Message from the CEO
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 companies, and held its annual Worldwide BAM Safety Day where attendance is mandatory for all employees and subcontractors on site. BAM reduced the absolute CO2 emissions by 17 per cent compared to the level of 2009, which is better than the targeted improvement of 15 per cent.
BAM was again ranked within the top five of the leading Dutch sustainability index, the annual Transparency Benchmark. BAM’s 2015 Integrated Report is the second report that is prepared in line with the Integrated Reporting (IR) Framework. Integrated Reporting provides insight on financial and non-financial value creation. By adopting the principles of Integrated Reporting and by application of the Global Reporting Initiative, G4 ‘Comprehensive’, BAM will continue to provide more relevant information to all stakeholders.
Back in Shape has resulted in a solid foundation, on which we can build further to BAM’s success in 2016 and beyond. During the year a BAM-wide representation of employees has contributed to our updated strategy for 2016-2020 – ‘Building the present, creating the future’. In several sessions during an inspiring Edge Journey, external and internal specialists gave their views to think about future technologies and applications having impact on BAM’s current and future business.
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 environment, our objective is to improve profitability and capital efficiency by ‘doing things better’. This means a more disciplined focus on market segments and projects where we can use either scale or expertise as critical success factors. Secondly, we will shape our business portfolio towards ‘doing better things’ by rationalising our propositions and developing new solutions for customers. Thirdly, we will invest in digitalisation to be an industry leader in how we build and what we build – ‘doing new things’. Our target is to reach a double digit return on capital employed by 2020.
2016 will be a year of reinforcement with a top priority to implement ‘Building the present, creating the future’. We are preparing further restructuring measures for Dutch Construction and Property to restore its profitability in the coming quarters. The de-risking of the project backlog will be largely completed by the end of 2016. For the full year 2016, we expect the adjusted result before tax to be higher than the level of 2015. We anticipate a restructuring charge of approximately €20 million, mainly related to the Dutch activities.
On behalf of Thessa Menssen, Erik Bax and myself, I would like to thank all our employees for their hard work and commitment throughout the year. We are very motivated for the challenge of the coming years, to continue to unlock the significant upside potential of BAM. We will work together to serve our clients better, improve our financial performance, and be a preferred employer and partner.
Bunnik, the Netherlands, 17 February 2016
Rob van Wingerden,
Royal BAM Group nv