastructure Concession
Landings (Jacksonville) Owner, LLC	50	Infrastructure Investment
Lexington (Ridgeland) Owner, LLC	50	Infrastructure Investment
Paces Brook (Columbia) Owner, LLC	50	Infrastructure Investment
San Mateo (Kissimmee) Owner, LLC	50	Infrastructure Investment
Southwind (Memphis) Owner, LLC	20	Infrastructure Investment
Southwind (Memphis) Holdings, LLC	20	Infrastructure Investment
Swiftsure Housing Partners, LLC	23	Infrastructure Concession
View SA Holding Company LP (i)(iii)	87	Infrastructure Investment
View SA LLC (i)	87	Infrastructure Investment
Corporation Service Company, 1900 W Littleton Blvd., Littleton, CO 80120
Denver Transit Constructors LLC	30	Design and Construction
Denver Transit Operators LLC	50	Operations and Maintenance
Denver Transit Systems LLC	50	Design and Construction

	% held by the
Entity	Group	Principal activity
National Registered Agents, Inc. 1209 Orange Street Wilmington DE 19801 United States
CHC RES 20 – Mt. Laurel LLC	31	Infrastructure Investment
Mt. Laurel CHC Equity LLC	31	Infrastructure Investment
CHC Mt. Laurel LLC	31	Infrastructure Investment
Vietnam
5th Floor, Gemadept Tower, 2Bis–4–6 Le Thanh Ton Street, Ben Nghe Ward, District 1, Ho Chi
Minh City, Vietnam
Gammon Construction Vietnam Co. Ltd	50	Building Construction and
		Management Services

Notes

(i)

Due to the shareholders’ agreement between Balfour Beatty and the other shareholders requiring unanimity of agreement in

respect of significant matters related to the financial and operating policies of the company, the Directors consider that the Group

does not control the company and it has been accounted for as a joint venture.

(ii)

Preference shares and/or deferred shares also held.

(iii)

Partnership interest held.

44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024 continued

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	% held by the
Entity	Group	Principal activity
United Kingdom
3 Sidings Court, White Rose Way, Doncaster, England, DN4 5NU
UBB Waste (Essex) Ltd	30	Dormant
United States
Corporation Service Company, 251 Little Falls Drive, Wilmington DE 19808
ACC Group Housing, LLC (i)	100	Infrastructure Concession
AETC Housing LP (i)(ii)	100	Infrastructure Concession
AMC West Housing LP (i)(ii)	100	Infrastructure Concession
Carlisle/Picatinny Family Housing LP (ii)	10	Infrastructure Concession
FDWR Parent LLC	10	Infrastructure Concession
Fort Bliss/White Sands Missile Range Housing LP (ii)	10	Infrastructure Concession
Fort Carson Family Housing LLC	10	Infrastructure Concession
Fort Detrick/Walter Reed Army Medical Center Housing	100	Infrastructure Concession
LLC (i)
Fort Eustis/Fort Story Housing LLC	10	Infrastructure Concession
Fort Eisenhower Housing LLC	10	Infrastructure Concession
Fort Hamilton Housing LLC	10	Infrastructure Concession
Fort Jackson Housing LLC	10	Infrastructure Concession
Lackland Family Housing, LLC (i)	100	Infrastructure Concession
Leonard Wood Family Communities, LLC	10	Infrastructure Concession
Northeast Housing LLC	10	Infrastructure Concession
Northern Group Housing, LLC (i)	100	Infrastructure Concession
Southeast Housing LLC (i)	100	Infrastructure Concession
Stewart Hunter Housing LLC	10	Infrastructure Concession
Vandenberg Housing LP (i)(ii)	90	Infrastructure Concession
Western Group Housing, LP (i)(ii)	100	Infrastructure Concession
West Point Housing LLC	10	Infrastructure Concession

Notes

(i) The Group evaluated each of its interests in the military housing projects to determine if the associated entities should be

consolidated. This analysis included, but was not limited to, identifying the activities that most significantly impact an entity’s

economic performance, which party or parties control those activities and the risks associated with these entities. Decision‑

making power over key facets of the contracts were evaluated when determining which party or parties had control over the

activities that most significantly impact a project’s economics. Based on this review, the Directors consider that the Group does

not have the power to direct these activities and does not control or jointly control them and therefore the entities have been

accounted for as associated undertakings.

(ii) Partnership interests held .

44 Details of related undertakings of Balfour Beatty plc as at 31 December 2024 continued

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

UNAUDITED GROUP FIVE-YEAR SUMMARY

2024

£m

2023

£m

2022

£m

2021

£m

2020

£m

Income

Revenue including share of joint ventures and associates 10,015 9,595 8,931 8,263 8,593

Share of revenue of joint ventures and associates (1,781) (1,602) (1,302) (1,078) (1,273)

Group revenue 8,234 7,9 9 3 7,629 7,18 5 7,320

Underlying profit from operations 248 228 279 197 51

Underlying net finance income/(costs) 41 33 12 (10) (15)

Underlying profit before taxation 289 261 291 187 36

Amortisation of acquired intangible assets (4) (5) (6) (5) (6)

Other non‑underlying items (71) (12) 2 (95) 18

Profit before taxation 214 244 287 87 48

Taxation (36) (50) – 52 (18)

Profit for the year 178 194 287 139 30

Profit for the year attributable to equity holders 178 197 288 140 30

(Loss)/profit for the year attributable to non‑controlling interests – (3) (1) (1) –

Profit for the year 178 194 287 139 30

Capital employed

Equity holders’ equity 1,121 1,198 1,378 1,369 1,336

Net non‑recourse borrowings – infrastructure concessions 335 264 242 243 317

Net cash – other (943) (842) (815) (790) (581)

513 620 805 822 1,072

2024

Pence

2023

Pence

2022

Pence

2021

Pence

2020

Pence

Statistics

Underlying earnings per ordinary share

43.6 37.3 47.5 29.7 3.7

Basic earnings per ordinary share 34.2 35.3 46.9 21.3 4.4

Diluted earnings per ordinary share 33.7 34.8 46.3 21.1 4.4

Proposed dividends per ordinary share 12.5 11.5 10.5 9.0 1.5

Underlying profit from operations before net finance income/(costs) including share of joint ventures and associates as a percentage of

revenue including share of joint ventures and associates 2.5% 2.4% 3.1% 2.4% 0.6%

Note

* Underlying earnings per ordinary share have been disclosed to give a clearer understanding of the Group’s underlying trading performance.

OTHER INFORMATION

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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

SHAREHOLDER INFORMATION

Financial calendar 2025

8 May Annual General Meeting

2 July Final 2024 dividend payable

13 August* 2025 half year results announcement

3 December* Interim 2025 dividend payable

4 December* Trading update

* Dates are subject to change

Registrar

Balfour Beatty’s share register is maintained by Equiniti, the Company’s Registrar. All administrative

enquiries relating to shareholdings and requests to receive corporate documents by email should,

inthe first instance, be directed to Equiniti, clearly stating your registered address and, if available,

yourshareholder reference number.

Please visit their website www.shareview.co.uk.

Telephone: +44 (0) 371 384 2703. Calls are charged at the standard geographic rate and will vary by

provider. Calls outside the United Kingdom are charged at the applicable international rate. Lines are

open between 8.30 am to 5.30 pm, Monday to Friday excluding public holidays in England and Wales.

Share certificates

In order to sell or transfer your shares, you must ensure that you have a valid share certificate.

Thismust be in the name of Balfour Beatty plc. If you lose or misplace your share certificate, you can

contact Equiniti customer experience centre and request a replacement certificate. Equiniti will then

issue a letter of indemnity to you which you will need to sign and return for a new certificate to be

produced. There is a fee charged for this service which includes an administration charge and a

counter signature fee (the counter signature fee can vary depending on the value of the shareholding).

Dividends and dividend reinvestment plan

Dividends may be paid directly into your bank or building society account through the Bankers

Automated Clearing System (BACS). Equiniti can provide a dividend mandate form. A Dividend

Reinvestment Plan (DRIP) is offered which allows holders of shares to reinvest their cash dividends

inthe Company’s shares through a specially arranged share dealing service. Full details of the DRIP

and its charges, together with mandate forms, are available at: www.shareview.co.uk.

International payment service

Shareholders outside the UK may elect to receive dividends directly into their overseas bank account,

or by currency draft, instead of by sterling cheque. For further information, contact the Company’s

Registrar, Equiniti using the contact details above.

Electronic shareholder communications

The Company’s website www.balfourbeatty.com provides a range of information about the Company,

our people and businesses and our policies on corporate governance, sustainability and health and

safety. The website should be regarded as your first point of reference for information on any of these

matters. The share price can also be found there. You can create a Shareview account, through which

you will be able to access the full range of online shareholder services, including the ability to: view

your holdings and indicative share price and valuation; view movements on your holdings and your

dividend payment history; register a dividend mandate to have your dividends paid directly into your

bank account; change your registered address; sign up to receive e‑communications to access the

online proxy voting facility; and download and print shareholder forms. Shareview is easy to use.

Please visit www.shareview.co.uk.

278

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Unsolicited telephone calls

In the past, some of our shareholders have received unsolicited telephone calls or

correspondence concerning investment matters from organisations or persons claiming or

implying that they have some connection with the Company. We advise our shareholders to

bewary of any unsolicited telephone calls, advice or correspondence concerning investment

matters from organisations or persons claiming or implying that they have some connection with

the Company. These are typically from overseas‑based ‘brokers’ who target UK shareholders

offering to sell them what often turn out to be worthless or high‑risk shares in UK or overseas

investments. Shareholders are advised to be very wary of any unsolicited advice, offers to buy

shares at a discount or offers of free annual and/or other reports on the Company.

If you receive any unsolicited investment advice:

@ Always ensure the firm is authorised by the Financial Conduct Authority (FCA), is on the FCA

check if a firm is on the FCA’s Register via register.fca.org.uk.

@ Ask the caller for their name and telephone number and inform them you will call them back.

Then check their identity to ensure that they are from the firm they say they are from by

calling the firm using the contact number listed on the FCA Register. Ifthere are no contact

details on the FCA Register or you are told that they are out of date, or if you have any other

doubts, call the FCA Consumer Helpline on 0800 111 6768 (freephone) or 0300 500 8082

from the UK, or +44 207 066 1000 from abroad. Calls using next generation text relay,

pleasecall (18001)0207 066 1000.

@ If you are approached about a share scam, please visit the FCA’s ScamSmart website at

www.fca.org.uk/scamsmart where you can access information about the various types of

scam, including share and boiler room fraud, see the FCA’s Warning List and reports on firms

about whom consumers have expressed concerns. Alternatively, you can call the FCA

Consumer Helpline (see above). If you use an unauthorised firm to buy or sell shares or other

investments, you will not have access to the Financial Ombudsman Service or be eligible to

receive payment under the Financial Services Compensation Scheme if things go wrong.

@ You should also report any approach to Action Fraud, which is the UK’s national fraud

reporting centre, at www.actionfraud.police.uk, or by calling 0300 123 2040.

American Depository Receipts (ADRs)

An American Depository Receipt (ADR) is a negotiable instrument issued by a depositary bank that

evidences ownership of shares in a corporation organised outside the US. Each ADR represents a

specific number of underlying shares in the non‑US company, on deposit with a custodian in the

applicable home market.

ADRs are generally treated as US domestic securities. They are quoted and traded in US Dollars

andare subject to the trading and settlement procedures of the market in which they trade.

Balfour Beatty’s ADR programme details

Symbol: BAFYY

ADR: Ordinary Share Ratio: 1:2

CUSIP: 05845R306

ADR ISIN: US05845R3066

Underlying ISIN: GB0000961622

Depositary Bank: JP Morgan Chase Bank N.A.

Country: United Kingdom

Balfour Beatty’s ADR Depositary Bank is JP Morgan Chase N.A. Forall ADR‑related enquiries,

investors can contact JP Morgan viatelephone, in writing or email as follows:

Telephone:

Toll free within the United States at: 1‑800‑990‑1135 or locally at651‑306‑4383.

JP Morgan representatives are available from 7.00 am to 7.00 pm Central Time, Monday to Friday.

In writing:

Mail

JP Morgan Shareholder Services

P.O Box 64504

St. Paul, Minnesota 55164‑0504

Overnight Mail

JP Morgan Chase Bank N.A.

1110 Centre Pointe Curve, Suite 101

Mendota Heights MN 55120‑4100

Contact Online

jpmorgan.adr@eq‑us.com

SHAREHOLDER INFORMATION CONTINUED

279Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

Gifting shares to your family or to charity

To transfer shares to another member of your family as a gift, please ask the Registrar for a Balfour

Beatty gift transfer form. Alternatively, if you only have a small number of shares whose value makes

ituneconomic to sell them, you may wish to consider donating them to the share donation charity

ShareGift (registered charity no. 1052686), whose work Balfour Beatty supports. Any shares you

donate to ShareGift will be aggregated and sold when possible, and the proceeds will be donated to

awide range of other UK charities. Since ShareGift was launched, over £47m has been given to more

than 3,650 charities. The relevant share transfer form may be obtained from the Registrar. For more

information visit www.sharegift.org.

Share dealing services

In addition to share dealing services provided by UK banks and brokers, Equiniti provide a telephone

and online share dealing service for UK resident shareholders. To use this service, telephone 023456

037037 from within the UK. Calls are charged at the standard geographic rate and will vary by provider.

Lines are open Monday to Friday 8.00 am to 4.30 pm, UK time, excluding public holidays in England

and Wales. Alternatively, you can log on to www.equiniti.com. Equiniti Limited is authorised and

regulated by the Financial Conduct Authority.

London Stock Exchange Codes

The London Stock Exchange Daily Official List (SEDOL) code is: 0096162.

The London Stock Exchange ticker code is: BBY.

Capital gains tax (CGT)

For CGT purposes the market value on 31 March 1982 of Balfour Beatty plc’s ordinary shares of 50p

each was 267.6p per share. This has been adjusted for the 1 for 5 rights issue in June 1992, the 2 for

11 rights issue in September 1996 and the 3 for 7 rights issue in October 2009 and assumes that all

rights have been taken up.

Consolidated tax vouchers

Balfour Beatty issues a consolidated tax voucher annually to all shareholders who have their dividends

paid direct to their bank accounts. If you would prefer to receive a tax voucher at each dividend

payment date rather than annually, please contact the Registrar. A copy of the consolidated tax

voucher may be downloaded from the Share Portal at www.shareview.co.uk.

Enquiries

Enquiries relating to Balfour Beatty’s results, business and financial position should be made in writing

to the Corporate Communications Department at the address shown below or by email to

info@balfourbeatty.com.

Balfour Beatty Registered Office: 5 Churchill Place, Canary Wharf, London E14 5HU

Registered in England and Wales, registered number 395826

Forward-looking statements

This report, including information included or incorporated by reference in it, may include statements

that are or may be forward‑looking statements, beliefs or opinions, including statements with respect

to Balfour Beatty’s business, financial condition, operations and prospects. These forward‑looking

statements may be identified by the use of forward‑looking terminology or the negative thereof such

as “expects” or “does not expect”, “anticipates” or “does not anticipate”, “targets”, “aims”, “continues”,

“is subject to”, “assumes”, “budget”, “scheduled”, “estimates”, “risks”, “positioned”, “forecasts”

“intends”, “hopes”, “believes” or variations of such words or comparable terminology and phrases or

statements that certain actions, events or results “may”, “could”, “should”, “shall”, “would”, “might”

or “will” be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent

risks and uncertainties surrounding future expectations. Forward‑looking statements are not based on

historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives,

goals, intentions and projections about future events, results of operations, prospects, financial

condition and discussions of strategy.

By their nature, forward‑looking statements involve known and unknown risks and uncertainties

because they relate to events and depend on circumstances that may or may not occur in the future.

These events and circumstances include changes in the global, political, economic, business, competitive,

market and regulatory forces, future exchange and interest rates, changes in tax rates, future business

combinations or disposals, and any epidemic, pandemic or disease outbreak. If any one or more of

these risks or uncertainties materialises or if any one or more of the assumptions prove incorrect,

actual results may differ materially from those expected, estimated or projected. Such forward‑looking

statements should therefore be construed in the light of such factors. As a result, you are cautioned

not to place any undue reliance on such forward‑looking statements.

No representation or warranty is made that any of these statements or forecasts will come to pass

orthat any forecast results will be achieved, and projections are not guarantees of future performance.

Forward‑looking statements speak only as at the date of this report and, other than in accordance with

its legal or regulatory obligations, Balfour Beatty expressly disclaims any obligations or undertaking to

update, or revise, any forward‑looking statements in this report.

No statement in this report is intended as a profit forecast or profit estimate and no statement in this

presentation should be interpreted to mean that Balfour Beatty’s earnings per share for the current or

future financial years would necessarily match or exceed the historical published earnings per share

forBalfour Beatty.

This report does not constitute or form part of any offer or invitation to sell or issue, or any solicitation

of any offer to purchase or subscribe for any securities. The making of this presentation does not

constitute any advice or recommendation regarding any securities.

280

Balfour Beatty plc | Annual Report and Accounts 2024

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION

SCAN TO VIEW THE ONLINE

SUMMARYREPORT

MORE INFORMATION

Online annual report

For a summary of our 2024 Annual Report and

Accounts visit:

ar24.balfourbeatty.com

Investor website

For more information about investor

relationsvisit:

balfourbeatty.com/investors

SCAN TO VIEW

BALFOURBEATTY’SWEBSITE

twitter.com/balfourbeatty

linkedin.com/company/balfour‑beatty‑plc

Facebook

facebook.com/balfourbeatty

YouTube

youtube.com/BalfourBeattyPlc

Instagram

instagram.com/balfourbeatty

Balfour Beatty plc’s commitment to environmental issues is reflected

in this Annual Report, which has been printed on Symbol Freelife Satin

and Arena Smooth Extra White, an FSC

certified material.

This document was printed by Park Communications using its

environmental print technology, which minimises the impact of

printing on the environment, with 99% of dry waste diverted from

landfill. Both the printer and the paper mill are registered to ISO 14001.

Balfour Beatty

5 Churchill Place

Canary Wharf

London E14 5HU

Telephone: +44(0) 20 7216 6800

www.balfourbeatty.com

Balfour Beatty is a registered trademark of Balfour Beatty plc