REG - Balfour Beatty PLC - Balfour Beatty 2025 full year results
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RNS Number : 1231W Balfour Beatty PLC 11 March 2026
BALFOUR BEATTY PLC RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2025
11 March 2026
Strong growth in earnings and order book - £200 million 2026 share buyback
Further momentum into 2026 and 2027 with accelerating demand in chosen
markets
Philip Hoare, Balfour Beatty Group Chief Executive, said: "Since joining in
September, I've been truly impressed by the depth of talent across Balfour
Beatty and the inherent strength of the Group. Our capabilities, the quality
of our order book and our disciplined approach to risk provide a powerful
foundation for the future.
"In 2025, the Group delivered on expectations with further earnings growth,
fuelled by strong operational performance and momentum in chosen growth
markets, where our end-to-end expertise, proven delivery and long-standing
customer relationships continue to differentiate Balfour Beatty.
"As the industry faces unprecedented demand and a widening skills gap, we'll
continue to invest in our people and in technology, driving further gains in
productivity and operational excellence. Supported by a robust balance sheet
and a resilient diverse business model, we are incredibly well positioned to
respond to market dynamics, accelerate profitable growth, improve margins and
drive value creation for our customers, communities, and shareholders."
Full year expectations delivered with profitable growth in earnings-based
businesses for the fifth consecutive year
· 8% revenue growth driven by UK power transmission and
US buildings demand
· Underlying profit from operations (PFO) from earnings-based
businesses up 16% to £293 million (2024: £252 million)
· Underlying EPS of 47.6p up 9% (2024: 43.6p)
Progress made across diverse portfolio
· UK Construction: Delivered profitable underlying growth to surpass
3% margin target one year ahead of expectations
· US Construction: Strong Buildings performance offset by cost
overruns at one Civils project; recoveries being pursued
· Support Services: PFO up 31% to £122 million and 8.5% PFO
margin achieved, driven by power transmission growth
· Infrastructure Investments: £5 million PFO (2024: £35
million). Monitorship anticipated to complete in June 2026
Balance sheet and cash flow strength continue to support sustainable and
attractive shareholder returns
· Strong cash generation: Average net cash(3) increased to
£1,212 million (2024: £766 million)
· £1.1 billion Directors' valuation of the Investments
portfolio (2024: £1.3 bn) following £120 million of asset disposals
· £200 million share buyback and full year dividend increased
by 12% to 14 pence per share (2024: 12.5p)
· Pension triennial valuation agreed, allowing future Defined Benefit
surplus to part fund Defined Contribution obligation
Strong momentum in chosen markets and further growth anticipated
· Record £22.7 billion order book up 23%, including over
£3.5 billion of new UK power generation projects
· Significant further pipeline including UK power transmission
schemes, UK major defence contracts and US buildings
· $444 million refinancing of Fort Carson US army base
enables major redevelopment including c.400 new homes
· Further profitable growth forecast in 2026 and 2027
(£ million unless otherwise specified) 2025 2024
Underlying(2) Total Underlying(2) Total
Revenue(1) 10,767 10,767 10,015 10,015
Profit from earnings-based businesses 293(#) 327 252(#) 180
Profit from operations 252(#) 284 248(#) 173
Pre-tax profit 291 323 289 214
Profit for the year 239 264 227 178
Basic earnings per share 47.6p 52.6p 43.6p 34.2p
Dividends per share 14.0p 12.5p
2025 2024
Order book(1) £22.7bn £18.4bn
Directors' valuation of Investments portfolio £1.1bn £1.3bn
Net cash - recourse(3) 1,446 943
Average net cash - recourse(3) 1,212 766
Segment analysis 2025 2024
Revenue(1) PFO(2,#) PFO Revenue(1) PFO(2,#) PFO
margin(2) margin(2)
£m £m % £m £m %
UK Construction 3,112 110 3.5% 3,011 81 2.7%
US Construction 4,509 25 0.6% 3,638 40 1.1%
Gammon 1,090 36 3.3% 1,550 38 2.5%
Construction Services 8,711 171 2.0% 8,199 159 1.9%
Support Services 1,427 122 8.5% 1,210 93 7.7%
Earnings-based businesses 10,138 293 2.9% 9,409 252 2.7%
Infrastructure Investments 629 5 606 35
Corporate activities - (46) - (39)
Total 10,767 252 10,015 248
Notes:
(1) Including share of joint ventures and associates
(2) Before non-underlying items (Note 9)
(3) Excluding non-recourse net borrowings, which comprise cash and debt
ringfenced within certain infrastructure investments project companies, and
lease liabilities
(#) 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 Bank, 21
Moorfields, London, EC2Y 9DB at 09:00 (GMT) on 11 March 2026. 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 FULL YEAR RESULTS ANNOUNCEMENT
· GROUP CHIEF EXECUTIVE'S OVERVIEW
· RESULTS OVERVIEW
· DIVISIONAL REVIEWS
· MEASURING OUR FINANCIAL PERFORMANCE
GROUP CHIEF EXECUTIVE'S OVERVIEW
"The Group has taken a further significant step forward in 2025 and delivered
notable growth in our earnings-based businesses, with both of the UK segments
performing above the top end of their margin targets and a strong US Buildings
result. In a period of strong demand across our key markets, the Group has
grown its order book to a record level through securing long-term and
high-quality work, largely for repeat customers.
"The Group's improving operational performance, its large order book and
strong market outlook give the Board confidence in further earnings-based
business growth in 2026 and underpins its continued confidence in Balfour
Beatty's ongoing ability to deliver sustainable cash generation for
significant shareholder returns, as reflected in our decision to increase
dividends and share buybacks for 2026."
Further profitable growth achieved in 2025
Balfour Beatty delivered a further successful period of operational and
financial performance in 2025. For a fifth consecutive year, the Group
achieved profitable growth from its earnings-based businesses (Construction
Services and Support Services), demonstrating the consistency and reliability
of its diverse portfolio, while materially increasing the forward order book,
operating cashflow and shareholder returns.
The Group's ambition to increase earnings-based business PFO in 2025 was
achieved with a 16% increase to £293 million, which contributed to the
Group's underlying profit for the year improving to £239 million (2024: £227
million). Non-underlying items after tax were a credit of £25 million (2024:
charge of £49 million). The year end order book grew by 23%, driven by the
addition of long-term power generation projects in the UK, average net cash
increased to £1,212 million compared to £766 million in 2024 and £189
million of cash was returned to shareholders (2024: £161 million) through a
combination of dividends and share buybacks.
Outperformance in UK operations drives portfolio progress
Profitable growth was delivered in both the earnings-based businesses in 2025.
Balfour Beatty's geographical, operational and contract diversity remains a
key strength of the Group and was once again an important factor in the
consistency of the Group's financial results. Construction Services PFO
increased 8% to £171 million, as growth in the UK Construction PFO margin to
above its long-standing 3% target was partially offset by lower profitability
in US Construction, where growth in US Buildings was outweighed by cost
overruns at a US Civils project. Gammon's PFO was also slightly down due to
lower revenues, although PFO margin improved as forecast. Support Services
grew revenue by 18% while delivering PFO margins ahead of its targeted 6-8%
range, resulting in PFO increasing 31% to £122 million. Infrastructure
Investments achieved its disposal targets for the year, delivering £36
million of gains and £120 million of proceeds, which exceeded the Directors'
valuation; however it recorded lower PFO due to additional costs in US
military housing. During the year, the Group agreed with the US Department of
Justice to extend both Balfour Beatty Communities' plea agreement and
monitorship to 6 June 2026 to allow the Group further time to complete planned
remediation work.
The Directors' valuation of the Investments portfolio reduced by 15% to £1.1
billion (2024: £1.3 billion), due to the disposal of 12 assets, increased
discount rates and sterling strengthening against the US dollar.
The Group has forecast further profitable growth in 2026 and beyond, driven by
its focus on four core growth markets: UK energy, UK transport, UK defence and
US buildings. Additionally, costs are expected to reduce following completion
of both the independent compliance monitor's work with Balfour Beatty
Communities and the delayed US Civils project. In Infrastructure Investments,
following the agreement of a 25-year ground lease extension at Fort Carson in
Colorado early in 2026, the Group successfully completed a refinancing which
raised $444 million for a major redevelopment of the community, including
c.400 new homes and the renovation of over 300 existing homes.
Long-term UK energy contracts driving order book expansion
The Group's order book increased by 23% to £22.7 billion in 2025 (2024:
£18.4 billion), with growth in each segment of the earnings-based businesses.
While demand remained strong in the majority of Balfour Beatty's key markets,
the main driver of the order book's increase is the addition of projects
linked to the UK's energy transition, with the Group converting over £3.5
billion of power generation orders for the Sizewell C and Net Zero Teesside
power stations, while increasing the power transmission order book by almost
40%. The Group also delivered notable order book growth in UK rail, US roads
and Hong Kong buildings.
In a period of unprecedented infrastructure demand, the Group continues to be
selective in the work it undertakes, using increased bid margin thresholds and
utilisation of disciplined risk frameworks and contract governance to reduce
risk and raise quality in the forward order book. As a result, the order book
comprises a project portfolio that the Group believes has the appropriate
contractual terms and conditions for the risk undertaken. UK Construction is
heavily weighted towards lower-risk target cost and cost plus incentivised fee
contracts, whilst US Construction is heavily weighted towards buildings
projects, for which the Group ensures early issuing of subcontracts and
insurance of the supply chain in order to protect its margin.
In addition to the reported order book, the Group has a deep pipeline of work
which it has been selected for but has yet to go to contract. This represents
a further significant volume of future activity and includes much of the work
which has been awarded in both the power transmission and distribution sector
and in the UK defence sector, which is being contracted on a phased or task
order basis. It also includes c£2.5 billion of US Buildings projects which
have been awarded but not contracted and the £1.2 billion Lower Thames
Crossing road project in the UK.
Positive market outlook supporting further growth
Throughout 2025, Balfour Beatty has continued to focus on its four chosen
growth markets - UK energy transition and security, UK transport, UK defence,
and US buildings - and the outlook for each, combined with the Group's order
book, underpin the firm expectation of further growth from the earnings-based
businesses in 2026 and beyond.
In the UK, the Government set out a 10-year infrastructure strategy as it
looks to deliver on its objective to stimulate economic growth by investing in
and enabling infrastructure development. Supported by the publication of The
Infrastructure Pipeline and a commitment to finance at least £725 billion of
the cost while seeking further material investment from the private sector,
this longer-term approach brings improved certainty and clarity for the
industry, allowing UK contractors and their suppliers to plan accordingly and
invest in capability. In the US, US Buildings' organic growth strategy and
lower interest rates have contributed to the division's encouraging progress.
· UK energy: The essential long-term upgrade to the UK's energy
infrastructure is well underway, driving improvement in energy security and
facilitating the energy transition, with significant and timely investment in
both generation and network infrastructure necessary to meet the Government's
net zero targets. Balfour Beatty is heavily involved in projects such as the
new nuclear power stations at Hinkley Point C and Sizewell C, the Net Zero
Teesside power station with carbon capture, and across the UK with its
market-leading power transmission and distribution capability.
· UK defence: In June, the UK Government released the Strategic
Defence Review, declaring defence as an engine for growth. Government plans to
strengthen national security and modernise defence infrastructure are bringing
material opportunities to market, with these schemes increasingly requiring
contractors with high-security experience and end-to-end capabilities. Balfour
Beatty's capabilities and credentials, including its experiences in civil
nuclear construction, are well matched to these requirements and in 2025 the
Group was selected by Rolls-Royce for a second long-term project as part of
its AUKUS expansion, following a similar award in 2024.
· UK transport: Investment in the UK transport network is an
important component of the Government's growth plans and is essential to
address ageing infrastructure, net zero targets and domestic and international
connectivity. Given Balfour Beatty's capabilities in the construction and
maintenance of road and rail, and its experience in delivering major airport
projects, the Group is well positioned to capitalise on transport
opportunities when they arise, with growth expected in the medium term.
· US buildings: The US buildings sector in Balfour Beatty's target
states is poised for further growth, supported by steady economic expansion,
robust public-sector spending and favourable demographic trends. There are
encouraging forecasts in the division's specialist industries, with increased
investment in education, leisure, and data centres. The Group has also seen
encouraging results from its organic growth strategy, as a result of further
geographic diversification.
Growing and attracting an engaged workforce
Balfour Beatty's greatest assets are its people and their capabilities and, as
demonstrated by the order book growth in the year, the demand for these
remains extremely strong across a range of markets. As the Group continues to
deliver on its growth aspirations, the focus on attracting and recruiting new
talent and retaining its existing experts grows in tandem, as the Group looks
to closely match the rising trajectory of work with a growing, and
appropriately skilled, workforce.
The annual employee engagement survey is an essential tool for the Group to
assess its own performance and the progress made in the year. In 2025, the
survey results remained industry-leading, with overall employee engagement at
83% (2024: 84%), which is 8% higher than benchmark engagement scores for the
industry.
During 2025, the Group has continued with its four pillared people strategy -
Attract, Retain, Grow and Thrive - empowering colleagues to excel and build
rewarding careers. From early careers to experienced hires to senior
leadership, investment is being made in the skills needed to deliver demand,
supported by inclusive leadership, data-led learning and a consistent, high
quality employee experience. Across the UK, US and Hong Kong, this approach is
locally tuned but globally aligned, ensuring the Group has the capacity,
capability and culture to deliver for its customers - safely, ethically and
with pride. In the Group's fastest growing market, Power Transmission and
Distribution in the UK, the business welcomed over 500 new starters for the
second year in a row, facilitating a near doubling of revenue over those two
years. To retain its talent, Balfour Beatty focuses on providing an inclusive
environment where its people feel valued and can be productive, and the
Group's voluntary attrition rate in the UK remained stable at 10%. At year
end, 8.9% of the UK workforce were apprentices, graduates and sponsored
students in 'earn and learn' positions, exceeding both The 5% Club's base
target and overall average.
Further work required in journey to Zero Harm
Health, safety and wellbeing (HS&W) remain the highest priority for
Balfour Beatty, underpinned by strong governance and accountability, with
mental health treated like physical health to ensure a holistic approach.
Sadly, despite the Group's relentless focus on its Zero Harm goal, one
colleague tragically lost their life during the year while working on the
decommissioning of a steel propane tank in the US. The Company offers its
deepest sympathy and support to their family, friends and co-workers. The
Group is determined to learn from this event, and to implement the findings
from this incident. During the year, new learning and sharing forums across
key working areas have been initiated, which aim to ensure that Balfour Beatty
drives, shares and consistently adopts the common best practice across the
whole business.
The Group tracks HS&W statistics closely in its efforts to achieve
continuous improvement. Further progress has been made with most of these KPIs
in 2025, most notably in voluntary safety observations, which increased by 67%
to over 780,000 across the Group's activities. This level of engagement
highlights not only the accountability for HS&W recognised by colleagues,
but also how embedded safety is in the Group's culture. Lost time injuries
(excluding international joint ventures) reduced in both rate and absolute
numbers from 0.09 (100 injuries) in 2024 to 0.08 (89 injuries) in 2025, with
both US and UK operations recording their lowest rates to date. The Group did
note a slight increase in its major injury rate of 0.01; this was
predominantly due to lower-limb injuries and slips, trips and falls. A working
group has been convened to identify the risk factors that have led to the
rise.
The Group continues to leverage technology to improve HS&W. At road
projects in North Carolina, the Group has deployed a communication network
called Safety Cloud. This sends real-time digital alerts to motorists within a
one-mile radius of work activities, warning of work zones, lane closures and
hazards. These alerts, integrated with platforms like Apple Maps, Waze and
in-vehicle systems, give drivers vital time to slow down and manoeuvre safely.
In the UK, the widespread adoption of digital permits, as well as a revised,
reinforced utilities avoidance procedure, contributed to a 30% reduction in
underground service strikes.
Sustainability central to delivering long‑term resilience and performance
During 2025, Balfour Beatty continued to embed and strengthen its Building New
Futures sustainability strategy, launched in 2024 to reflect the evolving
environmental, social and governance landscape. The six focus areas-net zero,
resource efficiency, community value, supply chain integrity, nature positive,
and employee diversity, equity and inclusion-remained central to delivering
long‑term resilience and positive outcomes. The Group's first double
materiality assessment validated these priorities and reinforced the alignment
between its strategy, risk management and external expectations, while
emphasising the importance of governance, ethics and transparency. Progress
was recognised through an improvement in the Group's FTSE4Good ESG score.
Capability and collaboration continue to be built across Balfour Beatty,
including through the new Sprouting Sustainability Network, which empowers
early‑career professionals to drive meaningful change. The Group also
advanced its climate and nature agendas by maturing carbon reporting,
preparing for emerging regulation, and completing the first full year of
implementing its Nature Positive Principles.
In 2025, the Group delivered £1,012 million (2024: £991 million) of social
value, including spend with local suppliers and local businesses, and
volunteering. The Group also achieved a 2.3% reduction in absolute carbon
emissions and a 7.8% intensity reduction in Scope 1 and 2 greenhouse gas (GHG)
emissions.
Increased dividends and share buybacks in 2026
Continuity in Balfour Beatty's capital allocation framework, which has been in
place since 2021, has been an important factor in the Group delivering
attractive shareholder returns over the period, while ensuring the appropriate
balance between investment in the business and a strong capital position. 2025
has been a further important step in the Group's growth, with positive
progress made with regard to revenue, margin, order book, balance sheet and
outlook. As a result, the Board has confidence that the Group will continue to
deliver significant future shareholder returns and as such is today
recommending a final dividend of 9.8 pence per share (2024: 8.7 pence), giving
a total recommended dividend for the year of 14 pence per share (2024: 12.5
pence). Additionally, the Company intends to repurchase £200 million of
shares during the 2026 phase of its multi-year share buyback programme,
bringing the cumulative return to shareholders since the introduction in 2021
of the multi-year capital allocation framework to over £1.2 billion.
The total cash return to shareholders in 2026 (including the final 2025
dividend and 2026 interim dividend) is therefore expected to be c.£267
million (2025: £189 million).
Outlook
The Board expects a high single-digit percentage increase in PFO from its
earnings-based businesses in 2026. This includes further underlying margin
growth in UK Construction (when excluding the £11 million insurance recovery
in 2025), improved US Construction margin, with the delayed Civils highway
project expected to complete around the middle of the year, and increased
Support Services PFO, with further growth in power volumes and PFO margin
remaining above 8%.
Infrastructure Investments PFO for 2026, prior to disposals, is forecast to be
a small loss and is aligned to the Group's agreement with the US Department of
Justice to extend both Balfour Beatty Communities' plea agreement and
monitorship to 6 June 2026.
Infrastructure Investments is expected to continue to deliver attractive
end-to-end returns from its recurring income, by divesting assets and making
new investments in line with the Group's capital allocation framework.
Following a significant level of activity in 2025, gains on disposal are
expected to be lower in 2026, in the range of £5-15 million, as the Group
times its asset sales to capture maximum value.
The Board expects net finance income in the range of £28-32 million for 2026
and for the effective tax rates in each of the three geographies to remain
close to statutory rates, albeit with cash tax payments in the UK remaining
below statutory levels in the medium term as losses are utilised. Average net
cash in 2026 is expected to be in a range of £1.3-1.5 billion, with capital
expenditure between £40 and £50 million and working capital remaining
broadly unchanged.
The Group's long-term outlook remains positive, with the growth forecast in
2026 and 2027 being driven by strong visibility from its high-quality order
book, alongside the further opportunities in the energy, transport and defence
sectors in the UK and the Group's chosen buildings sectors in the US. This
gives the Board confidence in Balfour Beatty's continued ability to deliver
profitable managed growth and sustainable cash generation, and in turn
significant ongoing shareholder returns.
RESULTS OVERVIEW
Unless otherwise stated, all commentary in this section and the Divisional
financial reviews is on an underlying basis.
Throughout this report, the Group has presented financial performance measures
which are considered most relevant to Balfour Beatty and are used to manage
the Group's performance. These financial performance measures are chosen to
provide a balanced view of the Group's operations and are considered useful to
investors as these measures provide relevant information on the Group's past
or future performance, position or cash flows. These financial performance
measures are also aligned to measures used internally to assess business
performance in the Group's budgeting process and when determining
compensation. An explanation of the Group's financial performance measures and
appropriate reconciliations to its statutory measures are provided in the
Measuring Our Financial Performance section. Non-underlying items are the
cause of the differences between underlying and statutory profitability.
Additionally, revenue includes the Group's share of revenue of joint ventures
and associates.
Group financial summary
Balfour Beatty's underlying results in 2025 show further progress at a Group
level. Revenue increased by 8% (9% at constant exchange rate (CER)) to
£10,767 million (2024: £10,015 million) driven by increases in US
Construction and Support Services, partially offset by lower Gammon volumes.
Statutory revenue, which excludes joint ventures and associates, was £9,489
million (2024: £8,234 million).
The underlying profit from operations for the year increased to £252 million
(2024: £248 million) driven by an increase in PFO from the earnings-based
businesses, partially offset by a reduction in Infrastructure Investments.
Statutory profit from operations was £284 million (2024: £173 million).
Underlying profit / (loss) from operations(2) 2025 2024
£m £m
UK Construction 110 81
US Construction 25 40
Gammon 36 38
Construction Services 171 159
Support Services 122 93
Earnings-based businesses 293 252
Infrastructure Investments pre-disposals operating loss (31) (8)
Infrastructure Investments gain on disposals 36 43
Corporate activities (46) (39)
Total underlying profit from operations 252 248
(2) Before non-underlying items (Note 9)
Net finance income of £39 million (2024: £41 million) reduced as a result of
lower interest rates and a 2024 impairment write back of subordinated debt not
being repeated. Underlying pre-tax profit was £291 million (2024: £289
million). The taxation charge on underlying profits decreased to £52 million
(2024: £62 million), primarily reflecting the recognition of previously
unrecognised brought-forward trading losses and a lower tax charge on the 2025
disposals. The 2025 disposals, mainly UK assets, benefited from additional tax
reliefs that were not available on the 2024 disposal, which related to a US
asset. This resulted in underlying profit after tax of £239 million (2024:
£227 million). Total statutory profit after tax for the year was £264
million (2024: £178 million), as a result of the net effect of non-underlying
items.
Underlying basic earnings per share were 47.6 pence (2024: 43.6 pence), which,
along with non-underlying earnings per share of 5.0 pence (2024: loss of 9.4
pence), gave a total basic earnings per share of 52.6 pence (2024: 34.2
pence). This included the benefit from the basic weighted average number of
ordinary shares reducing to 499 million (2024: 521 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 £25 million for the period (2024: net charge of
£49 million). This included three significant items.
Firstly, the Group has recognised a £49 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-judgment 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 costs incurred.
Secondly, a charge of £37 million has been recognised in the 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 reassessed its provision for BSA claims which resulted in an
increase in the provision of £83 million. 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 2025, the Group increased its provision by £37
million as a result of new claims received in the period, settlements and
reassessments to previously provided claims together with legal costs
incurred. Consistent with the treatment adopted in 2024, this charge was
recognised within non-underlying items and in the Construction Services
segment.
Finally, during 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 to Hitachi Rail. After deducting
cost of disposal, the Group recorded a gain on disposal of £23 million within
its non-underlying results in the year.
Further detail is provided in Note 9.
Cash flow performance
The Group's net cash increased by £503 million in the year (2024: £101
million), resulting in a year end net cash position of £1,446 million (2024:
£943 million), excluding non-recourse net borrowings and lease liabilities.
Cash from operations, which included a large working capital inflow, was
partially offset by increased shareholder returns. Capital expenditure also
increased in 2025, due in part to further investment in the Power business in
the UK and the US Civils business, where new equipment was purchased to
support the Texas division's strategy to contract outside of joint ventures.
Cash flow performance 2025 2024
£m £m
Operating cash flows before working capital movements and pension deficit 297 208
payments
Working capital inflow 408 99
Pension deficit payments(+) (10) (30)
Cash from operations 695 277
Lease payments (including interest paid) (77) (66)
Dividends from joint ventures and associates 59 71
Capital expenditure (49) (28)
Share buybacks (126) (101)
Dividends paid (64) (61)
Infrastructure Investments
- disposal proceeds 120 43
- new investments (29) (28)
Other (26) (6)
Net cash movement 503 101
Opening net cash* 943 842
Closing net cash* 1,446 943
(*)( ) Excluding Infrastructure Investments (non-recourse) net borrowings and
lease liabilities
(+) Including £2 million (2024: £2 million) of regular funding
Working capital
A £408 million working capital inflow (2024: £99 million) was driven by
increased revenue and advanced receipts on several new projects in US
Construction and Support Services.
Working capital flows^ 2025 2024
£m £m
Inventories 2 (34)
Net contract assets 376 165
Trade and other receivables (217) (225)
Trade and other payables 264 (6)
Provisions (17) 199
Working capital inflow^ 408 99
(^) Excluding impact of foreign exchange
Including the impact of foreign exchange and non-operating items, negative
(i.e. favourable) current working capital increased to £1,639 million (2024:
£1,228 million), equating to 17.3% (2024: 14.9%) of revenue. Working capital
continues to be dependent on contract mix and the timing of project starts and
completions, and in the medium term, the Group expects negative working
capital as a percentage of revenue to be in the range of 15-18%.
Net cash/borrowings
The Group's average net cash increased to £1,212 million in 2025 (2024: £766
million). The Group's year end net cash position, excluding non-recourse net
borrowings and lease liabilities, was £1,446 million (2024: £943 million).
Non-recourse net borrowings, held in Infrastructure Investments entities
consolidated by the Group, were £411 million (2024: £335 million). The
balance sheet also included £198 million for lease liabilities (2024: £162
million). Statutory net cash at 31 December 2025 was £837 million (2024 £446
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.
The Group completed the 2025 share buyback programme on 12 December 2025
having purchased 24.2 million shares, which were held in treasury. These
shares were subsequently cancelled on 24 December 2025. The Group commenced
the initial £50 million tranche of its 2026 share buyback programme on 5
January 2026. As announced today, the Group intends to buy back a total of
£200 million of shares during the 2026 phase of its multi-year share buyback
programme.
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 31 December 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 31 December 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 financial statements and, for this reason, have
continued to adopt the going concern basis in preparing the full year Group
financial statements. Further detail is provided in Note 1.3 Going Concern.
Pensions
In early 2026, the Group reached agreement with the trustees of the Balfour
Beatty Pension Fund (BBPF) over the triennial valuation of the Defined Benefit
section of the BBPF as at 31 March 2025. As a result of the collaborative
working between the company and the trustees and the substantial financial
commitments made by the Company over many years, the BBPF is in a strong
position. Consistent with prior valuations the Group have agreed a journey
plan approach to managing the BBPF. The Group made a one-off contribution of
£30 million in February 2026, as stipulated in the recent agreement, and no
further contributions are expected to be made.
The Company and the trustees have agreed that once the Defined Benefit section
moves into surplus, as measured on an agreed set of parameters, further
surplus can be used by the Company to meet its existing obligations to the
Defined Contribution section of the BBPF. Given the current strong position of
the BBPF, the Group is expecting to start receiving a cash benefit from the
surplus by 2027. In certain circumstances, were the funding level in the
Defined Benefit section to fall below certain pre-agreed thresholds, surplus
offset in this way would need to be repaid to the Defined Benefit section by
the Company.
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. Discussions between the
Group and the trustees to agree this triennial valuation are ongoing.
The Group's balance sheet includes net retirement benefit liabilities of £48
million (2024: net assets of £2 million) as measured on an IAS 19 basis,
comprising the BBPF (£9 million), RPS (£7 million) and other schemes (£32
million).
Dividend
The Board is committed to a sustainable ordinary dividend that is expected to
grow over time, targeted at a pay-out ratio of 40% of underlying profit after
tax excluding gains on disposal of Investments assets.
Following the 4.2 pence per ordinary share interim dividend declared at the
half year, the Board is recommending a final dividend of 9.8 pence per share,
giving a total recommended dividend for the year of 14 pence per share (2024:
12.5 pence per share).
DIVISIONAL REVIEWS
CONSTRUCTION SERVICES
Financial review
Revenue at £8,711 million was up 6% (2024: £8,199 million), an 8% increase
at CER, with higher volumes in UK Construction and US Construction offset by a
reduction at Gammon. Underlying profit from operations increased to £171
million (2024: £159 million) due to improved profitability in UK
Construction, partially offset by reduced profitability in US Construction and
a lower Gammon contribution due to reduced volumes. Statutory PFO for the year
was £182 million (2024: £87 million). The order book increased 23% (29% at
CER) in the year to £18.7 billion (2024: £15.2 billion), largely due to new
power generation orders in UK Construction.
Construction Services 2025 2024
Revenue(1) PFO Order book(1) Revenue(1) PFO Order book(1)
£m £m £bn £m £m £bn
UK Construction 3,112 110 8.9 3,011 81 6.2
US Construction 4,509 25 7.8 3,638 40 7.1
Gammon 1,090 36 2.0 1,550 38 1.9
Underlying(2) 8,711 171 18.7 8,199 159 15.2
Non-underlying - 11 - - (72) -
Total 8,711 182 18.7 8,199 87 15.2
(1) Including share of joint ventures and associates
(2) Before non-underlying items (Note 9)
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 3% to £3,112 million
(2024: £3,011 million) driven largely by higher volumes in the energy sector.
UK Construction achieved its long-standing PFO margin target of 3% in the
year, with strong project delivery, the improved risk profile of its portfolio
and a one-off £11 million insurance recovery contributing to underlying
profit from operations of £110 million (2024: £81 million). This represents
a 3.5% PFO margin (2024: 2.7%), which is 3.2% when excluding the insurance
recovery, and demonstrates good progress in the division's margin expansion
efforts, with further improvement expected in 2026.
The UK Construction order book grew by 44% in 2025 to £8.9 billion (2024:
£6.2 billion), driven largely by the work won at Sizewell C nuclear power
station and the Net Zero Teesside carbon capture project. The order book
remains relatively low risk compared to historic norms, with 88% of orders
contracted on target cost or cost-plus contract terms (2024: 79%).
Additionally, at year end, 84% (2024: 92%) of the order book was with public
sector and regulated industry customers, and more than half of the remaining
16% related to Net Zero Teesside, where the ultimate client is a joint venture
between BP and Equinor.
US Construction: Revenue in US Construction increased by 24% (28% increase at
CER) to £4,509 million (2024: £3,638 million) driven largely by stronger
demand in US Buildings. Underlying profit from operations for US Construction
reduced by 38% to £25 million (2024: £40 million) with the cost of schedule
delays at one US Civils highways project in Texas more than offsetting strong
performance from the US Buildings business. Tariffs had a relatively low
impact on the business in the year, and where incurred, were largely recovered
through pre-existing contract terms. US Construction PFO is expected to
improve in 2026, with the delayed Civils highway project expected to complete
around the middle of the year.
The US Construction order book increased by 10% (18% at CER) to £7.8 billion
(2024: £7.1 billion) with increases in both the Buildings and Civils
divisions when measured in dollar terms. Growth in the US Buildings order book
was driven largely by $750 million of correctional facility work in the
Southeast, increased data centre work and education orders. US Civils order
book growth was primarily due to an $889 million contract for the Texas
Department to reconstruct a 3.7km section of Interstate 30 in Dallas County.
The project, scheduled for completion in 2031, will be delivered solely by
Balfour Beatty and is reflective of the Group's capabilities and focus going
forward.
Gammon: The Group's share of Gammon's revenue reduced by 30% (28% at CER) to
£1,090 million (2024: £1,550 million) driven by decreased activity on major
civils projects, as work on the two major projects at Hong Kong International
Airport moved towards completion through the year. Although underlying profit
decreased to £36 million (2024: £38 million), Gammon delivered an improved
profit margin of 3.3% (2024: 2.5%), with the improvement in margin driven by
the mix of work completed across the project portfolio.
The Group's share of Gammon's order book increased by 5% (18% at CER) to £2.0
billion (2024: £1.9 billion), with new additions including a commercial
development in Tung Chung with a 23-storey office tower, five-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. Further new orders were received for work in the Northern
Metropolis, including four nine-storey buildings at the Hong Kong-Shenzhen
Innovation and Technology Park and civils contracts to prepare land and
deliver engineering infrastructure works for new development areas. Northern
Metropolis projects now represent 26% of the Gammon order book.
Operational review
UK Construction
Further demand in UK energy and defence markets
Balfour Beatty holds a market-leading position in a growing UK infrastructure
market, with unmatched scale and vertically integrated capability for
delivering major and regional civils projects. The market outlook has
strengthened during 2025, with the UK Government launching a 10-year
infrastructure strategy as it looks to deliver on its objective to stimulate
economic growth by investing in and enabling infrastructure development. The
strategy is supported by the publication of The Infrastructure Pipeline, which
details the projects to be delivered over the 10-year period, financed by at
least £725 billion of public funding and further material investment from the
private sector. This longer-term approach, which includes planning reform and
the creation of the National Infrastructure and Service Transformation
Authority (NISTA), brings improved certainty and clarity for the industry as a
whole, allowing UK contractors and their suppliers to plan accordingly and
invest in capability. The Government also recognised the necessity for further
investment in UK defence, which it forecast will create hundreds of thousands
of jobs and contribute to economic growth.
In 2025, Balfour Beatty has continued to target three strategic growth markets
in the UK - energy transition and security, defence and transport. With regard
to energy, the essential long-term upgrade to the UK's energy infrastructure
is underway and the volume of work required to meet the UK's net zero
ambitions is vast. The Group was successful in adding two of its long-term
power generation targets to the order book during the year, with a combined
value of over £3.5 billion:
· In conjunction with its major role in the ongoing construction of
the Hinkley Point C nuclear power station in Somerset, Balfour Beatty has been
selected as one of three contractors to deliver the construction of the new
Sizewell C nuclear power station in Suffolk. In June, Balfour Beatty signed
the Programme Alliance Agreement in partnership with Laing O'Rourke and
Bouygues Travaux Publics to deliver the main civil works at Sizewell C, and as
a result of the project reaching financial close in November, around £3
billion of Sizewell C work is now included in the Group's order book;
· Following a multi-year bid, including the delivery of a front-end
engineering design (FEED) study, Balfour Beatty signed an £833 million
contract with Technip Energies to act as the construction partner for Net Zero
Teesside Power - an onshore power, carbon capture and compression project that
is poised to be the world's first gas-fired power station with carbon capture
and storage.
In addition to these successes, the Group, alongside Technip and GE Vernova,
are working on a further FEED study for a proposed new build gas-fired power
station with carbon capture and storage for the Connah's Quay Low Carbon Power
project. The Group also continues to pursue opportunities in the UK's emerging
small modular nuclear reactor market, and the UK Construction division's civil
engineering expertise is expected to be drawn on further as a result of the
ongoing expansion of power transmission and distribution volumes within
Support Services.
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.
Balfour Beatty's approach to growing its UK defence market share includes
winning further work for both the Defence Infrastructure Organisation, whose
projects tend to be security classified, and at Defence Nuclear Enterprise
(DNE) sites. In 2025, the Group's live projects at DNE sites included the Hub
at AWE Aldermaston and the expansion work at Rolls-Royce's site in Raynesway,
Derby, needed to meet the growth in demand from the Ministry of Defence and as
a result of the AUKUS agreement. During the year, Balfour Beatty was selected
by Rolls-Royce for a second project of works at Raynesway, which will see the
Company deliver the critical nuclear licensed infrastructure required to
support the client's manufacture of fissile components for the Royal Navy's
submarine propulsion systems, and the new AUKUS submarines. Further major DNE
construction frameworks are currently being pursued in 2026.
Transport remains an important component of the UK Government's growth plans
and, while fiscal headwinds are impacting the volume of activity in the short
term, support for major infrastructure projects such as the Lower Thames
Crossing road scheme and rail projects such as Northern Powerhouse Rail, the
Transpennine Route Upgrade and East West rail was reaffirmed in 2025. The
Government has also publicly backed the expansion plans for Heathrow Airport.
National Highways' draft third Road Investment Strategy (RIS3), which includes
£25 billion of funding over five years and is due to be finalised imminently,
has an increased focus on maintenance and renewals rather than new roads
while, outside of HS2, the majority of UK rail funding in the short term is
also focused on operating, maintaining and renewing the core railway.
Given Balfour Beatty's strong market positions and range of capabilities in
the construction and maintenance of roads and railways, and its experience in
airport construction, the Group continues to see UK Transport as a growth area
in the medium term. The Lower Thames Crossing road scheme, a project which the
Group was awarded £1.2 billion of work for in 2023 but has yet to start the
main works contract, was granted a further £891 million of public funding in
2025 and NISTA are developing a private finance solution to fund the project
to completion. HS2 will continue to be a material project for Balfour Beatty
for the foreseeable future, and following a pause caused by a legal challenge,
the c£200 million A57 Link Roads scheme, delivering two new strategic
highways links between Manchester and Sheffield, is expected to proceed in
2026. With the Group's depth of capabilities across transport construction and
maintenance, including asset management across regional as well as national
infrastructure projects, Balfour Beatty is well positioned to play a
significant role in the delivery of the UK Government's transport strategy.
Strong operational delivery takes PFO margin above 3%
In 2025, Balfour Beatty's UK Construction division delivered an improved PFO
margin for the fifth year in a row and surpassed its long-standing 3% margin
target. This ongoing margin expansion is built on a track record of strong
operational delivery and a portfolio of higher-quality and lower-risk
projects, overseen by the Group's disciplined and rigorous bidding process.
Balfour Beatty's ambition to provide industry-leading project delivery across
the UK Construction portfolio not only drives margin performance, but also
demonstrates the Group's capabilities and standards, thereby aiding the
pursuit of future work. This focus on project delivery, alongside the
disciplined bidding and strong client demand, has contributed to the forward
order book growing by 44% in 2025, while remaining heavily weighted towards
lower-risk contract forms. As such, 88% of the £8.9 billion order book is
contracted on target cost or cost plus incentivised fee terms, while the
remaining 12% is weighted towards two-stage fixed-price contracts, which are
inherently lower risk than one-stage fixed-price arrangements. The Group
remains focused on ensuring that new work is contracted on the appropriate
contractual terms and conditions for the risk undertaken, in order to protect
the Group's margin and reduce the loss-making portion of the project
portfolio.
On the UK's largest infrastructure project, HS2, Balfour Beatty and its joint
venture partners are delivering the main civil engineering works for the Area
North section and the new station at Old Oak Common in London. On Area North,
the Balfour Beatty VINCI joint venture completed civil engineering work on the
1-mile Long Itchington Wood twin-bore tunnel as well as achieving tunnel
breakthroughs at both bores of the 3.5-mile Bromford Tunnel. In addition, it
successfully pushed the 4,600-tonne M6 South Viaduct east deck over the M6,
with the final stage achieved without closing the motorway. At Old Oak Common,
the Balfour Beatty VINCI SYTRA joint venture has installed over 70% of the
first high-speed platform slabs and commenced blockwork and mechanical and
electrical module installation. At the new Hinkley Point C nuclear power
station, good progress continues to be made on the underground marine works
and the 230-tonne triple point shaft formwork structure was lowered and
installed 40 metres underground to connect the three tunnels. The Group is
also part of the MEH Alliance, which is delivering the mechanical, electrical
and HVAC installation at the power station, with volumes increasing during the
year.
The Major Highways team achieved substantial completion of the major
improvement scheme at the interchange between Junction 10 of the M25 and the
A3, with traffic management lifted in line with scheduled expectations. The
team also completed its work on the National Emergency Area Retrofit scheme,
providing emergency refuge areas on the M25, M3 and M4 and enhancing safety on
the network. Work began during the year on the M3 Junction 9 scheme, in joint
venture with VolkerFitzpatrick, with enabling works, piling and earthworks
delivered to facilitate significant structural works in 2026, while the A63
project is on track to open to traffic in the first half of 2026, with strong
delivery in 2025 on major structural elements, such as the underpass tunnel
and pumping station.
UK Construction operates across the length and breadth of Great Britain,
delivering hundreds of diverse projects. During 2025, the business installed
the first new bridge over the River Trent in Nottingham for 65 years,
commenced construction on the new Nairn Academy school in the Scottish
Highlands and delivered restoration works on the historic Riddings Viaduct, a
Victorian structure that spans the Anglo-Scottish border. Beyond the new
Rolls-Royce and power station contracts, other projects added to the UK
Construction order book during 2025 included the Dunard Centre, Edinburgh's
first purpose-built concert hall in over a century, and the South East Pier
Extension at Edinburgh Airport. Various additional contracts, including new
flood and coastal defences in Suffolk and the South Wokingham Distributor Road
in Berkshire, were awarded to Balfour Beatty through the SCAPE Civil
Engineering frameworks. Through the Group's partnership with SCAPE, it has
been helping to shape and strengthen local communities for the last ten years,
and remains contracted as the sole delivery partner until November 2028.
US Construction
Disciplined approach to US growth
Balfour Beatty's US Construction division is comprised of the US Buildings and
US Civils businesses.
US Buildings is a construction management business, diversified across
geographies and client sectors, which targets major cities and urban areas in
states with favourable economic outlooks. The business delivered strong
revenue growth in 2025, demonstrating why it is one of Balfour Beatty's four
chosen growth markets, and is considered the lower-risk segment within the
division. With most of the projects undertaken by US Construction contracted
on fixed-price terms, US Buildings utilise the early issuance of subcontracts
and insurance of the supply chain to mitigate risk.
The US Civils business focuses on highways projects in Texas and the
Carolinas, and on local rail and civils work in California. In contrast to the
Group's approach to US buildings, civils contracts in the US are generally
delivered on a self-perform basis, which on fixed-price arrangements gives
limited scope to mitigate inflation and schedule risk. As a result, the Group
remains cautious in its approach to complex civils contracts in the US and has
reduced its exposure to the sector in recent years, with 2025 revenue down by
nearly 30% compared to 2023. Civils bidding is now focused on projects that
closely align to the business' core capabilities, with all major new contracts
in the last three years being in the road sector.
Strong revenue growth following period of order book expansion
Balfour Beatty's growth engine in the US continues to be its buildings
business, which increased revenue by 29% (33% at CER) in 2025 and contributed
91% of US Construction revenues (2024: 87%) following a strong period of
orders that began in the second half of 2024. The business continued to win
work at a similar rate throughout 2025 and during the 18-month period
preceding year end, the order book grew by 26% in local currency, driven by
two key factors: an organic growth strategy coupled with falling interest
rates.
Having identified the opportunity for growth in 2023, based on the strength of
some core markets, including aviation, leisure, education and government,
combined with the impact of a more settled economy, the Group put to work its
two-pronged organic growth strategy to add further diversification to its
regional businesses. The Group opened new offices, targeting additional cities
in states with existing Balfour Beatty offices, and broadened the end-markets
served in some regions where the business was already active.
The new office locations are prospering and contributing well to the growth in
revenue and order book. In Jacksonville, Florida, the team is constructing a
new terminal at Jacksonville International Airport and delivering work for the
Transportation Authority, while in Sacramento, California, the team is also
working at the local airport and has completed construction of the new Cesar
Chavez Elementary School. The Charleston office in South Carolina has recently
finished construction of a senior living facility on Kiawah Island and, in
Savannah, Georgia, the team has started construction of a local elementary
school. Given the success of the geographic expansion, the Group opened a
further new branch in 2025 in El Centro, California, and will continue to
monitor further opportunities.
By broadening the regions in which it serves certain end-markets, the US
Buildings business is further utilising its in-house expertise and long-term
customer relationships to drive organic growth, with success in various
sectors. In the US data centre market, which is expanding at pace, Balfour
Beatty has strong recent history of delivering projects in the Northwest for
major tech companies. During 2025, Balfour Beatty has worked with these
customers to discuss data centre opportunities outside of its core Northwest
market, which has resulted in the Group being selected for a project in
Virginia, while projects in other new states are being pursued. In aviation,
in addition to the work in Jacksonville and Sacramento, the business is
delivering projects at two airports in North Carolina and has identified a
strong pipeline of new projects coming to market in the next three years that
closely match the Group's experience and capabilities. The Group has also seen
further revenue growth from its geographical expansion of its theme park,
correctional facility and student accommodation project portfolios in the
year.
Given the breadth of geographies and client sectors served by Balfour Beatty's
US Buildings portfolio, the overall business is somewhat protected from sector
and economic volatility. One factor that did impact demand in the past was the
post-pandemic rise in interest rates, as the increased cost of financing
projects led to delays in some projects being approved. Since interest rates
first started to drop in Q3 2024, demand in the US buildings market has
reacted positively. This, combined with the success of the geographic and
sector expansion, has contributed to the business consistently adding around
$3 billion of new contracts to the order book every six months.
High delivery standards maintained across US Buildings portfolio
During the year, progress has been made on significant buildings projects
including:
· The 17-storey, 800-guestroom, Grand Hyatt Miami Beach hotel in
Florida;
· The Marine Corps Recruit Depot San Diego Recruit Mess Hall in
California;
· A social services campus for The Salvation Army of North Texas
Dallas;
· The Portals IV 356-unit residential project in Washington DC;
· Three transformative library projects for Multnomah County in
Oregon, with one new build and two major expansions;
· Completion of the Gipson Play Plaza in North Carolina, which is now
the largest adventure playground in the Southeast;
· Completion of The Charles, a premier multifamily development
located in Charleston's waterfront district.
US Civils performance impacted by delays on Texas highways project
The US Civils business continued to pivot towards a more concentrated
portfolio of projects in 2025, with a heavier weighting of work delivered in
highways and bridges, which have historically been profitable activities for
the Group. This represented 67% of revenue in 2025 compared to 55% the year
before, driven by both an increase in highways volumes and less rail activity.
The performance of the division was negatively impacted during the year 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 is pursuing cost recoveries.
US Civils' focus on delivering highways projects for long-term customers has
driven order book growth of 53% in 2025 and the division has taken further
steps to de-risk project contracting and execution. New orders awarded in the
year, such as an $889 million contract with the Texas Department of
Transportation to reconstruct a 3.7km section of Interstate 30 in Dallas
County and a $260 million share of a contract with the South Carolina
Department of Transportation to replace ageing bridges over Lake Marion, are
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
Strong positions in Hong Kong and Singapore
Gammon, Balfour Beatty's 50:50 joint venture with Jardine Matheson based in
Hong Kong, has a local reputation for delivering high-quality projects in
Southeast Asia. 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. Demand remained strong in Singapore, particularly for
commercial and tourism-related projects, and local orders comprise 14% of
Gammon's order book at year end.
Gammon continues to have a strong share of both the buildings and civils
markets in Hong Kong. In buildings, the focus is on the use of Design for
Manufacture and Assembly (DfMA) and modular construction to improve
productivity and efficiency and expanding the customer base on a selective
basis. In civils, the strategy is to leverage engineering excellence, with a
key area of future work likely to be from significant infrastructure
programmes in Hong Kong and in Singapore.
During 2025, Gammon completed the new coach hall at Hong Kong International
Airport and made strong progress towards completion of the new Terminal 2
departure facilities, which are scheduled to open in March 2026. The business
also completed its work on the Central Kowloon Route, a major three-lane road,
where it delivered major work packages covering critical tunnel
infrastructure, complex electrical and mechanical systems and ventilation
buildings. The Hong Kong buildings team completed the construction of One
Causeway Bay, an iconic development on the Victoria Harbour, and celebrated
the topping out of the Hong Kong Housing Society's Subsidised Sale Flats
Project in Kai Tak, which comprises two 40-storey residential towers.
In Singapore, Gammon made good progress on projects including the Ang Mo Kiu
Station, where the business is responsible for the design, construction and
tunnelling works at the interchange station, and the Global Switch Singapore
Data Centre, where the team is replacing the existing cooling systems.
SUPPORT SERVICES
Financial review
The Support Services business provides power, plant, road and rail maintenance
services and is characterised by profitable recurring revenues underpinned by
long-term frameworks.
Support Services revenue increased by 18% to £1,427 million (2024: £1,210
million) due to higher power transmission and distribution volumes, with power
revenues nearly doubling since 2023. Underlying profit from operations
increased to £122 million (2024: £93 million), as the growth in revenue was
largely related to the disciplined delivery of higher-margin activities. This
resulted in PFO margin of 8.5% in the year (2024: 7.7%), which is above the
targeted 6-8% PFO margin range and represents outstanding performance in the
segment. Statutory profit for the year was £145 million (2024: £93 million).
Support Services PFO is expected to increase in 2026, with further growth in
power volumes and PFO margin remaining above 8%.
The Support Services order book increased by 25% to £4.0 billion (2024: £3.2
billion) driven by new power transmission and distribution contacts and a
strong period of work winning in the Rail business.
Support Services 2025 2024
Order book(1) (£bn) 4.0 3.2
Revenue(1) (£m) 1,427 1,210
Profit from operations(2) (£m) 122 93
Non-underlying items (£m) 23 -
Statutory profit from operations (£m) 145 93
(1) Including share of joint ventures and associates
(2) Before non-underlying items (Note 9)
A reconciliation of the Group's performance measures to its statutory results
is provided in the Measuring our financial performance section
Operational review
Accelerating growth in power transmission and distribution market
The power transmission and distribution market in the UK, within which Balfour
Beatty holds market-leading scale, has continued on a rapid trajectory of
growth, which is expected to continue in the medium term. In 2025, Ofgem
confirmed its final RIIO-T3 determinations and committed an initial £10
billion of funding for electricity network upgrades in the price control
period (2026-2031) for the three transmission owners: National Grid, Scottish
and Southern Electricity Networks (SSEN) and Scottish Power Energy Networks
(SPEN). The regulator recognised that this was the first portion of what its
own forecasts suggest could be over £70 billion of funding in the period to
2031. A large portion of this will be through the Accelerated Strategic
Transmission Investment (ASTI) programme for major new infrastructure in which
Balfour Beatty is playing a leading role. The Group is also seeing major
demand as a result of new connections to the grid, through new renewable
generation, battery storage, industrial clients and data centres, which in
turn requires the transmission owners to invest in their networks.
Balfour Beatty's market-leading position in the UK power transmission and
distribution construction industry is built not only on scale, but also a
unique end-to-end offering, including design, steel fabrication, panel
manufacturing, ground engineering, all aspects of transmission and
distribution construction, and commissioning. As well as continued growth in
its core disciplines of overhead lines, underground cabling and substations,
the Group has also entered the growing converter station market, where it is
ideally placed to deliver civil engineering works. The converter station
strategy is aligned to that of the rest of the Power business; focusing on
work for the regulated transmission and distribution network owners, where the
Group has existing long-term framework positions and strong technical
knowledge and experience. The business was selected for various schemes and
frameworks during 2025 and the order book increased by 38%. Progress with the
three key customers included:
- Awarded two places on National Grid's High Voltage Direct Current
supply chain framework, to deliver both the civil engineering works for future
converter station schemes, as well as the associated onshore underground
cabling works. The five-year framework has an option to extend for a further
three years;
- Appointed by National Grid as the regional delivery partner for the
North East of England as part of its £8 billion Electricity Transmission
Partnership, designed to accelerate the delivery of vital substation
infrastructure;
- Awarded a place on SPEN's transmission business' Strategic Agreement
for Overhead Line Works framework. The five-year framework has an option to
extend for a further five years;
- Planning consent granted for the £690 million Skye 132kV
Reinforcement project for SSEN, which also placed a major order for Balfour
Beatty's steel fabrication facility to manufacture towers for the ASTI
programme, with manufacture and testing of a new tower type underway.
As this market continues to expand at pace, the business continues to grow its
capacity and capability. Over 500 people joined the Power T&D business in
2025, taking new recruits to over 1,000 in two years. Core to the business'
growth strategy is the utilisation of Balfour Beatty's full UK offering. By
leveraging the scale and depth of those capabilities, the business can add
value for its long-term customers, while bringing new work to other parts of
the Group.
During the year, Balfour Beatty's work for National Grid included work on
Bramford-Twinstead, a new overhead line and underground cable scheme in
Suffolk, which forms part of the client's Great Grid Upgrade, good progress on
three substation projects and the installation of all underground cables on
the North Wessex Downs VIP scheme. The business also mobilised and made good
progress on the Prysmian's Eastern Green Link 2 onshore HVDC cable
installation, a critical new energy 'superhighway' between England and
Scotland. In Scotland, work for SSEN included the ongoing early contractor
involvement (ECI) and design works on the Group's ASTI projects, including the
Netherton Hub converter station, Longside substation and
Beauly-Blackhillock-Peterhead overhead line projects, in addition to the
separately funded Skye 132kV Reinforcement project. Work also continued on the
Argyll Reinforcement project, where the Group is constructing three new
substations. The Group also began ECI work in the year on two overhead line
upgrade schemes for SPEN.
Bidding success in road maintenance
The addressable portion of the road maintenance market continues to be well
funded, with the Government's November 2025 Budget announcing £7.3 billion of
capital funding for local highways maintenance in England to be allocated
across the next four financial years. This represents a further increase on
the record £1.6 billion allocated in the current year, which was £500
million higher than 2024-2025.
In 2025, the volume of road maintenance work remained high, albeit slightly
lower than 2024 due to the completion of a contract with West Sussex in the
first quarter. Balfour Beatty was awarded a £75 million, five-year contract
by Southampton City Council, procured through the SCAPE framework, to
delivered highway maintenance services. In January 2026, the Group was awarded
a £315 million seven-year Warwickshire Highways Maintenance contract. The new
agreement marks the Company's third consecutive term delivering the work and
there is an option to extend the contract by a further six years based on the
successful delivery of the initial term, worth up to a total value of £900
million. Looking forward, there are further Local Authority contracts coming
to market in the next year for which the Group is well positioned, as it looks
to further deploy its effective maintenance solutions and technology-driven
infrastructure management.
Strong year for rail orders
Balfour Beatty's Rail business delivered another solid year of operational
performance in 2025, which was a very strong period for order intake. The
business signed around £750 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.
This order intake is a strong reflection of the diverse expertise held within
the Rail business. During a period where track renewal work under CP7 has been
slow in coming to market, this diversity is a key strength in ensuring that
the business continues to perform well and maintain volumes. Opportunities in
the railway enhancement space and through supplementary services and
activities are being developed, all of which have additional government
funding. This includes enhancement opportunities such as Transpennine, East
West Rail and various improvements across the TfL network and wider local and
mayoral authority schemes, which all received additional committed funds in
the spending review. These opportunities are in addition to the Group's
existing framework positions and supplementary in-house capabilities, such as
design and the supply and operation of plant, all of which have significant
order book and pipeline.
During 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 to Hitachi Rail. A gain on disposal of £23
million was recorded within non-underlying results for the year.
INFRASTRUCTURE INVESTMENTS
Financial review
Infrastructure Investments made a £31 million pre-disposals operating loss in
the year (2024: £8 million) driven largely by monitor and legal costs in
military housing. This underlying loss was offset by a £36 million gain on
asset disposals, resulting in PFO of £5 million (2024: £35 million).
Balfour Beatty continues to invest in attractive new opportunities, each
expected to meet its investment hurdle rates. In the year, the Group invested
£29 million in new and existing projects, with two US multifamily housing
projects added to the portfolio. The Group also continues to sell assets,
timed to maximise benefit to shareholders, with twelve asset disposals
completed in 2025 across three transactions. In the UK, the Group sold its
stake in a 536-bed student accommodation building in Glasgow and completed a
ten-asset disposal, which comprised three offshore transmission owners
(OFTOs), five street lighting projects, one biomass plant and one road
concession. In the US, the Group sold one multifamily housing project in
Columbia, South Carolina. In total, asset sales delivered £36 million gain on
disposal and £120 million of cash proceeds, which was above the Directors'
valuation. Each of the three transactions achieved end-to-end multiples in the
range of 2 to 2.5 times. Both the gain on disposal and the cash proceeds for
2025 included £2 million of contingent consideration received in the year in
relation to the University of Texas at Dallas student accommodation disposal
completed in 2024.
Infrastructure Investments PFO for 2026, prior to disposals, is forecast to be
a small loss and is aligned to the Group's agreement with the US Department of
Justice to extend both Balfour Beatty Communities' plea agreement and
monitorship to 6 June 2026. 2027 PFO, prior to disposals, is forecast in a
positive range of £10 to £20 million.
Net investment income of £11 million was £8 million lower than the prior
year (2024: £19 million) due to an impairment writeback of subordinated debt
in 2024 not being repeated. This was partially offset by an increase in
interest received on subordinated debt.
Underlying profit before tax decreased to £16 million (2024: £54 million).
Statutory profit before tax was £14 million (2024: £51 million).
Infrastructure Investments 2025 2024
£m £m
Pre-disposals operating loss(2) (31) (8)
Gain on disposals(2) 36 43
Profit from operations(2) 5 35
Net investment income(~) 11 19
Profit before tax(2) 16 54
Non-underlying items (2) (3)
Statutory profit before tax 14 51
(2) Before non-underlying items (Note 9)
(~) 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
Operational review
Balfour Beatty's competitive expertise to finance, develop, build and maintain
infrastructure puts the Group in a strong position to capitalise on new
investment opportunities. The Group has maintained its disciplined approach to
investments and disposals to ensure the delivery of investment hurdle rates
and is currently assessing investment opportunities in:
· Student accommodation: Across the UK and US, Balfour Beatty is
progressing a range of opportunities to develop student housing solutions on
and off campus;
· Military Housing: The Group manages and operates 21 US military
housing projects, and continues to redevelop houses across the portfolio;
· Residential: Balfour Beatty continues to see attractive US
multifamily housing come to market, providing opportunity to invest profitably
in the regeneration of these properties;
· US P3: The US has become an increasingly exciting market for
public-private partnerships, and, to date, 42 states (plus Washington DC) have
passed legislation allowing P3 projects; and
· Energy transition: As the UK's energy mix transitions to more
renewable sources, and the UK adopts more sustainable transport such as
electric vehicles, there are opportunities for private sector investment.
In the UK, the Group is constructing the 1,899-bed West Slope student
accommodation development on behalf of the University of Sussex. The first new
student accommodation and the health and wellbeing centre are expected to be
open in time for the 2026/27 academic year, with more accommodation, catering
and retail facilities opening over the following two years.
In the US, the Investments business began development of a 1,070-bed
undergraduate student housing complex at the University of Texas in Austin,
made progress on the construction of the 1,204-bed William & Mary
University project in Virginia and was awarded predevelopment agreements to
develop on-campus accommodation at the University of Florida and the Wentworth
Institute of Technology. The Group's key US P3 investment is the automated
people mover project at Los Angeles International Airport, with US
Construction contributing to the build phase and Infrastructure Investments
providing an element of the financing. Construction is due to complete in the
coming year, during which Balfour Beatty will inject its committed equity.
Further pipelines of campus and P3 projects are under review.
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.
In US military housing, 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. During the year, the Group agreed with the DOJ to
extend both Balfour Beatty Communities' plea agreement and monitorship to 6
June 2026 to allow the Group further time to complete planned remediation
work.
As part of a major redevelopment programme at Fort Carson, the Group began
work on the construction of 56 new homes in 2025. In early 2026, following the
agreement of a 25-year ground lease extension to 2074, the Group successfully
completed a refinancing which raised $444 million for the remaining phases of
the redevelopment, including the demolition of approximately 300 older homes,
the construction of close to 400 new, modern residences, and the renovation
and modernisation of an additional 334 existing homes. This work will commence
in May 2026 and extend through to 2030, with Balfour Beatty's US Buildings
team delivering construction. The US Military are looking at further
redevelopments to modernise on-base housing, which will bring opportunities to
Balfour Beatty. One such project is a 76-home scheme at Fort Gordon, which
the Group started during the year.
In 2023, Balfour Beatty Investments partnered with Urban Electric Networks, a
British EV charge point operator, to establish Urban Fox and address the
growing need for accessible and innovative electric vehicle charging
infrastructure in the UK. The partnership combines Urban Electric Networks'
innovative and entrepreneurial spirit with Balfour Beatty's unmatched scale,
skill and capability in financing and delivering infrastructure in the heart
of local communities.
In February 2026, Urban Fox signed a 20-year agreement with Kent County
Council to deploy a large-scale programme of on-street electric vehicle
chargers across Kent, installing up to 10,000 new on-street electric vehicle
chargers and prioritising areas where residents have limited access to off
street parking.
Directors' valuation
The Directors' valuation decreased by 15% to £1,069 million (2024: £1,254
million). The portfolio is 65% weighted towards the US (2024: 58%). The number
of projects in the portfolio decreased by 11 to 49 (2024: 60).
Movement in value 2024 to 2025
£m 2024 Equity invested Distributions received Sales Unwind of discount Operational performance Discount FX 2025
proceeds
rates
UK 525 1 (21) (113) 34 (20) (29) - 377
US 729 28 (10) (7) 48 (10) (33) (53) 692
Total 1,254 29 (31) (120) 82 (30) (62) (53) 1,069
Balfour Beatty invested £29 million (2024: £28 million) in new and existing
projects. During the year the Group added two new multifamily housing
projects, one in Conroe, Texas and another in Newberry, Florida.
Cash yield from distributions amounted to £31 million (2024: £34 million).
Twelve assets were sold in the period. This included ten UK PPP assets sold to
the Group's co-shareholder; a direct-let student accommodation asset in
Glasgow; and one multifamily housing project in South Carolina. The total
consideration of £120 million also included £2 million of contingent
consideration received in relation to the University of Texas at Dallas
student accommodation disposal completed in 2024.
Unwind of discount at £82 million (2024: £81 million) is a function of
moving the valuation date forward by twelve months with the result that future
cash flows are discounted by twelve months less.
Operational performance movements resulted in a £30 million decrease (2024:
£2 million decrease). The operational performance movements in the UK were
primarily due to a reduction in the valuation of the student accommodation
portfolio. In the US the movement was driven primarily by lower broker
valuations of US multifamily housing assets and higher than forecast
independent compliance monitor costs in US military housing.
In addition, the discount rates applied to project cash flows 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 £62 million.
The foreign exchange movement was a £53 million decrease, as sterling
appreciated against the US dollar (2024: £12 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
multifamily housing projects which, due to the perpetual nature of the assets
and the depth and liquidity of the rental housing market, are valued based on
periodic broker reports for each property.
The valuation methodology used at the previous Directors' valuation is
unchanged.
Discount rates applied to the UK portfolio range from 8% to 10.25% (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% (2024:
8.4%). A 1% change in the discount rate would change the value of the UK
portfolio by approximately £38 million.
Discount rates applied to the US portfolio range from 6.75% to 10.5% (2024:
6.25% to 10.5%), with an implied US weighted average discount rate of 8.2%
(2024: 7.9%). A 1% change in the discount rate would change the value of the
US portfolio by approximately £73 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 £20 million and a 1% change in the long-term rental growth rate
in the US portfolio would change the valuation by approximately £70 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 December 2025
Value by sector
Sector 2025 2024 2025 2024
No. projects No. projects £m £m
Roads 6 12 139 162
Healthcare 2 2 131 133
Student accommodation and Residential 5 7 107 166
Energy transition - 4 - 64
UK total 13 25 377 525
US military housing 21 21 562 605
Student accommodation and other PPP 5 5 56 58
Residential housing 10 9 74 66
US total 36 35 692 729
Total 49 60 1,069 1,254
Value by phase
Phase 2025 2024 2025 2024
No. projects No. projects £m £m
Operations 46 57 1,025 1,208
Construction 3 3 44 46
Total 49 60 1,069 1,254
Value by income type
Income type 2025 2024 2025 2024
No. projects No. projects £m £m
Availability based 7 17 286 370
Demand - operationally proven (2+ years) 39 39 742 836
Demand - early stage (less than 2 years) 3 4 41 48
Total 49 60 1,069 1,254
MEASURING OUR FINANCIAL PERFORMANCE
Providing clarity on the Group's alternative performance measures
The Group has included this section in this announcement with the aim of
providing transparency and clarity on the measures adopted internally to
assess performance.
Throughout this announcement, 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 (APMs) adopted by the Group are also
commonly used in the sectors it operates in and therefore serve as a useful
aid for investors to compare Balfour Beatty's performance to its peers.
The Board believes that disclosing these performance measures enhances
investors' ability to evaluate and assess the underlying financial performance
of the Group's operations and the related key business drivers.
These financial performance measures are also aligned to measures used
internally to assess business performance in the Group's budgeting process and
when determining compensation.
Equivalent information cannot be presented by using financial measures defined
in the financial reporting framework alone.
Readers are encouraged to review this announcement 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 and accrued interest receivable, which are included in the
Group's income statement in finance costs.
Operating cash flow (OCF)
The Group uses an internally defined measure of OCF to measure the performance
of its earnings-based businesses and subsequently to determine the amount of
incentive awarded to employees in these businesses under the Group's Annual
Incentive Plan (AIP). This measure also aligns to one of the vesting
conditions attributable to the Group's PSP awards.
Measuring the Group's performance
The following measures are referred to in this announcement when reporting
performance, both in absolute terms and also in comparison to earlier years:
Statutory measures
Statutory measures are derived from the Group's reported financial statements,
which have been prepared in accordance with UK-adopted international
accounting standards (IFRS) and in conformity with the requirements of the
Companies Act 2006.
Where a standard allows certain interpretations to be adopted, the Group has
applied its accounting policies consistently. These accounting policies can be
found on pages 185 to 192 of the Annual Report and Accounts 2025.
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 2025. 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; and
· The Group's order book does not include revenue to be earned in its
Infrastructure Investments segment as the value of this part of the business
is driven by the Directors' valuation of the Investments portfolio. Refer to
section (i).
Reconciliation of order book to transaction price to be allocated to remaining
performance obligations
2025 2024
£m
£m
Order book (performance measure) 22,678 18,443
Less: Share of orders included within the Group's joint ventures and associates (2,664) (2,322)
Less: Estimated orders under framework agreements included in the order book (370) -
disclosure
Add: Transaction price allocated to remaining performance obligations in 2,533 2,616
Infrastructure Investments(+)
Transaction price allocated to remaining performance obligations for the 22,177 18,737
Group(+) (statutory measure)
(+) Refer to Note 4.3 in the Annual Report and Accounts 2025.
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 non-underlying costs are excluded from the Group's measure of profit to
enable comparability of the Group's performance from its ongoing normal
day-to-day trading activities.
From time to time, it may be appropriate to exclude further items that are
considered distortive in size and nature to aid comparability of the Group's
performance.
Further details of non-underlying items are provided in Note 9.
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 2025 statutory results to performance measures
Non-underlying items 2025 performance
measures
£m
2025 Intangible Net release of provisions claim on legacy project in Texas Provision recognised Gain on disposal of Omnicom Balfour Beatty
statutory
amortisation
results
£m for BSA £m
£m
£m claims
£m
Revenue including share of joint ventures and associates (performance) 10,767 - - - - 10,767
Share of revenue of joint ventures and associates (1,278) - - - - (1,278)
Group revenue (statutory) 9,489 - - - - 9,489
Cost of sales (9,021) - (49) 37 - (9,033)
Gross profit 468 - (49) 37 - 456
Gain on disposals of interests in investments 32 - - - - 32
Amortisation of acquired intangible assets (3) 3 - - - -
Other operating expenses (277) - - - (23) (300)
Group operating profit 220 3 (49) 37 (23) 188
Share of results of joint ventures and associates 64 - - - - 64
Profit from operations 284 3 (49) 37 (23) 252
Investment income 80 - - - - 80
Finance costs (41) - - - - (41)
Profit before taxation 323 3 (49) 37 (23) 291
Taxation (59) (2) 12 (9) 6 (52)
Profit for the year 264 1 (37) 28 (17) 239
Reconciliation of 2025 statutory results to performance measures by segment
Non-underlying items
Profit/(loss) from operations 2025 Intangible Net release of provisions claim on legacy project in Texas Provision recognised Gain on disposal of Omnicom Balfour Beatty 2025 performance
statutory
amortisation
measures
results
£m for BSA £m
£m
£m
£m claims
£m
Segment
Construction Services 182 1 (49) 37 - 171
Support Services 145 - - - (23) 122
Infrastructure Investments 3 2 - - - 5
Corporate activities (46) - - - - (46)
Total 284 3 (49) 37 (23) 252
Reconciliation of 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 Recognition of charge for claim on legacy project in Texas 2024 performance
statutory
amortisation
measures
results
£m £m for BSA £m
£m
£m
£m claims
£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 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 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
The Group's Infrastructure Investments segment is assessed on an underlying
profit before tax (PBT) measure. This is calculated as follows:
2025 2024
£m £m
Underlying profit from operations (section (b) and Note 5) 5 35
Add: Subordinated debt interest receivable(+) 26 17
Add: Interest receivable on PPP financial assets(+) - 2
Add: Interest receivable on other infrastructure concession assets(+) 1 -
Add: Fair value loss on investment asset(+) - (2)
Less: Non-recourse borrowings finance cost(+) (14) (12)
Add/(Less): Net (impairment)/impairment reversal of subordinated debt and accrued interest (2) 14
receivable(+)
Underlying profit before tax (performance) 16 54
Non-underlying items (section (b) and Note 5) (2) (3)
Statutory profit before tax 14 51
(+) Refer to Note 7 and Note 8.
d) Underlying earnings per share
In line with the Group's measurement of underlying performance, the Group also
presents its earnings per share (EPS) on an underlying basis. The table below
reconciles this to the statutory earnings per share.
Reconciliation from statutory basic EPS to performance EPS
2025 2024
pence
pence
Statutory basic earnings per ordinary share 52.6 34.2
Amortisation of acquired intangible assets after tax 0.3 0.6
Other non-underlying items after tax (5.3) 8.8
Underlying basic earnings per ordinary share (performance) 47.6 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 Statement of Cash Flows.
Reconciliation from statutory cash generated from operations to OCF
2025 2024
£m £m
Cash generated from operating activities (statutory) 656 265
Add back: Pension payments including deficit funding (Note 21) 10 30
Less: Repayment of lease liabilities (including lease interest payments) (77) (66)
Add: Operational dividends received from joint ventures and associates 59 71
Add back: Cash flow movements relating to non-operating items 33 13
Less: Operating cash flows relating to non-recourse activities (25) (24)
Operating cash flow (OCF) (performance) 656 289
The Group includes/excludes the following items to provide a view of cash
flows that aligns with management's internal measure of operating cash flow
performance:
Pension payments including deficit funding (£10 million): the Group has
excluded pension payments which are included in the Group's statutory measure
of cash flows from operating activities from its internal OCF measure as these
primarily relate to deficit funding of the Group's main pension fund, Balfour
Beatty Pension Fund (BBPF). The payments made for the 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) (£77
million outflow): the payments made for the Group's leasing arrangements are
included in the Group's OCF measure as these payments are made to third-party
suppliers for the lease of assets that are used to deliver services to the
Group's customers, and hence to generate revenue. Under IFRS, these payments
are excluded from the Group's statutory measure of cash flows from operating
activities as these are considered debt in nature under accounting standards.
Operational dividends received from joint ventures and associates (£59
million inflow): dividends received from joint ventures and associates which
are generated from non-disposal activities are included in the Group's OCF
measure as these are cash returns to the Group from cash flows generated from
operating activities within joint ventures and associates. Under IFRS, these
returns are classified as investing activities.
Cash flow movements relating to non-operating items (£33 million): the
Group's OCF measure excludes certain working capital movements that are not
directly attributable to the Group's operating activities.
Operating cash flows relating to non-recourse activities (£25 million): the
Group's OCF measure is specifically targeted to drive performance improvement
in the Group's earnings-based businesses and therefore any operating cash
flows relating to non-recourse activities are removed from this measure. Under
IFRS, there is no distinction between recourse and non-recourse cash flows.
g) Recourse net cash/borrowings
The Group also measures its performance based on its net cash/borrowings
position at the year end. This is analysed by excluding elements that are
non-recourse to the Group as well as lease liabilities.
Non-recourse elements are cash and debt that are ring-fenced within certain
infrastructure concession project companies and are excluded from the
definition of net debt set out in the Group's borrowing facilities. In
addition, lease liabilities which are deemed to be debt in nature under
statutory measures are also excluded from the Group's definition of net
cash/borrowings as these are viewed to be operational in nature reflecting
payments made in exchange for use of assets.
Net cash/borrowings reconciliation
2025 Adjustment 2025 2024 Adjustment 2024
statutory
£m
performance
statutory
£m
performance
£m
£m
£m
£m
Total cash within the Group 1,860 (193) 1,667 1,558 (265) 1,293
Cash and cash equivalents - infrastructure concessions 193 (193) - 265 (265) -
- other 1,667 - 1,667 1,293 - 1,293
Total debt within the Group (1,023) 802 (221) (1,112) 762 (350)
Borrowings - non-recourse loans (604) 604 - (600) 600 -
- other (221) - (221) (350) - (350)
Lease liabilities (198) 198 - (162) 162 -
Net cash 837 609 1,446 446 497 943
h) Average net cash/borrowings
The Group uses an average net cash/borrowings measure as this reflects its
financing requirements throughout the year. The Group calculates its average
net cash/borrowings based on the average opening and closing figures for each
month through the year.
The average net cash/borrowings measure excludes non-recourse cash and debt
and lease liabilities, and this performance measure shows average net cash of
£1,212 million for 2025 (2024: £766 million).
Using a statutory measure (inclusive of non-recourse elements and the lease
liabilities recognised) gives average net cash of £642 million for 2025
(2024: £441 million).
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 £1.07 billion at year
end (2024: £1.25 billion).
The Directors' valuation will differ from the statutory carrying value of
these investments, which are accounted for using the relevant standards in
accordance with IFRS rather than a discounted cash flow approach.
Reconciliation of the net assets of the Infrastructure Investments segment to
the comparable statutory measure of the Investments portfolio included in the
Directors' valuation
2025 2024
£m £m
Net assets of the Infrastructure Investments segment (refer to Note 5.1) 568 626
Less: Net assets not included within the Directors' valuation - Housing (42) (60)
division
Comparable statutory measure of the Investments portfolio under IFRS 526 566
Comparison of the statutory measure of the Investments portfolio to its
performance measure
2025 2024
£m £m
Statutory measure of the Investments portfolio (as above) 526 566
Difference arising from the Directors' valuation being measured on a 543 688
discounted cash flow basis compared to the statutory measure primarily derived
using a combination of the following IFRS bases:
· historical cost
· amortised cost
· fair value
Directors' valuation (performance measure) 1,069 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 year.
The Group's key exchange rates applied in deriving its statutory results are
shown in Note 4.
To measure changes in the Group's performance compared with the previous year
without the effects of foreign currency fluctuations, the Group provides
growth rates on a CER basis. These measures remove the effects of currency
movements by retranslating the prior year's figures at the current year's
exchange rates, using average rates for revenue and closing rates for order
book. A comparison of the Group's statutory growth rate to the CER growth rate
is provided in the table below:
2025 statutory growth compared to performance growth
Construction Services
UK US Gammon Total Support Services Infrastructure Investments Total
Revenue (£m)
2025 statutory 3,112 4,477 - 7,589 1,427 473 9,489
2024 statutory 3,011 3,619 - 6,630 1,210 394 8,234
Statutory growth 3% 24% - 14% 18% 20% 15%
2025 performance(^) 3,112 4,509 1,090 8,711 1,427 629 10,767
2024 performance retranslated(^) 3,011 3,536 1,508 8,055 1,210 594 9,859
Performance CER growth 3% 28% (28)% 8% 18% 6% 9%
Order book (£bn)
2025 8.9 7.8 2.0 18.7 4.0 - 22.7
2024 6.2 7.1 1.9 15.2 3.2 - 18.4
Growth 44% 10% 5% 23% 25% - 23%
2025 8.9 7.8 2.0 18.7 4.0 - 22.7
2024 retranslated 6.2 6.6 1.7 14.5 3.2 - 17.7
CER growth 44% 18% 18% 29% 25% - 28%
^ Performance revenue is underlying revenue including share of revenue from
joint ventures and associates as set out in section (e).
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.
Group Income Statement
For the year ended 31 December 2025
2025 2024
Notes Underlying Non-underlying items Total Underlying Non-underlying Total
items(1) (Note 9) £m items(1) items £m
£m £m £m (Note 9)
£m
Revenue including share of joint ventures and associates 10,767 - 10,767 10,015 - 10,015
Share of revenue of joint ventures and associates 15 (1,278) - (1,278) (1,781) - (1,781)
Group revenue 9,489 - 9,489 8,234 - 8,234
Cost of sales (9,033) 12 (9,021) (7,817) (66) (7,883)
Gross profit/(loss) 456 12 468 417 (66) 351
Gain on disposals of interests in investments 23.2 32 - 32 43 - 43
Amortisation of acquired intangible assets 14 - (3) (3) - (4) (4)
Other operating (expenses)/income (300) 23 (277) (271) (5) (276)
Group operating profit/(loss) 188 32 220 189 (75) 114
Share of results of joint ventures and associates excluding gain on disposals 60 - 60 59 - 59
of interests in investments
Gain on disposals of interests in investments 23.2 4 - 4 - - -
Share of results of joint ventures and associates 15 64 - 64 59 - 59
Profit/(loss) from operations 252 32 284 248 (75) 173
Investment income 7 80 - 80 82 - 82
Finance costs 8 (41) - (41) (41) - (41)
Profit/(loss) before taxation 291 32 323 289 (75) 214
Taxation 10 (52) (7) (59) (62) 26 (36)
Profit/(loss) for the year 239 25 264 227 (49) 178
Attributable to
Equity holders 238 25 263 227 (49) 178
Non-controlling interests 1 - 1 - - -
Profit/(loss) for the year 239 25 264 227 (49) 178
(1) Before non-underlying items (Note 9).
Notes 2025 pence 2024 pence
Earnings per share
- basic 11 52.6 34.2
- diluted 11 52.0 33.7
Dividends per share proposed for the year 12 14.0 12.5
Group Statement of Comprehensive Income
For the year ended 31 December
2025
2025 2024
Group Share of joint ventures and associates Total Group Share of Total
£m £m £m £m joint £m
ventures
and associates
£m
Profit for the year 200 64 264 119 59 178
Other comprehensive (loss)/income for the year
Items which will not subsequently be reclassified to the income statement
Actuarial (losses)/gains on retirement benefit assets/liabilities (62) 1 (61) (102) - (102)
Fair value revaluations of investments in mutual funds measured at fair value 1 - 1 2 - 2
through OCI
Tax on above 15 - 15 26 - 26
(46) 1 (45) (74) - (74)
Items which will subsequently be reclassified to the income statement
Currency translation differences (19) (13) (32) 6 3 9
Fair value revaluations - PPP financial assets - 8 8 (2) (48) (50)
- cash flow hedges - 8 8 1 10 11
Recycling of revaluation reserves to the income statement on disposal(^) - 24 24 - - -
Tax on above - (4) (4) - 10 10
(19) 23 4 5 (25) (20)
Total other comprehensive (loss)/income for the year (65) 24 (41) (69) (25) (94)
Total comprehensive income for the year 135 88 223 50 34 84
Attributable to
Equity holders 222 84
Non-controlling interests 1 -
Total comprehensive income for the year 223 84
(^) Recycling of revaluation reserves to the income statement on disposal has
no associated tax effect.
Group Statement of Changes in Equity
For the year ended 31 December 2025
Called-up Share Capital Share Other reserves (µ) Retained Non- Total
share premium redemption of joint £m profits controlling £m
capital account reserve ventures' £m interests
£m £m £m and £m
associates'
reserves
£m
At 1 January 2024 272 176 74 (27) 157 546 10 1,208
Total comprehensive income for the year - - - 34 7 43 - 84
Ordinary dividends - - - - - (61) (1) (62)
Joint ventures' and associates' dividends - - - (71) - 71 - -
Purchase of treasury shares - - - - - (101) - (101)
Cancellation of ordinary shares (13) - 13 - - - - -
Movements relating to share-based payments(+) - - - - (2) 3 - 1
At 31 December 2024 259 176 87 (64) 162 501 9 1,130
Total comprehensive income/(loss) for the year - - - 88 (18) 152 1 223
Ordinary dividends - - - - - (64) (1) (65)
Joint ventures' and associates' dividends - - - (59) - 59 - -
Purchase of treasury shares - - - - - (126) - (126)
Cancellation of ordinary shares (12) - 12 - - - - -
Movements relating to share-based payments(+) - - - - 2 (12) - (10)
Reserves transfers relating to joint venture and associate disposals - - - 4 - (4) - -
At 31 December 2025 247 176 99 (31) 146 506 9 1,152
(µ) Other reserves include £22m of special reserve (2024: £22m).
(+) Movements relating to share-based payments include £5m tax credit (2024:
£4m) recognised directly within retained profits.
Group Balance Sheet
At 31 December 2025
Notes 2025 2024
£m
£m
Non-current assets
Intangible assets - goodwill 13 819 854
- other 14 256 268
Service concession contract asset 154 69
Property, plant and equipment 151 136
Right-of-use assets 192 153
Investment properties 104 101
Investments in joint ventures and associates 15 363 385
Investments 18 24
PPP financial assets 18 21
Trade and other receivables 17 296 326
Retirement benefit assets 21 - 43
Deferred tax assets 199 200
2,570 2,580
Current assets
Inventories 155 158
Contract assets 16.1 238 229
Trade and other receivables 17 1,253 1,099
Cash and cash equivalents - infrastructure investments 20.3 193 265
- other 20.3 1,667 1,293
Current tax receivable 17 8
3,523 3,052
Total assets 6,093 5,632
Current liabilities
Contract liabilities 16.2 (1,062) (697)
Trade and other payables 18 (1,957) (1,778)
Provisions 19 (266) (239)
Borrowings - non-recourse loans 20.3 (37) (11)
- other 20.3 (68) (185)
Lease liabilities (70) (57)
Current tax payable (8) (13)
(3,468) (2,980)
Non-current liabilities
Contract liabilities 16.2 (1) (2)
Trade and other payables 18 (100) (88)
Provisions 19 (323) (378)
Borrowings - non-recourse loans 20.3 (567) (589)
- other 20.3 (153) (165)
Lease liabilities (128) (105)
Retirement benefit liabilities 21 (48) (41)
Deferred tax liabilities (153) (153)
Derivative financial instruments - (1)
(1,473) (1,522)
Total liabilities (4,941) (4,502)
Net assets 1,152 1,130
Equity
Called-up share capital 247 259
Share premium account 176 176
Capital redemption reserve 99 87
Share of joint ventures' and associates' reserves (31) (64)
Other reserves 146 162
Retained profits 506 501
Equity attributable to equity holders of the Parent 1,143 1,121
Non-controlling interests 9 9
Total equity 1,152 1,130
Group Statement of Cash Flows
For the year ended 31 December 2025
Notes 2025 2024
£m
£m
Cash flows from operating activities
Cash from operations 695 277
Income taxes paid (39) (12)
Net cash from operating activities 656 265
Cash flows from investing activities
Dividends received from:
- joint ventures and associates - infrastructure investments 21 26
- joint ventures and associates - other 38 45
- other investments 1 1
Interest received - infrastructure investments - joint ventures 3 7
Interest received subsidiaries - infrastructure investments 9 11
- other 50 40
Purchases of: - service concession contract asset - infrastructure investments (79) (56)
- property, plant and equipment (49) (28)
- investment properties (36) (36)
Investments in and long-term loans to joint ventures and associates (11) (20)
Return of equity from joint ventures and associates 5 -
PPP financial assets cash expenditure (4) (5)
PPP financial assets cash receipts 7 8
Disposals of: - investments in joint ventures - infrastructure investments 89 43
- property, plant and equipment - other 5 5
- investment properties 48 -
- other investments 6 5
- trade and assets relating to Omnicom Balfour Beatty 24 -
Net cash from investing activities 127 46
Cash flows used in financing activities
Purchase of ordinary shares (31) (12)
Purchase of treasury shares (126) (101)
Proceeds from new loans relating to: - infrastructure investments assets 20.4 22 36
- other 20.4 - 39
Repayments of loans relating to: - infrastructure investments assets 20.4 (30) (9)
- other 20.4 - (40)
Repayment of lease liabilities (68) (59)
Ordinary dividends paid 12 (64) (61)
Other dividends paid - non-controlling interests (1) (1)
Interest paid - infrastructure investments (14) (12)
Interest paid - other (22) (31)
Net cash used in financing activities (334) (251)
Net increase in cash and cash equivalents 449 60
Effects of exchange rate changes (30) 3
Cash and cash equivalents at beginning of year 1,373 1,310
Cash and cash equivalents at end of year 20.2 1,792 1,373
Notes to the financial statements
1 Basis of accounting
The annual financial statements have been prepared on a going concern basis in
accordance with UK-adopted international accounting standards and in
conformity with the requirements of the Companies Act 2006 (the Act). The
presentational currency of the Group is sterling.
The financial information in this announcement, which was approved by the
Board of Directors on 10 March 2026, does not constitute the Company's
statutory accounts for the years ended 31 December 2025 or 2024, but is
derived from those accounts. Statutory accounts for 2024 have been delivered
to the Registrar of Companies and those for 2025 will be delivered following
the Company's Annual General Meeting. The auditor has reported on the 2025
accounts; the report is unqualified, did not draw attention to any matters by
way of emphasis without qualifying the report and did not contain statements
under Section 498(2) or (3) of the Companies Act 2006.
Whilst the financial information included in this preliminary announcement has
been computed in accordance with IFRS, this announcement does not itself
contain sufficient information to comply with IFRS. The Company expects to
publish full financial statements for the Group that comply with IFRS in April
2026.
2 Going concern
The Directors consider it reasonable to assume that the Group has adequate
resources to continue for the foreseeable future and, for this reason, have
continued to adopt the going concern basis in preparing the financial
statements.
The key financial risk factors for the Group remain largely unchanged. The
Group's principal risks and the consequent impact these might have on the
Group as well as mitigations that are in place are detailed on pages 76 to 89
of the Annual Report and Accounts 2025.
The Group's US private placement and committed bank facilities contain certain
financial covenants, such as the ratio of the Group's EBITDA to its net debt
which needs to be less than 3.0 and the ratio of its EBITA to net borrowing
costs which needs to be in excess of 3.0. These covenants are tested on a
rolling 12-month basis as at the June and December reporting dates. At 31
December 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 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 £22.7bn at 31 December 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 31 December 2025, the Group's only debt, other than non-recourse borrowings
ring-fenced within certain concession companies, comprised $208m US private
placement (USPP) notes.
The Group's £450m committed sustainability linked bank facility remained
undrawn at 31 December 2025 and is fully available to the Group until June
2028. The Group's £30m bilateral committed facility also remained undrawn at
31 December 2025 and remains fully available to the Group until December 2027.
2 Going concern continued
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 financial statements.
3 Accounting policies
3.1 Adoption of new and revised standards
The following accounting standards, interpretations and amendments have been
adopted by the Group in the year ended 31 December 2025:
· Amendments to the following standard:
· IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability.
The amended standard did not have a material effect on the Group.
3.2 Accounting standards not yet adopted by the Group
The following accounting standards, interpretations and amendments have been
issued by the IASB but had either not been adopted by the UK or were not yet
effective in the UK at 31 December 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
The Directors do not expect these new and amended standards to have a material
effect on the Group and have chosen not to adopt any of the above standards
and interpretations earlier than required. The Group is currently assessing
the impact of the revised presentation and disclosure requirements for
financial statements from IFRS 18.
3.3 Judgements and key sources of estimation uncertainty
The Group's principal judgements and key sources of estimation uncertainty are
set out in Note 2.28 of the Annual Report and Accounts 2025.
4 Exchange rates
The following key exchange rates were applied in the financial statements.
Average rates
£1 buys 2025 2024 Change
US$ 1.32 1.28 3.1%
HK$ 10.25 9.98 2.7%
Closing rates
£1 buys 2025 2024 Change
US$ 1.35 1.25 8.0%
HK$ 10.47 9.73 7.6%
5 Segment analysis
Reportable segments of the Group:
Construction Services - activities resulting in the physical construction of
an asset;
Support Services - activities which support existing assets or functions such
as asset maintenance and refurbishment; and
Infrastructure Investments - acquisition, operation and disposal of
infrastructure assets such as roads, hospitals, student accommodation,
military housing, multifamily residences, offshore transmission networks,
waste and biomass and other concessions. This segment also includes the
Group's housing development division.
5.1 Total Group Construction Support Infrastructure Corporate Total
Income statement - performance by activity Services Services Investments activities
2025 2025 2025 2025 2025
£m £m £m £m £m
Revenue including share of joint ventures and associates 8,711 1,427 629 - 10,767
Share of revenue of joint ventures and associates (1,122) - (156) - (1,278)
Group revenue 7,589 1,427 473 - 9,489
Group operating profit/(loss)(1) 117 122 (5) (46) 188
Share of results of joint ventures and associates 54 - 10 - 64
Profit/(loss) from operations(1) 171 122 5 (46) 252
Non-underlying items:
- amortisation of acquired intangible assets (1) - (2) - (3)
- provision recognised in relation to claims made under the Building (37) - - - (37)
Safety Act
- net release of provision recognised in relation to a legacy claim 49 - - - 49
received for a project completed in 2012 in Texas
- gain on disposal of Omnicom Balfour Beatty - 23 - - 23
11 23 (2) - 32
Profit/(loss) from operations 182 145 3 (46) 284
Investment income 80
Finance costs (41)
Profit before taxation 323
(1) Before non-underlying items (Note 9).
Construction Support Infrastructure Corporate Total
Income statement - performance by activity Services Services Investments activities
2024 2024 2024 2024 2024
£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:
- amortisation of acquired intangible assets (1) - (3) - (4)
- provision recognised in relation to claims made under the Building (83) - - - (83)
Safety Act
- charge recognised in relation to a legacy claim received for a (52) - - - (52)
project completed in 2012 in Texas
- net release of provisions relating to Rail Germany 21 - - - 21
- recognition of insurance recovery in relation to rectification works 43 - - - 43
on a development in London
(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 9).
5 Segment analysis continued
5.1 Total Group continued
Construction Support Infrastructure Corporate Total
Assets and liabilities by activity Services Services Investments activities
2025 2025 2025 2025 2025
£m £m £m £m £m
Contract assets 134 67 37 - 238
Contract liabilities - current (742) (319) (1) - (1,062)
Inventories 71 41 43 - 155
Trade and other receivables - current 1,005 171 43 34 1,253
Trade and other payables - current (1,627) (212) (61) (57) (1,957)
Provisions - current (228) (19) (4) (15) (266)
Working capital* (1,387) (271) 57 (38) (1,639)
Total assets 2,223 624 1,267 1,979 6,093
Total liabilities (3,061) (723) (699) (458) (4,941)
Net assets (838) (99) 568 1,521 1,152
* Includes non-operating items and current working capital.
Assets and liabilities by activity Construction Support Infrastructure Corporate Total
Services Services Investments activities
2024 2024 2024 2024 2024
£m £m £m £m £m
Contract assets 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)
Total assets 2,209 520 1,309 1,594 5,632
Total liabilities (2,635) (524) (683) (660) (4,502)
Net assets (426) (4) 626 934 1,130
* Includes non-operating items and current working capital.
5 Segment analysis continued
5.1 Total Group continued
Other information Construction Support Infrastructure Corporate Total
Services Services Investments activities
2025 2025 2025 2025 2025
£m £m £m £m £m
Capital expenditure on property, plant and equipment 10 22 - 17 49
Capital expenditure on service concession contract assets - - 79 - 79
Depreciation 20 69 4 9 102
Gain on disposals of interests in investments (Note 23.2) - - 32 - 32
Gain on disposals of interests in investments within joint ventures and - - 4 - 4
associates (Note 23.2)
2024 2024 2024 2024 2024
£m £m £m £m £m
Capital expenditure on property, plant and equipment 7 18 - 3 28
Capital expenditure on service concession contract assets - - 56 - 56
Depreciation 23 57 3 9 92
Gain on disposals of interests in investments - - 43 - 43
Performance by geographic destination United United Rest of
Kingdom States world Total
2025 2025 2025 2025
£m £m £m £m
Revenue including share of joint ventures and associates 4,778 4,891 1,098 10,767
Share of revenue of joint ventures and associates (106) (80) (1,092) (1,278)
Group revenue 4,672 4,811 6 9,489
Non-current assets excluding financial assets and deferred tax assets 1,099 877 84 2,060
2024 2024 2024 2024
£m £m £m £m
Revenue including share of joint ventures and associates 4,420 4,039 1,556 10,015
Share of revenue of joint ventures and associates (102) (125) (1,554) (1,781)
Group revenue 4,318 3,914 2 8,234
Non-current assets excluding financial assets, deferred tax assets and 1,014 896 90 2,000
retirement benefit assets
( )
5.2 Infrastructure Investments
Group Share of joint Total Group Share of joint Total
2025 ventures and 2025 2024 ventures and 2024
£m associates £m £m associates £m
Underlying profit/(loss) from operations(1) (Note 15)(+) (Note 15)(+)
2025 2024
£m £m
UK^ 8 - 8 (2) 9 7
North America (18) 6 (12) 2 9 11
Gain on disposals of interests in investments 32 4 36 43 - 43
22 10 32 43 18 61
Bidding costs and overheads (27) - (27) (26) - (26)
(5) 10 5 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 9).
6. Revenue
6.1 Nature of services provided
6.1.1 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 for three main types of
infrastructure assets: highways, railways and other large-scale infrastructure
24 to 60 months for large-scale complex construction assets such as 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 6.1.2.
6 Revenue continued
6.1 Nature of services provided continued
6.1.2 Support Services
The Group's work in this segment supports existing assets through maintaining,
upgrading and managing services across utilities and infrastructure assets.
Revenue generated in this segment is measured over time as control passes to
the customer as and when services are provided. Progress is measured by
reference to the cost incurred on the contract to date compared to the
contract's end of job forecast (the input method). Payments are structured as
milestone payments set out in the respective contracts.
Types of assets Nature, timing of satisfaction of performance obligations and significant
payment terms
Utilities Within the Group's services contracts, the Group provides support services to
various types of utility assets.
For contracts servicing power transmission and distribution assets, the Group
constructs and maintains electricity networks, including replacement or new
build of overhead lines, underground cabling, cable tunnels and offshore wind
farm maintenance. Contracts entered into are fixed-price, cost-plus or
target-cost contracts with shared pain/gain mechanisms. Contract lengths can
vary from 12 to 36 months. Each contract is normally assessed to contain one
PO. However, where a contract contains both a construction phase and a
maintenance phase, these are assessed to contain two separate POs.
Infrastructure The Group provides maintenance, asset and network management and design
services in respect of highways, railways and other publicly available assets.
The customer in this area of the Group is mainly government bodies. Types of
contract include a fixed schedule of rates, fixed-price, target-cost
arrangements and cost-plus.
Contract terms range from 1 to 25 years. Where contracts include a lifecycle
element, this is accounted for as a separate PO and recognised when the work
is delivered.
6 Revenue continued
6.1 Nature of services provided continued
6.1.3 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 6.2.
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 6.2.
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 6.2.
6 Revenue continued
6.2 Disaggregation of revenue
The Group presents a disaggregation of its revenue according to the primary
geographical markets in which the Group operates as well as the types of
assets serviced by the Group. The nature of the various services provided by
the Group is explained in Note 6.1. This disaggregation of revenue is also
presented according to the Group's reportable segments as described in Note
5.
For the year ended 31 December 2025
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 3,112 4,509 1,090 8,711
Group revenue 3,112 4,477 - 7,589
Support Revenue including share of joint ventures and associates 1,423 - 4 1,427
Services
Group revenue 1,423 - 4 1,427
Infrastructure Investments Revenue including share of joint ventures and associates 243 382 4 629
Group revenue 137 334 2 473
Total Revenue including share of joint ventures and associates 4,778 4,891 1,098 10,767
revenue
Group revenue 4,672 4,811 6 9,489
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 4,966 3,130 508 107 8,711
Group revenue 4,281 2,695 506 107 7,589
Support Revenue including share of joint ventures and associates 14 743 631 39 1,427
Services
Group revenue 14 743 631 39 1,427
Infrastructure Investments Revenue including share of joint ventures and associates 533(+) 87 8 1 629
Group revenue 470(+) 3 - - 473
Total Revenue including share of joint ventures and associates 5,513 3,960 1,147 147 10,767
revenue
Group revenue 4,765 3,441 1,137 146 9,489
Timing of revenue recognition Construction Support Infrastructure Total
Services Services Investments £m
£m £m £m
Over time 8,706 1,425 594 10,725
At a point in time 5 2 35 42
Revenue including share of joint ventures and associates 8,711 1,427 629 10,767
Over time 7,584 1,425 438 9,447
At a point in time 5 2 35 42
Group revenue 7,589 1,427 473 9,489
+ Includes rental income of £57m including share of joint ventures and
associates or £32m excluding share of joint ventures and associates.
6 Revenue continued
6.2 Disaggregation of revenue continued
( )
For the year ended 31 December 2024
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 Support Infrastructure Total
Services Services Investments £m
£m £m £m
Over time 8,194 1,209 587 9,990
At a point in time 5 1 19 25
Revenue including share of joint ventures and associates 8,199 1,210 606 10,015
Over time 6,625 1,209 375 8,209
At a point in time 5 1 19 25
Group revenue 6,630 1,210 394 8,234
+ Includes rental income of £48m including share of joint ventures and
associates or £26m excluding share of joint ventures and associates.
7 Investment income
2025 2024
£m £m
Subordinated debt interest receivable 26 17
Interest receivable on PPP financial assets - 2
Interest receivable on other infrastructure concession assets 1 -
Interest received on bank deposits 51 40
Other interest receivable and similar income 1 2
Impairment reversal of joint ventures and associates loans - 17
Net finance income on pension scheme assets and obligations (Note 21) 1 4
80 82
8 Finance costs
2025 2024
£m £m
Non-recourse borrowings - bank loans and overdrafts 14 12
US private placement - finance cost 10 10
Interest on lease liabilities 9 7
Fair value loss on investment asset - 2
Other interest payable - committed facilities 2 2
- letter of credit fees - 1
- other finance charges 4 4
Impairment of joint ventures and associates - loans 1 2
- accrued interest 1 1
41 41
The net impairment of loans to joint ventures and associates and accrued
interest receivable of £2m (2024: £14m net impairment reversal) relates to
expected credit loss assessments performed. All of these impairments relate to
subordinated debt and accrued interest receivable from joint ventures and
associates held within the Infrastructure Investments segment.
9 Non-underlying items
2025 2024
£m £m
Items credited to/(charged against) profit
9.1 Amortisation of acquired intangible assets (3) (4)
9.2 Other non-underlying items:
- net release/(charge) recognised in relation to a claim received on a legacy 49 (52)
project completed in 2012 in Texas
- provision recognised in relation to claims made under the Building Safety (37) (83)
Act
- gain on disposal of Omnicom Balfour Beatty 23 -
- recognition of insurance recovery in relation to rectification works on a - 43
development in London
- net release of provisions relating to Rail Germany - 21
Total other non-underlying items 35 (71)
Credited to/(charged against) profit before taxation 32 (75)
9.3 Tax (charge)/credit:
- tax on amortisation of acquired intangible assets 2 1
- tax on other items above (9) 25
Total tax (charge)/credit (7) 26
Credited to/(charged against) profit for the year 25 (49)
9.1 The amortisation of acquired intangible assets comprises: customer
contracts £2m (2024: £3m); and customer relationships £1m (2024: £1m).
The charge was recognised in the following segments: Construction Services
£1m (2024: £1m); and Infrastructure Investments £2m (2024: £3m).
9.2.1 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 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.
9.2.2 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 2025, the Group increased its provision by £37m as a result of new claims
received in the period, settlements and reassessments to previously provided
claims, together with legal costs incurred. Consistent with the treatment
adopted in 2024, this charge was recognised within non-underlying and in the
Construction Services segment.
9.2.3 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 to Hitachi Rail. After deducting cost
of disposal, the Group recorded a gain on disposal of £23m within its
non-underlying results in the year.
The gain on disposal has been recognised in the Support Services segment.
9 Non-underlying items continued
9.3.1 The amortisation of acquired intangible assets gave rise to a tax credit
of £2m (2024: £1m).
9.3.2 The remaining non-underlying items recognised in the Group's operating
profit gave rise to a current tax charge of £9m (2024: £25m credit), of
which £12m charge relates to the net release recognised in relation to a
legacy project completed in 2012 (SH161 in Texas), £9m credit relating to the
increase in provision for BSA claims and £6m charge relates to the disposal
of Omnicom Balfour Beatty.
10 Income taxes
Underlying Non-underlying Total Total
Items(1) items 2025 2024
2025 (Note 9) £m £m
£m 2025
£m
Total UK tax 48 (3) 45 29
Total non-UK tax 4 10 14 7
Total tax charge(x) 52 7 59 36
UK current tax
- current tax 28 (3) 25 7
- adjustments in respect of prior periods 3 - 3 5
31 (3) 28 12
Non-UK current tax
- current tax 3 - 3 14
- adjustments in respect of previous periods (1) - (1) 2
2 - 2 16
Total current tax 33 (3) 30 28
UK deferred tax
- origination and reversal of temporary differences 22 - 22 22
- adjustments in respect of previous periods (5) - (5) (5)
17 - 17 17
Non-UK deferred tax
- origination and reversal of temporary differences 1 11 12 (6)
- adjustments in respect of previous periods 1 (1) - (3)
2 10 12 (9)
Total deferred tax 19 10 29 8
Total tax charge(x) 52 7 59 36
(x) Excluding joint ventures and associates.
(1) Before non-underlying items (Note 9).
The Group has recognised a £7m tax charge (2024: £26m credit) within
non-underlying items in the year. Refer to Notes 9.3.1 and 9.3.2.
The Group tax charge excludes amounts for joint ventures and associates (refer
to Note 15), except where tax is levied at the Group level.
In addition to the Group tax charge, tax of £11m has been credited (2024:
£36m) directly to Group other comprehensive income, comprising: a tax credit
of £15m for subsidiaries (2024: £26m); and a tax charge in respect of joint
ventures and associates of £4m (2024: £10m credit). A tax credit of £5m
(2024: £4m) has been recognised directly in Group equity relating to
share-based payments, comprising a current tax credit of £3m (2024: £2m) and
a deferred tax credit of £2m (2024: £2m).
11 Earnings per share
2025 2024
Earnings Basic Diluted Basic Diluted
£m £m £m £m
Earnings 263 263 178 178
Amortisation of acquired intangible assets - including tax credit of £2m 1 1 3 3
(2024: £1m)
Other non-underlying items - including tax charge of £9m (2024: £25m) (26) (26) 46 46
Underlying earnings 238 238 227 227
Basic Diluted Basic Diluted
m m m m
Weighted average number of ordinary shares 499 505 521 528
The basic earnings per ordinary share is calculated by dividing the profit for
the year attributable to equity holders by the weighted average number of
ordinary shares outstanding during the year, excluding treasury shares and
shares held in the Employee Share Ownership Trust.
The diluted earnings per ordinary share uses an adjusted weighted average
number of shares and includes shares that are potentially outstanding in
relation to equity-settled share-based payment arrangements.
Potential dilutive effect of ordinary shares issuable under equity-settled
share-based payment arrangements is 6m (2024: 7m).
Earnings per share Basic Diluted Basic Diluted
pence pence pence pence
Earnings per ordinary share 52.6 52.0 34.2 33.7
Amortisation of acquired intangible assets after tax 0.3 0.2 0.6 0.6
Other non-underlying items after tax (5.3) (5.2) 8.8 8.7
Underlying earnings per ordinary share 47.6 47.0 43.6 43.0
12 Dividends
2025 2024
Per share Amount Per share Amount
pence £m pence £m
Proposed dividends for the year
Interim - current year 4.2 20 3.8 19
Final - current year 9.8 47(&) 8.7 44
14.0 67 12.5 63
Recognised dividends for the year
Final - prior year 44 42
Interim - current year 20 19
64 61
(&) Amount dependent on number of shares on the register on 15 May 2026.
Subject to approval at the Annual General Meeting on 7 May 2026, the final
2025 dividend will be paid on 1 July 2026 to holders on the register on 15 May
2026 by direct credit or, where no mandate has been given, by cheque posted by
1 July 2026. The ordinary shares will be quoted ex-dividend on 14 May 2026.
The last date for Dividend Reinvestment Plan (DRIP) elections will be 10 June
2026.
13 Intangible assets - goodwill
Cost Accumulated Carrying
£m impairment amount
losses £m
£m
At 1 January 2025 1,074 (220) 854
Currency translation differences (33) (2) (35)
At 31 December 2025 1,041 (222) 819
2025 2024
Carrying amounts of goodwill by cash-generating unit (CGU) £m Pre-tax £m Pre-tax
discount rate discount rate
% %
UK Regional and Engineering Services 249 10.9% 248 10.8%
Balfour Beatty Construction Group Inc 414 11.1% 445 11.2%
Rail UK 68 11.0% 68 11.2%
Balfour Beatty Investments US 50 11.3% 53 11.2%
Other 38 11.0% 40 10.9%
Group total 819 854
The recoverable amount of goodwill is based on value-in-use, a key input of
which is forecast cash flows. The Group's cash flow forecasts are based on the
expected future revenues and margins of each CGU, giving consideration to the
current level of confirmed and anticipated orders. Cash flow forecasts for the
next three years are based on the Group's Three-Year Plan, which covers the
period from 2026 to 2028. The cash flow forecasts for each CGU were compiled
from each of its constituent business units as part of the Group's annual
financial planning process.
The other key inputs in assessing each CGU are its long-term growth rate and
discount rate. The discount rates have been calculated using the Weighted
Average Cost of Capital (WACC) method, which takes account of the Group's
estimated optimal capital structure (financial risk) as well as the nature of
each CGU's business (operational risk). Long-term growth rates are assumed to
be the estimated future GDP growth rates based on published independent
forecasts for the country or countries in which each CGU operates, less 1.0%
to reflect current economic uncertainties and their consequent estimated
effect on public sector spending on infrastructure.
In the derivation of each CGU's value-in-use, a terminal value is assumed
based on a multiple of earnings before interest and tax. The multiple is
applied to a terminal cash flow, which is the normalised cash flow in the last
year of the forecast period. However, due to the long-term nature and the
degree of predictability of some contracts within Balfour Beatty Investments
US, the forecast period used in the derivation of this CGU's value-in-use
extends beyond the Group's three-year cash flow forecast period in line with
the duration of the contracts within the CGU. The EBIT multiple is calculated
using the Gordon Growth Model and is a factor of the discount rate and growth
rate for each CGU. The nominal terminal value is discounted to present value.
13 Intangible assets - goodwill continued
2025 2024
Inflation rate Real growth rate Nominal long-term growth rate applied(+) Inflation rate Real growth Nominal long-term growth
% % % % rate rate applied(1)
% %
UK Regional and Engineering Services 2.5 1.2 3.7 2.4 1.2 3.6
Balfour Beatty Construction Group Inc 2.3 1.6 3.9 2.2 1.7 3.9
Rail UK 2.5 1.2 3.7 2.4 1.2 3.6
Balfour Beatty Investments US 2.3 1.6 3.9 2.2 1.7 3.9
Other 2.4 1.4 3.8 2.3 1.5 3.8
(+) These nominal long-term growth rates are reduced by 1.0% when performing
goodwill assessments to reflect current economic uncertainties and their
consequent estimated effect on public sector spending on infrastructure.
Sensitivities
The Group's impairment review is sensitive to changes in the key assumptions
used. The major assumptions that result in significant sensitivities are the
discount rate and the long-term growth rate, and for certain CGUs, changes to
underlying cash projections.
A reasonable possible change in key assumptions would not give rise to an
impairment in any of the Group's CGUs.
14 Intangible assets - other
Cost Accumulated Carrying
£m amortisation amount
£m £m
At 1 January 2025 655 (387) 268
Currency translation differences (21) 18 (3)
Charge for the year - (9) (9)
At 31 December 2025 634 (378) 256
Other intangible assets comprise: acquired intangible assets of customer
contracts, customer relationships, and brand names; Infrastructure Investments
intangible assets on student accommodation projects in which the Group bears
demand risk; and software and other.
15 Investments in joint ventures and associates
Infrastructure Investments
Construction UK^ North Total
Services £m America £m Total
£m £m £m
Income statement
Revenue 1,122 108 48 156 1,278
Operating profit excluding gain on disposals of interests in investments 58 13 16 29 87
Gain on disposals of interests in investments - - 4 4 4
Operating profit 58 13 20 33 91
Investment income 3 56 13 69 72
Finance costs (1) (67) (23) (90) (91)
Profit before taxation 60 2 10 12 72
Taxation (6) (2) - (2) (8)
Profit after taxation 54 - 10 10 64
Balance sheet
Non-current assets
Intangible assets:
- Infrastructure Investments - 13 - 13 13
- other 8 4 - 4 12
Property, plant and equipment 22 - 85 85 107
Investment properties - - 120 120 120
Investments in joint ventures and associates 3 - - - 3
PPP financial assets - 579 251 830 830
Military housing projects - - 109 109 109
Other non-current assets 82 13 7 20 102
Current assets
Cash and cash equivalents 237 142 17 159 396
Other current assets 377 76 6 82 459
Total assets 729 827 595 1,422 2,151
Current liabilities
Borrowings - - (25) (47) (72) (72)
non-recourse
Other current liabilities (458) (148) (9) (157) (615)
Non-current liabilities
Borrowings - non-recourse (97) (533) (367) (900) (997)
Other non-current liabilities (106) (83) - (83) (189)
Total liabilities (661) (789) (423) (1,212) (1,873)
Net assets 68 38 172 210 278
Goodwill 30 - - - 30
Reclassify negative investment to provisions - 2 - 2 2
Loans to joint ventures and associates - 53 - 53 53
Total investment in joint ventures and associates 98 93 172 265 363
^ Including Ireland.
The Group's investment in military housing joint ventures' and associates'
projects is recognised at its remaining equity investment plus the value of
the Group's accrued returns from the underlying projects.
15 Investments in joint ventures and associates continued
2024
Infrastructure Investments
Construction Support UK^ North Total
Services Services £m America £m Total
£m £m £m £m
Income statement
Revenue 1,569 - 104 108 212 1,781
Operating profit 40 - 33 17 50 90
Investment income 9 - 66 15 81 90
Finance costs (1) - (61) (23) (84) (85)
Profit before taxation 48 - 38 9 47 95
Taxation (7) - (11) - (11) (18)
Profit after taxation from joint ventures and associates 41 - 27 9 36 77
Adjustment for expected credit losses at Group level - - (18) - (18) (18)
Profit after taxation 41 - 9 9 18 59
Balance sheet
Non-current assets
Intangible assets:
- Infrastructure Investments - - 13 - 13 13
- other 9 - 11 1 12 21
Property, plant and equipment 24 - - 39 39 63
Investment properties - - - 173 173 173
Investments in joint ventures and associates 4 1 - - - 5
Money market funds - - - 1 1 1
PPP financial assets - - 833 266 1,099 1,099
Military housing projects - - - 116 116 116
Other non-current assets 115 - 23 8 31 146
Current assets
Cash and cash equivalents 334 - 158 24 182 516
Other current assets 395 - 87 2 89 484
Total assets 881 1 1,125 630 1,755 2,637
Current liabilities
Borrowings - - - (35) - (35) (35)
non-recourse
Other current liabilities (607) (1) (172) (5) (177) (785)
Non-current liabilities
Borrowings - non-recourse (104) - (750) (438) (1,188) (1,292)
Other non-current liabilities (116) - (149) - (149) (265)
Total liabilities (827) (1) (1,106) (443) (1,549) (2,377)
Net assets 54 - 19 187 206 260
Goodwill 32 - - - - 32
Reclassify negative investment to provisions 7 - - - - 7
Loans to joint ventures and associates - - 86 - 86 86
Total investment in joint ventures and associates 93 - 105 187 292 385
(^) Including Ireland.
16 Contract balances
16.1 Contract assets
£m
At 1 January 2024 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 year 168
Reclassified from contract liabilities (Note 16.2) (16)
Impairments on contract assets recognised at the beginning of the year (6)
At 31 December 2024 229
Currency translation differences (9)
Transfers from contract assets recognised at the beginning of the year to (201)
receivables
Increase related to services provided in the year 248
Reclassified from contract liabilities (Note 16.2) (20)
Impairments on contract assets recognised at the beginning of the year (9)
At 31 December 2025 238
16.2 Contract liabilities
£m
At 1 January 2024 (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 16.1) 16
At 31 December 2024 (699)
Currency translation differences 30
Revenue recognised against contract liabilities at the beginning of the year 631
Increase due to cash received, excluding amounts recognised as revenue during (1,048)
the year
Reclassified to contract assets (Note 16.1) 20
Businesses disposed 3
At 31 December 2025 (1,063)
17 Trade and other receivables
2025 2024
£m £m
Current
Trade receivables 702 616
Less: provision for impairment of trade receivables (2) (2)
700 614
Due from joint ventures and associates 19 16
Due from joint operation partners 2 5
Contract fulfilment assets 9 17
Contract retentions receivable 264 242
Accrued income 20 12
Prepayments 160 65
Other receivables(+) 79 128
1,253 1,099
Non-current
Due from joint ventures and associates 107 123
Contract fulfilment assets 21 34
Contract retentions receivable 119 102
Other receivables(+) 49 67
296 326
Total trade and other receivables 1,549 1,425
( +) Includes insurance recoveries recognised in relation to rectification
works on a development in London (Note 9.2.2).
18 Trade and other payables
2025 2024
£m £m
Current
Trade and other payables 707 625
Accruals 895 813
Contract retentions payable 244 230
VAT, payroll taxes and social security 111 108
Due to joint ventures and associates - 2
1,957 1,778
Non-current
Accruals 12 10
Contract retentions payable 88 75
Due to joint ventures and associates - 3
100 88
Total trade and other payables 2,057 1,866
19 Provisions
Contract Employee Other Total
provisions provisions provisions £m
£m £m £m
At 1 January 2024 352 33 32 417
Currency translation differences 1 - - 1
Reclassified from accruals 1 - 1 2
Transfers (10) - 10 -
Charged/(credited) to the income statement:
- additional provisions 365 9 13 387
- unused amounts reversed (54) (3) (7) (64)
Utilised during the year (113) (7) (3) (123)
Transfer movement in negative investment in joint venture to provisions (Note - - (3) (3)
15)
At 31 December 2024 542 32 43 617
Currency translation differences (8) - - (8)
Reclassified from accruals 2 - - 2
Charged/(credited) to the income statement:
- additional provisions 208 8 7 223
- unused amounts reversed (110) (1) - (111)
Utilised during the year (120) (6) (3) (129)
Transfer net movement in negative investment in joint venture held in - - (5) (5)
provisions to investment in joint venture (Note 15)
At 31 December 2025 514 33 42 589
20 Notes to the statement of cash flows
20.1 Cash from/(used in) operations Non-underlying items Total Total
Underlying 2025 2025 2024
items(1) £m £m £m
2025
£m
Profit/(loss) from operations 252 32 284 173
Share of results of joint ventures and associates (64) - (64) (59)
Depreciation of property, plant and equipment 30 - 30 31
Depreciation of right-of-use-assets 68 - 68 60
Depreciation of investment properties 4 - 4 1
Amortisation of other intangible assets 6 3 9 10
Amortisation of contract fulfilment assets 12 - 12 27
Pension deficit payments, including regular funding (10) - (10) (30)
Movements relating to equity-settled share-based payments 16 - 16 10
Gain on disposal of interests in investments (32) - (32) (43)
Gain on disposal of Omnicom Balfour Beatty - (23) (23) -
Profit on disposal of property, plant and equipment (3) - (3) (2)
Other non-cash items (4) - (4) -
Operating cash flows before movements in working capital 275 12 287 178
Decrease in operating working capital 408 99
Inventories 2 (34)
Contract assets (19) 74
Trade and other receivables (217) (225)
Contract liabilities 395 91
Trade and other payables 264 (6)
Provisions (17) 199
Cash from operations 695 277
(1) Before non-underlying items (Note 9).
20 Notes to the statement of cash flows continued
20.2 Cash and cash equivalents
2025 2024
£m £m
Cash and deposits 1,191 1,084
Term deposits 476 209
Cash balances within infrastructure concessions 193 265
Bank overdrafts (68) (185)
1,792 1,373
20.3 Analysis of net cash/(borrowings)
2025 2024
£m £m
Cash and cash equivalents (excluding infrastructure concessions) 1,667 1,293
Bank overdrafts (68) (185)
US private placement (153) (165)
Net cash excluding infrastructure concessions 1,446 943
Non-recourse infrastructure concessions project finance loans at amortised (604) (600)
cost with final maturity between 2026 and 2072
Infrastructure concessions cash and cash equivalents 193 265
(411) (335)
Net cash 1,035 608
The Company, together with certain of its UK and US subsidiaries, operates
notional pooling facilities with main relationship UK and US clearing banks
where overdraft balances are offset with cash balances and interest is
calculated on a net basis. During the year ended 31 December 2025, the Group
maintained a net cash position on these pooling facilities, so there was no
interest payable to the bank in respect of these bank overdrafts. Overdraft
balances and cash held at these banks have been reported gross in the Group
balance sheet as there was no legal right of offset and no intention to settle
the bank overdrafts at the balance sheet date.
The loans relating to project finance arise under non-recourse facilities
taken out by project-specific subsidiary companies. The loans of each company
are secured by a combination of fixed and floating charges over that company's
interests in its project's assets and revenues and the shares in the company
held by its immediate parent company.
Term deposits are held on a short-term basis and are readily accessible to the
Group at any time with insignificant break costs.
Included in cash and cash equivalents is restricted cash of £16m (2024:
£16m) held by the Group's self-insurance company, Delphian Insurance Company
Ltd, which is subject to Isle of Man insurance solvency regulations.
Cash and cash equivalents also include: £134m (2024: £158m) within
construction project bank accounts which is used for project specific
expenditure; £425m (2024: £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 £193m (2024: £265m) relating to maintenance and
other reserve accounts in Infrastructure Investments subsidiaries, of which
£164m (2024: £234m) is reserved for the construction of University of
Sussex's West Slope student accommodation project.
20 Notes to the statement of cash flows continued
20.4 Analysis of movements in borrowings
Infrastructure US private placement Bank overdrafts Total
concessions £m £m £m
non-recourse
project finance
£m
At 1 January 2025 (600) (165) (185) (950)
Currency translation differences 4 12 - 16
Proceeds of loans (22) - (68) (90)
Repayments of loans - other 8 - 185 193
Repayments of loans - disposal of Foundry Court (Note 23.2) 22 - - 22
Loan indexation (11) - - (11)
Amortisation of fair value adjustment to loan (5) - - (5)
At 31 December 2025 (604) (153) (68) (825)
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 Environmental, Social and Governance (ESG) rating score. The
RCF remained undrawn at 31 December 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 an SLL, including metrics that mirror the
RCF. As of 31 December 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 4.9 years and an
average coupon rate of 6.5% per annum. The earliest maturity for these notes
will be in June 2027 for US$35m.
21 Retirement benefit assets and liabilities
IAS 19 Employee Benefits (IAS 19) prescribes the accounting for defined
benefit schemes in the Group's financial statements. Obligations are
calculated using the projected unit credit method and discounted to a net
present value using the market yield on high-quality corporate bonds. The
pension expense relating to current service cost is charged to contracts or
overheads based on the function of scheme members and is included in cost of
sales and net operating expenses. The net finance income arising from the
expected interest income on plan assets and interest cost on scheme
obligations is included in investment income. Actuarial gains and losses are
reported in the statement of comprehensive income.
The investment strategy of the Balfour Beatty Pension Fund (BBPF) is to hold
assets of appropriate liquidity and marketability to generate income and
capital growth. The BBPF invests partly in a diversified range of assets
including equities and hedge funds in anticipation that, over the longer term,
they will grow in value faster than the scheme's obligations. The BBPF has
been undertaking a phased withdrawal from equities and hedge funds. The
remaining BBPF assets are principally fixed and index-linked bonds and
derivatives, providing protection against movements in inflation and interest
rates and hence enhancing the resilience of the funding level of the scheme.
The performance of the assets is measured against market indices.
21 Retirement benefit assets and liabilities continued
The Group operates a Scottish Limited Partnership (SLP) structure which holds
the Group's 40% interest in the Birmingham Hospital PFI investment and the
Group's 15% share of the Connect Plus (M25) asset. The BBPF is a partner in
the SLP and is entitled to a share of the income of the SLP. In accordance
with IFRS 10 Consolidated Financial Statements, the SLP is deemed to be
controlled by the Group, which retains the ability to substitute the
investment in the Birmingham Hospital PFI investment and the Connect Plus
(M25) asset for other investments from time to time.
Under IAS 19, the investment held by the BBPF in the SLP does not constitute a
plan asset and therefore the pension deficit presented in these financial
statements does not reflect the BBPF's interest in the SLP. Distributions from
the SLP to the BBPF are reflected in the Group's financial statements as
pension contributions on a cash basis. In 2025, the BBPF received
distributions of £2m from the SLP (2024: £2m), which were used to pay
defined contribution costs. The Company and the trustees have agreed that the
BBPF's partnership interest in the SLP will be terminated in 2026.
Balfour Beatty and the trustees of the BBPF have reconfirmed their commitment
to a journey plan approach to managing the BBPF with the aim of reaching
self-sufficiency by 2026. The Company and trustees previously agreed the 31
March 2022 formal valuation and as a result Balfour Beatty made deficit
contributions to the BBPF of £5m in 2025 (2024: £22m). The Company and
trustees have now agreed the 31 March 2025 formal valuation and as a result,
the Company made a deficit contribution to the BBPF of £30m in February 2026.
The Company and the trustees have agreed that once the Defined Benefit section
moves into surplus as measured on an agreed set of parameters, further surplus
can be used by the Company to meet its existing obligations to the Defined
Contribution section of the BBPF. Given the current strong position of the
BBPF, the Group is expecting to start receiving a cash benefit from the
surplus by 2027. In certain circumstances, were the funding level in the
Defined Benefit section to fall below certain pre-agreed thresholds, surplus
offset in this way would need to be repaid to the Defined Benefit section by
the Company.
This agreement constitutes a minimum funding requirement (MFR) under IFRIC 14
IAS 19: The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction. The Group has not
recognised any liabilities in relation to this MFR as any
surplus of deficit contributions to the BBPF would be recoverable by way of a
refund and the Group has the unconditional right to the surplus and controls
the run-off of the benefit obligations once all other obligations of the BBPF
have been settled.
Principal actuarial assumptions for the IAS 19 accounting valuations of the
Group's principal schemes
2025 2024
Balfour Railways Balfour Railways
Beatty Pension Beatty Pension
Pension Scheme Pension Scheme
Fund % Fund %
% %
Discount rate 5.50% 5.50% 5.55 5.55
Inflation rate - RPI 2.90% 2.90% 3.25 3.25
- CPI 2.40% 2.50% 2.75 2.90
Future increases in pensionable salary 2.40% 2.50% 2.75 2.90
Rate of increase in pensions in payment (or such other rate as is guaranteed) 2.80% 2.60% 3.05 2.95
( )
Number Number Number Number
Total number of defined benefit members 24,296 2,851 24,880 2,905
The future improvements assumption adopted for the BBPF and RPS have been
updated in 2025 to reflect the most recent model available, with the Group
setting future improvements in line with the Continuous Mortality
Investigation (CMI) 2024 core projections model.
21 Retirement benefit assets and liabilities continued
BBPF life expectancies
2025 2024
Average life expectancy at 65 years of age Average life expectancy
at 65 years of age
Male Female Male Female
Members in receipt of a pension 21.9 23.1 21.3 23.0
Members not yet in receipt of a pension (current age 50) 22.7 24.0 22.2 23.9
RPS life expectancies
2025 2024
Average life expectancy at 65 years of age Average life expectancy
at 65 years of age
Male Female Male Female
Members in receipt of a pension 21.1 22.8 20.8 22.7
Members not yet in receipt of a pension (current age 50) 21.9 23.7 21.6 23.6
Amounts recognised in the Balance Sheet
2025 2024
Balfour Railways Balfour Railways
Beatty Pension Beatty Pension
Pension Scheme Other schemes^ Pension Scheme Other schemes^
Fund £m £m Total Fund £m £m Total
£m £m £m £m
Present value of obligations (2,222) (279) (32) (2,533) (2,248) (287) (34) (2,569)
Fair value of plan assets 2,213 272 - 2,485 2,291 280 - 2,571
(Liabilities)/assets in the balance sheet (9) (7) (32) (48) 43 (7) (34) 2
^ Investments in mutual funds of £16m (2024: £20m) are held to satisfy the
Group's deferred compensation obligations.
The defined benefit obligations comprise £32m (2024: £34m) arising from
wholly unfunded plans and £2,501m (2024: £2,535m) arising from plans that
are wholly or partly funded.
Movements in the retirement benefit assets and obligations for the year £m
At 1 January 2025 2
Currency translation differences 1
Current service cost (2)
Net finance income 1
Actuarial movements - on obligations from reassessing the difference between RPI and CPI 2
- on obligations from changes in demographic assumptions (2)
- on obligations from changes to other financial assumptions 25
- on obligations from experience losses (33)
- on assets (54)
Contributions from employer - regular funding 2
- ongoing deficit funding 5
Benefits paid 5
At 31 December 2025 (48)
21 Retirement benefit assets and liabilities continued
Sensitivity of the Group's retirement benefit obligations at 31 December 2025
to different actuarial assumptions
Sensitivity to increase in assumption Sensitivity to decrease in assumption
Assumption Percentage (Decrease)/ (Decrease)/ Percentage Increase/ (decrease) Increase/ (decrease) in
points/years increase in increase in points/years in obligations
obligations obligations obligations £m
% £m %
Discount rate 0.5% (5.0)% (124) (0.5)% 5.4% 136
Market expectation of RPI inflation 0.5% 3.5% 87 (0.5)% (3.7)% (93)
Salary growth 0.5% <0.1% - (0.5)% <(0.1)% -
Life expectancy 1 year 4.0% 101 (1 year) (4.2)% (105)
Sensitivity of the Group's retirement benefit assets at 31 December 2025 to
changes in market conditions
Percentage (Decrease)/ (Decrease)/
points increase in increase in
assets assets
% £m
Increase in interest rates 0.5% (4.9)% (123)
Increase in market expectation of RPI inflation 0.5% 3.4% 85
The asset sensitivities only take into account the impact of the changes in
market conditions on bond-type assets. The value of the schemes'
return-seeking assets is not directly correlated with movements in interest
rates or RPI inflation.
The BBPF includes a defined contribution section with 16,951 members at 31
December 2025 (2024: 16,619 members) with £58m (2024: £50m) of contributions
paid and charged in the income statement in respect of this section. The
total pension cost recognised in the income statement in respect of employee
service for defined benefit and defined contribution schemes was £67m (2024:
£59m).
22 Share capital
During the year ended 31 December 2025, 5.0m (2024: 2.9m) shares were
purchased at a cost of £31m (2024: £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.
In 2025 the Company commenced the fifth phase of its share buyback programme,
which completed on 12 December 2025. The Company purchased 24.2m (2024: 27.1m)
shares for a total consideration of £125m (2024: £100m) and held those
shares in treasury with no voting rights. The purchase of those shares,
together with associated fees and stamp duty amounting to £1m (2024: £1m),
utilised £126m (2024: £101m) of the Company's distributable profits.
On 24 December 2025, the Company cancelled the 24.2m treasury shares purchased
through the 2025 phase of its share buyback programme (2024: 27.1m). This
cancellation resulted in a decrease in called-up share capital in issue of
£12m (2024: £13m) and a corresponding increase in the capital redemption
reserve.
23 Acquisitions and disposals
23.1 Current and prior year acquisitions
There were no acquisitions in 2025.
In 2024, the Group acquired an additional 17% of Denver Transit Operators LLC
(DTO), an existing joint venture of the Group, for a purchase price of £6m,
which increased the Group's holding in this joint venture to 50%. The Group
continues to apply equity-method accounting for DTO and has recognised a
customer contract intangible asset of £9m as a result of this acquisition.
23.2 Current year disposals
Notes Disposal date Entity/asset Percentage disposed % Cash Net (assets)/ liabilities Amount recycled from reserves £m Direct cost incurred Underlying Non-underlying gain
consideration disposed £m gain £m
£m £m £m
23.2.1 1 August 2025 Omnicom Balfour Beatty(&) n/a 24 2 - (3) - 23
23.2.2 30 September 2025 Paces Brook(&^) n/a 5 (1) - - 4 -
23.2.3 18 December 2025 Foundry Courtyard (Kennedy Street)(&) n/a 48 (25) - - 23 -
23.2.4 19 December 2025 Sunderland Street Lighting, South Tyneside Street Lighting, Coventry Street 20% respectively 7 (7) - - - -
Lighting, Cambridgeshire Street Lighting and Northamptonshire Street Lighting
projects(%#)
23.2.5 19 December 2025 Connect CNDR Ltd(%#) 25% 6 (6) 1 - 1 -
23.2.6 23 December 2025 Gwynt y Môr, Humber Gateway & Thanet offshore transmission projects(%#) 60%; 20%; 20% respectively 74 (43) (25) - 6 -
23.2.7 Other(#) n/a 2 - - - 2 -
166(~) (80) (24) (3) 36 23
Less: Repayment of debt following disposal of Foundry Courtyard (22)
Less: Cash proceeds not included in Directors' valuation(+) (24)
Disposal proceeds per the Directors' valuation (120)
(&) Asset Sale
(%) Equity Sale
(^) Disposal of asset within a joint venture entity.
(#) Disposal of joint venture.
(+) The Directors' valuation does not include proceeds in relation to the
Group's sale of Omnicom Balfour Beatty.
(~) Proceeds from the sale within joint venture entities are included within
Dividends received from joint ventures and associates - Infrastructure
Investments and within Return of equity from joint ventures and
associates in the statement of cash flows.
23.2.1 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 to Hitachi Rail. After deducting cost
of disposal, the Group recorded a gain on disposal of £23m within its
non-underlying results in the year. Refer to Note 9.2.3.
23.2.2 On 30 September 2025, the Group disposed of its Paces Brook asset, a
260-unit multifamily residential project located in Columbia, South Carolina,
for a cash consideration of £5m. The asset disposal resulted in a gain of
£4m being recognised in underlying operating profit.
23.2.3 On 18 December 2025, the Group disposed of its Foundry Courtyard
(Kennedy Street) asset, a 536-bed student accommodation building located in
Glasgow for a cash consideration of £48m. The asset disposal resulted in a
gain of £23m being recognised in underlying operating profit.
23.2.4 On 19 December 2025, the Group disposed of its entire interest in five
street lighting projects for a cash consideration of £7m. The infrastructure
concession disposal resulted in a net gain of £nil being recognised in
underlying operating profit, comprising a gain of £nil in respect of the
investment in the joint ventures.
23.2.5 On 19 December 2025, the Group disposed of its 25% interest in Connect
CNDR Ltd for a cash consideration of £6m. The infrastructure concession
disposal resulted in a net gain of £1m being recognised in underlying
operating profit, comprising a gain of £nil in respect of the Group's
investment in the joint ventures of £8m and £2m of upstream loan from the
joint venture, and a gain of £1m related to the recycling of revaluation
reserves to the income statement.
23.2 Current year disposals continued
23.2.6 On 23 December 2025, the Group disposed of its entire interest in its
three offshore transmission projects for a cash consideration of £74m. The
infrastructure concession disposal resulted in a net gain of £6m being
recognised in underlying operating profit, comprising a gain of £31m in
respect of the Group's investment in the joint ventures of £6m and £37m of
accrued interest receivable from the joint venture, and a loss of £25m
related to the recycling of revaluation reserves to the income statement.
23.2.7 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.
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. This includes, but is
not limited to, any new claims that may arise relating to fire safety
regulations under the Building Safety Act. The Group assesses the likelihood
of success of claims, actions or ongoing investigations, taking into
consideration any legal advice received. No provision is made where the
Directors consider that the action is unlikely to succeed, or that the Group
cannot make a sufficiently reliable estimate of the potential obligation.
However, in certain cases where assessments are ongoing and the Group cannot
yet conclude whether it is probable the claim is valid, a possible obligation
may exist at 31 December 2025. In respect of these cases, it is not
practicable to estimate the financial effect based on the current status of
the assessments.
25 Related party transactions
Joint ventures and associates
The Group has contracted with, provided services to, and received management
fees from, certain joint ventures and associates amounting to £466m (2024:
£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 17 and 18 respectively.
Transactions with non-Group members
The Group also entered into transactions and had amounts outstanding with
related parties which are not members of the Group as set out below. This
company was a related party as it was controlled, jointly controlled or under
significant influence by a director of Balfour Beatty plc.
2025 2024
£m £m
Site Assist Software Limited(+)
Purchase of services 1 1
(+) Transactions disclosed with Site Assist Software Limited relate to the
period from 1 January 2025 to 8 September 2025. After this date the company
ceased to be a related party of the Group due to Leo Quinn stepping down from
the role of Group Chief Executive.
25 Related party transactions continued
All transactions with this related party were conducted on normal commercial
terms, equivalent to those conducted with external parties. No guarantees have
been given or received. No expense has been recognised in the year for bad or
doubtful debts in respect of amounts owed by this related party.
During 2025, a member of the Group's staff was seconded on a full-time basis
to The 5% Club, a charity which is a dynamic movement of employer-members
working to create a shared prosperity across the UK by driving 'earn and
learn' skills training. The expense for the salary cost was borne by the Group
and no consideration was received in return. The 5% Club ceased to be a
related party to the Group after Leo Quinn stepped down from his role as Group
Chief Executive on 8 September 2025.
26 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 Annual Report and Accounts 2024.
27 Events after the reporting date
In the period from 1 January 2026 to 9 March 2026 (the latest practicable date
prior to the date of this announcement) the Company purchased 3.1m ordinary
shares, which are held in treasury with no voting rights, for a total
consideration of £23m (including stamp duty and fees).
In early 2026, the Group reached agreement with the trustees of the Balfour
Beatty Pension Fund (BBPF) over the triennial valuation of the Defined Benefit
section of the BBPF as at 31 March 2025. The Group made a one-off contribution
of £30m in February 2026, as stipulated in the recent agreement, and no
further contributions are expected to be made.
The Company and the trustees have agreed that once the Defined Benefit section
moves into surplus as measured on an agreed set of parameters, further surplus
can be used by the Company to meet its existing obligations to the Defined
Contribution section of the BBPF. Given the current strong position of the
BBPF, the Group is expecting to start receiving a cash benefit from the
surplus by 2027. In certain circumstances, were the funding level in the
Defined Benefit section to fall below certain pre-agreed thresholds, surplus
offset in this way would need to be repaid to the Defined Benefit section by
the Company.
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