Chairman and Chief Executive's introduction

This is Balfour Beatty's seventh Corporate Responsibility Report, continuing the Group's commitment not only to fulfilling the full range of its responsibilities to all its stakeholder groups but also to reporting, openly, on its progress in so doing.

We regard this reporting process as of great importance, not only in communicating our approach and achievements, but also in demonstrating to our customers that we aim to match or even surpass the very high standards of responsible conduct which they set themselves and their supply chain partners.

We are very pleased to report a continuation of the progress we have made in recent years. Our record profits, earnings, order book and growing employee numbers demonstrate our economic contribution. We have continued to reduce our accident frequency rate, found better ways of managing our environmental impacts and both fine tuned and augmented our corporate citizenship credentials. We believe our improving environmental and social performance has also made us an even more sustainable organisation.

Governance and management

We have continued to evaluate critically all our governance and management systems to ensure their suitability for purpose. Policies have been renewed and, where necessary, restated. We are updating the terms of reference of the Business Practices Committee so that it can monitor, evaluate and guide our non-financial performance more effectively.

We have begun the process of training all our people in our ethical standards and the attitudes and behaviour expected of them when they are acting in Balfour Beatty's name.

Safety

Senior management focus on safety continues to increase. It is our stated aim that it should be no more hazardous to go to work on one of our construction sites than it is one of our offices. We achieved a further 16% reduction in accident frequency rate in the year. Particular emphasis has been, and continues to be, given to the process of designing hazards out of the construction process, for example, with increasing use of off-site component manufacture and assembly.

Health

We continue to seek ways in which the rigorous standards of safety management required around the Group can be applied equally to occupational and public health. Our range of programmes aimed at dealing with such issues as health screening, drug and alcohol testing, stress, hand-arm vibration and manual handling is growing all the time.

Environment

Our programmes to reduce waste, energy consumption, emissions, the use of non-sustainable materials and water consumption continued to be developed and delivered another year of improving practices. We are becoming increasingly successful in spreading good practice to all our operating companies across the Globe.

The wider community

Balfour Beatty's work enhances the physical environment. It creates educational, healthcare, transportation and other social capital. The Group believes it has a responsibility to extend the positive impact that its work has on the lives of asset users to the wider community in which the company operates.

A key theme in Balfour Beatty's CR activities is enhancing the lives of young people, particularly those at risk or at some disadvantage, and improving the communities in which they live and grow. This theme finds expression through a number of initiatives at corporate, operating company and local and individual project level.

Notable amongst the progress made in 2007 was our decision to assume name sponsorship of the London Youth Games, Europe's largest youth sports programme. Sport achieves many things for young people. It promotes personal well-being. It breeds confidence and a sense of purpose. It offers opportunity where there may be few alternatives. It acts in support of social cohesion and against social exclusion.

When the opportunity to positively impact the lives of every single child who attends a state school in London over the next six years arose, we didn't have to think very hard or very long.

We have worked hard on developing and growing a number of other programmes during the year.

The future

As we wrote last year, the Group will continue to be judged by its stakeholders not just on its size and profitability but also on how well it manages its affairs beyond financial performance. We work very hard on this aspect of the Group's affairs and believe we will be able to continue to make progress this year and beyond.

Sir David John KCMG	Ian Tyler

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