Driving Change Next Generation Thinking | Sustainable Delivery Driving Change “The World Is Changing Rapidly and So Are We
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Annual Integrated Report 2019 Driving change Next generation thinking | Sustainable delivery Driving change “The world is changing rapidly and so are we. Arcadis is transforming into a data and insight-driven provider of products and services putting the human experience at the center of what we do. This evolution will enable us to create sustainable and resilient cities and industries that thrive and improve quality of life for people around the world.” Peter Oosterveer, CEO Executive Supervisory Financial Other Introduction Board report Board report statements information Arcadis Annual Integrated Report 2019 83 Triodos Bank Office matches client’s sustainable purpose Driebergen-Zeist, The Netherlands Supporting Triodos as a partner in designing and planning their new home space. Arcadis was part of the design team and delivered services focused on Landscape Architecture & Urbanism, design of the innovative solar cellar roof. BREEAM-certification, (spatial) planning and environmental research (heritage, sustainable mobility, soil, ecology, hydrology and archeology). Challenge Solution Impact The sustainable Triodos Bank is growing fast and Matching their purpose, Triodos built a completely The new office creates room for improving the needed a new headquarter. The building site is located sustainable office-based on circular design principles, ecological structure and biodiversity. The construction on an old and cultural-historical valuable estate in a with the use of bio-based materials and re-used is designed in a way that components and materials protected ecological zone. materials. The building is also energy neutral based can easily be disassembled, without losing value. on heat-cold storage and green roofs. Solar panels are The building and estate reached the highest BREEAM placed above the parking lot. The building is optimally score, are energy neutral, have a closed water circuit integrated into the environment. The entire estate is and are located right next to the train station. developed in accordance with the vision of balancing The whole project won a number of awards like the nature, culture and economy. The project even Cobouw Award 2019 for best new office, best office Relevant SDGs: improved the biodiversity of the estate and its design by Architectenweb 2019 and the award for water-balance. the best nature-inclusive build and design 2019. Executive Supervisory Financial Other Introduction Board report Board report statements information Arcadis Annual Integrated Report 2019 4 Table of contents Executive Board report Other information Other information 261 Our strategy 31 Independent auditor’s report 262 Our strategy for 2018-2020 31 Assurance report of the independent auditor 269 Strategic context 35 Other financial data 271 Mega trends 36 Five-year summary 272 Stakeholder dialogue 37 Segment information 274 Sustainable Development Goals 40 Company addresses 275 Competitive landscape 43 Glossary financial & non-financial indicators 277 Connectivity matrix 45 Other 279 Performance & developments 47 People & Culture 47 Innovation & Growth 63 Focus & Performance 84 Supervisory Board report Performance by Segment 93 Report by the Supervisory Board 162 Europe & Middle East 93 Remuneration report 168 Americas 105 Asia Pacific 117 CallisonRTKL 126 Arcadis Logos Energia (ALEN) 135 Financial Statements Consolidated financial statements 176 Introduction Governance & Compliance 136 Company financial statements 248 2019 at a glance 5 Composition of the Executive Board 136 Message from the CEO 8 Composition of the Executive Leadership Team 137 Message from the Chairman 13 Composition of the Supervisory Board 138 Our business 14 Corporate Governance report 141 The Arcadis journey 27 Enterprise Risk Management 147 Introduction 2019 at a glance Executive Supervisory Financial Other Introduction Board report Board report statements information Arcadis Annual Integrated Report 2019 5 2019 at a glance 2019 at a glance People & Culture Number of employees Voluntary turnover rate Total Recordable Case Frequency (TRCF) Improvement headcount as at 31 December as % of total staff per 200,000 work hours Deterioration 2018: 2018: 2018: 27,354 15.6% 0.18 27,875 13.5% 0.16 Unchanged 1 Employee engagement Females in total workforce Employees passing Code of Conduct training employee net promoter score (on a scale of -100 to 100) as % of total staff of all employees in 2019 2018: 2018: 2018: 19 3.102 38% 37% 97% 98% 1 Based on a sample of employees, see page 49 2 In prior years a scale of 0 - 4 was used; for the definition and method of measure for the indicator in 2019 see page 277 For definitions and methods of measure for the indicators included on this spread, please refer to page 277. The indicators that fall within the scope of limited assurance of our external auditor are marked with the symbol. See page 269 for the Assurance report of the independent auditor, which includes details on scoping and outcomes. Executive Supervisory Financial Other Introduction Board report Board report statements information Arcadis Annual Integrated Report 2019 6 2019 at a glance 2019 at a glance Innovation & Growth Organic revenue growth Organic revenue growth Global Key Clients Arcadis’ carbon footprint Improvement net revenues net revenues MT CO2 per FTE Deterioration 2018: 2018: 2018: 3% 10% 2.98 3% 5% 2.49 Unchanged Book-to-bill ratio Arcadis Way implementation progress Revenues that relate to relevant SDGs net revenues as % of net revenues as % of revenues 2018: 2018: 2018: 1.00 0.97 63% 33% 79% 80% For definitions and methods of measure for the indicators included on this spread, please refer to page 277. The indicators that fall within the scope of limited assurance of our external auditor are marked with the symbol. See page 269 for the Assurance report of the independent auditor, which includes details on scoping and outcomes. Executive Supervisory Financial Other Introduction Board report Board report statements information Arcadis Annual Integrated Report 2019 7 2019 at a glance 2019 at a glance Focus & Performance Gross revenues Operating EBITA margin Return on Invested Capital Improvement in € millions as % of gross revenues (ROIC) Deterioration 2018: 2018: 2018: 3,256 7.3% 4.7% 3,473 8.1% 6.1% Unchanged Net Income from Operations per share Net Working Capital Net debt to EBITDA ratio in € as % of gross revenues average 2018: 2018: 2018: 1.42 1.01 16.6% 15.1% 1.4 2.0 Dividend per share Days Sales Outstanding Free Cash Flow proposed, in € (DSO) in € millions Figures based on IAS 17 for comparison purposes. 2018: 2018: 2018: For the IFRS 16 figures 0.56 0.47 88 80 97 149 see page 272. For definitions and methods of measure for the indicators included on this spread, please refer to page 277. The indicators that fall within the scope of limited assurance of our external auditor are marked with the symbol. See page 269 for the Assurance report of the independent auditor, which includes details on scoping and outcomes. Message from the CEO Executive Supervisory Financial Other Introduction Board report Board report statements information Arcadis Annual Integrated Report 2019 8 Message from the CEO Next generation thinking Sustainable delivery Dear stakeholders, Strategic progress Our ‘Creating a Sustainable Future’ strategy is based on three pillars: Welcome to our 2019 Annual Integrated Report. People & Culture, Innovation & Growth, and Focus & Performance. We are advancing our vision for the future of Arcadis against a backdrop of Advances we made in each of our three strategic pillars include: growing market opportunities driven by global trends. Continued urbanization drives demand for sustainable transportation solutions and affordable housing. People & Culture – Our focus on creating a stronger, unique culture with a growth Climate change creates growth in water solutions, resilience and a transition to mindset and a disciplined focus on pursuing the right clients while creating better zero carbon. Globalization drives multinational clients to consultancies that can financial performance is starting to bear fruit, especially in North America, provide services worldwide. Digitization drives the development of new business Continental Europe and the UK. In addition, we are building on the foundation models and better-informed investment decision making in which we can play of the Grow Perform Succeed performance management framework that we first a key role. In the midst of all of this, we are seeking to improve quality of life by started implementing in 2018. We are on a journey to become an employer of better understanding the human experience and connecting it with our deep asset choice. In 2019, we started piloting two new initiatives: Your Voice, our new knowledge. Our urban and industrial clients will benefit from this transformation, employee engagement program and the Line Management Experience – a bespoke as the end user experience will inform our designs and solutions, making them curricula for line managers at all levels. Our voluntary staff turnover decreased inherently more relevant. Simultaneously, we have chosen to continue our path to 13.5% globally. We were able to achieve a significant decrease in voluntary to be a leader in sustainability. We target carbon neutrality by 2030 for our global turnover in North America, and improvements in UK, Asia, Australia Pacific, operations and increasingly seek to convince clients that sustainable solutions CallisonRTKL, Latin America, and the Middle East. We saw an increase