GROWING AS A BUSINESS AND AS INDIVIDUALS

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1 GROWING AS A BUSINESS AND AS INDIVIDUALS For us, 'success' means supporting the prosperity of our clients, our own financial growth, and ensuring that our people grow and enjoy challenging careers. It also means achieving a diverse workforce, providing the variety of actives and skills on which a twenty first century business depends. TALENT The ongoing capability and engagement of our employees is critical to ensure the profitable and sustainable growth of the Company. Balfour Beatty achieves this through the comprehensive training and development of existing employees across the Company and targeted external recruitment as necessary has seen a significant change in the composition of our global workforce. Following the divestment of our UK Facilities Management business, Workplace (8,700 employees), to GDF SUEZ in December 2013 and the divestment of our global Professional Services Division, Parsons Brinckerhoff (14,500 employees) to WSP in November 2014, the Group has now reduced to 24,000 employees in our core business and a further 12,000 employees as a proportional allocation of our Joint Venture interests. Balfour Beatty is now repositioned as an infrastructure group focused on construction, services and investments, comprising: top tier national and regional construction businesses in the UK and US; a leading international investments business; a services division with a number of specialist construction and asset management businesses, and; successful construction joint ventures in the Far East and Middle East. Organisational capability continues to be reviewed across the Group within the Organisation and People Review (OPR). This ensures visibility to talent, robust succession planning and targeted technical and leadership training and development interventions. Balfour Beatty remains committed to the 5% Club with an objective that 5% of our UK workforce will be graduates or apprentices in structured training programmes in the next four years. This is clearly demonstrated by the doubling of the number of apprenticeships we offered in 2014 to 184 places up from 92 places in The number of graduates and apprentices as a proportion of our UK businesses is consistent with 2013, despite selling Parsons Brinckerhoff with its large graduate pool. Apprentices 326 Graduates 184 Sponsored students 17

2 Total UK workforce 17,000 % of structured trainees 3.1% Our UK businesses are supporting around 230 people studying part-time at local colleges and universities. The Company is recognised as actively promoting the advancement of engineering skill and capability in the UK. We work in strong partnership with The Prince's Trust to target unemployed young people via the delivery of the Get into Construction and more recently the Get into Highways programme. Over the last 5 years, there have been around 400 young people who have been through this programme working and learning on Balfour Beatty sites. About 70% have gained employment in the industry with us directly or our supply chain. This has been a very successful programme and there are plans to expand the programme for next year and beyond. Our UK highways and maintenance business has been nurturing the talent in their local communities as well as supporting their clients social value agendas by providing work experience for disadvantaged people, including ex-offenders. The West Sussex contract is working with SUMMIT which is essentially a Social Enterprise operating as a subcontractor. SUMMIT employs ex-offenders from Ford Open Prison giving them work experience and training which greatly improves their opportunities for finding permanent employment, preventing them from re-offending. Our Overhead Transmission Line Training Centre in the Philippines offers us the opportunity to train for a worldwide market, offering trainees internationally-recognised qualifications and training to ensure safety and quality on our global electricity transmission projects. The training is a rigorous programme, covering safety, installation and jointing of overhead line conductors, electrical testing of equipment and installation of steel works. Upon completion of the programme, trainees achieve an International Vocational Qualification (IVQ) in Electrical Power Engineering, which has the same high standards as its UK equivalent the NVQ and is awarded by City and Guilds. This means that competencies and training are consistent across the whole of Balfour Beatty, in all territories. To date we have trained over 300 overhead transmission line workers through the training centre. The Company recently was honoured to receive at St James Palace a Partnership Certificate from The Duke of Edinburgh s Award scheme in recognition of our young employee development, supported by the Government Employer Ownership of skills Fund. Our joint venture Gammon Construction was awarded the HR Excellence Awards 2014 presented by the Hong Kong Institute of Human Resource Management. They include The Grand Award of the Year and Excellence Business Partner Award in Strategic HR Category. The Awards also shed light on our training officer Andy Sin, who received the individual award Rising Star proving Gammon s extraordinary achievement in nurturing its people its commitment to the Contractor Cooperative Training Scheme (CCTS). Balfour Beatty has received a government grant to further develop the leadership and technical skills of our workforce and to attract people into the industry. Over the next 3 years over 2,000 employees will benefit from the contract made available by the UK Commission for Employment & Skills / Skills Funding Agency under the Employer Ownership Skills Funding Scheme. The primary vehicle for delivering this programme will be by the newly established Balfour Beatty Academy. A number of trailblazing industry training standards have already been approved as Balfour Beatty leads a consortium of other employers, customers, professional institutions and trade associations.

3 In the Dubai, we have set up a training centre for blue collar workers to improve their skills and take up new technical roles as part of their continual professional development. Through an assessment programme operatives are able to learn and demonstrate their skills, incentivising them to acquire new skills and improving their career prospects. EMPLOYEE SATISFACTION We recognise that the extension of our commitment to emerging talent is only laudable if accompanied by a broader, inclusive focus on the on-going development of all our people. As a result we were pleased to see that the levels of engagement have improved in a challenging 12 months in the UK from 66% to 71% and the rest of the world (ROW) from 66% to 75%. Staff satisfaction levels stayed almost the same in North America at 82% and Europe at 58% as in The lower staff satisfaction levels in Europe can be explained by the planned exit of our rail operations in Europe and recent disposals. Figure 2: Percentage of employees that are satisfied in the annual employee survey UK 71% North America 82% ROW 75% Europe 58% DIVERSITY Commitment to diversity and inclusion remains central to our people strategy. While the proportion of female employees has reduced in recent years with the disposal of our Facilities Management and Professional Services business as below, key interventions are in place to enhance diversity and inclusion in our core remaining business. For example, the Company is strongly supporting the Government s Your Life campaign, which is encouraging the study of STEM subjects amongst female students. Further building on our Opportunity Now accreditation, a Connecting Women network forum has been introduced across the UK business. A LGBT network has also been established as part of the Stonewall Diversity Champion programme. Balfour Beatty is also the first infrastructure Company to become a member of the OUTstanding LGBT professional network and proud to be represented in the 2014 Financial Times Top 100 LGBT Business Leaders list in a special report on executive diversity. Additionally, Balfour Beatty Investments UK was the recipient of Investors in People (IIP) Gold award for the second time,

4 Percentage recognizing outstanding people in management. Only 7% of IIP-accredited organizations currently hold this status. Figure 3 provides an overview of the percentage of women in our workforce. Given the significant reduction in staff from 47,200 employees to 24,000 staff the disposal of our services and professional services businesses, the percentage of total women in our workforce as dropped from 23% to 16% over the last two years. The percentage of senior leadership positions held by female employees was 18.5% (again excluding PB data). However, parts of our business that are not directly linked to frontline construction work such as our investments business have 42% of the leadership positions filled by women. However, encouraging women to work in this sector still remains a challenge. 33 (10.34%) of all of our company directors of our group companies were female which is an increase on last year s figure of 9.03%. Diversity-related questions are now included in all employee surveys and unconscious bias training has been delivered to a range of senior leaders and included in Group leadership programmes. A commitment to diversity and inclusion is also referenced as one of the key attributes we are seeking from our future leaders. The commitment to diversity is also evident in our supply chain and business development. Over 50% of our suppliers in the UK are now SMEs, generating a strong platform to build relations and extend opportunity in local communities. Promoting diversity in our business development helps us share our commitment in the market and work more closely with customers on shared agendas. In 2015, we will build further on our progress, extending our focus further from gender to other characteristics and aligning UK policy in areas like parental support and flexible working. Figure 3: Female employees in the workforce 25% 20% 15% 10% % 0% 23.0% 22.0% 16.0% Total workforce CDP

5 CDP Score Our CDP score increased during the year from 87 to 94 and we were awarded a position on the CDP s 2014 Climate Performance Leadership Index for our actions to reduce carbon emissions and mitigate the business risks of climate change. Nearly 2,000 listed companies submitted information to the CDP, an international, not-for-profit organisation providing a global system for companies and cities to measure, disclose, manage and share vital environmental information. Of the companies questioned, only 187 achieved Performance Leadership status. Our score of 94A is a strong improvement on last year s score of 87B, and provides recognition for how much we have already achieved in reaching our carbon reduction targets. This reflects a combination of top management commitment, our emissions record and our governance arrangements. CDP Score