REG - Balfour Beatty PLC - BALFOUR BEATTY PLC 2025 HALF YEAR RESULTS
Yesterday 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250813:nRSM0629Va&default-theme=true
RNS Number : 0629V Balfour Beatty PLC 13 August 2025
BALFOUR BEATTY PLC RESULTS FOR THE HALF YEAR ENDED 27 JUNE 2025
13 August 2025
Strong UK results driving growth in earnings-based businesses
On track to achieve full year expectations with high quality order book
momentum
Leo Quinn, Balfour Beatty Group Chief Executive, said: "Our continuing strong
cash generation is underpinned by a growing order book with improved margins
and lower risk contract forms. This provides the Board with increasing
confidence in significant future cash generation that supports our ongoing
dividends and share buybacks. This is demonstrated by the momentum in our key
growth areas in the first half.
"Support Services has delivered a 35% profit uplift driven by the power
transmission business, UK Construction has achieved its long-standing 3%
margin target earlier than expected and, in US Construction, Buildings
reported strong revenue growth from its strategy of focused expansion.
Furthermore, recent UK Government announcements confirm a deep pipeline of
major infrastructure projects which closely align with the Group's unique
expert capabilities and will further enhance the quality of the future order
book. Balfour Beatty's market leading positions and ongoing success are a
testament to the expertise, dedication and hard work of our people."
On track to achieve full year expectations with further growth in 2026
* Continue to expect an increase in underlying profit from operations (PFO) from
the earnings-based businesses in 2025 with strong UK Construction and Support
Services growth offsetting lower US Construction profit
* Infrastructure Investments: £30 - £40 million gain on disposals forecast,
small pre-disposals loss expected in second half
* £19.5 billion order book (FY2024: £18.4 billion) giving visibility and
underpinning further growth in 2026 and beyond
* A ten year, c.£20 billion, pipeline of work in addition to order book,
including Sizewell C and power transmission schemes
First half growth from the earnings-based businesses
* PFO from earnings-based businesses up 7% to £108 million (2024: £101
million)
* Underlying EPS reduced 6% to 14.4 pence per share (2024: 15.3 pence)
* Non-underlying pre-tax credit of £37 million, including £50 million release
of US Civils provision following SH161 settlement
Underlying profit from operations of £77 million in line with prior year
* UK Construction: Delivered profitable underlying growth to achieve 3% margin
target one year ahead of expectations
* US Construction: First half loss with strong Buildings performance offset by
cost overruns at one Civils project; recoveries being pursued
* Support Services: PFO up 35% to £46 million driven by growth in the power
transmission business
* Infrastructure Investments: £10 million loss (2024: £7 million loss).
Agreement in principle with US Department of Justice to extend military
housing monitorship to 6 June 2026
Balance sheet and cash flow strength support sustainable and attractive
shareholder returns
* Average net cash(3) increased to £1,102 million (FY2024: £766 million) -
expecting £1.1 - 1.2 billion for full year
* Directors' valuation of the Investments portfolio decreased 8% to £1.2
billion (FY2024: £1.3 billion)
* Half year dividend increased by 11% to 4.2 pence per share (2024: 3.8p). £188
million shareholder returns in 2025
(£ million unless otherwise specified) HY 2025 HY 2024
Underlying(2) Total Underlying(2) Total
Revenue(1) 5,150 5,150 4,677 4,677
Profit from earnings-based businesses 108 146 101(#) 116
Profit from operations 77 114 77(#) 91
Pre-tax profit 95 132 98 112
Profit for the period 73 101 81 96
Basic earnings per share 14.4p 19.8p 15.3p 18.1p
Dividends per share 4.2p 3.8p
HY 2025 FY 2024 HY 2024
Order book(1) £19.5bn £18.4bn £16.6bn
Directors' valuation of Investments portfolio £1.2bn £1.3bn £1.3bn
Net cash - recourse(3) 1,237 943 785
Average net cash - recourse(3) 1,102 766 735
Segment analysis HY 2025 HY 2024
Revenue(1) PFO(2,#) PFO Revenue(1) PFO(2,#) PFO
margin(2) margin(2)
£m £m % £m £m %
UK Construction 1,563 56 3.6% 1,458 34 2.3%
US Construction 2,087 (11) (0.5)% 1,703 18 1.1%
Gammon 547 17 3.1% 714 15 2.1%
Construction Services 4,197 62 1.5% 3,875 67 1.7%
Support Services 662 46 6.9% 554 34 6.1%
Earnings-based businesses 4,859 108 2.2% 4,429 101 2.3%
Infrastructure Investments 291 (10) 248 (7)
Corporate activities (21) (17)
Total 5,150 77 4,677 77
Notes:
(1) Including share of joint ventures and associates
(2) Before non-underlying items (Note 8)
(3) Excluding non-recourse net borrowings, which comprise cash and debt
ringfenced within certain infrastructure investments project companies
(#) Underlying profit from operations, or PFO, as defined in the Measuring our
financial performance section
A reconciliation of the Group's performance measures to its statutory results
is provided in the Measuring our financial performance section
Investor and analyst enquiries:
Jim Ryan
Tel. +44 (0)7858 368527
jim.ryan@balfourbeatty.com (mailto:jim.ryan@balfourbeatty.com)
Media enquiries:
Vivienne Dunn
Tel. +44 (0)203 810 2345
vivienne.dunn@balfourbeatty.com (mailto:vivienne.dunn@balfourbeatty.com)
Investor and analyst presentation:
A presentation to investors and analysts will be made at Deutsche Numis, 45
Gresham Street, London, EC2V 7BF at 09:00 (GMT) on 13 August 2025. There will
be a live webcast of this on: www.balfourbeatty.com/webcast
(https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.balfourbeatty.com%2Fwebcast&data=05%7C01%7CJim.Ryan%40balfourbeatty.com%7C25665b1cf76942e13aeb08db98b7909e%7Ca04222fe0c5c40bb842097a219ba514e%7C0%7C0%7C638271686390333218%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=OTXWdtcSRw138kobSP1OBWwmUVHSSY7cejEYWZEsrvs%3D&reserved=0)
. (http://www.balfourbeatty.com/webcast) The webcast will be recorded and
subsequently available at Results, reports and presentations - Investors -
Balfour Beatty plc
(https://www.balfourbeatty.com/investors/results-reports-and-presentations/) .
2025 HALF YEAR RESULTS ANNOUNCEMENT
· GROUP CHIEF EXECUTIVE'S OVERVIEW
· RESULTS OVERVIEW
· DIVISIONAL FINANCIAL REVIEWS
· MEASURING OUR FINANCIAL PERFORMANCE
GROUP CHIEF EXECUTIVE'S OVERVIEW
Executive summary
Balfour Beatty's first half performance was largely positive, with increased
PFO from the earnings-based businesses, an enhanced order book and increased
cash, all underlining the strength of the Group's foundations for future
growth. In the earnings-based businesses, PFO rose by 7% as UK Construction
achieved its long-standing 3% PFO margin target a year earlier than expected,
and US Buildings and Support Services delivered strong revenue growth while
maintaining margins, demonstrating notable progress in two of the Group's
chosen growth areas. The US Civils business recorded a first half loss from
operations due to cost overruns on a highways project in Texas, for which
recoveries are being pursued. The Directors' valuation of the Investments
portfolio has reduced by 8% to £1.2 billion (FY2024 £1.3 billion) due to
increased discount rates and sterling strengthening against the US dollar.
The Group's outlook across its four strategic growth markets - UK energy
transition and security, UK transport, UK defence, and US buildings - has
continued to strengthen, supported by successful bidding activity and
increased clarity around the UK's infrastructure agenda. The UK Government has
started to make progress with its objective to stimulate economic growth by
investing in and enabling infrastructure development, with its support for
clean energy projects, private financing for public infrastructure, planning
reform and modernising the UK's defence estate all beneficial to the Group.
More generally, the £725 billion 10-year infrastructure strategy and National
Infrastructure Pipeline bring improved certainty and clarity for the industry
as a whole, allowing UK contractors and their suppliers to plan accordingly
and invest in capability.
Given this, the Group has been able to pursue its bidding with a high level of
selectivity and discipline. In the UK energy sector, Balfour Beatty has
started work on the £833 million Net Zero Teesside Carbon Capture project and
made further progress with each of the three power transmission network
owners, while Sizewell C, for which Balfour Beatty will deliver one third of
the main civils works, has now passed final investment decision and is
expected to go to contract in the coming months. In UK transport, the rail
business secured around £500 million of new orders, while further Government
funding was confirmed for various road projects which the Group had previously
been awarded, including the Lower Thames Crossing and A66. US Buildings
delivered a further 6% growth in its order book, which is now 26% higher than
a year ago on constant exchange rate (CER).
In total, the Group's £19.5 billion order book has grown by 6% (11% at CER)
in the first half, with growth in each segment, and continues to give clear
visibility in the short and medium term. Given Balfour Beatty's focus on
robust governance and disciplined bidding, the order book comprises a
portfolio of projects that the Group believes has the appropriate contractual
terms and conditions for the risk undertaken. In addition to the reported
order book, much of the work which the Group has been awarded in both the
power transmission and distribution sector and in the UK defence sector are
being contracted on a phased or task order basis and represent a further
significant volume of future activity.
As of August 2025, Balfour Beatty is engaged in discussions with the US
Department of Justice about Balfour Beatty Communities' plea agreement and
monitorship, and has agreed in principle to extend both to 6 June 2026.
Financial summary
Balfour Beatty reported underlying profit from operations from its
earnings-based businesses of £108 million in the first half of 2025 (2024:
£101 million), with particularly strong growth in UK Construction and Support
Services largely offset by a loss in US Construction, where the cost of delays
at one civils project in Texas cancelled out a strong performance from the
Buildings business. Underlying profit from operations for the Group remained
flat at £77 million, with the increase from the earnings-based businesses
offset by a loss in Infrastructure Investments and higher central costs. At a
PFO level, and prior to disposals, Infrastructure Investments remains
profitable when excluding the costs associated with the monitor's work.
Non-underlying items after tax were a gain of £28 million (2024: £15
million) and included the release of a £50 million legal provision
established in 2024 in relation to a US Civils project completed in 2012.
Balfour Beatty's financial strength remains a competitive differentiator, and
its average net cash position increased to £1,102 million in the first half
(FY 2024: £766 million), as a result of increased operating cashflows and
working capital inflows in most divisions. The Directors' valuation of the
Investments portfolio decreased to £1.2 billion (FY 2024: £1.3 billion) as a
result of increased discount rates and sterling strengthening against the US
dollar.
Given the Group's ongoing cash generation, strong order book, growing
opportunities and established competitive positions in the UK energy,
transport and defence sectors and in selected US buildings sectors, the Board
has confidence in Balfour Beatty's capacity to deliver significant and
attractive future shareholder returns. The current tranche of Balfour Beatty's
multi-year share buyback programme, £125 million for 2025, is progressing
well and is on track to complete by the end of the year. In addition, the
Board has declared an interim dividend of 4.2 pence per share (2024: 3.8
pence).
Continued expansion and progress in the Group's growth markets
Balfour Beatty's selective geographic and operational diversity is an
essential part of the Group's business model. The breadth of capabilities,
clients and locations in the Group's focused portfolio provides resilience
against sector-specific challenges, while its deep understanding of each of
these areas allows for early sighting of new opportunities. For the past 18
months, Balfour Beatty has been concentrated on delivering profitable growth
from four key markets, which were identified as having an increasing volume of
attractive opportunities that closely align to the Group's end-to-end
capabilities and experience in delivering large complex infrastructure
projects. The outlook for these markets - energy, transport and defence in the
UK and buildings in the US - has continued to strengthen in the first half of
2025, which underpins the Board's ongoing confidence in profit growth from the
earnings-based businesses in 2025 and beyond.
UK energy transition and security: In the year to date the Group has
progressed opportunities across a variety of technologies and major clients,
including:
- Signed an £833 million contract with Technip Energies to act as the
construction partner for Net Zero Teesside Power - an onshore power, capture
and compression project which is poised to be the world's first gas-fired
power station with carbon capture and storage;
- Signed the Programme Alliance Agreement in partnership with Laing
O'Rourke and Bouygues Travaux Publics to deliver the main civil works at the
new Sizewell C Nuclear power station, which achieved a £38 billion final
investment decision in July 2025;
- Good progress on Scottish and Southern Electricity Networks (SSEN)
power transmission and distribution projects, with planning consent granted
for the £690 million Skye 132kV Reinforcement project and a major order
received from SSEN for Balfour Beatty's steel fabrication facility to
manufacture towers for the ASTI programme, with manufacture and testing of a
new tower type underway;
- A very busy period with National Grid as Balfour Beatty work on
direct allocations projects as well as longer term framework opportunities,
including the Group being awarded the North East region of the Electricity
Transmission Partnership. The Group is seeing record activity with National
Grid which will lead to a growth in the order book through the remainder of
2025 and 2026;
- Further progress with Scottish Power Energy Networks (SPEN), with
the Group being a preferred bidder on SPEN's Strategic Agreement for
Transmission Overhead Line Works.
UK Defence: In the first half, Balfour Beatty has been onsite delivering
defence infrastructure projects for clients including Rolls-Royce, AWE and the
Defence Infrastructure Organisation. In June, the UK Government released the
Strategic Defence Review, declaring defence as an engine for growth, which
will boost prosperity, jobs and security for people across the UK and called
for a new partnership with industry, including improved contract management,
faster delivery, and a move to industry-standard construction methods. This
alignment with Balfour Beatty's capabilities, and the Group's experience in
defence infrastructure and high-security environments, means it is well placed
to support the UK Government's objectives in this sector.
UK Transport: Balfour Beatty's UK Rail business had a particularly strong
period for orders in the first half of the year, securing around £500 million
of new work, including civil engineering works under CP7, track renewal with
the Central Rail Systems Alliance and fleet supply and operation for Network
Rail. The Group was also awarded c.£100 million of major highways work for
the M3 Junction 9 scheme.
UK transport is an area of strength for Balfour Beatty, which is expected to
contribute to growth in the medium-term. The Government have been clear that a
focus on investing in connectivity and unlocking opportunity across the
country means that transport is a key driver of economic growth, however
timeframes remain uncertain. Specifically for Balfour Beatty, Government
support and funding for the Lower Thames Crossing, the A66 and the North
Hykeham Relief Road bring further certainty to projects which the Group has
been completing preconstruction work on in recent years. More generally,
recent announcements also included a £16 billion investment for local
transport projects in England's city regions, funding for rail network
enhancement, a new bank of major road network schemes and support for the
Heathrow expansion, all of which will bring opportunities to the Group.
US buildings: Balfour Beatty's US buildings operations are focused primarily
on specific, high growth regions, with construction spending in the Group's
chosen states projected to grow 6% per year to 2029. This strategy means that,
despite a period of economic uncertainty in the US, demand in US Buildings key
sectors has remained strong for Balfour Beatty, and following 24% growth in
the order book across 2024, a further 6% growth has been delivered in the
first half of 2025. This order book growth has been driven by increases in
most client subsectors, including: residential, with new apartment buildings
in Washington DC and North Carolina contracted; hospitality, aided by the $385
million contract to construct the Grand Hyatt Miami Beach hotel; education,
with new school projects in North Carolina, California and Florida; and data
centres, where new orders of c$150 million were taken in the Northwest. The
order book growth over the past 18 months has contributed to a large increase
in work delivered, with a 36% increase in volumes compared to the first half
of 2024 at CER.
Construction Services: Strong performance in UK and in US buildings impacted
by US Civils delay
UK Construction: The Group's market-leading position in the UK infrastructure
market is built on its scale and vertically integrated capability for
delivering major projects. In the year to date, the division has continued to
deliver some of the country's most significant infrastructure schemes. At HS2
Area North, the Balfour Beatty VINCI joint venture completed the 472-metre
River Tame West Viaduct at Delta Junction in North Warwickshire and Europe's
heaviest ever box-slide, with the JV team sliding a 14,500-tonne concrete box
structure into position to allow trains to pass under the A46 dual
carriageway. At Old Oak Common Station, the Balfour Beatty VINCI SYTRA joint
venture began the installation of the first high-speed platform slabs, while
at the conventional station, construction of the retaining wall commenced. At
Hinkley Point C, good progress continues to be made on the underground marine
works for the new nuclear power station, with the adit connections completed
in two of the three tunnels.
The division achieved a 3.6% PFO margin during the period (2024: 2.3%),
thereby achieving the Group's ambition to deliver a 3% PFO margin in UK
Construction.
US Construction: The Group's earning-based activities in the US delivered a
mixed performance in the first half. The US Buildings business delivered 92%
of US Construction revenues for the period and continues to expand, with
higher volumes and further order book growth, while maintaining its high
delivery standards. New projects started in the period are representative of
the diversity of the portfolio and include the new Inglewood High School
Campus in California, a social services campus for The Salvation Army of North
Texas Dallas, the 17 storey, 800 guestroom, Grand Hyatt Miami Beach hotel in
Florida and the Portals IV 356-unit residential project in Washington DC.
Other operational milestones achieved in the period include the topping out of
a new psychiatric residential treatment facility in Columbia, South Carolina,
and the completion of the Gipson Play Plaza in Raleigh, North Carolina, which
is now the largest adventure playground in the Southeast.
The performance of the Group's US Civils division, which represents 8% of US
Construction revenues in the period, was negatively impacted by cost overruns
and schedule delays on a single joint venture highways project in Texas, which
commenced in 2019 and is due to finish in mid-2026. As to be expected, the
Group are pursuing cost recoveries.
As communicated previously, in recent years Balfour Beatty has been pivoting
the US Civils business towards a more concentrated portfolio of projects, with
a heavier weighting towards highways and bridges in the Southeast and Texas.
These activities have historically been profitable for the Group. The Group
also decided to cease bidding for joint venture design build highways projects
in Texas, seeking to further de-risk project contracting and execution. As
part of this strategy, the Group was recently awarded an $889 million contract
by the Texas Department of Transportation to reconstruct a 3.7km section of
Interstate 30 in Dallas County, scheduled for completion in 2031, reflective
of the Group's capabilities and focus going forward. The Group remains
confident that US highways will be a profitable activity for the Group in the
medium term.
Gammon: Balfour Beatty's Hong Kong based 50:50 joint venture with Jardine
Matheson has performed well in the first half and grown PFO. As expected, with
the major projects at Hong Kong International Airport moving towards
completion, the volume of work completed by Gammon in the period has reduced,
however PFO margin has improved. The Hong Kong construction sector remains
positive during a difficult fiscal period for the region, with Government
commitments to invest in infrastructure projects, and in particular to
accelerate the development of the Northern Metropolis. Other upcoming
opportunities for Gammon include the railway network extension, with wide
ranging plans including a connection between the New Development Area in Hong
Kong with Shenzhen, and a HK$100 billion project recently announced by the
Hong Kong Airport Authority to develop an airport city that aims to integrate
commercial activities, art, entertainment, and leisure.
Operationally, Gammon's work on Terminal 2 at the International Airport is
progressing well, with the Terminal opening in stages from September this
year. The team are progressing on the final fitting out works within the
building, while externally the viaduct and roadworks are nearing completion.
The business is also making good progress on the Central Kowloon Route, a
major three-lane road which will connect the Yau Ma Tei Interchange in West
Kowloon with the Kai Tak Development Area in East Kowloon. Gammon has major
work packages covering critical tunnel infrastructure, complex electrical and
mechanical systems and ventilation buildings, with the route due to open to
traffic in December. Gammon's order book remained flat at £1.9 billion, which
is a 12% increase at CER, with a strong intake of orders in the buildings
sector.
Support Services: Growth underway with increased activities in power
transmission
Support Services is focused on power, plant, road and rail maintenance and is
characterised by profitable recurring revenues underpinned by long term
contracts. For full year 2025, Support Services is expected to deliver towards
the top of its targeted PFO margin range of 6-8%.
The power transmission business has delivered strong growth in the period and
has recruited over 850 people since the start of 2024. In the first half,
Balfour Beatty mobilised the Bramford to Twinstead Reinforcement project for
National Grid, a scheme with 18km of new 400kV overhead lines and 11km of new
400kV underground cable. The Group also mobilised the Eastern Green Link 2
Cabling project for Prysmian, installing 67km of 525kV HVDC cables. These
projects are both critical parts of National Grid's Great Grid Upgrade. Good
progress was made in the construction of new substations at Little Horsted,
Norwich and Wallend, all of which are to enable the connection of new green
energy, while the Group also finished installing the cables on the 3.5km North
Wessex Downs VIP scheme, which will complete this year. In Scotland, the team
have mobilised to site and begun early works on the Skye Reinforcement project
following consents being given and have also mobilised on Argyll Substations.
Progress continues on the early contractor involvement phase on the Group's
ASTI projects for SSEN and on the upgrade of the 170km Kincardine to Kintore
overhead line on the East Coast of Scotland.
The road maintenance business has continued to perform well in the first half
of 2025, matching the high volume of work delivered in the first half of 2024.
The business is in a busy period of bidding as it pursues profitable growth,
with a number of Local Authority opportunities coming to market in the near
future. The rail business has had a strong first half, particularly with
regard to winning work, signing long-term agreements which underpin the
business for up to ten years.
On 1 August 2025, the Group completed the disposal of Omnicom Balfour Beatty,
its specialist rail measurement hardware and intelligent software business,
for a consideration of £24 million (subject to a typical post completion
working capital adjustment) to Hitachi Rail. After deducting cost of disposal,
the Group is anticipating recording an estimated gain on disposal of £20
million within its non-underlying results in the second half of the year.
Infrastructure Investments: Two investments in multifamily housing
Balfour Beatty continues to invest in attractive new opportunities and has
added two new projects to the portfolio in the first half of the year. The
Gathering at Arbor Greens in Newberry, Florida, and River Pointe in Conroe,
Texas, are two multifamily housing communities with c.300 units each. The
Group has maintained its disciplined approach to investments and disposals to
ensure the delivery of investment hurdle rates. The Group's current focus
remains on investment opportunities in:
- Residential: Balfour Beatty continues to see attractive US
multifamily housing come to market, providing opportunity to invest profitably
in the regeneration of these properties.
- Student accommodation: Across the UK and US, demand for student
accommodation remains strong as universities continue to improve their
facilities to attract students.
- US P3: Balfour Beatty continues to pursue investment and
construction opportunities in public-private partnerships, and, to date, 41
states (plus DC) have passed legislation allowing P3 projects.
- 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.
The Group continues to see opportunities in student accommodation and in the
first half of the year was awarded predevelopment agreements to develop
on-campus accommodation at the University of Florida and the Wentworth
Institute of Technology. In the UK, construction of the West Slope student
accommodation development at Sussex University is ongoing.
In US military housing, the Group have started construction at Ft Carson on
the first 56 new homes of a c.475 new home project, for which a ground lease
extension is under negotiation and required to finance the wider
redevelopment. Construction is also underway on a 76-home project at Fort
Gordon.
The Group continues to work with the independent compliance monitor, appointed
by the US Department of Justice (DoJ) in 2021 and commencing work in 2022. As
of August 2025, Balfour Beatty is engaged in discussions with the DoJ about
Balfour Beatty Communities' plea agreement and monitorship, and has agreed in
principle to extend both to 6 June 2026.
Outlook
Balfour Beatty are on track to achieve full year earnings expectations, with
further growth in 2026. The Board continues to expect an increase in PFO from
its earnings-based businesses for the full year, with UK Construction, Gammon
and Support Services expected to continue their good performance, offsetting
reduced expectations for US Construction which is now expected to deliver full
year PFO of roughly £20 million due to the loss in US Civils. Infrastructure
Investments financial performance is expected to improve in the second half,
with the full year loss forecast to be slightly larger than at the half year,
prior to disposals. Gains on investment disposals for the full year are now
expected to be in the range of £30 - £40 million. The Board expects net
finance income of around £30 million for 2025 and for the effective tax rates
in each of the three geographies to remain close to statutory rates.
The Group's average cash in 2025 is now expected to be in the range of £1.1 -
£1.2 billion, with capital expenditure between £40 and £50 million and a
working capital outflow in the second half of the year.
The Group's longer-term outlook remains positive. The acceleration of growth
achieved by UK Construction and Support Services in the first half of the year
further demonstrates the earnings potential of the Group. When coupled with
increasing opportunities in the four key growth markets it has positioned
itself for - energy, transport and defence sectors in the UK and the US
buildings market - the Board continues to have confidence in Balfour Beatty's
ongoing ability to deliver profitable managed growth and strong cash
generation, and in turn, sustainable and attractive shareholder returns.
RESULTS OVERVIEW
Unless otherwise stated, all commentary in this section and the Divisional
financial reviews is on an underlying basis.
Throughout this report, Balfour Beatty has presented financial performance
measures which 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 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, underlying revenue includes the Group's share of
revenue in joint ventures and associates.
Group financial summary
Underlying revenue increased by 10% (12% at CER) to £5,150 million (2024:
4,677 million) driven by increases at US Construction, UK Construction and
Support Services, partially offset by a reduction at Gammon. Statutory
revenue, which excludes joint ventures and associates, was £4,522 million
(2024: £3,885 million).
Construction Services revenue was up 8% (10% at CER) to £4,197 million (2024:
£3,875 million), with increased US Construction and UK Construction
activities partially offset by reduced volumes at the major Hong Kong airport
projects. Support Services revenue increased by 19% to £662 million (2024:
£554 million) driven by growth in the power transmission business.
Underlying profit / (loss) from operations(2) HY 2025 HY 2024
£m £m
UK Construction 56 34
US Construction (11) 18
Gammon 17 15
Construction Services 62 67
Support Services 46 34
Earnings-based businesses 108 101
Infrastructure Investments pre-disposals operating (loss) / profit (12) (7)
Infrastructure Investments gain on disposals 2 -
Corporate activities (21) (17)
Total underlying profit from operations 77 77
(2) Before non-underlying items (Note 8)
Underlying profit from operations of £77 million was in line with prior year
(2024: £77 million), with a £7 million increase in PFO from the
earnings-based businesses offset by a £3 million increase in the
Infrastructure Investments loss and a £4 million increase in corporate
activity costs. Statutory profit from operations was £114 million (2024: £91
million).
Including net finance income of £18 million (2024: £21 million), underlying
pre-tax profit was £95 million (2024: £98 million). The taxation charge on
underlying profits was £22 million (2024: £17 million) and results in an
underlying profit after tax of £73 million (2024: £81 million). Total
statutory profit after tax for the period was £101 million (2024: £96
million), as a result of the net effect of non-underlying items.
Underlying basic earnings per share was 14.4 pence (2024: 15.3 pence), which,
along with non-underlying earnings per share of 5.4 pence (2024: 2.8 pence),
gave a total basic earnings per share of 19.8 pence (2024: 18.1 pence). This
included the benefit from the basic weighted average number of ordinary shares
reducing to 509 million (2024: 528 million) as a result of the Group's share
buyback programme.
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 credit of £28 million for the period (2024: £15
million). This included two significant items.
Firstly, the Group has recognised a £50 million credit in relation to a US
Civils project completed in 2012. In 2024, the Group recognised a provision of
£52 million for a claim received from the North Texas Tollway Authority
(NTTA) on a project to provide design and build services in relation to the
extension of NTTA's President George Bush Turnpike Highway (SH161 in Texas)
through a joint operation formed with Fluor Enterprise Inc. in which the Group
owned a 40% share. This project completed in 2012. This provision, net of
insurance recoveries, represented damages awarded to NTTA through a jury
verdict in November 2024, and also included pre-judgement interest and legal
costs. This charge was recognised in the Construction Services segment in 2024
and included within the Group's non-underlying results due to the size of the
provision. The Group maintained the view that these damages are a result of
design elements of the contract which were performed by subcontractors to the
joint operation. In June 2025, an all-party settlement was reached between
NTTA, the joint operation, as well as its design subcontractors. The Group's
share of the settlement was fully funded by its insurers resulting in no cost
to the Group. As such, the Group has released this provision in full after
taking into account legal cost incurred.
Secondly, a charge of £11 million has been recognised in the half-year in
relation to the Group's obligations under the UK Building Safety Act (BSA). In
2024, following further developments and clarifications in the legal landscape
of the Building Safety Act (BSA) introduced in 2022, progression of the
Group's investigation and due diligence as well as adjudications on claims
received to date, the Group's reassessment of its provision for BSA claims
resulted in an increase in the provision of £83m. The provision did not
include potential recoveries from third parties. The increase was recognised
as a non-underlying charge due to its size and the nature of the cost, which
arose from a change in legislation. In the half-year period, the Group
increased its provision by £11 million as a result of new claims received in
the period, reassessments to previously provided claims and legal costs
incurred. Consistent with the treatment adopted in 2024, this has been
recognised as a non-underlying charge in the Construction Services segment.
Further detail is provided in Note 8.
Cash flow performance
The total cash movement in the first half resulted in a £294 million increase
(2024: £57 million decrease) in the Group's period end net cash position to
£1,237 million (FY 2024: £943 million), excluding non-recourse net
borrowings, largely driven by a £290 million working capital inflow.
Operating cash flows were ahead of profit from operations, while there was a
£65 million outflow for the current tranche of the multi-year share buyback
programme.
Cash flow performance HY 2025 HY 2024
£m £m
Operating cash flows 161 128
Working capital inflow/(outflow) 290 (76)
Pension deficit payments(+) (8) (14)
Cash from operations 443 38
Lease payments (including interest paid) (37) (33)
Dividends from joint ventures and associates 28 32
Capital expenditure (23) (12)
Share buybacks (65) (72)
Infrastructure Investments
- disposal proceeds 2 -
- new investments (20) (12)
Other (34) 2
Net cash movement 294 (57)
Opening net cash* 943 842
Closing net cash* 1,237 785
(+) Including £1 million (2024: £1 million) of regular funding
(*)( ) Excluding infrastructure investments (non-recourse) net borrowings
Working capital
The £290 million net working capital inflow (2024: £76 million outflow) was
driven by increased negative working capital in UK Construction, primary due
to timing, and advance receipts on several projects in US Construction.
Working capital flows^ HY 2025 HY 2024
£m £m
Inventories 4 (38)
Net contract assets 97 (66)
Trade and other receivables (169) (106)
Trade and other payables 416 151
Provisions (58) (17)
Working capital inflow / (outflow)^ 290 (76)
(^) Excluding impact of foreign exchange and disposals
Including the impact of foreign exchange and non-operating items, negative
(i.e. favourable) current working capital increased to £1,643 million (FY
2024: £1,228 million). Negative working capital as a percentage of revenue
for the first half was 18.2% (FY 2024: 14.9%).
Net cash/borrowings
The Group's average net cash increased in the first half to £1,102 million
(FY 2024: £766 million, HY 2024: £735 million). The Group's net cash
position at the half year, excluding non-recourse net borrowings, was £1,237
million (FY 2024: £943 million; HY 2024 £785 million).
Non-recourse net borrowings, held in Infrastructure Investments entities
consolidated by the Group, were £384 million (FY 2024: £335 million; HY
2024: £279 million). The balance sheet also included £176 million for lease
liabilities (FY 2024: £162 million; HY 2024: £151 million). Statutory net
cash at half year was £677 million (FY 2024: £446 million; HY 2024: £355
million).
Share buyback
On 6 January 2025, Balfour Beatty commenced an initial £50 million tranche of
its 2025 share buyback programme, which was subsequently increased, following
the release of its 2024 full year results, to £125 million on 12 March 2025.
In the first half, the Group purchased 14 million shares for a total
consideration of £65 million. These shares are currently held in treasury
with no voting rights. This tranche of the multi-year share buyback programme
is on track to complete by the end of 2025.
Banking facilities
The Group's £450 million core Revolving Credit Facility (RCF) extends to June
2028. The RCF remains a Sustainability Linked Loan, and 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 27 June 2025.
The Group retains an additional £30 million bilateral committed facility on
similar terms to the core RCF. This facility has a maturity of December 2027.
At 27 June 2025 the bilateral committed facility remained undrawn.
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 condensed financial statements and, for this reason,
have continued to adopt the going concern basis. Further detail is provided in
Note 1.3 Going Concern.
Pensions
Balfour Beatty and the trustees of the Balfour Beatty Pension Fund (BBPF) have
previously agreed to a journey plan approach to managing the BBPF whereby the
BBPF was aiming to reach self-sufficiency by 2027. A formal triennial funding
valuation is due with effect from 31 March 2025 with discussions between the
Group and the Trustees to agree this triennial valuation underway.
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 £15
million (FY 2024: £2 million) as measured on an IAS 19 basis, with the
surplus on the BBPF (£57 million) partially offset by deficits on RPS (£11
million) and other schemes (£31 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 gain on disposal of Investments assets. As announced at the time
of the 2022 full year results, going forward, the Board expects the interim
dividend to be roughly one third of the prior year's full year dividend.
Aligned to this, and following a 2024 full year dividend of 12.5 pence, the
Board has declared an interim dividend of 4.2 pence for 2025 (2024: 3.8
pence).
DIVISIONAL FINANCIAL REVIEWS
CONSTRUCTION SERVICES
Underlying revenue at £4,197 million was up 8% (2024: £3,875 million), a 10%
increase at CER, with higher volumes in US Construction and UK Construction
partially offset by lower volumes at Gammon. Underlying profit from operations
reduced to £62 million (2024: £67 million) as the cost of delays to a US
Construction civils job more than offset strong growth at UK Construction. The
order book grew by 4% (10% at CER) in the period to £15.8 billion (FY 2024:
£15.2 billion).
Construction Services HY 2025 HY 2024 FY 2024
Revenue(1) PFO Order book(1) Revenue(1) PFO Order book(1) Order book(1)
£m £m £bn £m £m £bn £bn
UK Construction 1,563 56 6.3 1,458 34 6.1 6.2
US Construction 2,087 (11) 7.6 1,703 18 5.6 7.1
Gammon 547 17 1.9 714 15 2.0 1.9
Underlying(2) 4,197 62 15.8 3,875 67 13.7 15.2
Non-underlying - 38 - 15 -
Total 4,197 100 15.8 3,875 82 13.7 15.2
(1) Including share of joint ventures and associates
(2) Before non-underlying items (Note 8)
A reconciliation of the Group's performance measures to its statutory results
is provided in the Measuring our financial performance section
UK Construction: Revenue in UK Construction increased by 7% to £1,563 million
(2024: £1,458 million) driven largely by increased volumes in the Group's
Scottish operations.
UK Construction achieved its long-standing PFO margin target of 3% in the
period, with strong project delivery, the improved risk profile of its
portfolio and a one-off £10 million insurance recovery contributing to
underlying profit from operations of £56 million (2024: £34 million). This
represents a 3.6% PFO margin (2024: 2.3%). The full year PFO margin for UK
Construction is expected to be around 3.0% prior to including the insurance
recovery.
The UK Construction order book grew by 2% to £6.3 billion (FY 2024: £6.2
billion), with new additions including the Net Zero Teesside project and
various projects through the SCAPE Civil Engineering public sector procurement
frameworks, through which Balfour Beatty has been helping to shape and
strengthen local communities for the last ten years. 79% of the UK
Construction order book is from public sector and regulated industry clients
and 82% of orders are now on either target cost or cost plus contractual
terms.
US Construction: Revenue in US Construction increased by 22% (26% at CER) to
£2,087 million (2024: £1,703 million), driven by an increase in buildings
activities, slightly offset by a reduction in civils.
US Construction made an underlying loss from operations of £11 million (2024:
profit of £18 million), with the cost of schedule delays at a US Civils
highways project in Texas more than offsetting strong performance from the US
Buildings business. Second half performance is expected to be stronger, with
full year PFO for 2025 expected to be around £20 million.
The US Construction order book grew by 7% (17% at CER) to £7.6 billion (FY
2024: £7.1 billion). At constant exchange rate, 6% growth in US Buildings was
largely driven by growth in residential, education and hospitality buildings,
while 45% growth in US Civils was driven by the addition of a $889 million
contract in Texas to reconstruct a 3.7km section of Interstate 30 in Dallas
County.
Gammon: The Group's share of Gammon's revenue decreased by 23% (22% at CER) to
£547 million (2024: £714 million). Work on the two major projects at Hong
Kong International Airport are moving towards completion and therefore
activity levels have declined as forecast.
Underlying profit increased to £17 million (2024: £15 million) representing
a 3.1% profit margin (2024: 2.1%) driven by the mix of work completed across
Gammon's project portfolio.
The Group's share of Gammon's order book remained flat at £1.9 billion (FY
2024: £1.9 billion) but grew by 12% at CER. Additions to the order book in
the first half include: a commercial development in Tung Chung with a
23-storey office tower, 5-storey retail podium and 20-storey data centre; a
commercial and residential development in Kowloon with six residential towers;
and a five-tower residential development in Tai Po.
SUPPORT SERVICES
The Support Services business provides power, plant, road and rail maintenance
and is characterised by profitable recurring revenues underpinned by long term
frameworks targeting PFO margin of 6-8%.
Support Services revenue rose 19% to £662 million (2024: £554 million), with
increased volumes in the power transmission business driven by growing demand
in the sector, in which Balfour Beatty have market leading capabilities.
Underlying profit from operations increased 35% to £46 million (2024: £34
million) driven by the higher power volumes. PFO margin increased to 6.9% in
the period (2024: 6.1%), with the mix of work being more heavily weighted to
the power sector. Support Services is expected to deliver towards the top end
of its targeted 6-8% margin range for the 2025 full year.
The Support Services order book increased by 16% to £3.7 billion (FY 2024:
£3.2 billion). During the first half, the Rail business signed around £500
million of new orders including: an eight year agreement, with a two year
option to extend, to supply, operate and maintain a fleet of high-performance
tamping machines to support track renewal and maintenance projects across
England, Scotland and Wales; a place on Network Rail's CP7 Western Reactive
framework; and further track renewal work with the Central Rail Systems
Alliance. The Power order book also grew, driven by an order from SSEN to
procure steelworks and other items for the ASTI framework.
Support Services HY 2025 HY 2024
Order book(1) (£bn) 3.7 2.9
Revenue(1) (£m) 662 554
Profit from operations(2) (£m) 46 34
Non-underlying items (£m) - -
Statutory profit from operations (£m) 46 34
(1) Including share of joint ventures and associates
(2) Before non-underlying items (Note 8)
A reconciliation of the Group's performance measures to its statutory results
is provided in the Measuring our financial performance section.
INFRASTRUCTURE INVESTMENTS
Infrastructure Investments made a £12 million underlying loss from operations
in the period (2024: £7 million) driven by monitor and legal costs in
military housing and costs relating to the hand back of UK PFI assets. The
underlying loss was partially offset by a £2 million profit on disposal,
which represents contingent consideration for the University of Texas at
Dallas student accommodation disposal completed in 2024.
Infrastructure Investments financial performance is expected to improve in the
second half, with the full year loss forecast to be slightly larger than at
the half year, prior to disposals. The Group is anticipating a gain on
disposals for the full year in the range of £30 - £40 million, with a number
of ongoing transactions.
Net investment income in the first half was £4 million (2024: £11 million)
with no repeat of the impairment write back of subordinated debt recorded in
2024.
Balfour Beatty continues to invest in attractive new opportunities, each
expected to meet its investment hurdle rates. In the first half, the Group
invested £20 million in new and existing projects, with two US multifamily
housing projects, The Gathering at Arbor Greens in Florida and River Pointe in
Texas, added to the portfolio.
Infrastructure Investments HY 2025 HY 2024
£m £m
Pre-disposals operating (loss) / profit(2) (12) (7)
Gain on disposals(2) 2 -
(Loss) / profit from operations(2) (10) (7)
Net investment income(~) 4 11
(Loss) / profit before tax(2) (6) 4
Non-underlying items (1) (1)
Statutory (loss) / profit before tax (7) 3
(2) Before non-underlying items (Note 8)
(~) 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
Directors' valuation
The Directors' valuation decreased by 8% to £1,158 million (FY 2024: £1,254
million). The portfolio is now 57% weighted towards the US (FY 2024: 58%). The
number of projects in the portfolio increased by two to 62 (FY 2024: 60).
Movement in value FY 2024 to HY 2025
£m FY 2024 Equity invested Distributions received Sales Unwind of discount Operational performance Discount FX HY 2025
proceeds
rates
UK 525 1 (8) 0 18 (12) (29) - 495
US 729 19 (5) (2) 24 (5) (32) (65) 663
Total 1,254 20 (13) (2) 42 (17) (61) (65) 1,158
Balfour Beatty invested £20 million (2024: £12 million) in new and existing
projects, with investment predominantly relating to the addition of
multifamily housing projects in Conroe, Texas and Newberry, Florida.
Cash yield from distributions amounted to £13 million (2024: £16 million).
Additionally, £2 million of contingent consideration was received in the
period in relation to the University of Texas at Dallas student accommodation
disposal completed in 2024.
Unwind of discount at £42 million (2024: £40 million) is a function of
moving the valuation date forward by six months with the result that future
cash flows are discounted by six months less.
Operational performance movements resulted in a £17 million decrease (2024:
£16 million increase). This related to a reduction in the valuation of the
student accommodation portfolio in the UK and higher than forecast independent
compliance monitor costs in US Military Housing
In addition, the discount rates applied to project cashflows were increased to
reflect changes in long term interest rates and the secondary market in both
the UK and US, leading to a reduction in value of £61m.
The foreign exchange movement was a £65 million decrease, as sterling
appreciated against the US dollar (2024: £6 million increase).
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 of individual projects and reflect secondary
market transaction experience. The main exception to the use of DCF is for US
multi-family 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.
The valuation methodology used at the previous Directors' valuation is
unchanged.
Discount rates applied to the UK portfolio range from 8% to 10.25% (FY 2024:
7.25% to 10.25%) depending on the maturity and risk of each project. The
implied weighted average discount rate for the UK portfolio is 9.0% (FY 24:
8.4%). A 1% change in the discount rate would change the value of the UK
portfolio by approximately £41 million.
Discount rates applied to the US portfolio range from 6.75% to 10.5% (FY 2024
22: 6.25% to 10.5%), with an implied US weighted average discount rate of 8.4%
(FY 2024: 7.9%). A 1% change in the discount rate would change the value of
the US portfolio by approximately £74 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 £24 million and a 1% change in the long-term rental growth rate
in the US portfolio would change the valuation by approximately £62 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 UK-adopted international accounting
standards rather than using a discounted cash flow approach. A full
reconciliation is provided in section i) of the Measuring Our Financial
Performance section.
Portfolio valuation June 2025
Value by sector
Sector HY 2025 FY 2024 HY 2025 FY 2024
No. projects No. projects £m £m
Roads 12 12 154 162
Healthcare 2 2 129 133
Student accommodation 5 5 115 137
Energy transition 4 4 67 64
Other 2 2 30 29
UK total 25 25 495 525
US military housing 21 21 531 605
Student accommodation and other PPP 5 5 54 58
Residential housing 11 9 78 66
US total 37 35 663 729
Total 62 60 1,158 1,254
Value by phase
Phase HY 2025 FY 2024 HY 2025 FY 2024
No. projects No. projects £m £m
Operations 59 57 1,115 1,208
Construction 3 3 43 46
Total 62 60 1,158 1,254
Value by income type
Income type HY 2025 FY 2024 HY 2025 FY 2024
No. projects No. projects £m £m
Availability based 17 17 364 370
Demand - operationally proven (2+ years) 41 39 751 836
Demand - early stage (less than 2 years) 4 4 43 48
Total 62 60 1,158 1,254
Responsibility statement of the Directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for use in the
UK;
· the interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first half of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
second half of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first half of the
current financial year and that have materially affected the financial
position or performance of the Group during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
Leo Quinn Philip
Harrison
Group Chief Executive Chief
Financial Officer
12 August 2025
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.
MEASURING OUR FINANCIAL PERFORMANCE
Providing clarity on the Group's alternative performance measures
The Group has included this section in this report 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 alternative performance measures 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.
Readers are encouraged to review this report in its entirety.
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 receivables and
accrued interest, 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.
Measuring the Group’s performance
The following measures are referred to in this report when reporting
performance, both in absolute terms and also in comparison to earlier periods:
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 of the Annual Report and Accounts 2024.
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:
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 in the Annual
Report and Accounts 2024. 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.
· 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.
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).
Reconciliation of order book to transaction price to be allocated to remaining
performance obligations
2025 2024 2024
first half first half year
£m
£m
£m
Order book (performance measure) 19,470 16,623 18,443
Less: Share of orders included within the Group's joint ventures and associates (2,554) (2,360) (2,322)
Less: Estimated orders under framework agreements included in the order book (289) (65) -
disclosure
Add: Transaction price allocated to remaining performance obligations in 2,328 2,035 2,616
Infrastructure Investments
Transaction price allocated to remaining performance obligations for the Group 18,955 16,233 18,737
(statutory measure)
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.
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 8.
A reconciliation has been provided below 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 the half-year ended 27 June 2025 statutory results to
performance measures
Non-underlying items
2025 first half Intangible Net release of provision for claim on legacy project in Texas Provision recognised for BSA claims 2025 first half performance
statutory
amortisation
measures
results
£m £m £m
£m
£m
Revenue including share of joint ventures and associates (performance) 5,150 - - - 5,150
Share of revenue of joint ventures and associates (628) - - - (628)
Group revenue (statutory) 4,522 - - - 4,522
Cost of sales (4,293) - (50) 11 (4,332)
Gross profit 229 - (50) 11 190
Gain on disposal of interests in investments 2 - - - 2
Amortisation of acquired intangible assets (2) 2 - - -
Other net operating expenses (140) - - - (140)
Group operating profit 89 2 (50) 11 52
Share of results of joint ventures and associates 25 - - - 25
Profit from operations 114 2 (50) 11 77
Investment income 40 - - - 40
Finance costs (22) - - - (22)
Profit before taxation 132 2 (50) 11 95
Taxation (31) - 12 (3) (22)
Profit for the period 101 2 (38) 8 73
Reconciliation of the half-year ended 27 June 2025 statutory results to
performance measures by segment
Non-underlying items
Profit/(loss) from operations 2025 first half Intangible Net release of provision for claim on legacy project in Texas Provision recognised for BSA claims 2025 first half performance
statutory
amortisation
measures
results
£m £m £m
£m
£m
Segment
Construction Services 100 1 (50) 11 62
Support Services 46 - - - 46
Infrastructure Investments (11) 1 - - (10)
Corporate activities (21) - - - (21)
Total 114 2 (50) 11 77
Reconciliation of the half-year ended 28 June 2024 statutory results to
performance measures
Non-underlying items
2024 first half Intangible Rail Germany 2024 first half performance
statutory
amortisation
measures
results
£m £m
£m
£m
Revenue including share of joint ventures and associates (performance) 4,677 - - 4,677
Share of revenue of joint ventures and associates (792) - - (792)
Group revenue (statutory) 3,885 - - 3,885
Cost of sales (3,677) - (21) (3,698)
Gross profit 208 - (21) 187
Amortisation of acquired intangible assets (2) 2 - -
Other net operating expenses (145) - 5 (140)
Group operating profit 61 2 (16) 47
Share of results of joint ventures and associates 30 - - 30
Profit from operations 91 2 (16) 77
Investment income 40 - - 40
Finance costs (19) - - (19)
Profit before taxation 112 2 (16) 98
Taxation (16) (1) - (17)
Profit for the period 96 1 (16) 81
Reconciliation of the half-year ended 28 June 2024 statutory results to
performance measures by segment
Non-underlying items
Profit/(loss) from operations 2024 first half Intangible Rail Germany 2024 first half performance
statutory
amortisation
measures
results
£m £m
£m
£m
Segment
Construction Services 82 1 (16) 67
Support Services 34 - - 34
Infrastructure Investments (8) 1 - (7)
Corporate activities (17) - - (17)
Total 91 2 (16) 77
Reconciliation of the year ended 31 December 2024 statutory results to
performance measures
Non-underlying items
2024 Intangible Net release of provisions relating to Rail Germany Recognition of insurance on rectification works in London Provision recognised for BSA claims Recognition of charge for claim on legacy project in Texas 2024 performance
statutory
amortisation
measures
results
£m £m £m £m
£m £m
£m
Revenue including share of joint ventures and associates (performance) 10,015 - - - - - 10,015
Share of revenue of joint ventures and associates (1,781) - - - - - (1,781)
Group revenue (statutory) 8,234 - - - - - 8,234
Cost of sales (7,883) - (26) (43) 83 52 (7,817)
Gross profit 351 - (26) (43) 83 52 417
Gain on disposals of interests in investments 43 - - - - - 43
Amortisation of acquired intangible assets (4) 4 - - - - -
Other net operating expenses (276) - 5 - - - (271)
Group operating profit 114 4 (21) (43) 83 52 189
Share of results of joint ventures and associates 59 - - - - - 59
Profit from operations 173 4 (21) (43) 83 52 248
Investment income 82 - - - - - 82
Finance costs (41) - - - - - (41)
Profit before taxation 214 4 (21) (43) 83 52 289
Taxation (36) (1) (2) 11 (21) (13) (62)
Profit for the year 178 3 (23) (32) 62 39 227
Reconciliation of the year ended 31 December 2024 statutory results to
performance measures by segment
Non-underlying items
Profit/(loss) from operations 2024 Intangible Net release of provisions relating to Rail Germany Recognition of insurance on rectification works in London Provision recognised for BSA claims Recognition of charge for claim on legacy project in Texas 2024 performance
statutory
amortisation
measures
results
£m £m £m £m
£m £m
£m
Segment
Construction Services 87 1 (21) (43) 83 52 159
Support Services 93 - - - - - 93
Infrastructure Investments 32 3 - - - - 35
Corporate activities (39) - - - - - (39)
Total 173 4 (21) (43) 83 52 248
c) Underlying profit before tax
As explained, the Group's Infrastructure Investments segment is assessed on an
underlying profit before tax (PBT) measure. This is calculated as follows:
2025 2024 2024
first half first half year
£m
£m
£m
Underlying profit from operations (section (b) and Note 3) (10) (7) 35
Add: Subordinated debt interest receivable(^) 13 5 17
Add: Interest receivable on PPP financial assets(^) 1 1 2
Add: Fair value (loss)/gain on investment asset(^) (1) - (2)
Less: Non-recourse borrowings finance cost(^) (7) (6) (12)
Add/(less): Net (impairment)/impairment reversal of subordinated debt and accrued interest (2) 11 14
receivable(^)
Underlying profit before tax (performance) (6) 4 54
Non-underlying items (section (b) and Note 3) (1) (1) (3)
Statutory profit before tax (7) 3 51
(^) Refer to Note 6 and Note 7.
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.
2025 2024 2024
first half first half year
pence
pence
pence
Statutory basic earnings per ordinary share 19.8 18.1 34.2
Amortisation of acquired intangible assets after tax 0.3 0.2 0.6
Other non-underlying items after tax (5.7) (3.0) 8.8
Underlying basic earnings per ordinary share (performance) 14.4 15.3 43.6
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's Statement of Cash Flows.
Reconciliation from statutory cash generated from operations to OCF
2025 2024 2024
first half first half year
£m
£m
£m
Cash generated from operating activities (statutory) 423 35 265
Add back: Pension payments including deficit funding (Note 18) 8 14 30
Less: Repayment of lease liabilities (including lease interest payments) (37) (33) (66)
Add: Operational dividends received from joint ventures and associates 28 32 71
Add back: Cash flow movements relating to non-operating items 22 4 13
Less: Operating cash flows relating to non-recourse activities (15) (16) (24)
Operating cash flow (OCF) (performance) 429 36 289
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 (£8m): 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) (£37m
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 (£28m
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 represent 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 (£22m): the Group's OCF
measure excludes certain working capital movements that are not directly
attributable to the Group's operating activities.
f) Operating cash flow (OCF) continued
Operating cash flows relating to non-recourse activities (£15m): 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.
g) Recourse net cash/borrowings
The Group also measures its performance based on its net cash/borrowings
position at the period 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
2025 Adjustment 2025 2024 Adjustment 2024 2024 Adjustment 2024
£m
£m
£m
first half first half first half first half year year
(statutory)
(performance)
(statutory)
(performance)
(statutory)
(performance)
£m
£m
£m
£m
£m
£m
Total cash within the Group 1,803 (236) 1,567 1,284 (292) 992 1,558 (265) 1,293
Cash and cash equivalents
- infrastructure concessions 236 (236) - 292 (292) - 265 (265) -
- other 1,567 - 1,567 992 - 992 1,293 - 1,293
Total debt within the Group (1,126) 796 (330) (929) 722 (207) (1,112) 762 (350)
Borrowings - non-recourse loans (620) 620 - (571) 571 - (600) 600 -
- other (330) - (330) (207) - (207) (350) - (350)
Lease liabilities (176) 176 - (151) 151 - (162) 162 -
Net cash 677 560 1,237 355 430 785 446 497 943
h) Average net cash/borrowings
The Group uses an average net cash/borrowings measure as this reflects its
financing requirements throughout the period. The Group calculates its average
net cash/borrowings based on the average of opening and closing figures for
each month through the period.
The average net cash/borrowings measure excludes non-recourse cash and debt
and lease liabilities, and this performance measure shows average net cash of
£1,102m (2024: first half £735m; full-year £766m).
Using a statutory measure (inclusive of non-recourse elements and lease
liabilities) gives average net cash of £562m (2024: first half £395m;
full-year £441m).
i) Directors' valuation of the Investments portfolio
The Group uses a different methodology to assess the value of its Investments
portfolio. As described in the Directors' valuation section, 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 £1.16bn at the
half-year (2024: first half £1.27bn; full-year £1.25bn).
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
2025 2024 2024
first half first half year
£m £m £m
Net assets of the Infrastructure Investments segment (refer to Note 3.2) 610 613 626
Less: Net assets not included within the Directors' valuation - Housing (55) (67) (60)
division
Comparable statutory measure of the Investments portfolio under IFRS 555 546 566
Comparison of the statutory measure of the Investments portfolio to its
performance measure
2025 2024 2024
first half first half year
£m £m £m
Statutory measure of the Investments portfolio (as above) 555 546 566
Difference arising from the Directors' valuation being measured on a 603 724 688
discounted cash flow basis compared to the statutory measure primarily derived
using a combination of the following IFRS bases:
§ historical cost;
§ amortised cost; and
§ fair value
Directors' valuation (performance measure) 1,158 1,270 1,254
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 Directors' valuation section, 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.
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
period. The Group's key exchange rates applied in deriving its statutory
results are shown in Note 2.
To measure changes in the Group's performance compared with the previous
period 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 period's figures at the current
period'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:
2025 statutory growth compared to performance growth
Construction Services
UK US Gammon Total Support Services Infrastructure Investments Total
Revenue (£m)
2025 first half statutory 1,563 2,070 - 3,633 662 227 4,522
2024 first half statutory 1,458 1,692 - 3,150 554 181 3,885
Statutory growth 7% 22% - 15% 19% 25% 16%
2025 first half performance(^) 1,563 2,087 547 4,197 662 291 5,150
2024 first half performance retranslated(^) 1,458 1,658 697 3,813 554 244 4,611
Performance CER growth 7% 26% (22)% 10% 19% 19% 12%
Order book (£bn)
2025 first half 6.3 7.6 1.9 15.8 3.7 - 19.5
2024 year 6.2 7.1 1.9 15.2 3.2 - 18.4
Growth 2% 7% -% 4% 16% - 6%
2025 first half 6.3 7.6 1.9 15.8 3.7 - 19.5
2024 year retranslated 6.2 6.5 1.7 14.4 3.2 - 17.6
CER growth 2% 17% 12% 10% 16% - 11%
(^) Performance revenue is underlying revenue including share of revenue from
joint ventures and associates as set out in section (e).
INDEPENDENT REVIEW REPORT TO BALFOUR BEATTY PLC
Conclusion
We have been engaged by Balfour Beatty plc ("the Company") to review the
condensed set of financial statements in the half-yearly financial report for
the period ended 27 June 2025 which comprises Condensed Group Income
Statement, Condensed Group Statement of Comprehensive Income, Condensed Group
Statement of Changes in Equity, Condensed Group Balance Sheet, Condensed Group
Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the period ended 27 June 2025 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the
UK. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other
information contained in the half-yearly financial report and consider whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
The annual financial statements of the Group are prepared in accordance with
UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group'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 the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this 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 for our review work, for this
report, or for the conclusions we have reached.
Mike Barradell
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
12 August 2025
Condensed Group Income Statement
For the half-year ended 27 June 2025
2025 first half unaudited 2024 first half unaudited 2024 year audited
Notes Underlying Non-underlying items Total Underlying Non-underlying items Total Underlying Non-underlying Total
items(1) (Note 8) £m items(1) (Note 8) £m items(1) items £m
£m £m £m £m £m (Note 8)
£m
Revenue including share of joint ventures and associates 5,150 - 5,150 4,677 - 4,677 10,015 - 10,015
Share of revenue of joint ventures and associates 5.1 (628) - (628) (792) - (792) (1,781) - (1,781)
Group revenue 4,522 - 4,522 3,885 - 3,885 8,234 - 8,234
Cost of sales (4,332) 39 (4,293) (3,698) 21 (3,677) (7,817) (66) (7,883)
Gross profit/(loss) 190 39 229 187 21 208 417 (66) 351
Gain on disposals of interests in investments 2 - 2 - - - 43 - 43
Amortisation of acquired intangible assets - (2) (2) - (2) (2) - (4) (4)
Other operating expenses (140) - (140) (140) (5) (145) (271) (5) (276)
Group operating profit/(loss) 52 37 89 47 14 61 189 (75) 114
Share of results of joint ventures and associates 5.1 25 - 25 30 - 30 59 - 59
Profit/(loss) from operations 77 37 114 77 14 91 248 (75) 173
Investment income 6 40 - 40 40 - 40 82 - 82
Finance costs 7 (22) - (22) (19) - (19) (41) - (41)
Profit/(loss) before taxation 95 37 132 98 14 112 289 (75) 214
Taxation 9 (22) (9) (31) (17) 1 (16) (62) 26 (36)
Profit/(loss) for the period 73 28 101 81 15 96 227 (49) 178
Attributable to
Equity holders 73 28 101 81 15 96 227 (49) 178
Non-controlling interests - - - - - - - - -
Profit/(loss) for the period 73 28 101 81 15 96 227 (49) 178
(1) Before non-underlying items (Note 8).
Notes 2025 2024 2024
first half first half year
unaudited unaudited audited
pence pence pence
Earnings per share
- basic 10 19.8 18.1 34.2
- diluted 10 19.6 18.0 33.7
Dividends per share proposed for the period 11 4.2 3.8 12.5
Condensed Group Statement of Comprehensive Income
For the half-year ended 27 June 2025
2025 first half unaudited 2024 first half unaudited 2024 year audited
Group Share of joint ventures and associates Total Group Share of joint ventures and associates Total Group Share of Total
£m £m £m £m £m £m £m joint £m
ventures
and associates
£m
Profit for the period 76 25 101 66 30 96 119 59 178
Other comprehensive income/(loss) for the period
Items which will not subsequently be reclassified to the income statement
Actuarial gains/(losses) on retirement benefit assets/liabilities 4 - 4 5 - 5 (102) - (102)
Fair value revaluations of investments in mutual funds measured at fair value - - - 2 - 2 2 - 2
through OCI
Tax on above (1) - (1) (1) - (1) 26 - 26
3 - 3 6 - 6 (74) - (74)
Items which will subsequently be reclassified to the income statement
Currency translation differences (24) (17) (41) 2 1 3 6 3 9
Fair value revaluations - PPP financial assets - (3) (3) (1) (38) (39) (2) (48) (50)
- cash flow hedges - 5 5 - 5 5 1 10 11
Tax on above - (1) (1) - 8 8 - 10 10
(24) (16) (40) 1 (24) (23) 5 (25) (20)
Total other comprehensive (loss)/income for the period (21) (16) (37) 7 (24) (17) (69) (25) (94)
Total comprehensive income for the period 55 9 64 73 6 79 50 34 84
Attributable to
Equity holders 64 79 84
Non-controlling interests - - -
Total comprehensive income for the period 64 79 84
Condensed Group Statement of Changes in Equity
For the half-year ended 27 June 2025
Other reserves
Called-up Share Capital Redemption Reserve Share Hedging reserves PPP financial assets Currency translation reserve Other (µ) Retained Non- Total
share premium £m of joint £m £m £m £m profits controlling £m
capital account ventures' £m interests
£m £m and £m
associates'
reserves
£m
At 31 December 2023 audited 272 176 74 (27) (5) 1 115 46 546 10 1,208
Total comprehensive income/(loss) for the period - - - 6 - (1) 2 1 71 - 79
Ordinary dividends - - - - - - - - (42) - (42)
Joint ventures' and associates' dividends - - - (32) - - - - 32 - -
Purchase of treasury shares - - - - - - - - (73) - (73)
Movements relating to share-based payments(+) - - - - - - - (4) 8 - 4
At 28 June 2024 unaudited 272 176 74 (53) (5) - 117 43 542 10 1,176
Total comprehensive income/(loss) for the period - - - 28 1 (1) 4 1 (28) - 5
Ordinary dividends - - - - - - - - (19) (1) (20)
Joint ventures' and associates' dividends - - - (39) - - - - 39 - -
Purchase of treasury shares - - - - - - - - (28) - (28)
Cancellation of ordinary shares (13) - 13 - - - - - - - -
Movements relating to share-based payments(+) - - - - - - - 2 (5) - (3)
At 31 December 2024 audited 259 176 87 (64) (4) (1) 121 46 501 9 1,130
Total comprehensive income/(loss) for the period - - - 9 - - (24) - 79 - 64
Ordinary dividends - - - - - - - - (44) (1) (45)
Joint ventures' and associates' dividends - - - (28) - - - - 28 - -
Purchase of treasury shares - - - - - - - - (65) - (65)
Movements relating to share-based payments(+) - - - - - - - (4) 2 - (2)
At 27 June 2025 unaudited 259 176 87 (83) (4) (1) 97 42 501 8 1,082
(µ) Other reserves include £22m of special reserve (2024: first half £22m;
full-year: £22m).
(+) Movements relating to share-based payments include £nil tax credit (2024:
first half £nil; full-year: £4m) recognised directly within retained
profits.
Condensed Group Balance Sheet
At 27 June 2025
Notes 2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Non-current assets
Intangible assets - goodwill 12 809 850 854
- other 260 273 268
Service concession contract asset 109 35 69
Property, plant and equipment 139 136 136
Right-of-use assets 167 143 153
Investment properties 127 66 101
Investments in joint ventures and associates 5.2 362 384 385
Investments 16 28 24
PPP financial assets 19 23 21
Trade and other receivables 14 356 296 326
Retirement benefit assets 18 57 125 43
Deferred tax assets 182 176 200
2,603 2,535 2,580
Current assets
Inventories 154 163 158
Contract assets 13.1 302 379 229
Trade and other receivables 14 1,148 1,007 1,099
Cash and cash equivalents - infrastructure investments 17.2 236 292 265
- other 17.2 1,567 992 1,293
Current tax receivable 10 12 8
3,417 2,845 3,052
Assets held for sale 1 - -
Total assets 6,021 5,380 5,632
Current liabilities
Contract liabilities 13.2 (837) (614) (697)
Trade and other payables 15 (2,138) (1,942) (1,778)
Provisions 16 (272) (203) (239)
Borrowings - non-recourse loans 17.3 (36) (10) (11)
- other 17.3 (180) (44) (185)
Lease liabilities (62) (52) (57)
Current tax payable (8) (3) (13)
(3,533) (2,868) (2,980)
Liabilities held for sale (3) - -
(3,536) (2,868) (2,980)
Non-current liabilities
Contract liabilities 13.2 (1) (2) (2)
Trade and other payables 15 (91) (115) (88)
Provisions 16 (280) (197) (378)
Borrowings - non-recourse loans 17.3 (584) (561) (589)
- other 17.3 (150) (163) (165)
Lease liabilities (114) (99) (105)
Retirement benefit liabilities 18 (42) (35) (41)
Deferred tax liabilities (140) (162) (153)
Derivative financial instruments 21 (1) (2) (1)
(1,403) (1,336) (1,522)
Total liabilities (4,939) (4,204) (4,502)
Net assets 1,082 1,176 1,130
Equity
Called-up share capital 259 272 259
Share premium account 176 176 176
Capital redemption reserve 87 74 87
Share of joint ventures' and associates' reserves (83) (53) (64)
Other reserves 134 155 162
Retained profits 501 542 501
Equity attributable to equity holders 1,074 1,166 1,121
Non-controlling interests 8 10 9
Total equity 1,082 1,176 1,130
Condensed Group Statement of Cash Flows
For the half-year ended 27 June 2025
Notes 2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Cash flows from operating activities
Cash from operations 17.1 443 38 277
Income taxes paid (20) (3) (12)
Net cash from operating activities 423 35 265
Cash flows from/(used in) investing activities
Dividends received from: - joint ventures and associates - infrastructure investments 11 16 26
- joint ventures and associates - other 17 16 45
- other investments - 3 1
Interest received - joint ventures - infrastructure investments 1 3 7
Interest received subsidiaries - infrastructure investments 2 6 11
- other 25 20 40
Purchases of: - service concession contract asset (37) (25) (56)
- property, plant and equipment (23) (12) (28)
- investment properties(+) (14) - (36)
Investments in and long-term loans to joint ventures and associates (4) (12) (20)
PPP financial assets cash expenditure (2) (1) (5)
PPP financial assets cash receipts 4 3 8
Disposals of: - investments in joint ventures - infrastructure investments 2 - 43
- property, plant and equipment - other 3 2 5
- other investments 7 - 5
Net cash (used in)/from investing activities (8) 19 46
Cash flows used in financing activities
Purchase of ordinary shares 19 (7) (2) (12)
Purchase of treasury shares 19 (65) (72) (101)
Proceeds from new loans relating to: - infrastructure investments assets 17.4 - 3 36
- other 17.4 - 39 39
Repayments of loans relating to: - infrastructure investments 17.4 (4) (4) (9)
assets
- other 17.4 - (40) (40)
Repayment of lease liabilities (33) (30) (59)
Ordinary dividends paid 11 - - (61)
Other dividends paid - non-controlling interests (1) - (1)
Interest paid - infrastructure investments (3) (6) (12)
Interest paid - other (14) (15) (31)
Net cash used in financing activities (127) (127) (251)
Net increase/(decrease) in cash and cash equivalents 288 (73) 60
Effects of exchange rate changes (38) 3 3
Cash and cash equivalents at beginning of period 1,373 1,310 1,310
Cash and cash equivalents at end of period 17.2 1,623 1,240 1,373
(+) In the first half of 2025, the Group acquired an investment property.
Consideration was settled with the seller through a combination of cash
payments plus assignment of debt from the seller to the Group. The element of
consideration relating to the debt assignment amounting to £22m is not
disclosed in the cash flow statement as it is a non-cash transaction. Refer to
Note 17.4.
Notes to the financial statements
1.1 Basis of accounting
The condensed Group financial statements for the half-year ended 27 June 2025
have been prepared in accordance with the Disclosure and Transparency Rules of
the Financial Conduct Authority and with IAS 34 Interim Financial Reporting as
adopted for use in the UK. The condensed Group financial statements should be
read in conjunction with the financial statements for the year ended 31
December 2024, which were prepared in accordance with UK-adopted international
accounting standards (IFRS) and in conformity with the requirements of the
Companies Act 2006 (the Act).
The condensed Group financial statements, which are not audited, have been
reviewed and were approved for issue by the Board on 12 August 2025. The
financial information included in this report does not constitute statutory
accounts for the purposes of Section 434 of the Companies Act 2006. A copy of
the Group's audited statutory accounts for the year ended 31 December 2024 has
been delivered to the Registrar of Companies. The independent auditor's report
on those accounts was unqualified, did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying the
report and did not contain a statement under Section 498(2) or (3) of the
Companies Act 2006. The condensed Group financial statements have been
prepared on the basis of the accounting policies set out in the Annual Report
and Accounts 2024 except as described in Note 1.4 below.
1.2 Judgements and key sources of estimation uncertainty
The Group's principal judgements and key sources of estimation uncertainty
remain unchanged since the year-end and are set out in Note 2.28 on pages 205
to 206 of the Annual Report and Accounts 2024.
1.3 Going concern
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 these condensed financial statements and, for this reason, have
continued to adopt the going concern basis.
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
of the Annual Report and Accounts 2024.
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 27 June
2025, 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 condensed 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 £19.5bn at 27 June 2025 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 27 June 2025, the Group's only debt, other than non-recourse borrowings
ring-fenced within certain concession companies, comprised $208m US private
placement (USPP) notes.
1.3 Going concern continued
The Group's £450m committed sustainability linked bank facility remained
undrawn at 27 June 2025 and is fully available to the Group until June 2028.
The Group's £30m bilateral committed facility also remained undrawn at 27
June 2025 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 has adequate resources to
continue for the going concern period and, for this reason, have continued to
adopt the going concern basis in preparing the condensed financial statements.
1.4 Adoption of new and revised standards
The following accounting standards, interpretations and amendments have been
adopted by the Group in the current period:
· Amendments to the following standards:
· IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability
The above amended standards did not have a material effect on the Group.
1.5 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 27 June 2025:
· IFRS 18 Presentation and Disclosure in Financial Statements
· IFRS 19 Subsidiaries without Public Accountability: Disclosures
· Amendments to the following standards:
· 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
2 Exchange rates
The following key exchange rates were applied in these financial statements:
Average rates
£1 buys 2025 2024 2024 28 June 2024 - 27 June 2025 31 Dec 2024 - 27 June 2025
first half first half year % change % change
unaudited unaudited audited
US$ 1.30 1.27 1.28 2.4% 1.6%
HK$ 10.14 9.90 9.98 2.4% 1.6%
Closing rates
£1 buys 2025 2024 2024 28 June 2024 - 27 June 2025 31 Dec 2024 - 27 June 2025
first half first half year % change % change
unaudited unaudited audited
US$ 1.37 1.26 1.25 8.7% 9.6%
HK$ 10.76 9.87 9.73 9.0% 10.6%
3 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
Infrastructure Investments - acquisition, operation, and disposal of
infrastructure assets such as roads, hospitals, student accommodation,
military housing, offshore transmission networks, waste and biomass and other
concessions. This segment also includes the Group's housing development
division.
3.1 Income statement - performance by activity
For the half-year ended 27 June 2025 unaudited Construction Support Infrastructure Corporate Total
Services Services Investments activities £m
£m £m £m £m
Revenue including share of joint ventures and associates 4,197 662 291 - 5,150
Share of revenue of joint ventures and associates (564) - (64) - (628)
Group revenue 3,633 662 227 - 4,522
Group operating profit/(loss)(1) 40 46 (13) (21) 52
Share of results of joint ventures and associates 22 - 3 - 25
Profit/(loss) from operations(1) 62 46 (10) (21) 77
Non-underlying items:
- amortisation of acquired intangible assets (1) - (1) - (2)
- provision recognised in relation to claims made under the Building Safety (11) - - - (11)
Act
- net release of provision recognised in relation to a legacy claim received 50 - - - 50
for a project completed in 2012 in Texas
38 - (1) - 37
Profit/(loss) from operations 100 46 (11) (21) 114
Investment income 40
Finance costs (22)
Profit before taxation 132
(1) Before non-underlying items (Note 8).
3 Segment analysis continued
3.1 Income statement - performance by activity continued
For the half-year ended 28 June 2024 unaudited Construction Support Infrastructure Corporate Total
Services Services Investments activities £m
£m £m £m £m
Revenue including share of joint ventures and associates 3,875 554 248 - 4,677
Share of revenue of joint ventures and associates (725) - (67) - (792)
Group revenue 3,150 554 181 - 3,885
Group operating profit/(loss)(1) 49 34 (19) (17) 47
Share of results of joint ventures and associates 18 - 12 - 30
Profit/(loss) from operations(1) 67 34 (7) (17) 77
Non-underlying items:
- amortisation of acquired intangible assets (1) - (1) - (2)
- provision recognised for rectification works to be carried out on a 16 - - - 16
development in London
15 - (1) - 14
Profit/(loss) from operations 82 34 (8) (17) 91
Investment income 40
Finance costs (19)
Profit before taxation 112
(1) Before non-underlying items (Note 8).
Construction Support Infrastructure Corporate Total
For the year ended 31 December 2024 audited Services Services Investments activities £m
£m £m £m £m
Revenue including share of joint ventures and associates 8,199 1,210 606 - 10,015
Share of revenue of joint ventures and associates (1,569) - (212) - (1,781)
Group revenue 6,630 1,210 394 - 8,234
Group operating profit/(loss)(1) 118 93 17 (39) 189
Share of results of joint ventures and associates 41 - 18 - 59
Profit/(loss) from operations(1) 159 93 35 (39) 248
Non-underlying items:
- net release of provisions relating to Rail Germany 21 - - - 21
- recognition of insurance recovery in relation to rectification works on a 43 - - - 43
development in London
- provision recognised in relation to claims made under the Building Safety (83) - - - (83)
Act
- charge recognised in relation to a legacy claim received for a project (52) - - - (52)
completed in 2012 in Texas
- amortisation of acquired intangible assets (1) - (3) - (4)
(72) - (3) - (75)
Profit/(loss) from operations 87 93 32 (39) 173
Investment income 82
Finance costs (41)
Profit before taxation 214
(1) Before non-underlying items (Note 8).
3 Segment analysis continued
3.2 Assets and liabilities by activity
As at 27 June 2025 unaudited Construction Support Infrastructure Corporate Total
Services Services Investments activities £m
£m £m £m £m
Contract assets - current 179 76 47 - 302
Contract liabilities - current (631) (204) (2) - (837)
Inventories 50 46 58 - 154
Trade and other receivables - current 993 85 32 38 1,148
Trade and other payables - current (1,692) (279) (74) (93) (2,138)
Provisions - current (239) (10) (2) (21) (272)
Working capital* (1,340) (286) 59 (76) (1,643)
* Includes non-operating items and current working capital.
Total assets 2,284 577 1,321 1,839 6,021
Total liabilities (2,933) (646) (711) (649) (4,939)
Net (liabilities)/assets (649) (69) 610 1,190 1,082
As at 28 June 2024 unaudited Construction Support Infrastructure Corporate Total
Services Services Investments activities £m
£m £m £m £m
Contract assets - current 269 72 38 - 379
Contract liabilities - current (512) (99) (3) - (614)
Inventories 72 25 66 - 163
Trade and other receivables - current 863 87 29 28 1,007
Trade and other payables - current (1,578) (243) (54) (67) (1,942)
Provisions - current (182) (3) (4) (14) (203)
Working capital* (1,068) (161) 72 (53) (1,210)
* Includes non-operating items and current working capital.
Total assets 2,362 490 1,277 1,251 5,380
Total liabilities (2,559) (473) (664) (508) (4,204)
Net (liabilities)/assets (197) 17 613 743 1,176
As at 31 December 2024 audited Construction Support Infrastructure Corporate Total
Services Services Investments activities £m
£m £m £m £m
Contract assets - current 116 70 43 - 229
Contract liabilities - current (506) (188) (3) - (697)
Inventories 47 48 63 - 158
Trade and other receivables - current 939 99 22 39 1,099
Trade and other payables - current (1,470) (198) (59) (51) (1,778)
Provisions - current (213) (6) (3) (17) (239)
Working capital* (1,087) (175) 63 (29) (1,228)
* Includes non-operating items and current working capital.
Total assets 2,209 520 1,309 1,594 5,632
Total liabilities (2,635) (524) (683) (660) (4,502)
Net (liabilities)/assets (426) (4) 626 934 1,130
3 Segment analysis continued
3.3 Other information
Construction Support Infrastructure Corporate Total
Services Services Investments activities £m
£m £m £m £m
For the half-year ended 27 June 2025 unaudited
Capital expenditure on property, plant and equipment 6 9 - 8 23
Capital expenditure on service concession contract asset - - 37 - 37
Depreciation 12 33 2 4 51
Gain on disposals of interests in investments - - 2 - 2
For the half-year ended 28 June 2024 unaudited
Capital expenditure on property, plant and equipment 4 7 - 1 12
Capital expenditure on service concession contract asset - - 25 - 25
Depreciation 12 29 1 4 46
For the year ended 31 December 2024 audited
Capital expenditure on property, plant and equipment 7 18 - 3 28
Capital expenditure on service concession contract asset - - 56 - 56
Depreciation 23 57 3 9 92
Gain on disposals of interests in investments - - 43 - 43
3.4 Infrastructure Investments
Group Share of joint Total Group Share of Total Group Share of Total
2025 ventures and 2025 2024 joint 2024 2024 joint 2024
first half
first half
first half
first half
unaudited associates
unaudited
unaudited ventures and
unaudited year ventures and year
£m
£m
£m
£m
Underlying profit/(loss) from operations(1) 2025 associates audited associates audited
first half 2024 £m 2024 £m
first half
unaudited(+)
unaudited(+) year
£m
£m audited(+)
£m
UK(^) 2 (1) 1 - 7 7 (2) 9 7
North America (7) 4 (3) (2) 5 3 2 9 11
Gain on disposals of interests in investments 2 - 2 - - - 43 - 43
(3) 3 - (2) 12 10 43 18 61
Bidding costs and overheads (10) - (10) (17) - (17) (26) - (26)
(13) 3 (10) (19) 12 (7) 17 18 35
(+) 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 (Note 8).
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 infrastructure works The Group provides construction services to three main types of infrastructure
assets: highways, railways and other large-scale infrastructure assets such as
24 to 60 months for large-scale complex construction waste, water and energy plants.
Highways represent the Group's activities in constructing motorways in the UK,
US and Hong Kong. This includes activities such as design and 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.
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
windfarm maintenance. Contracts entered into are normally fixed-price and
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 Revenue continued
4.1 Nature of services provided continued
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.
4 Revenue continued
4.2 Disaggregation of revenue
The Group presents a disaggregation of its underlying 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 underlying
revenue is also presented according to the Group's reportable segments as
described in Note 3.
For the half-year ended 27 June 2025 unaudited
Segment Primary geographical markets United United Rest of Total
Kingdom States world £m
£m £m £m
Construction Services Revenue including share of joint ventures and associates 1,563 2,087 547 4,197
Group revenue 1,563 2,070 - 3,633
Support Revenue including share of joint ventures and associates 661 - 1 662
Services
Group revenue 661 - 1 662
Infrastructure Investments Revenue including share of joint ventures and associates 108 180 3 291
Group revenue 61 165 1 227
Total revenue Revenue including share of joint ventures and associates 2,332 2,267 551 5,150
Group revenue 2,285 2,235 2 4,522
Segment Revenue by types of assets serviced Buildings Infrastructure Utilities Other Total
£m £m £m £m £m
Construction Services Revenue including share of joint ventures and associates 2,342 1,537 261 57 4,197
Group revenue 2,001 1,314 261 57 3,633
Support Revenue including share of joint ventures and associates 7 344 295 16 662
Services
Group revenue 7 344 295 16 662
Infrastructure Investments Revenue including share of joint ventures and associates 254(+) 33 4 - 291
Group revenue 226(+) 1 - - 227
Total revenue Revenue including share of joint ventures and associates 2,603 1,914 560 73 5,150
Group revenue 2,234 1,659 556 73 4,522
Timing of revenue recognition Construction Services Support Infrastructure Investments Total
£m Services £m £m
£m
Over time 4,195 662 279 5,136
At a point in time 2 - 12 14
Revenue including share of joint venture and associates 4,197 662 291 5,150
Over time 3,631 662 215 4,508
At a point in time 2 - 12 14
Group revenue 3,633 662 227 4,522
(+) Includes rental income of £30m including share of joint ventures and
associates or £17m excluding share of joint ventures and associates.
4 Revenue continued
4.2 Disaggregation of revenue continued
For the half-year ended 28 June 2024 unaudited
Segment Primary geographical markets United United Rest of Total
Kingdom States world £m
£m £m £m
Construction Services Revenue including share of joint ventures and associates 1,458 1,703 714 3,875
Group revenue 1,458 1,692 - 3,150
Support Revenue including share of joint ventures and associates 554 - - 554
Services
Group revenue 554 - - 554
Infrastructure Investments Revenue including share of joint ventures and associates 90 156 2 248
Group revenue 44 137 - 181
Total revenue Revenue including share of joint ventures and associates 2,102 1,859 716 4,677
Group revenue 2,056 1,829 - 3,885
Segment Revenue by types of assets serviced Buildings Infrastructure Utilities Other Total
£m £m £m £m £m
Construction Services Revenue including share of joint ventures and associates 1,906 1,680 218 71 3,875
Group revenue 1,584 1,279 216 71 3,150
Support Revenue including share of joint ventures and associates 6 363 171 14 554
Services
Group revenue 6 363 171 14 554
Infrastructure Investments Revenue including share of joint ventures and associates 208(+) 37 3 - 248
Group revenue 179(+) 2 - - 181
Total revenue Revenue including share of joint ventures and associates 2,120 2,080 392 85 4,677
Group revenue 1,769 1,644 387 85 3,885
Timing of revenue recognition Construction Services Support Infrastructure Investments Total
£m Services £m £m
£m
Over time 3,872 553 242 4,667
At a point in time 3 1 6 10
Revenue including share of joint venture and associates 3,875 554 248 4,677
Over time 3,147 553 175 3,875
At a point in time 3 1 6 10
Group revenue 3,150 554 181 3,885
(+) Includes rental income of £30m including share of joint ventures and
associates or £17m excluding share of joint ventures and associates.
4 Revenue continued
4.2 Disaggregation of revenue continued
For the year ended 31 December 2024 audited
United United Rest of Total
Revenue by primary geographical markets Kingdom States world £m
£m £m £m
Construction Services Revenue including share of joint ventures and associates 3,010 3,638 1,551 8,199
Group revenue 3,010 3,619 1 6,630
Support Revenue including share of joint ventures and associates 1,209 - 1 1,210
Services
Group revenue 1,209 - 1 1,210
Infrastructure Investments Revenue including share of joint ventures and associates 201 401 4 606
Group revenue 99 295 - 394
Total Revenue including share of joint ventures and associates 4,420 4,039 1,556 10,015
revenue
Group revenue 4,318 3,914 2 8,234
Buildings Infrastructure Utilities Other Total
Revenue by types of assets serviced £m £m £m £m £m
Construction Services Revenue including share of joint ventures and associates 4,178 3,465 417 139 8,199
Group revenue 3,420 2,657 414 139 6,630
Support Revenue including share of joint ventures and associates 12 782 385 31 1,210
Services
Group revenue 12 782 385 31 1,210
Infrastructure Investments Revenue including share of joint ventures and associates 445(+) 153 8 - 606
Group revenue 390(+) 4 - - 394
Total Revenue including share of joint ventures and associates 4,635 4,400 810 170 10,015
revenue
Group revenue 3,822 3,443 799 170 8,234
Timing of revenue recognition Construction Services Support Infrastructure Total
£m Services Investments £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
+ Includes rental income of £48m including share of joint ventures and
associates or £26m excluding share of joint ventures and associates.
5 Share of results and net assets of joint ventures and associates
5.1 Income statement
2025 2024 2024
first half
first half unaudited year
unaudited
audited
£m
£m £m
Revenue 628 792 1,781
Operating profit 36 35 90
Investment income 36 47 90
Finance costs (45) (54) (85)
Profit before taxation 27 28 95
Taxation (3) (9) (18)
Profit after taxation from joint ventures and associates 24 19 77
Adjustment for expected credit losses at Group level 1 11 (18)
Profit after taxation 25 30 59
5.2 Balance sheet
2025 2024 2024
first half
first half unaudited year
unaudited
audited
£m
£m £m
Intangible assets - Infrastructure Investments intangible 13 13 13
- other 19 11 21
Property, plant and equipment 40 22 63
Investment properties 193 269 173
Investments in joint ventures and associates 6 9 5
Money market funds - 52 1
PPP financial assets 1,061 1,097 1,099
Military housing projects 106 115 116
Net borrowings (838) (793) (811)
Other net liabilities (359) (533) (420)
Share of net assets of joint ventures and associates 241 262 260
Goodwill 29 31 32
Reclassify negative investment to provisions 7 8 7
Loans to joint ventures and associates 85 83 86
Total investment in joint ventures and associates 362 384 385
6 Investment income
2025 2024 2024
first half
first half year
unaudited
unaudited
audited
£m £m £m
Subordinated debt interest receivable 13 5 17
Interest receivable on PPP financial assets 1 1 2
Interest received on bank deposits 25 20 40
Other interest receivable and similar income - 1 2
Impairment reversal of loans to joint ventures and associates - 11 17
Net finance income on pension scheme assets and obligations (Note 18) 1 2 4
40 40 82
7 Finance costs
2025 2024 2024
first half
first half year
unaudited
unaudited
audited
£m £m £m
Non-recourse borrowings - bank loans and overdrafts 7 6 12
US private placement - finance cost 5 5 10
Interest on lease liabilities 4 3 7
Fair value loss on investment asset 1 - 2
Other interest payable - committed facilities 1 1 2
- letter of credit fees - 1 1
- other finance charges 2 3 4
Impairment of loans to joint ventures and associates - loans 1 - 2
- accrued interest 1 - 1
22 19 41
8 Non-underlying items
2025 2024 2024
first half
first half year
unaudited
unaudited
audited
£m £m £m
Items credited to/(charged against) profit
8.1 Amortisation of acquired intangible assets (2) (2) (4)
8.2 Other non-underlying items:
- net release/(charge) recognised in relation to a claim received on a legacy 50 - (52)
project completed in 2012 in Texas
- provision recognised in relation to claims made under the Building Safety (11) - (83)
Act
- recognition of insurance recovery in relation to rectification works on a - - 43
development in London
- net release of provisions relating to Rail Germany - 16 21
Total other non-underlying items 39 16 (71)
Credited to/(charged against) profit before taxation 37 14 (75)
8.3 Tax (charges)/credits:
- tax on provision recognised in relation to a claim received on a legacy (12) - 13
project completed in 2012 in Texas
- tax on provision recognised in relation to claims made under the Building 3 - 21
Safety Act
- tax on insurance recovery in relation to rectification works on a - - (11)
development in London
- tax on other items above - 1 3
Total tax (charge)/credit (9) 1 26
Non-underlying items credited to/(charged against) profit for the period 28 15 (49)
8.1 The amortisation of acquired intangible assets comprises: customer
contracts £1m (2024: first half £1m; full-year £3m); and customer
relationships £1m (2024: first half £1m; full-year £1m). The charge was
recognised in the following segments: Construction Services £1m (2024: first
half £1m; full-year £1m) and Infrastructure Investments £1m (2024: first
half £1m; full-year £3m).
8.2.1 In 2024 the Group recognised a provision of £52m for a claim received
from the North Texas Tollway Authority (NTTA) on a project to provide design
and build services in relation to the extension of NTTA's President George
Bush Turnpike Highway (SH161 in Texas) through a joint operation formed with
Fluor Enterprise Inc. in which the Group owned a 40% share. This project
completed in 2012. This provision, net of insurance recoveries, represented
damages awarded to NTTA through a jury verdict in November 2024, and also
included pre-judgement interest and legal costs. This charge was recognised in
the Construction Services segment in 2024 and included within the Group's
non-underlying results due to the size of the provision.
The Group maintained the view that these damages are a result of design
elements of the contract which were performed by subcontractors to the joint
operation. In June 2025, an all-party settlement was reached between NTTA and
the joint operation as well as its design subcontractors. The Group's share of
the settlement was fully funded by its insurers resulting in no cost to the
Group. As such, the Group has released this provision in full after taking
into account legal cost incurred.
8.2.2 In 2024, following further developments and clarifications in the legal
landscape of the Building Safety Act (BSA), introduced in 2022, progression of
the Group's investigation and due diligence as well as adjudications on claims
received to date, the Group reassessed its provision for BSA claims which
resulted in an increase in the provision of £83m. The provision did not
include potential recoveries from third parties. The increase was recognised
in non-underlying due to its size and the nature of the cost, which arose from
a change in legislation.
In the half-year period, the Group increased its provision by £11m as a
result of new claims received in the period, reassessments to previously
provided claims and legal costs incurred. Consistent with the treatment
adopted in 2024, this charge was recognised within non-underlying and in the
Construction Services segment.
9 Taxation
Underlying Non- Total 2024 2024
items underlying 2025 first half year
unaudited
audited
2025 items first half
first half
£m £m
(Note 8) unaudited
unaudited(1)
2025 £m
£m
first half
unaudited
£m
Total UK tax 26 (3) 23 15 29
Total non-UK tax (4) 12 8 1 7
Total tax charge(x) 22 9 31 16 36
UK current tax 9 (3) 6 4 12
Non-UK current tax 9 (1) 8 (1) 16
Total current tax 18 (4) 14 3 28
UK deferred tax 17 - 17 11 17
Non-UK deferred tax (13) 13 - 2 (9)
Total deferred tax 4 13 17 13 8
Total tax charge(x) 22 9 31 16 36
(x) Excluding joint ventures and associates.
(1) Before non-underlying items (Note 8).
The Group has recognised a £9m tax charge (2024: first half £1m credit; full
year: £26m credit) within non-underlying items in the period. Refer to Note
8.3. The Group tax charge excludes amounts for joint ventures and associates,
except where tax is levied at the Group level.
In addition to the Group tax charge/(credit) above, tax of £2m has been
charged (2024: first half £7m credit; full-year £36m credit) directly to
other comprehensive income, comprising: a deferred tax charge of £1m for
subsidiaries (2024: first half £1m charge; full-year £26m credit) and a
deferred tax charge in respect of joint ventures and associates of £1m (2024:
first half £8m credit; full-year £10m credit). A tax credit of £nil (2024:
first half £nil; full-year £4m) has been recognised directly in equity
relating to share-based payments.
10 Earnings per share
2025 first half unaudited 2024 first half unaudited 2024 year audited
Earnings Basic Diluted Basic Diluted Basic Diluted
£m £m £m £m £m £m
Earnings 101 101 96 96 178 178
Amortisation of acquired intangible assets after tax 2 2 1 1 3 3
Other non-underlying items after tax (30) (30) (16) (16) 46 46
Underlying earnings 73 73 81 81 227 227
Basic Diluted Basic Diluted Basic Diluted
m m m m m m
Weighted average number of ordinary shares 509 514 528 532 521 528
The basic earnings per ordinary share is calculated by dividing the profit for
the period 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 equity-settled share-based payment arrangements.
Potential dilutive effect of ordinary shares issuable under equity-settled
share-based payment arrangements is 5m (2024: first half 4m; full-year 7m).
10 Earnings per share continued
2025 first half unaudited 2024 first half unaudited 2024 year audited
Earnings per share Basic Diluted Basic Diluted Basic Diluted
Pence Pence pence pence pence pence
Earnings per ordinary share 19.8 19.6 18.1 18.0 34.2 33.7
Amortisation of acquired intangible assets after tax 0.3 0.3 0.2 0.2 0.6 0.6
Other non-underlying items after tax (5.7) (5.7) (3.0) (3.0) 8.8 8.7
Underlying earnings per ordinary share 14.4 14.2 15.3 15.2 43.6 43.0
11 Dividends on shares
2025 first half unaudited 2024 first half unaudited 2024 year audited
Per share Amount Per share Amount Per share Amount
pence £m pence £m pence £m
Proposed dividends for the period
Interim 2024 - - 3.8 19 3.8 19
Final 2024 - - - - 8.7 44(^)
Interim 2025 4.2 21 (&) - - - -
3.8 19 12.5 63
Recognised dividends for the period
Final 2023 - 42 42
Interim 2024 - - 19
Final 2024 44 - -
44 42 61
(^) The Group declared a final dividend of 8.7p for 2024 which was estimated
to amount to £44m based on the number of shares that would be on the register
on 16 May 2025. Based on the actual number of shares, a payment of £44m was
made on 30 June 2025.
(&) Amount dependent on number of shares on the register on 31 October
2025.
The final 2024 dividend of 8.7 pence per share was paid on 2 July 2025 to
holders on the register on 16 May 2025. The ordinary shares were quoted
ex-dividend on 15 May 2025.
The Board is declaring an interim dividend of 4.2 pence per share, which will
be payable on 5 December 2025 to holders on the register on 31 October 2025.
The last date for DRIP (Dividend Reinvestment Plan) elections is 14 November
2025.
12 Intangible assets - goodwill
Cost Accumulated Carrying
£m impairment amount
losses £m
£m
At 31 December 2023 audited 1,069 (224) 845
Currency translation differences 3 2 5
At 28 June 2024 unaudited 1,072 (222) 850
Currency translation differences 2 2 4
At 31 December 2024 audited 1,074 (220) 854
Currency translation differences (46) 1 (45)
At 27 June 2025 unaudited 1,028 (219) 809
As at 27 June 2025, the Group performed an assessment to identify indicators
of impairment relating to goodwill allocated to cash-generating units (CGUs).
This included a review of internal and external indicators of impairment and
consideration of the year-to-date performance of the relevant CGUs and any
changes in key assumptions. The outcome of this assessment was that there were
no indications of impairment which could reasonably be expected to eliminate
the headroom computed as at 31 December 2024. As a result of this assessment,
no impairment charges were recorded in the first half of 2025 (2024: first
half £nil; full-year £nil).
A full detailed impairment review will be conducted on all CGUs as at 31
December 2025.
13 Contract balances
13.1 Contract assets
£m
At 31 December 2023 audited 300
Currency translation differences 3
Transfers from contract assets recognised at the beginning of the year to (220)
receivables
Increase related to services provided in the period 168
Reclassified from contract liabilities (Note 13.2) (16)
Impairments on contract assets recognised at the beginning of the year (6)
At 31 December 2024 audited 229
Currency translation differences (11)
Transfers from contract assets recognised at the beginning of the year to (226)
receivables
Increase related to services provided in the period 363
Impairments on contract assets recognised at the beginning of the year (3)
Reclassified from contract liabilities (Note 13.2) (49)
Reclassified to assets held for sale (Note 25) (1)
At 27 June 2025 unaudited 302
13.2 Contract liabilities
£m
At 31 December 2023 audited (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 (644)
the year
Reclassified to contract assets (Note 13.1) 16
At 31 December 2024 audited (699)
Currency translation differences 40
Revenue recognised against contract liabilities at the beginning of the year 657
Increase due to cash received, excluding amounts recognised as revenue during (888)
the period
Reclassified to contract assets (Note 13.1) 49
Reclassified to liabilities held for sale (Note 25) 3
At 27 June 2025 unaudited (838)
14 Trade and other receivables
2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Current
Trade receivables 694 543 616
Less: provision for impairment of trade receivables (2) (1) (2)
692 542 614
6
Due from joint ventures and associates 16 22 16
Due from joint operation partners 2 7 5
Contract fulfilment assets 22 18 17
Contract retentions receivable 233 228 242
Accrued income 17 10 12
Prepayments 86 69 65
Other receivables 80 111 128
1,148 1,007 1,099
Non-current
Due from joint ventures and associates 132 113 123
Contract fulfilment assets 18 42 34
Contract retentions receivable 108 135 102
Prepayments 43 - -
Other receivables 55 6 67
356 296 326
Total trade and other receivables 1,504 1,303 1,425
15 Trade and other payables
2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Current
Trade and other payables 835 692 625
Accruals 917 865 813
Contract retentions payable 215 214 230
Due to joint ventures and associates 2 1 2
VAT, payroll taxes and social security 125 128 108
Dividends on ordinary shares 44 42 -
2,138 1,942 1,778
Non-current
Accruals 7 6 10
Contract retentions payable 81 105 75
Due to joint ventures and associates 3 4 3
91 115 88
Total trade and other payables 2,229 2,057 1,866
16 Provisions
Contract Employee Other Total
provisions provisions provisions £m
£m £m £m
At 31 December 2023 audited 352 33 32 417
Currency translation differences (1) - - (1)
Reclassified to accruals (11) - - (11)
Charged/(credited) to the income statement:
- additional provisions 73 4 2 79
- unused amounts reversed (34) - - (34)
Utilised during the period (43) (4) (3) (50)
At 28 June 2024 unaudited 336 33 31 400
Currency Translation differences 2 - - 2
Reclassified to accruals 12 - 1 13
Transfers (10) - 10 -
Charged/(credited) to the income statement:
- additional provisions 292 5 11 308
- unused amounts reversed (20) (3) (7) (30)
Utilised during the period (70) (3) - (73)
Transfer movement in negative investment in joint venture to provisions - - (3) (3)
At 31 December 2024 audited 542 32 43 617
Currency translation differences (8) - (1) (9)
Reclassified to accruals 4 - - 4
Charged/(credited) to the income statement:
- additional provisions 94 4 2 100
- unused amounts reversed (102) - - (102)
Utilised during the period (54) (3) (1) (58)
At 27 June 2025 unaudited 476 33 43 552
17 Notes to the statement of cash flows
17.1 Cash from operations Underlying items Non-underlying items Total Total Total
2025 2025 2025 2024 2024
first half unaudited(1) first half unaudited first half unaudited first half year
£m £m £m unaudited audited
£m £m
Profit from operations 77 37 114 91 173
Share of results of joint ventures and associates (25) - (25) (30) (59)
Depreciation of property, plant and equipment 16 - 16 16 31
Depreciation of right-of-use assets 33 - 33 29 60
Depreciation of investment properties 2 - 2 1 1
Amortisation of other intangible assets 2 2 4 5 10
Amortisation of contract fulfilment assets 15 - 15 11 27
Pension payments including deficit funding (8) - (8) (14) (30)
Movements relating to equity-settled share-based payments 6 - 6 6 10
Gain on disposal of interests in investments (2) - (2) - (43)
Profit on disposal of property, plant and equipment (2) - (2) (1) (2)
Operating cash flows before movements in working capital 114 39 153 114 178
Decrease/(increase) in operating working capital 290 (76) 99
Inventories 4 (38) (34)
Contract assets (85) (77) 74
Trade and other receivables (169) (106) (225)
Contract liabilities 182 11 91
Trade and other payables 416 151 (6)
Provisions (58) (17) 199
Cash from operations 443 38 277
(1) Before non-underlying items (Note 8).
17 Notes to the statement of cash flows continued
17.2 Cash and cash equivalents 2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Cash and deposits 1,174 883 1,084
Term deposits 393 109 209
Cash balances within infrastructure investments 236 292 265
Bank overdrafts (180) (44) (185)
1,623 1,240 1,373
17.3 Analysis of net cash/(borrowings) 2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Cash and cash equivalents (excluding infrastructure investments) 1,567 992 1,293
Bank overdrafts (180) (44) (185)
US private placement (150) (163) (165)
Net cash excluding infrastructure investments 1,237 785 943
Non-recourse infrastructure investments project finance loans at amortised (620) (571)
cost with final maturity between 2025 and 2072
(600)
Infrastructure investments cash and cash equivalents 236 292 265
(384) (279) (335)
Net cash 853 506 608
Balfour Beatty plc, together with certain of its UK subsidiaries, operates a
notional pooling facility with a main relationship UK clearing bank where
overdraft balances are offset with cash balances and interest is calculated on
a net basis. At the half-year, the Group maintained a net cash position on
this pooling facility, so there was no interest payable to the bank in respect
of these bank overdrafts (2024: half-year net cash; full-year net cash).
Overdraft balances and cash held at this bank have been reported gross in the
Group balance sheet at 27 June 2025 and 31 December 2024 as there was 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.
Included in cash and cash equivalents is restricted cash of £16m (2024: first
half £12m; full-year £16m) held by the Group's self-insurance company,
Delphian Insurance Company Ltd, which is subject to Isle of Man insurance
solvency regulation.
Cash and cash equivalents also include: £105m (2024: first half £116m;
full-year £158m) within construction project bank accounts which is used for
project specific expenditure; £451m (2024: first-half £359m; full-year
£382m) in relation to the Group's share of cash held by joint operations
which is used for expenditure within the joint operation projects; and £237m
(2024: first half £292m; full-year £265m) relating to maintenance and other
reserve accounts in Infrastructure Investments subsidiaries, of which £203m
(2024: first half £264m; full-year £234m) is reserved for the construction
of University of Sussex's West Slope student accommodation project.
17 Notes to the statement of cash flows continued
17.4 Analysis of movements in borrowings Infrastructure investments US private placement Bank overdraft Total
non-recourse £m £m £m
project finance
£m
At 31 December 2023 audited (570) (162) (104) (836)
Currency translation differences - (2) - (2)
Proceeds of loans (3) (39) (44) (86)
Repayments of loans 4 40 104 148
Amortisation of fair value adjustment to loan (2) - - (2)
At 28 June 2024 unaudited (571) (163) (44) (778)
Currency translation differences (1) (2) - (3)
Proceeds of loans (33) - (141) (174)
Repayments of loans 5 - - 5
Arrangement fees 3 - - 3
Amortisation of fair value adjustment to loan (3) - - (3)
At 31 December 2024 audited (600) (165) (185) (950)
Currency translation differences 6 15 - 21
Proceeds of loans - - (180) (180)
Repayments of loans 4 - 185 189
Interest accretion on loan (6) - - (6)
Assignment of loan from purchase of investment property (22) - - (22)
Amortisation of fair value adjustment to loan (2) - - (2)
At 27 June 2025 unaudited (620) (150) (180) (950)
The Group retains its core Revolving Credit Facility (RCF) with a maturity of
June 2028. The RCF remains a Sustainability Linked Loan (SLL) and 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 27 June 2025.
The Group retains an additional £30m bilateral committed facility that has
materially the same terms and conditions as the RCF, with a maturity of
December 2027. The facility is also a SLL, including metrics that mirror the
RCF. As of 27 June 2025, the facility remained undrawn.
The US Private Placement (USPP) notes are comprised of a series of
US-denominated loan notes with a weighted average maturity of 5.35 years and
an average coupon rate of 6.50% per annum. The earliest maturity for these
notes will be in June 2027 for US$35m.
18 Retirement benefit assets and liabilities
Principal actuarial assumptions for the IAS 19 accounting valuations of the 2025 2024 2024
Group's principal schemes
first half first half year
unaudited unaudited audited
% % %
Discount rate on obligations 5.55 5.25 5.55
Inflation rate - RPI 3.00 3.25 3.25
- CPI(*) 2.50 2.70 2.75
Future increases in pensionable salary(#) 2.50 2.70 2.75
Rate of increases in pensions in payment (or such other rate as is 2.05 3.05 3.05
guaranteed)(^)
(*) Actuarial assumption applied to the Railways Pension Scheme was 2.65%
(2024: first half 2.85%; full-year 2.90%).
(#) Actuarial assumption applied to the Railways Pension Scheme was 2.65%
(2024: first half 2.85%; full-year 2.90%).
(^) Actuarial assumption applied to the Railways Pension Scheme was 2.75%
(2024: first half 2.90%; full-year 2.95%).
Amounts recognised in the balance sheet 2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Present value of obligations (2,520) (2,674) (2,569)
Fair value of plan assets 2,535 2,764 2,571
Net assets in the balance sheet(+) 15 90 2
(+) This amount represents the aggregate of the retirement benefit schemes in
a net surplus position of £57m (2024: first half £125m; full-year £43m),
and those in deficit of £42m at 27 June 2025 (2024: first half £35m;
full-year £41m). These asset amounts are shown separately on the balance
sheet as the Balfour Beatty Pension Fund is in a net surplus position.
Analysis of net assets in the balance sheet 2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Balfour Beatty Pension Fund 57 113 43
Railways Pension Scheme (11) 12 (7)
Other schemes(*) (31) (35) (34)
15 90 2
(*) Other schemes include the Group's deferred compensation obligations for
which investments in mutual funds of £14m (2024: first half £19m; full-year
£20m) are held by the Group to satisfy these obligations.
2025 2024 2024
Movements in the retirement benefit net assets for the period first half first half year
unaudited unaudited audited
£m £m £m
At beginning of period 2 69 69
Currency translation differences - - 1
Current service cost (1) (2) (3)
Net finance income 1 2 4
Actuarial movements - on obligations from reassessing the difference between RPI and CPI - - (2)
- on obligations from changes in demographic assumptions - - 4
- on obligations from changes to other financial assumptions 30 160 241
- on obligations from experience gains - (4) (8)
- on assets (26) (151) (337)
Contributions from employer - regular funding 1 1 2
- ongoing deficit funding 5 13 28
Benefits paid 3 2 3
At end of period 15 90 2
18 Retirement benefit assets and liabilities continued
The investment strategy of the BBPF and the sensitivity of the Group's
retirement benefit obligations and assets to different actuarial assumptions
are set out in Note 31 on pages 237 and 245, respectively, of the Annual
Report and Accounts 2024.
The Group's balance sheet includes net retirement benefit assets of £15m
(2024: first half £90m; full-year £2m) as measured on an IAS 19 basis, with
surpluses on the BBPF partially offset by deficits on the other schemes.
In the first half of 2025, the Group recorded net actuarial gains on its
relevant benefit schemes of £4m (2024: first half £5m net gains, full-year
£102m net losses). A decrease in inflationary expectations has led to a
reduction in the present value of obligations from 31 December 2024 to 27 June
2025. Similarly, the assets fell in value over the first half of 2025, with
this reduction primarily driven by the liability hedging that is in place in
the BBPF, offset in part by the payment of deficit contributions in the
period. These two factors have acted to offset each other, with the scheme's
net assets increasing from £2m to £15m in the period.
Balfour Beatty and the trustees of the Balfour Beatty Pension Fund (BBPF) have
previously agreed to a journey plan approach to managing the BBPF whereby the
BBPF is aiming to reach self-sufficiency by 2027. A formal triennial funding
valuation is due with effect from 31 March 2025 with discussions between the
Group and the Trustees to agree this triennial valuation underway.
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 £6m per
annum until February 2025. The next formal triennial funding valuation of
the RPS is due with effect from 31 December 2025.
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. On 5 June 2025, the Department for Work and
Pensions (DWP) announced that the Government will introduce legislation to
give pension schemes affected by the Virgin Media ruling the ability to
retrospectively obtain written actuarial confirmation that historic benefit
changes met the necessary standards.
Following the DWP's announcement, the Company does not expect the Virgin Media
ruling to give rise to any additional liabilities and so the net
assets/(liabilities) for both the Balfour Beatty Pension Fund and the Balfour
Beatty section of the Railways Pension Scheme have not been adjusted and
continue to reflect the benefits currently being administered.
19 Share capital
During the half-year ended 27 June 2025, 1.3m (2024: first half 0.6m;
full-year 2.9m) shares were purchased for £7m (2024: first half £2m;
full-year £12m) by the Group's employee discretionary trust to satisfy awards
under the Performance Share Plan, the Deferred Bonus Plan and the Restricted
Share Plan.
The Company commenced the fifth phase of its share buyback programme in 2025.
As at 27 June 2025, the Company had purchased 14m (2024: first half 20.4m;
full-year 27.1m) shares. These 14m shares are currently held in treasury with
no voting rights. The purchase of these shares, together with associated fees
and stamp duty, has utilised £65m (2024: first half £73m; full-year £101m)
of the Company's distributable profits and the cash paid in settlement during
the period was £65m (2024: first half £72m; full-year £101m).
20 Disposals
In December 2024, the Group partially disposed of its interests in the four
phases of its Northside at UTD portfolio, located in Richardson (Dallas),
Texas. This partial disposal resulted in the Group retaining a 5% share in
each of the phases. The Group received consideration of £43m and recognised
an underlying gain of £43m in 2024.
As part of this disposal, the Group is entitled to receive additional proceeds
over the next 5 years subject to certain conditions. At the time of the
disposal, the Group did not include an estimate of this contingent
consideration within its assessment of the gain on disposal as there was
significant uncertainty as to whether these conditions would be met. At the
half year, the Group received an additional £2m of proceeds. This additional
gain of £2m has been recognised as an underlying gain consistent with the
Group's treatment of the gain on disposal previously recognised. No further
additional proceeds have been recognised in the Group's results at this stage
and will only be recognised once further cash proceeds have been received.
21 Financial instruments
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 in the current period or
preceding year.
Financial instruments at fair value 2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Financial assets
Level 1
Investments in mutual fund financial assets 14 19 20
Level 3
PPP financial assets 19 23 21
Other investment assets 2 6 4
Total assets measured at fair value 35 48 45
Financial liabilities
Level 2
Financial liabilities - foreign currency contracts (1) (1) (1)
Financial liabilities - infrastructure concessions interest rate swaps - (1) -
Total liabilities measured at fair value (1) (2) (1)
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
other comprehensive income 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.
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.
21 Financial instruments continued
Fair value estimation continued
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 (2024: first half £1m;
full-year £nil) / £nil increase (2024: first half £1m; full-year £nil) in
the fair value of the assets taken through equity.
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 (2024: first half £22m;
full-year £21m)/£22m increase (2024: first half £23m; full-year £21m) in
the fair value of the assets taken through equity within the share of joint
ventures' and associates' reserves.
22 Related party transactions
The Group has contracted with, provided services to, and received management
fees from, certain joint ventures and associates amounting to £207m (2024:
first half £212m, full-year £438m). 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 14 and 15 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. Each
company was a related party as it was controlled, jointly controlled or under
significant influence by a Director of Balfour Beatty plc.
2025 2024 2024
first half first half year
unaudited unaudited audited
£m £m £m
Site Assist Software Limited
Purchase of services 1 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 period for bad
or doubtful debts in respect of amounts owed by related parties.
During the first half of 2025, a member of the Group's staff continued to be
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.
23 Principal risks and uncertainties
The nature of the principal risks and uncertainties which could adversely
impact the Group's profitability and ability to achieve its strategic
objectives include: external risks arising from the effects of national or
market trends and political change and the complex and evolving legal and
regulatory environments in which the Group operates; organisation and
management risks including business conduct/compliance, data protection,
cybercrime and people related risks; financial risks arising from failure to
forecast material exposures and manage financial resources; and operational
risks arising from work winning, project delivery, joint ventures, supply
chain, health and safety and sustainability matters.
The Directors do not consider that the nature of the principal risks and
uncertainties facing the Group has fundamentally changed since the publication
of the Group's Annual Report and Accounts 2024.
24 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. The Group takes legal
advice as to the likelihood of success of claims and actions and no provision
is made where the Directors consider, based on that advice, 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 27 June 2025.
In respect of these cases, it is not practicable to estimate the financial
effect based on the current status of the assessments.
25 Events after the reporting date
In the period from 28 June 2025 to 11 August 2025 (the latest practicable date
prior to the date of this report), the Company purchased 3.0m shares, which
are currently held in treasury with no voting rights, for a total
consideration of £15m (including associated fees and stamp duty).
On 1 August 2025, the Group completed the disposal of Omnicom Balfour Beatty,
its specialist rail measurement hardware and intelligent software business,
for a consideration of £24m (subject to a typical post completion working
capital adjustment) to Hitachi Rail. After deducting cost of disposal, the
Group is anticipating recording an estimated gain on disposal of £20m within
its non-underlying results in the second half of the year. The assets and
liabilities of Omnicom Balfour Beatty that are part of the disposal have been
classified as held for sale in the Group's condensed balance sheet at 27 June
2025.
There were no other material post balance sheet events arising after the
reporting date.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EAKPAFLLSEFARecent news on Balfour Beatty
See all newsREG - Balfour Beatty PLC - Transaction in Own Shares
AnnouncementREG - Balfour Beatty PLC - Transaction in Own Shares
AnnouncementREG - Balfour Beatty PLC - BALFOUR BEATTY PLC 2025 HALF YEAR RESULTS
AnnouncementREG - Balfour Beatty PLC Schroders PLC - Holding(s) in Company
AnnouncementREG - Balfour Beatty PLC - Transaction in Own Shares
Announcement