Annual Report and Accounts 2022
We’re driving the transformation of our industry to meet the challenges of the future
Balfour Beatty has delivered strong operational and financial performance across the Group.
Group highlights
UNDERLYING REVENUE¹
£8,931m
NUMBER OF EMPLOYEES
25,000
UNDERLYING PROFIT BEFORE TAX
£291m
DIRECTORS’ VALUATION INVESTMENTS PORTFOLIO
£1.3bn
¹
£8.5bn
£6.0bn
£2.9bn
UNITED KINGDOM
UNITED STATES
HONG KONG
£17.4bn
GROUP ORDER BOOK
¹ Including share of joint ventures and associates.
The strong results in 2022 are a testament to Balfour Beatty’s transformation into a well-balanced and lower risk group. The diversified portfolio, both geographically in the UK, US and Hong Kong, and operationally across Construction Services, Support Services and Infrastructure Investments, plus the strength of our balance sheet and cash management, have provided the resilience for the Group to deliver ahead of expectations and grow our order book through the global instability seen in 2022.
The Board’s confidence in both the short and longer term is reflected in its commitment to a multi-year programme of strong shareholder cash returns. We believe that Balfour Beatty’s unique capabilities and the positive outlook in its chosen markets will enable it to deliver ongoing profitable managed growth.
Group Chief Executive
Leo Quinn
Group Chief Executive’s review
Our strategy: Build to Last
Launched in 2015, Build to Last is our strategy for continuous improvement. It is the day-to-day guide we use to uphold our purpose, and underpins everything we do.
Our strategy, Build to Last, is fundamental to how we’re building a market-leading Balfour Beatty for the next 100 years. It’s 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.
The Build to Last strategy is measured against our five values – Lean, Expert, Trusted, Safe and Sustainable.
Lean
Trusted
We create value for our customers and drive continuous improvement
We deliver on our promises and we do the right thing
Our strategy: Build to Last
Our KPIs
£815m
NET CASH (£m)
£297m
UNDERLYING PROFIT FROM OPERATIONS (£m)
2021: £790m
2021: £197m
2021: 96%
80%
95%
CUSTOMER SATISFACTION AVERAGE (%)
Our KPI
We make safety personal
We act responsibly to protect and enhance our planet and society
Safe
Sustainable
2021: 0.19
2021: 25.3 tCO
0.15
Our KPI
Our KPI
LOST TIME INJURY RATE
22.4
TOTAL SCOPE 1 & 2 EMISSIONS (tCO
excluding non-recourse borrowings
excluding international joint ventures
Building a
Opportunities in infrastructure
Balfour Beatty operates in a number of carefully selected markets, based on level of opportunity and ability to outperform its competitors.
Our chosen markets show strong underlying drivers and continue to deliver significant opportunities to the Group.
Business model
Multi-disciplinary collaboration is core to Balfour Beatty’s identity; our Construction Services, Support Services and Infrastructure Investments teams work closely together to ensure high-quality outcomes for our stakeholders.
Business model
Sharing the value we create
In striving to achieve its purpose of Building New Futures,
Balfour Beatty touches the lives of many people. Working with its stakeholders across the industry and beyond, the Group continues to innovate, lead the market through driving change, shape the debate and inspire a new generation of talent to be the change-makers of tomorrow.
Collaborative and long-term mutually beneficial relationships with our customers are the foundation of our success.
Customers
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.
Employees
Our many supply chain partners, large and small, are an invaluable resource fundamental to the successful delivery of all of our projects. We also work with trusted partners in a number of
long-term joint ventures which are critical to our success.
Supply chain and strategic partners
Our activities can have a lasting impact on the communities in which we operate – we strive to leave a positive legacy.
Communities
Governments set the policy and legislative context within which we operate, which has significant implications for our operations.
Governments
Balfour Beatty’s shareholders, as the owners of the Company, are a critical stakeholder for the Group.
Shareholders
Stakeholder value
Balfour Beatty prides itself on being a responsible, sustainable organisation that delivers long-term benefits for the business, society and the environment creating positive returns for all of the Group’s stakeholders.
Sustainability highlights
£1.5bn+
2.2m
social value generated in the UK
£816m
charitable donations in the UK
£340,000
charitable donations in the US
$500,000
charitable donations in Hong Kong
HK$2.1m
Sustainability
The Board’s confidence in both the short and longer term is reflected in its commitment to a multi-year programme of strong shareholder cash returns. We believe that Balfour Beatty’s unique capabilities and the positive outlook in its chosen markets will enable it to deliver ongoing profitable managed growth.
Chief Financial Officer’s review
The following are financial performance measures which are considered most relevant to the Group and used to manage the Group’s performance.
Measuring financial performance
2018
2019
2020
2021
7,802
8,405
8,587
2018
2019
2020
2021
197
205
221
51
UNDERLYING PROFIT FROM OPERATIONS (PFO) £m
2018
2019
2020
2021
29.7
26.3
26.7
3.7
UNDERLYING EARNINGS PER
SHARE (BASIC) Pence
UNDERLYING REVENUE¹ £m
2018
2019
2020
2021
16.1
12.6
14.3
16.4
ORDER BOOK¹ £bn
2018
2019
2020
2021
7,185
6,634
7,313
7,320
STATUTORY REVENUE £m
2018
2019
2020
2021
9.0
4.8
2.1
1.5
DIVIDENDS PER SHARE Pence
2018
2019
2020
2021
139
135
133
30
STATUTORY PROFIT FOR THE YEAR £m
2018
2019
2020
2021
21.3
19.7
19.0
4.4
STATUTORY EARNINGS PER SHARE (BASIC) Pence
Led by a strong management team, Balfour Beatty continues to deliver strong financial performance with an enhanced focus on positioning for growth in critical national infrastructure.
Governance
Group Chair introduction
Governance
Promoting the long-term, sustainable success of the Company.
Establishing the Company’s purpose, values and behaviour supports the Board’s active promotion of a positive culture. Consideration of stakeholder interests is a key cornerstone of the Board’s decision-making process.
Processes and procedures are in place to ensure that there is an appropriate balance of Board members who are sufficiently supported and have the necessary skills, experience and independence to discharge their duties as Directors.
The Board is the principal
decision-making body of the Company and each Director has specific responsibilities depending on their individual role. The day-to-day operation of the Group is formally delegated by the Board to the Group Chief Executive.
Board leadership and Company purpose
Key statutory and regulatory disclosures are made by the Board on an annual basis to ensure compliance with all applicable requirements.
The Board has delegated authority on specific governance matters to its Committees:
Directors’ report
Committee reports
Division of responsibilities
Composition, succession and evaluation
Governance
Maintaining a strong Board
Board of Directors
Remuneration
LTIR
tCO
How our Group works together
Building New Futures
¹ Including share of joint ventures and associates, before non-underlying items.
Financial statements
Our approach to remuneration continues 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 Directors have skills and experience relevant to the sector in which the Group operates in order to effectively set the strategic direction and purpose of the Group.
e/£m
2
2
per £m revenue)
Download the full report
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This is an interactive version of Balfour Beatty plc’s Annual Report and Accounts 2022. The content herein should be read in conjunction with and with reference to the printed version, which is available to download.
All content copyright 2022
Balfour Beatty plc.
All rights reserved
Designed by Balfour Beatty
Disclaimer
Privacy
Legal
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Accessibility
Strategic report
Governance
Financial statements
Investors
2
e/£m
Group Chair
Charles Allen, Lord Allen of Kensington, CBE
Chief Financial Officer
Philip Harrison
tonnes of waste avoided from landfill
spent with UK SMEs and local businesses
infrastructure
investments (II)
A proven track record of developing and financing projects.
CONSTRUCTION
SERVICES (CS)
We manage strong construction businesses in the UK, US and
Hong Kong.
Knowledge transfer
Delivery skills support investment opportunities
Profitable work for construction business
Cross-selling across customer base
SUPPORT
SERVICES (SS)
We maintain, upgrade and manage vital services across
the power transmission, distribution, utilities, road
and rail sectors.
The infrastructure market outlook is positive and is boosted by the Infrastructure and Projects Authority’s £650bn pipeline, providing the highest levels of investment in decades.
Positive outlook for the UK
650bn
UK
£
Driven by the US$1.2 trillion Infrastructure Investment & Jobs Act, infrastructure growth in the US will experience a significant boost in
Balfour Beatty’s chosen states.
Strong infrastructure stimulus in the US
1.2tn
US
$
The outlook is positive, supported by the Government’s plan to increase land supply, speed up railway development projects and rehabilitate the city’s ageing buildings.
Stable spend in Hong Kong
HK
$
1tn
HS2 high-speed railway line, UK
Towards a
zero carbon construction site
How do we...
With around 39%¹ of global carbon dioxide emissions being directly associated with buildings, decarbonising the built environment sector is key to mitigating climate change.
Find out more
Midtown Atlanta developments, US
Better, faster, greener
How do we...
Rapidly evolving modern methods of construction are revolutionising how the built environment is designed, constructed and maintained.
Find out more
M+ Museum, Hong Kong
Utilising capabilities from across the Group, our one-stop solution improves efficiencies and delivers certainty for our customers.
Find out more
A breadth of in-house capability
How do we...
Find out more about our infrastructure expertise...
Our highly skilled colleagues and partners set us apart
Expert
2021: 76%
Our KPI
EMPLOYEE ENGAGEMENT INDEX (%)
Download centre
Governance
Group Chair's introduction
Measuring financial performance
Chief Financial Officer's review
Sustainability highlights
Sharing the value we create
Business model
Opportunities in infrastructure
Infrastructure expertise
Our strategy: Build to Last
Group Chief Executive's review
Group highlights
Home
8,280
Market review
We’re driving the transformation of our industry to meet the challenges of the future
Annual Report and Accounts 2022
Balfour Beatty has delivered strong operational and financial performance across the Group.
UNDERLYING REVENUE¹
UNITED KINGDOM
UNITED STATES
HONG KONG
Group highlights
£8,931m
NUMBER OF EMPLOYEES
25,000
UNDERLYING PROFIT BEFORE TAX
¹ Including share of joint ventures and associates.
£291m
£8.5bn
£6.0bn
£2.9bn
DIRECTORS’ VALUATION INVESTMENTS PORTFOLIO
£1.3bn
GROUP ORDER BOOK
The strong results in 2022 are a testament to Balfour Beatty’s transformation into a well-balanced and lower risk group. The diversified portfolio, both geographically in the UK, US and Hong Kong, and operationally across Construction Services, Support Services and Infrastructure Investments, plus the strength of our balance sheet and cash management, have provided the resilience for the Group to deliver ahead of expectations and grow our order book through the global instability seen in 2022.
The Board’s confidence in both the short and longer term is reflected in its commitment to a multi-year programme of strong shareholder cash returns. We believe that Balfour Beatty’s unique capabilities and the positive outlook in its chosen markets will enable it to deliver ongoing profitable managed growth.
Group Chief Executive
Leo Quinn
Group Chief Executive’s review
Launched in 2015, Build to Last is our strategy for continuous improvement. It is the day-to-day guide we use to uphold our purpose, and underpins everything we do.
Our strategy, Build to Last, is fundamental to how we’re building a market-leading Balfour Beatty for the next 100 years. It’s 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.
The 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
excluding non-recourse borrowings
excluding international joint ventures
2021: £790m
2021: £197m
2021: 76%
We deliver on our promises and we do the right thing
Our strategy: Build to Last
Lean
Trusted
£815m
Our KPIs
NET CASH (£m)
Our highly skilled colleagues and partners set us apart
Expert
Our KPI
EMPLOYEE ENGAGEMENT INDEX (%)
£297m
UNDERLYING PROFIT FROM CONTINUING OPERATIONS (£m)
2021: 96%
80%
Our KPI
95%
CUSTOMER SATISFACTION AVERAGE (%)
We make safety personal
We act responsibly to protect and enhance our planet and society
Safe
Sustainable
2021: 0.19
2020: 25.3 tCO
e/£m
2
0.15
LTIR
tCO
e/£m
2
Our KPI
Our KPI
LOST TIME INJURY RATE
22.4
TOTAL SCOPE 1 & 2 EMISSIONS (tCO
per £m revenue
e)
2
Delivering Build to Last
Rapidly evolving modern methods of construction are revolutionising how the built environment is designed, constructed and maintained.
Find out more
How do we...
With around 39%¹ of global carbon dioxide emissions being directly associated with buildings, decarbonising the built environment sector is key to mitigating climate change.
Find out more
Opportunities in infrastructure
Driven by the US$1.2 trillion Infrastructure Investment & Jobs Act, infrastructure growth in the US will experience a significant boost in
Balfour Beatty’s chosen states.
Strong infrastructure stimulus in the US
1.2tn
US
$
The outlook is positive, supported by the Government’s plan to increase land supply, speed up railway development projects and rehabilitate the city’s ageing buildings.
Stable spend in Hong Kong
240bn
HK
$
Multi-disciplinary collaboration is core to Balfour Beatty’s identity; our Construction Services, Support Services and Infrastructure Investments teams work closely together to ensure high-quality outcomes for our stakeholders.
How our Group works together
Business model
Business model
SUPPORT
SERVICES (SS)
We maintain, upgrade and manage vital services across
the power transmission, distribution, utilities, road
and rail sectors.
Cross-selling across customer base
Knowledge transfer
CONSTRUCTION
SERVICES (CS)
We manage strong construction businesses in the UK, US and
Hong Kong
Profitable work for construction business
Delivery skills support investment opportunities
infrastructure
investments (II)
A proven track record of developing and financing projects.
PHOTO GALLERY
Los Angeles International Airport (LAX) Automated People Mover, US
Balfour Beatty and its joint venture partners in LAX Integrated Express Solutions (LINXS) are responsible for the design, build, finance, operation and maintenance of the LAX Automated People Mover project. To construct this 2.25-mile above-ground airport transport system connecting passengers with the airline terminals, LINXS is utilising expert capabilities from its US construction businesses with the financial expertise of Balfour Beatty Investments.
M25, UK
In 2009, Balfour Beatty, with its joint venture partners, was awarded the design, build, finance and operate contract for the M25, and has subsequently upgraded, widened and enhanced sections of the London orbital motorway. The Group continues to operate and maintain the M25 through its stake in Connect Plus Services.
Hinkley Point C, Somerset, UK
Delivering the UK’s first nuclear power station in a generation has drawn on a breadth of capabilities from across the UK business. Construction Services is carrying out the tunnelling and maritime works package, plus the mechanical and electrical works through the MEH Alliance. Support Services is delivering the 48km, 400kV overhead line connection project on behalf of National Grid.
In striving to achieve its purpose of Building New Futures, Balfour Beatty touches the lives of many people. Working with its stakeholders across the industry and beyond, the Group continues to innovate, lead the market through driving change, shape the debate and inspire a new generation of talent to be the change-makers of tomorrow.
Collaborative and long-term mutually beneficial relationships with our customers are the foundation of our success.
Sharing the value we create
Customers
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.
Employees
Our many supply chain partners, large and small, are an invaluable resource fundamental to the successful delivery of all of our projects. We also work with trusted partners in a number of long-term joint ventures which are critical to our success.
Supply chain and strategic partners
Our activities can have a lasting impact on the communities in which we operate – we strive to leave a positive legacy.
Communities
Governments set the policy and legislative context within which we operate, which has significant implications for our operations.
Governments
Shareholders
Balfour Beatty’s shareholders, as the owners of the Company, are a critical stakeholder for the Group.
Stakeholder value
The Board’s confidence in both the short and longer term is reflected in its commitment to a multi-year programme of strong shareholder cash returns. We believe that Balfour Beatty’s unique capabilities and the positive outlook in its chosen markets will enable it to deliver ongoing profitable managed growth.
Chief Financial Officer’s review
Chief Financial Officer
Philip Harrison
¹ Including share of joint ventures and associates, before non-underlying items
The following are financial performance measures which are considered most relevant to the Group and used to manage the Group’s performance.
Measuring financial performance
DIVIDENDS PER SHARE Pence
STATUTORY EARNINGS PER SHARE (BASIC) Pence
STATUTORY PROFIT FOR THE YEAR £m
STATUTORY REVENUE £m
ORDER BOOK¹ £bn
UNDERLYING EARNINGS PER SHARE (BASIC) Pence
UNDERLYING PROFIT FROM OPERATIONS (PFO) £m
CONTINUING UNDERLYING REVENUE¹ £m
Financial statements
Towards a zero carbon construction site
Employees
Supply chain and strategic partners
Nomination Committee
Safety and Sustainability Committee
Audit and Risk Committee Remuneration Committee
•
•
•
•
Led by a strong management team, Balfour Beatty continues to deliver strong financial performance with an enhanced focus on positioning for growth in critical national infrastructure.
Governance
Group Chair introduction
Group Chair
Charles Allen, Lord Allen of Kensington, CBE
Governance
Promoting the long-term, sustainable success of the Company.
Establishing the Company’s purpose, values and behaviour supports the Board’s active promotion of a positive culture. Consideration of stakeholder interests is a key cornerstone of the Board’s decision-making process.
Board leadership and Company purpose
Directors’ report
Committee reports
Division of responsibilities
Composition, succession and evaluation
Processes and procedures are in place to ensure that there is an appropriate balance of Board members who are sufficiently supported and have the necessary skills, experience and independence to discharge their duties as Directors.
The Board is the principal decision-making body of the Company and each Director has specific responsibilities depending on their individual role. The day-to-day operation of the Group is formally delegated by the Board to the Group Chief Executive.
Key statutory and regulatory disclosures are made by the Board on an annual basis to ensure compliance with all applicable requirements.
The Board has delegated authority on specific governance matters to its Committees:
Governance
The Directors have skills and experience relevant to the sector in which the Group operates in order to effectively set the strategic direction and purpose of the Group.
Our approach to remuneration continues to deliver a robust link between strategy, reward and performance, supporting Balfour Beatty’s drive to deliver profitable managed growth and sustainable cash generation.
Maintaining a strong Board
Remuneration
Board of Directors
Downloads centre
Download the full report
Governance
Strategic report
Financial statements
Investors
This is an interactive version of Balfour Beatty plc’s 2022 Annual Report and Accounts. The content herein should be read in conjunction with and with reference to the printed version, which is available to download above.
All content copyright 2022 Balfour Beatty plc.
All rights reserved
Disclaimer
Privacy
Terms of use
Accessibility
Legal
Download centre
Governance highlights
Group Chair's introduction
Measuring financial performance
Chief Financial Officer's review
Sustainability highlights
Sharing the value we create
Business model
Opportunities in infrastructure
Infrastructure expertise
Our strategy: Build to Last
Group Chief Executive's review
Group highlights
Home
2018
2019
2020
2021
418
(78)
STATUTORY NET CASH/ (BORROWINGS) £m
2018
2019
2020
2021
790
337
512
581
NET CASH £m
139
(20)
¹https://worldgbc.org/article/bringing-embodied-carbon-upfront/
8,931
2022
279
2022
47.5
29.7
2022
17.4
10.5
2022
7,629
2022
790
815
2022
441
2022
287
2022
46.9
2022
2022
Performance measures
Statutory measures
It has given me great pleasure to experience first-hand the realities of Balfour Beatty life on the ground and witness its employees living and breathing the Group’s culture and values.
Find out more about our infrastructure expertise...
Find out more about our infrastructure expertise.
Innovation everywhere
Across Balfour Beatty, we are harnessing the power of digital and cutting-edge technology to drive productivity, improve safety and develop sustainable solutions. Look out for this icon in the report to read about our best innovations which are helping to transform the infrastructure and construction industry.
6.5%
of UK workforce in earn and learn positions
Photo credit: Los Angeles International Airport
Hinkley Point C, Somerset, UK
Delivering the UK’s first nuclear power station in a generation has drawn on a breadth of capabilities from across the UK business. Construction Services is carrying out the tunnelling and maritime works package, plus the mechanical and electrical works through the MEH Alliance. Support Services is delivering the 48km, 400kV overhead line connection project on behalf of National Grid.
Los Angeles International Airport (LAX) Automated People Mover, US
Balfour Beatty and its joint venture partners in LAX Integrated Express Solutions (LINXS) are responsible for the design, build, finance, operation and maintenance of the LAX Automated People Mover project. To construct this 2.25-mile above-ground airport transport system connecting passengers with the airline terminals, LINXS is utilising expert capabilities from its US construction businesses with the financial expertise of Balfour Beatty Investments.
Littlebrook substation, Kent, UK
As part of National Grid’s transformation programme, Balfour Beatty is replacing the high-voltage Littlebrook substation to ensure power supply in the Southeast for years to come. This project combines multiple aspects of the Group’s capabilities, including ground engineering, construction, steel fabrication, M&E, cabling and overhead line connections.
M25, UK
In 2009, Balfour Beatty, with its joint venture partners, was awarded the design, build, finance and operate contract for the M25, and has subsequently upgraded, widened and enhanced sections of the London orbital motorway. The Group continues to operate and maintain the M25 through its stake in Connect Plus Services.
1
Innovation everywhere
Across Balfour Beatty, we are harnessing the power of digital and cutting-edge technology to drive productivity, improve safety and develop sustainable solutions. Look out for this icon in the report to read about our best innovations which are helping to transform the infrastructure and construction industry.
29.7
26.3
26.7
3.7
UNDERLYING EARNINGS PER SHARE (BASIC) Pence
21.3
19.7
19.0
4.4
Littlebrook substation, Kent, UK
As part of National Grid’s transformation programme, Balfour Beatty is replacing the
high-voltage Littlebrook substation to ensure power supply in the Southeast for years to come. This project combines multiple aspects of the Group’s capabilities, including ground engineering, construction, steel fabrication, M&E, cabling and overhead line connections.
Balfour Beatty prides itself on being a responsible, sustainable organisation that delivers long-term benefits for the business, society and the environment creating positive returns for all of the Group’s stakeholders.
Sustainability highlights
renewable electricity generated by the Group compared to 2020
£1.5bn+
tonnes waste avoided from landfill
2.2m
social value generated in the UK
£816m
of UK workforce in earn and learn positions
6.5%
charitable donations in the UK
£340,000
charitable donations in the US
$500,000
charitable donations in Hong Kong
HK$2.1m
Sustainability
Explore our innovations
Innovation everywhere
Innovation everywhere
