Royal BAM Group nv Runnenburg 9 3981 AZ Bunnik P.O. Box 20 3980 CA Bunnik The Netherlands Telephone +31 (0)30 659 89 88 [email protected] www.bam.com Established at Bunnik, the Netherlands Trade register number 30058019 Layout: Boulogne Jonkers Vormgeving, Zoetermeer, the Netherlands Printing: Veenman+, Rotterdam, the Netherlands Cover: Coal Drops Yard, King’s Cross, London Illustrations: Michael Boulogne, Jurriaan Brobbel, PM Photography Printed on FSC®-certified paper, Multiart Sil from Papyrus 19-02 Integrated Report 2018 2 Royal BAM Group nv Contents 1 2 3 Message from the CEO 6 Value creation 8 Business performance 20 2.1 Business model 9 3.1 Financial performance 21 2.2 Strategy 12 3.2 Social performance 30 2.3 Stakeholder engagement 3.3 Environmental performance 45 and material themes 16 3.4 Outlook 54 4 5 6 Risk management 56 Governance 66 Supervisory Board 78 5.1 Corporate governance 67 6.1 Report of the Supervisory Board to shareholders 79 5.2 Decree on Article 10 of the Takeover Directive 70 6.2 Remuneration report 90 5.3 Supervisory Board and Executive Board 72 5.4 Management Board 76 7 8 9 Financial statements 100 Other information 200 Appendices 214 8.1 Combined independent auditor’s 9.1 Royal BAM Group nv shares 215 report on the 2018 financial 9.2 Five-year overview 219 statements and Sustainability Information 201 9.3 Non-Financial Information and Diversity information reference 8.2 Proposed appropriation of result 210 table 220 8.3 Articles of Association provisions 9.4 Key financial dates 221 governing the distribution of profit 211 9.5 Glossary 222 8.4 Anti-takeover measures 212 9.6 Sustainability reporting process and methods 223 8.5 List of principal subsidiaries, joint arrangements and associates 213 9.7 Material themes and management approach 226 BAM is subject to the structure regime as intended in Part 4, Book 2 of the Dutch Civil Code. The Executive Board Report as intended in Part 9 of Book 2 of the Dutch Civil Code consists of chapters 1-5, 8.4, 9.1 and 9.7. Integrated Report 2018 3 Royal BAM Group nv Key figures (x € million, unless otherwise stated) Profit 2018 2017 * Revenue (x € million) Adjusted result before tax (x € million) Continuing operations Revenue 7,208 6,535 Adjusted result before tax 153.2 24.9 7,208 153.2 Result before tax 114.5 20.0 2017 2017 Net result attributable to the shareholders 6,535 24.9 of the company 23.8 (13.8) Earnings per share (in €1) 0.09 (0.05) Dividends per ordinary share (in €1) 0.14 0.10 Net result (x € million) Order book (x € million) Dividend payout (in %) 1 40 50 Number of shares as at 31 December (x 1,000) 273,296 273,213 Share closing price as at 31 December 23.8 12,692 (in €1) 2.51 3.83 2017 2017 (13.8) 11,636 Equity attributable to the shareholders of the Company 729.0 721.3 Capital base 846.7 836.2 Total assets 4.578.0 4.488.6 RATIOS Order book 12,692 11,636 Adjusted result before Net result attributable to tax as % of revenue the shareholders of the Company as % of revenue Net investment in property, plant and equipment 72.2 70.7 Depreciation charges 63.7 55.0 2.1 0.3 Amortisation charges 6.1 4.5 2017 2017 Impairment charges 23.8 4.8 0.4 (0.2) Cash flow before dividend 117.4 50.5 Ratios Adjusted result before tax as % of revenue 2.1 0.4 Capital ratio as % ROCE (in %) of total assets Net result attributable to the shareholders of the Company as % of revenue 0.3 (0.2) Net result attributable to the shareholders of the Company as % of average equity 3.3 (1.6) 18.5 7.5 2017 2017 Solvency ratios 18.6 0.6 ROCE (in %) 7.5 0.6 Equity attributable to the shareholders of the Company as % of total assets 15.9 16.1 Capital base as % of total assets 18.5 18.6 * The comparative figures, where applicable, have been restated for IFRS 15. 1 The dividend payout has been adjusted for a one-off non-cash impairment of deferred tax asset. TRADE WORKING CAPITAL SHARES (in % of revenue) Earnings per share Dividends per ordinary share (8.8) 0.09 0.14 2017 2017 2017 (11.1) (0.05) 0.10 Integrated Report 2018 4 Royal BAM Group nv SAFETY People 2018 2017 Incident frequency Safety behaviour (IF BAM) audit (in %) Human resource Average number of employees (in FTE) 20,156 19,720 Number of employees as at 31 December 4.2 72% (in FTE) 20,194 19,837 2016 - 4.8 2016 - 70% Training costs per employee (in €1) 703 614 2017 - 4.6 2017 - 72% Female/male employees (in %) 17/83 16/84 Safety Incident frequency (IF BAM) 4.2 4.6 HUMAN RESOURCES Safety Behaviour Audit (SBA) 72 72 Female/male employees Training costs per (in %) employee (in €1) Planet 2018 2017 Climate positive 17/83 703 CO emissions intensity 26.8 28.1 2 2016 - 15/85 2016 - 667 (in tonnes per € million revenue) 2017 - 16/84 2017 - 614 CO2 emissions (in kilotonnes) 193 186 Energy (in terra joules) 2,744 2,644 Resource positive Number of employees Construction and office waste intensity 17.9 20.3 (at 31 December, in FTE) (in tonnes per € million revenue) Construction and office waste (in kilotonnes) 129 134 20,194 Total waste (in million tonnes) 2.3 1.9 2016 - 19,486 Sustainable certified timber (in %) 94 98 2017 - 19,837 RESOURCE POSITIVE Construction and office Construction and Sustainable certified waste intensity (in tonnes office waste timber (FSC and PEFC) per € million revenue) (in kilotonnes) (in %) 17.9 129 94% 2016 - 21.3 2016 - 148 2016 - 98% 2017 - 20.3 2017 - 134 2017 - 98% CLIMATE POSITIVE CO2 emissions intensity CO2 emissions Energy consumption (in tonnes per € million revenue) (in kilotonnes) (in terra joule) 26.8 193 2,744 2016 - 29.1 2016 - 203 2016 - 3,000 2017 - 28.1 2017 - 186 2017 - 2,644 Integrated Report 2018 5 Royal BAM Group nv Message from 1 the CEO Music, theatre, conference and exhibition The Bonus Arena, Hull BAM Construct UK completed the Bonus Arena in 2018. The new flexible development with a capacity of 3,500 persons is a combined music, theatre, and conference and exhibition venue. The arena Is located between Hull city centre and the Humber estuary. Integrated Report 2018 6 Royal BAM Group nv Message Value Business Risk Supervisory Financial Other from the CEO creation performance management Governance Board statements information Appendices BAM has much to be proud of. With a history stretching back 150 years, and through a variety of acquisitions, we have transformed from a small carpentry business into a truly ‘Focus to perform international construction firm – one of the largest in Europe. together’ To celebrate 150 years of constructing and maintaining some Rob van Wingerden, CEO Royal BAM Group nv of the world’s most iconic buildings and infrastructure projects, BAM will plant 150,000 trees in 2019 – giving back to the communities in which we work. 2018 has been a year of good progress for BAM. Most of our businesses performed well, which reflected the benefits of ongoing improvements in our tendering and project execution. Although the sea lock IJmuiden adversely affected our result and cash flow, we have made further steps in de-risking the project. and charitable work. Planet, in terms of our net positive impact, Our overall cash flow for the year was positive and our financial waste and CO2 reduction. And profit, in terms of return on capital position remained strong. employed, margin, trade working capital and property investment. Adjusted result before tax for the year 2018 improved by €128.3 Accelerate strategy execution million to €153.2 million. The adjusted pre-tax margin was 2.1 per cent (0.4 per cent). The overall order book growth (€12,700 million To fulfil our purpose, we need to deliver on our strategy: Building at year-end 2018 compared to: €11,600 million at year-end 2017) the present, creating the future. Doing things better, doing better was driven by positive market conditions and winning multiyear things and doing new things, including innovating through digital projects especially in civil engineering in the UK. The margin on the technologies and digital construction so we can anticipate any new order intake continued to improve and is well within the issues before the implementation phase and make our strategic target margin bandwidth of 2 per cent to 4 per cent. performance more predictable – in other words, we make it (digitally) before we make it (physically). Enabling our people, our Worldwide safety campaign biggest asset, to capitalise on state-of-the-art knowledge and resources, talent and training, and rolling-out our uniform project In 2018 our safety performance improved again and we launched approach and uniform business controlling, as well as developing a new campaign: Your Safety is My Safety. We are very grateful to an organisational structure and governance to support our One all 20,000 BAM employees for their continuous attention to safety BAM way of working, those are the things that enable us to get and their efforts to incorporate safer working conditions. the very best out of our company for all our clients and other stakeholders, today and in the future. This year’s Worldwide BAM Safety Day reflected our collective responsibility for safety, facilitating an open dialogue to engage Outlook with all persons involved (employees, supply chain, clients).