Combined independent auditor’s report on the 2016 financial statements and Sustainability Information
Basis for our conclusions
We conducted our assurance engagements in accordance with Dutch law, including the Dutch Standards on Auditing and the Dutch Standard 3810N ‘Assurance engagements relating to sustainability reports’. Dutch Standard 3810N is a subject specific standard under the International Standard on Assurance Engagements (ISAE) 3000 ‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’.
Our responsibilities under those standards are further described in the section: ‘Our responsibilities’ in this report.
We believe the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusions.
We are independent of Royal BAM Group nv in accordance with the “Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence)” and other relevant independence regulations in the Netherlands. This includes that we do not perform any activities that could result in a conflict of interest with our independent assurance engagement. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics)’.
Our engagements scope
The consolidated financial statements comprise:
- The consolidated statement of financial position as at 31 December 2016;
- The following statements for 2016: the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows;
- The notes comprising a summary of the significant accounting policies and other explanatory information.
The company financial statements comprise:
- The company statement of financial position as at 31 December 2016;
- The company income statement for 2016;
- The notes comprising a summary of the accounting policies and other explanatory information.
The Sustainability Information in scope comprise:
- Reasonable assurance - Descriptive information in the following paragraphs/chapters: Material themes (page 26-27), Business conduct and transparency (page 65) and Safety in paragraph Health and Safety (pages 60, 63, 64);
- Limited assurance - All other information reported in chapters chapters 2, 3.1, 3.2, 4.2, 4.3, 9.
Limitations in our scope
The Sustainability Information contains prospective information, such as ambitions, strategy, targets, expectations and projections. Inherent to this information is that actual future results may differ in the future and are therefore uncertain. We do not provide any assurance on the achievability and feasibility of prospective information.
Our scope for the group audit of the financial statements
Royal BAM Group nv is the head of a group of entities. The financial information of this group is included in the consolidated financial statements of Royal BAM Group nv.
Our group audit focused on the significant group entities located in BAM’s home countries (the Netherlands, Germany, United Kingdom, Ireland and Belgium) and BAM International with its various activities abroad. We have performed extensive audit procedures ourselves for group entities located in the Netherlands, thereby focusing on the key risk areas. Apart from focusing on significant group entities, we also reviewed and selected projects on a risk basis, thereby taking into consideration the size and nature of projects, as well as the countries in which projects are being executed.
For the foreign BAM home countries, we involved EY component auditors, who are familiar with local laws and regulations and who applied full scope audits. In order to take responsibility as group auditor in line with current auditing standards, we visited our component auditors in United Kingdom, Ireland, Germany and Belgium and furthermore, we discussed the outcome of audit procedures with all component auditors.
For BAM International, for purpose of the 2016 audit, we visited Tanzania and Costa Rica as key locations ourselves to perform audit procedures. For the Middle East business, BAM has involved a local audit firm who we also visited and we reviewed their work. We concluded that we can rely on their work performed in relation to the audit of the consolidated financial statements of Royal BAM Group nv.
As a result of the above mentioned procedures, we have covered all entities and foreign locations that are material to the consolidated financial statements of BAM. In addition, we have performed analytical review procedures and made inquiries with management with respect to some smaller locations that are not material and made sure that there are no developments or exposures that should have been covered.
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion about the consolidated financial statements.
The information in the scope of our engagements needs to be read and understood together with the reporting criteria, for which BAM is solely responsible for selecting and applying, taking into account applicable law and regulations related to reporting. The criteria used for the preparation of the Report and thus relevant for our examination are described below. We consider the reporting criteria used relevant and suitable for our assurance engagements.
The scope of our assurance procedures is influenced by the application of materiality. Our assurance engagements aim to provide assurance about whether the financial statements and the Sustainability Information are free from material misstatement. Misstatements may arise due to fraud or error. They are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of intended users taken on the basis of the financial statements and the Sustainability Information. The materiality affects the nature, timing and extent of our assurance procedures and the evaluation of the effect of identified misstatements on our conclusions.
We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.
We agreed with the supervisory board that misstatements in excess of €1,750,000, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
At December 31, 2016 there were no remaining audit differences impacting result.
For the assurance procedures concerning the Sustainability Information as a whole and for each part of the Sustainability Information, we have considered the factors that influence the relevance for the intended users of the Sustainability Information, based on the Royal BAM Group nv’s materiality assessment. Based on our professional judgment, we determined the materiality for each of the identified key performance indicators at 5 per cent deviation, with the exception of BAM Incident Frequency, which has been determined at 3 per cent deviation.
Our key audit and review matters
Key audit and review matters are those matters that, in our professional judgment, were of most significance in our assurance procedures for the financial statements and the Sustainability Information. We have communicated the key audit and review matters to the Supervisory Board. The key audit and review matters are not a comprehensive reflection of all matters discussed.
These matters were addressed in the context of our assurance procedures for the financial statements and the Sustainability Information as a whole and to conclude thereon. All these matters have been audited by us with satisfactory results and we believe these have been properly disclosed where applicable. For the interest of the reader, we highlight the most important elements we focused on in 2016.
Other information included in the integrated report
In addition to the financial statements and our auditor’s report thereon, the integrated report contains other information that consists of:
- Key figures;
- The Executive Board Report;
- Report of the Supervisory Board;
- Remuneration Report;
- Other information pursuant to Part 9 of Book 2 of the Dutch Civil Code;
- Chapter 8 Royal BAM Group nv shares; and
- Chapter 9 Appendices.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is less than the scope of those performed in our audit of the financial statements or in our review of the Sustainability Information.
Management is responsible for the preparation of the other information, including the Executive Board report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other information pursuant to Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements
We have been appointed in the shareholders meeting on 22 April 2015 as auditors of Royal BAM nv as of the audit for the year 2016 and have operated as statutory auditor since that date.
Responsibilities of Management and the Supervisory Board
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code.
Management is also responsible for the preparation of the Sustainability Information in accordance with accordance with the Sustainability Reporting Guidelines version G4 of the GRI (Comprehensive option) and the supplemental BAM reporting criteria, including the identification of the stakeholders and the determination of material issues. The choices made by Management with respect to the scope of the Report are included in page 239-241 of the Sustainability information.
Furthermore, Management is responsible for such internal control as Management determines is necessary to enable the preparation of the financial statements and the Sustainability Information that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, Management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, Management should prepare the financial statements using the going concern basis of accounting unless Management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements.
The Supervisory Board is responsible for overseeing the company’s (financial) reporting process.
Our objective is to plan and perform the assurance assignments in a manner that allows us to obtain sufficient and appropriate assurance evidence for our conclusions.
Our assurance procedures aimed at obtaining reasonable assurance have been performed with a high, but not absolute, level of assurance, which means we may not have detected all errors and fraud.
The procedures performed in obtaining limited assurance are focused on the plausibility of information which does not require exhaustive gathering of evidence as in engagements focused on reasonable assurance. The procedures performed consisted primarily of making inquiries of Management and others within the entity, as appropriate, applying analytical procedures and evaluating the evidence obtained. The level of assurance obtained in review engagements is therefore substantially less than the assurance obtained in an audit engagement.
Utrecht, 20 February 2017
Ernst & Young Accountants LLP
Signed by G.A.M. Aarnink
Annex to the combined independent auditor’s report
We have exercised professional judgment and have maintained professional skepticism throughout the assurance engagements, in accordance with Dutch Standards on Auditing and the Dutch Standard 3810N ‘assurance engagements relating to sustainability reports’, ethical requirements and independence requirements.
Our audit to obtain reasonable assurance about the financial statements (consolidated and corporate) included the following:
- Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.
- Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
- Concluding on the appropriateness of Management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause an the company to cease to continue as a going concern.
- Evaluating the overall presentation, structure and content of the financial statements, including the disclosures.
- Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Our review to obtain limited assurance about the Sustainability Information included the following:
- Performing an external environment analysis and obtaining insight into relevant social themes and issues and the characteristics of the organisation.
- Evaluating the appropriateness of the reporting policy and its consistent application, including the evaluation of the results of the stakeholders’ dialog and the reasonableness of management’s estimates.
- Evaluating the design and implementation of the reporting systems and processes related to the information in the Sustainability Information.
- Interviewing Management and relevant staff at corporate and local levels responsible for the sustainability strategy, policies and performance.
- Interviewing relevant staff responsible for providing the information as disclosed in the Sustainability Information, carrying out internal control procedures on the data and consolidating of data in the Sustainability Information.
- Visits to multiple sites and offices of BAM’s Operating Companies in Belgium, United Kingdom, the Netherlands, Germany and Costa Rica to evaluate the source data and to evaluate the design and implementation of control and validation procedures at local level.
- Performing analytical review of the data and trend explanations submitted for consolidation at group level.
In addition to the procedures mentioned above, for information included in the paragraphs Material themes and Business conduct and transparency and for the information on Safety in paragraph Health and Safety we performed the following to obtain reasonable assurance:
- Conducting analytical procedures and substantive testing procedures on the relevant data.
- Assessing the processing of other information, such as the aggregation process of data into the information as presented in the sustainability information.
- Investigating internal and external documentation to determine whether the applicable sustainability information is reliable.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the assurance procedures and significant findings, including any significant findings in internal control that we identify during our assurance procedures.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine those matters that were of most significance in the audit of the financial statements and the review of the Sustainability Information of the current period and are therefore the key audit and review matters. We describe these matters in our combined auditor’s report and assurance report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.