Integrated Report 2 – 2015 Key figures (x € million, unless otherwise stated) 2015 2014 Continuing operations Revenue 7,423 7,314 Adjusted result Adjusted result before tax 88.2 62.2 before tax Result before tax 13.3 (122.4) Result before tax Net result attributable to the shareholders of the Company 10.2 (108.2) excluding restructuring costs Earnings per share (in €1) and other exceptional - Continuing operations 0.04 (0.40) costs, impairment - Discontinued operations - - charges and pension one-off. Dividends per ordinary share (in €1) 0.02 - Dividend payout (in %) 50 - Number of shares as at 31 December (x 1,000) 270,394 270,999 Share closing price as at 31 December (in €1) 5.13 2.58 Equity attributable to the shareholders of the Company 902.1 827.4 Capital base Capital base 1,026.5 951.9 Equity attributable to Total assets 4,852.2 4,956.0 the shareholders of the Company plus Order book 11,480 10,268 subordinated debt. Net investment in property, plant and equipment 41.7 39.0 Depreciation charges 66.5 79.6 Amortisation charges 4.0 3.2 Impairment charges 39.1 115.9 Cash flow before dividend 119.8 90.5 Ratios - Adjusted result before tax from continuing operations as % of revenue 1.2 0.9 - Net result attributable to the shareholders of the Company as % of revenue 0.1 - - Net result attributable to the shareholders of the Company as % of average equity 1.2 - Solvency ratios - Equity attributable to the shareholders of the Company as % of total assets 18.6 16.7 Capital ratio - Capital ratio 21.2 19.2 Capital base divided by total assets. People Average number of employees (in FTE) 21,916 23,325 Number of employees as at 31 December (in FTE) 21,248 23,137 Training costs per employee (in €1) 509 579 Female/male (in %) 14/86 14/86 Safety Incident frequency Incident frequency (IF) 4.5 5.0 (IF) Safety Awareness Audits (SAA) 75.4 74.2 The total number of industrial accidents CO2 and energy leading to absence CO2 emissions (in kilotonnes) 230 242 from work per million CO2 emissions intensity (in tonnes per € million revenue) 30.9 33.0 hours worked on Energy (in terra joules) 3,356 3,410 construction sites. Waste Waste (in million tonnes) 2.4 4.8 Construction and office waste (in kilotonnes) 161 182 Construction waste separation (in %) 29 33 2015 – 3 BAM at a glance Contents Royal BAM Group nv (BAM or the Group) is a European construction 2 Key figures group that unites operating companies in five home markets with the corporate centre in the Netherlands and is listed at Euronext 4 1. Message from the CEO Amsterdam. With approximately 21,500 employees, BAM is active in the construction and mechanical and electrical services, civil 6 2. Value creation engineering, property and public private partnerships (PPP) sectors. 7 Stakeholder engagement and material themes 16 Strategy The Group ranks among the largest construction companies in 20 Business model Europe. BAM has leading market positions in the Netherlands, 24 Risks and opportunities Belgium, the United Kingdom, Ireland and Germany. The Group undertakes specialist construction and civil engineering projects in 38 3. Business performance niche markets worldwide. 39 Financial performance 53 Social performance One of BAM’s prominent features is its widespread regional 64 Environmental performance network of offices, meaning that the company is always close to 77 Outlook its clients. 80 4. Governance BAM’s philosophy is to offer real value to its clients and work with 81 Corporate governance them in close and lasting collaboration that provides outstanding 91 Report of the Supervisory Board to shareholders performance in relation to the maintenance, innovation and 99 Remuneration report expansion of built environments. BAM is recognised and 106 Declaration in accordance with the Dutch Financial acknowledged for the quality and reliability of its products and Supervision Act services as well as for the commitment, knowledge and 107 Decision on Article 10 of the Takeover Directive experience of its employees. 109 Supervisory Board and Executive Board 112 5. Financial statements 114 Consolidated financial statements 119 Notes to the consolidated financial statements 190 Company financial statements 191 Notes to the company financial statements 198 6. Other information 199 Independent auditor’s and assurance report 209 Proposed appropriation of result 209 Articles of Association provisions governing the distribution of profit 209 Anti-takeover measures 211 Five-year overview Front cover: 212 List of principal subsidiaries, joint arrangements The Arnhem Central Public Transport and associates Terminal in the Netherlands celebrated its 213 Glossary grand opening on 19 November 2015. Bus terminal and train station are combined 214 7. Appendices into a new type of complex - an integrated 215 Sustainability reporting process and methods public transportation area, designed by 218 GRI Disclosures UNStudio. The transfer hall shelters the 226 Charters, memberships and certifications facilities and waiting areas for the trains, trolley buses and bus station, as well as commercial areas and a 233 8. Organisation structure and Management conference centre, and serves as the linking hub between these Board transportation modes, the city centre, the underground car park and the office plaza of the Public Transport Terminal in Arnhem. The Public 234 9. Royal BAM Group nv shares Transport Terminal was built by BAM Bouw en Techniek, in joint 237 Key financial dates arrangement with Ballast Nedam. BAM Infra was involved in the civil works near the terminal, including the square for the trolley buses. See also pages 50-51. 4 – 2015 1. Message from the CEO 2015 – 5 Building the present, creating the future ‘I am pleased with the major advances we made in 2015 to successfully implement the Back in Shape programme. With our 21,500 people working together, we delivered on demanding targets. Our results for the year show we are turning around our performance, and there is more potential to be unlocked. Our full year results featured a strong rebound in margins at Civil engineering. Construction and M&E services was still held back by a loss at the Dutch non-residential activities. The result at Property was driven by commercial property divestments. There was a non-cash impairment of Dutch property due to the twin-track housing market and the subdued retail sector. PPP had a solid year with good project wins. Our total order book increased in the year. BAM is continuously improving the Group’s safety performance. In 2015 BAM succeeded in reducing the Incident frequency (IF), which reflects the number of lost-time incidents per million worked hours, to 4.5 (2014: 5.0). The Group intensified the Safety Awareness Audits (SAA) conducted across and between operating shape our business portfolio towards ‘doing better things’ by companies, and held its annual Worldwide BAM Safety Day where rationalising our propositions and developing new solutions for attendance is mandatory for all employees and subcontractors on customers. Thirdly, we will invest in digitalisation to be an industry site. BAM reduced the absolute CO2 emissions by 17 per cent leader in how we build and what we build – ‘doing new things’. compared to the level of 2009, which is better than the targeted Our target is to reach a double digit return on capital employed improvement of 15 per cent. by 2020. BAM was again ranked within the top five of the leading Dutch 2016 will be a year of reinforcement with a top priority to sustainability index, the annual Transparency Benchmark. BAM’s implement ‘Building the present, creating the future’. We are 2015 Integrated Report is the second report that is prepared in line preparing further restructuring measures for Dutch Construction with the Integrated Reporting (IR) Framework. Integrated and Property to restore its profitability in the coming quarters. Reporting provides insight on financial and non-financial value The de-risking of the project backlog will be largely completed by creation. By adopting the principles of Integrated Reporting and by the end of 2016. For the full year 2016, we expect the adjusted application of the Global Reporting Initiative, G4 ‘Comprehensive’, result before tax to be higher than the level of 2015. We anticipate BAM will continue to provide more relevant information to all a restructuring charge of approximately €20 million, mainly related stakeholders. to the Dutch activities. Back in Shape has resulted in a solid foundation, on which we can On behalf of Thessa Menssen, Erik Bax and myself, I would like to build further to BAM’s success in 2016 and beyond. During the year thank all our employees for their hard work and commitment a BAM-wide representation of employees has contributed to our throughout the year. We are very motivated for the challenge of updated strategy for 2016-2020 – ‘Building the present, creating the coming years, to continue to unlock the significant upside the future’. In several sessions during an inspiring Edge Journey, potential of BAM. We will work together to serve our clients better, external and internal specialists gave their views to think about improve our financial performance, and be a preferred employer future technologies and applications having impact on BAM’s and partner. current and future business. Bunnik, the Netherlands, 17 February 2016 Our updated strategy for 2016-2020 will further improve the performance of our current project and business portfolio, and will position us for future opportunities. In a fragile macro-economic Rob van Wingerden, environment, our objective is to improve profitability and capital CEO, efficiency by ‘doing things better’. This means a more disciplined Royal BAM Group nv focus on market segments and projects where we can use either scale or expertise as critical success factors.