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Arcadis Annual Integrated Report 2017 Arcadis Annual Integrated Report 2017 5 Message from the CEO Arcadis NV NV Arcadis Annual Integrated Report 2017 Report Integrated Annual CREATING MEANINGFUL IMPACT MEANINGFUL CREATING CREATING A SUSTAINABLE FUTURE Annual Integrated Report 2017 This Annual Integrated Report contains interactive elements. Click on this button to go to the overall index. This document is optimized for Acrobat Reader. CREATING A SUSTAINABLE FUTURE 157 FINANCIAL 23 EXECUTIVE BOARD REPORT STATEMENTS 24 OUR NEW STRATEGY 159 Consolidated financial “Over the coming years we will foster a strong 24 Our new strategy statements culture which will allow our passionate people 25 Strategic context 84 Performance by segment 219 Company financial 26 Mega trends 84 Europe & Middle East statements to blossom, exceed our clients’ expectations and 27 Stakeholder dialogue 94 Americas create growth by focusing on our strengths. 30 Sustainable development 102 Asia Pacific 232 OTHER goals as relevant for Arcadis 110 CallisonRTKL INFORMATION 32 Competitive landscape Creating a sustainable future is all about enabling 33 Strategic pillars 116 GOVERNANCE AND 233 Other information this growth in Arcadis and by expanding horizons 34 Our strategic framework COMPLIANCE 234 Independent auditor’s report 2018 - 2020 116 Composition of the 243 Assurance report of so that, together, we will look forward to a bright 4 INTRODUCTION 36 Connectivity matrix Executive Board the independent auditor future for our Company... and for you.” 118 Composition of the 141 SUPERVISORY 245 Other financial data 4 2017 at a glance 40 PERFORMANCE & Supervisory Board BOARD REPORT 246 Five-year summary 6 Message from the CEO DEVELOPMENTS 120 Overview of senior 248 Segment information Peter Oosterveer, CEO 11 Message from the Chairman 40 People & Culture management 142 Report by the 249 Company addresses 12 Our business and passion 58 Innovation & Growth 122 Corporate governance report Supervisory Board 251 Glossary financial & 20 The Arcadis journey 76 Focus & Performance 130 Enterprise risk management 150 Remuneration report non-financial indicators ON THE COVER: 1000 ARBRES Reinventing Paris with a thousand trees TABLE OF CONTENTS To be completed: 2023 Improving the Connecting the city city climate and the suburbs, and living bridging the gap environment between Parisians Arcadis to design the bridge building above 1000 the ring road ARBRES Bringing life back to this forgotten area REINVENTING PARIS WITH A THOUSAND TREES BE INSPIRED, WATCH THE VIDEO: © Compagnie de Phalsbourg – Ogic INTRODUCTION 2017 at a glance INTRODUCTION | 2017 AT A GLANCE 2017 AT A GLANCE | INTRODUCTION 2017 AT A GLANCE PEOPLE & CULTURE INNOVATION & GROWTH FOCUS & PERFORMANCE In 2017, we worked together with our clients to deliver exceptional and sustainable outcomes, NUMBER EMPLOYEE ORGANIC BOOK-TO-BILL GROSS REVENUES NET INCOME FROM DIVIDEND PER SHARE OF EMPLOYEES ENGAGEMENT SCORE REVENUE GROWTH RATIO in € millions OPERATIONS PER SHARE proposed, in € and create value for headcount as at 31 December on a scale of 0 - 4 net revenues net revenues in € all stakeholders 27,327 3.03 1% 1.02 3,219 1.18 0.47 2016: 27,080 2015: 3.07 2016: - 4% 2016: 0.94 2016: 3,329 2016: 1.08 2016: 0.43 VOLUNTARY FEMALES IN TOTAL REVENUE GROWTH ARCADIS WAY OPERATING EBITA NET WORKING DAYS SALES TURNOVER RATE WORKFORCE KEY CLIENTS IMPLEMENTATION PROGRESS MARGIN CAPITAL OUTSTANDING as % of total staff as % of total staff net revenues as % of net revenues as % of net revenues as % of gross revenues (DSO) 14.6% 37% 17% 31% 7.6 % 16.9% 88 Improvement 2016: 15.0% 2016: 36% 2016: 6% 2016: 3% 2016: 7.1% 2016: 17.5% 2016: 91 Unchanged Deterioration TOTAL RECORDABLE EMPLOYEES PASSING ARCADIS’ NUMBER OF IDENTIFIED RETURN ON NET DEBT TO FREE CASH FLOW CASE FREQUENCY (TRCF) CODE OF CONDUCT TRAINING CARBON FOOTPRINT ENVIRONMENTAL INVESTED CAPITAL EBITDA RATIO in € millions per 200,000 work hours of all employees in 2017 MT CO2 per FTE NON-COMPLIANCES (ROIC) average For definitions and methods of measure for the indicators included on this spread, please refer to page 251. The indicators that fall within the scope of % none % limited assurance of our external auditor are marked 0.26 97 3.34 7.3 2.3 98 with the symbol (2017 only). See page 243 for 2016: 0.26 2016: 94% 2016: 3.50 2016: none 2016: 6.8% 2016: 2.5 2016: 80 the Assurance report of the independent auditor, which includes details on scoping and outcomes. 4 Arcadis Annual Integrated Report 2017 Arcadis Annual Integrated Report 2017 5 Message from the CEO INTRODUCTION | MESSAGE FROM THE CEO MESSAGE FROM THE CEO | INTRODUCTION “ Returning to organic growth and improving our MESSAGE FROM THE CEO financial performance in the second half of the year. ” 100 DAYS, FIVE HIGHLIGHTS After my appointment to the These are Executive Board, I visited all our regions, my key meeting clients, and Arcadians. take-aways: Committed Strong client Deep market sector Focus & project Opportunities people relationships insights & expertise delivery for growth Dear stakeholders, They have a level of pride in their work that is contagious and makes me proud to be an Arcadian. At the same time, Welcome to our first fully Annual Integrated Report. our people have been clear to me about opportunities for improvement, and we have taken this input on board as we The simplification of the organizational structure combined developed our new strategy. Among other things, this led with our increased focus on our clients, both initiated early in to the introduction of a new core value: People First. This the year, contributed to the improvement of our performance. supports our ambition to be the employer of choice for our CREATING We reviewed our strategy whereby we received input from people. People First means we care for each other and we fellow Arcadians, clients, shareholders, and other stakeholders. create a safe and respectful working environment where our In November, we presented our new strategy entitled people can grow, perform, and succeed. We have changed our ‘Creating a sustainable future’, which fully capitalizes on global value ‘Client Focus’ to ‘Client Success’ to reflect our ambition A SUSTAINABLE trends like climate change, sustainable industries, and livable to impact our clients’ results. Our other core values – Integrity, cities. This strategy builds on our strong legacy in Water, Collaboration, and Sustainability – remained unchanged and Infrastructure, Environment, and Buildings, and further are as relevant as ever. advances Arcadis towards a highly innovative industry-leading FUTURE Design & Consultancy. FINANCIAL PERFORMANCE IMPROVED AS THE YEAR PROGRESSED PEOPLE FIRST AS NEW CORE VALUE We improved our financial performance as the year Peter Oosterveer, CEO After my appointment to the Executive Board by shareholders progressed. Organic net revenue growth moved into positive late April, I visited all regions in which we have activities. territory, while operating EBITA was higher than prior year. I familiarized myself with the great projects we do around We had a strong cash flow and reduced our debt. Moreover, the world and met with a large number of clients. Most we see a positive business sentiment in many of the markets memorable on these visits, however, were the meetings in which we operate, which has contributed to a corresponding with our people. I have gained tremendous admiration for improvement in our performance. the capabilities, knowledge, and passion of our people. 6 Arcadis Annual Integrated Report 2017 Arcadis Annual Integrated Report 2017 7 INTRODUCTION | MESSAGE FROM THE CEO MESSAGE FROM THE CEO | INTRODUCTION In North America, our biggest single market, our re-focused HEALTH & SAFETY The strategy is based on three strategic pillars: STRATEGIC REVIEW CALLISONRTKL; organization achieved an organic growth of more than 2%, with a Health & safety remains central in everything we do. For the sixth year MARKET CONSULTATION IN PROGRESS strong contribution from both our environmental and our infrastructure in a row, Arcadis’ Total Recordable Case Frequency (TRCF) for 2017 People & Culture – We are convinced that creating an environment for An important announcement in 2017 was the decision to perform business. In Europe, increased investments in the private sector created (0.26, the same as in 2016) remains at the lowest level since Arcadis people to grow, perform, and succeed will be vital to attract, develop, a strategic review of CallisonRTKL, our architectural business, that growth, while public-sector work was stable thanks to large projects like began collecting global H&S data in 2004, when it was 1.13. Our and retain the workforce of the future. We will be the employer of represents approximately 10% of our global revenues. This review is the Paris metro. In the UK, we were able to substantially grow our Lost Time Case Frequency (LTCF) for 2017 (0.11) increased by 0.01 choice through continued investment in our people and by attracting part of our effort to sharpen our strategic focus. backlog as well as our revenues, with a strong win rate in several compared to 2016 (0.10). Arcadis’ injury rates continue to remain well capabilities for future needs. sectors, especially in the infrastructure market. Australia’s performance below the average injury rates of the publicly available US benchmarks We evaluated a range of strategic options to optimize the value of was exceptionally strong, the wins of the big metro projects in Sydney for the Architecture and Engineering Industry, which were 0.70 (TRCF) Innovation & Growth – To capture the opportunities provided by global CallisonRTKL, within or outside of Arcadis, to provide the best prospects and Melbourne are a true example of how our global collaboration and 0.20 (LTCF) for the most recent reporting period (2016). mega trends, Arcadis will step up investments in digitalization to for our people, clients, and shareholders. While a final decision has not and knowledge exchange yields successes. In Asia, market conditions become a digital frontrunner in our industry.
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