Annual Report and Accounts 2021
We’re driving the transformation of our industry to meet the challenges of the future
We have delivered operating profits ahead of expectations with a higher quality order book and expert capabilities matched to favourable infrastructure markets.
Group highlights
UNDERLYING REVENUE¹
£8.3bn
NUMBER OF EMPLOYEES
24,500
UNDERLYING PROFIT BEFORE TAX
£187m
DIRECTORS’ VALUATION INVESTMENTS PORTFOLIO
£1.11bn
ORDER BOOK¹
£8.1bn
£5.4bn
£2.6bn
UNITED KINGDOM
UNITED STATES
HONG KONG
£16.1bn
GROUP ORDER BOOK
¹ Including share of joint ventures and associates, before non-underlying items
In 2021, despite the challenges presented by COVID-19, we have delivered operating profits ahead of expectations. Balfour Beatty emerges from the last two years with capabilities intact and a higher quality order book. Together these provide the visibility to deliver profitable managed growth and sustainable cash generation.
With a transformed portfolio focused on favourable infrastructure markets across our chosen geographies and our sector leading balance sheet, we are confident of delivering significant future returns to shareholders.
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
£790m
NET CASH (£m)
£197m
UNDERLYING PROFIT FROM OPERATIONS (£m)
2020: £581m
2020: £51m
2020: 95%
76%
96%
CUSTOMER SATISFACTION AVERAGE (%)
Our KPI
We make safety personal
We act responsibly to protect and enhance our planet and society
Safe
Sustainable
2020: 0.10
2020: 18.8 tCO
0.14
Our KPI
Our KPI
LOST TIME INJURY RATE
25.3
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
With over 650 million shares in issue, Balfour Beatty’s shareholders are a critical stakeholder for the Group. Shareholders, defined as a person, company, or institution that owns at least one share of a company’s stock, are the owners of Balfour Beatty.
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
958%
Reduction in tonnes of tCO
1,830,527
social value generated in the UK
£716.5m
UK average Considerate Constructors score (industry average 38.23)
42.63
total amount for charitable contributions
£1,022,825
of UK workforce in earn and learn positions
6.2%
Sustainability
Balfour Beatty has delivered its 2021 results ahead of expectations. The underlying profit from operations for the year at £197 million represents a significant improvement from 2020 as Balfour Beatty recovered from the COVID-19 pandemic.
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
CONTINUING UNDERLYING PROFIT FROM OPERATIONS (PFO) £m
2018
2019
2020
2021
29.7
26.3
26.7
3.7
CONTINUING UNDERLYING EARNINGS PER SHARE (BASIC) Pence
CONTINUING 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
It is a privilege to chair such a high-quality Group. I have had the opportunity to meet a large number of colleagues across many project sites and have seen our values being put into practice.
Governance
Group Chair introduction
Governance
Promoting the long-term, sustainable success of the Company.
Establishing the Company’s purpose, values and behaviours 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
2
2
per £m revenue
e
revenue against 2010 baseline
2
Download the full report
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This is an interactive version of Balfour Beatty plc’s Annual Report and Accounts 2021. 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
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Legal
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Accessibility
Strategic report
Governance
Financial statements
Investors
M25, UK
In 2009, Balfour Beatty in joint venture was awarded the design, build, finance and operate contract for the M25, which included the widening and upgrade of sections of the London orbital motorway. The Group continues to operate and maintain the M25 through its stake in Connect Plus Services.
Bowie State University, US
In 2021, US Construction Services delivered a 557 bed on-campus housing community, including an Entrepreneurship Center, for Bowie State University. The project was developed under a procured P3 arrangement by Balfour Beatty Campus Solutions on behalf of the university and the Maryland Economic Development Corporation.
Hinkley Point C, UK
The new nuclear programme capitalises on the breadth of Balfour Beatty’s capability. Construction Services is carrying out the tunnelling and maritime works package, plus the mechanical and electrical works through the MEH Joint Venture. Support Services is delivering the 48km, 400kV overhead line connection project on behalf of National Grid.
2
e
Group Chair
Charles Allen, Lord Allen of Kensington, CBE
Chief Financial Officer
Philip Harrison
tonnes waste avoided from landfill
renewable electricity generated by the Group compared to 2020
more than £1bn UK spend with 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 Government’s £650bn National Infrastructure Strategy, providing the highest levels of investment in decades.
Positive outlook for the UK
650bn
UK
£
Driven by the US$1.2 trillion bipartisan Infrastructure Investment and Jobs Act, infrastructure growth in the US will experience a significant boost, and in particular in Balfour Beatty’s chosen states.
Strong infrastructure stimulus in the US
1.2tn
US
$
The outlook is positive in the medium term, supported by the Government’s plan to increase land supply, speed up railway development projects and rehabilitate the city’s ageing buildings, combined with an additional total investment of HK$240bn to combat climate change.
Stable spend in Hong Kong
HK
$
240bn
HS2 high-speed railway line, UK
construct a 90km section of a
high-speed railway?
How do we...
By bringing together two global leaders in the delivery of critical infrastructure to shape a sustainable solution. Our joint venture, Balfour Beatty VINCI, is designing and building part of the most exciting railway project in Europe – HS2. Our main works civil engineering contracts will deliver earthworks, ground engineering, and many structures including bridges, viaducts and tunnels along a 90 km-long stretch of the UK’s new high-speed rail line.
Find out more
Midtown Atlanta developments, US
build the ultimate place to live, work and play in the heart of a city?
How do we...
You bring together a team of infrastructure experts to create a dynamic, multifamily community in the heart of Midtown Atlanta. Collaborating with two customers with one shared goal, our 500-strong team used lean construction methods and the latest technologies to deliver three projects in one.
Find out more
M+ Museum, Hong Kong
We bring together a team of 300 experts armed with the latest digital tools including 3D scanning, lasers, drones and augmented reality, all contributing to precision engineering and improved planning, progress tracking and decision making.
Find out more
create an iconic
cultural landmark?
How do we...
Take a look at our project showcases from the UK, the US and Hong Kong...
Our highly skilled colleagues and partners set us apart
Expert
2020: 75%
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
Project showcases - UK, US and Hong Kong
Our strategy: Build to Last
Group Chief Executive's review
Group highlights
Home
8,280
Market review
Balfour Beatty US was named as one of the Top 5 Best Places to Work by the San Diego Business Journal and Orange County Business Journal.
‘Highly commended’ Princess Royal Training Awards for ‘exemplary’ training, learning and development response in the face of COVID-19.
Best Innovative HR Initiative Award by CTgoodjobs for the HRIS roll-out.
APM Award for Contribution to Project Management.
Our awards
We’re driving the transformation of our industry to meet the challenges of the future
Annual Report and Accounts 2021
We have delivered operating profits ahead of expectations with a higher quality order book and expert capabilities matched to favourable infrastructure markets.
UNDERLYING REVENUE¹
UNITED KINGDOM
UNITED STATES
HONG KONG
Group highlights
£8.3bn
NUMBER OF EMPLOYEES
24,500
UNDERLYING PROFIT BEFORE TAX
ORDER BOOK¹
¹ Including share of joint ventures and associates, before non-underlying items
£187m
£8.1bn
£5.4bn
£2.6bn
DIRECTORS’ VALUATION INVESTMENTS PORTFOLIO
£1.11bn
GROUP ORDER BOOK
In 2021, despite the challenges presented by COVID-19, we have delivered operating profits ahead of expectations. Balfour Beatty emerges from the last two years with capabilities intact and a higher quality order book. Together these provide the visibility to deliver profitable managed growth and sustainable cash generation.
With a transformed portfolio focused on favourable infrastructure markets across our chosen geographies and our sector leading balance sheet, we are confident of delivering significant future returns to shareholders.
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
2020: £581m
2020: £51m
2020: 75%
We deliver on our promises and we do the right thing
Our strategy: Build to Last
Lean
Trusted
£790m
Our KPIs
NET CASH (£m)
Our highly skilled colleagues and partners set us apart
Expert
Our KPI
EMPLOYEE ENGAGEMENT INDEX (%)
£197m
UNDERLYING PROFIT FROM CONTINUING OPERATIONS (£m)
2020: 95%
76%
Our KPI
96%
CUSTOMER SATISFACTION AVERAGE (%)
We make safety personal
We act responsibly to protect and enhance our planet and society
Safe
Sustainable
2020: 0.10
2020: 18.8 tCO
e
2
0.14
LTIR
tCO
e
2
Our KPI
Our KPI
LOST TIME INJURY RATE
25.3
TOTAL SCOPE 1 & 2 EMISSIONS (tCO
per £m revenue
e)
2
Delivering Build to Last
You bring together a team of infrastructure experts to create a dynamic, multifamily community in the heart of Midtown Atlanta. Collaborating with two customers with one shared goal, our 500-strong team used lean construction methods and the latest technologies to deliver three projects in one.
Find out more
How do we...
By bringing together two global leaders in the delivery of critical infrastructure to shape a sustainable solution. Our joint venture, Balfour Beatty VINCI, is designing and building part of the most exciting railway project in Europe – HS2. Our main works civil engineering contracts will deliver earthworks, ground engineering, and many structures including bridges, viaducts and tunnels along a 90 km-long stretch of the UK’s new
high-speed rail line.
Find out more
Opportunities in infrastructure
Driven by the US$1.2 trillion bipartisan Infrastructure Investment and Jobs Act, infrastructure growth in the US will experience a significant boost, and in particular in Balfour Beatty’s chosen states.
Strong infrastructure stimulus in the US
1.2tn
US
$
The outlook is positive in the medium term, supported by the Government’s plan to increase land supply, speed up railway development projects and rehabilitate the city’s ageing buildings, combined with an additional total investment of HK$240bn to combat climate change.
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
M25, UK
In 2009, Balfour Beatty in joint venture was awarded the design, build, finance and operate contract for the M25, which included the widening and upgrade of sections of the London orbital motorway. The Group continues to operate and maintain the M25 through its stake in Connect Plus Services.
Bowie State University, US
In 2021, US Construction Services delivered a 557 bed on-campus housing community, including an Entrepreneurship Center, for Bowie State University. The project was developed under a procured P3 arrangement by Balfour Beatty Campus Solutions on behalf of the university and the Maryland Economic Development Corporation.
Hinkley Point C, UK
The new nuclear programme capitalises on the breadth of Balfour Beatty’s capability. Construction Services is carrying out the tunnelling and maritime works package, plus the mechanical and electrical works through the MEH Joint Venture. 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
With over 650 million shares in issue, Balfour Beatty’s shareholders are a critical stakeholder for the Group. Shareholders, defined as a person, company, or institution that owns at least one share of a company’s stock, are the owners of Balfour Beatty.
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
Tonnes of Scope 1 & 2 CO
1,830,527
social value generated in the UK
£716.5m
more than £1bn UK spend with SMEs and local businesses
£1bn
UK average Considerate Constructors score (industry average 38.23)
42.63
total amount for charitable contributions
£1,022,825
Building New Futures
Sustainability
Reduction in tonnes of tCO
of UK workforce in earn and learn positions
6.2%
Our awards
Balfour Beatty has delivered its 2021 results ahead of expectations. The underlying profit from operations for the year at £197 million represents a significant improvement from 2020 as Balfour Beatty recovered from the COVID-19 pandemic.
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
CONTINUING UNDERLYING EARNINGS PER SHARE (BASIC) Pence
CONTINUING UNDERLYING PROFIT FROM OPERATIONS (PFO) £m
CONTINUING UNDERLYING REVENUE¹ £m
Financial statements
2018
2019
2020
2021
2018
2019
2020
2021
2018
2019
2020
2021
2018
2019
2020
2021
2018
2019
2020
2021
2018
2019
2020
2021
2018
2019
2020
2021
construct a 90km section of a high-speed railway?
958%
Employees
Supply chain and strategic partners
Nomination Committee
Audit and Risk Committee Remuneration Committee
Safety and Sustainability Committee
•
•
•
•
It is a privilege to chair such a high-quality Group. I have had the opportunity to meet a large number of colleagues across many project sites and have seen our values being put into practice.
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 behaviours 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 2020 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 2021 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
Project showcases - UK, US and Hong Kong
Our strategy: Build to Last
Group Chief Executive's review
Group highlights
Home
£1bn
2018
2019
2020
2021
418
(78)
STATUTORY NET CASH/ (BORROWINGS) £m
2018
2019
2020
2021
790
337
512
581
NET CASH £m
139
(20)
