Annual Report (ESEF) • Feb 22, 2024
Preview not available for this file type.
Download Source File(x € million, unless otherwise stated)
| People | Profit | |||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||
| Safety | ||||||
| Incident frequency BAM (IF BAM) | 3.4 | 3.7 | ||||
| Incident frequency total (IF Total) | 2.6 | - | ||||
| Human resources | ||||||
| Average number of employees (in FTE) | 13,344 | 14,608 | ||||
| Female/male employees (in %) | 21/79 | 20/80 | ||||
| Return on inclusion score | 55 | - | ||||
| Planet | ||||||
| Decarbonisation | ||||||
| Scope 1 and 2 CO₂ emissions intensity (in tonnes per € million revenue) | 10.9 | 13.3 | ||||
| Scope 1 and 2 CO₂ emissions (in kilotonnes) | 69 | 88 | ||||
| Energy consumption (in terajoules) | 1,378 | 1,475 | ||||
| CDP Climate ranking | A | A | ||||
| Circularity | ||||||
| Construction and office waste intensity (in tonnes per € million revenue) | 8.7 | 10.4 | ||||
| Construction and office waste (in kilotonnes) | 55 | 69 |
1 Refer to the glossary in chapter 9.4 for definitions.
2 These numbers were restated for omissions identified during 2023. Refer to chapter 6.3 for further details.
3 Adjusted EBITDA for 2022 includes the gain on sale of Wayss & Freytag Ingenieurbau amounting to €52 million.
| Profit | 2023 | 2022 |
|---|---|---|
| Revenue | 6,270 | 6,618 |
| Adjusted EBITDA | 304.3 | 350.2 |
| Adjusted EBITDA margin (in %) | 4.9 | 5.3 |
| Net result attributable to the shareholders of the Company | 175.0 | 179.6 |
| Earnings per share (in €) | 0.65 | 0.66 |
| Dividend per share (in €) | 0.20 | 0.15 |
| Dividend payout (in %) | 31 | 22 |
| Average number of ordinary shares (x 1,000) | 269,966 | 271,784 |
| Share closing price as at 31 December (in €1) | 2.42 | 2.17 |
| Equity attributable to the shareholders of the Company | 920.5 | 810.6 |
| Total assets | 3,932.0 | 3,819.4 |
| Solvency ratio (in %) | 23.4 | 21.2 |
| Capital employed | 1,345.7 | 1,194.3 |
| Return on capital employed (in %) | 13.7 | 16.8 |
| Order book | 9,809 | 10,038 |
| Inputs | Outputs |
|---|---|
| € | Value creation |
| Social Value | |
| Decarbonisation | |
| Circularity | |
| Safety, health and inclusion | |
| Climate adaptation | |
| Biodiversity | |
| Product leadership | |
| Lifecycle solutions |
| Project development | ...and operates in key countries |
|---|---|
| • Tendering | |
| • Design and engineering | |
| • Constructing | |
| • Maintaining | |
| • Operating | |
| • Facilities management |
‘We have successfully executed our ambitious strategic agenda for the 2021-2023 period, Building a sustainable tomorrow.’
Over 2023, Royal BAM Group nv delivered a strong performance with an adjusted EBITDA of €304 million, reflecting a margin of 4.9 per cent. The cash position and order backlog are at a good level. BAM proposes to pay a dividend over the year 2023 of €0.20 per share. Furthermore, BAM will return €30 million to shareholders via a share buyback. For the strategic period 2024-2026, BAM expects to deliver an adjusted EBITDA margin between 4 and 6 per cent.
‘I am pleased that our Group further improved its operational performance in 2023.’In the Netherlands, civil engineering continued the positive trend, the residential activities had a good performance, while the contribution of non-residential construction substantially improved during the second half of the year. The division United Kingdom and Ireland showed a solid contribution overall. The performance of Construction UK disappointed due to supply chain issues and cost overruns at a large project. Civil engineering UK, Ventures UK and Ireland contributed well. There were positive results from the activities in Belgium and Invesis. Our financial resilience further improved, illustrated by the increase of our capital ratio and our strong cash position. We propose to pay our shareholders a dividend of €0.20 per share over 2023, reflecting an increase of 33 per cent versus last year. We have successfully executed our ambitious strategic agenda for the 2021-2023 period, ‘Building a sustainable tomorrow’, and we delivered all of our strategic targets. During the past three years, we have made major progress in de-risking our portfolio by selective tendering and by divestments. This strategy resulted in a more stable performance of BAM in the last three years. We remained focused on supporting our clients achieving their goals by providing value driven, reliable and sustainable solutions for construction and infrastructure. In early 2023, as a signal of our focus on leadership in sustainable construction, we defined clear sustainability goals. These include ambitious decarbonisation targets as well as targets for circularity, climate adaptation, biodiversity, safety, health, inclusion, and social value. This year we achieved an important milestone of a 56 per cent scope 1 and 2 CO 2 intensity reduction versus 2015. I am also proud that BAM has achieved for the fifth consecutive year a place on CDP’s prestigious ‘A’ list for climate change. Notwithstanding the business or sustainability related challenges the Company faces, it is people who matter most. In 2023, a BAM employee lost his life while working on one of the Group’s projects. These accidents impact everybody; first and foremost family and friends but also colleagues and others involved in accidents related to our activities. We deeply regret all incidents and express our heartfelt determination to prevent all safety-related incidents.
Looking forward, our new strategy for 2024-2026 builds on the solid progress realised in the last three years with sustainability as our key driver. We maintain our focus to protect profitability, we continue to transform our Group to strengthen competitive advantages and we aim for expansion for future growth in selected product market combinations. We are convinced that our strategy can create meaningful growth in value for our clients, will create development opportunities for our employees, and will generate attractive returns for our shareholders, while BAM actively contributes to more sustainable and inclusive communities and society. In the next phase of the strategy for 2024- 2026 BAM continues its current dividend policy to distribute a dividend between 30 and 50 per cent of the net result. The Group will also consider cash returns via share buybacks. In 2024, in addition to the proposed dividend over 2023, BAM will return €30 million to shareholders via a share buyback.
Market conditions remain challenging in the short-term as a consequence of higher interest rates, political and geopolitical uncertainties and the continued pressure to attract and retain staff. Against this background, our order book is at a good level of €9.8 billion and we remain focused on the quality of the order intake. For the medium and longer term, we see attractive market opportunities supported by demand for decarbonisation, critical infrastructure and sustainable and affordable homes, where we have proven market-leading capabilities. For the strategic period 2024-2026, BAM expects to deliver an adjusted EBITDA margin between 4 and 6 per cent.
Finally, also on behalf of the Executive Committee, I would like to thank all our stakeholders for their confidence in BAM. I would like to especially thank our employees for their hard work and commitment to serve our clients.’
Bunnik, the Netherlands, 21 February 2024
Ruud Joosten, CEO
Royal BAM Group nv
Weldon Village Academy, a new co-educational secondary school, providing 1,200 places for students in years 7 to 11 and 300 post-16.
Weldon, BAM Construct UK
The Group’s organisational structure is based on two divisions, one dedicated to the Netherlands and the other to the United Kingdom and Ireland. The implementation of this structure was an important step in delivering on BAM’s strategic agenda for 2021 - 2023 and was put in place to enhance operational excellence, knowledge sharing and the development of sustainable and life-cycle solutions in the underlying businessess. The Group’s activities in Belgium are organised separately. The two divisions and Belgium are supported by a focused and streamlined corporate centre. In the divisions Netherlands and United Kingdom and Ireland, BAM leverages its scale and strong position to lead with replicable and ‘best-in- industry’ construction processes, delivered by highly skilled employees to create valuable, sustainable solutions for its clients. The Group employs approximately 13,900 people. The division Netherlands employs approximately 6,800 people, the division United Kingdom and Ireland approximately 6,800 people, and Belgium approximately 200 people. Through its joint venture Invesis, BAM is also committed to PPP civil and social infrastructure projects.
BAM carries out non-residential construction activities in the Netherlands, the United Kingdom and Ireland, and on a modest scale in Belgium and Denmark. In addition, BAM delivers residential construction projects primarily in the Netherlands, Ireland and Belgium. Housing for families, students and the elderly is developed and built mainly in the Netherlands, where development and construction are provided as a fully integrated solution to clients. Property development activities are carried out in the Netherlands, the United Kingdom, Ireland and on a limited scale in Belgium. BAM is also active in facilities management in the Netherlands, the United Kingdom, Ireland and Belgium. BAM’s civil engineering activities cover the markets in the Netherlands, the United Kingdom, Ireland and Denmark (Fehmarnbelt Tunnel).
Since 1 January 2022, BAM’s Executive Committee consisted of the two Executive
Appendices
* Other information
* Financial statements
* Sustainability statements
* Supervisory Board
* Risk management and governance
* Business performance
* Value creation
* Message from the CEO
| Public Private Partnerships | Royal BAM Group nv - Corporate centre | BAM Infra Nederland - BAM Bouw en Techniek - BAM Residential - BAM Specials | BAM Nuttall - BAM Construct UK - BAM Contractors (Ireland) - BAM Ventures | BAM Interbuild - Kairos Netherlands - division Belgium | United Kingdom and Ireland - division | Invesis (50%) |
|---|---|---|---|---|---|---|
| Human capital | Professional and skilled employees in all areas of construction and property development, civil engineering and facility management, including support staff. | • Building a diverse workforce with approximately 13,900 employees, reflecting the communities in which BAM operates • Living and breathing the five core values ( see chapter 3.2) • Developing employees’ capabilities by training, coaching and leadership development | ||||
| Natural capital | Materials such as concrete, steel, timber and asphalt. | • 62,000 tonnes steel, 100,000 m 3 ready-mix concrete, 610,000 tonnes asphalt used in the Netherlands in 2023 • In the Netherlands and the United Kingdom 96 per cent of the timber used is certified sustainable | ||||
| Manufactured capital | Machinery, tools and buildings. | • In-house site equipment (BAM Materieel and BAM Site Solutions) • Over 50 office locations in the United Kingdom, Ireland, Netherlands, and Belgium | ||||
| € Inputs 2023 | ||||||
| Social and relational capital | Social relationships and networks, including clients, business partners, suppliers, subcontractors and other stakeholders. | • 95 per cent of BAM’s 2023 spend with 22 per cent of our vendors • Engaging stakeholders ( see chapter 2.3) • Social Value engagement ( see chapter 3.2) | ||||
| Intellectual capital | Digital, modular and industrialised construction technologies. | • Industrialised production of modular timber houses in BAM’s factory • Digital construction approach following ISO19650 by utilising 3D and 4D modelling | ||||
| Financial capital | Funding from shareholders, financial stakeholders and clients. |
BAM’s Activities
* Project development
* Tendering
* Design and engineering
* Constructing
* Maintaining
* Operating
* Facilities management
BAM’s value creation model shows how the Group uses resources, capabilities and expertise to create sustainable value for all stakeholders. BAM creates value with ... ... and operates in home countries
Sustainability is at the heart of BAM’s strategy
The ‘wheel’ represents BAM’s sustainability framework. An overview of the corresponding strategic targets is presented in chapter 2.2 Strategy. The United Nations’ Sustainable Development Goals linked to BAM’s Sustainability Strategy are:
SDG 15
Virgin materials
Deliver circular products by maximising resource efficiency and eliminating waste
Reduce carbon emissions to limit global warming and its effects
Adapt the built environment to increase climate resilience
Improve the variety of life to enhance ecosystems
Foster safe, healthy and inclusive working and living environments
Engage with communities to enhance people’s lives
Outputs 2023
* Incident Frequency BAM (IF BAM) is 3.4
* Women representing 21 per cent of the workforce
* Return on inclusion of 55
Limiting global warming and its effects, and reducing waste
* 56 per cent reduction of CO 2 intensity (scope 1 and 2) compared to 2015
* 60 per cent reduction of construction and office waste intensity compared to 2015
Being financially strong to build a safe and sustainable living environment
* Worked on more than 4,000 projects
* Solvency ratio of 23.4 per cent
* Adjusted EBITDA of €304.3 million
Providing a safe and inclusive working environment
The year 2023 is the final year of the 2021 – 2023 strategy ‘building a sustainable tomorrow’. The goal was to increase profitability of the Company and de-risk the portfolio and the work BAM choose to undertake. BAM is pleased to report that this de-risking strategy resulted in improved returns for the period 2021-2023. The Group’s performance in 2023 is a solid foundation for the next phase of the ‘building a sustainable tomorrow’ strategy, for the period of 2024-2026. This strategic period will continue the hard work of the last three years and aim to focus to protect profitability, transform to strengthen competitive advantage and expand for future growth. BAM’s purpose of ‘building a sustainable tomorrow’ remains unchanged, as it consistently strives to enhance its contribution to a more sustainable world, improve working environments, and deliver significant returns for shareholders.
BAM will support joint venture Invesis in implementing its strategy based on enhancing its position in home markets, expanding into new markets and building new offerings in new energy and digital infrastructure.
People and high performance culture
Successful execution relies on highly engaged people in a high-performance organisation, emphasising diversity, an attractive employee journey, leadership by example, talent management, and adaptive organisation.
Strategic outlook 2024-2026 holds exciting prospects for BAM. The launch of the sustainability component of the strategy early 2023 has been well-received by BAM’s stakeholders. BAM’s dedication towards building a sustainable tomorrow remains unwavering. The construction market in the future promises opportunities in areas like residential, renovation and new energy markets. BAM’s strategy capitalises into these areas. The competitive advantage stems from strong client relations, size and scope, and product and process leadership. BAM is confident that the refined focus on key markets, coupled with breadth of offering, will position it strongly going forward.
BAM sees strong further growth in residential, new energy markets and renovations towards 2030. With BAM’s scale and scope it is well positioned to serve these larger societal opportunities. BAM aims to expand in markets that are in line with BAM’s strengths and sustainability values. This will be done through expanding existing capabilities. Key initiatives for the period 2024-2026 underpinning this are:
In Belgium, BAM continues its activities as an integrated construction, development and facilities management company, with a focus on sustainable projects.
BAM’s strategy involves focus on selected markets with favourable risk-reward profile and positive impact on sustainability in the Netherlands, and in the United Kingdom and Ireland, emphasising key clients and proven competitive advantages.
BAM aims to be a market leader in selected, sustainable, and profitable product market combinations (PMCs). The strategy for 2024-2026 focuses on protecting profitability, transforming through industrialisation and digitisation, and further expanding into growth markets.
Focus to protect profitability, transform to strengthen competitive advantage and prepare to expand in sustainable and profitable markets
Restructured NL and UK&I portfolio organising for risk mitigation
Expand further in sustainability driven high-return PMCs to become sustainability leader
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
Gender diversity:
Return on inclusion:
Incident frequency:
2026: UK&I 35% social value for projects, NL to deliver 5% social value on top of contractual obligations
BAM uses a classification system based on the size and risk profile of its projects, ranging from A (highest classification) to E. A, B, and C projects typically represent medium to large projects.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
Delivered for Norfolk County Council, the Herring Bridge in Great Yarmouth eases traffic congestion on the town’s roads, shortens journey times and improves journey reliability. BAM Nuttall (in joint venture)
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
Supply chain partners are essential to BAM, and therefore the Company engages with its key suppliers directly. During projects, BAM is in constant dialogue with its suppliers about project expectations, safety, sustainable solutions and sources of supplied goods to reduce the environmental and social negative impact of projects.
BAM builds crucial facilities which society needs, such as housing, hospitals, schools, utilities and infrastructure. By their very nature, BAM’s construction and civil engineering works have an impact on local communities. BAM’s engagement through its projects is typically focused on topics like local spend, education and creating positive social impact through volunteering.
By delivering projects, BAM is in constant contact with local and other governmental authorities about issuing permits and about compliance with regulations. BAM engages with regulators on issues such as carbon-free buildings, carbon impact in the infrastructure life cycle and other environmental issues.
These groups, as well as typical types of engagement, are:
BAM plays an active role in offering sustainable solutions to BAM’s clients. This extends beyond the most effective offering, to value created for society and the environment. BAM is in constant dialogue with its clients about project expectations and projections. In addition, BAM organises client meetings to share knowledge and best practices. This is primarily done through account management and business development.
Engagement with investors, financial institutions and the financial community at large is actively pursued and usually takes place through road shows, seminars, investment meetings, press releases and in the Annual General Meeting of shareholders.
Employees are BAM’s most valuable assets. Employee engagement is facilitated through multiple platforms such as internal events, open collaboration days, senior management meetings, the Young BAM, Future BAM and trainee communities and quarterly online BAM Engagement surveys. Additionally, BAM has active Works Councils across the business to discuss organisational changes and other employee-related matters.
As part of the process, internal stakeholders were trained in the understanding of sustainability impacts, risks and opportunities and with respect to performing the double materiality assessment and quantification of the impacts. Collaboration and knowledge sharing was enhanced across departments to address sustainability risks and further develop capabilities around determining the material impacts and the material financial risk and opportunities on BAM in relation to all aspects of BAM’s sustainability strategy and other environmental, social and goverance matters.
The Executive Committee, and members of the Supervisory Board, are continuously involved in the stakeholder engagement process and in discussions with external stakeholders, such as clients, suppliers, shareholders and their representatives, providers of debt and insurance, and representatives of environmental organisations.
BAM’s stakeholders are all members of interest groups which significantly influence or are influenced by BAM’s economic, environmental and social impact. BAM has identified six key stakeholder groups based on its value creation model as presented in chapter 2.2.
BAM consistently fosters active participation from stakeholders in the formulation of BAM’s (sustainability) strategy and related targets.
The awareness and engagement with stakeholders towards building a sustainable performance culture has been a key focus in 2023. In 2023 the stakeholder dialogue further refined around BAM’s sustainability matters driven by the yearly materiality assessment as reported in chapter 6.1. In 2023 BAM has applied a double materiality approach. The stakeholder dialogue included the impact of BAM on the environment and society (inside-out) and the financial risks and opportunities for BAM (outside-in). This approach ensures a thorough and nuanced evaluation of the environmental, social, and governance matters and helps to better understand the relationship between these financial and sustainability risks and opportunities. This method is referred to as the double materiality assessment and is in consideration of the requirements in the European Sustainability Reporting Standards (ESRS) 1 and 2 for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD), which will be applicable for listed companies such as BAM from 1 January 2024.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
BAM determined the matters that have the largest impact and are of the highest concern to the stakeholders in BAM’s value chain. The outcome is summarised in figure 3. Compared to the 2022 assessment, the result shows two main differences.# Royal BAM Group nv Annual Report 2023
Tango Utrecht
Commissioned by housing associations Portaal and Woonin, BAM Wonen built 178 social rental homes in the Leidsche Rijn district of Utrecht. The homes meet the BENG standard (Bijna Energie-Neutraal Gebouw or Nearly Energy Neutral Building). Designed by BureauVanEig and Zecc Architecten, the apartments have a high-quality insulated building envelope with triple glazing, combined with high-quality energy facilities such as solar panels. This results in a future-proof building with a low energy consumption for the tenants.
Maintenance works on track and overhead lines of the RandstadRail, using an electric aerial platform. Zoetermeer, BAM Infra Nederland
Over 2023, Royal BAM Group nv delivered a strong performance with an adjusted EBITDA of €304 million, reflecting a margin of 4.9 per cent. The liquidity position and order backlog are at a good level. BAM proposes to pay a dividend over the year 2023 of €0.20 per share. Furthermore, BAM will return €30 million to its shareholders via a share buyback. For the strategic period 2024-2026, BAM expects to deliver an adjusted EBITDA margin between 4 and 6 per cent.
| Key numbers (x € million, unless otherwise stated) | 2023 | 2022 |
|---|---|---|
| Revenue | 6,270 | 6,618 |
| Adjusted EBITDA ¹ | 304.3 | 350.2 |
| Adjusted EBITDA margin ¹ | 4.9% | 5.3% |
| Net result attributable to shareholders | 175.0 | 179.6 |
| Dividend (in € per share) ² | 0.20 | 0.15 |
| Order book (end of period) | 9,809 | 10,038 |
| Trade working capital efficiency ¹ | (13.2%) | (15.8%) |
| Return on average capital employed ¹ | 13.7% | 16.8% |
¹ Refer to the glossary in chapter 9.4 for definitions.
² Proposal for 2023
The revenue of the division Netherlands and division United Kingdom and Ireland increased by 2 per cent. The Group revenue declined by 5 per cent to €6.3 billion compared to full-year 2022 due to the divestments in Germany and Belgium in 2022. The revenue of the divested activities was €394 million in 2022. The development of the British pound exchange rate had a negative effect of €55 million. Adjusted EBITDA of €304 million, reflected the strong operational performance, equating to a margin of 4.9 per cent. In 2022, adjusted EBITDA was €350 million, including positive contributions of divested companies and hedge revaluations. Excluding the positive result of the Wayss & Freytag transaction, the adjusted EBITDA margin was 4.5 per cent in 2022. The net result was €175 million (2022: €180 million), reflecting earnings per share of €0.65 (2022: €0.66). Adjusted items refer to reorganisation costs in both divisions. The net result was supported by the positive effects of increased interest rates and a low tax rate of 5 per cent. This tax rate includes the positive effects of recognised liquidation losses and of the revaluation of deferred tax assets for tax losses. Impairments were limited to €3 million (2022: €15 million). The order book at year-end 2023 remained solid at €9.8 billion (2022: €10 billion), with a clear focus on quality. This included the reduction of €300 million due to government review of the regional UK roads development programme and the positive British pound exchange rate effect of €89 million. Of the total order book, €4.9 billion is expected to be carried out in 2024.
| Performance in 2023 | Progress |
|---|---|
| BAM aims to improve adjusted EBITDA to circa 5 per cent. | The margin on the adjusted EBITDA for 2022 was 4.9 per cent, compared to 5.3 in 2022. |
| Trade working capital efficiency (“TWC efficiency”) below -10 per cent. | The TWC efficiency was -13.2 per cent at year-end 2023 compared to -15.8 per cent at year-end 2022. |
| Return on capital employed (ROCE) >10 per cent. | ROCE in 2023 was 13.7 per cent (2022: 16.8 per cent). |
| Grow capital ratio to 20 per cent over the strategic period. | Capital ratio was 23.4 per cent at year-end 2023 compared to 21.2 per cent at year-end 2022. |
Market conditions remain challenging in the short-term as a consequence of higher interest rates, political and geopolitical uncertainties and the continued pressure to attract and retain staff. Against this background, the order book is at a good level of €9.8 billion, and BAM remains focused on the quality of the order intake. For the medium and longer term, BAM sees attractive market opportunities supported by demand for decarbonisation, critical infrastructure and sustainable and affordable homes, where we have proven market-leading capabilities. For the strategic period 2024-2026, BAM expects to deliver an adjusted EBITDA margin between 4 and 6 per cent.
| 2023 Revenue | 2023 Adj. EBITDA | 2022 Revenue | 2022 Adj. EBITDA | |
|---|---|---|---|---|
| Construction and Property | 2,072 | 111.9 | 1,978 | 105.5 |
| Civil engineering | 964 | 65.0 | 967 | 68.1 |
| Other including eliminations | (29) | 2.1 | (28) | (1.1) |
| Total | 3,007 | 179.0 | 2,917 | 172.5 |
| Adjusted EBITDA margin | 6.0% | 5.9% | ||
| Revenue growth | 3% | (1%) | ||
| Adjusted EBITDA growth | 4% | 23% | ||
| TWC efficiency | (12.0%) | (14.5%) | ||
| Orderbook | 4,917 | 4,366 | ||
| Orderbook growth | 13% | (1%) |
Revenue increased by 3 per cent compared to full-year 2022 driven by non-residential and telecom and energy systems activities, both part of Construction and Property. Adjusted EBITDA increased by 4 per cent to €179 million compared to €173 million in full-year 2022, reflecting an adjusted EBITDA margin of 6.0 per cent (2022: 5.9 per cent). The Dutch residential activities reported a good contribution. Home sales decreased to 1,670, reflecting the more challenging market conditions and including 134 sold homes in the Bajeskwartier project, of which 107 on behalf of joint venture partners. BAM is fully responsible for the development and sales of this project. In 2022, BAM sold 2,113 homes, including 106 for Bajeskwartier.
| 2023 Revenue | 2023 Adj. EBITDA | 2022 Revenue | |
|---|---|---|---|
| Revenue | |||
| Adj. EBITDA |
| Division NL | 3,007 | 179.0 | 2,917 | 172.5 |
|---|---|---|---|---|
| Division UK&I | 3,139 | 121.5 | 3,134 | 81.6 |
| Germany, Belgium and International | 125 | 11.4 | 569 | 77.8 |
| Invesis | - | 2.6 | - | 23.5 |
| Other including eliminations (1) | (10.2) | (2) | (5.2) | |
| Total | 6,270 | 304.3 | 6,618 | 350.2 |
Adjusted items | (9.6) | (5.2)
Depreciation and amortisation | (121.3) | (116.6)
Impairments | (2.7) | (15.0)
Finance result | 12.9 | 2.3
Result before tax | 183.6 | 215.7
Income tax expense | (8.6) | (37.9)
Non-controlling interest | 0.0 | 1.9
Net result attributable to shareholders | 175.0 | 179.6
BAM’s policy is to pay out 30 to 50 per cent of the net result for the year, thereby considering the balance sheet structure supporting the strategic agenda. BAM proposes to pay a dividend of €0.20 per share, which reflects a pay-out ratio of 30 per cent of net income over the year 2023. Subject to adoption by the Annual General Meeting on 10 April 2024, the shares will trade ex-dividend on 12 April 2024 and dividend will be paid on 8 May 2024 with a scrip alternative. BAM will combine the repurchase of the shares to offset the dilution for the scrip alternative with the additional share buyback of approximately €30 million and a repurchase of shares to fulfil its obligations for share-based employee incentive schemes. Going forward, BAM intends to pay its dividends in cash.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
The performance of non-residential was impacted by design issues and cost overruns at the four non- residential projects in Denmark, of which two have been completed in the second half of the year. The operational performance of civil engineering remained strong. The order book increased by 13 per cent to €4.9 billion mainly driven by strong order intake in non-residential construction and a stable development at civil engineering and residential construction and property. Recent project wins include the A-Pier at Schiphol, a five-year partnership with VodafoneZiggo and several residential developments in Diemen (Steigerblok), Veenendaal (Ritmeester) and in Zwolle (Spoorzone). The formation of the new Dutch government has added to the uncertainty for the construction and property industry, especially regarding the ambition to build more homes and the legislation regarding nitrogen. Currently, cost increases and the relatively higher interest rates are leading to delays of some project awards. The residential market is still under pressure but shows some signals of recovery due to the effect of pay rises and a stabilisation of mortgage rates. For the medium to longer term, there remains a strong rationale for essential investments in energy transition, infrastructure and sustainable and affordable homes.
| 2023 Revenue | 2023 Adj. EBITDA | 2022 Revenue | 2022 Adj. EBITDA | |
|---|---|---|---|---|
| Construction UK | 1,046 | (14.8) | 1,062 | 35.6 |
| Civil engineering UK | 1,363 | 77.3 | 1,243 | 22.0 |
| Ventures UK | 323 | 36.8 | 222 | 13.1 |
| Ireland | 463 | 27.6 | 669 | 20.9 |
| Other including eliminations | (56) | (5.4) | (62) | (10.0) |
| Total | 3,139 | 121.5 | 3,134 | 81.6 |
Adjusted EBITDA margin | 3.9% | 2.6%
Revenue growth | 0% | 5%
Adjusted EBITDA growth | 49% | (9%)
TWC efficiency | (13.8%) | (17.8%)
Orderbook | 4,533 | 5,402
Orderbook growth | (16%) | (18%)
Revenue of €3.1 billion was in line with full-year 2022, with high activity in civil engineering UK and Ventures offsetting the lower level in Ireland due to progress on large projects. The British pound exchange rate had a €55 million negative effect on revenue. Adjusted EBITDA improved significantly to €122 million compared to €82 million in full-year of 2022, reflecting an adjusted EBITDA margin of 3.9 per cent (2022: 2.6 per cent). The contribution of Construction UK was impacted by supply chain issues and cost overruns at a large project. Civil engineering UK showed a good performance supported by the high activity level and the settlement for a legacy project while adjusted EBITDA in 2022 included disappointing results on some larger projects. The Ventures business had a strong performance, also driven by the divestment of an office development in the first half-year. The result of Ireland included an improved performance in civil engineering. The National Children’s Hospital is progressing towards completion, in line with the revised agreed timetable. The order book declined by 16 per cent to €4.5 billion, including the cancellation of a €300 million highways framework contract in the first half-year. The development of the British pound exchange rate had a positive effect of €89 million. Project wins during the year included additional works for HS2, an extension of the Framework agreement with the UK Environment Agency to mitigate climate change and protect against coastal erosion and flooding, and the repurposing of the historic Typhoo Tea building into a new broadcast centre for the BBC in Birmingham. In the UK, the civil market is expected to be stable while in the short-term the construction market will be more challenging. The 2023 UK Energy Act to strengthen energy security and support the delivery of net zero is a positive development. BAM is positioned strongly in the energy market, following the successful execution of projects in this product market combination. Medium-term, there is a healthy pipeline in BAM’s core construction markets for education, health, offices and leisure and key markets in Ireland like transport and social infrastructure. The construction market in Ireland is forecast to grow. BAM remains focused on winning projects with the right risk/reward balance.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
| 2023 | 2022 | |
|---|---|---|
| Cash flow of operations | 276 | 246 |
| Cash flow from working capital | (99) | (466) |
| Change in provisions and pensions | (71) | 24 |
| Cash flow from operating activities | 106 | (196) |
| Cash flow from investing activities | (91) | (163) |
| Cash flow from financing activities | (109) | (93) |
| Increase / decrease in cash position | (94) | (452) |
| Cash and cash equivalents beginning period | 841 | 1,285 |
| Change in assets and liabilities held for sale | - | 42 |
| Exchange rate differences, other changes | 10 | (34) |
| Cash and cash equivalents at year-end | 757 | 841 |
At year-end 2023, cash and cash equivalents totalled €757 million (2022: €841 million), while trade working capital continues to normalise. The further improved operational performance resulted in a strong cash flow from operations of €276 million. Cash flow from working capital was €99 million negative, including the effects of higher interest rates and of lower advance payments on large lump-sum projects, which is in line with BAM’s adjusted tendering strategy. Provisions and pensions resulted in a cash outflow of €71 million, of which €35 million for defined benefit obligations, which included additional payments to cover the impact of indexation. Cash flow from investing activities of -€91 million primarily relates to regular capital expenditure with a focus on sustainable, digital and modular solutions such as the electrification of equipment and modular housing. In 2022 this item included a net outflow of €66 million from divestments.
| 2023 Revenue | 2023 Adj. EBITDA | 2022 Revenue | 2022 Adj. EBITDA | |
|---|---|---|---|---|
| Germany, Belgium and International | 125 | 11.4 | 569 | 77.8 |
Revenues declined substantially due to the divestments of Wayss & Freytag Ingenieurbau, BAM Galère and BAM Contractors nv during 2022. The activities in Belgium had a satisfactory performance. In Germany, BAM still shares responsibility for one project of the former BAM Deutschland.
In 2023, Invesis continued to create value from the operational portfolio by successfully refinancing the University Hospital Schleswig-Holstein project and transferring the Dendermonde prison project, the A10/A24 project and the Afsluitdijk project to PGGM. Invesis added the GLM2 Social Housing Project in Australia to the portfolio reaching financial close in the fourth quarter of 2023. One project was transferred to a new owner. There is a strong pipeline and preferred bidder decisions are expected in 2024. At year-end 2023, Invesis had 44 operational projects (2022: 43), with a further 4 under construction (2022: 5), making 48 PPP projects in total (2022: 48).
In October 2022, the Dutch Fiscal Information and Investigation Service (FIOD) and the Dutch Public Prosecutions Office (Openbaar Ministerie) have informed BAM International that it is the subject of an investigation into suspicions relating to potential fraud and corruption at some already completed projects. The timing and possible outcome of the investigation are uncertain. Therefore, the potential adverse financial impact of the outcome of the investigation, if any, cannot be reliably estimated at this time but could possibly be material. BAM is fully cooperating with the investigation and taking appropriate steps in connection with the investigation, including an internal review of the relevant projects. In July 2020, BAM announced its intention to wind down BAM International. Meanwhile all projects of BAM International have been completed.# Royal BAM Group nv Annual report 2023
The increase in shareholders’ equity of €110 million to €921 million mainly comprises the net result of 2023 (€175 million), positive exchange rate differences (€18 million), the negative effects of the payment of dividend and the related share buyback (-€42 million), remeasurement of post-employment benefit obligations (-€36 million) and cash flow hedges (-€8 million). BAM’s capital ratio further improved by 2.2 per cent point to 23.4 per cent at year-end 2023. The financial resilience further improved by securing the first extension of our €330 million revolving credit facility by one year to November 2027.
The Group’s effective tax rate in 2023 is 5 per cent and is well below the weighted average nominal rate of 24 per cent. This is mainly explained by the recognition of liquidation losses at BAM International and of the revaluation of deferred tax assets for tax losses. On corporate income tax, taxes on wages, social security contributions and VAT, the Group paid a total amount of €864 million in 2023 (2022: €981 million). Tax paid in 2022 was seriously impacted by the early and full repayment of Covid-19 deferred VAT and salary tax of €120 million.
| Total taxes paid in 2023 (x € million, unless otherwise stated) | Taxes | % Revenue |
|---|---|---|
| Netherlands | 433 | 50 |
| United Kingdom | 393 | 46 |
| Ireland | 16 | 2 |
| Belgium | 20 | 2 |
| Rest of the world | 2 | 0 |
| Total | 864 | 100 |
Revenue
: 3,006
: 2,676
: 463
: 118
: 7
: 6,270
Cash flow from financing activities of -€109 million included the payment of cash dividend and the buyback of shares issued for scrip and coverage of share based employee compensation plans, totalling €42 million. The remainder relates to leases and repayment of interest bearing debt. Exchange rates, primarily the British pound, had a positive effect of €10 million on cash and cash equivalents at the year-end.
| Financial position (x € million, unless otherwise stated) | 2023 | 2022 |
|---|---|---|
| Cash position | 757 | 841 |
| Borrowings | (62) | (53) |
| Net (debt) cash before lease liabilities | 695 | 788 |
| Lease liabilities | (234) | (174) |
| Net (debt) cash | 461 | 614 |
| Trade working capital | (822) | (1,010) |
| Shareholders’ equity | 921 | 811 |
| Balance sheet total | 3,932 | 3,819 |
| Capital ratio | 23.4% | 21.2% |
| Capital employed | 1,346 | 1,194 |
| Return on capital employed | 13.7% | 16.8% |
The trade working capital efficiency percentage further increased, ending 2023 at -13.2 per cent (2022: -15.8 per cent), which reflects a further normalisation as a result of unwinding of advance payments on large projects as a consequence of BAM’s adjusted tendering strategy and the effect of higher interest rates.
On 4 April 2023, BAM learnt with great sadness of the death of a highly valued colleague in a tragic accident during rail works in the Netherlands. Also several train passengers were injured in the accident. Multiple investigations are still ongoing. BAM has implemented additional safety measures to improve BAM’s year-on-year safety performance. In division Netherlands, specific attention was paid to high risk type of incidents, such as falling from heights and collision hazards, for example through toolbox meetings. Another focus area to further enhance BAM’s safety culture is the general risk awareness, on site and with senior management. Key employment agencies actively participated in two workshops with the aim of enhancing safety performance concerning subcontractors and hired workers. Division United Kingdom and Ireland has further enhanced its BAM Safety Leadership Programme across the division. A comprehensive Safety Leadership Survey was organised to gain further insight into the safety culture including the attitudes and perception of safety of BAM employees, supply chain and subcontractors. Recurring safety measures in the day-to-day activities include safety self-assessments and internal and external safety audits with a specific focus on safety instructions, execution, improvements, communication and procedures regarding safety. On the annual Safety Day, BAM’s offices and project sites evaluate and stimulate the correct attitude and behaviour around safety. In The Netherlands the Safety Day 2023 was held in March, aligned with the industry-wide ‘Bewust Veilig Dag’. BAM measures safety performance through the incident frequency and the number of serious accidents with the intent of continuous improvement. Incident frequency denotes the number of occupational accidents resulting in lost time (absence from work ≥ 1 day) per million hours worked. BAM measures incident frequency for its own employees (IF BAM) and for its own workforce, i.e. own employees plus subcontractors, hired workers and third parties (IF total). For 2023, BAM reports IF total for the first time in its annual report.
| Incident frequency (x 1 million worked hours) | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| IF BAM | 3.7 | 3.4 | |||
| IF Total | 2.6 | ||||
| Target | ≤ 3.0 |
In 2023, IF BAM decreased to 3.4 (2022 3.7), which does not meet the 2023 target of IF ≤ 3.0. IF Total is 2.6 in 2023. A total of 193 (2022: 234) lost time accidents were reported, of which 71 (2022: 77) accidents involved BAM employees.
| Performance in 2023 | Progress | |
|---|---|---|
| • Fully incorporate safety in daily activities to achieve an incident frequency of ≤ 3.0* | IF BAM of 3.4 (down from 3.7 in 2022). IF Total of 2.6 | IF BAM of 3.4 does not meet the target. IF Total of 2.6 meets the target. |
| • Evolve the leadership culture | BAM implemented its five core values in 2023 and developed a leadership framework | Progress made in implementing values and developing a framework. |
| • Achieve minimum 22 per cent female representation within senior leadership | Female representation in senior leadership is 15 per cent | Target not met. |
| • Achieve minimum score of 51 on ‘Return on inclusion’ assessment | Return on inclusion score is 55 (2021: 45) | Target met. |
| • Deliver 20 per cent social value in United Kingdom and Ireland | BAM is in the process of implementing a measurement and reporting tool | Progress is being made towards defining and implementing social value delivery, but target achievement is TBD. |
In 2023, 64 serious accidents were reported (2022: 63 serious accidents), of which 18 involved own employees. Serious accidents can be with and without lost time and are therefore not always included in BAM’s IF figures. BAM classifies an accident as ‘serious’ when a worker is hospitalised for more than 24 hours or when it involves an electrocution, amputation or fracture (including a hairline fracture in the bone). BAM’s processes are organised to learn from accidents, near-accidents and dangerous occurrences, to improve the safety culture across the company and to prevent any accidents from happening in the future.
BAM’s leaders play a crucial role in developing people and enabling a culture in which people act according to BAM’s values. A new BAM Leadership Framework was defined in 2023 and is based upon BAM’s five values and its desired leadership behaviour.
These values were developed in 2022 and implemented throughout 2023:
The intention of combining BAM’s values with the desired leadership behaviour, is a shift from having a ‘culture by default’ to developing a ‘culture by design’. The Group’s Leadership Framework will form the basis of BAM’s recruitment processes and its leadership development portfolio. The latter offers different development opportunities in learning and coaching, such as the Enterprise Leadership Programme, the Future Leaders Programme, and the People Management Essentials Programme. The leadership journeys of BAM’s senior leadership group are facilitated by multi-day immersive experiences which include one-to-one coaching sessions and workshops. Besides the Leadership Framework, various initiatives were deployed to further ‘activate’ the BAM values throughout the BAM organisation. For example, one value was ‘spotlighted’ each quarter: engaging articles and interviews were published across the internal communication channels. Division Netherlands organised Value workshops, including an ‘Inspiration Café’ and ‘Expeditions’, bringing colleagues along the journey. In 2024, these conversations will continue. In division UK & Ireland, the focus in 2023 was on embedding the values ‘in everything we do’. Specifically, a deep-dive was done that identified over 250 tasks through which the values will be embedded.# Annual report 2023 Royal BAM Group nv
BAM strongly believes that diversity of culture, experience and opinion is a key factor for success, and that diverse management contributes to the appropriate balance of skills, expertise and experience. In compliance with the statutory requirements to set a number for the diversity between female and male members of the Supervisory Board, its composition shall consist of at least one third (33 per cent) female members and at least one third (33 per cent) male members. Since the general meeting in 2017, the composition of the Supervisory Board has been in line with this target, with two out of six members being female.
The Group’s aim is that at least 25 per cent of the Executive Committee (which includes the Executive Board) shall consist of women and at least 25 per cent shall consist of men. Since the appointment of Sabine van Hooijdonk-Verboom as Chief HR Officer per 1 July 2023, the female share in the Executive Committee composition is 20 per cent. This does not meet the target yet and BAM will continue to look for opportunities when new positions in the Executive Committee (including Executive Board) become available.
Additionally, BAM has set targets for the percentage of women in its senior leadership group for the period up to 2030. The senior leadership group (‘SLG’) is defined as all employees in senior job grades (referred to as grade F, G and H in BAM’s salary framework). This group of approximately 140 employees includes members of the Executive Committee, the directors of businesses and large underlying business units, as well as the most senior functional roles in the divisions and at the corporate centre. As a result of a new grading model and newly defined group, the composition of the senior leadership has changed. At the end of 2023, the share of female leaders in SLG was 15 per cent while the target was set at 22 per cent.
| Female representation (in %) | |
|---|---|
| Supervisory Board | 33 |
| Executive committee | 20 |
| Senior leadership group | 15 |
Target (2023)
* Supervisory Board: 33%
* Executive committee: 25%
* Senior leadership group: 22%
BAM has defined and is actively pursuing interventions to improve the share of women in leadership positions, aware of the current gap to target and the longer-term ambition to achieve 30 per cent female representation in SLG by 2030. Key interventions include:
In the group defined as key SLG, a significantly larger share of 29 per cent is female. The key SLG are leaders reporting directly to an Executive Committee member.
The Group believes in stimulating an inclusive culture that respects and values differences, thereby making the Group stronger, more innovative, and more attractive. In 2022, three diversity and inclusion (D&I) leads were appointed within the Company; one for corporate centre, one for division Netherlands and one for division United Kingdom and Ireland. During 2023, these leads have been acting on BAM’s D&I Roadmap by for example offering inclusive webinars, making the recruitment processes more inclusive and further embedding the BAM values in leadership behaviour.
BAM collaborates with EA Inclusion, an external independent party, that conducts an inclusion assessment every two years. The assessment is based on extensive research and includes more than 50 interviews with key stakeholders, approximately 80 interviews with leaders, surveys conducted among circa 40 clients and suppliers, more than 15 site visits, and desk research based on workforce data (e.g. data on engagement, absence, gender, and age). The results of this rigorous process enable BAM to identify detailed actions to improve its efforts towards achieving the Group’s inclusiveness ambition.
BAM was scored at 55 points, reaching its targeted ‘Silver’ level of 51 points or higher (on a scale of 100). This was especially ambitious for the businesses in the Netherlands and Ireland that had scored at around the mid-30s level in 2021. This score reflected an overall improvement by 10 points from the assessment in 2021. The report mentioned that BAM clearly acknowledged the need for cultural change, having embraced its D&I ambition and supporting a range of initiatives. Significant progress was observed through interventions involving leadership development, Inclusion@BAM, and executive sponsors visibly engaging with these D&I interventions, for instance through articles, videos and interviews. The findings from the ROI assessment were shared and discussed with the Executive Committee as well as executive and HR directors of the businesses. Follow-up actions have been defined and include:
BAM is confident it will mature in its D&I journey and prepare to reach its targeted score of 60 or higher by 2026.
BAM’s ambition is to have a lasting societal impact by creating social value, a key theme in its ambition building a sustainable tomorrow. Social value enables investments back into the communities where projects are delivered. These investments range from directing wealth back into the local economy through local procurement and employment, to facilitating apprenticeships and to volunteering at local community projects. Activities that contribute to social and local economic value are allocated appropriate monetary value, which together can be expressed as a percentage of contract value or revenue.
BAM’s social value target of 20 per cent social value in 2023 included a specification that it was only applicable to projects worth over >€10 million. In 2023, it was decided to widen the scope of the social value targets for 2023 and 2026 to include all projects in the portfolio, regardless of contract value, as social value creation is equally important across all projects. Unfortunately, BAM was not able to reach the 2023 target.
In 2023, the division United Kingdom and Ireland established a Social Sustainability enabling service. This involved the development of comprehensive policies and processes, alongside investment in an integrated reporting tool. The implementation of the tool is still ongoing, and therefore BAM is not yet able to report consolidated social and local economic value across the division. The social sustainability team and people throughout the business continue to put effort into creating social and local economic value. Below are examples of these activities, figures are division wide:
In 2024, BAM plans to implement the reporting tool to be able to report a consolidated social and local economic value by the end of the year. Combined with the upscaling of social value initiatives, this contributes towards BAM’s progress against the 2026 target of delivering 35 per cent social value in the division.
In the division Netherlands, projects for the public sector often contain obligations to deliver Social Return on Investment. This is a method of delivering and measuring social value in projects, with a focus on getting people that have a distance to the labour market into work.# Royal BAM Group nv Annual Report 2023
This can be supported through hiring these people directly and through social procurement, for instance purchasing at social recognised companies. Various social activities also contribute to social return, such as school visits to engage primary school and high school students. At the moment, these efforts are not yet reported by the division on a consolidated basis. The division Netherlands has committed to deliver 5 per cent social value on top of the required obligations by 2026, for which division Netherlands intends to use a similar social value framework as the division United Kingdom and Ireland, made appropriate to the local context. Division Netherlands’ social return engagements in 2023 included:
BAM Belgium manages the Zwaluwfonds, a foundation for charity donations, funded by employees and partners of BAM. In 2023, over €27 thousand was donated to four charities.
BAM is part of the Considerate Constructors Scheme (CCS) in the United Kingdom and its Dutch equivalent Bewuste Bouwers. In this scheme, construction sites implement the Code of Considerate Practice, which includes behaviours for respecting the community, caring for the environment and valuing the workforce. In the United Kingdom, 58 CCS projects were registered in 2023 (2022: 42) with an average audit score of 43.7, above the industry average of 40.3. Under the scheme in the Netherlands 66 sites were registered (2022: 69) and the average audit score in 2023 was 7.3 (2022: 7.5), slightly below the industry average of 7.4.
BAM places great value on the health and well-being of everyone who works for the Group. The way in which BAM implements its systems varies per division.
In the division Netherlands, BAM has contracted a certified external occupational health service to provide preventive and curative doctor services. Additionally, a periodic occupational health examination (PAGO) is organised for staff. Employees have indirect (through case management) access to a range of preselected providers and tools, supplied under a collective health insurance contract. Interventions can be organised in areas such as physiotherapy, lifestyle, ergonomics, psychology and social work. In accordance with Dutch standards, non-occupational healthcare is arranged through individual health insurance, although BAM can deploy the aforementioned interventions to support and accelerate support at an individual level. New policies on occupational health are developed, communicated and governed in consultation with the various Dutch Works Councils and a special council committee for safety, health, well-being and environment (VWGM). This committee convenes on a quarterly basis and ad-hoc when required.
Occupational health screening is provided by external suppliers in the United Kingdom. Consultations may then lead to referrals to specialist medical practitioners where appropriate. Employees who are paid on a monthly basis have private medical insurance available to them at no cost, although this represents a taxable benefit. These are only available to UK employees, and a total of 70 per cent of UK colleagues have this benefit. Those not in the scheme rely on the National Health Service. All employees and their dependants have access to an employee assistance programme which provides free, 24/7, confidential advice, support, information and, where needed, counselling, on a range of mental, social, financial and physical health issues. A comprehensive programme of training and awareness-raising is underway in the division, including 400+ individuals being trained as mental health first aiders to support colleagues. This training also includes suicide awareness and prevention. The BAM Safety Day also incorporates well-being, so it is now the BAM Safety and Well-being Day. The aim is to continue raising awareness of the links between mental health and well-being, work safety and performance. BAMathon, a UK and Ireland-wide fitness event, took place in June 2023, with high levels of engagement shown by employees taking part in walking, running, cycling and swimming events in teams. The division won four well-being awards in 2023 for its innovative well-being work. It also became accredited with Investors in People in Workplace Health and Well-being. Safety committees have been set up at all levels in the organisation through which employees can signal occupational health hazards, suggest measures and work together with management to address these. Feedback on employee well-being is gained through a variety of processes, such as the Investors in People accreditation, Mind Index and Benchmark, Last Opinion (for leavers) and Glint surveys. Critical incident support is provided on sites in order to support those affected.
Protecting and upholding human rights is important for strong and inclusive communities and is linked to BAM’s efforts to create a sustainable environment. BAM has strengthened the approach on this topic in 2023 by a Human Rights Working Group, consisting of representatives from the Sustainability (reporting), Governance and Compliance, Human Resources, Procurement and Legal departments. This Working Group leads the efforts and actions to assess and mitigate Human Rights risks in the following areas:
Besides the quarterly Enterprise Risk Management assessments and the Double Materiality Assessment ( chapter 6.1), the Human Rights Working Group performed a deep dive risk assessment on potential human rights risks. The aim of this risk assessment is to understand the human rights risks within BAM’s own workforce and vendors (consisting of suppliers and subcontractors) and to determine necessary mitigating measures. The risk assessment confirmed existing insights and no new risks were identified.
BAM focuses on key and preferred vendors to ensure quality and compliance in the chain of subcontractors and suppliers. BAM uses onboarding for vendors. They are assessed on their compliance with BAM requirements. During tenders and the project phase, BAM uses competitive bidding or specific selected partners for each project, including checking that the vendor fully meets the Group’s requirements. The requirements are included in the general procurement conditions and require vendors to comply with the BAM (Vendor) Code of Conduct, the BAM Business Principles (see www.bam.com) and the United Nations Guiding Principles on Business and Human Rights. Relationships with vendors are regularly evaluated and recorded using the vendor pyramid. Where applicable, BAM has the right to monitor or assess a vendor’s compliance in line with the BAM Vendor Code of Conduct. In 2023, BAM continued to de-risk its vendor base by limiting sourcing of materials and labour from outside Europe. BAM analysed suppliers from outside Europe and other low-risk countries, being Australia, Canada, Switzerland, Norway and USA. No site reviews for human rights were required due to the de-risking of the vendor base. All new subcontractors in 2023 are located in the home markets. A limited percentage of the subcontractors (2023: 14 per cent) contains potential higher risk as it could involve lower-skilled or migrant labour. Depending on the specific nature of provided services by those potential higher risk subcontractors, additional risk mitigating measures have been taken, such as specific certifications, which are audited by external parties. BAM requires, for example, some subcontractors to register in the Labour Standards Register (Register Normering Arbeid) and at SNF (Stichting Normering Flexwonen) concerning standards for housing migrant workers. If the subcontractor does not meet the requirements, the subcontractor will be removed from the register and is then not allowed to work for BAM anymore.
In 2023, BAM deployed new training materials on its renewed Code of Conduct. There is a mandatory e-learning on the Code of Conduct with a target of 95 per cent completion for BAM employees. For BAM employees in the United Kingdom, an e-learning on modern slavery is compulsory. In the United Kingdom, BAM works with the Supply Chain Sustainability School to provide training through e-learning or classroom training for vendor employees and to engage the supply chain.
BAM has a framework agreement with Building and Wood Workers’ International (BWI), to promote and protect employee rights. Driven by the Modern Slavery Act in the United Kingdom, the focus on human rights has led to collaboration with the government and industry peers.# Royal BAM Group nv - Annual report 2023
This manifested itself, among others, through the Supply Chain Sustainability School to jointly improve industry performance on sustainability issues, including modern slavery. Monitoring and incidents and complaints handling BAM encourages its employees and vendors to report suspected human rights incidents and complaints to BAM or to vendors. The compliance function monitors reports related to human rights. In 2023, the compliance function did not receive any reports related to human rights in line with the code of conduct and vendor code of conduct. There have also not been any fines, penalties or compensation for damages. Strengthening Human Rights policies and procedures In summary, BAM is guided by the standards established in the Universal Declaration of Human Rights; the Corporate Responsibility to Respect Human Rights under the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. BAM also recognises and respects the ILO Declaration on Fundamental Principles and Rights at Work, the ILO Conventions in force and the ILO Tripartite Declaration of Principles concerning multinational enterprises and social policy (MNE declaration). BAM complies with the Minimum Safeguards from the EU Taxonomy. BAM has covered these standards in its Code of Conduct, Human Rights Guideline and other underlying policies, such as its sustainability policy and procurement policy.
The Company aims to reduce its carbon, resource and waste footprint, and offer clients scalable sustainable solutions. BAM’s performance on the targets in the sustainability strategy is divided in the four key strategic environmental themes: Decarbonisation, Circularity, Climate adaptation and Biodiversity. Supplementary disclosures and details are presented in chapter 6.3.
BAM underlines the urgency to reduce carbon emissions and the pivotal role that the construction sector plays in the transition towards a sustainable low-carbon society. BAM has a 1.5 °C Science-Based Target, verified by SBTi, in place to ensure BAM is in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement. BAM has further increased the ambition level of its Science Based Targets. The accelerated targets were released early 2023 as part of BAM’s sustainability strategy.
BAM has reached its 2023 reduction target of 50% versus 2015, as BAM’s scope 1 and 2 CO 2 intensity decreased by 56 percent versus 2015. The CO 2 intensity in 2023 was 18 per cent lower compared to 2022 (from 13.3 to 10.9 tonnes per € million revenue). The reduction target was mainly achieved by divestments of carbon intensive business units and BAM’s CO 2 reduction initiatives such as the use of biofuels and electrification. BAM’s absolute scope 1 and 2 CO 2 emissions in 2023 were 69 kilotonnes, which was 22 per cent lower than its 2022 emissions of 88 kilotonnes. BAM’s reports scope 1 and 2 CO 2 emissions using market based conversion factors for electricity as BAM’s reduction targets are based on market based accounting. BAM’s scope 1 and 2 CO 2 emissions using location based emissions factors are included in chapter 6.3.
The largest source of CO 2 emissions remains the fuel use on BAM’s construction sites. In 2023, absolute emissions from fuels used on construction site were 36 kilotonnes compared to 48 kilotonnes in 2022. This decrease was caused by electrification of equipment and replacing diesel with hydrotreated vegetable oil (HVO) as well as the divestments (2022 CO 2 emissions still included the footprint of projects in Germany). BAM continues its focus on the electrification of equipment to reduce CO 2 emissions on its construction sites and the dependency on fossil fuels. In the Netherlands, BAM aims to replace small equipment that needs replacement by electric alternatives. Other examples in 2023 are:
| Strategic targets | Performance in 2023 | Progress # Reduction roadmap scope 1 and 2 (in kilotonnes)
| Vehicle fleet | Electricity use | Construction sites |
|---|---|---|
| 23 | 26 | 30 |
| 15 |
| CO 2 reduction target: 50 per cent reduction in 2023 versus 2015 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 15 | 16 | 17 | 18 | 19 | 20 | 22* | 23 | 21 | ||||
| 0 | 5 | 10 | 15 | 20 | 25 | 30 | 0 | 5 | 10 | 15 | 20 | 25 |
| 10.9 |
| Scope 1 | Scope 2 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 19 | 19 | 20 | 21 | 22* | 23 | |||||||
| 0 | 30 | 60 | 90 | 120 | 150 | 150 |
*Restatement of the values disclosed in BAM’s annual report 2022, due to a prior period data omission. See specific details in chapter 6.3
34 Annual report 2023 Royal BAM Group nv
The roadmap towards BAM’s 2026 target and further reduction in 2030 (figure 17) shows that the majority of the CO 2 reduction is anticipated at the Company’s construction sites, as a result of further electrification of equipment and deployment of HVO. The electrification of BAM’s vehicle fleet is also expected to continue to substantially contribute to BAM’s CO 2 emissions reduction in the coming years.
BAM acknowledges the importance of reducing CO 2 emissions in the value chain outside the Group’s activities, which is also underlined by BAM’s ambitious scope 3 reduction target for 2030. In 2023, BAM has started initiatives to reduce emissions associated with the use of materials. One example is ‘GROENR BETON’. This is an initiative to offer more sustainable concrete to the market. Application of the concrete concept leads to a reduction of 15 to 20 percent CO 2 emissions compared to traditional mixtures. The properties of GROENR BETON are comparable to those of traditional concrete, making it suitable for many applications. Regarding reducing downstream emissions, BAM continued to deliver projects focusing on making homes energy efficient in 2023.
In 2023, BAM focused on improving the quality of measurement of scope 3. BAM has taken an increased effort in order to improve the completeness and accuracy of its scope 3 assessment in 2023. These efforts have led to an improvement in BAM’s scope 3 measurement but are only the first steps in a longer journey. The complex and diverse supply chain and large variety in type of assets that BAM delivers creates challenges to compiling consistent, accurate and complete data. Further efforts will be needed to get BAM’s scope 3 measurement to a level that allows effective steering on this topic.
BAM decided to start disclosing the results of its scope 3 assessment in this year’s annual report to inform stakeholders of its journey. BAM estimates its scope 3 footprint to be circa 2,552 kilotonnes (the breakdown of BAM’s scope 3 emissions is presented in chapter 6.3). The estimated scope 3 emissions are lower than BAM’s 2019 baseline, but a meaningful comparison is not possible due to the substantial changes in applied methodology. BAM will continue to put effort into determining to what extent reductions are the result of methodology changes, the smaller size of the company (due to divestments) and actual reductions in the value chain. BAM expects that in the coming years more methodology changes will occur which may result in significant changes on the reported scope 3 footprint.
Most of BAM’s scope 3 emissions are in the categories purchased goods and services and use of sold products. In 2023, BAM has made efforts in improving the measurement of these categories:
The used methodology for all categories is presented in chapter 6.3 – Sustainability statements.
BAM was awarded a place on the prestigious CDP Climate A List for the fifth consecutive year, recognising BAM’s efforts in CO 2 reduction and transparent reporting. BAM was included in the Europe’s Climate Leaders list of the Financial Times, a list of the top 400 European companies that have cut their greenhouse gas emissions the most.
BAM aims to deliver more circular solutions to limit the use of primary materials and the environmental impact of these materials. BAM’s circularity approach is centred around:
1) applying tools to support circular solutions (material passports and circularity assessment);
2) reducing the use of virgin materials by reusing, recycling and considering alternative materials and
3) waste reduction.
In BAM’s strategy there is a focus on material passports and circularity assessments. The aim of a material passport is to ensure that the materials retain their value for reuse or recycling. The materials passport therefore contributes to the circular economy. The circularity assessments provides insight into the extent to which a building uses recycled materials and into the reusability and detachability of materials used. Due to the high workload associated with both material passports and the circularity assessments, these are currently mainly delivered on a client-demand basis.
35 Annual report 2023 Royal BAM Group nv
In the Netherlands the construction and property sector mostly uses Madaster to set up material passports. Due to the large variety in client demands within the civil projects, instead of using a standardised tool, a standardised method developed by BAM was established in 2023 and already implemented in various projects. In 2023 a material passport was offered in 11 tenders (35 per cent of larger projects with design in scope) in the Netherlands. Within the United Kingdom and Ireland, no industry standard exists and BAM is working on developing these standards, and the material passports that were delivered in 2023 were not according to a set standard.
The construction and property sector in the Netherlands has adopted the Building Circularity Index (BCI) as a circularity assessment. The BCI is a scientifically based and proven measurement method to determine the circular potential of a building. In 2023, a circularity assessment was offered in 13 tenders (42 per cent of larger projects with design in scope) in the Netherlands. Within the United Kingdom and Ireland no industry standard exists and BAM is working on developing these standards.
In 2024, BAM will continue to offer material passports and circularity assessment on all projects in the Netherlands and work towards maturing the approach in the United Kingdom and Ireland. BAM aims to keep track on the share of projects where these circularity solutions are offered and implemented to prepare reporting against BAM’s circularity targets for 2030.
One of the targets in BAM’s sustainability strategy is focused on reducing the usage of primary materials. In 2023 both divisions have focused on setting a baseline and roadmap for the key materials (steel, concrete and asphalt). Accurately mapping these materials for the entire Company remains a challenge, and the roadmap will therefore be continuously improved based on new insights. BAM has estimated the quantities of these main materials used in its construction projects in the Netherlands (see chapter 6.3).
Construction and office waste are the most relevant waste categories for BAM as these materials are initially brought to BAM’s sites and offices on its behalf, in contrast to excavation and demolition waste. BAM has set the target to reduce construction and office waste intensity by 75 per cent by 2030 (versus 2015). In 2023, its construction and office waste intensity was 8,7 (2022: 10.4, which means a decrease of 60 per cent compared to 2015. A total of 5 kilotonnes (2022: 5 kilotonnes) was landfilled or incinerated without energy recovery. The volumes of excavation waste and demolition waste both decreased again in 2022. These volumes are mainly impacted by the type and phase of projects and BAM does not consider excavation waste and demolition wastes useful metrics to steer upon. Focus is on reducing construction waste, but also on repurposing waste. Both divisions have started initiatives to repurpose pallets that would otherwise be discarded by having a company collect all types of pallets for re-use purposes, reducing wood waste on construction sites substantially.# Annual Report 2023 Royal BAM Group nv
Even though the focus of BAM is on reducing and re-using waste, recycling is still an important part of our waste streams. BAM’s ‘recycle or reuse’ rate remained stable at 83 per cent (2022: 84 per cent).
While BAM and many other organisations are committed to mitigate climate change, BAM also acknowledges the reality that the climate is already changing and is expected to change further in the coming decades. That is why BAM has selected climate adaptation as one of its sustainability strategic themes. For BAM, climate adaptation is about adapting the built environment to increase climate resilience, meaning that the assets BAM delivers can withstand severe climate, such as heavy precipitation, drought and rising sea levels. Climate-adaptive solutions are also increasingly demanded by communities, clients and regulators. BAM does not have specific climate adaptation targets in place for 2023, but the Company is working towards delivering on the 2026 and 2030 targets.
Construction and office waste intensity (in tonnes per € million revenue)
| | 2019 | 2020 | 2021 | 2022* | 2023 |
| :------------------------------ | :--- | :--- | :--- | :---- | :--- |
| Construction and office waste | 18.0 | 15.0 | 16.0 | 17.0 | 19.0 |
Waste reduction target: 75 per cent reduction in 2030 versus 2015
Construction and office waste production per destination category (in kilotonnes)
| | 2019 | 2020 | 2021 | 2022* | 2023 |
| :------------------------ | :--- | :--- | :--- | :---- | :--- |
| Recycling / re-use | 55.0 | 60.0 | 55.0 | 55.0 | 55.0 |
| Incineration with energy recovery | | | | | |
| Landfill and incineration without energy recovery | | | | | |
Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO
36Annual report 2023 Royal BAM Group nv
In 2023, BAM has further implemented the Climate Risk Scan in the Netherlands. A Climate Risk Scan is now carried out in all large projects identifying the specific risks for project locations in the tender phase. These risks include water damage, drought, heat stress, subsidence and flooding. Based on the results of this scan, BAM is increasingly offering adaptive solutions, regardless whether this is specifically requested by the client. BAM aims to quantitively report on the share of large projects where climate adaptive measures are offered in 2024. An example of a project where climate adaptive measures were implemented is the new shopping centre in the Waalsprong. This project was developed by BAM and delivered in 2023 with green facades that improve the indoor climate and retain rainwater and blue roofs that collect extra rainwater during heavy precipitation. The roofs provide additional cooling and water buffering which mitigates risks related to heat stress, draught and water damage. BAM also delivers climate adaptive assets that have the function to withstand impacts of climate change. An example is the eight meter high sea wall in Dawlish that was completed in May 2023. Following a storm in 2014 that severely damaged the railway, the sea wall was renewed to withstand extreme weather conditions. The project team that developed and built the wall won two awards at the annual Institution of Civil Engineers (ICE) South West Civil Engineering Awards. In 2024, BAM aims to apply the climate risk scan on all projects in the Netherlands and work towards a similar scan for projects in the United Kingdom, Ireland and Belgium. BAM will continue to put the processes in place to ensure climate adaptation is sufficiently covered in all tenders and projects.
Biodiversity loss, together with climate change, is increasingly considered a severe threat to the planet, society and economy. Economies depend on healthy and resilient ecosystems and mitigating climate change can only truly be achieved by addressing biodiversity loss. Recognising the importance of nature, BAM included biodiversity as a key topic in its sustainability strategy. BAM does not have specific biodiversity targets in place for 2023, but the Company is working towards delivering on the 2026 and 2030 targets. The ambition of BAM is to have an aggregated net-positive impact on biodiversity by 2030. BAM’s roadmap and targets are centred around (i) measuring biodiversity effects, (ii) offering biodiversity enhancing solutions in tenders and (iii) achieving a positive biodiversity impact. For impacts on nature that are outside of the Company’s control, BAM tries to proactively encourage and promote a Nature Positive approach. This includes participating in industry groups such as CIRIA (UK and Ireland) or the Green Building Council and contributing to discussions on ‘embodied biodiversity’ and biodiversity loss through BAM’s value chain. Cementing this drive, division United Kingdom and Ireland was proud to be among the first to sign the Nature Positive Business Pledge in 2023. This is a commitment by businesses to progressively halt and reverse their negative impacts on nature. Methodologies that provide businesses with clear guidelines for setting biodiversity targets and measuring impacts have not yet been developed at industry level. In 2023, BAM created a biodiversity scorecard to assess the maturity of its processes around biodiversity. This scorecard will be applied to projects and will act as the first step towards defining and measuring impact. It will measure various indicators such as habitat creation and enhancement, Biodiversity Net Gain (where applicable), inclusion of facilities for wildlife, biosecurity and pollution avoidance protocols, indirect impact on biodiversity through our supply chain, training, or how the project shares best practice and lessons learned. In 2024, BAM will further test and implement the biodiversity scorecard on projects in the United Kingdom and Ireland, and explore if the same methodology can be applied to assess its projects in the Netherland and Belgium as well. This will help improve the insight in biodiversity impacts in BAM’s projects and showcase the effect of biodiversity enhancing measures.
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO
37Annual report 2023 Royal BAM Group nv
On behalf of the real estate company of the municipality of Tilburg and the Sports Company Tilburg, BAM Bouw en Techniek has made the Ice Sports Centre Stappegoor in Tilburg more sustainable.
Annual report 2023 37
Royal BAM Group nv
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO
38Annual report 2023 Royal BAM Group nv
38 Parking Keerdok, designed by POLO Architects-Archipelago, is a sustainable and multifunctional mobility hub, with 537 parking spaces and 110 bicycle sheds, retail spaces and offices. Mechelen, Kairos (in joint venture) and BAM Interbuild
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO
39Annual report 2023 Royal BAM Group nv
In the following sections, BAM’s risk management process and how the Company effectively addresses and manages the key risk areas are outlined.
BAM’s risk management framework, established by the Executive Board, covers the approach to and responsibilities for risk management across the Company. The Executive Board has defined a strategy focusing on a sustainable business and project portfolio. This focus and the underlying strategic objectives and initiatives form the basis for BAM’s enterprise risk management. It addresses the Company’s strategic, operational, financial and compliance risks, which are assessed and prioritised based on their impact and probability, and based on the effectiveness of the risk response by the organisation. The Supervisory Board monitors and advises the Executive Board, which is responsible for enterprise risk management within the company. On behalf of the Executive Board, the Risk and Control Committee coordinates the set-up and effectiveness of the risk management framework. The Risk and Control Committee, chaired by the Chief Financial Officer (CFO), advises the Executive Board on the main risks in the context of BAM’s risk appetite. Risk assessments are carried out quarterly, and mitigating actions are defined and monitored. In 2022, the Company’s risk appetite was validated with the Supervisory Board. A reassessment was conducted by the Executive Board in 2023 to
4.1 Risk management
Risk exposure is an inevitable part of BAM’s strategy; controlled risks can lead to new opportunities, resulting in value creation. BAM’s strategy has a clear focus on continued de-risking and accelerating opportunities for future growth, with sustainability as a key component. The strategy has been translated into BAM’s risk management framework and enables management to identify, evaluate and address risks. BAM strives for continuous improvement which in 2023 resulted in further embedding and strengthening of risk governance in relation to the organisational structure, increased management risk dialogues, attention to improvements in the effectiveness of internal controls regarding processes and systems and improvements in project control and reporting. These continuous improvements further strengthened the risk management and control systems, and played a key role in achieving BAM’s strategic objectives.# What impacted BAM in 2023
In 2023, BAM’s operations were influenced by some risks and uncertainties related to the nature and complexity of the business environment, alongside the identification of various opportunities. The Company continued to be affected by external risks such as persistent challenging market conditions from economic volatility, global political uncertainties due to international conflicts, market instability in the construction and property business in both divisions. Where necessary, corrective measures were taken to bring the risk profile in line with the respective risk appetite.
BAM is highly committed to preventing safety incidents and is focused on continuous improvements. However, the Company faced incidents at some project sites in 2023 and sadly learnt of the death of a highly valued colleague in a tragic accident during rail works in the Netherlands. Incidents are extensively evaluated by management of the respective businesses, the Executive Committee and the Health Safety and Sustainability Committee. Creating and maintaining a safe working environment remains a continuous focus area in order to achieve the Group’s safety targets and to prevent incidents.
The pricing of materials and labor in the supply chain remained volatile in 2023. Inflation has led to cost increases in some projects, to the risk of not meeting clients’ needs and to budget increases in construction during tenders. In addition, there is increased solvency risk in the UK supply chain. BAM has taken appropriate measures as part of its tender process and the effects are considered in estimates of the expected project results.
The market conditions remain challenging due to high interest rates, political and geopolitical uncertainties and the continued pressure to attract and retain staff. Despite these challenges, BAM’s order book remained at a good level.
From a human resource perspective, BAM faced a complex set of challenges and opportunities, including managing project resourcing gaps, addressing a shortage of technically-skilled people, and handling inflation-driven wage pressure. BAM’s response involves a focused approach to employee retention, workforce diversification, and implementing a comprehensive culture program in line with the BAM values.
BAM has further developed the sustainability component of its strategy with the launch of the sustainability framework. This positions BAM to significantly reduce its carbon, resource, and waste footprint, while offering clients scalable sustainability solutions. Additional compliance risks arise from the recently introduced CSRD reporting requirements. To monitor compliance, BAM has established a sustainability reporting team dedicated to overseeing progress and ensuring compliance with the respective standards. BAM’s commitment to product leadership and lifecycle solutions is pivotal in mitigating these risks. Through these measures, sustainability is expected to serve as a key differentiator for growth. The Company has set quantifiable targets and adjusted strategies as necessary to align with its overarching business objectives.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
40Annual report 2023 Royal BAM Group nv
management and control systems, the reliability of financial reporting and compliance with laws and regulations. The divisions, Belgium and the Group carry out self-assessments, and the results are reported to BAM Risk Management. These results are challenged by Risk Management, and improvement actions are implemented and monitored. Furthermore, internal audits challenge the results and provide recommendations to further improve the effectiveness of the internal control framework. The in control statement process results in the ‘Executive Board statement’ as described below. The underlying assessments at the divisional level form the basis for managerial accountability for the effectiveness of the internal control framework, together with the formal issuance of an in control statement to the Executive Board. Any deviations from the internal control framework are highlighted, including identified follow-up actions to resolve these deviations. The divisions have confirmed and signed the in control statement which supports the Executive Board in its assessment of the effectiveness of the design and operation of the internal control and risk management systems. The Company has identified areas of improvement as BAM is not yet at the level of maturity it aspires to.
process establishes a clear risk profile for each project and ensures that risks and rewards are adequately balanced. For certain projects, the stage gate process requires expert involvement to leverage the combined knowledge within the Company, to support the tender and the project team in maximising the project’s potential. The stage gate process follows a governance structure based on risk categorisation, to ensure that each tender and project is reviewed and approved by the appropriate management level. Bids for major projects or projects involving exceptional risk are submitted to the Executive Board for ratification and – if necessary – to the Supervisory Board for approval. BAM’s Internal Audit department performs independent testing of controls on selected projects across the Group. Based on this testing, an opinion is formed on the effectiveness of the project control system and the overall project performance.
The effectiveness of the internal control framework is monitored on a quarterly basis and assessed on a semi-annual basis. BAM has derived its internal control framework from the business model and underlying key processes and policies (e.g. for accounting, treasury, legal, compliance and information security). All key processes are identified around strategic enablers and are aligned with existing core processes in accordance with these enablers. The internal control framework ensures insight into the effectiveness of internal
innovation, and continues to invest in innovation through digital and sustainable technologies and solutions;
• Operational risks – BAM seeks to limit the risks that may jeopardise the execution of its business activities;
• Financial risks – BAM strives to maintain a solid financial position (e.g., solvency and credit facilities), ensuring access to the financial markets and retaining its clients, supply chain and other partners. BAM wants to provide an insightful, fair and accurate representation of its performance and economic results;
• Compliance risks – Compliance with all applicable laws and regulations including BAM’s code of conduct is of fundamental importance to the Group.
The strategic agenda, governance, core values, Code of Conduct, and policies and procedures further underpin risk appetite statements.
An important strategic pillar in BAM’s strategic agenda 2021-2023 was continued de-risking of the business by making conscious choices in the business to avoid disproportionate risks in the project portfolio, in particular for large projects. In this respect, the stage gate process is a fundamental part of the BAM risk management framework. Tenders for projects are guided through various stage gates, based on their complexity, size and risk profile. The stage gate
confirm that the risk appetite adequately accounts for sustainability strategy risk factors. The risk management framework has been further enhanced following the results of the Company’s double materiality assessment, which, among others, resulted in separating the sustainability risk into two separate risks relating to climate change and environmental impact. In line with the Dutch Corporate Governance Code, the COSO (Committee of Sponsoring Organisations of the Treadway Commission) Enterprise Risk Management Framework from 2017 was used as a reference to mature the Company’s risk management framework further.
The Executive Board is responsible for establishing the risk appetite within BAM in relation to the Company’s strategy and activities. Risk appetite is defined as the level at which BAM is willing to accept risk in the ordinary course of business to achieve its objectives. The risk appetite is assessed based on the Company’s strategy. An important pillar is the continued de-risking of BAM’s business and market choices to avoid disproportionate risks in the project portfolio. The company’s risk appetite and main risk areas are described based on the following categories:
• Strategic risks – BAM takes a balanced approach to risk and reward to achieve its strategic objectives in terms of results and
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
41Annual report 2023 Royal BAM Group nv
with legislation, rules and regulations. Nor can they provide certainty that BAM will achieve its objectives. Furthermore, the Executive Board confirms that, to the best of its knowledge:
• The financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of Royal BAM Group and of companies included in the consolidation;
• The Executive Board report provides a fair review of the position at the balance sheet date, the development and performance of the business during the financial year of Royal BAM Group;
• The Executive Board report describes the principal risks and uncertainties that Royal BAM Group faces.# Executive Board statement
In discharging this responsibility and to provide a substantiation for the statement below, the Executive Board has assessed the effectiveness of the design and operation of the internal control and risk management systems as described above. In accordance with the Dutch corporate governance code and the Financial Supervision Act (‘Wet op het financieel toezicht’), the Executive Board confirms that, to the best of its knowledge:
It should be noted that the above does not imply that these systems and procedures provide absolute assurance as to the realisation of operational and strategic business objectives, or that they can prevent all misstatements, inaccuracies, errors, fraud and non-compliances
| What does this mean | |
|---|---|
| Very high | BAM is very risk taking and accepts these risks may materialise with a very high likelihood and/or impact. |
| High | BAM is risk taking and accepts that these risks may materialise with a high likelihood and/or impact. |
| Medium | BAM accepts these risks to materialise with a medium likelihood and/or impact. |
| Low | BAM accepts these risks to materialise at a low likelihood and/or impact. |
| Very low | BAM has (almost) no appetite for materialisation of these risks. |
The following table summarises BAM’s key risk areas, the respective risk appetite and management’s measures to bring the risk in line with the risk appetite.
| Risk description # Annual report 2023 Royal BAM Group nv
Information technology is crucial in supporting and protecting the core and supporting processes. BAM increasingly relies on digital communication, connectivity and the use of technology. The Company has to remain alert to prevent the use of compromised data and the unavailability, loss or theft of critical strategic, financial and operational data. BAM has continued focus to stay up-to-date with external threats and developments. In addition, BAM continues to invest and improve its security efforts to remain resilient to growing cyber-risks. This includes investment in tooling and in implementing and testing its information- and cyber security framework to ensure the confidentiality, integrity and continuity of data.
45
Climate change-related risks are related to climate mitigation, such as the risk of operating in a CO2 intensive industry and climate adaptation risks, such as global warming are causing more frequently occurring extreme weather conditions, such as storms, heat waves, droughts, heavy rainfall with flooding and heavy snowfall.
The construction industry relies heavily on natural resources, which will be depleted when consumption goes faster than what nature can regenerate. Also the potential negative impact exists due to risk of pollution in our supply chain. The potential impact on biodiversity (through land use change) and the contribution to ecosystem services (benefits to humans provided by the natural environment and healthy ecosystems) can impose environmental risks, but also opportunities to the construction business.
Failure to deliver sustainable construction processes and sustainable new solutions could disrupt BAM’s position related to its clients and supply chain partners, and lead to reduced revenue and higher costs. Specific climate adaptation risks can affect the valuation of assets (e.g., land bank, equipment, project locations).
Failure to deliver sustainable construction processes and sustainable new solutions could disrupt BAM’s position related to its clients and supply chain partners, and lead to reduced revenue and higher costs. BAM has addressed sustainability through its governance (the Health, Safety and Sustainability committee), corporate team and divisional teams, strategy (ambition to achieve a net positive result), project portfolio (by reducing the impact of BAM on resource use in cooperation with partners in the supply chain and clients to explore circular economic business models), risk management (by identifying and managing potential risks and opportunities) and metrics (by setting targets as part of the strategic agenda). BAM reports on the Task Force on Climate-related Financial Disclosures (TCFD) guidelines through its yearly CDP climate response, which is publicly available on the CDP website. BAM has addressed sustainability through its governance (the Supervisory Board’s Health, Safety and Sustainability committee), corporate team and divisional teams. Impact assessments and planned improvements on measurement of BAM’s impact will result in better insight on consequences to be addressed. Since 2023 the sustainability strategy of BAM includes two environmental themes, which will be evaluated in the tendering process focusing on circularity and biodiversity measures to be included in the project offers.
Crisis and business continuity disruptions can have a material effect on the Company’s operations due to risks such as natural disasters, influenza and the Covid-19 pandemic. Disruptions (for example related to widespread public health concerns like Covid-19) can have a significant negative impact on BAM’s business results. BAM has a structured crisis management and multidisciplinary business continuity system to ensure continuity in a safe and healthy manner on project sites, in offices and at home.
46
Providing insightful, fair and accurate representation of performance and economic results is essential for trust in BAM. Material misstatements in the financial and sustainability reports may lead to a loss of confidence in the accounts by internal and external stakeholders.
BAM has a centrally steered Finance organisation that coordinates the process of accurate, complete and timely closing and consolidation of (non-)financial data. In 2023, a dedicated sustainability reporting function was established reporting directly to the CFO. This department works closely together with the business to address sustainability risks disclosed in the sustainability statements (chapter 6). The central BAM Accounting Guidelines (BAG) provide the principles and standards for the application of IFRS rules within BAM, and the appropriate implementation of the new accounting guidelines by BAM’s businesses is closely monitored. Furthermore, Group Finance coordinates, supports and approves complex interpretations and valuations. Periodic reviews by finance and risk functions underpin the insightful, fair and accurate representation of performance and economic results, and aim to prevent any material misstatements due to fraud or errors.
The attractiveness of BAM as a trusted partner to collaborate with or to invest in is strongly influenced by its financial position and its ability to manage financial risks. Failure to achieve the status of trusted partner may prevent BAM from working with preferred parties and lead to restrictions on access to financial markets. BAM’s financing strategy is based on long-term relationships with reputable financial institutions and a well-spread debt maturity schedule. A strong centralised focus on cash and working capital, including financing by clients and suppliers, limits the need for extra capital. Other specific financial risk management measures, including those in the area of interest rate risk, foreign exchange risk, credit risk and liquidity risk are disclosed in note 4 in the consolidated financial statements.
47
Regulatory compliance and the trust of clients, shareholders, lenders, construction partners and employees in BAM is vital to ensure the continuity of the Company. Ethical misconduct or non-compliance with applicable laws and regulations (such as competition, bribery and corruption and human rights) could expose BAM to liabilities or have a negative impact on its business and reputation. BAM may be subject to administrative, civil or criminal liabilities including significant fines and penalties, as well as suspension or debarment from government or non-government contracts for some period of time.
The BAM Code of Conduct and adjoining policies such as those relating to bribery, corruption and competition align with generally accepted standards and values and also with local legal and other rules and regulations. All employees must acknowledge the compliance with the Code of Conduct. The Group has a robust speak up approach (including external reporting line), so that breaches of the code and policy can be reported through various channels. Compliance officers monitor compliance and advise on integrity issues.
In October 2022, the Dutch Fiscal Information and Investigation Service (FIOD) and the Dutch Public Prosecutions Office (Openbaar Ministerie) have informed BAM International that it is the subject of an investigation into suspicions relating to potential fraud and corruption at some already completed projects. BAM is fully cooperating with the investigation and taking appropriate steps in connection with the investigation, including an internal review of the relevant projects. In July 2020, BAM announced its intention to wind down BAM International. Meanwhile all projects of BAM International have been completed.
48
On 20 December 2022, an updated version of the Dutch Corporate Governance Code (‘the Code’) was published. By means of a decree dated 20 September 2023, the Dutch government has designated the Code as applicable to Dutch companies with a public listing. The Code is based on the comply-or-explain principle and applies as from the financial year 2017.
This chapter reports on the application of the Code at Royal BAM Group. Together with the information about the corporate governance structure and the BAM corporate governance compliance overview which can be found on the Company’s website under the corporate governance heading (see www.bam.com/en/about-bam/corporate-governance), this comprises the ‘Corporate governance statement’ as specified in section 3, sub section 1 of the Decree with respect to the content of the Executive Board report (‘the Decree on the Executive Board report’).# Royal BAM Group nv
Information about BAM’s corporate governance structure and compliance with the Code (clause 3.1 of the Decree on the Executive Board report) and the functioning of the General Meeting and the rights of shareholders (clause 3a, sub section b of the Decree on the Executive Board report) can be found on the Company’s website under the aforementioned corporate governance heading. The most important aspects of BAM’s risk and control systems (clause 3a, sub a of the Decree on the Executive Board report) are available in chapter 4.3 of this annual report. Information about the composition and functioning of the Executive Board and the Supervisory Board (clause 3a, sub c of the Decree on the Executive Board report) is described in chapters 4.3 and 5.1, and the diversity policy for both boards (clause 3a, sub d of the Decree on the Executive Board report) is explained in this chapter and chapter 5.1. A declaration regarding the Decree in Article 10 of the EU Takeover Directive (clause 3b of the Decree on the Executive Board report) can be found in chapter 4.3 and the report on gender diversity in the Executive Committee (including the Executive Board), the Supervisory Board and sub-top of BAM is included in this chapter, as well as chapter 3.2 of this annual report.
Compliance with the Code is described in the aforementioned BAM corporate governance compliance overview, which is available on the Company’s website. This is to be read in conjunction with this section, and is deemed to be incorporated into this section. In the event that there is a difference between the content of BAM’s website and this section, this section will prevail. BAM complies with the principles and best practices of the Code. In accordance with the Code, the Company will submit any substantial changes in the main features of its corporate governance structure to the General Meeting for discussion purposes.
The corporate governance structure of the Company was reviewed by the Executive Board and Supervisory Board in February and December 2023, assisted by the company secretary. The BAM corporate governance compliance overview was last updated on 14 February 2024.
Best practice in section 2.1.6 of the Code stipulates that the diversity and inclusion policy for the Company (‘the D&I Policy’) should be explained in the Executive Board report and the way in which it was implemented in practice, addressing (1) the goals of the D&I Policy, (2) the plan to achieve the goals of the D&I Policy, (3) the results of the D&I Policy in the past financial year and – where relevant and applicable – insight into the inflow, progression and retention of employees and (4) the gender composition of the Supervisory Board, the Executive Committee (including the Executive Board) and the sub-top (as defined below) at the end of the past financial year. Information on points (1), (2) and (3) is captured in chapter 3.2 of this annual report, section ‘Female representation’. Details on point (4), relating more specifically to governance, are included below.
The Supervisory Board should be composed in such a way as to ensure a degree of diversity appropriate to BAM with regard to expertise, experience, competencies, other personal qualities, sex or gender identity, age, nationality and cultural or other background. In compliance with the statutory requirements to set a number for the (diversity between) female and male members of the Supervisory Board, its composition shall consist of at least one third (1/3) female members and at least one third (1/3) male members. Since the general meeting in 2017, the composition of the Supervisory Board has been in line with this target, with two out of six members being female.
The Supervisory Board has resolved that the diversity policy for the Supervisory Board will apply equally to the Executive Board and the Executive Committee, whereby the aim is that at least 25 per cent of the Executive Committee (including the Executive Board) shall consist of women. Since the appointment of Sabine van Hooijdonk-Verboom as Chief HR Officer per July 1st, 2023, the female share in the Executive Committee composition is 20 per cent. This does not meet the target yet and BAM will continue to look for opportunities when (new) positions in the Executive Committee (including Executive Board) become available.
| Appendices | Other information | Financial statements | Sustainability statements | Supervisory Board | Risk management and governance | Business performance | Value creation | Message from the CEO |
|---|---|---|---|---|---|---|---|---|
| 49 Royal BAM Group nv | Sustainability | The Corporate Governance Code | prescribes in section 1.1 | that the Executive Board | should develop a view on | sustainable long-term | value creation | by the Company, |
| formulate a strategy in line with this, including specific objectives. When formulating the strategy the Executive Board should pay attention to – amongst others – the impact of the Company in the field of sustainability, including the effects on people and the environment. BAM developed a new sustainability strategy in 2022, which was presented and rolled-out in January 2023. Further information about BAM’s strategy, including the sustainability strategy is provided in chapter 2.2 of this annual report. | Besides the target for the Executive Committee, BAM has set targets for the percentage of women in its sub-top for the period up to 2030. The sub-top has been defined as the senior leadership positions at BAM. Originally, these senior leadership positions were defined on a case-by- case basis. In 2022, a new senior leader grading model was developed based on the KornFerry Hay Group methodology, which has been implemented in the course of 2023. The senior leadership group (SLG) is now defined as all leaders in senior job grades (F, G, H). This group of approximately 140 employees includes members of the Executive Committee, the directors of businesses and large underlying business units, as well as the most senior functional roles in the divisions and at the corporate centre. As a result of this new grading model and newly defined group, the composition of the senior leadership has changed. At the end of 2023, the share of female leaders in SLG is at 15 per cent while the target was set at 22 per cent. This gap to target means additional attention and action is required, as outlined in chapter 3.2. It is important to note that in the group defined as key SLG, a significantly larger share of 29 per cent of incumbents are female. The latter group consists of all leaders graded F or higher, reporting directly to an Executive Committee member. | Silvertown Tunnel, 1.4 km twin-lane road tunnel under the River Thames, for client Transport for London (TfL). Riverlinx SPV (including Invesis) is financing and overseeing the design, build and maintenance of the project. CJV (including BAM Nuttall) implemented innovative and pioneering solutions for the UK, such as the TBM rotation and frozen cross-passages. | ||||||
| Appendices | Other information | Financial statements | Sustainability statements | Supervisory Board | Risk management and governance | Business performance | Value creation | Message from the CEO |
| 50 Annual report 2023 Royal BAM Group nv | Substantial interests | The Company is aware of the several interests in its equity, which are now reported under the provisions concerning the reporting of controlling interests under the Disclosure of the Financial Supervision Act (see chapter 9.1). | Special control rights | The shares into which the Company’s equity is divided are not subject to any special control rights. | Employee share or employee option plan | The Company does not have any recurring employee share or employee option plans other than the long-term incentive plan based on performance shares which was introduced for the members of the Executive Board in 2015. This long-term incentive plan is cascaded down to approximately 30 senior executive positions below the Executive Board. Specifically for 2021, the Company introduced a one-off special incentive plan in support of its new strategy. This plan is awarded to top management below Executive Board level, and is tightly linked to BAM’s strategic objectives for 2021-2023. It replaces eligibility for the regular long-term incentive plan for this period. | provisions of Article 31(6) of the Articles of Association. See chapter 8.2 for Articles of Association provisions governing the distribution of profit. | Limits on the transfer of shares |
This chapter relates to the provisions of the decree of 5 April 2006 implementing article 10 of Directive number 2004/25/EC of the European Parliament and the Council of the European Union dated 21 April 2004 and lastly revised on 13 October 2015 (‘the Decree on Article 10 of the EU Takeover Directive’).
The Company has three classes of shares: ordinary shares, preference shares B and a series of preference shares F. BAM shares are traded on the Euronext Amsterdam stock exchange. Note 22 of the financial statements may be used as a reference for the Company’s capital structure. At the balance sheet date, only ordinary shares were issued.
The following rights attached to the shares into which the Company’s capital is divided follow from the Articles of Association and the Dutch Civil Code.
Each share in the Company provides entitlement to the casting of one vote at shareholders’ meetings. There are no restrictions on the exercising of voting rights. The Company’s Articles of Association contain the usual provisions in relation to intimation for the purpose of being acknowledged as a proxy at shareholders’ meetings. Where the Articles of Association mention holders of depositary receipts or depositary receipt holders, whether named or bearer, this is understood to mean holders of depositary receipts issued with the Company’s cooperation and also individuals who, under the terms of Articles 88 or 89, Book 2 of the Dutch Civil Code, have the rights accorded to holders of depositary receipts for shares issued with the Company’s cooperation.
There is no difference in the voting rights attached to a preference share B, a preference share F or an ordinary share. As all ordinary shares and preference shares B and F have the same nominal value (EUR 0.10), every issued and outstanding share of a class gives the right to cast one vote in the general meeting and to cast one vote in the meeting of holders of that specific class.
Ordinary shares and preference shares F may only be issued against payment in full. Preference shares B may be issued against partial payment. Holders of ordinary shares have a preemptive right in respect of new ordinary shares to be issued, unless restricted or excluded pursuant to a resolution of the General Meeting. Holders of preference shares B and F do not have a preemptive right in respect of shares to be issued. The transfer of ordinary shares and preference shares F is not restricted by the Articles of Association. The transfer of preference shares B requires the approval of the Executive Board.
The relevant financial right attached to the shares which follows from Article 31 of the Articles of Association concerns the application of the profit in relation to preference shares B and F. A brief summary of Article 31 of the Articles of Association is that from the profit realised in any financial year, an amount will first be distributed, where possible, on the Class B cumulative preference shares, calculated by applying the percentage stated below to the amount that must be paid up on those shares at the start of the financial year for which the distribution is made. The percentage referred to above will be equal to the average of the Euribor rates for money market loans with a maturity of twelve months – weighted according to the number of days for which these rates prevailed – during the financial year for which the distribution is made, plus one percentage point. Euribor refers to the Euro Interbank Offered Rate as determined and published by the European Central Bank. Subsequently, if possible, a dividend will be distributed on each financing preference share of a certain series, with due consideration of the This chapter relates to the provisions of the decree of 5 April 2006 implementing article 10 of Directive number 2004/25/EC of the European Parliament and the Council of the European Union dated 21 April 2004 and lastly revised on 13 October 2015 (‘the Decree on Article 10 of the EU Takeover Directive’).
BAM differentiates the following categories of agreements as referred to in the Decree on Article 10 of the EU Takeover Directive:
The Company is obliged by law to operate a mitigated two-tier structure. The General Meeting appoints the members of the Supervisory Board, based on a recommendation from the Supervisory Board. The General Meeting also appoints the members of the Executive Board, with the Supervisory Board having the right of recommendation. A more detailed explanation of the rules governing the appointment and dismissal of members of the Supervisory Board and members of the Executive Board can be found in the Articles of Association of the Company. Resolutions to amend the Articles of Association or to dissolve the Company may only be adopted by the General Meeting pursuant to a proposal of the Executive Board and subject to the approval of the Supervisory Board.
The Executive Board’s powers are those arising from legislation and regulations. A more detailed description of the Executive Board’s duties can be found in the rules of the Executive Board and the Executive Committee.
The Executive Board was authorised by the General Meeting held on 12 April 2023 to issue ordinary shares and Class F preference shares and/or to grant options to purchase these shares, subject to approval from the Supervisory Board. This authorisation is limited in duration to eighteen months. It is also limited in scope to 10 per cent of the issued capital. The General Meeting held on 12 April 2023 granted authority to the Executive Board for a period of eighteen months to repurchase shares in the Company, within the limitations imposed by the law and the Articles of Association and subject to the approval of the Supervisory Board. In principle, the General Meeting is asked to grant these authorisations every year. Resolutions to amend the Articles of Association, or to dissolve the Company, may only be passed by the General Meeting based on a proposal put forward by the Executive Board and approved by the Supervisory Board.
The Company is not aware of any agreements involving one of the Company’s shareholders and which might provide reasons for restricting the transfer of shares or of depositary receipts issued with the Company’s cooperation or restricting the voting rights.
Mr Rottinghuis is a Dutch businessman who has held senior executive and non-executive roles for leading European companies across various industry sectors. He served as CEO and chairman of the Executive Board of Pon Holdings from 2001 until his retirement in 2010. He joined Pon in 1993 and became a member of the Executive Board in 1999. Before that, he fulfilled senior management roles at Royal Nedlloyd Group. Since his retirement from Pon, he has held several Supervisory Board and non-executive director positions, including at Royal Bank of Scotland, Blokker, DRG (food retail), Stork (as chairman) and CRH (cement building materials). Mr Rottinghuis completed his studies at the University of Groningen in 1982. Mr Rottinghuis is a Dutch national. Information about Mr Rottinghuis’s shareholding position is on page 79. Other offices: chairman of the Supervisory Board of Koole Terminals, and member of the Supervisory Board of Damen Shipyards Group. Mr Rottinghuis was appointed to the Supervisory Board in 2020.
Mr Boon studied quantitative business economics and commercial law at Erasmus University Rotterdam. He completed the postgraduate RA (Chartered Accountant) program at the same university. Mr Boon started his career at Unilever. From 1983 to 2000, he held various senior positions within this company, the latest being CFO of Unilever Brazil. In the period 2000-2004, Mr Boon was CEO of DiverseyLever Netherlands.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
51 Annual report 2023 Royal BAM Group nv
52 Annual report 2023 Royal BAM Group nv# Royal BAM Group nv Annual Report 2023
Mr Boon became CFO and member of the Executive Board of private equity owned Rijnmond Waste Processing and Van Gansewinkel Group respectively. In 2010, he joined publicly listed Nutreco and became its CFO and an Executive Board member in 2011. In 2015, following the delisting of Nutreco, he decided to leave this company. Mr Boon is a Dutch national. Information about Mr Boon’s shareholding position is on page 79. Other offices: chairman of the Supervisory Board of Albron, member of the Supervisory Board of KPMG Netherlands, and lay judge (expert member) of the Companies and Business Court (Enterprise Chamber), which is part of the Amsterdam Court of Appeal. Mr Boon was appointed to the Supervisory Board in 2017 and reappointed in 2021. He was appointed vice-chairman of the Supervisory Board in 2019.
Dr Skorupska obtained a master’s degree in Chemistry, Engineering and Geology at the University of Newcastle upon Tyne and subsequently conducted post-graduate research at the same university. She started her professional career with multiple research and management roles at successively IEA Coal Research and National Power plc. In 2001, Dr Skorupska moved to RWE where she held various senior management and executive positions until 2012, most recently as Chief Technology Officer at Essent in ‘s-Hertogenbosch, where she was responsible for Essent’s power plants (including construction projects). In 2013, Dr Skorupska became Chief Executive of REA, the Association for Renewable Energy and Clean Technology. Dr Skorupska is a British national and does not own any shares in the Company’s capital. Other offices: non-executive director at Transport for London, and non-executive director at Renewable Energy Assurance Ltd. Dr Skorupska was appointed to the Supervisory Board in 2021.
Mrs Koopmans earned a master’s degree in Law from Erasmus University Rotterdam and a further postgraduate degree Real Estate Law from Radboud University Nijmegen. Between 1991 and 1998, Mrs Koopmans was Chief Legal Officer at NBM-Amstelland (acquired by BAM in 2000). Since then, she has worked in various commercial and senior international leadership positions at Heerema Group, Cap Gemini Engineering and RELX Group. Between 2011 and 2015, Mrs Koopmans was managing director of the Legal & Regulatory division of Wolters Kluwer in the Netherlands and director of the global business line for workflow solutions. Before Wolters Kluwer, she was CEO at LexisNexis Business Information Solutions (RELX Group). Since 2015, Mrs Koopmans has worked as a non-executive director and advisor of companies. Mrs Koopmans is a Dutch national. Information about Mrs Koopmans’s shareholding position is on page 79. Other offices: non-executive director at Swiss Post AG, Sanoma Corporation and Cicor Group, member of the Supervisory Board of NORMA Group, lay judge (expert member) of the Companies and Business Court (Enterprise Chamber), which is part of the Amsterdam Court of Appeal. Mrs Koopmans was appointed to the Supervisory Board in 2020.
Mr Elfring obtained a master’s degree in Law and Business Economics at the University of Groningen. He started his career at Amsterdam- Rotterdam Bank, followed by management positions at Rabobank, Amsterdamse Investeringsbank, MeesPierson and Lehman Brothers. Between 2008 and 2011, he worked for Credit Suisse, where among other tasks he was responsible for Investment Banking in Northern Europe and the Benelux. Between 2011 and 2018, Mr Elfring worked for Bank of America Merrill Lynch, where from 2012 onwards he was responsible for Corporate and Investment Banking in Europe, the Middle East and Africa, based in London. In 2021, he became Vice-Chair of EMEA Investment Banking at J.P. Morgan Securities plc. Mr Elfring is a Dutch national and does not own any shares in the Company’s capital. Other office: chairman of the Supervisory Board of Vuyk Holding. Mr Elfring was appointed to the Supervisory Board in 2020.
Mr Sheffield studied civil engineering at the University of Surrey. He is a Chartered Engineer and Fellow of the British Institution of Civil Engineers. From 1983 to 2014, he was employed by the Kier Group, a large British construction and property development group, listed on the London stock exchange, where he held a number of management positions. Mr Sheffield spent the first 17 years of his career working on significant infrastructure and construction projects around the world, including seven years as a project director on power stations in the United Kingdom, desalination plants in Saudi Arabia and underground railways in Hong Kong. He then spent seven years running business units within the United Kingdom, and in 2005 he joined the Board of Kier Group with responsibility for global construction activities. He was appointed as Chief Executive Officer in 2010. In 2014, Mr Sheffield left the Kier Group for Laing O’Rourke, the largest private construction company in the United Kingdom, where he was a member of the Executive Committee until 2017 and responsible for their activities in Europe and the Middle East. Mr Sheffield is a British national and does not own any shares in the Company’s capital. Other offices: none. Mr Sheffield was appointed to the Supervisory Board in 2017 and reappointed in 2021.
Mr Joosten earned a degree in Business Economics at VU Amsterdam in 1987 and an MBA from the University of Leuven in 1990. Mr Joosten started with AkzoNobel in 1996 as a marketing director, joining from Petrofina (currently PPG) where he began his career in 1988. At AkzoNobel he held management positions in sales and marketing, and became managing director of Decorative Paints North and Eastern Europe in 2006. In 2013, he joined AkzoNobel’s Executive Committee and became responsible for the Decorative Paints business. In 2018, he became the Chief Operating Officer of AkzoNobel, responsible for the business performance of the coatings and paints businesses. Mr Joosten is a Dutch national. Information about Mr Joosten’s shareholding position is on page 97. Mr Joosten has been a member of the Executive Board (CEO) of Royal BAM Group since September 2020.
Mr Den Houter was trained as a hydrographic surveyor at the Amsterdam University of Applied Sciences, then earned a degree in business economics at the University of Amsterdam and an international master’s degree in Finance and Control. He started his career at Exxon Mobil in 2000, where he worked as a financial analyst and controller for the Benelux retail operating company. In 2005 he moved to Shell, where he worked as a controller at Shell Global Real Estate, project manager at Shell Energy Europe and financial manager for joint ventures at Shell Upstream International. He joined Heerema Marine Contractors (HMC) in 2010 as its Finance and Control Manager and then held the position of Senior Vice-President Finance before being appointed as CFO in 2012. Mr Den Houter is a Dutch national. Information about Mr Den Houter’s shareholding position is on page 97. Mr Den Houter has been a member of the Executive Board (CFO) of Royal BAM Group since August 2018.
Mr Wilkinson was appointed Chief Operating Officer (COO) for the division United Kingdom and Ireland, effective 1 January 2022. Since 5 October 2020, John Wilkinson has been a member of the Executive Committee (as COO for the former business line Civil Engineering). He was formerly President of Infrastructure and a member of the Executive Committee of SNC-Lavalin in Canada. He previously held senior positions with British civil engineering companies Laing O’Rourke, Kier Group and May Gurney, respectively as managing director of UK Infrastructure, executive director of Services and managing director. Mr Wilkinson holds a Bachelor of Science (Hons) in Construction Management from Reading University and is an Alumnus of Cambridge Judge Business School.
| Member | Committees | Date of initial appointment | Year of reappointment | End of current term | End of second term |
|---|---|---|---|---|---|
| H.Th.E.M. Rottinghuis* | HSS, NC | 15-04-2020 | - | 2024 | 2028 |
| G. Boon | AC | 19-04-2017 | 2021 | 2025 | 2025 |
| B. Elfring | AC, RC | 24-08-2020 | - | 2024 | 2028 |
| D. Koopmans* | NC, RC | 24-08-2020 | - | 2024 | 2028 |
| M.P. Sheffield | AC, HSS | 24-08-2017 | 2021 | 2025 | 2025 |
| N.M. Skorupska | HSS, NC, RC | 14-04-2021 | - | 2025 | 2029 |
* Right of recommendation of Central Works Council. Audit Committee (AC), Health, Safety and Sustainability Committee (HSS), Nomination Committee (NC), Remuneration Committee (RC).
| Member | Date of birth | Date of initial appointment | Date of reappointment | End of current term |
|---|---|---|---|---|
| R.J.M. Joosten, chairman | 21-11-1964 | 24-08-2020 | - | 2024 |
| L.F. den Houter | 20-05-1974 | 26-06-2018 | 13-04-2022 | 2026 |
Mr Nelis was appointed COO for the business line Construction and Property, effective 1 April 2019. Since 1 January 2022, Mr Nelis has coordinated the activities in the division Netherlands. Previously, he held the position of director at BAM Bouw en Vastgoed Nederland, BAM’s Dutch subsidiary for property development, non-residential and residential construction and M&E services. He joined BAM in 1996 and has held various management positions, including managing director of BAM Wonen (residential) from 2008 to 2016. Mr Nelis graduated as a Master of Science from Delft University of Technology. He is a member of the General Board of Bouwend Nederland.
S.B. (Sabine) van Hooijdonk-Verboom (1981), CHRO
Mrs van Hooijdonk-Verboom was appointed Chief HR officer, effective 1 July 2023. She joined BAM in early 2022 as executive director Group HR. Before she joined BAM, Mrs Van Hooijdonk- Verboom was global DE&I Lead and Executive HR Business Partner at JDE Peets where she was responsible for creating the People strategy in all the central functions. As part of this role, she also led the creation and implementation of the D&I business case. She gained extensive HR experience with senior (global) positions at KPMG and Philips. Mrs Van Hooijdonk-Verboom graduated as a Master of Science in business administration with a specialism in human resources at the VU University Amsterdam.
The Executive Committee consists of the Executive Board members R.J.M. Joosten and L.F. den Houter, as well as of Mrs S.B. (Sabine) van Hooijdonk-Verboom, Mr J.G. (Joost) Nelis and Mr J.D. (John) Wilkinson. Information about the role and responsibilities of the Executive Committee is included in the Executive Board and Executive Committee rules of procedure. The relationship and contact with the Supervisory Board is explained in the Supervisory Board rules of procedure (see www.bam.com), pursuant to which Supervisory Board meetings shall generally be attended by all members of the Executive Committee.
From the left: L.F. (Frans) den Houter, S.B. (Sabine) van Hooijdonk-Verboom, R.J.M. (Ruud) Joosten, J.G. (Joost) Nelis and J.D. (John) Wilkinson.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
57Annual report 2023 Royal BAM Group nv
Shetland HVDC link and all associated infrastructure for Scottish and Southern Electricity Networks (SSEN) Transmission. BAM Nuttall (in joint venture)
57Annual report 2023 Royal BAM Group nv
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
58Annual report 2023 Royal BAM Group nv
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
The new building for Iedersz, the work-learning organisation of the municipality of Groningen (designed by De Unie Architecten), has acquired energy label A+++++.
58
59Annual report 2023 Royal BAM Group nv
BAM successfully executed a de-risking strategy from 2021-2023, resulting in a focus on the Netherlands, United Kingdom and Ireland and an improved profitability and predictability of performance. Noteworthy is the emphasis on sustainability, with clear goals to reduce emission intensity and virgin material usage in our clients’ projects and in our own operations. Regarding sustainability the strategy focuses on climate adaptation, biodiversity, safety, health & inclusion, decarbonisation, circularity and increasing social value. The new strategy for 2024-2026 builds on the strong platform that has been created in the last three years. While the Company has clearly prepared for the years to come, significant challenges still lie ahead. The effects of climate change, which is threatening life on earth are increasingly becoming visible. In addition, political and economic uncertainty continued throughout 2023 and also give cause for concern. The cost of living has increased substantially on the back of inflation, rising interest rates, leading to a lack of purchasing power, inequality and social unrest. Governments are struggling to adequately and structurally address these challenges. It is encouraging to see that BAM, despite these challenges, not only has been able to meet its strategic targets but also has prepared for the next step. Notwithstanding the business or sustainability related challenges the Company faces, it is people who matter most. In 2023, a BAM employee lost his life while working on one of the Group’s projects. Such accidents impact everybody; first and foremost family and friends but also colleagues and others involved in accidents related to our activities. The Supervisory Board deeply regrets all incidents, and expresses its heartfelt determination to prevent all safety-related incidents.
The Company showed a solid financial performance in 2023. Other notable developments in 2023 included the launch of ambitious strategies for Sustainability and People, including goals and KPIs, and an update of the Code of Conduct following the implementation of new company values. The investigation by the Dutch Fiscal Information and Investigation Service (FIOD) and the Dutch Public Prosecutions Office (Openbaar Ministerie) into certain projects of BAM International is ongoing and the Supervisory Board is following the external investigation and internal review closely.
The year 2023 marks the end of BAM’s 2021-2023 strategy Building a sustainable tomorrow. Through this strategy, BAM aimed to provide clients with best-in-industry capabilities, contribute to the global movement towards greater sustainability, provide employees with a safe and rewarding work environment, substantially reduce the risk profile of the projects the Group undertakes, and generate attractive returns for shareholders. When the Company set out on this strategy in 2021, it marked a radical change in risk appetite by focusing on home markets where BAM’s market share makes a difference, divesting or closing operations that did not meet that criterium, no longer pursuing large projects with unbalanced risk profiles and transforming the organisation into a leaner and more focused operating model. The Supervisory Board is proud to see that BAM delivered on this three-year strategic plan by delivering an adjusted EBITDA margin of 4.9 per cent with a revenue of €6.3 billion, ROCE 13.7 per cent, Trade working capital efficiency of -13.2 per cent and a growth of the capital ratio to 23.4 per cent over the strategic period. After the organisational changes and completion of the programmes in 2022, the project portfolio has been de-risked considerably. Stricter control on order intake has helped delivering more predictable performance and sustainability is increasingly embedded in the Group’s business offerings. This all is supported by new company values and an ambitious culture programme aimed to arrive at a more engaged and inclusive workforce. In the course of 2023, the Company started with the preparation for the new strategic period 2024-2026. The Supervisory Board was highly involved in the process, during regular meetings and ad-hoc workshops and a multi-day off-site which was solely dedicated to the preparation of the new strategy. The new strategy proposed by the Executive Board was fully endorsed by the Supervisory Board. Based on this strategy, BAM’s divisions and functions prepared operating plans for 2024, which were consolidated into the operating plan for the Group. The Supervisory Board discussed the outlines and 2024 priorities in its meeting in September 2023, after which the Group’s operating plan was further discussed and approved in December. The Company prepared different stress scenarios, the outcome of which demonstrated the resilience of the Group.
In addition to the aforementioned items, the Supervisory Board discussed other matters with the Executive Committee in each of its regular meetings. These included the current state of affairs, BAM’s financial performance and divisions, critical project developments, market developments, the order intake, working capital and cash flow, the financial condition of the Company as reflected by the balance sheet, investments and divestments, and the quarterly trading updates. The meetings also included a reporting on what had been discussed during the meetings of the Supervisory Board committees. Other matters discussed were related to the annual report and financial statements for 2022, the 2023 half-year press release and interim statements, the dividend policy and the dividend proposal for 2023, as well as compliance reports and material legal proceedings in which the Company was engaged.
5.1 Report of the Supervisory Board to shareholders
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
60Annual report 2023 Royal BAM Group nv
Three of these committees are mandatory and in line with corporate governance requirements. The Health, Safety and Sustainability Committee was established in 2021 to underline the Supervisory Board’s focus and emphasis on these topics. It is the task of these committees to support and advise the Supervisory Board on items under the committees’ responsibility and to prepare the Supervisory Board’s decisions regarding those items.# Supervisory Board committee activities in 2023
The Supervisory Board has four permanent committees: Audit Committee, Remuneration Committee, Nomination Committee, and Health, finance, corporate governance and internal audit. The Supervisory Board as a whole remains responsible for the way in which it performs its tasks and for the preparatory work carried out by the committees. The committees all reported on their meetings to the Supervisory Board.
In 2023, the Audit Committee was composed of Gosse Boon (chair), Paul Sheffield and Bob Elfring. This composition is in line with the relevant provisions of the Corporate Governance Code. The Committee met six times in 2023: it held four regular meetings in which the financial results were discussed, plus an additional meeting in December to discuss BAM’s 2024 operating plan with the CFO and the Executive Director Group Control. In addition, a workshop was organised on sustainability reporting to assess the impact of the ESG and CSRD regulations, the ESG Governance and the role and responsibilities of the Audit Committee. The external auditor was present at all four regular meetings and the workshop. The CFO, the Executive Director Group Control and also the Group Director Internal Audit attended all regular Audit Committee meetings.
The Audit Committee organised a dedicated workshop on the developments with regard to sustainability reporting.
In 2023 the Remuneration Committee was composed of Denise Koopmans (chair), Bob Elfring and Nina Skorupska. One of the responsibilities of the Remuneration Committee is to make proposals to the Supervisory Board regarding the remuneration policy, the terms of employment of the members of the Executive Board, and the remuneration of the members of the Supervisory Board and the Executive Board. The remuneration of those members of the Executive Committee who are not also members of the Executive Board is also subject to the marginal approval of the Supervisory Board.
In 2023 the Remuneration Committee met seven times. In February, the Remuneration Committee submitted a proposal to the full Supervisory Board regarding the pay-out of the 2022 short- term incentive and the vesting of the 2020-2022 long-term incentive, based on BAM’s performance and the applicable criteria. While preparing the 2023 Annual General Meeting, the Remuneration Committee developed a proposal for the adoption of an amendment to increase the fixed remuneration of the chair, vice-chair and members of the Supervisory Board as well as the fees for committee chairs and vice-chairs in accordance of with inflation. The Remuneration Committee also performed a full review of the remuneration policies for the Executive Board and Supervisory Board. Based on expert advice and the input from different stakeholders a proposal for updated policies was prepared which was submitted to the Supervisory Board subsequently. In December 2023, the Remuneration Committee also submitted a proposal to the full Supervisory Board for the objective setting for the 2024 short-term incentive and the 2024-2026 long-term incentive.
The Remuneration Committee prepared the remuneration report, which also explained how the remuneration policy had been implemented in practice. The Remuneration Committee met seven times. The CEO was present during parts of these meetings, as were the executive director Group HR and the director of Compensation and Benefits, who also acts as secretary to the Remuneration Committee. The committee members also consulted each other a number of times outside the context of a formal meeting.
During 2023, the Nomination Committee was composed of Henk Rottinghuis (chair), Denise Koopmans and Nina Skorupska. The key responsibility of the Nomination Committee is to make proposals to the Supervisory Board regarding the size and composition of the Supervisory Board and the Executive Board, with regard to selection criteria, selection procedures, appointments and reappointments to both boards as well as with regard to the assessment of their performance. The Nomination Committee also monitors the Executive Board’s policy on selection criteria and appointment procedures for senior management, talent development and holds annual appraisals with the individual members of the Executive Board. Appointments to the Executive Committee in addition to the Executive Board members, are also subject to the approval of the Supervisory Board. In 2023 the Nomination Committee reviewed the decision to appoint Sabine van Hooijdonk-Verboom to the Executive Committee as CHRO and proposed to the Supervisory Board to approve this decision recognizing the fact that employees are the essential success factor for achieving the Company’s strategy.
The Nomination Committee met three times in 2023 , in addition to which members consulted each other a number of times outside the context of a formal meeting. Items discussed included the composition of the Supervisory Board, Executive Board, Executive Committee and senior management, including diversity and inclusion aspects regarding this composition. In addition, the Nomination Committee, the CEO and the CHRO discussed workforce trends, selection criteria and appointment procedure for senior managers, the results of the 2023 an indexation.
Edusessions are organised throughout the year in order to inform and educate the Supervisory Board about specific matters. In 2023, Edusessions were held about social value, return on inclusion and unconscious bias, as well as on risk appetite and risk profile, and the impact and future of artificial intelligence at BAM. These events expose the Supervisory Board to other talented people in the organisation. During the multi-day off-site in September the Supervisory Board visited the Flow factory in Oudkarspel (Netherlands) for modular off-site manufacturing of wooden houses.
In 2023, the full Supervisory Board met on ten occasions (seven formal meetings and three ad-hoc meetings) in the presence of the Executive Board or Executive Committee. The attendance rate of the individual members at the full Supervisory Board and the committee meetings was 100 per cent with the exception of Mrs. Koopmans (95%) and Dr Skorupska (68% due to personal circumstances). Before each of the formal meetings, the Supervisory Board met without the Executive Committee being present. Topics discussed in these pre-meetings regarded the preparation of the meeting, the functioning of the Executive Board, the annual self-assessment, and the remuneration policy and remuneration of the Executive Board members, including the determination of the variable portion of their remuneration for 2023 and the targets for 2024.
The Supervisory Board highly values an open and regular dialogue with shareholders and investors to explain the Group’s strategy and performance and to receive feedback. The Supervisory Board reviewed BAM’s investor relations activities and shareholder base in all its meetings and was informed of the feedback given by shareholders, investors and analysts. The Supervisory Board also took note of various analysts’ reports regarding the Company. Together with the Executive Board, the Supervisory Board prepared the Annual General Meeting in April 2023. The meeting was subsequently evaluated. The hybrid approach of organising a physical meeting while also allowing shareholders to participate and vote virtually is perceived as a positive development in encouraging shareholders to join these important meetings. The Supervisory Board was pleased that all proposals were adopted.
The Executive Committee also regularly updated the Supervisory Board on the situation regarding a number of important long-running projects and tenders. Such discussions focused mainly on the risks in these projects and how these were managed and/or could be mitigated. Besides the regular matters that needed to be addressed, the Supervisory Board spent ample time on specific topics, which included the development of the new strategy, the appointment of Sabine van Hooijdonk-Verboom to the Executive Committee as Chief Human Resources Officer (CHRO), the execution of the share buy-back programme, the update of the Code of Conduct, the status of the investigation by Dutch authorities into potential irregularities at some of BAM International’s completed projects and the status of the investigations into the life lost including the actions that have been taken as a result.
A delegation from the Supervisory Board met with the Central Works Council in the Netherlands. The Supervisory Board actively engaged with the Executive Committee as well as other senior managers in order to ensure the Supervisory Board received the right information. Besides these formal meetings, the chairman of the Supervisory Board had regular contact with BAM’s CEO, as did the chairman of the Audit Committee with the Company’s CFO. The chairman and other members of the Supervisory Board also met with a wide range of senior managers in order to be briefed on specific topics such as human resources,
61Annual report 2023 Royal BAM Group nv# Royal BAM Group nv Annual report 2023
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
During the year the Remuneration Committee reviewed the fixed remuneration of the CEO and CFO in light of remuneration increases of other employees and developments in the labour market reference group and submitted a proposal to implement a talent review cycle looking into succession planning for senior management roles, diversity and inclusion, and talent development. Finally, the Nomination Committee was updated regularly on initiatives on the people roadmap to deliver on the people strategy.
Topics
In line with its regular tasks and responsibilities, the Audit Committee addressed many topics, including the development of BAM’s key financial figures, the external auditor’s 2023 assurance plan, the external auditor’s Board Reports, the internal audit plan for 2023 and 2024, and the output and impact of the new mandatory sustainability reporting requirements. In addition, developments relating to tax, IT (including IT general controls), insurance, legislation (including material legal proceedings), treasury, compliance, risk management and pensions were monitored and reviewed, as well as BAM’s progress on the transformation of its IT landscape and finance functions.
External auditor
The Audit Committee was briefed by the external auditor on relevant developments in the audit profession and on the major findings of their audit and review procedures. The Committee met with the external auditor without the Executive Board being present, and reported to the Supervisory Board on the performance of and the relationship with the external auditor. Furthermore, the chairman of the Audit Committee regularly communicated on a one-to-one basis with the external auditor and the CFO. The Audit Committee considers the Company’s relationship with the external auditor to be effective.
Throughout 2023, the Health, Safety, and Sustainability (HSS) Committee, composed of Henk Rottinghuis (chair), Paul Sheffield and Nina Skorupska, supervised and challenged health and safety practices within the Company, while driving sustainability throughout the organisation. The HSS Committee’s key responsibilities included a thorough review and advisory role regarding the Company’s health, safety, and sustainability policies, management approaches, culture, and performance. Moreover, the HSS Committee reflected on significant internal and external developments, fostering the advancement of an ambitious, well-structured sustainability agenda, and supporting the implementation of a clearly articulated roadmap.
The Supervisory Board agrees with the Executive Board that safety is the highest priority for BAM, its people, supply chain employees and society at large. The Supervisory Board took note of the tragic life lost during 2023 and discussed actions taken following incidents in previous years. This accident was discussed extensively both by the Supervisory Board and the Health, Safety and Sustainability Committee. This life lost and also the other serious accidents that occurred show that safety requires permanent attention. The incident frequency (IF BAM) decreased from 3.7 in 2022 to 3.4 in 2023. It remains BAM’s aspiration to prevent all incidents and to meet the target of ≤ 3.0 in the short to medium term. Across the Group, safety conversations with the project teams remain a valued ongoing best practice. The Supervisory Board took note of the positive feedback on the BAM Safety Day (see chapter 3.2), which aims to increase awareness of the importance of safety. Continuous focus is required to further decrease the incident frequency. The Supervisory Board emphasises the importance of continuing to learn from accidents, near-accidents and dangerous occurrences, and of increasing BAM’s focus on the prevention of serious accidents. The Supervisory Board fully supports the Company’s continuous efforts to further increase safety, not only through guidelines and instructions but especially by giving it consistent management attention and emphasizing behavioral aspects.
Each year, an updated corporate governance compliance overview is published on BAM’s website, providing transparency on how BAM complies with the Dutch Corporate Governance Code. The Supervisory Board took note of the updated Dutch Corporate Governance Code which was published on 20 December 2022 and monitored implementation and compliance in the course of 2023. The rules for the Executive Board and Executive Committee and the rules for the Supervisory Board were updated in order to address the changes in the Corporate Governance Code. The Supervisory Board and the Executive Board are of the opinion that the Company’s corporate governance is up to standard. Please refer to the corporate governance statement in chapter 5.1 for more information.
Proper risk management remains a high priority for the Supervisory Board, essential for predictable performance and enhancing shareholder value. As such, it continued to be high on the Supervisory Board’s agenda. BAM’s 2021-2023 strategy focuses on de-risking the portfolio, a crucial factor in improving shareholder returns. In its meetings, the Supervisory Board discussed the risk appetite that fits with the Company’s strategic agenda and the related business and project portfolio. BAM’s focus on its key growth markets, alongside a robust stage gate tender process, continue to play a pivotal role in identifying potential risks early and implementing appropriate measures to mitigate risks at the tendering level. The Supervisory Board continues to fully support the Executive Committee’s strategic decision to stop tendering for large, complex, single-stage projects that present an unbalanced risk-reward profile. This decision reflects BAM’s firm commitment to critical and selective tendering, essential for de-risking BAM’s portfolio. By drawing lessons from past challenges, BAM is reinforcing its risk management strategies. Furthermore, the Supervisory Board, in collaboration with the Executive Committee, continuously evaluates the company’s risk appetite. This ongoing process ensures BAM sets clear boundaries for future engagements, aligning them with its long-term strategic objectives.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
The Executive Board, composed of chairman and CEO Ruud Joosten, and CFO Frans den Houter, remained unchanged in 2023. Ruud Joosten joined the Executive Board in 2020 and Frans Den Houter became a member of the Executive Board in 2018 and was re-appointed in 2022. In September 2023 the Supervisory Board announced its intention to re-appoint Ruud Joosten in 2024. Further information about the individual members of the Executive Board is available in chapter 4.4.
In addition to Ruud Joosten and Frans den Houter, the Executive Committee at year-end consisted of a further three members: Sabine van Hooijdonk-Verboom, Joost Nelis and John Wilkinson. The composition of the Executive Committee reflects BAM’s organisational structure, which means that since 1 January 2022, BAM’s activities are being managed in two divisions, of which one focuses on the Netherlands, while the other focuses on the United Kingdom and Ireland. This structure replaced the previous Construction and Property and Civil Engineering business lines. Joost Nelis, the former chief operating officer (COO) for Construction and Property, became responsible for the activities in the Netherlands on 1 January 2022. John Wilkinson, who was formerly the COO for BAM’s Civil Engineering activities, became responsible for the activities
The HSS Committee supervises two matters of greatest importance to the Group: taking care of BAM’s employees and those directly or indirectly involved in its operations (health and safety aspects), and sustainability at large, comprising the impact of BAM’s activities on society, climate and the environment.
The Supervisory Board is delighted that BAM was rated on the CDP A-list for the fifth consecutive year, and notices a promising ongoing trend in reducing BAM’s environmental footprint. The Supervisory Board closely monitors the challenges in CO 2 measurements and the planned reductions in scope 1, 2 and 3. In this regard the Supervisory Board notes with satisfaction that the Company has met (and even exceeded) its 2023 scope 1 and 2 CO 2 reduction target of 50 per cent reduction versus 2015. Further acceleration is however needed to also meet the ambitious 2026 targets.The Company is also committed to reduce the scope 3 CO 2 intensity of its operations by 50 per cent in 2030 compared to the 2019 base year. While the Company is quite ambitious in its scope 3 approach, the Supervisory Board also acknowledges that consistent and reliable measuring of scope 3 is an enormous challenge and maturing the measurement process will be a multi-year journey for the Company. The Supervisory Board recognises the need to educate more customers to choose and pay for sustainable solutions.
Early in 2023, BAM launched its long-term sustainability strategy, which is built on the Company’s purpose and market- driven sustainability ambitions. This strategy is an integral part of both BAM’s 2021-2023 strategic plan and the new strategic plan for 2024-2026. The strategy has been developed around six material themes concerning People and Planet, and is driven by the global challenges regarding climate change and inequality, and related developments concerning legislation, clients and competitors. These themes are aligned with selected United Nations Sustainable Development Goals (SDGs) and include clear goals for the shorter and longer term. The Supervisory Board was closely involved in the development of the sustainability strategy and the goals that were set for the six themes. The Supervisory Board recognises the importance and connection of all six sustainability themes and supports the Company in its focus on achieving the targets it has set.
In order to further support attention to matters such as safety and sustainability, the Supervisory Board established a committee for Health, Safety and Sustainability (HSS) in 2021. This is a permanent committee of the Supervisory Board composed of three members, with also the COOs and the Head of Sustainability attending.
The Supervisory Board reviewed BAM’s business and project portfolio, including those projects with a higher risk profile, and discussed how these are managed. Additional comfort and insights were obtained from Internal Audit, which continued with auditing several high- exposure projects, resulting in recommendations to improve project control measures.
As part of the Supervisory Board’s annual risk management review, the Audit Committee and, subsequently the Supervisory Board discussed in their respective October and February meetings the outcome of BAM’s enterprise risk management assessment in the presence of the Executive Director Group Control. This annual assessment provides an overview of the key risks BAM faces in achieving its objectives. The key risks and related mitigating measures were discussed.
The Executive Director Group Control also informed the Supervisory Board about the status of adherence to BAM’s business requirements framework, which is used to assess the internal risk management and control system throughout the Group. The Supervisory Board was pleased to note that improvements continue to be made, amongst other by implementing a risk monitoring tool. The Supervisory Board concluded that BAM has in place adequate internal risk management and control systems, financial reporting manuals and procedures for drawing up financial reports as well as an established monitoring and reporting system.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
64Annual report 2023 Royal BAM Group nv
In November 2023, the Supervisory Board performed its annual self-assessment for the year under review. This self-assessment was done with the support of an external facilitator and included interviews with all individual members of the Supervisory Board. In addition the facilitator also held interviews with the members of the Executive Board, selected senior managers and the external auditor. The feedback from these interviews was translated into a report which was subsequently discussed in a dedicated evaluation session. In this session, specific attention was paid to tone-of-voice, provision of information, focus areas and succession planning.
The Supervisory Board concluded that it continues to be a well-functioning team, is of an appropriate size, and benefits from expertise, diversity and international representation. A number of suggestions were made to further strengthen the Supervisory Board going forward, focusing on topics including succession planning, balance between business and other topics and board room dynamics.
The Supervisory Board also reviewed the functioning of the Executive Board and its members, based on input received from the Executive Board following its own performance evaluation. The outcome of the review by the Supervisory Board was shared and discussed with the members of the Executive Board.
The Supervisory Board established that none of the Executive Board members held more than two Supervisory Board positions at large organisations or a position as chairman of such a supervisory body in 2023. This was in line with the Management and Supervision Act (‘Wet bestuur en toezicht rechtpersonen’) and the Corporate Governance Code.
Given his position as a member of the Supervisory Board of KPMG, Mr Boon will be excluded from the selection process for the new external auditor which will start in 2024. No other conflicts of interest between the Company and members of the Executive Board and/or Executive Committee were established or reported.
The Supervisory Board also met the requirements of the Code with regard to independence in 2023. Its members did not have any other relationships of a business nature with the Company. Furthermore, none of the Supervisory Board members had more than five memberships of supervisory boards at Dutch listed companies or other large institutions. The Supervisory Board is not aware of any conflicts of interest between its members and the Company.
Although formally not a conflict of interest, it may occur that a project is discussed involving other parties with whom a member of the Supervisory Board has an affiliation. In that case, it is standard practice that the respective board member will leave the meeting and thus refrain from participating in the discussion.
The Supervisory Board, Executive Board and Executive Committee recognise the benefits and importance of diversity in their composition. The profile for the Supervisory Board includes a minimum 30 per cent target for female and male board members respectively. The present composition of the Supervisory Board is in line with the targets set. For the Executive Board and Executive Committee, a minimum 25 per cent target was set for female and male board members, respectively. With the appointment of Sabine van Hooijdonk-Verboom as CHRO the female representation increased to 20 per cent which is still not in line with the above target.
In accordance with the 2021 law on diversity at the top of large corporations (‘Wet evenwichtiger verhouding tussen mannen en vrouwen in het bestuur en de raad van commissarissen’), BAM has set and/or reconfirmed fitting and challenging targets on diversity for its Supervisory Board, Executive Board and/or Executive Committee and senior leadership group. In addition, an action plan was established in order to achieve these targets. Further information on the targets and action plan is available in chapter 3.2.
in the United Kingdom and Ireland on the same date. Some legacy projects outside the core geographies have been divided between the two COOs. BAM’s Belgian management reports to Mr Joosten. Effective 1 July 2023 Sabine van Hooijdonk-Verboom joined the Executive Committee as CHRO in order to emphasise the importance of BAM’s people in executing the set strategy. Further information about the individual members of the Executive Board and Executive Committee is available in chapter 4.4 and chapter 4.5.
As in previous years, the Supervisory Board in 2023 consisted of six members, including chairman Henk Rottinghuis who was appointed to his position in 2020. The Board’s vice- chairman was Gosse Boon. The four other members were Bob Elfring, Denise Koopmans, Paul Sheffield and Nina Skorupska. Further information about the six individual members of the Supervisory Board is available in chapter 4.4.
When selecting new candidates, the Supervisory Board considers expertise, experience, diversity, and independence aspects as described in the profile of the Supervisory Board (schedule 2 of the Supervisory Board rules of procedure, which are available on BAM’s website). Candidates always meet with the Executive Board and a delegation of the Central Works Council whose input is considered in the recommendation for nomination.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
65Annual report 2023 Royal BAM Group nv
valuation of land and building rights, the valuation of goodwill and other assurance- related topics. In the February and August meetings, the Supervisory Board, in the presence of the external auditor, discussed the revenue recognition, project accounting and valuation (including variation orders and claims), as well as other topics regarding accounting and reporting such as the valuation of goodwill, foreign exchange results, uncertain tax positions, fraud, and compliance and non- compliance with laws and regulations as well as sustainability information.
This annual report, which is based on the International Integrated Reporting Framework, includes the 2023 financial statements, duly prepared by the Executive Board.# The financial statements have been audited by the external auditor, Ernst & Young Accountants LLP; the unqualified independent auditor’s report is included in chapter 8.1.
The Audit Committee discussed the draft financial statements with the Executive Board and the external auditor. The Audit Committee also discussed the auditor’s report and board report, and the quality of internal risk management and control systems. The Audit Committee had this discussion with the external auditor without the Executive Board being present. Subsequently, the Supervisory Board discussed this annual report, including the financial statements, with the Executive Board in the presence of the external auditor. The Supervisory Board took note of the reporting from the Audit Committee and reviewed the auditor’s report and the quality of internal risk management and control systems. The Supervisory Board concluded that it should sign the 2023 financial statements.
The Supervisory Board recommends that the 2023 financial statements should be adopted during the Annual General Meeting, to be held on 10 April 2024. The Supervisory Board is of the opinion that the financial statements, the report by the Executive Board and the report by the Supervisory Board provide a solid basis on which to hold the Executive Board accountable for the management policies pursued, and the Supervisory Board accountable for its supervision of these policies. The members of the Supervisory Board signed off the financial statements in accordance with their statutory obligations under article 2:101, paragraph 2 of the Dutch Civil Code.
The Supervisory Board recommends that attendees at the Annual General Meeting should adopt the proposal of the Executive Board to make a distribution of €0.20 per share against the net result of 2023.
This proposal was subsequently approved at the Annual General Meeting.
The 2023 assurance plan was presented to, and discussed with, the Audit Committee and the Supervisory Board, and subsequently approved. During the audit of the 2022 full-year results and the review of the 2023 half-year results, the Supervisory Board met with Ernst & Young Accountants LLP to discuss its reports. The relationship between the external auditor and the Supervisory Board was effective and open. The Supervisory Board established that the external auditor received the financial and sustainability information on which the reports were based in a timely manner, and noted that the external auditor had discussed the information provided with the Executive Board and officers of the Company. The Supervisory Board took note of the reports and board reports as prepared by the external auditor, and addressed the follow-up of the identified action points.
The Supervisory Board discussed with the external auditor and the Executive Board the areas of emphasis related to the annual reporting as identified by the auditor. These comprised the revenue recognition, investigation by the Dutch authorities into potential irregularities at some of BAM International’s completed projects, non-financial information and sustainability, prepared by the Executive Board and Supervisory Board.
During the year under review, the external auditor Ernst & Young Accountants LLP reported on its 2022 audit, and attended the quarterly meetings with the Audit Committee and Supervisory Board, as well as the Annual General Meeting on 12 April 2023.
The Supervisory Board assessed the performance of, and its relationship with, the external auditor, based upon feedback from the Executive Board, the evaluation and recommendation of the Audit Committee and the feedback of the financial leadership team. Based on this assessment, the Supervisory Board’s experience with the external auditor, and the external auditor’s expertise with regard to the construction industry in general and BAM in particular, the Supervisory Board recommended that the shareholders present at the Annual General Meeting should reappoint Ernst & Young Accountants LLP as the external auditor responsible for auditing the 2024 financial statements and review of the sustainability information of the Group. The Supervisory Board appreciated the open discussions and transparent communications and felt that the Executive Board was functioning well.
As no new members joined either the Executive Board or Supervisory Board in 2023, no inductions were required.
The Supervisory Board recognises the importance of continuous training and development. This is addressed extensively in the annual performance evaluation, and safeguarded by an annual educational budget for Supervisory Board members. Given the importance of sustainability, the Supervisory Board (together with the Executive Committee) followed a follow-up programme by the Institute for Sustainability Leadership (University of Cambridge) on the changing global context, with a particular focus on approaches to protect and restore nature and the interconnectedness of climate, nature, society and economic progress. This programme contributed to aligning both boards in their ambition to be a frontrunner in the construction industry.
The Annual General Meeting took place on 12 April 2023. Shareholders were given the opportunity to either participate in-person or virtually. The Annual General Meeting was
All proposals were adopted. Besides the regular topics, the agenda also included the presentation of the new sustainability strategy and the amendment of the remuneration policy for the Supervisory Board.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
66Annual report 2023 Royal BAM Group nv
The Supervisory Board is confident that BAM is well-positioned for successful performance, with the Group consistently executing a transparent strategy, focusing on protecting profitability, transforming through industrialisation and digitisation, and further expanding into growth markets. The portfolio has been de-risked considerably with projects taken onboard before 2020 now largely completed and the annual profitability in the three consecutive years (2021-2023) is positive and shows an increasing trend. The Supervisory Board extends its gratitude to the Executive Board, the Executive Committee, management, and staff for their dedicated contributions, collectively enhancing BAM’s resilience and ultimately benefiting all stakeholders of the Company.
Bunnik, the Netherlands, 21 February 2024
On behalf of the Supervisory Board,
Henk Rottinghuis, Chairman
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
67Annual report 2023 Royal BAM Group nv
The New Children’s Hospital (NCH) project will bring together the services currently provided at three children’s hospitals into a modern, custom- designed, digital, hospital at St James’s campus in Dublin, to deliver the best care and treatments for Ireland’s sickest children and young people. NCH will be also the primary centre for paediatric education, training, and research in Ireland, BAM Contractors Ltd.
67Annual report 2023 Royal BAM Group nv
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
68Annual report 2023 Royal BAM Group nv
‘Dear shareholders,
On behalf of the Supervisory Board, it is with great pleasure that I present the 2023 Remuneration Report. This comprehensive document outlines the relation between BAM’s performance and the remuneration awarded to the Executive Board and Supervisory Board over the past year. Additionally, it explains the objectives that have been set to govern Executive Board remuneration in 2024. In addition to this, BAM’s remuneration policies for the Executive Board and Supervisory Board will be brought to the 2024 Annual General Meeting for adoption, since it has been four years since their last full review. During this time, BAM executed a de-risking process, resulting in a focus on the Netherlands, UK and Ireland and an improved profitability and predictability of performance. Furthermore, sustainability became a key focus area, with clear goals to reduce CO 2 intensity and virgin material usage in clients’ projects and in BAM’s own operations. As we move into the new strategic period 2024-2026, the Remuneration Committee thoroughly considered BAM’s new strategy during its remuneration policy reviews. In accordance with this strategy, BAM aims to be a market leader in selected, sustainable, and profitable product market combinations. The strategy focuses on protecting profitability, transforming through industrialisation and digitalisation, and further expanding into growth markets. Throughout 2023, the Remuneration Committee convened seven times, with a significant focus on formulating remuneration policies and meticulously assessing their implementation.# 5.2 Remuneration report
69Annual report 2023 Royal BAM Group nv
Stakeholder consultation has played an important role in shaping the proposed remuneration policies, with the Committee engaging in discussions to gather valuable feedback. The outcome of these discussions is reflected in the preamble of the proposed policies that will be submitted to the Annual General Meeting.
Stakeholders however also provided other views on broader remuneration matters, including the remuneration report. Primarily, they were highly appreciative of BAM’s commitment to following best practice in governance by disclosing the threshold, target and excellent performance levels of the incentive plans at the end of the performance period. This disclosure can be found in tables 25 and 26. Some stakeholders have urged BAM to further expand this by disclosing performance levels at the start of the performance period. We have however decided not to do so, since performance levels are a detailed reflection of BAM’s strategic and operational plans which we consider to be commercially sensitive.
Additionally, stakeholders have advised BAM to further improve its remuneration report and start providing a more elaborate explanation of the reasons why incentive objectives are set and how achievement on these objectives is assessed. To this purpose, BAM has changed the structure, presentation and content of its remuneration report. The remuneration policies of the Executive Board and Supervisory Board have been relocated to BAM’s website and are summarised in the remuneration report through the new ‘at a glance’ section. This allows the report to focus on the application of the policy with an emphasis on objective setting and achievement. This change is complemented by a shift towards a more visual and insightful representation.
In the following pages, we present BAM’s new remuneration report, featuring the following elements:
To conclude, we hereby extend our heartfelt thanks to all stakeholders for their unwavering support and guidance on both the 2023 remuneration report and the proposed remuneration policies.’
Denise Koopmans, Chair of the Remuneration Committee
70Annual report 2023 Royal BAM Group nv
| R.J.M. Joosten | L.F. den Houter | |
|---|---|---|
| Fixed remuneration | €791,000 | €565,000 |
| STI | €553,660 | €395,276 |
| LTI | ||
| Post-employment benefits | ||
| Other benefits |
A bar chart illustrates the breakdown of remuneration components for R.J.M. Joosten and L.F. den Houter. The chart shows:
* Fixed remuneration for R.J.M. Joosten is approximately €791,000, and for L.F. den Houter is approximately €565,000.
* STI for R.J.M. Joosten is approximately €553,660, and for L.F. den Houter is approximately €395,276.
* LTI is shown as a bar for both, with R.J.M. Joosten's LTI bar extending to around €714,000 (this is not explicitly stated in text but inferred from graphic) and L.F. den Houter's LTI bar extending to around €395,000 (this is not explicitly stated in text but inferred from graphic).
* Post-employment benefits for R.J.M. Joosten are around €176,000 and for L.F. den Houter are around €126,000.
* Other benefits for R.J.M. Joosten are around €22,000 and for L.F. den Houter are around €22,000.
The Y-axis ranges from 0 to 2,200, with increments of 200.
| 2023 Actuals | |
|---|---|
| STI 2023 payout (amount) | |
| R.J.M. Joosten | €553,660 |
| L.F. den Houter | €395,276 |
| Overall achievement STI objectives 2023 | |
| 27.5% 55% 82.5% 68.3% | |
| 0% | 100% 50% |
A bar chart shows the "STI 2023 payout (% of fixed remuneration)" with a scale from 0% to 150%. The actual payout is marked at 68.3%. Threshold, Target, and Excellent achievement levels are also indicated by vertical lines at 27.5%, 55%, and 82.5% respectively.
| Vesting LTI plan 2021-2023 (% of award) | |
|---|---|
| 50% 100% 150% 131.1% | |
| 0% | 150%50% 100% |
A bar chart shows "Vesting LTI plan 2021-2023" with a scale from 0% to 150%. The actual vesting is marked at 131.1%. Threshold, Target, and Excellent achievement levels are also indicated by vertical lines at 50%, 100%, and 150% respectively.
Arcadis, Balfour Beatty, Bauer, Besix, Boskalis, Eiffage, Fugro, Galliford Try, Heijmans, Hochtief, Kier Group, NCC, Post NL, SBM Offshore, Signify, Skanska, Strabag, TKH, VolkerWessels, Vopak
71Annual report 2023 Royal BAM Group nv
The members of the Executive Board received remuneration in the past financial year in line with the remuneration policy adopted by the General Meeting on 15 April 2020 and amended on 24 August 2020, 14 April 2021 and 13 April 2022. Scenario analyses have been done and have been taken into consideration upon drafting this remuneration policy. The remuneration policy for the Executive Board is available on BAM’s website ( see www.bam.com/en/about-bam/corporate-governance/ articles-of-association-rules-and-codes). A summary of the remuneration of the individual members of the Executive Board can be found in the table below.
| Total remuneration Executive Board (x €1,000) | Fixed remuneration | Short-term incentive | Long-term incentive | Other benefits ² | Post-employment benefits | Total remuneration |
|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| R.J.M. Joosten | 801 | 772 | 554 | 525 | 550 | - |
| L.F. den Houter | 572 | 551 | 395 | 375 | 714 | 81 |
¹ The amount shown under ‘Long-term incentive’ consists of the taxable value of the performance shares vested to the Executive Board member at the vesting date in the respective financial year.
² The amount shown under ‘Other benefits’ consists of the car allowance.
BAM has not awarded any options to members of the Executive Board. The remuneration of the Executive Board members was not affected by a change of control at the Company. No loans were issued. The Supervisory Board did not see any reason during the financial year to use its extraordinary powers to adjust or reclaim variable remuneration that has been awarded previously.
The Supervisory Board reviewed the fixed remuneration against the increase in average employee remuneration within BAM as also reflected in the relevant collective labour agreements in the Netherlands. On this basis, the fixed remuneration of Mr Joosten was increased by 2.5 per cent per 1 January 2023 to €791,000 gross per annum and by 2.5 per cent per 1 July 2023 to €811,000 gross per annum (the previous increase for the CEO being 3 per cent as of 1 January 2022). The fixed remuneration of Mr Den Houter was increased by 2.5 per cent per 1 January 2023 to €565,000 gross per annum and by 2.5 per cent per 1 July 2023 to €579,000 gross per annum (the previous increase for the CFO being 3 per cent as of 1 January 2022).
Based on input from the Remuneration Committee, the Supervisory Board evaluated the Company’s performance in 2023 in relation to the objectives that had been set for the year. The Supervisory Board has reviewed the formulaic outcome and considers it to be reasonable and fair. On that basis, it has not applied any discretionary adjustment. Therefore, the short-term incentive outcome has been determined at 68.3 per cent of fixed remuneration. Further details on the achievement of the performance objectives can be found in table 25.
Based on input from the Remuneration Committee, the Supervisory Board evaluated the Company’s performance over the performance period 2021-2023 in relation to the objectives that had been set. The Supervisory Board has reviewed the formulaic outcome and considers it reasonable and fair. On that basis, it has not applied any discretionary adjustment. Therefore, the vesting percentage for this plan has been determined at 131.1 per cent. Further details on the achievement of the performance objectives can be found in table 26. The conditional performance shares that were awarded under the LTI plan 2021-2023, will vest on 22 April 2024.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
72Annual report 2023 Royal BAM Group nv
As announced in the remuneration report over 2022, the LTI plan for 2023-2025 was awarded during 2023 with unchanged objectives and in line with the remuneration policy. The performance objectives and weighting can be found in the table below.
| 33.3% | 33.3% | 11.1% | 11.1% | 11.1% | |
| Relative TSR | CDP Climate ranking ² | Adjusted EBITDA 2025 (%) ¹ | Scope 1 and 2 CO 2 intensity reduction (%) | Construction and office waste intensity reduction (%) | |
| ¹ Expressed as a percentage of revenue. | ² Score on the global disclosure system of CDP Climate. |
The conditionally awarded and vested performance shares under all LTI plans to members of the Executive Board are disclosed in table 28.
Both Mr Joosten and Mr Den Houter received an age-independent gross allowance of 22 per cent of their fixed remuneration as pension contribution, in line with the remuneration policy.
Members of the Executive Board are appointed for a term of four years, and deliver their services under a management services agreement. The table below states the appointment dates, notice periods and the severance payment if the Company terminates the management services agreement of a member of the Executive Board.
| R.J.M. Joosten | L.F. den Houter | |
|---|---|---|
| Date of first appointment | 24-08-2020 | 26-06-2018 |
| Start date current appointment | 24-08-2020 | 13-04-2022 |
| Period of appointment | 4 years ¹ | 4 years ² |
| Notice period for the Company | 3 months | 3 months |
| Notice period for the Executive Board member | 3 months | 3 months |
| Severance | max 1 year’s fixed remuneration | max 1 year’s fixed remuneration |
¹ Appointed until the General Meeting in 2024.
² Appointed until the General Meeting in 2026.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
73Annual report 2023 Royal BAM Group nv
| Objective | Weighting (%) | Achievement on performance objectives | Achievement (% of target) | STI (% of fixed remuneration) |
|---|---|---|---|---|
| Financial | ||||
| Adjusted EBITDA (x € million) ¹ | 45 | BAM delivered a strong performance with an adjusted EBITDA of €304 million. After deducting €10 million, related to divestments, the achievement significantly exceeded target. | 142.5 | 35.2 |
| ROCE (in %) ² | 25 | The Return On Capital Employed significantly exceeded target level. | 135 | 18.6 |
| Non-financial | ||||
| Employee engagement (in %) ³ | 7.5 | It has been proving difficult to increase the engagement score. BAM has however strengthened the process, applying more focused interventions for specific units. | - | - |
| Safety (IF Total) | 7.5 | The long-term strategic target of 3.0 was met, but the more ambitious STI target of 2.5 in 2023 was not reached entirely. | 50 | 2.1 |
| Scope 1 and 2 CO 2 intensity reduction (in %) | 7.5 | This year, BAM achieved a 56 per cent scope 1 and 2 CO 2 intensity reduction versus 2015, higher than the agreed milestone of 50 per cent. | 150 | 6.2 |
| Construction and office waste intensity reduction (in %) | 7.5 | The reduction significantly exceeded excellent level and was well in line with the long-term ambition to reduce towards 75 per cent in 2030 versus 2015. This achievement also demonstrates that waste intensity can be volatile, depending on the type and phase of actual projects. | 150 | 6.2 |
| Overall achievement | 68.3 |
¹ The adjusted EBITDA used for target setting and achievement of STI differs from the one reported, due to a different calculation methodology which primarily focuses on the long-term profitability of the Company. It also differs from the adjusted EBITDA for the LTI, which is limited to BAM’s home markets. In the event of divestments, EBITDA of divested entity is removed from ‘threshold’, ‘at target’ and ‘excellent’ performance levels as well as from actuals for the remaining part of the year. The direct and indirect effect of divestment (possible book gains, losses, transaction costs and the remaining operational EBITDA within the year) are not included in the calculation.
² Measured with the standardised, external (Glint) survey.
| Threshold | Excellent | Target | Achievement | |
|---|---|---|---|---|
| Adjusted EBITDA (45%) | 200 | 300 | 400 | 142.5 |
| ROCE (25%) | 10 | 15 | 5-10 | 135 |
| Scope 1,2 carbon intensity reduction (7.5%) | ≥ 15 | 10-15 | 5-10 | 150 |
| Employee engagement (7,5%) | 70 | 76 | 72 | - |
| Safety (7,5%) | 2.5 | ≤ 2.1 | 2.5 | 50 |
| Construction and office waste intensity reduction (7.5%) | ≥ 5 | 3-5 | 1-3 | 150 |
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
74Annual report 2023 Royal BAM Group nv
| Objective | Weighting (%) | Achievement on performance objectives | Achievement (% of target) | Vesting (% of award) |
|---|---|---|---|---|
| Relative TSR ¹ | 33.3% | Position 3 See table 27 for the TSR peer group ranking. BAM’s relative TSR performance has again increased, after having ended up in 9th position over 2019-2021 and 7th position over 2020-2022. | 100 | 33.3 |
| Adjusted EBITDA (x € million) ² | 33.3% | BAM delivered a strong performance with an adjusted EBITDA of €304 million. After deducting €3 million net, related to results from Germany and BAM International as well as to divestments, the achievement significantly exceeded target. | 143.3 | 47.8 |
| Sustainability - CDP Climate Ranking | 11.1% | BAM has once again earned a spot on the prestigious CDP Climate A List, for the fifth consecutive year. | 150 | 16.7 |
| Scope 1 and 2 CO 2 intensity reduction (in %) | 11.1% | This year, BAM achieved a 56 per cent scope 1 and 2 CO 2 intensity reduction versus 2015, higher than the agreed milestone of 50 per cent. Overall, the reduction over 3 years was much higher than anticipated, demonstrating the acceleration of BAM’s ambition level. |
| Performance period | Award date | Vesting date | End of lock-up period | Shares awarded ¹ | Shares vested ² | Value of conditionally awarded shares at award date | Value at year-end 2023 ³ |
|---|---|---|---|---|---|---|---|
| R.J.M. Joosten | |||||||
| 01-01-2023 - 31-12-2025 | 20-04-2023 | 20-04-2026 | 20-04-2028 | 347,201 | n/a | 711,900 | 839,532 |
| 01-01-2022 - 31-12-2024 | 25-04-2022 | 25-04-2025 | 25-04-2027 | 254,341 | n/a | 694,350 | 614,997 |
| 01-01-2021 - 31-12-2023 | 22-04-2021 | 22-04-2024 | 22-04-2026 | 221,961 | n/a | 490,000 | 536,702 |
| 01-01-2020 - 31-12-2022 | 01-09-2020 | 24-04-2023 | 23-04-2025 | 285,734 | 305,971 | 381,111 | 739,838 |
| L.F. den Houter | |||||||
| 01-01-2023 - 31-12-2025 | 20-04-2023 | 20-04-2026 | 20-04-2028 | 220,445 | n/a | 452,000 | 533,036 |
| 01-01-2022 - 31-12-2024 | 25-04-2022 | 25-04-2025 | 25-04-2027 | 161,465 | n/a | 440,800 | 390,422 |
| 01-01-2021 - 31-12-2023 | 22-04-2021 | 22-04-2024 | 22-04-2026 | 135,894 | n/a | 300,000 | 328,592 |
| 01-01-2020 - 31-12-2022 | 23-04-2020 | 24-04-2023 | 23-04-2025 | 367,371 | 393,389 | 490,000 | 951,215 |
| 01-01-2019 - 31-12-2021 | 29-04-2019 | 29-04-2022 | 29-04-2024 | 68,393 | 34,197 | 291,600 | 82,688 |
¹ This is the ‘at-target’ number of conditionally awarded performance shares. The number of performance shares that vest may vary between 0 (in the event of ‘below threshold’ performance) and 150 per cent (in the event of ‘excellent’ or ‘above excellent’ performance) of the ‘at-target’ number of performance shares. For Mr Joosten, the shares awarded in 2020 have been decreased pro rata according to the number of months in which he provided management services during the relevant performance period. Since Mr Den Houter served as CEO on an interim basis until the appointment of Mr Joosten, the LTI award value for the 2020-2022 plan was based on an award value of 70 per cent (CEO level instead of CFO level) of fixed remuneration including the CEO allowance.
² The number of vested shares at the vesting date before tax (withhold to cover deduction) and including the dividend up until the vesting date.
³ The value for the award in 2019 and 2020 is based on the number of ‘Shares vested’ in this table, multiplied by the closing share price of BAM at year-end 2023 (€2.418). The value for the other awards is based on the number of ‘Shares awarded’ in this table (since these shares are still conditional at year-end 2023), multiplied by the closing share price of BAM at year-end 2023 (€2.418).
The Company has rules relating to possessing and trading in BAM securities. These rules are published on the Company’s website. The table below shows the shares held by Executive Board members on 31 December 2023.
| Share ownership | Executive Board members ¹ ( x €1,000 ) |
|---|---|
| R.J.M. Joosten (share ownership requirement 100% of fixed remuneration) | 99% (€574) |
| L.F. den Houter (share ownership requirement 75% of fixed remuneration) | 10% (€60) |
| Vested shares from LTI plan | 51% (€411) |
| Privately acquired BAM shares | 30% (€242) |
¹ Ratios based on the number of shares on 31 December 2023, multiplied by the closing share price of BAM at year-end 2023 (€2.418) divided by the fixed remuneration at year-end 2023.
BAM’s internal pay ratio in 2023 was 25 (2022: 26), meaning that its CEO’s pay was 25 times the average pay within the organisation. The internal pay ratio is calculated as the total annual CEO remuneration divided by the average employee remuneration (employee benefit expenses excluding restructuring costs and termination benefits divided by the average number of FTE). Both the annual CEO remuneration and the average employee remuneration are derived from the financial statements (IFRS). External employees are not included in the calculation since BAM does not have sufficient information available. The decrease in the ratio is primarily caused by an increase of the average employee remuneration. A five-year analysis of Executive Board remuneration versus internal pay ratio, average employee remuneration and company performance can be found in table 30. It contains the performance measure adjusted EBITDA, which is believed to be a crucial reflection of the success of the Company.
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| CEO actual ¹ | 752 | 726 | 1,021 | 1,829 | 1,209 |
| CFO actual ¹ | 1,015 | 1,419 | 2,103 | 1,151 | 1,490 |
| Other benefits 4 | 235,400 | 200,800 | 278,405 | 350,200 | 304,300 |
| Post-employment benefits 0 | 752 | 726 | 1,021 | 1,829 | 1,209 |
| Executive Board remuneration ¹ | 752 | 726 | 1,021 | 1,829 | 1,209 |
| Company performance adjusted EBITDA ² | 200,800 | 278,405 | 350,200 | 304,300 | 235,400 |
| Average employee remuneration ² | 71 | 16 | 14 | 21 | 26 |
| Internal pay ratio ² | 74 | 81 | 81 | 85 | 278,405 |
¹ The Executive Board remuneration is derived from table 22 of this remuneration report. The actual remuneration for the CEO in 2020 is based on the annualised remuneration of Mr Joosten, who was appointed per September 2020. The actual remuneration for the CEO before 2020 is related to the previous CEO, Mr Van Wingerden. The actual remuneration for the CFO in 2020 is exclusive of the CEO allowance and the retrospective payment in 2020 of pension contributions to the CFO from 1 August 2018 onwards has been allocated to the relevant years.
² The average employee remuneration and internal pay ratio are derived from the financial statements (IFRS).
Based on advice from the Remuneration Committee, Audit Committee and Health, Safety and Sustainability Committee, the Supervisory Board determined the performance objectives and their weighting for the 2024 short-term incentive and the 2024-2026 long-term incentive. For the short-term incentive, the existing ROCE (return on capital employed) objective will be replaced with an objective on total cash flow. This change reflects the increasing importance of cash management upon the unwinding of advance payments on large projects. Furthermore, the overall employee engagement objective will be replaced with a more specific objective, concerning the belief that management will take action to drive concrete interventions to improve employee engagement. Finally, the objective on construction and office waste intensity reduction, that was included in previous years, will be removed. This will be done to shift the weighting of the performance objectives towards the most meaningful and ambitious areas of the sustainability strategy. For the long-term incentive, the weighting for CO 2 intensity reduction will be increased and the two objectives on CDP Climate and construction and office waste intensity reduction, as included in previous years, will be replaced by a sustainability scorecard of 5 targets on circularity, climate adaptation, biodiversity, inclusion & diversity and social value. This scorecard will better enable BAM to steer and reward on performance delivered against the specific objectives reflected in the sustainability strategy.
| STI 2024 | ||||
|---|---|---|---|---|
| Adjusted EBITDA (€) | 45% | |||
| Employee engagement (action taking) ² | 25% | |||
| Total cash flow (€) ¹ | 10% | |||
| Scope 1 and 2 CO 2 intensity reduction (%) | 10% | |||
| Safety (IF Total) | 10% |
¹ Average end-month IFRS cash position (excluding joint ventures) for October-December 2024 minus average for October-December 2023.
² Measured with the standardised, external (Glint) survey. Average % employees positive over Q1-Q4 on Glint survey statement: ‘I believe meaningful action will be taken as a result of this survey’.
150 16.7 - Construction and office waste intensity reduction (in %) 11.1 The reduction significantly exceeded excellent level and was well in line with the long-term ambition to reduce towards 75 per cent in 2030 versus 2015. This achievement also demonstrates that waste intensity can be volatile, depending on the type and phase of actual projects.
150 16.7 Overall achievement 131.1
245 275 305 301 Adjusted EBITDA (33.3%) 400200 3001000 41 Construction and office waste intensity reduction (11.1%) 9 5020 30 40 ≥ 15 9 - 12 12 - 15 B A- A A 0 BA- AB CDP ranking (11.1%) 48 9 5020 30 40 Carbon intensity reduction (11.1%) ≥ 15 9 - 12 12 - 15 Threshold Excellent Target Achievement 26 Performance on 2021-2023 LTI objectives
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
75Annual report 2023 Royal BAM Group nv
28 LTI plan (value in €)
... (rest of the content from the table) ...
27 TSR peer group ranking LTI plan 2021-2023
| Strabag | BAM | Balfour Beatty | Eiffage | Vinci | Heijmans | Kier | Porr | Skanska | Hochtief | NCC |
|---|---|---|---|---|---|---|---|---|---|---|
| 0 -20 | 20 40 60 80 100 | 1 2 3 4 5 6 7 8 9 10 11 |
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
76Annual report 2023 Royal BAM Group nv
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
77Annual report 2023 Royal BAM Group nv# Annual report 2023 Royal BAM Group nv
| | 94.5 | 57.8 | 52.5 | 52.5 | 52.5 | 52.5 | 10.5 | 7.4 | 7.4 | 7.4 | 6 | 7.5 | 10.5 | 9 | 10.5 | 3 | 10.5 | 3 | 0 | 110 | 100 | 90 | 80 | 70 | 60 | 50 | 40 | 30 | 20 | 10 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :-- | :-- | :-- | :- | :-- | :--- | :- | :--- | :- | :--- | :- | :- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :-- |
| Fixed remuneration | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Attendance fee | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Committee fee | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| H.Th.E.M. Rottinghuis, chairman | X | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| G. Boon, vice-chairman | | X | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| B. Elfring | | | X | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| D. Koopmans | | | | X | | | | | | | | | | | | | | | | | | | | | | | | | | |
| M.P. Sheffield | | | | | X | | | | | | | | | | | | | | | | | | | | | | | | | |
| N.M. Skorupska | | | | | | X | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | X | X | X | X | X | X | X | X | X | X | X | X | X | | | | | | | | | | | |
Fixed remuneration
Committee fee
Attendance fee
Expenses
The members of the Supervisory Board received remuneration in the past financial year in line with the remuneration policy as adopted by the General Meeting on 15 April 2020 and amended on 12 April 2023. The remuneration policy for the Supervisory Board is available on BAM’s website ( see www.bam.com/en/about-bam/corporate-governance/articles-of-association-rules-and-codes). The remuneration of the individual members of the Supervisory Board over the last five years can be found in the table below. No options or shares were awarded to members of the Supervisory Board, and no loans were issued to them.
| 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| H.Th.E.M. Rottinghuis, chairman | 108 | 103 | 102 | 48 | - |
| G. Boon, vice-chairman | 71 | 70 | 67 | 59 | 63 |
| B. Elfring | 69 | 68 | 62 | 20 | - |
| D. Koopmans | 74 | 68 | 65 | 23 | - |
| M.P. Sheffield | 67 | 65 | 59 | 164 | 68 |
| N.M. Skorupska | 66 | 65 | 42 | - | - |
| H. Valentin, former member | - | - | 16 | 59 | 68 |
| H.L.J. Noy, former chairman | - | - | - | 46 | 80 |
| C.M.C. Mahieu, former member | - | - | - | 54 | 60 |
| K.S. Wester, former vice-chairman | - | - | - | - | 18 |
| R. Provoost, former member | - | - | - | - | 8 |
| Total | 455 | 439 | 413 | 473 | 365 |
¹ The amounts are excluding reimbursed expenses. Amounts 2020 include the 20 per cent Covid-19 reduction and the additional remuneration for Mr Sheffield as delegated Supervisory Board member.
The table below shows the shares held by Supervisory Board members on 31 December 2023.
| Supervisory Board members | Type of shares | Number of shares |
|---|---|---|
| H.Th.E.M. Rottinghuis, chairman | Privately acquired BAM shares | 100,000 |
| G. Boon, vice-chairman | Privately acquired BAM shares | 100,000 |
| D. Koopmans | Privately acquired BAM shares | 15,000 |
Extension of Holyrood Academy in Chard, Somerset. Designed by Grainge Architects, the new building incorporates a purpose-built student/dining area, six classrooms and new office space and meeting rooms. BAM Construct UK delivered a building which is all-electric and fitted with energy efficient fabric in line with Somerset County Council’s climate change strategy.
Bunnik, the Netherlands, 21 February 2024
The new Perth Museum will open its doors in Spring 2024, after the redevelopment of Perth City Hall for Perth and Kinross Council and Hub East Central, rejuvenating a historic landmark and providing space for the city’s collection of national artifacts, including the Stone of Destiny.
82 Perth (Scotland), BAM Construct UK
BAM consistently fosters communication and dialogue with both internal and external stakeholders to learn about the perspectives and concerns of those parties impacted by the Company. Such interactions not only expand BAM’s knowledge base but also enhance the Company’s capacity for sound decision-making and the effective prioritisation of actions.
BAM updated the approach of the materiality assessment as a first step in preparation for the implementation of the Corporate Sustainability Reporting Directive (CSRD), which becomes applicable for BAM as of 2024. The materiality assessment discussed in this chapter has been prepared in consideration of the relevant paragraphs from the European Sustainability Reporting Standards (ESRS 1 and 2). Key changes in the approach include:
BAM determined which matters are material to stakeholders. These material matters were subsequently used to determine the scope of BAM’s sustainability reporting. Going forward, the list of (material) sustainability matters will be evaluated on a yearly basis in line with the CSRD.
Following the methodology of Double Materiality Assessment (DMA), BAM actively solicited input and feedback from internal and external stakeholders to gain a comprehensive understanding of the most pressing concerns to stakeholders. This approach helps to establish evidence of actual or potential impact on both people and the environment associated with the Company’s activities, particularly from the perspective of stakeholders who may be directly impacted.
Double materiality has two dimensions, namely: impact materiality and financial materiality. Thus, the methodology used for this assessment is based on two processes. The first process involves the identification, assessment, and prioritisation of actual and potential impact made by BAM on people and the environment. The second process focuses on identification, assessment, and prioritisation of financial risks and opportunities for BAM associated with Environment, Social, and Governance (ESG) matters. After determining the material matters for BAM, the final step in the process is the integration of sustainability matters within the organisational processes. The matters identified through the materiality analysis are used for strategic direction and control on material sustainability matters. The material matters resulting from the DMA also determine the scope of BAM’s sustainability reporting. The implementation of the DMA and related sustainability reporting is not intended as a compliance exercise but to drive strategic embedding of sustainability in the core activities of BAM, aiming to achieve sustainable change and build a resilient company.
Identification of matters
BAM performed a documentation review to gather a wide range of potential matters relevant to the Company. The desk review included a media search related to the industry, review of internal documents, review of the previous materiality assessment, peer reviews, and a global standards review. Next, BAM held several dialogue sessions with internal stakeholders to identify actual and potential impact and financial risks and opportunities. Stakeholders were invited to the dialogue sessions that fit their areas of expertise (within Environment, Social or Governance). These sessions were attended by employees across BAM’s divisions and underlying businesses.
| Impact Materiality (inside-out): Impacts of BAM on people and environment | Financial Materiality (outside-in): Financial risks and opportunities for the company resulting from sustainability matters |
Management (ERM) process. BAM facilitated pre-read material, Q&A sessions, and one-on-one meetings to ensure the participants were well-informed throughout the process.# Assessment of Financial Materiality
BAM aimed to harmonise this process as much as possible with the existing risk management process. Consequently, BAM’s risk management experts played a role in consolidating the extensive list of potential financial risks and opportunities into a more manageable list of nineteen matters.
A wider group of internal stakeholders, including the people involved in the ‘identification of matters’, was invited to participate in a survey regarding impact. BAM requested the participants to assess the scale, scope, irremediable character (for negative impact) and likelihood (for potential impact) per matter. Matters are classified as material when the assessment outcome exceeds the pre-defined thresholds. The defined criteria, i.e., quantification of the assessment, are in line with BAM’s Enterprise Risk
| Matters discussed | Clients | Joint project and business development, strategic partnership, workshop, (social) media, in-person meeting, podcast recording | Collaboration on sustainability, circularity |
|---|---|---|---|
| Knowledge institutions | In-person meeting, workshop, online meeting | Circularity, water scarcity, decarbonisation | |
| Local communities | In-person meeting, workshop, information market, guest lecture, open office hours, BouwApp, voluntary work community | Safety during construction works | |
| Suppliers and subcontractors | In-person meeting, online meeting, virtual event | Timber certification, circularity, sustainability strategy, supply chain, HVO, petrol engine alternative products, hydrogen and innovation | |
| Industry bodies | Virtual event, conference, workshop, round-the-table event, in-person meeting, online meeting | Decarbonisation, sustainability nature-based solutions, climate adaptation, biodiversity, nature positive initiatives, sustainability strategy, innovation, social value | |
| Regulators | In-person meeting, online meeting | Sustainable mobility, regeneration, climate resilience, HVO adoption by the industry, combatting climate change, sustainability strategy, carbon reduction, biodiversity | |
| Investors and analysts | In-person meeting, online meeting, round-the-table event | Biodiversity, working conditions in the value chain, natural capital, human rights, biodiversity, sustainability | |
| NGOs and trade unions | In-person meeting, online meeting, (social) media | Decarbonisation, safety | |
| Media | Conference, media content | Decarbonisation, energy transition |
34 External stakeholder overview
85Annual report 2023 Royal BAM Group nv
Finance experts from across the Group were invited to participate in the financial materiality survey. Participants were requested to assess the size and likelihood for each identified financial risk or opportunity. They were also encouraged to identify any additional financial risks and opportunity during this stage. Whether a matter classified as material in the outcome of the assessment is determined based on pre-defined thresholds in line with BAM’s risk management process.
The data derived from the survey results was collected and analysed, with particular attention to outliers, unexpected findings, and alignment with BAM’s sustainability strategy. Regarding Impact materiality, dialogue sessions on the outcomes were held with the experts involved in the ‘Identification of matters’. For financial materiality, a dialogue session was conducted involving BAM’s financial leadership, including the Company’s CFO.
BAM maintains an ongoing dialogue with external stakeholders, including those in BAM’s value chain, to remain informed about their perspectives and expectations with respect to sustainability matters. The level of engagement with external stakeholders was increased during the development of the sustainability strategy. BAM’s sustainability strategy, launched in the first quarter of 2023, includes the material matters discovered during that process. Throughout 2023, the company continued to engage with external stakeholders through numerous discussions centred around various ESG topics, as summarized in figure 34. Nature is considered as a silent stakeholder. Where ecological data and data on the conservation of species is missing, nature can be represented by for example NGOs, knowledge institutions, and scientists. Refer to chapter 2.3 for a description of external stakeholders.
BAM selected material matters for these sustainability statements based on interactions with internal and external stakeholders. The alignment of the DMA process with CSRD in addition to GRI, and new insights in the impact on people and environment, led to additional material matters compared to the prior reporting year. The relevant disclosures regarding BAM’s material sustainability matters are included in this report provided that the data and information are available and meet the necessary quality standards. These sustainability statements not only highlight BAM’s commitment to transparency about sustainability performance to inform stakeholders, but also serve as a cornerstone for nurturing a responsible and resilient business approach. BAM strives for transparency regarding both its knowledge and areas where information may be lacking, aspiring to uphold openness in its reporting. As the DMA was first conducted in 2023, and integrating material matters into reporting processes takes time, the development and disclosure of targets and metrics on all matters is a work in progress. BAM has addressed the material financial risks and opportunities through the materiality assessment; however, given the novelty of the subject, detailed reporting on these effects is not provided in this annual report.
The DMA led to a selection of nineteen material impacts and two material financial risks and opportunities. The results of the analysis are presented in figure 35, revealing a tilt to the ‘impact’ side. This is in line with the current insights and understanding within BAM on the link between financial risks and opportunities and sustainability impact. Financial risks and opportunities are either limited, mitigated, or might not yet have been calculated due to the lack of data driven insights used in the assessment. In line with the BAM sustainability strategy, two topics were added as material on the impact axis: (1) Circularity, and (2) Return on inclusion. Biodiversity positive alternatives was added as a sub- matter under “Biodiversity loss: own operations”. In validation sessions, the completeness of the financial material matters was evaluated, leading to the inclusion of two material financial matters (Financial risk of climate change on BAM’s land bank valuation and Opportunities related to energy efficiency). This addition was prompted by the anticipation that these potential financial risks and opportunities may evolve in the near future, for example due to changes in legislation or change in client demand.
This is the first time BAM has evaluated its material sustainability matters from a double materiality perspective. The DMA is performed by BAM in accordance with the requirements in ESRS 1 and ESRS 2, required by the CSRD, which is effective from 1 January 2024 onwards. Throughout the assessment process, additional information and interpretation guidance emerged, driven in part by feedback rounds and additional Q&A documents provided by the European Commission. Given the novelty of this subject, BAM went through an iterative process finding the right way to perform the assessment that fits the Company environment, and including the right experts across the Company, leading to a significant learning curve for everyone involved.
86Annual report 2023 Royal BAM Group nv
35 (Material) Sustainability matters 2023
| Impact materiality environmental Themes | Reference | social | Financial materiality |
|---|---|---|---|
| Low | Medium | Medium | |
| High | High | ||
| GHG emissions: own operations (scope 1 and 2) | |||
| GHG emissions: value chain (scope 3) | |||
| Adaptation to climate change | |||
| Pollution of air and soil: own operations | |||
| Pollution of air and soil: upstream operations | |||
| Pollution of air and soil: substances of (very high) concern | |||
| Water discharges in water bodies and in the oceans: own operations | |||
| Water discharges in water bodies and in the oceans: upstream operations | |||
| Water consumption: own operations | |||
| Water consumption: upstream operations | |||
| Habitat degradation and intensity of pressure on marine life: own operations | |||
| Biodiversity loss: own operations | |||
| Biodiversity loss: sustainable use of land and forest in the supply chain | |||
| Biodiversity: Nature inclusive design | |||
| Ecosystem services | |||
| Circularity: depletion of raw materials | |||
| Circularity: circular design | |||
| Circularity: waste reduction | |||
| Circularity: waste reuse and recycling | |||
| Occupational health and safety: own operations | |||
| Work-related ill health: own employees | |||
| Violence and harassment in the workplace | |||
| Collective bargaining coverage and social dialogue (own workforce) | |||
| Diversity within the company's own workforce (own employees) | |||
| Return on inclusion | |||
| Training and skills development (own employees) | |||
| Corporate culture | |||
| Health and safety for the company's workers in the value chain | |||
| Adequate wages | |||
| Modern slavery and human rights | |||
| Precarious work for the company's workers in the value chain | |||
| Social value | |||
| Land and resource rights of communities in the value chain | |||
| Water availability and water quality communities in the value chain | |||
| Consumer safety (related to product quality) | |||
| Consumers and end users: area Development | |||
| Management of relationships with |
The DMA encompasses the entire Royal BAM Group, including all activities, divisions, and businesses. This extends to the Company’s upstream, own operations, and downstream activities, covering all associated geographical regions.
A sustainability matter is material from an impact perspective when it pertains to BAM’s material actual or potential, positive or negative impact on people or the environment over the short-, medium- and long-term time horizons (within one year, between one and five years, longer than five years). BAM determined a quantitative threshold that was also made qualitative for the purpose of the survey and dialogue sessions. An impact is material if it is scored ‘critical’ or ‘high’. The impact is not material it is scored ‘medium’, ‘low’, or ‘negligible’.
BAM has considered the connections of the Company’s impacts and dependencies with risk and opportunities that may arise from those impacts and dependencies during the identification and assessment phase of the process on financial materiality. During dialogue sessions with stakeholders, financial risks and opportunities related to the impacts and dependencies were identified. Stakeholders were also invited to identify any supplementary risks and opportunities for BAM in the survey. A sustainability matter is material from a financial perspective if it triggers or may trigger material financial risks or opportunities on BAM. This is the case when it generates or may generate risks or opportunities that have a material influence (or are likely to have a material influence) on BAM’s cash flows, development, performance, position, cost of capital or access to finance in the short-, medium- and long-term time horizons (within one year, between one and five years, longer than five years). The materiality of a financial risk or opportunity is based on the severity of the impact and likelihood of the risk or opportunity to occur. BAM determined a quantitative threshold that was also made qualitative for the purpose of the survey and dialogue sessions. A financial risk or opportunity is material if it is scored ‘critical’ or ‘high’. The financial risk or opportunity is not material it is scored ‘medium’, ‘low’, or ‘negligible’.
BAM considered whether to emphasise gross or residual risk when prioritising financial risks or opportunities. Exclusively considering gross risk might render the discussion irrelevant, as it deviates from real-world scenarios where numerous risks are mitigated by long-standing legislation, company processes and management controls. Solely considering residual risk may not address root causes and lead to an incomplete understanding of the risk landscape. BAM opted for a middle-ground approach. BAM takes into account the overall size or severity of a risk. The assessment of likelihood incorporates residual risk, as industry-wide measures, standard business processes, and internal controls reduce the probability of an event occurring.
BAM prioritises sustainability-related risks relative to other types of risks as part of the Enterprise Risk Management process. BAM’s Enterprise Risk Management process (chapter 4.1) encompasses strategic, operational, financial, and compliance risks. The results of the DMA as well as the sustainability strategy, feed into the overall risk management process. Risks are evaluated and ranked based on their potential impact, likelihood, and the efficacy of the organisation’s risk response measures. This procedure fosters discussions throughout the organisation, involving financial and sustainability experts, and leads to an appropriate management response and monitoring on relevant controls. The assessment outcomes currently reveal a limited number of value chain-related themes. Anticipating greater insight and data accessibility, BAM expects additional value chain-related themes to emerge as material outcomes. For instance, the impact on biodiversity in the supply chain is identified as an area worth monitoring closely. BAM anticipates ongoing development regarding the maturity of this process in the coming years. BAM expects more robust outcomes through increased data insights and more clarity on the practical implementation of the guidelines and comparability across the industry.
BAM’s aim to continuously improve reporting transparency on sustainability performance and progress with respect to the sustainability strategy, resulted in this set of sustainability statements as part of the management information provided in this report.
The sustainability information disclosed in BAM’s annual report has been prepared in accordance with the GRI Universal Standards 2021 and complies with the EU Non-Financial Reporting Directive (2014/95/EU) and the ‘EU Taxonomy’ delegated acts referred to in chapter 6.6. An overview of the GRI disclosures covered by this report is available on BAM’s website (https://www.bam.com/en/investors/annual-reports). In chapter 6.1, the Double Materiality Assessment has been prepared in accordance with the European Sustainability Reporting Standards (ESRS) 1 and 2. The information on relevant indicators, definitions, scope and measurement can be found in these sustainability statements. In addition to the information that is already provided in chapter 3, chapter 6 is covering disclosures and notes on all material matters.
This report presents both quantitative and qualitative data for the calendar year 2023. Data collection also relates to this timeframe. Exceptions are disclosed in the notes to the reported figures. BAM applies the GHG Protocol Corporate accounting and reporting standard to define the organisational boundary for reporting sustainability information. In general, BAM applies the ‘share of equity’ approach to account for sustainability information and data. The approach regarding acquisitions and divestments are disclosed on a case-by-case basis. With respect to reporting on safety BAM also has (parts of) the value chain in scope. Detailed definitions are included in chapter 9.4 Glossary. The metric-specific reporting principles are explained in the notes to the reported numbers. No significant changes from previous reporting periods in the scope and boundaries have been incorporated.
BAM uses a consolidated reporting system for sustainability information (including CO 2 emissions, waste, safety and other people related indicators). This can be seen as an extension of the financial reporting system (consolidation tool). The applied reporting processes and definitions are formalised in BAM’s Sustainability reporting manual, which provides guidance on how to collect, consolidate and report data. BAM’s main sustainability matters and indicators are described in chapter 2.3 and chapter 6.1. Key internal controls that are caried out to ensure consistent, complete and accurate reporting are also described in the Sustainability reporting manual.
Making judgements, assumptions and estimates is a fundamental part of preparing sustainability- related disclosures. Useful contextual assumptions and those that can significantly impact measurements are explicitly disclosed in the sustainability statements to aid in the interpretation of sustainability information. In principle, assumptions used in the sustainability statements are consistent with the assumptions used in the financial statements to the extent possible, and otherwise differences are disclosed. For specific metrics, BAM uses information from the value chain partners, i.e. scope 1, 2 and 3 reporting, IF total (including subcontractors), and waste intensity. In these cases accounting principles disclosed clarify for which part of the data BAM relies on third party input, if applicable. Reporting based on third party data deals with measurement uncertainty, for example due to the quality or availability of data from value chain partners.
By nature, forward looking information, like plans and targets, involve risk and uncertainty because they relate to future events and circumstances. There are many factors that could cause actual results and developments to differ materially from those expressed or implied.
Prior-period errors are omissions from, and misstatements in, the sustainability information for one or more periods. These errors may arise from misuse or failure to use reliable information that was available and the Company reasonably could have obtained and considered. Changes in estimates are different from (corrections of) prior-period errors. A change in estimate results from new information or new developments.# 6.2 Sustainability reporting principles
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO 89
Annual report 2023 Royal BAM Group nv
BAM has a sustainability reporting restatement policy that describes the principles used in case of data restatements (including both errors and changes in estimates). BAM assesses on a case-by-case basis whether the restatement is material for the information, including both qualitative and quantitative factors. If considered material, the prior-period reported data will be restated, unless it is impracticable to do so. The reason why information is revised will be disclosed in the notes.
The Executive Board has appointed Ernst & Young Accountants LLP (EY) to provide independent assurance of the report to provide BAM’s stakeholders with assurance about BAM’s sustainability information. BAM has obtained limited assurance for the sustainability information reported in chapters 2, 3.2, 3.3, and chapter 6.
BAM has policies in place to manage material impacts, risks and opportunities:
The policies describe the objective, scope, principles, requirements, and roles and responsibilities of functions within BAM. The matters that became material to BAM for the first time during 2023, and are not part of BAM’s sustainability strategy or fundamental business practices, will be included in the policies in 2024 (Pollution of air and soil: upstream operations, Ecosystem services, Work related ill-health). The general objective of the policies is to provide an overarching and standardised approach to managing sustainability topics across BAM. BAM requires management of the divisions to monitor sustainability requirements against pre-determined plans, standards and objectives and report in line with the reporting requirements as set out in the BAM Sustainability reporting manual. The scope of the policies is BAM’s own operations and projects where BAM is responsible for the administration. In all other activities, for example related to joint arrangements, the Company encourages partners to demonstrate the commitments reflected in the policies. Divisions may produce instructions to meet local needs and expectations. Such instructions are consistent with, and not in conflict with, the BAM policy framework. The policies apply to all companies, employees, and any other representatives of BAM. The Executive Committee is ultimately responsible and accountable for sustainability at BAM. Focus areas are BAM’s sustainability strategy, sustainability reporting and the sustainable business initiatives. Management of the divisions is accountable for implementation of the strategy, reporting, policies and business initiatives in the division. Through implementation of the BAM Sustainability Policy, BAM commits to the United Nations Sustainable Development Goals framework and ISO14001 environmental management systems. The policies are available to all BAM employees via BAM Connect. Input from stakeholders on the policies is obtained during ongoing discussions with employees (directly and/or via the relevant Works Council), interactions with shareholders (directly and/or via shareholder representative organisations) and interactions with other relevant stakeholders. With regard to the Works Council, their input is not part of formal (statutory) advice or consent rights in accordance with the Dutch Works Council Act (Wet op de Ondernemingsraden).
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO 90
Annual report 2023 Royal BAM Group nv
Based on the outcomes of the Double Materiality Assessment, BAM discloses information on the following matter(s) in these sustainability statements:
The following information is incorporated by reference to other parts of the Executive board report:
| Description | Chapter | (Sub)chapter name |
|---|---|---|
| Transition plan for climate change mitigation and adaptation | 3.3 | Environmental performance |
| Decarbonisation | Climate adaptation | |
| Policies related to climate change mitigation and adaptation | 6.2 | General information |
| Actions and resources in relation to climate change policies | 3.3 | Environmental performance |
| Decarbonisation | Climate adaptation | |
| Energy consumption and mix | 3.3 | Environmental performance |
| Procurement of renewable electricity | Targets related to climate change mitigation and adaptation |
BAM has committed to reduce the CO 2 intensity of its operations. BAM has a 1.5 °C Science-Based Target, verified by SBTi, in place to ensure BAM is in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement. BAM has further increased the ambition level of the Company’s Science Based Targets. The accelerated targets were released early 2023 as part of BAM’s sustainability strategy. The target is broken down into a scope 1 and 2 target (reduction of 50 per cent by 2023 and 80 per cent by 2026 compared to 2015) and a scope 3 reduction target of 50 per cent by 2030 compared to 2019. Future developments, such as variations in sales volumes or mergers and acquisitions, are considered through the setting of intensity targets instead of absolute targets for scope 1 and 2. When BAM experiences fluctuations in revenue, absolute emissions naturally follow the same trend. Adopting intensity-based targets brings the Company closer to assessing genuine environmental improvements, as opposed to solely concentrating on absolute emission targets. Due to the absolute nature of the scope 3 target, the scope 3 metrics follow the fluctuation in revenue, meaning that as the Company’s revenue increases or decreases, scope 3 emissions also move accordingly. There is an expectation that over time, the methodology for measuring scope 3 emissions will improve, potentially involving calculations and measurements conducted by the company’s suppliers rather than relying on generalised databases. BAM continuously tracks the effectiveness of the Company’s actions by internal quarterly reporting on the targets and related metrics.
BAM’s energy consumption and greenhouse gas inventory are based on the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, Revised Edition as issued by the World Business Council for Sustainable Development and the World Resources Institute. BAM reports its greenhouse gas emissions as CO 2 equivalent while considering greenhouse gases other than CO 2 . BAM’s reporting scope includes both direct CO 2 emissions (scope 1 emissions originating from BAM’s own sources) and indirect CO 2 emissions resulting from the generation of purchased electricity used by BAM, calculated with market-based conversion factors (scope 2 emissions). Where clients provide BAM with electricity and BAM receives information on its client-supplied electricity consumption, BAM includes this consumption in its carbon footprint. On several projects, BAM provides fuel and electricity to subcontractors. In accordance with BAM’s Sustainability reporting manual, the supplied fuel and electricity to subcontractors should be measured and excluded from reported figures, unless fuel and electricity are supplied under the supervision of BAM. In practice, however, it is not always possible to determine how much fuel is supplied to subcontractors. In that case, BAM accounts for all CO 2 emissions. BAM reports fuel consumption by leased vehicles under scope 1 emissions. Energy consumption from district heating is considered negligible, and is therefore not included in BAM’s overall energy consumption and related CO 2 emissions.
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO 91
Annual report 2023 Royal BAM Group nv
Activity data, mostly based on meter readings, invoices and data provided by suppliers, are used to calculate BAM’s footprint. In instances where complete and accurate data are unavailable, BAM employs calculations or estimations utilising reliable methods and input data. BAM calculates the energy consumption (in terajoules) and CO 2 emissions associated with BAM’s energy consumption, using conversion factors from reputable and authoritative sources. BAM applies country- specific conversion factors for electricity and natural gas, BAM uses tank-to-wheel emission factors for scope 1 emissions as well-to-tank is part of BAM’s scope 3 footprint. For scope 2 emissions, the full well-to-wheel factors are applied. All conversion factors are reviewed annually and updated if necessary.
| 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| Scope 1 | 62.3 | 79.5 | 94.0 | 95.1 | 116.7 |
| Scope 2 | 6.3 | 8.5 | 12.3 | 10.0 | 14.4 |
| Total | 68.6 | 88.0 | 106.4 | 105.2 | 131.1 |
| 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| Scope 1 | 62.3 | 79.5 | 94.0 | 95.1 | 116.7 |
| Scope 2 | 16.4 | 16.3 | 20.9 | 22.0 | 25.0 |
| Total | 78.7 | 95.8 | 114.9 | 117.1 | 141.7 |
| 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| Scope 1 and 2 | 10.9 | 13.3 | 14.5 | 15.4 | 18.2 |
| Scope 1 and 2 (including employee travel related scope 3) | 12.1 | 14.4 | 15.4 | 16.7 | 20.1 |
| Division | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|
| NL | 29.6 | 35.9 | 35.6 | 33.5 | 40.6 |
| UK&I | 38.3 | 36.8 | 44.3 | 34.2 | 43.4 |
| Other | 0.7 | 15.3 | 26.5 | 37.5 | 47.1 |
| Total absolute emissions | 68.6 | 88.0 | 106.4 | 105.2 | 131.1 |
* Restatement of the values disclosed in BAM’s annual report 2022: BAM’s share of emissions related to the projects in Denmark was omitted in the data. CO 2 emissions for 2022 have been restated, the additional impact on CO 2 emissions - scope 1 and 2 is 1.966 kilotonnes. The total impact on 2022 CO 2 Intensity scope 1 and 2 is 0.3.
| Division | Construction sites | Vehicle fleet | Offices |
|---|---|---|---|
| NL | 9.4 | 19.0 | 1.3 |
| UK&I | 30.4 | 7.7 | 0.1 |
| Other | 0.1 | 0.6 | 0.0 |
| Total | 39.9 | 27.3 | 1.4 |
BAM’s scope 3 estimation is based on several different data sources, methods and assumptions. Six out of the fifteen categories are considered not applicable and/or not material for BAM, for the following reasons:
The methodology, data sources and key assumption and limitations of the nine categories for which the scope 3 emissions are estimated are listed below:
BAM’s scope 3 inventory is based on the Greenhouse Gas Protocol Corporate Value chain (scope 3) Accounting and Reporting Standard. BAM reports its greenhouse gas emissions as CO 2 equivalent. The table below shows BAM’s 2023 scope 3 emissions across the fifteen scope 3 categories as defined in the Greenhouse Gas Protocol. Total scope 3 emissions are estimated at 2,552 kilotonnes, a factor 37 larger than BAM’s scope 1 and 2 emissions. The vast majority of BAM’s scope 3 emissions fall in categories (1) Purchased goods and services and in category (11) Use of sold products.
| Scope 3 Category | Emissions (ktonnes CO 2 e) | Share of scope 1, 2 and 3 |
|---|---|---|
| 1 Purchased goods and services | 1,416 | 54% |
| 2 Capital goods | 119 | 5% |
| 3 Fuel and energy-related activities | 19 | 1% |
| 4 Upstream transportation and distribution | 0 | 0% |
| 5 Waste generated in operations | 13 | 1% |
| 6 Business travel | 5 | 0% |
| 7 Employee commuting | 2 | 0% |
| 8 Upstream leased assets | - | - |
| 9 Downstream transportation and distribution | - | - |
| 10 Processing of sold products | - | - |
| 11 Use of sold products | 924 | 35% |
| 12 End-of-life treatment of sold products | 54 | 2% |
| 13 Downstream leased assets | - | - |
| 14 Franchises | - | - |
| 15 Investments | - | - |
| Total scope 3 | 2,552 | 97% |
| Scope 1 and 2 | 69 | 3% |
| Total scope 1,2 and 3 | 2,621 | 100% |
CO 2 emissions associated with commuting by car are captured following the same process as BAM’s scope 1 and 2 emissions. Using country specific statistics, HR data and conversion factors the emissions related to the other modes of transport are calculated. These emissions are added up to determine total employee commuting emissions.
The CO 2 emissions of the use of sold products are estimated by taking the energy use of the assets delivered by BAM in 2023 and multiplying that by the lifetime of the asset. BAM acknowledges that this approach can result in large fluctuation in emissions over the years depending on the amount and type of projects delivered in the reporting year. A different approach is used per asset type:
For some business units BAM was not able to derive the required data. For these missing business units, the CO 2 emissions are estimated based on the annual revenue of the non-assessed business units. In total, 15 per cent of the CO 2 emissions reported in this category was extrapolated.
CO 2 emissions from capital goods are derived from the CO 2 emissions from purchased goods and services. After processing in BAM’s tool, the total spend based CO 2 emissions includes both purchased goods and services and capital goods. The following Exiobase categories are considered to comprise capital goods:
The CO 2 emissions from these categories are deducted from the category purchased goods and services and reported under capital goods.
The upstream CO 2 emission of fuels- and energy related activities are derived from the same fuel and energy use which form the basis for BAM’s scope 1 and 2 emissions. The fuel and energy quantities are multiplied by country specific ‘well to tank’ emission factors to cover the upstream emissions that are not included in the scope 1 and 2 calculation.
CO 2 emissions associated with upstream transport and distribution are included in category (1) Purchased goods and services. It is not feasible for BAM to distinguish transport related emissions in the Exiobase factors.
CO 2 emissions associated with the disposal and treatment of waste are based on the waste figures that BAM also reports separately.# Royal BAM Group nv
Waste quantities are categorised by BAM’s waste processors into different waste streams and conversion factors from the ‘Emissions Factors Hub’ are used to estimate associated CO 2 emissions. Excavation waste is not included in this estimation as excavation waste is most often reused on site or on a different site.
CO 2 emissions related to business travel are captured following the same process as BAM’s scope 1 and 2 emissions. BAM captures data related to privately owned cars (refunded kilometres), air travel and train travel.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
94
From 2024 onwards, BAM intends to further define and report financial effects related to climate- related physical and transition risks. During the initial reporting years, the data availability within the company is expected to be limited and financial effects are anticipated to be derived based on estimations and calculations.
On a qualitative basis BAM’s financial effects due to climate change risks and opportunities can be related to the following key areas:
The most substantial decisions that were recently taken, related to direct investments and/or decisions that have direct impact on financial resources and planning, are:
Based on the outcomes of the Double Materiality Assessment, BAM discloses information on the following matter in these sustainability statements:
The CO 2 emissions associated with the end of life treatment of sold products are estimated based on the delivered Construction and Property assets in 2023 which are also used in the category use of sold products. The total floor area of these assets is calculated and multiplied with an average amount demolition waste per square metre. The mass of waste is then multiplied by emission factors from the Emission Factors Hub (same source as in category 5. Waste).
BAM conducts, and focuses on further maturing, climate-related scenario analyses (short, medium and long term) in two areas:
BAM’s target is in line with the 1.5 ºC trajectory of the International Energy Agency Net Zero Emissions by 2050 (IEA NZE 2050) scenario. The scenario is applied without any alterations to the underlying inputs, assumptions and methods used by the IEA. BAM uses this scenario to explore relevant climate change risks on both medium term (2030) and long term (2050), as these timeframes are both relevant for BAM, but ask for a different strategic approach.
The scenario analyses have been used to strengthen BAM’s business objectives and sustainability strategy. Also, BAM used the results of the scenario analyses to set a science-based target for 2030. BAM linked this to its ambition of having a net positive impact on climate, resources and people by 2050.
In response to the climate adaptation matter, BAM has developed a climate scan that is applied to key projects where physical climate related risks are relevant to either the construction process or the asset itself ( chapter 3.3 Environmental performance). This climate scan makes use of the ‘klimaateffecten atlas’ (climate effects register) which is based on the fourteen climate scenarios of KNMI (Royal Netherlands Meteorological Institute) which are based on the climate scenarios of IPCC (Intergovernmental Panel on Climate Change). The most severe climate scenario used by KNMI and in BAM’s climate scan is based on RCP 6.0 (Representative Concentration Pathway, global temperature rise of 3-4 °C by 2100). This climate scan is applied in the early phase of a project (or tender) and based on the outcome, climate change adaptation measures are discussed with clients and in most cases implemented. BAM targets towards 2026 is to have these type of climate risk scans effectively introduced to all of the large (A and B category) tenders.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
95
Within the civil sector, an industry-wide problem was discovered in 2021. Harmful substances were released during asphalt production, including benzene and PAHs, when high percentages of recycled asphalt (PR) are used in new asphalt mixtures. In both 2022 and in 2023 operational carbon filters were installed in various asphalt plants, these filters ensure a significant reduction in emissions. For the short-term this mitigates severe impact and avoids having to scale down production. In the meantime, the plants are working on smarter and more sustainable techniques for the longer term. From 2024 onwards, BAM intends to report on upstream pollution in alignment with CSRD. During the initial reporting years, the data is anticipated to be derived based on estimations and calculations.
Based on the outcomes of the Double Materiality Assessment, BAM discloses information on the following matter(s) in these sustainability statements:
The following information is incorporated by reference to other parts of the Executive board report:
| Description | Chapter (Sub)chapter name |
|---|---|
| Transition plan and consideration of biodiversity and ecosystems in strategy and business model | 2.1 Business model |
| Biodiversity | 3.3 Environmental performance |
| Value creation model | |
| Policies related to biodiversity and ecosystems | 6.2 General information |
| Actions and resources related to biodiversity and ecosystems | 3.3 Environmental performance |
| Biodiversity | |
| Targets related to biodiversity and ecosystems | 3.3 Environmental performance |
| Biodiversity |
The following information is incorporated by reference to other parts of the Executive board report:
| Description | Chapter (Sub)chapter name |
|---|---|
| Policies related to pollution | 6.2 General information |
| Actions and resources related to pollution | 3.3 Environmental performance |
| Scope 3 | |
| Reduce use of non-biobased primary (virgin) material | |
| Targets related to pollution | 3.3 Environmental performance |
| Scope 3 | |
| Reduce use of non-biobased primary (virgin) material |
In the Sustainability Strategy BAM Group focuses on the reduction of non-biobased virgin materials. Specifically, the focus is on reducing the consumption of primary materials such as concrete, steel, and asphalt, known for their substantial environmental impact, including pollution. These materials contribute to the release of CO 2 and air pollutants like sulphur oxides, nitrogen oxides, and carbon monoxide. BAM aims to minimise the reliance on primary non-biobased materials by substituting them with bio-based or secondary (reused and recycled) materials. For instance, the strategy involves replacing steel and concrete with sustainably sourced timber whenever possible. Additionally, BAM is actively working to enhance awareness of purchased products, such as requesting suppliers to specify the type of concrete on invoices.
Nitrogen emissions remain an important concern in the construction sector in the Netherlands. The government does not yet have a clear policy on this matter. Awaiting final policy and in order to continue building, a separate calculation must be made for each construction project of the nitrogen emissions released during construction. Until now, BAM projects were hardly affected; BAM closely monitors developments in this area.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
96
The following information is incorporated by reference to other parts of the Executive board report:
| Description | Chapter (Sub)chapter name |
|---|---|
| Policies related to resource use and circular economy | 6.2 General information |
| Actions and resources related to resource use and circular economy | 3.3 Environmental performance |
| Circularity | |
| Targets related to resource use and circular economy | 3.3 Environmental performance |
| Circularity |
BAM Group contributes to the circular economy by designing buildings and infrastructure in line with circular economy principles and maximising the extent to which waste processing is recirculated in practice after first use.# Sustainability Statements
To design according to circular principles, BAM developed a Circularity Assessment and Material Passports. The Circularity Assessment can support decision-making about which circular design principles to implement in the design phase of a project. In the Material Passport the materials used in the end product are documented, enhancing repairability, disassembly, and planning for re-use and recycling at the end of the product lifecycle. Refer to chapter 3.3 for more information on material passports and circularity assessment.
Critical raw materials for Royal BAM are ready-mix concrete, timber, asphalt and steel. BAM reports the amount of materials used and the recycled content of various materials used in the Netherlands. Raw materials which are consumed in large quantities and which have a significant impact on natural resources, have been selected. BAM reports on concrete, timber, asphalt and steel. Raw material consumption in the Netherlands was determined using supplier reports. This data was extrapolated to cover all suppliers. The results are verified against BAM’s procurement database, and with BAM’s internal and external experts. The recycled content was determined based on information provided by suppliers.
From 2024 onwards, BAM intends to define and report impact metrics related to biodiversity. During the initial reporting years, the data is anticipated to be derived based on estimations and calculations.
This topic emerged as a material matter for the first time during the 2023 Double Materiality Assessment. Implementation of the reporting processes is still ongoing. Ecosystem services are these services provided by ecosystems that lead to benefits received by people in the form of security, goods and materials, health and wellbeing. Examples include, food and timber provision, climate regulation (carbon storage and sequestration, urban cooling), water purification and flow regulation, flood protection, recreation, tourism, and physical and mental health. This definition is based on the work of IEMA Biodiversity and Natural Capital (BaNC) Network. During 2023 BAM developed a Biodiversity Assessment that will be used on a selection of projects from the start of 2024. The assessment includes the matter Ecosystem services. BAM intends to report externally on this matter starting from the reporting year 2024, in alignment with the CSRD, complying to the CSRD disclosure requirements on this topic.
Based on the outcomes of the Double Materiality Assessment, BAM discloses information on the following matter(s) in these sustainability statements:
* Circular design
* Depletion of raw materials
* Waste reduction
* Waste reuse and recycling
Material consumption in the Netherlands
| Consumption | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|
| Ready-mix concrete (in m³) | 100,000 | 183,000 | 282,500 | 231,500 | 203,000 |
| Timber (in m³) | 16,250 | 16,750 | 18,000 | 21,000 | 34,500 |
| Asphalt (in t) | 610,000 | 750,000 | 775,000 | 1,400,000 | 1,100,000 |
| Steel (in t) | 62,000 | 72,000 | 84,000 | 77,000 | 76,000 |
| Recycled content | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|
| Ready-mix concrete (in %) | 4 | 7 | 7 | 5 | 10 |
| Timber (in %) | 0 | 0 | 0 | 0 | 0 |
| Asphalt (in %) | 43 | 45 | 45 | 39 | 42 |
| Steel (in %) | 70 | 70 | 68 | 70 | 70 |
Timber plays a crucial role in minimising the use of non-biobased materials. BAM has committed to using only certified sustainable timber for its projects, as part of its agreement with FSC Netherlands. BAM achieved a certified sustainable timber use of 95 per cent for its projects in division Netherlands and 99 per cent in United Kingdom. The drop in percentage for division Netherlands compared to 2022 (99 per cent) is caused by a single purchase unintentionally done with a supplier that is not FSC-certified. This deviation from the BAM Sustainability Policy was further investigated and BAM concluded that although the chain of custody was formally broken, the timber in question was sourced sustainably by the supplier. Hence, the risk of actual usage of non-certified timber on the project is low. The data coverage is 93 per cent, as timber use in Ireland is not included. Market conditions continue to make it very challenging to procure sustainable certified timber in Ireland.
Certified sustainable timber use
| 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| Organisational coverage | 93 | 89 | 87 | 81 | 80 |
| Sustainable timber | 96 | 99 | 99 | 99 | 99 |
The reporting scope of waste includes all waste leaving BAM’s sites and offices. Reported waste is mainly based on waste tickets and data provided by suppliers. Reported waste is either measured, calculated or estimated using methods and input data based on BAM’s experience in comparable works. Excavation waste and demolition waste are especially difficult to measure and are more often calculated or estimated. Construction and office waste consists of temporary and permanent construction and other materials and packaging brought on to sites which are to be discarded and subsequently leave offices, construction sites and/or BAM sites such as depots or premises. Waste is retrieved and processed by third-party waste processors. BAM relies on these processors to adhere to (local) legislations stating that the waste needs to be disposed of in a responsible way.
Construction and office waste
| C&O waste | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|
| C&O waste Intensity (in tonnes per € million revenue) | 8.7 | 10.4 | 11.6 | 14.6 | 17.7 |
| C&O waste | 54.6 | 68.8 | 85.0 | 99.7 | 127.5 |
| Destination | |||||
| Recycling / re-use | 45.4 | 58.4 | 65.4 | 76.2 | 95.8 |
| Incinteration with energy recovery | 4.5 | 5.8 | 11.4 | 8.5 | 14.0 |
| Landfill and incineration without energy recovery | 4.7 | 4.6 | 8.2 | 15.0 | 17.7 |
| Source | |||||
| Excavation waste | 747.9 | 1,470.3 | 2,146.4 | 2,020.2 | 2,664.9 |
| Demolition waste | 105.8 | 414.6 | 773.1 | 784.1 | 526.1 |
| Construction waste | 51.3 | 65.3 | 80.3 | 94.9 | 122.6 |
| Office waste | 3.3 | 3.5 | 4.7 | 4.8 | 4.9 |
Based on the outcomes of the Double Materiality Assessment, BAM discloses information on the following matters in these sustainability statements:
* Diversity (own employees)
* Return on inclusion
* Training and skills development (own employees)
* Occupational health and safety (own operations)
* Work-related ill health (own employees)
The following information is incorporated by reference to other parts of the Executive Board report:
| Chapter | (Sub)chapter name | |
|---|---|---|
| Policies related to own workforce | 6.2 | General information |
| Policies | ||
| Processes for engaging with own workforce and workers’ representatives about impacts | 3.2 | Social performance |
| Health and well-being | ||
| Processes to remediate negative impacts and channels for own workforce to raise concerns | 6.5 | Governance information |
| Fostering a speak up culture | ||
| Taking action | ||
| Targets | 3.2 | Social performance |
| Safety, Leadership culture. Female representation, Return on inclusion, Social value, Health and well-being | ||
| Incidents, complaints and severe human rights impacts | 3.2 | Social performance |
| Human rights | ||
| Return on inclusion | 3.2 | Social performance |
| Return on inclusion | ||
| Collective bargaining coverage and social dialogue |
BAM recognises the importance of extending its strategy to its workforce and knows that data optimisation is required to do so effectively. To that end, BAM uses a single cross-divisional core HR system that supports most HR processes and reports using standardised data. In addition, BAM has implemented a reporting solution that offers internationally used standard metrics and allows multiple data sources to be integrated for strategic HR reporting and people analytics. Concerning the information provided below, percentages are calculated based on headcount, and the absolute numbers given represent headcount unless explicitly stated otherwise.
Percentage of employees covered by collective employment agreements
| Covered | 59% |
| Not covered* | 41% |
* Conditions of employees not covered by collective employment agreements are generally based on conditions from these collective employment agreements and/or company-specific.
Characteristics of the undertaking’s employees
The total number of employees in scope for the overviews of 2023 is 13,897 (contingent workforce and students excluded) as per 31 December 2023. The geographic distribution of employees is included in table 46.
Headcount
| Netherlands | 6,834 |
| United Kingdom | 6,049 |
| Ireland | 694 |
| Belgium | 196 |
| Other | 124 |
| Total | 13,897 |
The distribution of employee by function reflects BAM’s operations and services, with Build as the largest category. Build, Maintain and Design together comprise the majority of the Company’s workforce (76 per cent), followed by the supporting capabilities of Management and support and Acquire (22 per cent).
Distribution of employees
| Headcount | Percentage | |
|---|---|---|
| Acquire | 457 | 3% |
| Build | 7,383 | 53% |
| Design | 683 | 5% |
| Maintain | 2,437 | 18% |
| Management and support | 2,650 | 19% |
| Other | 287 | 2% |
| Total | 13,897 | 100% |
The Company’s workforce mirrors the demographic trend of an aging population.# Workforce ageing is most apparent in Maintain (where 45 per cent of staff are aged over 50), Build (where 38 per cent are aged over 50) and Support and management (where 37 per cent are aged over 50). These three categories together form more than 90 per cent of the workforce. Other employee categories show a lower percentage of employees over 50 (closer to 30 per cent). Overall, 14 per cent of BAM’s workforce are under 30 years of age.
| Ageing workforce (in %) | < 30 | 30-50 | 50+ | Total |
|---|---|---|---|---|
| Acquire | 8 | 61 | 31 | 100 |
| Build | 16 | 46 | 38 | 100 |
| Design | 12 | 59 | 29 | 100 |
| Management and support | 12 | 51 | 37 | 100 |
| Maintain | 12 | 43 | 45 | 100 |
| Other | 17 | 59 | 24 | 100 |
| Total | 14 | 48 | 38 | 100 |
The most common types of non-employees in BAM’s own workforce are subcontractors and self-employed people. These non-employees may be involved in work activities similar to BAM employees or may be recruited as specialists. BAM works on reporting FTE for non-employees.
In 2023, economic shifts and labour trends continued to influence both business landscapes and candidate markets. In the recruitment process, BAM primarily focused on sharpening the Employee Value Proposition (EVP) and Employer Brand (EB). Additionally, investments were made in promoting gender balance and fostering skill and competence development among the Company’s leaders. An integrated EVP and EB allows BAM to deliver on its goals, and especially improves engagement of the Company’s people: it supports BAM in the mission to become the employer of choice. BAM created a compelling employee value proposition in 2023, which the Company will communicate internally and externally in 2024. BAM’s EVP captures BAM’s positively differentiating aspects, while employee data also underpins why working at BAM is of value. BAM incorporated and aligned the BAM sustainability strategy with the EB strategy, which puts sustainability at the forefront of our minds in everything we do and how we do it. This makes BAM take responsibility for reducing its carbon footprint, preserving the natural environment, and creating a balanced and healthy workplace. Talent attraction in 2023 intensified under highly competitive market conditions. In 2023, BAM filled 2,009 positions, across the organisation. The number of new recruits decreased by 91 compared to 2022 (2,100). The majority of these new recruits were hired to fill positions in Build, Maintain and Management and support. In general, 29 per cent of new recruits were female, up from 30 per cent in 2022.
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO
The representation of women on the Supervisory Board stands at 33 percent, whereas the Executive Committee has only 20 percent female members. Of the people who report directly to the Executive Committee, 29 per cent are women. In both the Board and the Executive Committee, the average age is slightly higher than the Company average.
| Representation in management (in %) | Female | Non-female | < 30 | 30-50 | 50+ |
|---|---|---|---|---|---|
| Supervisory Board | 33 | 67 | 0 | 0 | 100 |
| Executive Committee | 20 | 80 | 0 | 40 | 60 |
| Direct Reports to Executive Committee* | 29 | 71 | 0 | 48 | 52 |
| Managers | 17 | 83 | 2 | 56 | 42 |
*Excluding support roles
| Part-time Female | Part-time Non-female | Parttime Total | Full-time Female | Full-time Non-female | Fulltime Total | Total | |
|---|---|---|---|---|---|---|---|
| Netherlands | 4 | 4 | 9 | 4 | 37 | 41 | 49 |
| United Kingdom | 5 | 2 | 7 | 7 | 30 | 37 | 44 |
| Ireland | 0 | 0 | 0 | 1 | 4 | 5 | 5 |
| Belgium | 0 | 0 | 0 | 0 | 1 | 1 | 1 |
| Other | 0 | 0 | 0 | 0 | 1 | 1 | 1 |
| Total | 9 | 6 | 16 | 12 | 72 | 84 | 100 |
Please note: working part-time is defined as working less than 1 FTE. Any row where the percentages seem not to add up to 100% is due to rounding of numbers.
In total, 32 per cent of new recruits were hired in the Netherlands, and 65 per cent in the United Kingdom and Ireland. At year-end 2023, BAM had 718 open vacancies: 422 in Netherlands and 285 in United Kingdom and Ireland. The majority of open vacancies are in the same fields as those for which new recruits were appointed. The key recruitment focus for BAM is to find professionals who can thrive on the journey towards greater sustainability, digitisation and industrialisation. These include people with profiles such as sustainability consultants, programme managers and digital specialists, who can be deployed across the organisation and thrive on an environment of collaboration and change.
BAM recognises the importance of gender diversity. In 2023, its female representation grew to 21 per cent. In the Netherlands and ‘other’ regions, BAM had a somewhat lower female representation, whilst United Kingdom had a relatively high female representation of 26 per cent.
| Distribution of employees (in %) | Female | Non-female | Total |
|---|---|---|---|
| Netherlands | 16 | 84 | 100 |
| United Kingdom | 26 | 74 | 100 |
| Ireland | 24 | 76 | 100 |
| Belgium | 24 | 76 | 100 |
| Other | 19 | 81 | 100 |
| Total | 21 | 79 | 100 |
Gender categories were chosen as female and non-female, in line with BAM’s ambitions for female representation in the workforce and to avoid the risk of singling out employees who are non-binary or do not have their gender recorded. Additionally, BAM notes that there are still differences in representation between female and non-female employees. Most notably, women are still a marked minority in the Build employee category (9 per cent), and only in Support and management do women form 50 per cent of the workforce. Furthermore, whereas most employees have full-time contracts at BAM regardless of gender, women more commonly hold part-time contracts.
Appendices Other information Financial statements Sustainability statements Supervisory Board Risk management and governance Business performance Value creation Message from the CEO
| Netherlands | United Kingdom | Ireland | Belgium | Other* | Total | |
|---|---|---|---|---|---|---|
| Permanent | 94 | 94 | 95 | 100 | 85 | 94 |
| Female | 15 | 25 | 22 | 24 | 19 | 20 |
| Non-female | 79 | 69 | 72 | 76 | 66 | 74 |
| Fixed-term | 4 | 1 | 4 | 0 | 13 | 3 |
| Female | 1 | 1 | 1 | 0 | 1 | 1 |
| Non-female | 3 | 1 | 2 | 0 | 12 | 2 |
| Non-guaranteed hours | 0 | 2 | 0 | 0 | 0 | 1 |
| Female | 0 | 1 | 0 | 0 | 0 | 0 |
| Non-female | 0 | 1 | 0 | 0 | 0 | 1 |
| Other | 2 | 3 | 2 | 0 | 2 | 2 |
| Female | 0 | 1 | 0 | 0 | 0 | 0 |
| Non-female | 1 | 3 | 1 | 0 | 2 | 2 |
| Totals | 100 | 100 | 100 | 100 | 100 | 100 |
Any column where the percentages seem not to add up to 100% is due to rounding of numbers. For financial information regarding personnel expenses, refer to Note 7 to the consolidated financial statements in chapter 7.
BAM is committed to providing employees with learning opportunities to improve employability of people working at BAM. Throughout 2023, BAM refined its Performance & Development (P&D) processes and professionalised its learning opportunities. The goal was to empower its employees to attain continuous professional growth throughout their careers. BAM provides learning and development opportunities to its people via live and virtual learning experiences. These opportunities enable employees to execute their roles with excellence, accelerate their learning curves, and develop great careers through continuous learning. In 2023, the learning platform Study Tube was developed in division Netherlands. Mainly through targeted platforms like Study Tube, employees can focus on timely and topical development areas including leadership behaviour, management excellence, functional capabilities, diversity and sustainability. BAM values transparency around the performance of its workforce. A total of 78 per cent of staff members had undergone a full performance review over 2023 per year-end, the rest will be completed in 2024.
All employees and non-employees in BAM’s own workforce are covered by the Company’s safety system. The health and well-being system only covers BAM employees as the employers of non-employees are responsible to have these processes in place for their employees. Safety performance at BAM is measured using the incident frequency (IF) indicator. The IF indicator denotes the number of work-related injuries resulting in lost time (absence from work ≥ 1 day) per million hours worked, independent of the severity of the injury. Reportable injuries are based on actual occurrences and are never extrapolated or estimated. Despite all measures and an open safety culture, there is an inherent risk of incomplete accident reporting. BAM is partially dependent on information provided by subcontractors and the person involved in the accident. The worked hours used in the IF calculation are measured, calculated or estimated. Division United Kingdom and Ireland collects the hours of non-BAM employees in three ways: (1) data collected from pass used to enter and exit construction site, (2) hours indicated by the subcontractor, (3) headcount by e.g. project lead on project site. Where necessary, the assumption is made that a workday is 8 or 9 exposure hours. In division Netherlands hired individuals write their worked hours in BAM’s systems. Some of the hours can be calculated based on spend, where a set fee is paid for e.g. machine with operator. Hours of other non-BAM employees working for division Netherlands are determined based on the amount that is transfered to the ‘G-rekening’ per estimated hour worked. Worked hours relate to the calendar year 2023, with the exception that a part of the business uses the timeframe from 25 December 2022 until 24 December 2023. Work-related hazards and hazardous situations are reported via the incident reporting processes in the business, including high-potential near-misses and dangerous occurrences. Thorough accident investigation is important as a legal requirement and to identify the immediate and underlying causes of accidents and can provide information that may assist in preventing recurrences.# Annual Report 2023 Royal BAM Group nv
The overall IF indicator comprises two categories:
* IF BAM: Incident frequency for BAM employees on BAM sites;
* IF Total: Incident frequency including all people working on sites managed by BAM (BAM employees, self-employed people and subcontractors’ employees and third parties such as members of the public).
| Incident frequency (x 1 million worked hours) | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|
| IF BAM | 3.4 | 3.7 | 4.5 | 5.3 | 4.8 |
| IF Total | 2.6 | -* | -* | -* | -* |
* BAM reports IF Total figures externally for the first time in 2023. BAM will report this information going forward, comparative information has not been part of the reporting scope and as such has not been derived from internal records.
Health and safety legislation and regulation continues to increase in many countries, where the Group operates. Raising the standard of health and safety performance is the main thrust behind these legal requirements. The Group seeks to secure the highest standards of health and safety, irrespective of the standards imposed by any legal framework. It was therefore decided that all subsidiaries of the Group should comply with the ISO 45001:2018 standard for occupational health and safety management systems. All employees whose safety BAM is responsible for (employees, subcontractors, and hired individuals) are covered by this system. BAM’s code of conduct calls for workers to never put health and safety aside to get the job done and to stop an activity that the worker believes to be unsafe. Workers can report environmental, health, and safety issues to the line manager, or compliance officer, or via the speak-up process. Workers are protected against reprisals because reports can be made to the compliance officer outside the project team or anonymously (if desired) via the speak-up process. Following the Code of Conduct, retaliation – whether direct or indirect – against employees who raise a concern may result in disciplinary action up to and including dismissal.
Working in the construction industry can expose workers to a variety of hazards that can cause long-term health effects. BAM characterizes ill-health as mental and physical health issues that do not stem from an acute event, such as a work-related accident leading to injury. These health complaints typically manifest after a prolonged exposure to an agent or emerge over an extended period, as seen in diseases that may surface years after exposure to toxic chemicals. This matter emerged for the first time as a material matter through BAM’s materiality analysis in 2023. Information related to metrics and targets is currently still unavailable. This topic is managed by the divisions and by external parties to guarantee confidentiality of personal information. Projects are ongoing to improve availability of statistical information. Present challenges in the reporting involve distinguishing between work-related injuries and ill-health, as well as differentiating between work-related and non-work-related ill health.
For details regarding BAM’s impacts, actions, targets, and metrics concerning this entity specific matter, please refer to chapter 3.2 Social performance, specifically the subchapter on Social Value.
Sassevaart joint venture (including BAM Infra Nederland) is delivering Nieuwe Sluis (new lock) in Terneuzen for client VNSC (Vlaams-Nederlandse Scheldecommissie).
95 per cent at year-end 2023. BAM’s site employees without access to online learning platforms, are trained through so-called toolbox meetings. Additionally, Compliance Officers provide target group specific training sessions to educate on specific compliance themes.
In 2023, the number of cases reported was in line with previous years. The reported suspicions of misconduct have been assessed and, where needed, sanctions have been taken, up to and including dismissal. Reported cases dealt with issues such as inappropriate use of company assets, safe working environment and privacy breaches of which a limited number needed to be reported to the external local privacy authorities. There have not been any fines, penalties or compensation for damages.
Fostering a speak up culture, in which employees feel empowered to talk about any issue without fear of negative consequences, is essential for BAM. The revised Speak Up procedure, which is also summarised in the Code of Conduct, encourages the reporting of possible breaches and offers protection for those who speak up. Furthermore, the revised procedure also includes the new requirements of the (EU) Whistleblower Directive. The quarterly employee pulse survey showed that the majority of employees feels free to express concerns without fear of negative consequences. Work to promote awareness of the Speak Up option is a key theme in the compliance program. Those who wish to report a concern or incident can report directly to a line manager, confidential advisor or compliance officer. People wishing to remain anonymous can use the Speak Up Line, which is operated by a third party and open to employees and external stakeholders alike 24/7. Cases that are identified as higher risk are reported to the Ethics and Compliance Committee.
BAM is involved in many stages of the construction value chain, from development, engineering and construction to maintenance and operation. Vendors are essential in all this, as their knowledge, people and other resources provide more than 75 per cent of BAM’s revenue while bringing added value to clients. Large vendor categories include concrete works, steel construction, mechanical and electrical engineering, wood (constructions) and temporary labour. These are typically sourced from preferred vendors close to construction sites. Vendors are subject to BAM’s general purchasing terms and conditions and BAM’s Vendor Code of Conduct (renewed in 2023), which cover commitments to safety, human rights, sanctions and trade restrictions and the environment. The two divisional procurement departments secure continuous alignment on selected categories, systems, reporting and knowledge exchange. In 2023 the divisions improved their vendor onboarding processes and are further enhancing safety and sustainability in their vendor onboarding and selection processes. Sustainable sourcing and safety in the supply chain remain key topics in the coming years to contribute to the BAM strategy.
Based on the outcomes of the Double Materiality Assessment, BAM discloses information on the following matters in these sustainability statements:
* Corporate culture
* Prevention and detection of corruption and bribery
* Protection of data and respecting privacy
The following information is incorporated by reference to other parts of the Executive board report:
| Description | Chapter (Sub)chapter name |
|---|---|
| Corporate culture | 3.2 Social performance |
| Leadership culture | |
| Business conduct policies and corporate culture |
The BAM Code of Conduct describes the expected behaviours and it deals with the varying subjects such as the BAM values, safety, human rights, preventing bribery & corruption, protection of data and respecting privacy. The BAM Code of Conduct subjects are part of the risk management process (including a compliance risk assessment), training and awareness, monitoring and reporting. In line with internal and external developments, in 2023 BAM revised its Code of Conduct and underlying policies that define how to remain true to the BAM values and to do things right. The most significant change was the more explicit alignment in the Code of Conduct with the BAM values, the new sustainability strategy, social & psychological safety, reliable business partners (human rights) and export control (sanctions). New employees must sign a statement in which they acknowledge to comply with this code as part of their employment contract.
BAM believes that communication and training are fundamental to making and keeping the Code of Conduct alive and to encourage open conversations. BAM adopted a targeted approach for the different working groups to achieve optimum understanding and adaptation. A new interactive e-learning is developed to train employees on the code. The training, available in country-specific languages (e.g. Dutch and English), is mandatory for BAM employees. Progress is closely monitored and reported to management. The objective is to reach around 95 per cent completeness on an ongoing basis, taking into account fluctuations due to new starters. The status was between 94 and 6.5.
Undetected bribery and corruption can cause serious damage to society, including damaging public trust and causing injustice through advantaging some at the expense of others. Compliance risk assessments are conducted as part of BAM’s risk management process.# Overarching, BAM obtains its main turnover in countries with a low or very low risk of corruption based on the Corruption Perception Index (CPI) from Transparency International. This index focuses on the strict application of the United Nations Convention Against Corruption (UNCAC). Furthermore, there are quarterly risk assessments on compliance risks developments and the assessment of its measures to ensure a match with the very low risk appetite for compliance risks. The Ethics and Compliance Committee supports the Executive Committee and the divisions with the compliance programme, actual compliance matters and remedial actions. It ensures consistency across the Group. Reported suspicions of misconduct are discussed on a quarterly basis with the Executive Committee and every six months with the Audit Committee of the Supervisory Board. On a yearly basis, the effectiveness of the management approach is assessed and improvement activities are captured in the operating plan of the compliance function. Furthermore, in 2023 BAM strengthened the compliance process and monitoring by initiating Divisional Ethics and Compliance Committees in addition to the Group Ethics and Compliance Committee.
Implementing robust data protection measures safeguards the personal data of employees and clients. Protection of data and respecting privacy is a core element of the BAM Code of Conduct and is part of underlying, specific policies on data privacy, information and cyber security. BAM has dedicated Privacy, Information Security and Cyber Security functions who collaboratively work together with management to implement ‘privacy and security by design’ within the organization, at selected projects and in contracts with new third parties. BAM has relevant certifications in place, such as ISO 27001 Information Security. Furthermore, there is a coordinated training and awareness program to keep management and employees up-to-date on new developments and required behaviour. In addition, there are specified privacy, information security and cyber security controls included in the BAM Requirements Framework, which are being assessed on the effectiveness of its risk mitigation. A limited number of privacy breaches needed to be reported to the external local privacy authorities. There have not been any fines, penalties or compensation for damages during the reporting period. In November 2023, the new Dawlish sea wall performed as designed when faced with some exceptionally high winds and stormy conditions. The project is an example of exceptional collaboration, drawing on expertise from Network Rail, BAM Nuttall and its suppliers.
The EU taxonomy for sustainable activities, i.e. ‘green taxonomy’, is a classification system to clarify which economic activities are environmentally sustainable, in the context of the European Green Deal, a set of policy initiatives by the European Commission supporting the ambition of the EU to be climate-neutral by 2050. The EU taxonomy was adopted by the European Union with Regulation 2020/852, and requires BAM to assess and disclose the percentage of environmentally sustainable economic activities for the proportion of revenue, capital expenditures and operational expenditures. The EU taxonomy comprises six environmental objectives to identify sustainable economic activities: climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems.
An economic activity is defined as environmentally sustainable if it meets the technical screening criteria:
* Substantial contribution criteria: the activity contributes substantially to at least one of the six environmental objectives;
* Do no significant harm (DNSH) criteria: the activity does no significant harm to any of the other environmental objectives;
* Minimum safeguards criteria: the activity is carried out in compliance with minimum safeguards.
In 2022 BAM disclosed what portion of its revenue, its capital expenditure, and operating expenditure was eligible and aligned under the EU taxonomy on the first two objectives (climate change mitigation and climate change adaptation). In 2023, the European Commission published the activity descriptions and technical screening criteria on the other four objectives, as a result of which 6.6
BAM is required to disclose eligibility on all six objectives. BAM decided to also report alignment with these four new objectives. The current EU taxonomy assessment is based on BAM’s interpretation of EU taxonomy guidelines available in 2023, including the latest published Environmental Delegated Act on 21 November 2023. BAM recognized that the regulation is continuously being developed, hence some elements are open to interpretation by the industry and other parties. This will potentially affect BAM’s interpretation of the criteria going forward, and therefore the outcomes of taxonomy eligibility and alignment.
BAM has completed an eligibility assessment of its activities and for the eligible activities BAM assessed alignment with the EU taxonomy. The assessment process has been executed under the supervision of the Executive Committee, and led by the Sustainability Reporting team with the support of the relevant functions, such as sustainability and finance. The assessment covers all countries in which the Group operates, and is executed using the following five steps (figure 31).
All the activities within the Group’s portfolio included in the Climate Delegated Act have been identified. Examples of eligible economic activities include ‘Infrastructure for rail transport’, ‘Construction of new buildings’ and ‘Renovation of existing buildings’.
The eligible activities identified in the previous phase are analysed to verify their compliance with the substantial contribution criteria of the EU Taxonomy. BAM mainly focused its assessment on activities that are considered sustainable in perspective of the Company’s sustainability strategy, such as rail projects, modular timber construction (Flow concept), energy neutral houses, nearly-zero-energy buildings and renovation of houses and buildings.
An analysis of existing environmental procedures was performed to verify compliance with the DNSH criteria for each activity or project, dependent on the granularity of the assessment. BAM has evaluated these DNSH criteria to establish a sufficient amount of detail for the procedures involved. Non-compliance with any of the DNSH criteria results in an ’eligible-not aligned’ outcome of the assessment.
BAM has verified that the eligible economic activities are carried out in compliance with minimum safeguards, including the Human Right due diligence process and risk assessment for the Group. The following topics have been identified:
* Human right policies;
* Human right impacts;
* Human right communication;
* Grievance mechanisms;
* Consumer interests;
* Bribery and corruption;
* Fair competition;
* Taxation.
BAM assessed the steps of the due diligence process described in the minimum safeguard requirements.
* Embed responsible business conduct into policies and management systems;
* Identify and assess adverse impacts in operations, supply chains and business relationships;
* Cease, prevent or mitigate adverse impacts;
* Track implementation and results;
* Communicate how the topics and related measures are addressed.
In concluding the outcome of the four previous steps, BAM has classified all the economic activities across its portfolio in the following three categories: eligible-aligned, eligible-not aligned, and not-eligible (figure 54).
The EU taxonomy requires companies to examine whether an economic activity is included in the Delegated Regulation 2020/852 by the European Commission (eligibility) and whether or not these eligible economic activities are environmentally sustainable (alignment). BAM classifies its activities in the following three categories: eligible-aligned, eligible-not aligned, and not-eligible.
BAM reconciled the denominators for revenue and capital expenditure, with the reported data in the consolidated financial statements or in the underlying records, to mitigate the risk of double counting. The basis for the calculation of the EU taxonomy eligibility and alignment metrics for respectively revenue, capital expenditure and operational expenditure are based on the following definitions:
Revenue
Revenues accounted for in the consolidated financial statement as further defined in note 5.
Capital expenditure (capex)
Additions to tangible and intangible assets accounted for in the Consolidated Financial Statements under IFRS during the financial year, considered before depreciation, amortisation and any re-measurements, excluding goodwill (included in note 13, 14 and 15 in the Financial Statements). The capex cover the costs accounted for in accordance with IAS 16 (Property, Plant and Equipment, IAS 38 (Intangible assets) and IFRS 16 (Leases). Any leases that do not result in the recognition of a right of use asset are not accounted for as capex.
Operational expenditure (opex)
Direct non-capitalised costs recorded in the Consolidated Income Statement under IFRS that relate to research and development, building renovation measures, short-term lease, maintenance and repair (excluding expenses reported as raw materials and consumables used), and any other direct expenditure relating to the day-to-day servicing of assets or Property, Plant and Equipment (PP&E). Because the definition under the Delegated Act is taken into account to calculated total opex, the numbers differ from the figures presented under the heading ‘operating expenses’ in the financial statements.
The calculation of the financial metrics associated with each economic activity was performed relying on a centralised process, where sustainability information is mapped to financial information in a single database. The financial information was collected from the Group’ reporting system. Sustainability information is obtained from the CRM system and enriched with management information on the environmental performance of the economic activities. Procedures and assumptions were documented, including details, examples and substantive evidence of the assessment, in order to complete a reliable estimate of the eligibility and alignment assessment. In order to arrive at the EU taxonomy KPIs, BAM mapped its financial performance to the relevant EU taxonomy eligible and aligned economic activities.
Revenue - eligibility methodology
The revenue KPI is calculated based on the proportion of net revenue generated from projects. Revenue of joint ventures (as reported in note 16 of the Financial statements) is not included in the scope of the assessment. The analysis with regard to taxonomy eligibility was carried out on data per project. The EU taxonomy provides descriptions of eligible economic activities that belong to one of the six objectives of the EU taxonomy. The activities of BAM that are eligible under the EU taxonomy are all eligible under activities within the objectives climate change mitigation and climate change adaptation.
Revenue - alignment methodology
For the purpose of the taxonomy-alignment assessment, BAM clustered projects based on the nature of the activity and similarity in operational and technical criteria to assess compliance with the technical screening criteria in the EU taxonomy. Based on the Company’s strategic focus, preliminary screening and internal identification of potential ‘green’ revenue with different stakeholder groups, BAM selected multiple clusters for which the alignment assessment was performed. Dependent on the granularity of the criteria, the assessments were performed on a country, business or project level. BAM’s alignment assessment includes the analysis of all substantial contribution criteria and Do No Significant Harm criteria for the relevant objectives. In the assessment BAM:
1. Describes the context and application in BAM’s context;
2. Substantiates and provides available documentation to support the claim on whether an activity meets the criteria, either on a project, or on an activity level, dependent on the nature of the criteria;
3. Reaches a conclusion on the alignment based on the available substantiation;
4. Evidences adherence to the minimum safeguards on a Group-wide level.
Capex - eligibility and alignment methodology
The eligibility scan for capital expenditures in 2023 (capex additions) was performed in line with the eligibility scan for revenue. For all expenditures, BAM determined if there was a specific allocation possible to an economic activity. Most capex, such as (electric) equipment or cars, tower cranes, surveying equipment or cabins is associated with multiple economic activities. Eligibility for these additions is determined based on the proportion of the capital expenditure associated with
taxonomy- eligible activities on a business level. Capital expenditure by joint ventures (as reported in note 16 of the Financial statements) is not included in the scope of the assessment. The capex alignment assessment is based on three possible alignment scenarios:
* Capex is related to assets or processes that are associated with taxonomy-aligned economic activities;
* Capex is part of a Capex-plan as defined in the regulation to expand taxonomy-eligible economic activities to become taxonomy-aligned (subject to conditions);
* Capex is related to the purchase of output of aligned activities.
The aligned capex related to the first scenario has been calculated based on a pro-rata basis related to the revenue of the aligned economic activities per business. For the assessment and disclosures in 2023, BAM has allocated all capex to the economic activities identified for the taxonomy revenue KPI. Hence, alignment criteria applied to capex are equal to the criteria applied for the related economic activity. For example, with respect to investments in electric cars, BAM has assessed the alignment of capex in the context of the revenue generating activity it was allocated to. BAM did not consider alignment in relation to the asset itself, for example in 6.5 Transport by motorbikes, passenger cars and light commercial vehicles. BAM has not included capex plans for the capex alignment assessment of 2023, because the plans for improvements do not constitute a plan to reach alignment fully.
Opex - eligibility and alignment methodology
The expense accounts identified to determine operational expenditures according to the EU taxonomy definition are the following:
* Repairs and maintenance;
* Short-term leases (< 12 months);
* R&D expenses.
For repairs and maintenance, eligibility is determined on the basis of the activity description in the general ledgers. For the annual rent expenses related to short-term leases and R&D expenses, eligibility is calculated on a pro-rata basis related to the revenue eligibility of the activities per business.
Aligned revenue in 2023 (21 per cent) has increased compared to last year (2022: 13 per cent). mainly caused by shifts in portfolio and improved availability of evidence. Key insights from the assessment of the technical screening criteria have been shared within the business to further enhance BAM’s knowledge on building sustainably.
| € 6,270m | € 187m | € 71m | |
|---|---|---|---|
| Revenue | 14% | 65% | 21% |
| Operational expenditure | 23% | 56% | 21% |
| Capital expenditure | 7% | 53% | 40% |
| Eligible-aligned | Eligible-not aligned | Not-eligible |
|---|---|---|
In 2023, 86 per cent of BAM’s revenue is eligible under the EU Taxonomy, compared to 90 per cent in 2022. Changes are mainly driven by differences is BAM’s project portfolio. Details per activity are disclosed in table 55. Project revenues reported as not-eligible include economic activities related to electrical installations (including fibre cables for homes), data networks, airport infrastructure, earthworks, drill and blast projects, and oil- and gas-related projects, including energy plants and gas grid transmission and distribution networks. In line with last year, BAM reported activities such as the ground investigation works for planned wind farms and the construction of cement bases of wind farms as not-eligible. Although these activities are instrumental for the general functioning of energy-generating installations, based on the supplementary note from the Platform on Sustainable Finance (October 2022), BAM concludes that these activities would not be assumed to be instrumental for the substantial contribution of the target activity.# Appendices
110Annual report 2023 Royal BAM Group nv
Where an activity has a direct link with the target activity but does not have an instrumental role in delivering a substantial positive environmental impact, then this should not be considered an enabling activity.
In general, changes in portfolio also result in a different spread across the activity categories. For example, due to the divestment in 2022, the absolute revenue that is eligible under activity CCA 6.15 Infrastructure enabling road transport and public transport is less than prior period. In 2023 BAM took further steps to improve the accuracy of data on EU Taxonomy eligibility, which caused shifts from eligible revenue under the activity CCM 7.1 Construction of new buildings to not-eligible revenue or to other type of activities in category 7. The more detailed eligibility analysis also resulted in shifts between eligible activity categories.
In its alignment assessment, BAM obtained substantial evidence for meeting the relevant criteria. In 2023, BAM has aligned revenue in the following activity categories:
The largest part of BAM’s aligned revenue in 2023 (21 per cent) is coming from the projects related to Infrastructure for rail transport (CCM 6.14) in the Netherlands and United Kingdom. This outcome is similar to last year. Percentages are influenced by the relative amount of rail revenue in BAM’s portfolio.
In CCM 7.1 and CCM 7.2 BAM concluded on more aligned projects with the EU taxonomy compared to last year, because of an increased number of projects that has been assessed in 2023. BAM collects evidence of the technical screening criteria in these categories on a project by project level. Based on the likelihood of meeting the criteria, projects are selected for assessment. BAM sees the increase in the number of assessed projects in 2023 as a positive development in order to report more sustainable revenue, although BAM cannot yet conclude that projects are structurally more sustainably designed and executed based on this improvement.
In additional to the residential projects, the assessment also resulted in aligned non-residential revenue in CCM 7.1 and CCM 7.2. The assessment results show that while many non-residential projects do meet the requirements of the contribution criteria and most of the DNSH criteria, most do not meet the requirements of the DNSH criteria for the sustainable use and protection of water and pollution prevention and control. The assessment clarifies which decisions need to be made to meet these technical screening criteria for these type of projects. This knowledge will be taken into account for future decision making and therefore will support the construction of more sustainable buildings.
The aligned revenue in CCM 7.4 and CCM 7.5 is mainly related to activities where BAM installs charging stations for electric vehicles and smart meters in buildings.
On other activities, for example BAM’s water infrastructure and road transport activities, the alignment criteria could not be fulfilled. Revenues in these areas are reported as eligible-not aligned. For example, across BAM’s portfolio, the scope of detailed climate risk assessments (DNSH for climate change adaptation) has resulted in eligible-not aligned activities. In order to fulfill the DNSH criteria on climate change adaptation, BAM concluded that climate adaptation scans are not yet used on every relevant activity or project. The climate risk assessment performed for obtaining an environmental permit is in BAM’s view not sufficient to reach a positive conclusion on the DNSH criteria for climate change adaptation. The internal climate adaptation scan that is used in the residential and non-residential business meet the DNSH criteria that are relevant for the risks on local level.
Going forward, BAM expects to perform more regular climate adaptation scans that are compliant with the DNSH criteria for climate adaptation, as this is one of the targets in the sustainability strategy (see chapter 2.2).
Furthermore, BAM concluded that the activities related to infrastructure enabling road transport are not (yet) eligible under the objective Circular economy, as was expected last year. These activities are eligible under activity (CCA 6.15) infrastructure enabling road and pubic transport, and hence reported as such. This activity is not aligned with the EU taxonomy under the climate change adaptation criteria.
Also, specifically for economic activity Infrastructure for water transport (CCA 6.16) the substantial contribution criteria, as well as the DNSH criteria related to the sustainable use and protection of water could not be aligned with the requirements. In order to make a substantial contribution to climate change adaptation, BAM is required to perform a climate risk and vulnerability assessment and to substantiate the implementation of adaptation solutions in the project that:
Currently BAM does not have the relevant insights and documentation for all relevant projects regarding the implementation of adaptation solutions.
To meet the requirements for the DNSH criteria for the sustainable use and protection of water, BAM needs to determine whether environmental degradation risks related to preserving water quality and avoiding water stress have been identified and addressed with the aim of achieving good water status and good ecological potential. Environmental degradation risks are identified and addressed by the (local) government before the start of a project, evidenced by the permit received by BAM. In the current situation, BAM sees limited possibilities to substantiate the criteria on an activity or on a project-by-project basis, and hence reports this as not aligned in its 2023 assessment.
The proportion of capital expenditure (capex) in 2023 that is eligible-aligned is 21 per cent (2022: 8 per cent), 56 per cent was eligible for, but not aligned with the EU taxonomy, and 23 per cent of BAM’s capex in 2023 was determined to be not eligible.
Investments in 2023 that classify as aligned under the EU taxonomy include investments in equipment regarding the construction of BAM’s aligned activities under climate change mitigation, mainly related to the rail infrastructure activities. Also the investments related to the residential houses and the sustainable timber housing are considered to be aligned under the EU taxonomy, on the basis that revenue related to these residences can be aligned.
As part of the BAM’s strategy Building a sustainable tomorrow, BAM invests in both divisions in electric equipment and vehicles. The total investment and right to use (lease) additions for 2023 in electric equipment and vehicles is €38 million. Under the EU Taxonomy, all capex related to (electric) equipment is allocated to BAM’s economic activities. Due to this methodology, only electric equipment allocated to our aligned activities is classified as EU Taxonomy aligned capex. In the Delegated Regulation 2020/852 there is no economic activity defined that describes the use of (low carbon) equipment in construction and infrastructure projects. With respect to investments in electric cars, BAM has not classified those as eligible under economic activity 6.5 Transport by motorbikes, passenger cars and light commercial vehicles. Consistent with the approach for electric equipment, BAM used a pro rata allocation to the economic activities, to determine eligibility and alignment for the year 2023.
The proportion of operational expenditure (opex) in 2023 that is eligible-aligned is 40 per cent (2022: 35 per cent), 53 per cent was eligible for, but not aligned with the EU taxonomy, and 7 per cent of BAM’s opex in 2023 was determined to be not eligible.
As the opex definition in the EU taxonomy is very narrow, this KPI is less significant in the light of BAM’s business model. The percentages are estimated based on a pro-rata basis related to the revenue of the aligned economic activities in order to determine eligibility and alignment for the operational expenditures in 2023. Operational expenditure in 2023 that classifies as eligible-aligned with the EU taxonomy, include for example the short term lease expenses, pro rata, of BAM’s rail business.
111Annual report 2023 Royal BAM Group nv# Royal BAM Group nv
| Objective + Taxonomy code | Absolute revenue 2023 | Proportion of revenue 2023 | Climate change mitigation | Climate change adaptation | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | Climate change mitigation | Climate change adaptation | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | Minimum safeguards | Absolute revenue 2022 | Proportion of revenue 2022 | Taxonomy revenue 2023 compared to 2022 | Taxonomy proportion of revenue compared to 2022 | Enabling activity | Transitional activity |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| €/mln. | % | €/mln. | % | €/mln. | % | E | T | ||||||||||||||
| A. EU taxonomy eligible activities | |||||||||||||||||||||
| A.1 - Environmentally sustainable activities (eligible-aligned) | |||||||||||||||||||||
| Infrastructure for rail transport | 6.14 | 923 | 14.7% | 819 | 12.4% | 104 | 2.3% | E | |||||||||||||
| Construction of new buildings | 7.1 | 284 | 4.5% | 23 | 0.3% | 261 | 4.2% | E | |||||||||||||
| Renovation of existing buildings | 7.2 | 65 | 1.0% | 36 | 0.5% | 29 | 0.5% | T | |||||||||||||
| Installation, maintenance and repair of charging stations for electric vehicles in buildings | 7.4 | 30 | 0.5% | 0 | 0.0% | 30 | 0.5% | E | |||||||||||||
| Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings | 7.5 | 7 | 0.1% | 0 | 0.0% | 7 | 0.1% | E | |||||||||||||
| Revenue of environmentally sustainable activities (eligible-aligned) (A.1) | 1,308 | 20.9% | 20.9% | 878 | 13.3% | 430 | 7.6% | ||||||||||||||
| Of which Enabling | 960 | 15.3% | 15.3% | 819 | 12.4% | 141 | 2.9% | E | |||||||||||||
| Of which Transitional | 65 | 1.0% | 1.0% | 36 | 0.5% | 29 | 0.5% | T | |||||||||||||
| A.2 - EU taxonomy-eligible but not environmentally sustainable activities (eligible-not aligned) | |||||||||||||||||||||
| Infrastructure enabling road transport and public transport | CCA 6.15 | 859 | 13.7% | 1,139 | 17.2% | (280) | (3.5%) | E | |||||||||||||
| Infrastructure for water transport | CCA 6.16 | 287 | 4.6% | 338 | 5.1% | (51) | (0.5%) | ||||||||||||||
| Transmission and distribution of electricity | CCM 4.9 | 188 | 3.0% | 251 | 3.8% | (63) | (0.8%) | E | |||||||||||||
| Construction and safe operation of new nuclear power plants, for the generation of electricity or heat, including for hydrogen production, using best-available technologies | CCM 4.27 | 32 | 0.5% | 0 | 0.0% | 32 | 0.5% | E | |||||||||||||
| Renewal of water collection, treatment and supply systems | CCM 5.2 | 12 | 0.2% | 0 | 0.0% | 12 | 0.2% | E | |||||||||||||
| Construction, extension and operation of waste water collection and treatment | CCM 5.3 | 12 | 0.2% | 51 | 0.8% | (39) | (0.6%) | ||||||||||||||
| Renewal of waste water collection and treatment | CCM 5.4 | 16 | 0.3% | 0 | 0.0% | 16 | 0.3% | ||||||||||||||
| Infrastructure for rail transport | CCM 6.14 | 64 | 1.0% | 25 | 0.4% | 39 | 0.6% | E | |||||||||||||
| Construction of new buildings | 7.1 | 1,873 | 29.9% | 3,020 | 45.6% | (1,147) | (15.8%) | T | |||||||||||||
| Renovation of existing buildings | 7.2 | 589 | 9.4% | 222 | 3.4% | 367 | 6.0% | T | |||||||||||||
| Installation, maintenance and repair of energy efficiency equipment | 7.3 | 98 | 1.6% | 0 | 0.0% | 98 | 1.6% | E | |||||||||||||
| Installation, maintenance and repair of renewable energy technologies | 7.6 | 24 | 0.4% | 0 | 0.0% | 24 | 0.4% | E | |||||||||||||
| Others (<10 mln)* | 20 | 0.3% | 41 | 0.6% | (21) | (0.3%) | E | ||||||||||||||
| Revenue of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 4,074 | 65.0% | 46.7% | 18.3% | 0.0% | 0.0% | 0.0% | 0.0% | 5,087 | 76.9% | (1,013) | (11.9%) | |||||||||
| Revenue of Taxonomy eligible activities (A.1+A.2) | 5,382 | 85.8% | 67.6% | 18.3% | 0.0% | 0.0% | 0.0% | 0.0% | 5,965 | 90.1% | (583) | (4.3%) | |||||||||
| B. Taxonomy-non-eligible activities | |||||||||||||||||||||
| Revenue of taxonomy not-eligible activities (B) | 888 | 14.2% | 653 | 9.9% | 235 | 4.3% | |||||||||||||||
| Total (A + B) | 6,270 | 100.0% | 6,618 | 100.0% | (348) | 0.0% | |||||||||||||||
| 55 | |||||||||||||||||||||
| Proportion of revenue associated with EU taxonomy-aligned economic activities – disclosure covering 2023 | |||||||||||||||||||||
| Do no significant harm toSubstantial contribution to | |||||||||||||||||||||
| *The category other contains the activities CCM 4.3, CCM 4.12, CCM 5.1, CCM 6.13 and CCM 6.16. On these activities is less then 10 mln euro revenue eligible. |
| Objective + Taxonomy code | Absolute capex 2023 | Proportion of capex 2023 | Climate change mitigation | Climate change adaptation | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | Climate change mitigation | Climate change adaptation | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | Minimum safeguards | Absolute capex 2022 | Proportion of capex 2022 | Taxonomy capex 2023 compared to 2022 | Taxonomy proportion of capex compared to 2022 | Enabling activity | Transitional activity |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| €/mln. | % | €/mln. | % | €/mln. | % | E | T | ||||||||||||||
| A. EU taxonomy eligible activities | |||||||||||||||||||||
| A.1 - Environmentally sustainable activities (eligible-aligned) | |||||||||||||||||||||
| Infrastructure for rail transport | CCM 6.14 | 25.2 | 13.5% | 8.1 | 5.9% | 17.1 | 7.6% | E | |||||||||||||
| Construction of new buildings | CCM 7.1 | 12.5 | 6.7% | 3.4 | 2.5% | 9.0 | 4.2% | E | |||||||||||||
| Renovation of existing buildings | CCM 7.2 | 1.0 | 0.5% | 0.1 | 0.1% | 0.8 | 0.4% | T | |||||||||||||
| Installation, maintenance and repair of charging stations for electric vehicles in buildings | CCM 7.4 | 0.2 | 0.1% | 0.0 | 0.0% | 0.2 | 0.1% | E | |||||||||||||
| Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings | CCM 7.5 | 0.1 | 0.0% | 0.0 | 0.0% | 0.1 | 0.0% | E | |||||||||||||
| Capex of environmentally sustainable activities (Taxonomy-aligned) (A.1) | 39.0 | 20.8% | 20.8% | 11.7 | 8.4% | 27.3 | 12.4% | ||||||||||||||
| Of which Enabling | 25.5 | 13.6% | 13.6% | 8.1 | 5.9% | 17.4 | 7.8% | E | |||||||||||||
| Of which Transitional | 1.0 | 0.5% | 0.5% | 0.1 | 0.1% | 0.8 | 0.4% | T | |||||||||||||
| A.2 - Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy aligned activities) | |||||||||||||||||||||
| Infrastructure enabling road transport and public transport | CCA 6.15 | 37.1 | 19.8% | 52.8 | 38.2% | (15.7) | (18.4%) | E | |||||||||||||
| Infrastructure for water transport | CCA 6.16 | 9.9 | 5.3% | 6.1 | 4.4% | 3.7 | 0.8% | ||||||||||||||
| Transmission and distribution of electricity | CCM 4.9 | 8.6 | 4.6% | 3.7 | 2.7% | 5.0 | 1.9% | E | |||||||||||||
| Infrastructure for rail transport | CCM 6.14 | 1.2 | 0.6% | 6.0 | 4.4% | (4.8) | (3.7%) | E | |||||||||||||
| Construction of new buildings | CCM 7.1 | 31.9 | 17.0% | 34.9 | 25.3% | (3.1) | (8.3%) | ||||||||||||||
| Renovation of existing buildings | CCM 7.2 | 7.9 | 4.2% | 3.0 | 2.2% | 4.9 | 2.0% | T | |||||||||||||
| Installation, maintenance and repair of energy efficiency equipment | CCM 7.3 | 5.9 | 3.1% | 0.0 | 0.0% | 5.9 | 3.1% | E | |||||||||||||
| Others (<10 mln)* | 3.5 | 1.9% | 1.4 | 1.0% | 2.1 | 0.9% | E | ||||||||||||||
| Capex of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 106.0 | 56.5% | 31.5% | 25.0% | 0.0% | 0.0% | 0.0% | 0.0% | 107.9 | 78.1% | (2.0) | (21.6%) | |||||||||
| Capex of Taxonomy eligible activities (A.1+A.2) | 144.9 | 77.3% | 52.3% | 25.0% | 0.0% | 0.0% | 0.0% | 0.0% | 119.6 | 86.5% | 25.3 | (9.2%) | |||||||||
| B. Taxonomy-non-eligible activities | |||||||||||||||||||||
| Revenue of taxonomy not-eligible activities (B) | 42.5 | 22.7% | 18.6 | 13.5% | 23.9 | 9.2% | |||||||||||||||
| Total (A + B) | 187.4 | 100.0% | 138.2 | 100.0% | 49.2 | 0.0% | |||||||||||||||
| Do no significant harm toSubstantial contribution to | |||||||||||||||||||||
| 56 | |||||||||||||||||||||
| Proportion of capex associated with EU taxonomy-aligned economic activities – disclosure covering 2023 | |||||||||||||||||||||
| *The category other contains the activities where less then 1 million euro capex is eligible. |
| Objective + Taxonomy code | Absolute opex 2023 | Proportion of opex 2023 | Climate change mitigation | Climate change adaptation | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | Climate change mitigation | Climate change adaptation | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | Minimum safeguards | Absolute opex 2022 | Proportion of opex 2022 | Taxonomy opex 2023 compared to 2022 | Taxonomy proportion of opex compared to 2022 | Enabling activity | Transitional activity |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| €/mln. | % | €/mln. | % | €/mln. | % | E | T | ||||||||||||||
| A. EU taxonomy eligible activities | |||||||||||||||||||||
| A.1 - Environmentally sustainable activities (Taxonomy-aligned) | |||||||||||||||||||||
| Infrastructure for rail transport | CCM 6.14 | 27.2 | 38.6% | 24.6 | 35.3% | 2.6 | 3.3% | E | |||||||||||||
| Construction of new buildings | CCM 7.1 | 0.8 | 1.2% | 0,0 | 0.0% | 0.8 | 1.2% | E | |||||||||||||
| Renovation of existing buildings | CCM 7.2 | 0.1 | 0.2% | 0,0 | 0.0% | 0.1 | 0.2% | T | |||||||||||||
| Opex of environmentally sustainable activities (Taxonomy-aligned) (A.1) | 28.1 | 39.9% | 39.9% | 24.6 | 35.3% | 3.5 | 4.6% | ||||||||||||||
| Of which Enabling | 27.2 | 38.6% | 38.6% | 24.6 | 35.3% | 2.6 | 3.3% | E | |||||||||||||
| Of which Transitional | 0.1 | 0.2% | 0.0% | 0.0 | 0.0% | 0.1 | 0.2% | T | |||||||||||||
| A.2 - Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy aligned activities) | |||||||||||||||||||||
| Infrastructure enabling road transport and public transport | CCA 6.15 | 13.8 | 19.5% | 21.2 | 30.4% | (7.4) | (10.9%) | E | |||||||||||||
| Infrastructure for water transport | CCA 6.16 | 7.7 | 10.9% | 2.1 | 3.1% | 5.6 | 7.9% | ||||||||||||||
| Transmission and distribution of electricity | CCM 4.9 | 2.5 | 3.6% | 4.2 | 6.1% | (1.7) | (2.5%) | E | |||||||||||||
| Construction and safe operation of new nuclear power plants, for the generation of electricity or heat, including for hydrogen production, using best-available technologies | CCM 4.27 | 1.2 | 1.7% | 0.0 | 0.0% | 1.2 | 1.7% | ||||||||||||||
| Infrastructure for rail transport | CCM 6.14 | 2.4 | 3.4% | 0.4 | 0.6% | 2.0 | 2.8% | E | |||||||||||||
| Construction of new buildings | CCM 7.1 | 8.3 | 11.8% | 7.6 | 10.8% | 0.8 | 1.0% | ||||||||||||||
| Others (<10 mln)* | 1.5 | 2.2% | 6.9 | 9.8% | (5.3) | (7.7%) | E | ||||||||||||||
| Opex of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 37.4 | 53.1% | 22.6% | 30.4% | 0.0% | 0.0% | 0.0% | 0.0% | 42.4 | 60.8% | (5.0) | (7.7%) | |||||||||
| Opex of Taxonomy eligible activities (A.1+A.2) | 65.6 | 92.9% | 62.5% | 30.4% | 0.0% | 0.0% | 0.0% | 0.0% | 67.0 | 96.0% | (1.4) | (3.1%) | |||||||||
| B. Taxonomy-non-eligible activities | |||||||||||||||||||||
| Opex of taxonomy-non-eligible activities (B) | 5.0 | 7.1% | 2.8 | 4.0% | 2.2 | 3.1% | |||||||||||||||
| Total (A + B) | 70.6 | 100.0% | 69.8 | 100.0% | 0.8 | 0.0% | |||||||||||||||
| 57 | |||||||||||||||||||||
| Proportion of opex associated with EU taxonomy-aligned economic activities – disclosure covering 2023 | |||||||||||||||||||||
| *The category other contains the activities where less then 1 million euro opex is eligible. |
| Notes | 2023 | 2022 |
|---|---|---|
| Revenue | 6,270,474 | 6,618,169 |
| Materials and third party services | (4,567,485) | (4,881,286) |
| Personnel expenses | 7 (1,153,823) | (1,193,218) |
| Depreciation and amortisation | (121,293) | (116,602) |
| Impairments | 9 (3,559) | (13,473) |
| Exchange rate differences | (12,700) | (4,505) |
| Other operating expenses | (277,594) | (315,131) |
| Other income | 8 5,881 | 62,482 |
| Share in result of associates and joint ventures | 16 29,911 | 58,479 |
| Share in impairments of associates and joint ventures | 9 917 | (1,502) |
| Operating result | 170,729 | 213,413 |
| Finance income | 10 23,262 | 8,848 |
| Finance expense | 10 (10,423) | (6,589) |
| Result before tax | 183,568 | 215,672 |
| Income tax | 11 (8,614) | (37,948) |
| Net result | 174,954 | 177,724 |
| Attributable to: | ||
| Shareholders of the Company | 174,991 | 179,644 |
| Non-controlling interests | (37) | (1,920) |
| Earnings per share (x €1) | ||
| Basic earnings per share | 12 0.65 | 0.66 |
| Diluted earnings per share | 12 0.64 | 0.65 |
| Notes | 2023 | 2022 |
|---|---|---|
| Net result | 174,954 | 177,724 |
| Items that may be reclassified to the income statement | ||
| Fair value movement of cash flow hedges | (366) | 557 |
| Tax on fair value of cash flow hedge | 95 | (161) |
| Cash flow hedge | (271) | 396 |
| Fair value movement of cash flow hedges in joint ventures (net) | 16 (7,865) | 34,210 |
| Exchange rate differences | 18,442 | (27,784) |
| Items that will not be reclassified to the income statement | ||
| Remeasurements of post-employment benefit obligations | (43,733) | (27,485) |
| Tax on remeasurements of post-employment benefit obligations | 7,965 | 8,687 |
| Remeasurements of post-employment benefit obligations | 24 (35,768) | (18,798) |
| Other comprehensive income | (25,462) | (11,976) |
| Total comprehensive income | 149,492 | 165,748 |
| Attributable to: | ||
| Shareholders of the Company | 149,531 | 167,668 |
| Non-controlling interests | (39) | (1,920) |
| Notes | 31 December 2023 | 31 December 2022 |
|---|---|---|
| Equity | ||
| Equity attributable to owners of the Company | 920,495 | 810,590 |
| Non-controlling interests | 324 | (2,106) |
| Group equity | 22 920,819 | 808,484 |
| Non-current liabilities | ||
| Borrowings | 23 54,513 | 40,661 |
| Lease liabilities | 14 160,902 | 118,871 |
| Employee benefits | 24 32,041 | 45,568 |
| Provisions | 25 82,217 | 94,420 |
| Deferred tax liabilities | 11 14,848 | 18,511 |
| 344,521 | 318,031 | |
| Current liabilities | ||
| Borrowings | 23 7,061 | 11,968 |
| Lease liabilities | 14 73,313 | 55,806 |
| Trade and other payables | 26 2,447,781 | 2,468,555 |
| Provisions | 25 114,677 | 145,708 |
| Income tax payable | 23,848 | 10,843 |
| 2,666,680 | 2,692,880 | |
| Liabilities classified as held for sale | 21 - | - |
| 2,666,680 | 2,692,880 | |
| Total equity and liabilities | 3,932,020 | 3,819,395 |
| Notes | 31 December 2023 | 31 December 2022 |
|---|---|---|
| Non-current assets | ||
| Property, plant and equipment | 13 236,411 | 199,545 |
| Right-of-use assets | 14 217,433 | 170,737 |
| Intangible assets | 15 327,854 | 325,516 |
| PPP receivables | 13,675 | 13,593 |
| Investments in associates and joint ventures | 16 333,652 | 326,968 |
| Other financial assets | 17 92,759 | 77,591 |
| Employee benefits | 24 51,894 | 72,513 |
| Deferred tax assets | 11 82,446 | 57,428 |
| 1,356,124 | 1,243,891 | |
| Current assets | ||
| Inventories | 18 463,076 | 482,025 |
| Trade and other receivables | 19 1,326,208 | 1,230,305 |
| Income tax receivable | 23,645 | 14,239 |
| Cash and cash equivalents | 20 757,333 | 841,246 |
| 2,570,262 | 2,567,815 | |
| Assets classified as held for sale | 21 5,634 | 7,689 |
| 2,575,896 | 2,575,504 | |
| Total assets | 3,932,020 | 3,819,395 |
| Share capital | Non-controlling interests | Translation reserve | Hedging reserve | Retained earnings | Total | |
|---|---|---|---|---|---|---|
| As at 1 January 2022 | 839,311 | (77,383) | (101) | (108,238) | 653,589 | (186) |
| Cash flow hedges | - | - | 396 | - | 396 | - |
| Cash flow hedges in joint ventures | 16 | - | - | 34,210 | - | 34,210 |
| Remeasurements of post-employment benefit obligations | 24 | - | - | - | (18,798) | (18,798) |
| Exchange rate differences | - | (27,784) | - | - | (27,784) | - |
| Other comprehensive income, net of tax | - | (27,784) | 34,606 | (18,798) | (11,976) | - |
| Net result | - | - | - | 179,644 | 179,644 | (1,920) |
| Total comprehensive income | - | (27,784) | 34,606 | 160,846 | 167,668 | (1,920) |
| Repurchase of ordinary shares | 22 | - | - | - | (14,326) | (14,326) |
| Share-based payments | 28 | - | - | - | 3,659 | 3,659 |
| - | - | - | (10,667) | (10,667) | - | |
| As at 31 December 2022 | 839,311 | (105,167) | 34,505 | 41,941 | 810,590 | (2,106) |
| Cash flow hedges | - | - | (271) | - | (271) | - |
| Cash flow hedges in joint ventures | 16 | - | - | (7,865) | - | (7,865) |
| Remeasurements of post-employment benefit obligations | 24 | - | - | - | (35,768) | (35,768) |
| Exchange rate differences | - | 18,444 | - | - | 18,444 | (2) |
| Other comprehensive income, net of tax | - | 18,444 | (8,136) | (35,768) | (25,460) | (2) |
| Net result | - | - | - | - | 174,991 | 174,991 |
| Total comprehensive income | - | 18,444 | (8,136) | 139,223 | 149,531 | (39) |
| Repurchase of ordinary shares | 22 | - | - | - | (19,835) | (19,835) |
| Dividend | 22 | - | - | - | (21,998) | (21,998) |
| Change in ownership | (2,650) | (2,650) | ||||
| Share-based payments | 28 | - | - | - | 4,857 | 4,857 |
| - | - | - | (39,626) | (39,626) | 2,469 | |
| As at 31 December 2023 | 839,311 | (86,723) | 26,369 | 141,538 | 920,495 | 324 |
| Notes | 2023 | 2022 |
|---|---|---|
| Net result | 174,954 | 177,724 |
| Adjustments for: | ||
| • Income tax | 11 8,614 | 37,948 |
| • Depreciation, amortisation and impairments | 124,852 | 130,075 |
| • Share in result of associates and joint ventures | 16 (29,911) | (58,479) |
| • Share in impairments of associates and joint ventures | 9 (917) | 1,502 |
| • Result on sale of property, plant and equipment and intangible fixed assets | 8 (1,531) | (10,144) |
| • Gain on sale of subsidiaries, joint ventures and associates | 8 (1,785) | (52,337) |
| • Share based payments | 28 4,857 | 3,658 |
| • Finance income | 10 (23,262) | (8,848) |
| • Finance expense | 10 10,423 | 6,588 |
| Net proceeds from PPP receivables | (388) | 1,376 |
| Interest received | 23,974 | 7,324 |
| Interest paid | (15,008) | (10,913) |
| Income tax paid | (22,299) | (15,182) |
| Dividends received from joint ventures and associates | 16 23,773 | 35,972 |
| Cash flow from operations | 276,346 | 246,264 |
| Changes in provisions and pensions | (71,178) | 24,094 |
| Decrease/(increase) in inventories | 20,269 | (51,365) |
| Decrease/(increase) in trade and other receivables | (97,004) | (141,380) |
| Increase/(decrease) in trade and other payables | (22,726) | (273,527) |
| Net cash flow from operating activities | 105,707 | (195,914) |
| Notes | 2023 | 2022 |
|---|---|---|
| Net cash flow from operating activities (continued) | 105,707 | (195,914) |
| Investments in property, plant and equipment | 13 (80,005) | (92,869) |
| Investments in intangible fixed assets | 15 (4,312) | (1,613) |
| Investments in non-current receivables and other financial assets | 16/17 (24,789) | (28,986) |
| Repayments of non-current receivables and other financial assets | 16/17 9,160 | 9,954 |
| Proceeds from sale of property, plant and equipment and intangible fixed assets | 8 6,483 | 16,083 |
| Net proceeds from sale of subsidiaries, joint ventures and associates | 8 2,017 | (65,604) |
| Net cash flow from investing activities | (91,446) | (163,035) |
| Proceeds from borrowings | 23 25,154 | 39,142 |
| Repayments of borrowings | 23 (15,770) | (50,599) |
| Repayments of principal portion of lease liabilities | 14 (76,062) | (67,437) |
| Payment of dividend | (21,998) | - |
| Repurchase of ordinary shares | (19,835) | (14,326) |
| Net cash flow from financing activities | (108,511) | (93,220) |
| Total cash flow | (94,250) | (452,169) |
| Cash and cash equivalents on 1 January | 20 841,246 | 1,284,709 |
| Change in cash and cash equivalents held for sale | 21 - | 42,355 |
| Exchange rate differences on cash and cash equivalents | 10,337 | (33,649) |
| Cash and cash equivalents on 31 December | 20 757,333 | 841,246 |
Royal BAM Group nv (‘the Company’ or ‘BAM’), its subsidiaries (together, ‘the Group’) and the Group’s participations in joint operations and investments in associates and joint ventures design, build and maintain sustainable buildings, homes, and infrastructure for public and private sector clients.# The Group is mainly active in the Netherlands, the United Kingdom, Ireland and Belgium. In earlier years, the Group also had operations in Germany and was involved in specialist construction and civil engineering projects in niche markets worldwide. The Company is a public limited company listed on Euronext Amsterdam and has its registered seat and head office in Bunnik, the Netherlands. The address is Runnenburg 9, 3981 AZ, Bunnik, the Netherlands. The Company is registered at the Chamber of Commerce under number 30058019. The Executive Board and the Supervisory Board authorised the financial statements for issue on 21 February 2024.
The material accounting policies applied in the preparation of these consolidated financial statements have been consistently applied, unless otherwise stated. In these financial statements 2023, the Group made changes to the presentation of the consolidated income statement to align with industry practice and to increase transparency. The main changes comprise the combining of two line items (‘raw materials and consumables used’ and ‘subcontracted work and other external charges’) into ‘ Materials and third party services’ and the separate presentation of ‘other income’. Other income is separately presented to increase transparency on other income items that affect the Group’s results. Previously, its main component (gain on sale of subsidiaries) was reported separately while gains on sale of PP&E of €10 million in 2022 was reported in other operating expenses. Also, the presentation of the statement of changes in equity has been updated following the new layout of the annual report. A breakdown of ‘reserves’ into ‘hedging reserve’ and ‘translation reserve’, previously included in the notes, is now incorporated in the primary statement. Lastly, the presentation of cash-flow from operations in the statement of cash flows has been updated. The Group no longer presents cash-flow from ordinary operations as the cash-flows from PPP receivables, earlier presented separately, is no longer significant. Also, the composition of cash flow from operations has been amended to align with industry practice. It is now the cash flow from operating activities minus cash flows from working capital and pensions and provisions.
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union and also comply with the financial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code. The financial statements have been prepared on a going concern basis and, unless otherwise stated, under the historical cost convention. The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expense. The areas involving a higher degree of judgments or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4.
The Group continuously takes steps to reduce footprint and create sustainable environments. The Group has a defined sustainability strategy that focuses amongst others on the themes of decarbonisation, circularity, climate adaptation and biodiversity. The Group is working towards the following targets:
* an 80% relative reduction (versus 2015) of scope 1 and 2 CO 2 intensity by 2026.
* a 50% relative reduction (versus 2019) of scope 3 CO 2 emissions in 2030.
Additionally, the Group targets a 75% reduction (versus 2015) of construction and office waste intensity by 2030 and defined new KPIs as part of its sustainability strategy that was launched beginning of 2023. On a long term basis, the Group’s ambition is to have a net positive impact on climate and resources by 2050. This can be achieved by supply chain collaboration, innovation and digital thinking through products and realising products through circular business models. The Group considered the impact of these (accelerated) targets to its financial statements. The CO 2 reduction targets are expected to be achieved by (for example) the use of 100% renewable energy in all of the Group’s offices, reduction of diesel use on project sites by using biofuels or establishing early grid-connections. Most of these initiatives require changes to the way of working while the overall impact to the Group’s cost level is not material. For those initiatives that result in higher costs, e.g. when diesel on project sites is replaced by biofuels, clients are generally compensating the extra costs. The Group also reduces CO 2 emissions by increasing the use of electrical equipment and by electrification of the car fleet. The financial impact is assessed as limited, as this is mostly achieved through the generic replacement plans. The Group’s operating activities are exposed to laws and regulations that are impacted by climate and environment related matters. During 2022, the Dutch Council of State concluded that governmental
Notes to the consolidated financial statements
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
122Annual report 2023 Royal BAM Group nv
processes to issue permits for the construction of buildings and infrastructure does not comply with European laws. The governmental processes do not appropriately take into consideration whether the emission of nitrogen of certain construction activities have an impact to the environment. The conclusion of the Council does not impact permits that have already been issued but it does require changes to governmental processes. This implies that future processes to obtain permits may take more time than initially expected and that requests may be denied when the emission of nitrogen does not comply with the respective requirements. The impact of the Council’s conclusion to the Group’s secured contracts has been limited. To the extent permits for the respective projects had not been issued, the nitrogen impact of secured contracts has been re-assessed and, in most instances, it is concluded that the project complies with the applicable requirements. For projects that did not comply with the requirements, the Group has been able to take corrective measures such as changing the construction method or using electrical equipment. At the same time, it is noted that tender activity for road projects that require permits is slowing down. Market research shows that circa 7% to 15% of projects planned by the government will not be able to commence given their nitrogen impact. The financial effect of climate-related matters has been reflected in the Group’s budgets for the next years, which for example are used in the Group’s impairment tests for goodwill and deferred tax assets and in determining the realisable value of land and building rights. The overall impact to the financial statements is limited.
During 2022 and 2023, the Group’s activities have been exposed to the effects of supply chain disruption and inflation. The significant increase in energy prices in 2022 have seriously impacted the price of steel and other materials that are key elements in the Group’s construction activities. Prices for these materials stabilised during 2023, but cost pressure continued, mainly as a result of increased cost of labour. This all resulted in increased project-related costs in both years. For the vast majority of the Group’s projects, the exposure of the project result to the effects of inflation is limited as the respective contracts include a price indexation reimbursement clause. Based on such clause, the Group is entitled to additional (variable) revenue to compensate for the effect of increased costs. The form and content of the price indexation reimbursement clause may vary per jurisdiction and contract, and in some situations is challenged by the Group’s clients, resulting in increased estimation uncertainty of the overall project result. The Group also has contracts that do not contain a price indexation reimbursement clause. For such contracts the Group generally mitigates its exposure to price fluctuations by securing or fixing purchase prices for materials. Due to supply chain issues and/or liquidity constraints driven by significantly increased purchase prices, there have been situations in which suppliers were unable to meet their commitments (in a timely manner), exposing the Group to the price risk. At each reporting date, the effects are specifically considered in estimates of the expected project result, as described in note 3.1. Overall, the Group’s project results have been negatively impacted by inflation and supply chain disruption. The Group continues to increase contractual awareness and periodically revisits project estimates to pay attention to the treatment of costs that are not contractually agreed and to the actions to address price changes in contracts. To bring down inflation, central banks have increased their interest rates in 2022 and 2023. The effect of increasing interest rates is mainly reflected in the Group’s financial income and expense. Considering the Group is in a net cash position, the impact over 2023 has been positive. Increasing interest rates also have an impact to the annual goodwill impairment test and valuation of defined benefit obligations. The effects of changes in interest rates as well as the impact of further changes to them are disclosed in note 15 and 24 respectively.
Several amendments and interpretations apply for the first time as of 1 January 2023.# Royal BAM Group nv Annual report 2023
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The cost of an acquisition is measured as the aggregate of the consideration transferred. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date; any gains or losses arising from such remeasurement are recognised in the income statement. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in the income statement. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.
Intercompany transactions, balances and unrealised gains and losses on transactions between group companies are eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies. Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.
When the Group ceases to have control in a business, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in the income statement. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that business are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to the profit or loss or to retained earnings.
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in ‘euro’ (€), which is the Group’s presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement within ‘exchange rate differences’.
The results and financial position of the group companies that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
* assets and liabilities for each balance sheet are translated at the closing rate at the date of that balance sheet;
* income and expenses for each income statement are translated at average exchange rates; and
* all resulting exchange rate differences are recognised separately in equity in ‘other comprehensive income’.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange rate differences arising from the translation of these items are recognised in ‘other comprehensive income’.
The following exchange rates of the euro against the pound sterling (£) have been used in the preparation of these financial statements:
* closing exchange rate: 0.869 (2022: 0.884)
* average exchange rate: 0.870 (2022: 0.853)
Derivatives are only used for economic hedging purposes and not as speculative investments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and if so, the nature of the item being hedged. The Group designates the derivatives as hedges of a particular risk associated with a recognised asset or liability, a highly probable forecast transaction or the foreign currency risk of the unrecognised Group’s commitment.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
* there is ‘an economic relationship’ between the hedged item and the hedging instrument;
* the effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship;
* the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than twelve months and as a current asset or liability when the remaining maturity of the hedged item is less than twelve months. The effective portion of changes in the fair value of cash flow hedges is recognised in other comprehensive income.# 2.6 Statement of cash flows
The statement of cash flows is prepared using the indirect method. Cash flows in foreign exchange currencies are converted using the average exchange rate. Exchange rate differences on the net cash position are separately presented in the statement of cash flows. Payments in connection with interest and income tax are included in the cash flow from operations. Cash flows in connection with PPP receivables are also included in the cash flow from operations since these projects are part of regular construction and recurring maintenance revenue and include concessions for roads, rail, education, health care and government buildings. Paid dividend is included in cash flow from financing activities. The purchase price of acquisitions of subsidiaries are included in the cash flow from investing activities as far as payments have taken place. Cash and cash equivalents in the subsidiaries are deducted from the purchase price. In the statement of cash flows the interest paid related to leases is presented as part of the cash flow from operating activities, while the repayments are presented as part of the cash flows from financing activities. Non-cash transactions are not included in the statement of cash flows.
The preparation of these financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The reported amounts are based on factors which inherently are associated with uncertainties. Actual results may therefore differ materially from these estimates. The most significant judgments and estimates are summarised below.
The Group’s revenue recognition policies require management to make judgments and estimates, particularly for revenue that is recognised over time. Such revenue is generally recognised using the cost-to-cost method (i.e. an input method), which requires a forecast to be made of the profit margin on the performance obligation upon its completion and the costs yet to incur. The stage of completion is then determined by comparing actual costs incurred to date to total costs to complete the performance obligation. The Group has coordinated systems for cost estimating, forecasting and revenue and costs reporting. The system also requires a consistent judgment (forecast) of the final outcome of the project, including analyses of variances in earlier assessment dates. Making forecasts of the profit margin upon completion of the performance obligation involves judgments and estimates on costs as well as revenue. On the cost side, estimates are to be made with respect to costs to be incurred to complete the performance obligation as well as maintenance and defect liabilities. On the revenue side estimates are to be made with respect to the amount of variable consideration and judgments are required to determine whether such variable consideration should be constraint. Variable consideration includes fees for changes in scope of work (‘variation orders’), unpriced variation orders, claims due from customers as well as performance bonusses and/or penalties (‘liquidated damages’). Estimates of variable consideration are to be constraint to an amount that is not highly probable of a significant reversal. The Group quantifies highly probable as a probability of 75% or more. Variable consideration is generally included in total revenue (i.e. not constraint) when:
In exceptional circumstances, variable consideration may also be included in total revenue when none of the above criteria are met and/or when there is a dispute with the customer. In such circumstances, the highly probable criterion is generally substantiated by advice or opinion of a lawyer. As at 31 December 2023, the Group included in its revenues an aggregate amount of €44 million for claims due from customers and unapproved variation orders (31 December 2022: €32 million). The Group considers the amount as highly probable, however, inherent estimation uncertainty exists. The ultimate outcome of negotiations and settlements can differ and could impact the Group’s results.
The Group is subject to income taxes in numerous jurisdictions. Judgement and estimates are required in determining the provision for income taxes, particularly in determining the carrying amount of deferred tax assets and the amount of liabilities for (potential) uncertain tax positions. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Such estimates are based on the technical merits of the underlying position. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax assets and liabilities in the period in which such determination is made. Deferred tax assets are recognised for tax losses carry-forwards, temporary differences and tax credits to the extent that realisation of the related tax benefit through future taxable profits is probable. This requires estimating the amount of future taxable profits, for which a forecast window of five years is generally applied, and to apply judgment in assessing probability of actually achieving the forecasted levels.
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost for pensions include the discount rate, expected salary growth rates and expected indexation of pensions. Any changes in these assumptions will impact the carrying amount of pension obligations. The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds (AA) that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation. Other key assumptions are based on current market conditions and envisaged developments. Sensitivity analyses in respect of these assumptions is disclosed in note 24.
Land and building rights are generally acquired at a premium on its value in present state and condition Such premium can be paid since future intentions (i.e. development) of the Group represent a considerable value increase. The ultimate value of land and building rights upon development depends on a number of factors including the number of buildings and the expected sale or rental price of the respective buildings. In case the Group is not able to proceed development, e.g. upon adverse decision of a governmental body, the respective land and building rights is generally subject to an impairment. The valuation of land and building rights, to test their respective carrying amount for impairments, is based on a fair value assessment that takes into consideration relevant assumptions. Such fair value assessment is generally supported by a valuation of an external valuator (by rotation) to benchmark.
Goodwill is tested annually for impairment. The recoverable amounts of cash-generating units are determined based on value-in-use calculations. These calculations are determined using discounted cash flow projections and require estimates in connection with the future development of revenues, profit before tax margins and the determination of appropriate discount rates.# An impairment loss is recognised if the carrying amount of an asset of CGU exceeds its recoverable amount. Sensitivity analyses in respect of key assumptions are disclosed in note 15.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group’s aim is for a financing structure that ensures continuing operations and minimises cost of equity. For this, flexibility and access to the financial markets are important conditions. As usual within the industry, the Group monitors its financing structure using a capital ratio, among other factors. Capital ratio is calculated as the capital base divided by total assets. The Group’s capital base consists of equity attributable to shareholders of the Company and, up to 2021, the carrying amount of subordinated convertible bonds. The Group’s target capital ratio is above 20%. On 31 December 2023, the capital ratio was 23.4% (2022: 21.2%). Under the terms of borrowings facilities the Group is required to comply with financial covenants. For information on these financial covenants see note 23.
The Group’s activities are exposed to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. Risks are inherent to any business and the risks to which the Group is exposed are not unusual or different from what is considered acceptable in the industry. The Group’s risk management system is designed to identify and manage threats and opportunities. Effective risk management enables the Group to capitalise on opportunities in a carefully controlled environment. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to limit potential adverse effects on the Group’s financial performance. Financial risk management is carried out by Group treasury under policies approved by the Executive Board, which has the overall responsibility for risk management in the Group. Group treasury identifies, evaluates and, when necessary, hedges financial risks in close collaboration with the group companies. The Executive Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments, non-derivative financial instruments and possible investment of excess liquidity.
(a) Foreign exchange risk
A substantial part of the Group’s activities takes place in the United Kingdom (in pound sterling) and, to a limited extent, in other non-euro countries. The Group’s results and equity are therefore affected by fluctuations in foreign exchange rates. Generally, the Group is active in these non-euro countries through local subsidiaries, limiting the exchange risk as both income and expense are denominated largely in the same currencies. The associated translation risk to the group (arising from translation of the local currency into euro) is not hedged. Due to changes in the exchange rate of the euro to pound sterling, revenue and results from the United Kingdom slightly increased in 2023 while equity and order book slightly decreased. At year end 2023, a 10% change in the exchange rate, will impact the Group’s equity by circa €44 million. A limited part of the group’s activities involves contracts that have a different currency than the functional currency of the respective subsidiary. Group policy is that costs and revenues from these projects are mainly expressed in the same currency, thus limiting foreign exchange risks. The Group may hedge the residual exchange risk on a project-by-project basis, using forward exchange contracts. This involves hedging of unconditional project related exchange risks in excess of €1 million as soon as these occur. The Group reports these hedges by means of cash flow hedge accounting. Additional exchange risks in the tender stage and arising from contractual amendments are assessed on a case-by-case basis. Procedures have been established for proper recording of hedge transactions. Systems are in place to ensure the regular performance and analysis of the requisite hedge effectiveness measurements.
(b) Interest rate risk
The Group’s interest rate risk is associated with interest-bearing receivables and cash and cash equivalents on the one hand and interest-bearing borrowings, on the other. If the interest is variable, the Group is exposed to a cash flow risk, i.e. future interest payments vary with (changes in) the interest rate. If the interest rate is fixed, the group is exposed to a fair value risk. For interest-bearing borrowings the Group may manage cash flow risks; the fair value risk is not hedged. Interest rates on borrowings are generally variable and are hedged to fixed rates on a case-by-case basis with reference to the asset or operation that is funded. The analysis of the cash flow interest rate risk takes into account cash and cash equivalents, the debt position and the usual fluctuations in the Group’s working capital requirements. The composition of borrowings by interest rate is as follows:
| Up to 1 year | 1 to 5 years | Over 5 years | Total | |
|---|---|---|---|---|
| 31 December 2023 | ||||
| Total borrowings | 7,061 | 49,080 | 5,433 | 61,574 |
| Fixed interest rates | (2,370) | (5,424) | (156) | (7,950) |
| Variable interest rates | 4,691 | 43,656 | 5,277 | 53,624 |
| 31 December 2022 | ||||
| Total borrowings | 11,968 | 34,895 | 5,766 | 52,629 |
| Fixed interest rates | (3,083) | (6,105) | (379) | (9,567) |
| Variable interest rates | 8,885 | 28,790 | 5,387 | 43,062 |
Interest rates on cash and cash equivalents is variable. If variable interest rates had been higher 100 basis points, the Group’s net result before tax would have been €4.3 million higher (2022: €3 million higher). If the variable interest rates had been lower 100 basis points, the Group’s net result before tax would have been €4.3 million lower (2022: €3.7 million lower). The Group’s joint venture Invesis has, directly and indirectly (through its project joint ventures and associates), significant amounts of borrowings that have variable interest rates. Invesis and the underlying project joint ventures and associates entered into swaps to covert such variable interest rates into fixed interest rates. The aim of these interest rate swaps is create stable and predictable cash-flows from the respective projects. The Group applies cash-flow hedge accounting for these derivatives, see note 16.1 for more details.
The Group is exposed to credit risks with regard to financial assets including PPP receivables, non-current receivables, derivative financial instruments, trade receivables, contract assets, amounts due from related parties, other receivables, and cash and cash equivalents. The carrying amounts of the assets exposed to a credit risk are as follows:
| Notes | 2023 | 2022 | |
|---|---|---|---|
| Non-current assets | |||
| PPP receivables | 13,675 | 13,593 | |
| Non-current receivables | 17 | 91,647 | 76,449 |
| Current assets | |||
| Trade receivables – net | 19 | 525,083 | 477,265 |
| Contract assets | 19 | 554,840 | 524,655 |
| Amounts due from related parties | 19 | 18,465 | 22,112 |
| Other receivables | 19 | 86,057 | 76,708 |
| PPP receivables | 644 | 338 | |
| Derivative financial instruments | 19 | 121 | 522 |
| Cash and cash equivalents | 20 | 757,333 | 841,246 |
| 2,047,865 | 2,032,888 |
PPP receivables and a substantial part of trade receivables and contract assets are due from governments or government bodies in the Netherlands, the United Kingdom and Ireland. Considering these countries have a strong credit rating, the credit risk related to these assets is therefore inherently assessed as very low. Furthermore, a significant part of trade receivables – net is based on contracts involving advance payments or payments proportionate to progress of the work, which limits the credit risks, in principle, to the overall balances outstanding. Credit risk on trade and other receivables and contract assets is monitored continuously. Clients’ creditworthiness is analysed before entering into a contract and then monitored during performance of the project. This involves taking account of the client’s financial position, previous collaborations and other factors. Group policy is designed to mitigate credit risks which can for example be achieved by retaining ownership of assets until payment has been received, obtaining prepayments and the use of bank guarantees. Non-current receivables predominantly concern loans granted to property and joint ventures. These loans are in general not past due at the balance sheet date. Credit losses are identified based on the financial position and forecasts of these associates and joint ventures, which also include the value of the underlying property development positions. For a part of these loans property developments positions are held as securities generally subordinated to the providers of the external financing. Cash and cash equivalents are held in various banks. The Group limits the associated credit risk as a result of the Group’s policy to work only with respectable banks and financial institutions.## 4.2.3 Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in satisfying its financial liabilities. The Group’s policy on liquidity is to ensure that at all times sufficient liquidity is available to satisfy its liabilities when due. To monitor liquidity requirements, the group maintains a cash-flow forecast for the next twelve months. The forecast takes into account the amount of cash and cash equivalents, credit facilities and the usual fluctuations in the Group’s working capital requirements. The size of individual transactions can cause relatively large short-term fluctuations in the liquidity position. The main instruments to ensure that sufficient liquidity is available are the group’s cash pools and its credit facilities. The cash pools provide the Group with the flexibility to optimise the use of cash that is available in the entire group while the Group’s committed syndicated credit facility of €330 million and other credit facilities (see note 23), allow to draw loans should that be required. As of 31 December 2023 no loans were drawn from the facility (31 December 2022: nil). The expected contractual cash flows as of 31 December 2023 and 2022 is as follows:
| Carrying amount | Contractual cash flows | < 1 year | 1 – 5 years | > 5 years | |
|---|---|---|---|---|---|
| 2023 | |||||
| Syndicated credit facility | - | - | - | - | - |
| Non-recourse PPP loans | 8,509 | 9,782 | 855 | 3,347 | 5,580 |
| Non-recourse property financing | 32,464 | 39,447 | 5,464 | 33,983 | - |
| Other non-recourse financing | 3,557 | 3,766 | 1,539 | 2,227 | - |
| Recourse property financing | 13,874 | 16,323 | 1,629 | 14,485 | 209 |
| Other recourse financing | 3,170 | 3,240 | 985 | 2,255 | - |
| Lease liabilities | 234,215 | 241,652 | 72,450 | 138,203 | 30,999 |
| Provisions | 3,500 | 3,500 | 3,500 | - | - |
| Trade and other payables | 1,364,088 | 1,364,088 | 1,364,088 | - | - |
| 1,663,377 | 1,681,798 | 1,450,510 | 194,500 | 36,788 | |
| 2022 | |||||
| Syndicated credit facility | - | - | - | - | - |
| Non-recourse PPP loans | 8,538 | 9,828 | 786 | 3,338 | 5,704 |
| Non-recourse property financing | 20,525 | 23,388 | 4,194 | 19,194 | - |
| Other non-recourse financing | 3,458 | 3,621 | 1,463 | 2,158 | - |
| Recourse property financing | 15,972 | 17,797 | 6,410 | 11,162 | 225 |
| Other recourse financing | 4,136 | 4,250 | 1,013 | 3,023 | 214 |
| Lease liabilities | 174,677 | 182,022 | 57,915 | 104,262 | 19,845 |
| Provisions | 15,125 | 15,125 | 15,125 | - | - |
| Trade and other payables | 1,307,620 | 1,307,620 | 1,307,620 | - | - |
| 1,550,051 | 1,563,651 | 1,394,526 | 143,137 | 25,988 |
1 Consisting of financial guarantees relating to the sale of BAM Deutschland as disclosed in note 25.
The Group has three categories of financial instruments. A significant number of these are inherent to the Group’s business activities and are presented in various balance sheet items. The following summary indicates the values for which financial instruments are included for each relevant balance sheet item:
| Financial instruments | Financial Receivables | Non-financial liabilities | Hedging instruments | Total | |
|---|---|---|---|---|---|
| 2023 | |||||
| PPP receivables | 13,675 | - | - | - | 13,675 |
| Other financial assets | 91,674 | - | - | - | 91,674 |
| Trade and other receivables | 743,164 | - | 121 | 582,923 | 1,326,208 |
| Cash and cash equivalents | 757,333 | - | - | - | 757,333 |
| Borrowings | - | (61,574) | - | - | (61,574) |
| Provisions | - | (3,500) | - | (193,394) | (196,894) |
| Lease liabilities | - | (234,215) | - | - | (234,215) |
| Trade and other payables | - | (1,364,088) | (1,318) | (1,082,376) | (2,447,782) |
| 1,605,846 | (1,663,377) | (1,197) | (692,847) | (751,575) | |
| 2022 | |||||
| PPP receivables | 13,593 | - | - | - | 13,593 |
| Other financial assets | 77,591 | - | - | - | 77,591 |
| Trade and other receivables | 670,336 | - | 522 | 559,447 | 1,230,305 |
| Cash and cash equivalents | 841,246 | - | - | - | 841,246 |
| Borrowings | - | (52,629) | - | - | (52,629) |
| Provisions | - | (15,125) | - | (225,003) | (240,128) |
| Lease liabilities | - | (174,677) | - | - | (174,677) |
| Trade and other payables | - | (1,307,620) | (39) | (1,160,897) | (2,468,556) |
| 1,602,766 | (1,550,051) | 483 | (826,453) | (773,255) |
1 Other financial assets consist of several types of financial assets. See note 17 for the specification of receivables based on fair value through profit or loss, receivables based on amortised cost and other.
2 Consisting of financial guarantees relating to the sale of BAM Deutschland as disclosed in note 25.
All financial instruments are valued at amortised cost, with the exception of a part of the other financial assets (note 17) and the derivative instruments which are valued at fair value through profit or loss (unless in hedge accounting relationship).
The fair value of financial instruments not quoted in an active market is measured using valuation techniques. The Group uses various techniques and makes assumptions based on market conditions on balance sheet date. The valuation also includes (changes in) the credit risk of the counter party and the credit risk of the Group in conformity with IFRS 13. One of these techniques is the calculation of the net present value of the expected cash flows (discounted cash flow projections). The fair value of the interest rate swaps and the fair value of financial guarantee contracts are calculated as the net present value of the expected future cash flows. The fair value of the forward exchange contracts is measured based on the ‘forward’ currency exchange rates on balance sheet date. In addition, valuations from banks are requested for interest rate swaps. Financial instruments valued at fair value consist of interest rate swaps, foreign exchange contracts and a portion of the other financial assets. In line with the current accounting policies the derivatives are classified as level 2. Receivables valued on fair value through profit or loss, which are part of ‘Other financial assets’ and provision for financial guarantee contracts are classified as level 3 - the fair value is determined based on the discounted cash flow method. It is assumed that the carrying amount of ‘borrowings’, ‘trade and other receivables’ and ‘trade and other payables’ do not materially differ from their fair value.
The Group’s activities are grouped in two divisions, one dedicated to the Netherlands, which also includes the Group’s activities in Denmark, and the other to the United Kingdom and Ireland. The Group allocates resources and analyses performance and identified three reportable segments: Division Netherlands (‘division NL’), division United Kingdom and Ireland (‘division UK&I’) and Invesis. Belgium, Germany and International are considered individual operating segments that are not individually reportable, and thus combined. The performance of the segments division NL, division UK&I and Invesis are separately reported to and reviewed by the Executive Board. The Executive Board is considered the Chief Operating Decision Maker.
| Division NL | Division UK&I | Invesis | Other Belgium, Germany and International | Eliminations | Total | |
|---|---|---|---|---|---|---|
| 2023 | ||||||
| Revenue | 3,007,334 | 3,138,843 | - | 125,336 | (1,039) | 6,270,474 |
| Adjusted EBITDA | 178,999 | 121,463 | 2,594 | 11,434 | (10,174) | 304,316 |
| Adjusted items | (7,458) | (2,815) | - | 620 | - | (9,653) |
| EBITDA | 171,541 | 118,648 | 2,594 | 12,054 | (10,174) | 294,663 |
| Depreciation and amortisation | (75,241) | (42,715) | - | (2,264) | (1,073) | (121,293) |
| Impairments | (2,642) | - | - | - | - | (2,642) |
| Finance income and expense | (520) | 19,898 | - | 3,485 | (10,024) | 12,839 |
| Result before tax | 93,138 | 95,831 | 2,594 | 13,275 | (21,271) | 183,567 |
| 2022 | ||||||
| Revenue | 2,917,447 | 3,133,704 | - | 568,852 | (1,834) | 6,618,170 |
| Adjusted EBITDA | 172,547 | 81,648 | 23,477 | 77,800 | (5,252) | 350,220 |
| Adjusted items | (1,369) | (4,408) | - | 534 | 13 | (5,230) |
| EBITDA | 171,178 | 77,240 | 23,477 | 78,334 | (5,239) | 344,990 |
| Depreciation and amortisation | (76,327) | (27,435) | - | (10,729) | (2,112) | (116,603) |
| Impairments | (476) | (3,875) | - | (7,624) | (3,000) | (14,975) |
| Finance income and expense | (1,039) | 1,609 | - | 3,089 | (1,399) | 2,260 |
| Result before tax | 93,336 | 47,539 | 23,477 | 63,070 | (11,750) | 215,672 |
1 Adjusted EBITDA is the main segment performance measure. Refer to 9.5 Glossary for definition and reconciliation. Adjusted EBITDA of Belgium, Germany and International for 2022 includes the gain on sale of Wayss & Freytag Ingenieurbau amounting to €52 million.
| Division NL | Division UK&I | Invesis | Other Belgium, Germany and International | Eliminations | Total | |
|---|---|---|---|---|---|---|
| 2023 | ||||||
| Assets | 1,594,614 | 1,774,641 | - | 267,458 | (38,345) | 3,598,368 |
| Equity-accounted investees | 122,384 | 25,498 | 176,200 | 9,000 | 570 | 333,652 |
| Total assets | 1,716,998 | 1,800,139 | 176,200 | 276,458 | (37,775) | 3,932,020 |
| Liabilities | 1,605,576 | 1,364,793 | - | 133,240 | (92,408) | 3,011,201 |
| Group equity | 111,422 | 435,346 | 176,200 | 143,218 | 54,633 | 920,819 |
| Total equity and liabilities | 1,716,998 | 1,800,139 | 176,200 | 276,458 | (37,775) | 3,932,020 |
| 2022 | ||||||
| Assets | 1,590,082 | 1,739,804 | - | 288,877 | (126,336) | 3,492,427 |
| Equity-accounted investees | 106,574 | 25,415 | 186,197 | 8,183 | 599 | 326,968 |
| Total assets | 1,696,656 | 1,765,219 | 186,197 | 297,060 | (125,737) | 3,819,395 |
| Liabilities | 1,588,883 | 1,362,914 | - | 198,921 | (139,807) | 3,010,911 |
| Group equity | 107,773 | 402,305 | 186,197 | 98,139 | 14,070 | 808,484 |
| Total equity and liabilities | 1,696,656 | 1,765,219 | 186,197 | 297,060 | (125,737) | 3,819,395 |
Further disclosures about Invesis are included in note 16.# Appendices
131 Annual report 2023 Royal BAM Group nv
| Division and including Other disclosures | NL | UK&I | International | eliminations | Total |
|---|---|---|---|---|---|
| 2023 | |||||
| Additions to property, plant and equipment, right-of-use assets and intangible assets | 122,904 | 64,634 | 2,226 | 1,960 | 191,724 |
| Share in result of associates and joint ventures | 27,545 | (229) | 918 | - | 28,234 |
| Average number of FTE | 6,655 | 6,368 | 223 | 97 | 13,343 |
| Number of FTE at year-end | 6,681 | 6,273 | 212 | 97 | 13,263 |
| 2022 | |||||
| Additions to property, plant and equipment, right-of-use assets and intangible assets | 77,929 | 33,739 | 25,684 | 845 | 138,197 |
| Share in result of associates and joint ventures | 24,190 | (110) | 9,420 | - | 33,500 |
| Average number of FTE | 6,857 | 6,291 | 1,282 | 179 | 14,608 |
| Number of FTE at year-end | 6,807 | 6,227 | 308 | 97 | 13,439 |
The Group recognises revenue when it transfers control over a product or service to its customer, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services. The Group’s revenue is generally related to construction contracts, property development, maintenance and service contracts and service concession arrangements. Revenue recognition is subject to judgments and uncertainties as described in note 4. A provision is recognised when contracts for which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received. This assessment is for the full contract, which is not necessarily the same as if evaluated on project level, because a contract may include multiple performance obligations. In determining the amount of variable considerations as part of the economic benefits expected to be received under the contract, the policies below apply.
Construction contracts are contracts that are specifically negotiated for the construction of an asset for a client. The construction of an asset is generally one performance obligation and the transaction price generally consists of a fixed part and several variable parts. Variable parts include (but are not limited to) contractual options to a customer to make changes to the design or construction of the asset, inflation reimbursement clauses, performance incentives and liquidated damages. Variable revenue may also include changes to the design or construction of the asset for which the respective price has not been agreed. Variable revenue is generally constraint and recognised only to the extent it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. It is common practice for a contract to be subject to variation orders. These variation orders generally do not result in additional distinct goods and services and do not have a distinct price. Therefore they are accounted for as cumulative catch-up adjustment. In general, the Group is building on the land of the customer or improving an asset of the customer, which results in creating an asset that the customer controls as the asset is created. As a result, revenue for construction contracts is recognised over time, generally using the cost-to-cost method (i.e. an input method). Costs are recognised as incurred and revenue is recognised on the basis of the proportion of total costs at the reporting date to the estimated total costs of the contract. Estimated total costs of the contract may include cost contingencies to take account of the specific risks that have been identified during the early stages of the contract. The cost contingencies are reviewed on a regular basis throughout the contract life and are adjusted where appropriate.
The Group also develops and constructs property development at its own risk and rewards. Developed properties may be sold during the construction process or upon completion. When the property is sold during the construction process, the property changes into a construction contract and it follows the accounting policies described earlier. When the property is sold upon completion, revenue is recognised at a point in time. This happens generally when ownership of the asset is transferred and the Group has a legal right to receive payment. Sale of completed property generally occurs for a fixed price.
The Group also operates maintenance and service contracts. These services can be sold as separate contracts (e.g. facilities management) but also as part of a larger contract with other promised goods or services (e.g. maintenance of an highway that was also constructed). When part of a
132 Annual report 2023 Royal BAM Group nv
larger contract, the maintenance and service component generally represents a separate service and the transaction price is allocated to performance obligations based on the relative stand- alone selling price. Revenue from maintenance and service contracts is recognised over time. Progress for these contracts may be measured in different ways, depending on the nature of the service. The Group applies the progress measure that best depicts the way the customer receives and consumes the benefits. E.g. for a facilities management contract, progress may be measured based on time; the number of months or years that the service has been provided as compared to the number of months of years that the service was contracted. Measuring progress based on time is generally not appropriate for highway maintenance contracts as the amount of service (and costs) fluctuate significantly during the contract period. For these contracts, progress is measured based on the cost-to-cost method.
Under IFRIC 12, ‘Service concession arrangements’ comprise construction as well as operating and maintenance activities. All activities recognise revenue in conformity with the respective policies describe above and the consideration (concession payments) is allocated between the activities according to the relative stand-alone selling prices of the individual performance obligations. PPP receivables are financial assets in the form of concession payments to be received from governments based on the availability of the respective asset. The concession payments are unconditional and as they contain a significant financing component, they are discounted at a market interest rate.
Revenue is further disaggregated to the underlying businesses as follows:
| Division | NL | UK&I | 2023 |
|---|---|---|---|
| Construction and property | 2,072,409 | 1,045,861 | |
| Ventures | - | 323,307 | |
| Civil engineering | 963,987 | 1,363,364 | |
| BAM Ireland | - | 463,027 | |
| Other including eliminations | (29,062) | (56,716) | |
| Total | 3,007,334 | 3,138,843 |
| Division | NL | UK&I | 2022 |
|---|---|---|---|
| Construction and property | 1,977,966 | 1,062,407 | |
| Ventures | - | 221,823 | |
| Civil engineering | 967,036 | 1,243,395 | |
| BAM Ireland | - | 668,982 | |
| Other including eliminations | (27,555) | (62,903) | |
| Total | 2,917,447 | 3,133,704 |
Revenue of Belgium, Germany and International comprises Belgium of €118 million (2022: €222 million), Germany of nil (2022: €327 million) and International of €8 million (2022: €20 million).
Revenue is further disaggregated by nature as follows:
| Belgium, Germany and International | Division NL | Division UK&I | Eliminations | Total | 2023 | |
|---|---|---|---|---|---|---|
| Construction and maintenance | 2,535,975 | 2,940,028 | 59,662 | (1,039) | 5,534,626 | |
| Property development | 423,108 | 74,565 | 47,644 | - | 545,317 | |
| Service concession arrangements and other | 48,251 | 124,250 | 18,030 | - | 190,531 | |
| Total | 3,007,334 | 3,138,843 | 125,336 | (1,039) | 6,270,474 |
| Belgium, Germany and International | Division NL | Division UK&I | Eliminations | Total | 2022 | |
|---|---|---|---|---|---|---|
| Construction and maintenance | 2,417,066 | 3,024,016 | 511,006 | (1,834) | 5,950,254 | |
| Property development | 479,679 | 866 | 41,158 | - | 521,703 | |
| Service concession arrangements and other | 20,702 | 108,822 | 16,688 | - | 146,212 | |
| Total | 2,917,447 | 3,133,704 | 568,852 | (1,834) | 6,618,169 |
The consideration received that was included in the project contract liability balance at the beginning of the period, has been fully recognised as revenue in the current year. In the construction business, regular instalments take place but within the Group never leading to significant pre-financing longer than a year.
133 Annual report 2023 Royal BAM Group nv
Performance obligations could be satisfied once the technical completion is final and control has been fully transferred to the client. It is common however to finalise the last pricing discussions regarding variable considerations, including claims, after control has been transferred. Revenue recognised in 2023 from performance obligations satisfied in previous periods amounts to €6 million (2022: €37 million).
The revenue expected related to unsatisfied performance obligations (running or won projects) is as follows. The Group has not used the practical expedient to exclude performance obligations in contracts with an original expected duration of one year or less.
(x € million)
| 2023 | 2022 | |
|---|---|---|
| Up to 1 year | 4,936 | 5,133 |
| 2 to 5 years | 4,873 | 4,906 |
| Over 5 years | 1,330 | 1,332 |
| Total | 11,139 | 11,371 |
A major part of the Group’s activities concerns construction contracts and property development which are reflected in various balance sheet items.# An overview of the balance sheet items attributable to construction contracts and property development is stated below:
| Construction contracts | Property development | Total |
|---|---|---|
| Land and building rights | - | 236,777 |
| Property development | - | 205,689 |
| Amounts due from customers | 314,306 | 16,474 |
| Project assets | 314,306 | 458,940 |
| Non-recourse property financing | - | (32,464) |
| Recourse property financing | - | (13,874) |
| Amounts due to customers | (639,111) | (87,300) |
| Provision for onerous contracts | (148,071) | - |
| Project liabilities | (787,182) | (133,638) |
| As at 31 December 2023 | (472,876) | 325,302 |
| Construction contracts | Property development | Total |
|---|---|---|
| Land and building rights | - | 219,189 |
| Property development | - | 238,634 |
| Amounts due from customers | 313,556 | 13,768 |
| Project assets | 313,556 | 471,591 |
| Non-recourse property financing | - | (20,525) |
| Recourse property financing | - | (15,972) |
| Amounts due to customers | (679,441) | (89,526) |
| Provision for onerous contracts | (171,677) | - |
| Project liabilities | (851,118) | (126,023) |
| As at 31 December 2022 | (537,562) | 345,568 |
Amounts due to customers refers to payments received for work that has not yet started. As per 31 December 2023 these amount to €99 million for construction contracts and nil for property development (2022: €105 million and nil). Amounts due to customers at the beginning of the year have been fully recognised as revenue in the year. In the construction industry, customers regularly make advance payments but these do not result in significant pre-financing longer than a year.
| Note | 2023 | 2022 | |
|---|---|---|---|
| Wages and salaries | 942,815 | 965,487 | |
| Social security costs | 118,366 | 134,936 | |
| Share-based payment expense | 26 | 4,857 | 3,659 |
| Pension costs - defined contribution plans | 86,927 | 85,274 | |
| Pension costs - defined benefit plans | 24 | (481) | 2,733 |
| Other post-employment benefits | 1,339 | 1,129 | |
| 1,153,823 | 1,193,218 |
Personnel expenses include restructuring costs and other termination benefits of €10 million (2022: €4 million). At year-end 2023, the Group had 13,263 FTE (2022: 13,439). The average number of FTE in 2023 was 13,343 (2022: 14,608), of which 6,591 in other countries than the Netherlands (2022: 7,571).
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
134Annual report 2023 Royal BAM Group nv
Other income consists of income that is not related to the Group’s core activities such as gains on the sale of property, plant and equipment and intangible fixed assets, gains on the sale of subsidiaries, joint ventures or associates and other non-recurring income.
Other income can be specified as follows:
| 2023 | 2022 | |
|---|---|---|
| Gain on sale of Wayss & Freytag Ingenieurbau AG | - | 52,337 |
| Gain on sale of associates | 1,785 | - |
| Gain on sale of PP&E and intangible fixed assets | 1,531 | 10,145 |
| Other | 2,565 | - |
| 5,881 | 62,482 |
On 20 June 2022, BAM signed a share purchase agreement with ZECH Building SE for the sale of all of the Group’s shares in Wayss & Freytag Ingenieurbau AG. On 15 September 2022, the Group completed the divestment and all the assets and liabilities of the former subsidiary were fully derecognised. The shares were sold for an amount of €160 million, with related costs to sell of €5 million. The net cash outflow for the sale of Wayss & Freytag Ingenieurbau AG amounted to €26 million and is included in the proceeds from sale of subsidiaries in the consolidated statement of cash flows. Total revenue up to 15 September 2022 amounted to €327 million with a total adjusted EBITDA of €24 million. Wayss & Freytag Ingenieurbau AG was included in the operating segment Germany. The Group has indemnified the purchaser and provided various guarantees in the normal course of selling a business. As at 31 December 2023, the Group has not recognised any liability for these indemnifications as no outflow of resources are probable (2022: nil).
On 3 February 2022, the Group sold its shares in BAM Galère srl including part of BAM Mat bv assets to Thomas & Piron Group. Due to the loss of control of BAM Galère srl, all the assets and liabilities of the former subsidiaries were fully derecognised as of 3 February 2022. The shares and part of the assets of BAM Mat bv were sold for an amount of €34 million with related costs to sell of €2 million. A total impairment loss of €5 million was recognised to lower the carrying amount to its fair value less costs to sell. Of this impairment €4 million was already reported in 2021. The impairment loss forms part of the impairment charges. The net cash outflow for the sale of BAM Galère srl amounted to €5 million and is included in the proceeds from sale of subsidiaries in the statement of cash flows. Total revenue up to 3 February 2022 amounted to €22 million with a total adjusted EBITDA of €1 million. BAM Galère srl was included in the operating segment Belgium. The Group has indemnified the purchasers of BAM Galère srl for various risks that are in the normal course of selling a business. The maximum exposure for the Group amounts to €10 million for certain indemnifications and the total exposure is capped to the purchase price. As at 31 December 2023, the Group has not recognised any liability for these indemnifications as no outflow of resources are probable (2022: nil)
In 2022 the Group sold its shares in BAM Contractors nv to Desire Stadsbader N.V. The sale was completed on 5 May 2022. Due to the loss of control of BAM Contractors nv, all the assets and liabilities of the former subsidiary were fully derecognised as of 5 May 2022. As a result of the for sale, a total impairment of €18 million was recognised of which €16 million was already reported in 2021. The impairment loss forms part of the impairment charges. The shares were sold for an amount of €29 million in cash with related costs to sell of €2 million. The net cash outflow for the sale of BAM Contractors nv amounted to €35 million and is included in the Proceeds from sale of Subsidiaries in the consolidated cashflow statement. Total revenue up to 5 May 2022 amounted to €47 million with a total (adjusted) EBITDA of €2 million. BAM Contractors nv was included in the operating segment Belgium. The Group has indemnified the purchaser for various risks that are in the normal course of selling a business. The maximum exposure for the Group amounts to €15 million for certain indemnifications and the total exposure is capped to the purchase price. As at 31 December 2023, the Group has not recognised any liability for these indemnifications as no outflow of resources are probable (2022: nil)
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
135Annual report 2023 Royal BAM Group nv
Non-financial assets that have an indefinite useful life and intangible assets that are not ready to use are not subject to depreciation or amortisation but are tested annually for impairment. Non-financial assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (CGUs). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
| Notes | 2023 | 2022 |
|---|---|---|
| Intangible assets | 15 | - |
| ROU assets (reversal) | 14 | - |
| Assets held for sale and disposals | 8 | - |
| Other financial assets | - | |
| Inventories | 18 | 3,559 |
| Impairments | 3,559 | |
| Share in impairments of associates and joint ventures | (917) | |
| 2,642 |
Finance income is recognised using the effective interest method. Finance income on impaired loan and receivables is recognised using the original effective interest rate. Finance expenses comprise interest expenses on borrowings, deposits, cash positions, lease liabilities, finance lease expenses, gains and losses relating to hedging instruments and other financial expenses. Interest expenses on borrowings and lease liabilities are recognised in the income statement using the effective interest method.
| 2023 | 2022 | |
|---|---|---|
| Finance income | ||
| Interest income | 23,262 | 8,848 |
| Finance expense | ||
| Interest expense on lease liabilities | 7,988 | 4,236 |
| Interest expense on other financial liabilities | 7,313 | 5,931 |
| Less: capitalised interest on the Group’s own projects | (4,878) | (3,578) |
| 10,423 | 6,589 | |
| Net finance result | 12,839 | 2,259 |
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income respectively directly in equity. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It adjusts and/or establishes tax assets and tax liabilities where appropriate on the basis of amounts expected to be paid to or received from tax authorities.# Royal BAM Group nv
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred tax liability is settled. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
| 2023 | 2022 | |
|---|---|---|
| Current tax | 30,093 | 11,043 |
| Deferred tax | (21,479) | 26,905 |
| Total | 8,614 | 37,948 |
The weighted average tax rate applicable was 23.7% (2022: 22.6%). Income tax on the Group’s result before tax differs from the theoretical amount that would arise using BAM’s weighted average tax rate, caused by the main items:
| 2023 | 2022 | |
|---|---|---|
| Result before tax | 183,568 | 215,672 |
| Tax calculated at Dutch tax rate of 25.8%; | 47,361 | 55,643 |
| Tax effects of: | ||
| • Tax rates in other countries | (3,770) | (6,850) |
| • Non deductible goodwill impairment | - | 1,212 |
| • Non deductible expenses | 2,270 | 2,369 |
| • Remeasurement of deferred tax – changes in enacted tax rates | - | 349 |
| • Adjustments from filing tax returns | (846) | (2,432) |
| • Previously unrecognised tax losses | (44,717) | (11,347) |
| • Tax losses no(t) (longer) recognised | 14,458 | 14,589 |
| • Results of investments and other participations | (4,796) | (14,071) |
| • Change in uncertain tax provisions | (804) | (1,457) |
| • Other including expenses not deductible for tax purposes | (542) | (57) |
| Tax charge/(gain) | 8,614 | 37,948 |
| Effective tax rate | 4.7% | 17.6% |
In December 2022, the Council of the European Union unanimously adopted the Directive implementing Pillar Two global minimum tax rules. This directive aims to ensure a global minimum level of taxation of 15% in all countries in which multinationals are present. The Group completed an initial assessment of the impact of the new rules based on initiatives presented by governments in countries in which the Group is active. Based on this initial assessment the Group expects to apply the transitional safe harbour rules in all jurisdictions. The adoption of the Pillar Two Model rules by the jurisdictions in which the Group operates, is expected to have no material impact. In all relevant jurisdictions the applicable tax rate is around 25%, well above the minimum rate of 15%. The only exception is Ireland, where the corporate income tax rate is 12.5% for trading income and 25% for non-trading income. At the current mix of income, the Group expects an effective tax rate in Ireland of circa 15% and thus no material additional Pillar Two charge is expected.
In the Netherlands, Pillar Two may have an impact to the Group’s tax expense when significant liquidation losses (e.g. BAM International) are claimed as liquidation losses are disregarded by Pillar Two. Depending on the amount of liquidation losses and the amount of pre-tax income in a particular year, the effective tax rate in the Netherlands may be lower than 15% as a result of which additional taxes may be due under Pillar Two regulations. However, liquidations are expected to take place in the next three years, in which the Group is expecting to apply the transitional safe harbours. The Group applies the mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules.
| 2023 | 2022 | |
|---|---|---|
| Deferred tax assets | 82,446 | 57,428 |
| Deferred tax liabilities | (14,848) | (18,511) |
| Deferred tax assets (net) | 67,598 | 38,917 |
Deferred tax assets in a country are recognised only to the extent that it is probable that future taxable profits in that country are available against which the deductible temporary differences, available tax credits and available tax losses carry-forwards can be utilised. The assessment as to whether an entity will have sufficient taxable profits in the future is a matter requiring careful judgement based on the facts and circumstances available. Although the profit forecast shows that sufficient profit should be available in coming years to recognise a deferred tax asset for compensating losses, the Group performed further analysis of all positive and negative evidence to substantiate the position. The nature of the convincing evidence did not change significantly compared to 31 December 2022, except for the forecasted future taxable profits. The increase in deferred taxes is mainly driven by the reassessment of the Group’s forecasted taxable profits for the years 2024 – 2028, which resulted in the recognition of additional deferred tax assets relating to available tax losses mainly in the Netherlands. Furthermore, the envisaged wind down of foreign operations and subsequent liquidation of legal entities resulted in additional future tax deductions (reflected as intangible asset) in the Netherlands. On balance deferred tax assets increased by €25 million. Finally actuarial results on employee benefit provision recognized through other comprehensive income resulted in a decrease of deferred tax liabilities of €8 million in the UK.
The breakdown of deferred income tax assets and liabilities is as follows:
| Deferred tax assets | Deferred tax liabilities | Net deferred tax | |
|---|---|---|---|
| 2023 | 2022 | 2023 | |
| Intangible and financial assets | 24,680 | 3,751 | - |
| Tangible assets | 3,881 | 5,054 | 39,617 |
| Trade and other receivables | 1,115 | 19 | - |
| Loans and borrowings | 38,517 | 32,989 | 2,032 |
| Derivatives | 340 | - | 31 |
| Employee benefits provision | 18 | 34 | 12,880 |
| Other provisions | 5,251 | 3,096 | - |
| Current liabilities | - | - | 1,091 |
| Tax loss and tax credits | 49,447 | 48,374 | - |
| Subtotal | 123,249 | 93,317 | 55,651 |
| Netting | (40,803) | (35,889) | (40,803) |
| Total reported | 82,446 | 57,428 | 14,848 |
Tax loss and tax credits as of 31 December 2023 can be further specified by country as follows:
| Total available | of which Deferred Income tax recognised | Tax rate | Trade tax asset | |
|---|---|---|---|---|
| Netherlands | 441,984 | 172,732 | 25.8% | 44,565 |
| United Kingdom | - | - | 25.0% | - |
| Ireland | 23,138 | - | 12.5% | - |
| Belgium | 32,774 | 19,528 | 25.0% | 4,882 |
| Germany | 326,425 | 284,257 | 30.0% | - |
| Total | 824,321 | 284,257 | 49,447 |
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
| As at 1 January 2023 | (Charged)/credited to the income statement | (Charged)/credited to other comprehensive income | Changes in enacted tax rates | Disposal of | Exchange rate | As at 31 December 2023 | |
|---|---|---|---|---|---|---|---|
| Deferred tax assets | 57,428 | 25,018 | 35 | - | (59) | 12 | 82,446 |
| Deferred tax liabilities | (18,511) | (4,518) | (7,981) | 349 | - | (1,248) | (14,848) |
| Total reported deferred tax assets (net) | 38,917 | 20,500 | (7,946) | 349 | (59) | (1,236) | 67,598 |
| ## Other information |
139Annual report 2023 Royal BAM Group nv
At 31 December 2023, the tax losses available to the fiscal unity in the Netherlands amount to approximately €442 million (2022: €493 million). These losses mainly relate to the years 2013 - 2017 and result, to a large extent, from identifiable causes including significant property impairments and restructuring costs which are unlikely to recur. The losses can be carried forward indefinitely to be utilised up to 50% of a future taxable profit exceeding €1 million. Based on estimates and timing of future taxable profits within the fiscal unity for the upcoming five years, approximately €173 million of these losses are recognised (2022: €175 million). Management estimates of forecasted taxable profits are based on financial budgets approved by management, extrapolated using growth rates for revenue and profit before tax margins that take into account past performance and external market data and benchmark information. Growth rates for revenue and profit before tax margins are in line with the Group’s mid- and long-term expectations. Subsequently these forecasts have been reduced to meet the deferred tax assets recognition criteria. No specific tax planning opportunities have been taken into account. The envisaged wind down of foreign operations and subsequent liquidation of legal entities results in additional future tax deductions, resulting in additional deferred tax assets of €20 million.
In Ireland the Group has several legal entities that have available tax losses. These entities do not form a tax group and available tax losses can only be settled by the legal entity that has incurred the losses. At 31 December 2023 the total amount of tax losses available are €23 million, none of which is recognised. The legal term within which these losses may be offset against future profits is indefinite.
In Belgium the Group has several legal entities that carry tax losses. These entities do not form a tax group and the losses can only be settled by the entity that has incurred it. At 31 December 2023 the total amount of tax losses available is € 33 million of which €20 million is recognised. The legal term within which these losses may be offset against future profits is indefinite.
Although the Group has sold its German operations, a number of German legal entities remain present in the legal structure. These entities have tax losses available for future settlement of circa €610 million (corporate and trade tax combined), for which no deferred tax assets have been recognised. The legal term within which these losses may be offset against future profits is indefinite.
12. Earnings per share
Basic EPS is calculated by dividing the profit or loss for the year attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company adjusted for the effect of dilutive potential ordinary shares by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
| 2023 | 2022 | |
|---|---|---|
| Weighted average number of ordinary shares in issue | 269,966 | 271,783 |
| Net result attributable to shareholders | 174,991 | 179,644 |
| Basic earnings per share (in €) | 0.65 | 0.66 |
Allowing for dilution, the earnings per share are as follows:
| 2023 | 2022 | |
|---|---|---|
| Diluted weighted average number of ordinary shares in issue | 274,336 | 275,555 |
| Net result attributable to shareholders (diluted) | 174,991 | 179,644 |
| Diluted earnings per share (in €) | 0.64 | 0.65 |
The diluted weighted average number of ordinary shares in issue differ from the weighted average number of ordinary shares in issue by 4.4 million shares (2022: 3.8 million). These shares related to the Group’s share-based payment plans and represent the number of shares that would vest at the balance sheet date if that would be the end of the vesting period.
140Annual report 2023 Royal BAM Group nv
13. Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Other costs are charged to the income statement during the financial period in which they are incurred.
Land is not depreciated. Depreciation on other categories of property, plant and equipment is determined using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period. At the end of each reporting period the carrying amounts of property, plant and equipment are reviewed to assess whether there is an indication of impairment. If such an indication exists, the asset’s recoverable amount is determined. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds of the disposal to the carrying amount of the asset. A gain is recognised in other income, a loss is recognised as an impairment.
| Land | Plant and equipment | Construction in progress | Other assets | Total | |
|---|---|---|---|---|---|
| As at 1 January 2022 | |||||
| Cost | 143,543 | 353,117 | 14,560 | 126,122 | 637,342 |
| Accumulated depreciation and impairments | (76,359) | (258,886) | - | (103,855) | (439,100) |
| 67,184 | 94,231 | 14,560 | 22,267 | 198,242 | |
| Additions | 4,794 | 60,787 | 15,760 | 11,528 | 92,869 |
| Disposals | (1) | (2,650) | (2,492) | (217) | (5,360) |
| Transfer to assets held for sale | (2,947) | (32,721) | (9,891) | (938) | (46,497) |
| Reclassifications | (406) | 1,324 | (1,112) | 1,647 | 1,453 |
| Depreciation charges | (6,250) | (23,556) | - | (9,765) | (39,571) |
| Exchange rate differences | (352) | (999) | (11) | (228) | (1,590) |
| As at 31 December 2022 | 62,022 | 96,416 | 16,814 | 24,293 | 199,545 |
| Cost | 125,599 | 287,653 | 16,814 | 86,555 | 516,621 |
| Accumulated depreciation and impairments | (63,577) | (191,237) | - | (62,262) | (317,076) |
| 62,022 | 96,416 | 16,814 | 24,293 | 199,545 | |
| Additions | 3,834 | 43,515 | 21,155 | 11,501 | 80,005 |
| Disposals | (204) | (2,970) | (837) | (941) | (4,952) |
| Reclassifications | 205 | 4,561 | (3,000) | (1,294) | 472 |
| Depreciation charges | (6,548) | (22,343) | - | (10,410) | (39,301) |
| Exchange rate differences | 54 | 484 | 17 | 87 | 642 |
| As at 31 December 2023 | 59,363 | 119,663 | 34,149 | 23,236 | 236,411 |
| Cost | 129,669 | 318,723 | 34,149 | 96,710 | 579,251 |
| Accumulated depreciation and impairments | (70,306) | (199,060) | - | (73,474) | (342,840) |
| 59,363 | 119,663 | 34,149 | 23,236 | 236,411 |
Transfers to assets held for sale of €46 million in 2022 mainly relate to property, plant and equipment of Wayss & Freytag. Construction in progress mainly comprises plant and equipment.
141Annual report 2023 Royal BAM Group nv
14. Leases
The group is lessee for a range of assets that are used in the ordinary course of business. At inception of a contract, the Group assesses whether it is or contains, a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option) and it applies the lease of low-value assets recognition exemption that are considered of low value (i.e., below €5,000). Payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term. The Group recognises right-of-use asset and lease liability at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. At the end of each reporting period the carrying amounts of right-of-use assets are reviewed to assess whether there is an indication of impairment. If such an indication exists, the asset’s recoverable amount is determined. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The estimated useful life of the majority of right-of-use assets are as follows: Land and buildings 5 to 25 years Cars 1 to 6 years Equipment 1 to 11 years IT equipment 1 to 6 years Other 1 to 10 years The Group recognises lease liabilities at the present value of lease payments to be made over the lease term. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date, if the interest rate implicit in the lease is not readily determinable. The lease term comprises the non-cancellable term of the lease plus any periods covered by an option to extend the lease if it is reasonably certain to be exercise and any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. For several leases, the Group has renewal and/or extension options. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy). Usually, the Group is able to be reasonably certain if an option is exercised around two years before the lease term ends. The renewal options for leases of cars are not included as part of the lease term because the Group generally is not exercising any renewal options. These cars are used both by office and project management employees. Lease payments include fixed payments (including in- substance fixed payments) less any lease incentives receivable, non-lease components related to the leased asset, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the profit and loss. After the commencement date, the lease liability is measured at amortised cost using the effective interest method. It is remeasured when: • there is a change in future lease payments arising from a change in an index. The lease liability is then remeasured by discounting the revised lease payments by using the initial discount rate; • the Group changes its assessment of whether it will exercise a purchase, extension or termination option. In this case, the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; • a lease contract is modified and the lease modification is not accounted for as a separate lease. In this case, the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
| Equipment | Land and buildings | IT equipment | Cars | Other | Total | |
|---|---|---|---|---|---|---|
| As at 1 January 2022 | 95,897 | 16,588 | 191 | 97,053 | 322 | 210,051 |
| Additions | 8,956 | 3,035 | 90 | 31,499 | 135 | 43,715 |
| Disposals | - | (490) | - | (269) | - | (759) |
| Transfer to assets held for sale | (13,198) | (3,345) | (75) | (3,245) | (103) | (19,966) |
| Depreciation charges | (19,744) | (5,759) | (151) | (42,682) | (135) | (68,471) |
| Impairment reversal | 490 | - | - | - | - | 490 |
| Remeasurements | 6,737 | (246) | 32 | 1,571 | (59) | 8,035 |
| Reclassifications | 2 | 282 | - | (611) | - | (327) |
| Exchange rate differences | (1,178) | (180) | (1) | (664) | (8) | (2,031) |
| As at 31 December 2022 | 77,962 | 9,885 | 86 | 82,652 | 152 | 170,737 |
| Additions | 16,968 | 19,920 | 268 | 70,121 | 129 | 107,406 |
| Disposals | (464) | (34) | - | (402) | - | (900) |
| Depreciation charges | (17,810) | (13,974) | (194) | (43,848) | (1,892) | (77,718) |
| Remeasurements | (1,536) | 10,883 | - | 2,179 | 5,779 | 17,305 |
| Reclassifications | (108) | (399) | - | 451 | - | (56) |
| Exchange rate differences | 337 | 81 | - | 236 | 5 | 659 |
| As at 31 December 2023 | 75,349 | 26,362 | 160 | 111,389 | 4,173 | 217,433 |
Transfers to assets held for sale of €20 million in 2022 mainly relate to right-of-use assets of Wayss & Freytag.
Set out below are the movements in lease liabilities during the period:
| 2023 | 2022 | |
|---|---|---|
| As at 1 January | 174,677 | 215,771 |
| Additions | 119,641 | 40,504 |
| Accretion of interest | 7,611 | 4,158 |
| Payments | (83,673) | (71,595) |
| Remeasurements | 16,384 | 7,886 |
| Acquisition through business combinations | - | - |
| Disposals | - | (3,900) |
| Transfer to liabilities held for sale | - | (14,000) |
| Reclassifications | (1,144) | (1,913) |
| Exchange rate difference | 719 | (2,234) |
| As at 31 December | 234,215 | 174,677 |
| Current | 73,313 | 55,806 |
| Non-current | 160,902 | 118,871 |
Transfer to liability held for sale amounting to €14 million in 2022 relates to lease liabilities of Wayss & Freytag, see note 8. Refer to note 4.1 for further details on the maturities of the Group’s lease liabilities.
The following are the amounts recognised in profit or loss:
| 2023 | 2022 | |
|---|---|---|
| Depreciation expense of right-of-use assets | 77,718 | 68,471 |
| Interest expense on lease liabilities | 7,611 | 4,158 |
| Impairment/(reversal) of right of use assets | - | (490) |
| Rent expenses – short term leases | 52,863 | 57,548 |
| Rent expenses – leases of low-value assets | - | 135 |
| Rent expenses – variable lease payments | 13,059 | 8,045 |
| Total | 151,251 | 137,867 |
Amounts recognised in the consolidated statement of cash flows:
| 2023 | 2022 | |
|---|---|---|
| Repayments of principal portion of lease liabilities | 76,062 | 67,437 |
| Interest | 7,611 | 4,158 |
| Total | 83,673 | 71.595 |
An amount of €53 million of commitments exist for the short-term leases (2022: €44 million). Given the applied practical expedient, these leases are not included in the lease liabilities. The Group has several lease contracts that include extension options. As of 31 December 2023, the undiscounted potential future rental payments relating to extension options, which are not included in the lease liabilities are €53.8 million (2022: €51.8 million).
The Group has various lease contracts that have not yet commenced as at 31 December 2023. The undiscounted future lease payments for these contracts are € 4.5 million within one year, € 21.5 million within one to five years and € 1.2 million thereafter (2022: €4.4 million within one year, €32.4 million within one to five years and €3.9 million thereafter). The Group has variable lease payments amounting to € 13.1 million which are not recognised in lease liabilities, but are recognised as expense in profit and loss (2022: €18.2 million). The expected future costs related to these variable lease payments are € 7.6 million within one year and € 17.9 million within one to five years and € 0.9 million thereafter (2022: €6.1 million within one year, €11.7 million within five years and €0.5 million thereafter). Variable leases mainly relate to fuel costs which is based on usage. The variability of these costs depends on the number of vehicles driven, their actual usage and any changes in rates.
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree and the amount of the non-controlling interest in the acquiree. For the purpose of impairment testing, goodwill acquired in business combinations is allocated, at acquisition date, to the cash-generating units (CGUs) or groups of CGUs expected to benefit from that business combination. Each unit to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.# Royal BAM Group nv
| Non-integrated Goodwill software | Other | Total | |
|---|---|---|---|
| As at 1 January 2022 | |||
| Cost | 687,548 | 41,316 | 12,222 |
| Accumulated amortisation and impairments | (357,305) | (28,885) | (8,514) |
| 330,243 | 12,431 | 3,708 | |
| Additions | - | 1,613 | - |
| Disposals | - | (579) | - |
| Amortisation | - | (7,553) | (1,007) |
| Reclassifications | - | 442 | - |
| Impairments | (6,500) | - | - |
| Exchange rate differences | (7,282) | - | - |
| 316,461 | 6,354 | 2,701 | |
| As at 31 December 2022 | |||
| Cost | 684,284 | 42,011 | 11,127 |
| Accumulated amortisation and impairments | (367,823) | (35,657) | (8,426) |
| 316,461 | 6,354 | 2,701 | |
| Additions | - | 4,312 | - |
| Amortisation | - | (3,488) | (786) |
| Exchange rate differences | 2,299 | 1 | - |
| 318,760 | 7,179 | 1,915 | |
| As at 31 December 2023 | |||
| Cost | 686,757 | 38,088 | 11,232 |
| Accumulated amortisation and impairments | (367,997) | (30,909) | (9,317) |
| 318,760 | 7,179 | 1,915 |
Goodwill impairment reviews are undertaken annually in the fourth quarter or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
(b) Non-integrated software
Non-integrated software is stated at cost less accumulated amortisation and impairment losses. The cost of non-integrated software includes direct labour, any other costs directly attributable to developing the software for its intended use. Amortisation on non-integrated software is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives (between four and ten years). The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period.
(c) Other
Other intangible assets relate to market positions (including brand names) are stated at cost less accumulated amortisation and impairment losses. Amortisation on other intangible assets is calculated over their estimated useful lives (generally between two and ten years). The assets’ useful lives are reviewed and adjusted if appropriate, at the end of each reporting period.
Goodwill related to BAM Nuttall and BAM Construct UK are assessed as significant balances. The carrying amounts of goodwill for these CGUs are as follows:
| 2023 | 2022 | |
|---|---|---|
| BAM Nuttall | 66,418 | 64,873 |
| BAM Construct UK | 60,802 | 59,731 |
| Other CGUs (with non-significant goodwill balance) | 191,539 | 191,858 |
| As at 31 December | 318,759 | 316,462 |
The recoverable amount of each CGU was determined based on value-in-use calculations. Value-in-use was determined using discounted cash flow projections that cover a period of five years and are based on the financial plans approved by management. Key assumptions for the value-in-use calculations are those regarding discount rate (WACC), revenue growth rate and profit before tax margin. The discount rate has been determined consistent with the other parameters of the impairment test. The WACC used to determine the value in use of each CGU is 7.9% (31 December 2022: 8.2% ) subject to country specific adjustments. The WACC, revenue growth rate and profit before tax margin are key assumptions in the value-in-use calculations. If and when these assumptions would change in the future, this could have significant impact on the CGU’s value in use, which might give rise to an impairment. The key assumptions used in the value-in-use calculations for CGUs with significant allocated goodwill are as follows:
| Revenue growth rate in forecast period | Revenue growth beyond forecast period | Profit margin in forecast period | Profit margin after forecast period (post-tax) | Discount rate | |
|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | |
| BAM Construct UK | 8.6% | 8.9% | 1.5% | 0.1% | 3.0% |
| BAM Nuttall | 8.6% | 8.9% | 3.6% | 1.9% | 3.0% |
Revenue growth rates are based on the average annual growth rate from past performance and management’s expectations of market development referenced to external sources of information. The profit margin is the profit before tax margin as a percentage of revenue and is based on past performance and the development to a realistic normalised margin in the respective CGU. The impairment tests in 2023 did not result in impairments (2022: impairment of €6.5 million). The recoverable amounts of all CGUs exceed their carrying amounts with sufficient headroom.
(a) Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights or based on the representation on the board of directors. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. Goodwill relating to the associate is included in the carrying amount of the investment and is not tested for impairment separately. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to the income statement, where appropriate. The Group’s share of post-acquisition profit or loss is recognised in the income statement and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equal or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group determines the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the income statement. Profits and losses resulting from transactions between the Group and its associate are recognised in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. When necessary amounts reported by associates have been adjusted to conform with the Group’s accounting policies.
(b) Joint arrangements
Investments in joint arrangements are classified as either joint ventures or joint operations depending on the contractual rights and obligations. Joint ventures are joint arrangements whereby the Group and other parties that have joint control of the arrangement have rights to the net assets of the joint venture. The parties to the arrangement have agreed contractually that control is shared and decisions regarding relevant activities require unanimous consent of the parties which have joint control of the joint venture. Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in a joint venture equal or exceed its interest in the joint ventures, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. Interest in joint ventures includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures. Unrealised gains and losses on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Joint operations are joint arrangements whereby the Group and other parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the joint operation. The Group recognises its share in the joint operations’ individual revenues and expenses, assets and liabilities and recognises it on a line-by-line basis in the Group’s financial statements (see note 29).
| 2023 | 2022 | |
|---|---|---|
| Joint ventures | 318,487 | 312,893 |
| Associates | 15,165 | 14,075 |
| As at 31 December | 333,652 | 326,968 |
Certain individually immaterial joint ventures have a carrying amount below nil. Depending on the funding structure of these joint ventures and the Group’s contractual commitments to them, any further losses are reflected in an allowance for loans receivable or a provision for joint ventures. As at 31 December 2023, the Group recognised a provision for joint ventures amounting to €2 million (2022: €11 million) and an allowance for non-recoverable loans amounting to €7 million (2022: €5 million) within other financial assets.
Revenue and net result of property development joint ventures in 2023 amount to €98 million and € 16 million respectively (2022: €115 million and € 21 million).# Royal BAM Group nv Annual report 2023
Set out below are the joint ventures that are individually material to the Group. This information reflects the amounts presented in the financial statements of the joint ventures adjusted for differences in accounting policies.
| Country of incorporation | Principal activity | % Share 2023 | % Share 2022 |
|---|---|---|---|
| Netherlands | Asset management | 50.00% | 50.00% |
| Netherlands | Asphalt production | 50.00% | 50.00% |
As part of the sale of Group’s 50% share to PGGM in 2020, the parties agreed to a contingent consideration of up to €25 million for the years 2021-2025. The contingent consideration becomes payable if and when the secured equity commitments will exceed a certain threshold over a period of five years with a cap of €5 million for each and every year. Given the assumed threshold along with the past level of secured equity, the fair value of the contingent consideration is estimated at €2 million (2022: €2 million) and is included in other financial assets. The fair value of hedge instruments in Invesis resulted in a €7.8 million loss (2022: €34 million gain) in other comprehensive income (i.e. the effective portion of the hedge) and a €0.5 million gain (2022: €16 million gain) in profit and loss. Hedge accounting was not applied in Q1 2022 as a result of which all fair value movements (€12 million) were recognised in profit and loss. Hedge accounting was re-applied in Q2 2022 after which only the ineffective portion (€ 4 million) was recognised in profit and loss. Inherently, these unrealised gains reverse towards the maturity of the underlying instruments, resulting in a decrease in the carrying amount of Invesis. The gains are non-distributable and therefore included in the legal reserve as explained in note 7.1 of the Company financial statements.
The amounts recognised in the balance sheet and income statement are as follows:
| AsfaltNu cv | Invesis Group bv | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Current assets | 31,306 | 34,365 | 57,156 | 58,120 |
| Non-current assets | 37,026 | 33,831 | 376,992 | 380,984 |
| Current liabilities | (24,717) | (29,861) | (31,502) | (30,214) |
| Non-current liabilities | (6,954) | (7,149) | (50,246) | (36,496) |
| Net assets | 36,661 | 31,186 | 352,400 | 372,394 |
| Share in profit rights | 50% | 50% | 50% | 50% |
| Carrying amount | 18,331 | 15,593 | 176,200 | 186,197 |
| Of which: | ||||
| Cash and cash equivalents | 10,196 | 12,220 | 27,098 | 32,568 |
| Current financial liabilities | 24,541 | 28,817 | (3,146) | (4,058) |
| Non-current financial liabilities | 5,703 | 5,639 | (37,392) | (24,394) |
| Revenue | 95,813 | 95,446 | 57,334 | 41,793 |
| Profit or loss | 3,475 | 3,954 | 5,188 | 46,954 |
| Other comprehensive income | - | - | (15,232) | 66,408 |
| Total comprehensive income | 3,475 | 3,954 | (10,044) | 113,362 |
| Share in profit rights | 50% | 50% | 50% | 50% |
| Share in profit or loss | 1,738 | 1,977 | 2,594 | 23,477 |
Dividends received from Invesis Group bv in 2023 amount to €5 million (2022: €7 million).
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired or issued. In principle, the financial assets are held in a business model whose objective is to collect contractual cash flows over the lifetime of the instrument. Financial assets that do not meet Solely Payments of Principal and Interest (SPPI) criterion (for which the test is performed at instrument level) are classified as other financial assets at fair value through profit or loss.
Financial assets at amortised cost are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve months after the end of the reporting period which are classified as non-current assets. Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. If the credit risk on a financial asset has not increased significantly since initial recognition, the loss allowance for that financial instrument is the 12-month expected credit losses (ECL). If the credit risk on a financial asset has significantly changed since initial recognition the loss allowance equals the lifetime expected credit losses. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. Indications of increase in credit risk for financial assets include debtors experiencing significant financial difficulty or being in default or delinquency in interest or principal payments. The amount of lifetime credit losses is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, taking into account the value of collateral, if any. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss. Financial assets are derecognised when the right to receive cash flows has expired or has been transferred and the Group has transferred substantially all risks and rewards of ownership.
| Receivables valued on fair value through profit or loss | Other financial assets | Receivables valued at amortised cost | Total | |
|---|---|---|---|---|
| As at 1 January 2022 | 63,401 | 13,493 | 1,213 | 78,107 |
| Additions | - | - | (71) | (71) |
| Loans granted | 10,530 | - | - | 10,530 |
| Loan repayments | (9,873) | (10) | - | (9,883) |
| Transfer to assets held for sale | (375) | - | - | (375) |
| Reclassifications | - | (61) | - | (61) |
| Exchange rate differences | (448) | (208) | - | (656) |
| As at 31 December 2022 | 63,235 | 13,214 | 1,142 | 77,591 |
| Additions | - | - | (30) | (30) |
| Loans granted | 9,394 | 14,785 | - | 24,179 |
| Loan repayments | (7,697) | (1,463) | - | (9,160) |
| Transfer to current | (391) | 364 | (27) | - |
| Exchange rate differences | - | 206 | - | 206 |
| As at 31 December 2023 | 64,541 | 27,106 | 1,112 | 92,759 |
Receivables valued on fair value through profit or loss are mainly non-recourse loans to project development joint ventures and are classified as level 3 valuation method; the fair value is determined based on the discounted cash flow method.
Land, building rights and property developments are recorded at the lower of cost and net realisable value. The Group capitalises interest expenses on loans and borrowings that fund these assets to facilitate the development. Interest costs are capitalised once development commences and until practical completion, based on the total actual finance cost incurred on the borrowings during the period. When properties are acquired for future redevelopment, interest on borrowings is recognised in the income statement until redevelopment commences. Raw materials and finished goods are stated at the lower of cost and net realisable value. Cost is determined using the ‘first-in, first-out (FIFO) method’. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
| 2023 | 2022 | |
|---|---|---|
| Land and building rights | 236,777 | 219,189 |
| Property development | 205,689 | 238,634 |
| 442,466 | 457,823 | |
| Raw materials | 12,340 | 15,706 |
| Work in progress and semi-manufactures | 4,001 | 4,214 |
| Finished products | 4,269 | 4,282 |
| 463,076 | 482,025 |
Land and building rights are presented as current assets in the ordinary course of business, however by its nature, the realisation of the majority of these assets will be past one year. The majority of investments in property development is expected to be sold within one year.
Impairments relating to the property portfolio are as follows:
| Note | 2023 | 2022 |
|---|---|---|
| Impairment charges | 4,444 | 12,252 |
| Reversal of impairment charges | (885) | (12,804) |
| 3,559 | (552) |
Property development includes the following completed and unsold property:
| Number/m² | Carrying amount | Number/m² | Carrying amount | |
|---|---|---|---|---|
| 2023 | 2023 | 2022 | 2022 | |
| Houses | - | - | - | - |
| Commercial property - rented | 2,073 | 2,810 | 27,950 | 56,233 |
| Commercial property - unrented | 1,938 | 1,793 | 2,848 | 6,598 |
| 4,603 | 62,831 |
Other inventories were not subject to impairments in 2023 or 2022.
Trade and other receivables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method less, any impairment losses.# Appendices
149Annual report 2023 Royal BAM Group nv
A contract asset is recognised when the Group has a right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time. It is recognised as the revenue recognised minus the invoiced amount. When the invoiced amount exceeds the amount of revenue recognised, the balance is classified as amount due to customer. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
| 2023 | 2022 | |
|---|---|---|
| Trade receivables | 531,508 | 487,228 |
| Less: Provision for impairment of receivables | (6,425) | (9,963) |
| Trade receivables - net | 525,083 | 477,265 |
| Amounts due from customers | 330,780 | 327,324 |
| Amounts to be invoiced | 111,673 | 92,389 |
| Retentions | 112,387 | 104,942 |
| Contract assets | 554,840 | 524,655 |
| Amounts due from related parties | 18,465 | 22,112 |
| PPP receivables | 644 | 338 |
| Other financial assets | 1,242 | 1,524 |
| Derivative financial instruments | 121 | 522 |
| Other receivables | 86,057 | 76,708 |
| Prepayments | 139,756 | 127,181 |
| 1,326,208 | 1,230,305 |
The concentration of credit risk with respect to trade receivables is limited, as the Group’s customer base is large and geographically spread. As at 31 December 2023 a part of the trade receivables amounting to €20 million (2022: € 19 million) is past due over one year but partly impaired. These overdue receivables relate to a number of customers and remain outstanding mainly due to ongoing discussions about claims and/or variation orders. Retentions relate to amounts retained by customers on progress billings. In the United Kingdom and Ireland in particular, it is common practice to retain a percentage of invoiced amounts until completion of the project. Amounts due from related parties mainly comprise receivables from joint ventures and associates. Other receivables include €13.6 million for the Group’s entitlement to old receivables of BAM Deutschland AG as explained in note 25.
The ageing analysis of trade receivables and related provisioning is as follows:
| 2023 | 2022 | |||
|---|---|---|---|---|
| Trade receivables | Provision for impairment | Trade receivables | Provision for impairment | |
| Not past due | 430,130 | (260) | 408,606 | (1,500) |
| Up to 3 months | 53,330 | (10) | 37,677 | (2,275) |
| 3 to 6 months | 8,361 | (104) | 10,855 | (2,350) |
| 6 to 12 months | 19,821 | (1,794) | 11,501 | (1,749) |
| 1 to 2 years | 9,480 | (2,803) | 6,384 | (83) |
| Over 2 years | 10,386 | (1,454) | 12,205 | (2,006) |
| 531,508 | (6,425) | 487,228 | (9,963) |
Movements in the provision for impairment of trade receivables are as follows:
| 2023 | 2022 | |
|---|---|---|
| As at 1 January | 9,963 | 5,595 |
| Additions to provision for impairment | 2,428 | 18,655 |
| Disposals | - | (9,584) |
| Release | (1,327) | (3,232) |
| Receivables written off during the year as uncollectable | (4,577) | (1,028) |
| Reclassifications | (81) | (378) |
| Exchange rate differences | 19 | (65) |
| As at 31 December | 6,425 | 9,963 |
Provision for impairment of receivables in 2023 and 2022 is mainly related to disputed balances and final negotiations on these balances with the customers. No significant credit losses were incurred. The creation and release of provisions for impaired receivables are included in other operating expenses in the income statement.
150Annual report 2023 Royal BAM Group nv
Cash and cash equivalents include the Group’s share in cash of joint operations as part of the conditions in project specific funding agreements and amount to €238 million (2022: €254 million). From the remaining cash balance, an amount of €25 million (2022: €19 million) is not at the free disposal of the Group; it is intended for specific VAT and wage tax payments only.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. For this to be the case the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable. Non-current assets (or disposal groups) classified as held for sale are measured at the lower of the asset’s carrying amount and the fair value less costs to sell. Depreciation or amortisation of an asset ceases when it is classified as held for sale. Equity accounting ceases for an investment in a joint venture or associate when it is classified as held for sale.
| 2023 | 2022 | |
|---|---|---|
| Assets classified as held for sale | 5,634 | 7,689 |
| Liabilities classified as held for sale | - | - |
| 5,634 | 7,689 |
The Company’s share capital is classified as equity. It consists of the Company’s ordinary shares and preference shares. The surplus paid by shareholders above the nominal value of shares is recognised as share premium. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. Repurchases of own shares are deducted from retained earnings on a cost basis. The cost represents the market price paid on the acquisition date. When repurchased shares are sold or re-issued subsequently, any amount received is recognised as an increase in retained earnings, and the resulting surplus or deficit on the transaction remains in retained earnings. Dividend is recognised as a liability in the period in which it is approved by the Annual General Meeting.
| Number of ordinary shares | Number of treasury shares | Number of ordinary shares in issue | |
|---|---|---|---|
| As at 1 January 2022 | 279,407,449 | 6,111,432 | 273,296,017 |
| Repurchase of ordinary shares | - | 5,287,888 | (5,287,888) |
| Awarded LTI shares | - | (111,440) | 111,440 |
| Dividends | - | - | - |
| As at 31 December 2022 | 279,407,449 | 11,287,880 | 268,119,569 |
| Shares issued | 4,630,427 | 4,630,427 | |
| Repurchase of ordinary shares | - | 10,275,655 | (10,275,655) |
| Awarded LTI shares | - | (1,888,153) | 1,888,153 |
| Dividends | - | (9,246,187) | 9,246,187 |
| As at 31 December 2023 | 284,037,876 | 15,059,622 | 268,978,254 |
At year-end 2023, the authorised capital of the Group was 400 million ordinary shares (2022: 400 million) and 600 million preference shares (2022: 600 million), all with a nominal value of €0.10 per share (2022: €0.10 per share). All issued shares have been paid in full (only ordinary shares).
151Annual report 2023 Royal BAM Group nv
On 17 May 1993, the Company granted Stichting Aandelenbeheer BAM Groep (‘the Foundation’) a call option to acquire class B cumulative preference shares in the Company’s share capital. This option was granted up to such an amount as the Foundation might require, subject to a maximum of a nominal amount that would result in the total nominal amount of class B cumulative preference shares in issue and not held by the Company equalling no more than 99.9% of the nominal amount of the issued share capital in the form of shares other than class B cumulative preference shares and not held by the Company at the time of exercising of the right referred to above. The board of directors of the Foundation has the exclusive right to determine whether or not to exercise this right to acquire class B cumulative preference shares. Additional information has been disclosed in chapter 8.3.
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. The exchange rate differences for 2023 of €18.4 million include the reclassification of translation differences to profit or loss related to the wind down of BAM International for € 9.8 million (2022: €8.5 million). The related loss is included in exchange rate differences in the consolidated income statement.
On 12 April 2023, the annual general meeting approved a cash dividend of €0. 1 5 per ordinary share with a scrip alternative. On 8 May 2023, the Group paid €22 million in cash and distributed 9.2 million shares to shareholders that opted for stock dividend. In order to satisfy the stock dividend requirement, the Company issued 4.6 million new ordinary shares at no cost.
During 2023, the Group repurchased 10.3 million own shares for a total consideration of €19.8 million (2022: €14.3 million). This consists of the repurchase programme to offset the dilution effect due to the issue of stock dividend and of the various running share-based employee incentive schemes (9.4 million shares) and repurchase of vested shares from employees to settle their wage tax and social security premiums (0.9 million shares).
The Company proposes to declare a dividend over 2023 of €0.20 per ordinary share. The dividend can be paid in cash or in shares at the option of the shareholders. For dividend paid in shares, the Group will repurchase shares to offset dilution.
Borrowings are recognised initially at fair value, net of transaction costs incurred. After initial recognition borrowings are measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised. The effective interest rate amortisation is included as finance costs in the income statement (unless the costs are capitalised).Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
| As at 1 January 2023 | Proceeds from borrowings | Repayments of borrowings | Effective interest method | Other | As at 31 December 2023 |
|---|---|---|---|---|---|
| Non-recourse PPP loans | 8,538 | 615 | (644) | - | - |
| Non-recourse property financing | 20,525 | 17,218 | (5,279) | - | - |
| Recourse property financing | 15,972 | 5,061 | (7,159) | - | - |
| Other non-recourse financing | 3,458 | 2,260 | (1,722) | - | (439) |
| Other recourse financing | 4,136 | - | (966) | - | - |
| Bank overdrafts | - | - | - | - | - |
| 52,629 | 25,154 | (15,770) | - | (439) | 61,574 |
| As at 1 January 2022 | Proceeds from borrowings | Repayments of borrowings | Effective interest method | Transfers to/ from joint ventures | As at 31 December 2022 |
|---|---|---|---|---|---|
| Non-recourse PPP loans | 8,946 | 13 | (421) | - | - |
| Non-recourse property financing | 20,604 | 25,490 | (24,603) | - | (966) |
| Recourse property financing | 26,617 | 12,214 | (22,859) | - | - |
| Other non-recourse financing | 3,796 | 1,425 | (1,763) | - | - |
| Other recourse financing | 5,089 | - | (953) | - | - |
| Bank overdrafts | - | - | - | - | - |
| 65,052 | 39,142 | (50,599) | - | (966) | 52,629 |
The non-recourse PPP loans relate to real estate projects in the Netherlands. Of the non-current part, €5.3 million has a term to maturity of more than five years (2022: €5.4 million). The average term to maturity of these loans is 12 years (2022: 13 years). The average interest rate is 2.1% (2022: 2.1%). Non-recourse PPP loans relate directly to the associated receivables from government bodies. The interest rates are influenced marginally by market adjustments applying to companies. The terms of property loans are relatively short, as a consequence of which interest margins are in line with the markets.
These loans are contracted to finance land positions acquired for property development and ongoing property development projects. The average term of non-recourse property financing is 3.3 years (2022: 2.8 years). Interest on these loans is generally based on Euribor plus a margin. Interest margins of these loans do not depend on market fluctuations during the term of these loans. The carrying amount of the related assets is €119 million at year-end 2023 (2022: €126 million). The assets are pledged as a security for lenders. These loans will be payable on demand if the agreed qualitative and quantitative conditions relating to interest and capital repayments, among other things, are not met.
Recourse property financing is contracted to finance land and building rights and property development. The average term of recourse property financing is 3.0 years (2022: 3.0 years). Interest on these loans is based on Euribor plus a margin. Interest margins of these loans do not depend on market fluctuations during the term of these loans. For property financing loans amounting to €1 million, the interest is (partially) fixed (2022: €2 million). Recourse property financing relates directly to the accompanying assets, that constitute a security for lenders. The carrying amount of these assets amount to €90 million at year-end 2023 (2022: approximately €118 million). Additional securities exist in the form of a guarantee provided by the Group, in some cases supplemented by a bank guarantee. These loans will be repayable on demand if the agreed qualitative and quantitative conditions relating to interest and capital repayments, among other things, are not met.
On 30 November 2022, the Group entered into a revolving credit facility agreement that provides a facility of maximum €330 million which can be used for general corporate purposes, including working capital financing. The facility had a term of four years (until 30 November 2026) plus two one-year extension options. During 2023, the first option was exercised and the maturity extended to 30 November 2027. Loans obtained under the facility are subject to variable market interest rates (EURIBOR) plus a margin in the range of 1.75% - 3.00% depending on the Group’s Recourse Leverage Ratio. On an annual basis, the margin is adjusted based on the Group’s performance on four ESG KPIs. The maximum margin adjustment is plus/minus 0.05%, depending on the number of ESG KPI’s meeting their respective target. The RCF is subject to financial covenants (see note 23.6) and to market conform commitment and utilisation fees. The facility has not been used in 2022 and 2023.
Besides the committed syndicated credit facility, the Group holds €153 million (2022: €153 million) in bilateral credit facilities.
Terms and conditions, including covenants, for project financing, being (non-) recourse PPP loans, (non-) recourse property financing loans, are directly linked to the respective projects. A relevant ratio in property financing arrangements is the loan to value, i.e. the ratio between the financing arrangement and the value of the project. In PPP loans and recourse property financing arrangements the debt service cover ratio is generally applicable. This ratio relates the interest and repayment obligations to the project cash flow. A breach of covenants may require immediate repayment of the respective outstanding loan. During 2023, no early payments were made as a result of not adhering to the financing conditions of project related financing (2022: nil).
The Group’s revolving credit facility is subject to a number of financial covenants. Non-compliance with the covenants could qualify as an event of default based on which the lenders may require immediate repayment of outstanding loans and cancel their commitments. Terms and conditions for the committed syndicated credit facility are based on the Group as a whole, excluding non-recourse elements. The ratios for this financing arrangement (all recourse) are the leverage ratio, the interest cover ratio, the solvency ratio and the guarantor cover. The capital base in the financial covenants (as part of the solvency ratio) is adjusted for the hedging reserve and remeasurements of post-employments benefits, among other things.
The requirements and realisation of the recourse ratios described above, are summarised as follows:
| Calculation | Requirement | 2023 | 2022 | |
|---|---|---|---|---|
| Leverage ratio | Net borrowings/EBITDA | ≤ 2.50 | (3.9) | (4.8) |
| Interest cover ratio | EBITDA/net interest expense | ≥ 4.00 | N/A¹ | N/A¹ |
| Solvency ratio | Capital base ² /total assets | ≥ 15% | 30.9% | 27.5% |
| Guarantor covers | EBITDA share of guarantors | ≥ 70% | 110.8% | 99.6% |
| Assets share of guarantors | ≥ 70% | 99.9% | 101.6% |
¹ An increased recourse leverage ratio of 2.75 is permitted for each second and third quarter of the year.
² The capital base in the financial covenant is adjusted for the hedging reserve and remeasurements of post- employment benefits, among other things.
The Group reported a net recourse interest income instead of an expense for the year ended 31 December 2023, making the recourse interest cover ratio not applicable.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
A defined benefit plan is a pension plan that is not a defined contribution plan. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension obligation. When the plan assets exceed the defined benefit obligation, the Group recognises a pension asset, which is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available when it can be realised during the life of the plan, or upon settlement of the plan’s liabilities. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited in other comprehensive income in the period in which they arise.# Other employment obligations
Current service costs of defined benefit plans are recognised immediately in the income statement, as part of ‘employee benefit expenses’, and reflect the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past-service costs are recognised immediately in the income statement. Interest expenses are included in the ‘employee benefit expenses’. For defined contribution plans, the Group pays contributions to administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(b) Other employment obligations
Other employment obligations comprise jubilee benefits, retirement gifts, temporary leaves and similar arrangements and have a non-current nature. These obligations are discounted to their present value. Remeasurements are recognised in profit or loss.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
154Annual report 2023
Royal BAM Group nv
| 2023 | 2022 | |
|---|---|---|
| Defined benefit asset | 51,894 | 72,513 |
| Defined benefit liability | 19,190 | 32,546 |
| Other employee benefits obligations | 12,851 | 13,022 |
| Total | 32,041 | 45,568 |
The Group operates defined contribution plans in the Netherlands, United Kingdom, Belgium, Germany and Ireland under broadly similar regulatory frameworks. The legacy defined benefit pension plans in all countries are closed for new entrants. Defined benefit plans in the United Kingdom and Ireland are in a net asset position; there is no asset ceiling on these plans as the Group is entitled to a return of surplus at the end of the plans’ lives. A further description of the post- employment benefit plans per country is as follows:
Netherlands
In the Netherlands, the Group makes contributions to defined benefit schemes as well as defined contribution schemes. The pension schemes in the Netherlands are subject to the regulations as stipulated in the Pension Act. Due to the Pension Act the pension plans need to be fully funded and need to be operated outside the Company through a separate legal entity. Several multi- employer funds and insurers operate the various pension plans. The Group has no additional responsibilities for the governance of these schemes. The basic pension for every employee is covered by multi-employer funds in which also other companies participate based on legal obligations. These funds have an indexed average salary scheme and are therefore defined benefit schemes. Specifically, these are the industry pension funds for construction, metal & technology and railways. As these funds are not equipped to provide the required information on the Group’s proportionate share of pension liabilities and plan assets, the defined benefit plans are accounted for as defined contribution plans. The Group is obliged to pay the predetermined premium for these plans. The Group may not reclaim any excess payment and is not obliged to make up any deficit, except by way of the adjustment of future premiums. The part exceeding the basic pension amount (top-up part), which is not covered by multi-employer funds, is carried out under separate contracts and are all defined contribution schemes. At year-end 2023, the (twelve-month average) coverage rate of the industry pension fund for construction is 125% (2022: 132%). The industry pension fund for metal and technical sectors has a (twelve-month average) coverage rate of 110% at year-end 2023 (2022: 108%). The (twelve-month average) coverage rate of the industry pension fund for railways is 130% (2022: 133%). With effect from 2006, all defined benefit schemes are closed for new entrants. The build-up of future pension entitlements for employees is covered by the multi-employer funds or external insurance companies. Defined benefit schemes are closed for future accumulation. Indexation is mainly linked to the industry pension fund for construction. The Group has established an accountability committee, with representation from the Central Works Council (CWC) and the Socio-Economic Committee of the BAM pensioners association (SEC).
United Kingdom
In the United Kingdom, the Group makes contributions to defined benefit plans as well as defined contribution plans. The Group is responsible for making supplementary contributions to recover the historical financing deficits. The plan for supplementary contributions was last revised after the most recent actuarial valuations of the funds in April 2022 and led to supplementary contributions in 2023 to the amount of €6 million (2022: €6 million). The Group replaced the closed defined benefit pension schemes with defined contribution schemes, which are executed by an outside insurance company. Following the closure of future accumulation in defined benefit pension schemes in 2010, employees who participated in these schemes were invited to participate in the defined contribution schemes. The buyout of the HBG GA DB Scheme in 2022 has contributed to the reduction of the gross assets and liabilities of circa €91 million. During 2023, the High Court in the United Kingdom concluded in a case between Virgin Media and NTL Pension Trustees II that a salary-related contracted-out scheme cannot be changed unless the actuary confirmed in writing (through a so-called section 37 confirmation) that the scheme would continue to satisfy the legal norms. If such confirmation would not exist, the High Court concluded that the change would automatically void. The case has been appealed but has the potential to cause significant issues in the United Kingdom pensions industry. Trustees of the Group’s UK salary-related contracted-out scheme await the outcome of the appeal and, if necessary, will investigate the implications. It is currently impossible to estimate the potential impact, if any, on the Group’s schemes. In addition, several defined benefit schemes are accounted for as defined contribution schemes as the external parties administering the funds are not able to provide the required information. These schemes have a limited number of members. The Group is obliged to pay the predetermined premium for these plans. The Group may not reclaim any excess payment and is not obliged to make up any deficit, except by way of the adjustment of future premiums. The Group did not make material contributions in 2023 and 2022.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
155Annual report 2023
Royal BAM Group nv
Belgium
In Belgium, the Group makes contributions to a relatively small defined benefit scheme that is executed by an external insurance company. The Group has also made arrangements for employees to participate in a defined contribution scheme. Belgian defined contribution plans are subject to the law of 28 April 2003 on occupational pensions, due to changes in the law in December 2015 defined contribution plans are classified and accounted for as defined benefit plans.
Germany
After the disposal of BAM Deutschland in 2021 and Wayss & Freytag in 2022, the Group operates one remaining small defined benefit pension scheme financed by the employer, which is closed to new participants.
Ireland
The Group has a defined benefit scheme in Ireland, executed by a company pension fund. The multi-employer pension scheme was fully converted from a defined benefit scheme to a defined contribution scheme with effect from 1 January 2006 for new entrants. The Group is responsible for making supplementary contributions to recover the historical financing deficits. The plan for supplementary contributions was last revised after the most recent actuarial valuations of the funds in 2017. This has led to a yearly supplementary contribution of approximately €4 million (2022: €3 million).
The significant actuarial assumptions per country were as follows:
| United Netherlands | Kingdom | Belgium | Germany | Ireland | |
|---|---|---|---|---|---|
| 2023 | |||||
| Discount rate | 3.1% | 4.6 - 4.8% | 3.8% | 3.6% | 3,6% |
| Salary growth rate | - | - | 2.1% | 2.5% | - |
| Pension growth rate | 0 - 6.1% | 2.7 - 3.2% | 2.1% | 2.5% | 0 - 2.4% |
| 2022 | |||||
| Discount rate | 3.5% | 5.0% | 3.2% | 3.9% | 4.2% |
| Salary growth rate | - | - | 2.2% | 2.2% | - |
| Pension growth rate | 0 - 3.9% | 1.9 - 3.0% | 2.2% | 2.2% | 0 - 2.7% |
Assumptions regarding future mortality are based on actuarial advice in accordance with published statistics and experience in each country.
Movements in the defined benefit pension plans over the year are as follows:
| United Netherlands | Kingdom | Belgium | Germany | Ireland | Total | |
|---|---|---|---|---|---|---|
| As at 31 December 2023 | ||||||
| Defined benefit liability | 10,307 | - | 57 | 8,826 | - | 19,190 |
| Defined benefit asset | - | 51,041 | - | - | 853 | 51,894 |
| Net Defined benefit asset/(liability) | 10,307 | (51,041) | 57 | 8,826 | (853) | (32,704) |
| Present value of obligation | ||||||
| As at 1 January 2023 | 265,334 | 552,531 | 7,385 | 14,936 | 61,939 | 902,125 |
| Service cost | - | 47 | 213 | - | 696 | 956 |
| Interest expense | 9,036 | 27,080 | 230 | 558 | 2,540 | 39,444 |
| Remeasurements | 17,433 | 27,074 | 114 | (59) | 6,601 | 51,163 |
| Plan participants contributions | - | - | 120 | - | 261 | 381 |
| Benefit payments | (14,380) | (27,609) | (376) | (865) | (3,199) | (46,429) |
| Settlements | - | - | - | - | - | - |
| Transfer to held for sale | - | - | - | - | - | - |
| Disposals | - | - | - | - | - | - |
| Exchange rate differences | - | 9,525 | - | - | - | 9,525 |
| As at 31 December 2023 | 277,423 | 588,648 | 7,686 | 14,570 | 68,838 | 957,165 |
| Fair value of plan assets | ||||||
| As at 1 January 2023 | 242,192 | 623,355 | 7,313 | 5,665 | 63,567 | 942,092 |
| Interest income | 8,697 | 30,783 | 236 | 223 | 2,710 | 42,649 |
| Remeasurements | 8,717 | (2,315) | (36) | (849) | 1,913 | 7,430 |
| Employer contributions | 22,069 | 6,360 | 380 | 1,570 | 4,439 | 34,818 |
| Plan participants contributions | - | - | 120 | - | 261 | 381 |
| Benefit payments | (14,380) | (27,609) | (376) | (865) | (3,199) | (46,429) |
| Administration cost |
| United | Netherlands | Kingdom | Belgium | Germany | Ireland | Total |
|---|---|---|---|---|---|---|
| Amounts recognised in the income statement | ||||||
| Service cost | - | 47 | 213 | - | 696 | 956 |
| Net interest expense | 339 | (3,704) | (6) | 335 | (170) | (3,206) |
| Changes and plan amendments and settlements | - | - | - | - | - | - |
| Administration cost | 179 | 1,582 | 8 | - | - | 1,769 |
| 518 | (2,075) | 215 | 335 | 526 | (481) | |
| Amounts recognised in other comprehensive income | ||||||
| Remeasurements: | ||||||
| - Return on plan assets, excluding interest income | (8,717) | 2,315 | 36 | 849 | (1,913) | (7,430) |
| - (Gain)/loss from change in demographic assumptions | - | (2,826) | - | 570 | - | (2,256) |
| - (Gain)/loss from change in financial assumptions | 14,381 | 26,066 | (10) | (572) | 5,770 | 45,635 |
| - Experience (gains)/losses | 3,052 | 3,834 | 124 | (57) | 831 | 7,784 |
| 8,716 | 29,389 | 150 | 790 | 4,688 | 43,733 | |
| Income tax | - | (7,344) | (36) | - | (585) | (7,965) |
| Remeasurement net of tax | 8,716 | 22,045 | 114 | 790 | 4,103 | 35,768 |
| United | Netherlands | Kingdom | Belgium | Germany | Ireland | Total |
|---|---|---|---|---|---|---|
| As at 31 December 2022 | ||||||
| Defined benefit liability | 23,142 | 61 | 72 | 9,271 | - | 32,546 |
| Defined benefit asset | - | 70,885 | - | - | 1,628 | 72,513 |
| 23,142 | (70,824) | 72 | 9,271 | (1,628) | (39,967) | |
| Present value of obligation | ||||||
| As at 1 January 2022 | 357,265 | 1,097,096 | 9,291 | 37,041 | 98,617 | 1,599,310 |
| Service cost | - | 102 | 540 | - | 1,520 | 2,162 |
| Interest expense | 3,153 | 17,637 | 71 | 327 | 1,462 | 22,650 |
| Remeasurements | (81,249) | (400,882) | (92) | (3,885) | (37,401) | (523,509) |
| Plan participants contributions | - | - | 144 | - | 285 | 429 |
| Benefit payments | (13,835) | (30,926) | (498) | (851) | (2,544) | (48,654) |
| Settlements | - | (91,458) | - | - | - | (91,458) |
| Transfer to held for sale | - | - | - | (17,696) | - | (17,696) |
| Disposals | - | - | (2,071) | - | - | (2,071) |
| Exchange rate differences | - | (39,038) | - | - | - | (39,038) |
| As at 31 December 2022 | 265,334 | 552,531 | 7,385 | 14,936 | 61,939 | 902,125 |
| Fair value of plan assets | ||||||
| As at 1 January 2022 | 335,567 | 1,194,508 | 8,884 | 7,027 | 90,136 | 1,636,122 |
| Interest income | 3,004 | 19,414 | 72 | 69 | 1,369 | 23,928 |
| Remeasurements | (91,335) | (429,044) | 123 | (564) | (30,174) | (550,994) |
| Employer contributions | 8,977 | 5,804 | 434 | 2,091 | 4,495 | 21,801 |
| Plan participants contributions | - | - | 144 | - | 285 | 429 |
| Benefit payments | (13,835) | (30,926) | (498) | (851) | (2,544) | (48,654) |
| Administration cost | (186) | (1,656) | (7) | - | - | (1,849) |
| Settlements | - | (91,458) | - | - | - | (91,458) |
| Disposals | - | - | (1,839) | - | - | (1,839) |
| Transfer to held for sale | - | - | - | (2,107) | - | (2,107) |
| Exchange rate differences | - | (43,287) | - | - | - | (43,287) |
| As at 31 December 2022 | 242,192 | 623,355 | 7,313 | 5,665 | 63,567 | 942,092 |
| United | Netherlands | Kingdom | Belgium | Germany | Ireland | Total |
|---|---|---|---|---|---|---|
| Amounts recognised in the income statement | ||||||
| Service cost | - | 102 | 540 | - | 1,520 | 2,162 |
| Net interest expense | 149 | (1,777) | (1) | 258 | 93 | (1,278) |
| Changes and plan amendments and settlements | - | - | - | - | - | - |
| Administration cost | 186 | 1,656 | 7 | - | - | 1,849 |
| 335 | (19) | 546 | 258 | 1,613 | 2,733 | |
| Amounts recognised in other comprehensive income | ||||||
| Remeasurements: | ||||||
| - Return on plan assets, excluding interest income | 91,335 | 429,044 | (123) | 564 | 30,174 | 550,994 |
| - (Gain)/loss from change in demographic assumptions | 1,777 | (9,279) | - | - | - | (7,502) |
| - (Gain)/loss from change in financial assumptions | (83,137) | (427,868) | (215) | (3,327) | (38,197) | (552,743) |
| - Experience (gains)/losses | 111 | 36,265 | 123 | (558) | 796 | 36,737 |
| 10,086 | 28,162 | (215) | (3,321) | (7,227) | 27,485 | |
| Income tax | (2,602) | (7,041) | 53 | - | 903 | (8,687) |
| Remeasurement net of tax | 7,484 | 21,121 | (162) | (3,321) | (6,324) | 18,798 |
The average duration of the defined benefit obligations per country were as follows:
| United Netherlands | Kingdom | Belgium | Germany | Ireland | |
|---|---|---|---|---|---|
| Average duration (in years) - 2023 | 11 | 14 | 14 | 7 | 17 |
| Average duration (in years) - 2022 | 12 | 14 | 14 | 7 | 18 |
Plan assets are comprised as follows:
| United Netherlands | Kingdom | Belgium | Germany | Ireland | Total | |
|---|---|---|---|---|---|---|
| 2023 | ||||||
| Equity instruments | - | 55,739 | - | - | 23,183 | 78,922 |
| Debt instruments | - | 559,616 | - | - | 41,260 | 600,876 |
| Property | - | 9,106 | - | - | 3,128 | 12,234 |
| Qualifying insurance policies | 267,116 | 390 | 7,629 | 5,744 | - | 280,879 |
| Cash and cash equivalents | - | 14,838 | - | - | 2,120 | 16,958 |
| 267,116 | 639,689 | 7,629 | 5,744 | 69,691 | 989,869 | |
| 2022 | ||||||
| Equity instruments | - | 57,046 | - | - | 21,865 | 78,911 |
| Debt instruments | - | 543,752 | - | - | 38,084 | 581,836 |
| Property | - | 10,348 | - | - | 3,002 | 13,350 |
| Qualifying insurance policies | 242,192 | 855 | 7,313 | 5,665 | - | 256,025 |
| Cash and cash equivalents | - | 11,354 | - | - | 616 | 11,970 |
| 242,192 | 623,355 | 7,313 | 5,665 | 63,567 | 942,092 |
Plan assets do not include the Company’s ordinary shares. Assets with a value of €381 million are unquoted (2022: €324 million).
The impact to the defined benefit obligation to changes in weighted principal assumptions is as follows:
| 2023 | 2022 | |||
|---|---|---|---|---|
| Increase by 0,5% | Decrease by 0,5% | Increase by 0,5% | Decrease by 0,5% | |
| Discount rate | (€59 million) | €65 million | (€56 million) | €61 million |
| Indexation | €33 million | (€29 million) | €29 million | (€28 million) |
| Salary increase | €0 million | (€0 million) | €0 million | (€0 million) |
If the life expectancy increases or decreases by one year, the pension liability will increase or decrease by approximately €35 million (2022: increase or decrease by €33 million).
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.
Through its defined benefit pension plans the Group is exposed to a number of risks, the most significant of which are detailed below:
With regard to the funded plans, the Group ensures that the investment positions are managed within an asset-liability matching (‘ALM’) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension schemes. Within this framework, the Group’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency. The Group monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. The Group has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.
Employer contributions to post-employment benefit plans for the year ending 31 December 2024 are expected to decrease from 2023 from €35 million to €17 million. The contributions in 2023 included extra amounts for indexation.
Provisions for warranties, restructuring costs, claims/legal obligations, associates and joint ventures and onerous contracts are recognised when:
(a) the Group has a present legal or constructive obligation as a result of past events;
(b) it is probable that an outflow of resources will be required to settle the obligation; and
(c) the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Restructuring provisions are recognised when a detailed formal plan has been approved, and the restructuring has either commenced or has been announced publicly. Restructuring provisions comprise lease termination penalties and employee termination payments. Future operating losses are not recognised. If the Group’s share in losses exceeds the carrying amount of the investment (including separately presented goodwill and other uninsured receivables), further losses will not be recognised, unless the Group has provided securities to the associate or joint venture, committed to liabilities or payment on behalf of the associate and joint venture. In that case, the excess will be provided for.# Annual report 2023 Royal BAM Group nv
Provisions are classified in the balance sheet as follows:
| 2023 | 2022 | |
|---|---|---|
| Non-current | 82,217 | 94,420 |
| Current | 114,677 | 145,708 |
| Total | 196,894 | 240,128 |
The non-current part of provisions is discounted at a rate in the range of 0% to 6% (2022: 0% to 3%). The provision for onerous contracts is based on judgments and uncertainties as described in note 4. Approximately 60% of the provision is current in nature (2022: 60%).
| Claims and legal | Onerous contracts | Warranty | Restructuring obligations | Joint ventures | Other | Total |
|---|---|---|---|---|---|---|
| As at 1 January 2022 | 32,785 | 16,212 | 4,475 | 7,124 | 128,578 | 20,809 |
| Charged/(credited) to the income statement: | ||||||
| - Additional provisions | 21,566 | 5,820 | 350 | 4,534 | 94,449 | 24,173 |
| - Release | (2,470) | (590) | (100) | - | (13,168) | (2,437) |
| Used during the year | (16,245) | (16,146) | (454) | (1,080) | (21,889) | (20,581) |
| Reclassifications | (13) | (134) | - | - | 355 | - |
| Exchange rate differences | - | - | - | - | (1,587) | (38) |
| Transfer to liabilities held for sale | (4,700) | - | (3,771) | - | (15,061) | (638) |
| As at 31 December 2022 | 30,923 | 5,162 | 500 | 10,578 | 171,677 | 21,288 |
| Charged/(credited) to the income statement: | ||||||
| - Additional provisions | 24,797 | 10,273 | - | - | 82,632 | 86 |
| - Release | (9,345) | (620) | (500) | - | (10,265) | (1,200) |
| Used during the year | (15,418) | (7,698) | - | (8,244) | (96,666) | (11,774) |
| Exchange rate differences | - | - | - | - | 693 | 15 |
| As at 31 December 2023 | 30,957 | 7,117 | - | 2,334 | 148,071 | 8,415 |
The provision for warranty concerns the best estimate of the expenditure required to settle complaints and deficiencies that become apparent after the delivery of projects and that fall within the warranty period. In reaching its best estimate, the Group takes into account the risks and uncertainties that surround the underlying events which are assessed periodically. Approximately 50% of the provision is current in nature (2022: 50%).
As per 31 December 2022, other provisions of €15 million were related to the sale of BAM Deutschland AG, to cover the following obligations to the buyer:
• guarantee the buyer for collection of 90% of outstanding receivables older than one year as at 31 December 2020 (“old receivables”) with a final payment to the buyer two year after the sale
• share profits and losses for two projects from the expected project result on the transaction date. It was agreed that losses were shared up to a certain cap. When the expected loss exceeds the cap, the Group bears all risks.
During 2023, the guarantee on old receivables reached its final payment date. The Group paid the buyer €19.1 million to settle the outstanding receivables. After the payment, the Group remains entitled to 90% of future cash proceeds of one receivable of €13.6 million, which is reflected as a financial asset in other receivables. Provisions used during the year reflect the remainder of €5.5 million and €6 million of other payments. As of 31 December 2023, a provision of €3.5 million remains for the remaining exposure. Also, one of the two projects for which the risk sharing mechanism applied was completed and settled, resulting in a gain of €9 million. The Group bears all risks on the remaining project.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. A contract liability is recognised when the Group has an obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.
| Notes | 2023 | 2022 |
|---|---|---|
| Trade payables | 507,305 | 499,733 |
| Amounts due to customers (contract liabilities) | 726,411 | 768,967 |
| Amounts due to related parties | 90,192 | 30,424 |
| Social security and other taxes | 167,766 | 146,806 |
| Pension premiums | 8,475 | 7,201 |
| Amounts due for work completed | 90,777 | 148,665 |
| Amounts due for work in progress | 611,014 | 564,650 |
| Derivative financial instruments | 1,318 | 39 |
| Other liabilities | 64,517 | 64,158 |
| Accrued expenses and deferred income | 180,006 | 237,912 |
| Total | 2,447,781 | 2,468,555 |
Amounts due to related parties mainly comprises payables to joint ventures and associates. The amounts due for work completed and for work in progress relate to suppliers of the Group for contract work performed.
The Group identifies subsidiaries, associates, joint arrangements, third parties executing the Group’s defined benefit pension plans and key management as related parties. Transactions with related parties are conducted at arm’s length, on terms comparable to those for transactions with third parties.
A major part of the Group’s activities is carried out in joint arrangements. These activities include the assignment and/or financing of land as well as carrying out construction contracts. In 2023, the Group carried out transactions with associates and joint arrangements related to the sale of goods and services for €81 million (2022: €162 million) and related to the purchase of goods and services for €58 million (2022: €80 million). The 2023 year-end balance of short term receivables amounts to €18 million (2022: €22 million) and the short term liabilities amounts to €90 million (2022: €30 million).
At year-end 2023, the Group had outstanding loans to associates and joint ventures for the amount of €79 million (2022: €76 million). These loans were provided on normal commercial terms and conditions, except that a number of loans does not have a fixed repayment date. Interest rates for these loans are at arm’s length. Loans to related parties are included in ‘Other financial assets’ in the statement of financial position.
Key management includes members of the Executive Board and the Supervisory Board. The compensation paid or payable to the Executive Board for services is shown below:
(in € thousand)
| 2023 | ||||||
|---|---|---|---|---|---|---|
| Fixed remuneration | Short-term incentive | Long-term incentive | Other benefits | Post-employment benefits | Total | |
| R.J.M. Joosten | 801 | 554 | 545 | 22 | 176 | 2,098 |
| L.F. den Houter | 572 | 395 | 342 | 22 | 126 | 1,457 |
| Total | 1,373 | 949 | 887 | 44 | 302 | 3,555 |
(in € thousand)
| 2022 | ||||||
|---|---|---|---|---|---|---|
| Fixed remuneration | Short-term incentive | Long-term incentive | Other benefits | Post-employment benefits | Total | |
| R.J.M. Joosten | 772 | 525 | 617 | 23 | 170 | 2,107 |
| L.F. den Houter | 551 | 375 | 566 | 23 | 121 | 1,636 |
| Total | 1,323 | 900 | 1,183 | 46 | 291 | 3,743 |
1 The amount shown under Other benefits consists of the car allowance. The short-term incentive (‘STI’) is part of the remuneration package of the Executive Board and is based on financial objectives (70%) and non-financial objectives (30%). Further information about STI is specified in the remuneration report. For 2023, the Supervisory Board determined that payout over 2023 results is 68% of fixed remuneration (2022: 68%). Post-employment benefits to members of the Executive Board are an age-independent gross allowance of 22 per cent of their fixed remuneration from which they need to finance their own retirement savings, including a surviving dependent’s pension. The long-term incentive relates to the Performance Share Plan. Additional information is included in the remuneration report and in note 28. No loans or advances have been granted to the members of the Executive Board. On 31 December 2023, Mr Joosten held 100,000 privately acquired BAM shares and Mr Den Houter 25,000.
Remuneration for supervisory board members only comprises fixed remuneration, as further explained in the remuneration report, and is as follows:
(in € thousand)
| 2023 | 2022 | |
|---|---|---|
| H.Th.E.M. Rottinghuis, Chairman | 108 | 103 |
| G. Boon, Vice-Chairman | 71 | 70 |
| B. Elfring | 69 | 68 |
| D. Koopmans | 74 | 68 |
| M.P. Sheffield | 67 | 65 |
| N.M. Skorupska | 66 | 65 |
| Total | 455 | 439 |
No share options, loans or advances have been provided to the members of the Supervisory Board. On 31 December 2023, Mr Boon, Mrs Koopmans and Mr Rottinghuis respectively held 100,000, 15,000 and 100,000 privately acquired BAM shares.
The Group operates equity-settled share-based plans. The fair value of the employee services received in exchange for the grant of the shares is recognised as cost with a corresponding credit entry of equity. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. The total amount to be expensed is determined by reference to the fair value of the shares granted:
• including a market performance condition based on the Company’s share price;
• excluding the impact of any service and non-market performance vesting conditions; and
• including the impact of any non-vesting conditions.
At the end of each reporting period, the Group revises its estimates of the number of shares that are expected to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in the income statement within ‘personnel expenses’, with a corresponding adjustment to equity.In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
162Annual report 2023
The Company operates a Performance Share Plan for members of the Executive Board and for a limited group of senior management positions below the Executive Board. Under the Performance Share Plan, each year performance shares are conditionally awarded subject to performance over a vesting period of three years and followed by a lock-up period of two years. Further information about the Performance Share Plan is included in the remuneration report.
In 2021, the Company introduced a Special Incentive Plan (“SIP”), under which the Company awarded conditional performance shares to a limited group of senior management positions below the Executive Board to motivate them to deliver on the objectives for the strategic period 2021-2023. When an employee was also a participant in the regular Performance Share Plan, the SIP replaced any awards under the Performance Share Plan 2021-2023. SIP measures performance on adjusted EBITDA for the full company and home countries in 2022 and 2023. The performance shares vest three years after the award date provided that the participant is still employed with the Company. For excellent performance, the number of performance shares that vests may amount to a maximum of 150% of the ‘at target’ number of performance shares. This percentage may be reduced to 50% (on a sliding scale) for threshold performance and to zero below that.
In principle, conditionally awarded shares are forfeited if the participant is no longer employed by the company, however upon termination of employment due to retirement, disability or death the participant (or his or her heirs) reserves the right on the pro rata number of conditionally awarded shares to become unconditionally pursuant to the same vesting conditions as described above (pro rata means the number of full months that the participant was engaged by the Company during the performance period divided by 36 months).
For the performance shares, the most recent expected results of the group were included to calculate the expected vesting of performance shares. Conditional shares in the Performance Share Plan include a dividend right like ordinary shares, however these dividends will be paid out in shares at the vesting date. Therefore the dividend yield on the conditional shares equals nil. Conditional shares in the Special Incentive Plan do not include a dividend right like ordinary shares.
In 2023, an amount of €4.9 million was charged (2022: €3.7 million) to the income statement arising from the share plans. The movement of the Performance Share Plan and Special Incentive Plan (in number of shares) during 2023 for the members of the Executive Board and for other participants is shown below:
| As at 1 January 2023 | Awarded | Dividend rights (including dividend) | Vested | Forfeited | As at 31 December 2023 | |
|---|---|---|---|---|---|---|
| R.J.M. Joosten | 762,036 | 347,201 | 53,938 | (305,971) | - | 857,204 |
| L.F. den Houter | 664,730 | 220,445 | 47,057 | (393,389) | - | 538,843 |
| Other participants | 4,250,219 | 908,319 | 131,744 | (1,322,523) | (157,013) | 3,810,746 |
| 5,676,985 | 1,475,965 | 232,739 | (2,021,883) | (157,013) | 5,206,793 |
The movements in number of shares of the Performance Share Plan and Special Incentive Plan (included in 2021-2023) during 2023 per Share Based Plan year-layer is shown below:
| As at 1 January 2023 | Awarded | Dividend rights (including dividend) | Vested | Forfeited | As at 31 December 2023 | |
|---|---|---|---|---|---|---|
| 2020-2022 | 1,888,153 | - | 133,730 | (2,021,883) | - | - |
| 2021-2023 | 2,708,124 | - | 25,320 | - | (117,775) | 2,615,669 |
| 2022-2024 | 1,080,708 | - | 73,689 | - | (39,238) | 1,115,159 |
| 2023-2025 | - | 1,475,965 | - | - | - | 1,475,965 |
| 5,676,985 | 1,475,965 | 232,739 | (2,021,883) | (157,013) | 5,206,793 |
The fair value per share of the 2023 award in connection with the TSR performance part amounted to €1.23 per share and is determined using a Monte Carlo simulation model. For the other (non) financial performance measures, the fair value equals the share price at the grant date. The key assumptions used in the valuations of the fair values were as follows:
| 2023 | |
|---|---|
| Share price at grant date (in €) | 2.03 |
| Risk-free interest rate (in %) | 2.49 |
| Volatility (in %) | 45.10 |
Expected volatility has been determined based on historical volatilities for a period of five years.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
163Annual report 2023
A part of the Group’s activities is carried out in joint arrangements and classified as joint operations. This applies to all activities and all countries in which the Group operates. These arrangements remain in place until a project is finished. In practice, the duration of the majority of the joint operations is generally limited to a period of one to four years, with the exception of joint operations in connection with land and building rights held for strategic purposes.
Based on assessment of balance sheet total, revenue and result, none of the joint operations is individually material to the Group. The Group’s share of the revenue of these joint operations amounts to approximately €713 million in 2023 (2022: approximately €1.0 billion), representing approximately 11% of the Group’s revenue (2022: 15%).
The Group’s share of the balance sheets of joint operations is indicated below:
(in € million)
| 2023 | 2022 | |
|---|---|---|
| Belgium, Germany and Division NL Division UK&I International Total | Belgium, Germany and Division NL Division UK&I International Total | |
| Assets | ||
| - Non-current assets | 2.8 - - 2.8 | 20.9 - - 20.9 |
| - Current assets | 54.4 192.2 23.3 269.9 | 105.9 172.3 39.1 317.3 |
| Liabilities | ||
| - Non-current liabilities | 9.4 - - 9.4 | 12.6 14.0 - 26.6 |
| - Current liabilities | 44.7 165.7 23.0 233.4 | 98.3 144.3 38.9 281.5 |
| Net balance | 3.1 26.5 0.3 29.9 | 15.9 14.0 0.2 30.1 |
As of 31 December 2023, the Group has capital commitments for joint operations amounting to nil (2022: €12.5 million). Guarantees issued by banks and surety companies amount to €0.2 million (2022: €0.2 million). Transfers of funds and/or other assets are made in consultation with the partners of the joint operations.
Capital expenditure contracted for at the end of the reporting period but not yet incurred and conditional contractual obligations to purchase land for property development activities is as follows:
| 2023 | 2022 | |
|---|---|---|
| Property, plant and equipment | 908 | 8,121 |
| Land | 129,047 | 129,588 |
| 129,955 | 137,709 |
The conditional nature of the contractual obligations to purchase land relate to, among other items, the amendment of development plans, the acquirement of planning permissions and the actual completion of property development projects.
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
164Annual report 2023
In the normal course of business the Group is exposed to claims from (sub)contractors and client that generally arise from a dispute about the quality of work and the amount of compensation. The Group recognises provisions for such claims when a cash outflow is probable. When not resolved or settled, claims may subsequently involve legal proceeding which, if decided or settled adversely, may have a material impact on the Group’s financial position, operational result or cash flows.
In April 2023, the building safety act 2022 in the United Kingdom came into force covering multi high rise residential buildings. The regulations seek to improve fire safety on these buildings and may impact developers and construction companies as there is uncertainty to where liability would fall between the developer, constructor and owner if unsafe conditions would be identified. It is currently not possible to estimate the potential impact.
Ethical misconduct or non-compliance with applicable laws and regulations (such as competition, bribery and corruption) could expose BAM to liabilities or have a negative impact on its business and reputation. BAM may be subject to administrative, civil or criminal liabilities including significant fines and penalties, as well as suspension or debarment from government or non-government contracts for some period of time.
Bonds and guarantees are provided in the ordinary course of business to BAM’s clients, either by the Company (parental guarantees), by banks (bank guarantees), or by surety companies (surety bonds), securing due performance of the obligations under the contracts by the subsidiaries of the Company. These securities are limited in amount and can only be called upon in case of (proven) default. It is not expected that any material risks will arise from these securities.
The parent company guarantees issued amount to €109 million (2022: €140 million). Guarantees issued by banks and surety companies amount to €1.0 billion (2022: €1.0 billion). Guarantee facilities amount to €1.9 billion (2022: €2.0 billion).# 31.3 Investigation
In October 2022, the Dutch Fiscal Information and Investigation Service (FIOD) and the Dutch Public Prosecutions Office (Openbaar Ministerie) have informed BAM International that it is the subject of an investigation into suspicions relating to potential fraud and corruption at some already completed projects. The timing and possible outcome of the investigation are uncertain. Therefore, the potential adverse financial impact of the outcome of the investigation, if any, cannot be reliably estimated at this time but could possibly be material. BAM is fully cooperating with the investigation and taking appropriate steps in connection with the investigation, including an internal review of the relevant projects. In July 2020, BAM announced its intention to wind down BAM International. Meanwhile all projects of BAM International have been completed.
The fees stated below for the audit of the financial statements are based on the total fees for the audit of the financial statements, regardless of whether the procedures were already performed in the financial year. Expenses for services provided by the Company’s current independent auditor, Ernst & Young Accountants LLP (EY) and its foreign member firms to the Group are specified as follows:
| EY Netherlands | EY foreign member firms | Total | EY Netherlands | EY foreign member firms | Total | |
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Audit fees | 4,130 | 2,420 | 6,550 | 3,950 | 2,158 | 6,108 |
| Audit-related fees | 74 | 22 | 96 | 88 | 24 | 112 |
| Tax fees | - | - | - | - | - | - |
| Other non-audit fees | - | - | - | - | - | - |
| 6,646 | 6,220 |
No material events after the reporting period have occurred.
165Annual report 2023 Royal BAM Group nv
Notes
| 31 December 2023 | 31 December 2022 |
|---|---|
| Non-current assets | |
| Intangible assets | 314,536 |
| Tangible fixed assets | 1,263 |
| Financial assets | 936,965 |
| Deferred tax assets | 44,897 |
| Total | 1,297,661 |
Current assets |
Receivables | 57,612 | 53,739
Cash and cash equivalents | 247,215 | 327,831
Total | 304,827 | 381,570
Total assets | 1,602,488 | 1,663,148
Equity attributable to shareholders of the Company |
Issued and paid capital | 28,404 | 27,941
Share premium | 810,907 | 811,370
Legal reserves | 79,488 | 62,382
Retained earnings | (173,295) | (270,747)
Net result | 174,991 | 179,644
Total | 920,495 | 810,590
Provisions | 10,470 | 23,300
Non-current liabilities |
Lease liabilities | 825 | 903
Current liabilities |
Lease liabilities | 476 | 985
Other liabilities | 670,222 | 827,370
Total | 670,698 | 828,355
Total equity and liabilities | 1,602,488 | 1,663,148
Company statement of financial position (before appropriation of result, x €1,000)
Company income statement (x €1,000)
| Notes | 2023 | 2022 |
|---|---|---|
| Internal charges | 33,534 | 49,633 |
| Other income | - | - |
| External charges | (2,385) | (2,179) |
| Personnel expenses | (19,890) | (20,265) |
| Depreciation and amortisation charges | (1,073) | (2,112) |
| Impairment charges | - | (3,000) |
| Other operating expenses | (21,433) | (37,989) |
| Operating result | (11,247) | (15,912) |
| Finance income | 19,817 | 8,040 |
| Finance expense | (29,841) | (9,439) |
| (10,024) | (1,399) | |
| Result before tax | (21,271) | (17,311) |
| Income tax | 25,938 | 14,747 |
| Share of result of investments | 170,324 | 182,208 |
| Net result | 174,991 | 179,644 |
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
166Annual report 2023 Royal BAM Group nv
The company financial statements of Royal BAM Group nv (‘the Company’ or ‘BAM’) have been prepared in accordance with Part 9, Book 2 of the Dutch Civil Code. In accordance with subsection 8 of section 362, Book 2 of the Dutch Civil Code, the recognition and measurement principles applied in these parent company financial statements are the same as those applied in the consolidated financial statements (see note 2 to the consolidated financial statements). The expected credit losses on receivables from subsidiaries have not been included in the company financial statements, since these have been eliminated within the book value of the receivables.
Investments in subsidiaries are measured at net asset value. The net asset value is calculated using the accounting policies, as described in note 2 to the consolidated financial statements. The net asset value of subsidiaries comprises the cost, excluding goodwill, of BAM’s share in the net assets of the subsidiary plus BAM’s share in income or losses since acquisition, less dividends received.
Corporate income tax is charged and/or allocated to the subsidiaries forming part of the fiscal unity, as if they were independent taxable entities. Tax receivables and payables to the respective subsidiaries are included in current receivables and current other liabilities.
Notes to the company financial statements
| As at 1 January 2022 | Additions | Amortisation charges | Reclassifications | Impairment charges | Exchange rate differences | As at 31 December 2022 | Additions | Amortisation charges | Exchange rate differences | As at 31 December 2023 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost | |||||||||||
| Goodwill | 522,440 | - | - | - | (3,000) | (7,282) | 515,158 | - | - | 2,296 | 517,454 |
| Non-integrated software | 17,930 | (578) | (870) | (5,838) | - | - | 3,565 | 290 | (426) | - | 3,855 |
| Other | 883 | - | (89) | - | - | - | 883 | - | (88) | - | 883 |
| Total | 541,253 | (578) | (959) | (5,838) | (3,000) | (7,282) | 519,606 | 290 | (514) | 2,296 | 522,192 |
| Accumulated amortisation and impairments | |||||||||||
| Goodwill | (200,488) | - | - | - | 3,000 | 7,282 | (200,488) | - | - | - | (203,488) |
| Non-integrated software | (10,137) | 578 | 870 | 5,838 | - | - | (3,058) | - | 426 | - | (3,484) |
| Other | (507) | - | 89 | - | - | - | (596) | - | 88 | - | (684) |
| Total | (211,132) | 578 | 959 | 5,838 | 3,000 | 7,282 | (204,142) | - | 514 | - | (207,656) |
| As at 1 January 2022 | 321,952 | 7,793 | 376 | 330,121 | |||||||
| As at 31 December 2022 | 311,670 | 507 | 287 | 312,464 | |||||||
| As at 31 December 2023 | 313,966 | 371 | 199 | 314,536 |
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
167Annual report 2023 Royal BAM Group nv
| As at 1 January 2022 | Net result for the year | Dividends | Changes to legal structure | Capital contributions | Loan repayments | Hedging reserve | Remeasurements of post-employment benefit obligations | Exchange rate differences | As at 31 December 2022 | Net result for the year | Dividends | Changes to legal structure | Capital contributions | Loan repayments | Hedging reserve | Remeasurements of post- employment benefit obligations | Exchange rate differences | As at 31 December 2023 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares in subsidiaries | 539,150 | 158,731 | - | (113,744) | 20,000 | - | 396 | (11,314) | (19,494) | 573,725 | 167,730 | (93,816) | (2,287) | - | - | (271) | (27,049) | 15,940 | 633,972 |
| Receivables from subsidiaries | 353,159 | - | - | 9,631 | - | (197,832) | - | - | - | 164,958 | - | - | - | - | (38,784) | - | - | - | 126,174 |
| Other participating interests | 126,523 | 23,477 | (6,675) | - | 10,377 | - | 34,210 | - | (1,006) | 186,906 | 2,594 | (4,975) | - | - | (90) | (7,865) | - | 249 | 176,819 |
| Total | 1,018,832 | 182,208 | (6,675) | (104,113) | 30,377 | (197,832) | 34,606 | (11,314) | (20,500) | 925,589 | 170,324 | (98,791) | (2,287) | - | (38,874) | (8,136) | (27,049) | 16,189 | 936,965 |
Changes to legal structure reflect the effect of transfers of subsidiaries. In 2022, a number of direct subsidiaries were transferred to other subsidiaries for a cash consideration. The result on these transactions was nil, i.e. the consideration was equal to the respective subsidiary’s carrying amount. Adjustments in the group structure in 2023 are related to the acquisition of a non-controlling interest of a subsidiary in Ireland. A list of principal subsidiaries is disclosed in chapter 8.4 of this annual report.
| 2023 | 2022 | |
|---|---|---|
| Deferred tax assets | 44,897 | 41,668 |
| Total | 44,897 | 41,668 |
The Company carries the full balance of deferred tax assets on carry forward losses of the fiscal unity.
| 2023 | 2022 | |
|---|---|---|
| Amounts due from subsidiaries | 40,412 | 40,847 |
| Amounts due from joint ventures | - | - |
| Prepayments and accrued income | 17,200 | 12,892 |
| Total | 57,612 | 53,739 |
Receivables are due within one year.
| 2023 | 2022 | |
|---|---|---|
| Cash at bank and in hand | 247,215 | 327,831 |
| Total | 247,215 | 327,831 |
Cash and cash equivalents are at the free disposal of the Company.
At year-end 2023, the authorised capital of the Group was 400 million ordinary shares (2022: 400 million) and 600 million preference shares (2022: 600 million), all with a nominal value of €0.10 per share (2022: €0.10 per share). All issued shares have been paid in full.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
168Annual report 2023 Royal BAM Group nv
Movements in shareholders’ equity are as follows:
| As at 1 January 2022 | Net result for the year | Appropriation of result | Remeasurements of post-employment benefit obligations | Cash flow hedges | Repurchase of ordinary shares | Share-based payments | Exchange rate differences | Transfers | As at 31 December 2022 | Net result for the year | Appropriation of result | Issue of share capital | Dividend payment | Remeasurements of post-employment benefit obligations | Cash flow hedges | Repurchase of ordinary shares | Share-based payments | Exchange rate differences | Acquisition non-controlling interest | Transfers | As at 31 December 2023 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Issued and paid capital | 27,941 | - | - | - | - | - | - | - | - | 27,941 | - | - | 463 | - | - | - | - | - | - | - | - | 28,404 |
| Share premium | 811,370 | - | - | - | 34,606 | - | - | - | - | 811,370 | - | - | (463) | - | - | - | - | - | - | - | - | 810,907 |
| Legal reserves | 5,923 | - | - | - | - | - | 3,659 | (27,784) | 49,637 | 62,382 | - | - | - | - | - | - | - | - | 18,444 | - | 6,798 | 79,488 |
| Retained earnings | (189,031) | - | (2,614) | (18,798) | - | (14,326) | - | - | (49,637) | (270,747) | - | 179,644 | - | (21,998) | (35,768) | - | (19,835) | 4,857 | - | (2,650) | (6,798) | (173,295) |
| Net result | (2,614) | 179,644 | 2,614 | - | - | - | - | - | - | 179,644 | 174,991 | (179,644) | - | - | - | - | - | - | - | - | - | 174,991 |
| Total | 653,589 | 179,644 | - | (18,798) | 34,606 | (14,326) | 3,659 | (27,784) | - | 810,590 | 174,991 | - | - | (21,998) | (35,768) | - | (19,835) | 4,857 | 18,444 | (2,650) | - | 920,495 |
On 12 April 2023, the annual general meeting approved a cash# Annual report 2023 Royal BAM Group nv
Legal reserves comprise the reserves for (cash flow) hedging, translation differences and the Group’s non-distributable reserve relating to undistributed profits accumulated in joint ventures and associates. These legal reserves are required by Dutch law and are not distributable. The hedging reserve, which is mainly related to Invesis, amounts to €26 million (2022: €35 million) and the translation reserve amounts to €87 million negative (2022: €105 million negative). The Group’s non-distributable reserve relating to undistributed profits accumulated in joint ventures and associates amounts to €140 million (2022: €133 million) of which €101 million is related to Invesis (2022: €102 million). The sum of share premium, retained earnings and net result are in principle distributable except for an amount of €87 million, which is to cover the negative translation reserve.
The net result for 2023 amounting to €175 million has been attributed to shareholders’ equity. The Company proposes to declare a dividend over 2023 of €0.20 per ordinary share. The dividend can be paid in cash or in shares at the option of the shareholders. For dividend paid in shares, the Group will repurchase shares to offset dilution.
| 2023 | 2022 | |
|---|---|---|
| Employee benefits | 10,470 | 23,300 |
| 10,470 | 23,300 |
Employee benefits provision mainly relates to the defined benefit liability of the Dutch pension plan as disclosed in note 24 of the consolidated financial statements.
| 2023 | 2022 | |
|---|---|---|
| Amounts due to subsidiaries | 641,417 | 812,290 |
| Income tax payable | 10,824 | - |
| Other liabilities | 17,981 | 15,080 |
| 670,222 | 827,370 |
Amounts due to subsidiaries is related to intercompany financing and the Group’s cash pool structure. The amounts are payable on demand and are subject to an interest rate equal to one month EURIBOR. Other liabilities mainly consist of trade and other payables.
Internal charges represent revenue from services that have been charged to subsidiaries in respect of management activities and responsibilities. The company charges these to its subsidiaries on a cost-plus basis.
| 2023 | 2022 | |
|---|---|---|
| Wages and salaries | 15,347 | 27,387 |
| Social security costs | 1,192 | 2,242 |
| Share-based payment expense | 1,884 | 1,710 |
| Pension costs - defined contribution plans | 1,442 | 2,414 |
| Pension costs - defined benefit plans | 25 | 45 |
| Attributable to subsidiaries | - | (13,533) |
| 19,890 | 20,265 |
At year-end 2023, the Company employed 97 FTE (2022: 97). The average number of FTE in 2023 was 97 (2022: 179). There are no employees in other countries than the Netherlands. Employee benefit expenses attributable to subsidiaries in 2022 relate to expenses for activities and responsibilities that were transferred to subsidiaries following the implementation of the new organisational structure and that have been deducted from the employee benefit expenses. The employment contracts of these employees transferred during the year.
The Company’s effective tax rate is -122% (2022: -85%) and differs from the applicable nominal tax rate of 25.8%. The difference in both 2022 and 2023 is mainly attributable to the recognition of additional deferred tax assets relating to tax losses. This is based on the Group’s forecast of taxable profits for the next five years.
The Company has entered into arrangements with a number of its subsidiaries and affiliated companies in the course of its business. These arrangements relate to service transactions and financing agreements and were conducted at market prices.
At 31 December 2023, the Company has issued parent company guarantees amounting to € 109 million (2022: €140 million).
The Company is jointly and severally liable for the debts of the subsidiaries based in the Netherlands pursuant to section 403, Book 2 of the Dutch Civil Code. The Company, together with other participants, has a joint and several liability for deficits in the Group’s cash pool as a whole. The Company forms a fiscal unity with BAM’s major Dutch and certain other subsidiaries for income tax and VAT purposes and, for that reason, it is jointly and severally liable for the Dutch income tax and Dutch VAT liabilities of the whole fiscal unity.
Bunnik, the Netherlands, 21 February 2024
Supervisory Board:
H.Th.E.M. Rottinghuis
G. Boon
B. Elfring
N.M. Skorupska
Executive Board:
R.J.M. Joosten
L.F. den Houter
D. Koopman
M.P. Sheffield
Approximately 1,300 homes have been delivered on the 42.5 hectare site of the former artificial silk factory Enka in various residential neighborhoods with their own character, Ede. AM and BAM Wonen
Assembling the Greatworth green tunnel for HS2, designed to blend the high speed railway into the rural landscape and reduce disruption for communities around Greatworth in West Northamptonshire. EKFB, including BAM Nuttall
countries. We paid specific attention in our audit to a number of areas driven by the operations of the Company and our risk assessment.
We determined materiality and identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or error in order to design audit procedures responsive to those risks and to obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
| Materiality | € 30 million (2022: € 32 million) |
|---|---|
| Benchmark applied | 0.5 per cent of revenue |
Explanation: Based on our analyses of the common information needs of users of the financial statements, we consider result before tax the most appropriate benchmark to determine materiality. However, result before tax has been volatile and consequently we considered revenues to be a more appropriate benchmark to determine materiality. We determined materiality consistent with previous year. 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.
en beroepsregels accountants” (VGBA, Dutch Code of Ethics). We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following information in support of our opinion and any findings were addressed in this context, and we do not provide a separate opinion or conclusion on these matters.
Our understanding of the business: Royal BAM Group nv, through its operating companies, offers its clients products and services in the sectors Construction and Property, Civil Engineering and Public Private Partnerships. Revenues from construction contracts, is considered an area requiring critical accounting judgements and a key source of estimation uncertainty. Land and building rights involved in property development, at the company’s own risks and rewards, requires recoverability testing based on the net realisable value. The Company is structured in divisions and is mainly active in the Netherlands, the United Kingdom, Ireland and Belgium, and we tailored our group audit approach accordingly. Royal BAM Group nv decided in 2020 to cease all operations of BAM International in other
To: the shareholders and Supervisory Board of Koninklijke BAM Groep N.V.
Report on the audit of the financial statements 2023 included in the annual report
Our opinion: We have audited the financial statements 2023 of Koninklijke BAM Groep N.V. (hereinafter: the Company or Royal BAM Group nv) based in Bunnik, the Netherlands. The financial statements comprise the consolidated and company financial statements.# Independent auditor’s report and limited assurance report on sustainability information
174Annual report 2023 Royal BAM Group nv
In our opinion:
• The accompanying consolidated financial statements give a true and fair view of the financial position of Royal BAM Group nv as at 31 December 2023 and of its result and its cash flows for 2023 in accordance with International Financial Reporting Standards as adopted in the European Union (EU-IFRSs) and with Part 9 of Book 2 of the Dutch Civil Code.
• The accompanying company financial statements give a true and fair view of the financial position of Royal BAM Group nv as at 31 December 2023 and of its result for 2023 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated financial statements comprise:
• The consolidated statement of financial position as at 31 December 2023.
• The following statements for 2023: the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows.
• The notes comprising material accounting policy information and other explanatory information.
The company financial statements comprise:
• The company statement of financial position as at 31 December 2023.
• The company income statement for 2023.
• The notes comprising a summary of the accounting policies and other explanatory information.
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the Our responsibilities for the audit of the financial statements section of our report. We are independent of Royal BAM Group nv in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit firms supervision act), 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. Furthermore we have complied with the “Verordening gedrags-related risks and the effects of the energy transition and the Company’s commitments and (constructive) obligations, are taken into account in estimates and significant assumptions. Furthermore, we read the annual report and considered whether there is any material inconsistency between the sustainability information in section 2.2 “Strategy” and 3.3 “Environmental performance” and the financial statements, including Note 2.1.1 Climate-related matters. During our audit we observed that the Executive Board took climate change related risks and opportunities into account when determining the Company’s strategy and consequently in the determination of the financial reporting judgements, estimates or significant assumptions as at 31 December 2023.
Although we are not responsible for preventing fraud or non-compliance and we cannot be expected to detect non-compliance with all laws and regulations, it is our responsibility to obtain reasonable assurance that the financial statements, taken as a whole, are free from material misstatement, whether caused by fraud or error. 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.
We ensured that the audit teams both at group and at component levels included the appropriate skills and competences which are needed for the audit of a listed client in the real estate and construction industry. We included specialists in the areas of IT audit, corporate finance, income tax, pensions, construction projects, land and building rights, share based payments, legal and forensics.
Climate change and the energy transition are high on the public agenda. Issues such as CO2 reduction impact financial reporting, as these issues entail risks for the business operation, the valuation of assets and provisions or the sustainability of the business model and access to financial markets of companies with a larger CO2 footprint. The Executive Board summarised the Royal BAM Group nv’s commitments and obligations, and reported in the section 2.2 “Strategy” and 3.3 “Environmental performance” of the annual report and section 2.1.1 “climate-related matters” in the financial statements how the Company is addressing climate-related and environmental risks also taking into account related regulatory and supervisory guidance and recommendations. As part of our audit of the financial statements, we evaluated the extent to which climate-
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
175Annual report 2023 Royal BAM Group nv
external partners in which Royal BAM Group nv does not have a majority share. In order to take responsibility as Group auditor we have had several (virtual) meetings during each phase of the audit and ultimately discussed the outcome of audit procedures with all component auditors. In addition we visited our component auditors in the United Kingdom, Ireland and Denmark and reviewed their electronic audit files. We have performed audit procedures ourselves for entities within the Group located in the Netherlands, thereby focusing on the key risk areas. We also have performed several audit procedures centrally. As a result of the above mentioned procedures, we have covered all entities and foreign locations that are significant to the consolidated financial statements of Royal BAM Group nv. In addition, we have performed analytical review procedures and made inquiries with the Executive Board 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 components of the group, 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 on the consolidated financial statements. We agreed with the Supervisory Board that misstatements in excess of € 1.5 million, 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.
Royal BAM Group nv is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements. 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. In establishing the overall approach to the audit, we determined the audit procedures required to be performed by us, as Group auditors or by (non-)EY Global member firms operating under our instructions. For the foreign Royal BAM Group nv components, we involved EY component auditors, who are familiar with local laws and regulations. We involved non-EY component as well as EY component auditors for projects with may represent a risk of material misstatement due to fraud, in particular relating to important judgment areas and significant accounting estimates as disclosed in note 3 to the consolidated financial statements. We have also used data analysis to identify and address high-risk journal entries and evaluated the business rationale (or the lack thereof) of significant extraordinary transactions, including those with related parties. The following fraud risks identified required significant attention during our audit. bribery and corruption in close co-operation with our forensic and legal specialists. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present. We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance. We addressed the risks related to management override of controls, as this risk is present in all companies. For these risks we have performed procedures among other things to evaluate key accounting estimates for management bias that chapter 5 in which the Supervisory Board reflects on this (fraud) risk assessment. We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness, of internal controls designed to mitigate fraud risks. As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and
We identified and assessed the risks of material misstatements of the financial statements due to fraud.# Report of the independent auditor
During our audit we obtained an understanding of the Company and its environment and the components of the system of internal control, including the risk assessment process and the Executive Board’s process for responding to the risks of fraud and monitoring the system of internal control and how the Supervisory Board exercises oversight, as well as the outcomes. We refer to chapter 4 of the annual report for the Executive Board’s (fraud) risk assessment and section Risk Management of the Report of the Supervisory Board to shareholders in Presumed risks of fraud in revenue recognition.
We presumed that there are risks of fraud in revenue recognition. We evaluated that revenues from construction contracts and property development give rise to these risks, including the related valuation of work in progress, due to an intentional over-estimation and/or under- estimation of the project results and required contract provisions. The risk predominantly relates to projects that are considered key due to, amongst others, their relative size and complexity and may take the form of:
* Incorrect valuation of variable considerations (i.e. variation orders, claims, penalties and bonuses); and
* Incorrect estimation of costs to complete (including an increased estimation uncertainty due to supply chain pressure and inflationary aspects)
We describe the audit procedures responsive to the this fraud risk in the description of our audit approach for the key audit matter Valuation of projects and revenue recognition.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
176Annual report 2023 Royal BAM Group nv
We identified the risk that the Company does not comply with anti-fraud and bribery laws and regulations in jurisdictions where it does business, both as a result of active transactions and/or passive transactions in which it is involved. As a result, the Company may be subject to administrative, civil or criminal liabilities including fines and penalties, as well as suspension or debarment from government or non-government contracts for some period of time. The risk with regard to active transactions concerns the risk that the Company makes illegal payments (bribery) to induce the recipient to act or refrain from acting. The risk particularly relates to the tender process for (larger) projects. Due to the size of the company, Royal BAM Group nv is a large customer for its suppliers and subcontractors. Therefore, suppliers and subcontractors have an incentive to become a preferred supplier or subcontractor for work on specific projects or in general. This leads to the risk that the Company or its employees accept(s) payments (bribery) from suppliers or subcontractors (passive transactions). We also refer to chapter 4.1 of the annual report.
We obtained an understanding of the entity level controls and the legal and regulatory framework of the Company and executed procedures to confirm that they have been properly implemented. On a periodic basis, we enquired with the Executive Board, internal audit department, risk and compliance department and legal department to understand and assess existing and potentially non-compliance matters and new constructive and legal obligations. We inspected legal and compliance management reports. We read the minutes of meetings of the Executive Board and Supervisory Board. For the specific risks identified we involved forensic specialists to design a tailored work program to address the risks identified, containing among others the following procedures:
* inquiry with the Executive Board, compliance officer and tender desk manager;
* review of minutes of meetings of local management;
* performing analytical procedures, including data analytics;
* performing substantive test of details regarding the tender costs and costs related to agents incurred in 2023;
* performing substantive test of details regarding significant contracts with suppliers in 2023;
* review of correspondence with relevant authorities (e.g. relating to compliance with anti-bribery and anti-competition laws and regulations in jurisdictions where the Company does business);
* evaluation of (potential) lawsuits identified or suspected by the Company.
The Dutch Fiscal Information and Investigation Service (FIOD) and the Dutch Public Prosecutions Office (Openbaar Ministerie) have informed BAM International that it is the subject of an investigation into suspicions relating to potential fraud and corruption at some already completed projects. For further information we refer to note 31 and to our key audit matter “Investigation by the Dutch authorities”.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
177Annual report 2023 Royal BAM Group nv
We considered available information and made enquiries of relevant executives, directors, internal audit, legal, compliance, human resources, local management and the Supervisory Board. There are (remaining) compliance, regulatory and reputation risks inherent to doing business in jurisdictions around the world as disclosed in note 31 to the financial statements. We considered the possible impact on our opinion and evaluated the adequacy of related disclosures in the financial statements.
We performed appropriate audit procedures regarding compliance with the provisions of those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. Furthermore, we assessed factors related to the risks of non-compliance with laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general industry experience, through discussions with the Executive Board and local management, reading minutes, inspection of internal audit and compliance reports and performing substantive tests of details of classes of transactions, account balances or disclosures. We also inspected lawyers’ letters and correspondence with regulatory authorities and remained alert to any indication of (suspected) non-compliance throughout the audit. In case of potential non-compliance with laws and regulations that may have a material effect on the financial statements, we assessed whether the Company has an adequate process in place to evaluate the impact of non-compliance for its activities and financial reporting and, where relevant, whether the Company implemented remediation plans. Finally, we obtained written representations that all known instances of non-compliance with laws and regulations have been disclosed to us.
As disclosed in section going concern in note 2 to the financial statements, the financial statements have been prepared on a going concern basis. When preparing the financial statements, the Executive Board made a specific assessment of the Company’s ability to continue as a going concern and to continue its operations for the foreseeable future. We discussed and evaluated the specific assessment with the Executive Board exercising professional judgment and maintaining professional skepticism. We considered whether the Executive Board’s going concern assessment, based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, contains all relevant 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. Based on our procedures performed, we did not identify material uncertainties about going concern. 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 a company to cease to continue as a going concern.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed. Last year’s key audit matter regarding “Accounting for results from disposal of subsidiaries” is not a key audit matter in 2023 as no such divestments occurred in 2023. Recognition of deferred tax assets is no longer part of the key audit matter relating to the valuation of goodwill as the degree of uncertainty changed due improved (taxable) results and changes in Dutch tax loss utilization rulings. In comparison with previous year, our other key audit matters did not change.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
178Annual report 2023 Royal BAM Group nv
The valuation of projects and revenue recognition are significant to the financial statements based on the quantitative materiality and the degree of management judgment required to account for complex projects and to apply the cost-to-cost method. Under the cost-to-cost method, costs are recognised as incurred and revenue is recognised on the basis of the proportion of total costs at the reporting date to the estimated total costs of the contract.
Furthermore, we presumed that there are risks of fraud in revenue recognition, in particular related to revenues from construction contracts and property development. We therefore considered this to be a key audit matter. Refer to pages 37-47 (management report, section risk management), page 125 (Note 3. Critical accounting judgements and key sources of estimation uncertainties) and pages 131-133 (Note 6. Revenue and projects). Royal BAM Group nv is involved in large and complex construction projects for which the Company applies the cost-to-cost method. The amount of project revenue, profit recognised as well as provisions for onerous contracts in a year is dependent, inter alia, on the actual costs incurred, the assessment of the percentage of completion of (long-term) contracts and the forecasted contract revenue and costs to complete of each project. Furthermore, the amount of revenue and result are influenced by the valuation of variation orders and claims. This often involves a high degree of judgement due to the complexity of projects, uncertainty about costs to complete and uncertainty about the outcome of discussions with clients on variation orders and claims. Our audit procedures included obtaining an understanding of the internal control environment of Royal BAM Group nv, evaluating implementation of relevant controls, performing physical and digital site visits (using webcams), vouching project valuations and challenging the Executive Board’s position based on supporting documentation and Royal BAM Group nv’s accounting policy. For long-term contracts, we also compared the position that Royal BAM Group nv is currently taking to the positions taken in previous year, to ensure consistency in the valuation and to perform back testing on this estimate. During our procedures we had an increased focus on the impact of challenging market conditions from economic volatility, global political uncertainties due to international conflicts, inflationary aspects and supply chain pressure. In cases where a high amount of judgement is involved, we gained additional comfort by comparing the Executive Board’s positions to opinions from external parties such as lawyers or surveyors. For specific complex projects we involved our own construction experts to determine the reasonableness of the Executive Board’s estimations of variable considerations and costs to complete. Overall, in our view revenues are recognised and projects have been valued in accordance with EU-IFRSs.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
179Annual report 2023 Royal BAM Group nv
Our audit approach
Key observations
As disclosed on page 24 (management report, section financial performance) and page 164 (Note 31. Contingencies), the Dutch Fiscal Information and Investigation Service (FIOD) and the Dutch Public Prosecutions Office (Openbaar Ministerie) have informed BAM International that it is the subject of an investigation into suspicions relating to potential fraud and corruption at some already completed projects.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
180Annual report 2023 Royal BAM Group nv
Our audit approach
Key observations
As per 31 December 2023, Royal BAM Group nv recognised goodwill (€319 million). As discussed on page 25 (management report, section financial performance) and disclosed on page 126 (Note 3. Critical accounting judgements and key sources of estimation uncertainties) and pages 143-144 (Note 15. Intangible assets), the valuation of goodwill is, amongst others, based on the determination of cash generating units (“CGU’s”), the discount rate, revenue growth and profit before tax margin, among others derived from the 2024 operating plan and strategic agenda 2024-2026 as approved by the Supervisory Board, and the Executive Board’s outlook based on order intake and expected margins for new projects for 2024 and beyond. Estimation of future cashflows and results inherently involves a high degree of judgment. We therefore considered this to be a key audit matter. Royal BAM Group nv’s annual goodwill impairment test did not result in impairments. Key assumptions used in the value-in-use calculations of CGUs with a significant amount of goodwill are disclosed on page 144 of the Report.
Our audit procedures included an assessment of the Company’s assumptions underlying the estimated future results for their reasonableness and consistency with operating plans, strategic plans for future years, order intake, expected margins for new projects. We also challenged the Executive Board’s expectations of future results, challenged risk adjustments made by the Executive Board and we evaluated the historical accuracy of the Executive Board’s assumptions (back- testing) and analyzed the differences between expected and actual outcome. We involved corporate finance specialists to assess the reasonableness of the assumptions and appropriateness of the goodwil impairment test. In our view, the Executive Board’s assessment on the valuation of the recognised goodwill is reasonable and within the acceptable range taken into account the requirements of EU-IFRSs.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
181Annual report 2023 Royal BAM Group nv
Our audit approach
Key observations
As per 31 December 2023, Royal BAM Group nv recognised land and building rights (€ 237 million). As disclosed on page 126 (Note 3. Critical accounting judgements and key sources of estimation uncertainties) and pages 131-133 (Note 6. Revenue and projects), the estimates supporting the value of land and building rights relate to the future development of prices of residential housing for terms that vary from one year to more than thirty years, inherently creating significant estimation uncertainty. External parties, appraisers and institutions are involved to support the positions of the Executive Board. We therefore considered this to be a key audit matter.
We have assessed the calculations of the net realisable values of the land and building rights and challenged the reasonableness and consistency of the assumptions used by the Executive Board. We also determined consistency with prior years and external available information such as external appraisals and plans and decisions of government bodies. We also evaluated the Executive Board’s assumptions concerning the future development of prices of residential housing with independent expectations of external parties, appraisers and institutions. We involved our own valuation specialists to determine the reasonableness of the assumptions and models used by Royal BAM Group nv to support the value of land and building rights. In our view the valuation applied by Royal BAM Group nv is in accordance with EU-IFRSs.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
182Annual report 2023 Royal BAM Group nv
The annual report contains other information in addition to the financial statements and our auditor’s report thereon. Based on the following procedures performed, we conclude that the other information:
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 and Section 2:135b sub-Section 7 of the Dutch Civil Code and the Dutch Standard 720.# Report on Other Legal and Regulatory Requirements and ESEF Engagement
We were engaged by the shareholders meeting as auditor of Royal BAM Group nv on 22 April 2015, as of the audit for the year 2016 and have operated as statutory auditor ever since that date.
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audit of public-interest entities.
Royal BAM Group nv has prepared the annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF). In our opinion, the annual report, prepared in the XHTML format, including the partially marked-up consolidated financial statements, as included in the reporting package by Royal BAM Group nv, complies in all material respects with the RTS on ESEF.
The Executive Board is responsible for preparing the annual report, including the financial statements, in accordance with the RTS on ESEF, whereby the Executive Board combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including Dutch Standard 3950N “Assurance-opdrachten inzake het voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument” (assurance engagements relating to compliance with criteria for digital reporting). Our examination included amongst others:
The Executive Board is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRSs and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Executive Board is responsible for such internal control as the Executive Board determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, the Executive Board is responsible for assessing the Company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, the Executive Board should prepare the financial statements using the going concern basis of accounting unless the Executive Board either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Executive Board 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.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
183Annual report 2023 Royal BAM Group nv
The Supervisory Board is responsible for overseeing the Company’s financial reporting process.
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. The Information in support of our opinion section above includes an informative summary of our responsibilities and the work performed as the basis for our opinion.
Our audit further included among others:
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit. In this respect we also submit an additional report to the Audit Committee of the Supervisory Board in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report.
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 the key audit matters: those matters that were of most significance in the audit of the financial statements. We describe these matters in our auditor’s 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.
Utrecht, 21 February 2024
Ernst & Young Accountants LLP
Signed by J.H.A. de Jong
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management and governance
Business performance
Value creation
Message from the CEO
184Annual report 2023 Royal BAM Group nv
We have performed a limited assurance engagement on the sustainability information in the accompanying annual report for 2023 of Koninklijke BAM Groep N.V. (hereinafter: the Company or Royal BAM Group nv) based in Bunnik, the Netherlands. Based on our procedures performed and the assurance information obtained, nothing has come to our attention that causes us to believe that the sustainability information does not present fairly, in all material respects:
The sustainability information is included in the chapters 2.1 Business model, 2.2 Strategy, 2.3 Stakeholder engagement 3.2 Social performance, 3.3 Environmental performance and 6 Sustainability statements of the annual report.
We have performed our limited assurance engagement on the sustainability information in accordance with Dutch law, including Dutch Standard 3810N, “Assurance-opdrachten inzake duurzaamheidsverslaggeving” (Assurance engagements relating to sustainability reporting), which is a specified Dutch standard that is based on the International Standard on Assurance Engagements (ISAE) 3000, “Assurance engagements other than audits or reviews of historical financial information”. Our responsibilities in this regard are further described in the section Our responsibilities for the assurance engagement on the sustainability information of our report.# Limited assurance report of the independent auditor on the sustainability information
To: the shareholders and Supervisory Board of Koninklijke BAM Groep N.V.
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). 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 for Professional Accountants).
We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
The criteria applied for the preparation of the sustainability information are the GRI Sustainability Reporting Standards (GRI Standards) and the criteria supplementally applied as disclosed in chapter 6.2 Sustainability reporting principles of the annual report. The GRI Standards used are listed in the GRI Content Index as published on the website of Royal BAM Group nv.
The criteria applied specifically for chapter 6.6 EU Taxonomy is Regulation (EU) 2020/852, as supplemented with Commission Delegated Regulation (EU) 2021/2139, Commission Delegated Regulation (EU) 2021/2178, Commission Delegated Regulation (EU) 2023/2485 and Commission Delegated Regulation (EU) 2023/2486.
The comparability of sustainability information between entities and over time may be affected by the absence of a uniform practice on which to draw, to evaluate and measure this information. This allows for the application of different, but acceptable, measurement techniques. Consequently, the sustainability information needs to be read and understood together with the criteria applied.
The sustainability information includes prospective information such as ambitions, strategy, plans, expectations, and estimates. Prospective information relates to events and actions that have not yet occurred and may never occur. We do not provide assurance on the assumptions and achievability of this prospective information.
In the sustainability information, the calculations to determine scope 3 CO 2 emissions are mostly based on assumptions and sources from third parties. The assumptions and sources used are disclosed in chapter 6.2 Sustainability reporting principles of the annual report. We have assessed that these assumptions and external sources are plausible and appropriate, but we have not performed procedures on the content of these assumptions and external sources.
The references to external sources or websites in the sustainability information are not part of the sustainability information as included in the scope of our assurance engagement. We therefore do not provide assurance on this information. Our conclusion is not modified in respect of these matters.
The Executive Board is responsible for the preparation and fair presentation of the sustainability information in accordance with the criteria as included in the section Criteria, including the identification of stakeholders and the definition of material matters. The Executive Board is also responsible for selecting and applying the criteria and for determining that these criteria are suitable for the legitimate information needs of stakeholders, considering applicable law and regulations related to reporting. The choices made by the Executive Board regarding the scope of the sustainability information and the reporting policy are summarised in the chapter 6.2 Sustainability reporting principles of the annual report.
Furthermore, the Executive Board is responsible for such internal control as it determines is necessary to enable the preparation of the sustainability information that is free from material misstatement, whether due to fraud or error.
The Supervisory Board is responsible for overseeing the sustainability reporting process of Royal BAM Group nv.
Our responsibility is to plan and perform the assurance engagement in a manner that allows us to obtain sufficient and appropriate assurance evidence for our conclusion. Our assurance engagement is aimed to obtain a limited level of assurance to determine the plausibility of sustainability information. The procedures vary in nature and timing from, and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained in a limited assurance engagement is therefore substantially less than the assurance that is obtained when a reasonable assurance engagement is performed.
We apply the Nadere voorschriften kwaliteitssystemen (NVKS, regulations for quality management systems) and accordingly maintain a comprehensive system of quality management including documented policies and procedures regarding compliance with ethical requirements, professional standards and other relevant legal and regulatory requirements.
Our assurance engagement included amongst others:
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the assurance engagement and significant findings that we identify during our assurance engagement.
Ernst & Young Accountants LLP
Signed by
J.H.A. de Jong
Utrecht, 21 February 2024
(Summary of Article 31 of the Articles of Association)
From the profit achieved in any financial year, an amount will first be distributed, where possible, on the class B cumulative preference shares, calculated by applying the percentage stated below to the mandatory amount paid up on those shares as at the start of the financial year for which the distribution is made. The percentage referred to above will be equal to the average of the Euribor rates for money market loans with a maturity of twelve months – weighted according to the number of days for which these rates prevailed – during the financial year for which the distribution is made, plus one percentage point.# Euribor refers to the Euro Interbank Offered Rate as determined and published by the European Central Bank. Subsequently, if possible, a dividend will be distributed on each financing preference share of a certain series, with due consideration of the provisions of this article, equal to an amount calculated by applying a percentage to the nominal amount of the financing preference share concerned at the start of that financial year, plus the amount of share premium paid in on the financing preference share issued in the series concerned at the time of initial issue of the financing preference shares of that series, less the amount paid out on each financing preference share concerned and charged to the share premium reserve formed at the time of issue of the financing preference shares of that series prior to that financial year. If and to the extent that a distribution has been made on the financing preference shares concerned in the course of the year and charged to the share premium reserve formed at the time of issue of the financing preference shares of the series concerned, or partial repayment has been made on such shares, the amount of the distribution will be reduced pro rata over the period concerned according to the amount of the distribution charged to the share premium reserve and/or the repayment with regard to the amount referred to in the preceding sentence. The calculation of the dividend percentage for the financing preference shares of a certain series will be made for each of the series of financing preference shares referred to below, in the manner set forth for the series concerned.
The dividend percentage will be calculated by taking the arithmetic mean of the yield to maturity on euro government loans issued by the Kingdom of the Netherlands with a remaining term matching as closely as possible the term of the series concerned, as published in the Euronext Prices Lists, plus two percentage points.
The dividend percentage will be equal to the average of the Euribor rates for money market loans with a maturity of twelve months – weighted according to the number of days for which these rates prevailed – during the financial year for which the distribution is made, plus two percentage points.
The above percentages may be increased or reduced by an amount of no more than 300 basis points.
The above percentages apply for the following periods:
* series FP1 and FP5: five years;
* series FP2 and FP6: six years;
* series FP3 and FP7: seven years and
* series FP4 and FP8: eight years.
After a period expires, the percentage will be modified in accordance with the rules laid down in Article 31 paragraph 6(c) of the Articles of Association.
The Supervisory Board shall determine, based on a proposal by the Executive Board, what part of the profit remaining after application of the above provisions will be added to the reserves. The part of the profit that remains thereafter is at the disposal of the General Meeting, subject to the provision that no further dividends will be distributed on the preference shares and with due consideration of the other provisions of Article 31 of the Articles of Association.
He is involved in various family companies as chairman or as a member of foundation trust offices, and chairman of the Board of Stichting Instituut Gak.
Mr Van Riel has been a member of the Foundation’s board since 2019. He is a Dutch national. He is a former CEO and chairman of the Board of Management of Fugro N.V. He is chairman of the Supervisory Board of NV HVC and chairman of the Board of Stichting Preferente Aandelen Arcadis N.V.
Royal BAM Group nv has taken the following measures to protect itself against any undesired developments that might have an impact on the independence, continuity and/or identity of the Company and the group of companies associated with the Company.
Pursuant to a resolution passed by the General Meeting held on 12 June 1972, the Articles of Association include the possibility of issuing preference shares. Stichting Aandelenbeheer BAM Groep (hereafter referred to as ‘the Foundation’) was founded with a view to this possibility in 1978. The objective of the Foundation is to look after the interests of the Group. Specifically, the Foundation seeks to ensure that the interests of the Company, the Group and all their stakeholders are safeguarded as much as possible, and that influences which could undermine the independence and/or continuity and/or identity of the Group and which conflict with those interests are averted to the best of the Foundation’s ability.
The Foundation attempts to achieve this objective by acquiring and holding class B cumulative preference shares in the Company’s capital, by exercising the rights connected with those shares, and/ or by using its right of enquiry.
As announced at the General Meeting held on 4 June 1992 and considered at the General Meeting on 8 June 1993, the Company granted the Foundation an option to acquire class B cumulative preference shares in the Company’s capital on 17 May 1993. This option was granted up to such an amount as the Foundation might require, subject to a maximum of a nominal amount that would result in the total nominal amount of class B cumulative preference shares in issue and not held by the Company equalling no more than ninety-nine point nine per cent (99.9 per cent) of the nominal amount of the issued share capital in the form of shares other than class B cumulative preference shares and not held by the Company at the time of exercising the right referred to above.
The board of the Foundation has the exclusive right to determine whether or not to exercise this right to acquire class B cumulative preference shares. No class B cumulative preference shares have been issued at this time.
On 6 October 2008, the Company granted the Foundation the right, under Article 2:346(c) of the Dutch Civil Code, to submit a petition as referred to in Article 2:345 of the Dutch Civil Code (right of enquiry).
The Supervisory Board and the Executive Board reserve the right, in the interests of the Company and its associated companies, to resolve to take alternative measures in order to protect the Group against influences that might be regarded by the Supervisory Board and the Executive Board, after balancing the interests of the Company and all of the stakeholders in the Group, as being potentially damaging to the independence, continuity and/or identity of the Group.
The Foundation’s board consists of three members who are appointed by the Foundation’s board, after notification to the Executive Board. The Foundation is supported by its own legal and communication advisors. The composition of the board at the end of 2023 was: J.J. Nooitgedagt, chairman; F.K. Buijn; P. van Riel.
The chairman of the Foundation’s board receives an annual fee of €12,000 from the Foundation. The Foundation pays an annual fee of €10,000 to each of the other members of its board.
The particulars of the board members at the end of 2023 were as follows:
Mr Nooitgedagt has served on the Foundation’s board since 2017 and was appointed chairman in that same year. He is a Dutch national. A former member of the Executive Board and chief financial officer of Aegon, Mr Nooitgedagt is chairman of the Supervisory Board of PostNL N.V., chairman of the Supervisory Board of Invest-NL and chairman of the Board of Stichting Beschermingspreferente aandelen Fugro.
Mr Buijn has been a member of the Foundation’s board since 2012. He is a Dutch national. Due to his long-term experience as a qualified civil-law notary Mr Buijn is well versed in corporate law. Mr Buijn is a member of the Board of Stichting
| % | |
|---|---|
| BAM Groep Nederland bv*, Bunnik (Netherlands) | 100 |
| BAM Nederland bv*, Bunnik (Netherlands) | 100 |
| BAM Bouw en Techniek bv*, Bunnik (Netherlands) | 100 |
| BAM Residential bv*, Bunnik (Netherlands) | 100 |
| uniting the activities of: BAM Wonen bv*, Bunnik | 100 |
| Homestudios bv*, Utrecht | 100 |
| AM bv*, Utrecht | 100 |
| BAM Specials bv*, Bunnik (Netherlands) | 100 |
| BAM Energie & Water bv*, Zwolle | 100 |
| BAM Telecom bv*, Zwammerdam | 100 |
| BAM Infra Nederland bv*, Gouda (Netherlands) | 100 |
| uniting the activities of: BAM Infra bv*, Gouda | 100 |
| BAM Infra Rail bv*, Breda | 100 |
| BAM Infraconsult bv*, Gouda | 100 |
| BAM Belgium bv, Brussels (Belgium) | 100 |
| uniting the activities of: BAM Interbuild bv, Antwerp | 100 |
| Kairos nv, Antwerp | 100 |
| BAM Construct UK Ltd, Hemel Hempstead (United Kingdom) | 100 |
| BAM Nuttall Ltd, Camberley, Surrey (United Kingdom) | 100 |
| BAM International bv*, The Hague (Netherlands) | 100 |
| BAM Contractors Ltd, Kill, County Kildare (Ireland) | 100 |
| % | |
|---|---|
| Invesis bv, Bunnik (Netherlands) | 50.0 |
| AsfaltNu cv, Culemborg (Netherlands) | 50.0 |
A list of associates as referred to in Sections 379 and 414, Book 2, of the Netherlands Civil Code has been deposited at the Office of the Trade Register in Utrecht.
The new operating centre of the WZA (Wilhelmina Hospital Assen) includes six state-of-the-art operating rooms, which are equipped with, among other things, an ultra-modern air renewal system, Assen, BAM Bouw en Techniek.
Restoration of the listed Eindenhout estate (Huis Eindenhout, 1793). Haarlem, Schakel & Schrale (BAM Specials)
| BAM | AEX | ASCX | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|---|---|
| 0 | 1 | 2 | 3 | 4 | 5 |
BAM has been listed on Euronext Amsterdam since 1959 (symbol: BAMNB; ISIN code: NL0000337319). The share is included in the ASCX index, and options are traded by Liffe, the Euronext derivatives exchange. The market capitalisation at year-end 2023 was €651 million (year-end 2022: €582 million).
The purpose of the Group’s investor relations policy is to provide accurate, transparent and consistent information in a timely manner to stakeholders, which include existing and potential shareholders, financial institutions, brokers and the media. BAM intends to ensure there is a clear understanding of its strategy, performance and decisions to create awareness and confidence. Information is made available through the annual report, quarterly financial and other information, press releases and presentations to investors, which are all available on the Company’s website. BAM discloses price-sensitive information without delay through a press release and on its website. BAM has embedded a closed period in its reporting calendar. In this period, the Company does not enter into contact with investors, analysts or the press about the general business. This closed period starts six weeks prior to the publication of each annual report and half-year report and three weeks prior to the publication of the first and third quarter trading updates.
The 2023 closing price of the ordinary share was €2.42, which was 12 per cent above the closing price at year-end 2022 (€2.17). The ASCX index ended the year 1 per cent higher. BAM’s share price decreased by 4 per cent over the last five years. By way of comparison, the AEX and the ASCX indexes rose by 51 per cent and 28 per cent respectively in the same period. Graph 58 shows the history of the BAM ordinary share price over the past five years.
The average daily trade in BAM shares was 1,785,000 ordinary shares (2022: 2,151,000). In 2023, the average daily trade in BAM shares amounted to €3.9 million (2022: €5.4 million).
BAM closely monitors developments in its shareholder base by following public market information and a yearly shareholder identification report. Under the Dutch Financial Supervision Act, shareholders must disclose to the Dutch Authority for the Financial Markets (AFM) when they hold 3 per cent or more of shares and when they transfer to a different threshold level. At year-end 2023, the aggregate holdings of funds controlled by Dimensional Holdings and The Vanguard Group each surpassed 3 per cent in BAM’s share capital. BAM holds 15,059,622 (5 per cent) treasury shares, of which 5,947,165 shares are for the long-term incentive plan.
BAM has a dividend policy to distribute a dividend reflecting between 30 and 50 per cent of the net result for the year. When deciding upon the dividend, the Company considers the balance sheet structure supporting the strategic agenda. The proposal is to distribute a dividend of €0.20 over 2023 (in 2023 a dividend of €0.15 was distributed over the year 2022).
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Number of ordinary shares ranking for dividend | 273,296,017 | 273,296,017 | 273,296,017 | 268,119,569 | 268,978,254 |
| Average number of ordinary shares | 273,495,636 | 273,296,017 | 273,296,017 | 271,783,810 | 269,966,098 |
| Net result ranking for dividend | 0.04 | (0.45) | 0.07 | 0.67 | 0.65 |
| Equity attributable to shareholders | 2.30 | 2.13 | 2.39 | 3.02 | 3.42 |
| Dividend 1 | - | - | - | 0.15 | 0.20 |
| Pay-out (in %) | - | - | - | 22.3 | 30.7 |
| Dividend yield (in %) 2 | - | - | - | 6.9 | 8.3 |
| Highest closing price | 4.38 | 2.68 | 3.03 | 3.44 | 2.68 |
| Lowest closing price | 2.16 | 1.03 | 1.61 | 1.97 | 1.76 |
| Price on 31 December | 2.69 | 1.71 | 2.69 | 2.17 | 2.42 |
| Average daily trade (in number of shares) | 2,528,000 | 3,331,000 | 2,021,000 | 2,151,000 | 1,785,000 |
| Market capitalisation at year-end (x €1,000) 3 | 734,074 | 465,970 | 735,166 | 581,819 | 650,927 |
1 Dividend proposal 2023.
2 Based on share price at year-end.
3 Based on total number of ordinary shares in issue.
In 2022, BAM introduced a policy to buy back shares to satisfy its obligations of the various long-term incentive plans. Total shares qualifying for dividends increased by 858,685 at the end of 2023 versus the start of the year, to fulfil BAM’s obligations for share-based employee incentive schemes.
| 2022 | 2023 | |
|---|---|---|
| Outstanding ordinary shares on 31 December | 279,407,449 | 284,037,876 |
| Treasury shares held for performance share plan | (6,805,850) | (5,947,165) |
| Other treasury shares | (4,482,030) | (9,112,457) |
| Ordinary shares qualifying for a dividend on 31 December | 268,119,569 | 268,978,254 |
| Percentage of ordinary shares qualifying for a dividend | 96.0% | 94.7% |
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue (x € million, unless otherwise stated) | 7,314.0 | 7,422.9 | 6,976.1 | 6,603.7 | 7,207.8 | 7,209.1 | 6,768.2 | 7,315.3 | 6,618.2 | 6,270.5 |
| Adjusted EBITDA 2 | 124.3 | 137.1 | 159.8 | 113.1 | 213.7 | 235.4 | 200.8 | 278.4 | 350.2 | 304.3 |
| Adjusted EBITDA margin (in %) 2 | 1.7 | 1.8 | 2.3 | 1.7 | 3.0 | 3.3 | 2.9 | 3.8 | 5.3 | 4.9 |
| Operating result | (104.7) | (10.7) | 32.9 | 28.6 | 105.2 | 52.3 | (221.3) | 78.1 | 213.4 | 170.7 |
| Result before tax | (122.4) | 13.3 | 60.1 | 58.3 | 114.5 | 50.6 | (236.9) | 65.8 | 215.7 | 183.6 |
| Net result | (106.9) | 11.0 | 49.2 | 13.4 | 24.4 | 12.0 | (122.4) | 17.0 | 177.7 | 175.0 |
| • from continuing operations | (106.9) | 11.0 | 49.2 | 13.4 | 24.4 | 12.0 | (272.0) | 17.0 | 177.7 | 175.0 |
| • from discontinued operations | - | - | - | - | - | - | 149.7 | - | - | - |
| • attributable to the shareholders of the Company | (108.2) | 10.2 | 46.8 | 12.5 | 23.8 | 11.8 | (122.2) | 18.1 | 179.6 | 175.0 |
| Basic earnings per share (in €1) | (0.40) | 0.04 | 0.17 | 0.05 | 0.09 | 0.04 | (0.45) | 0.07 | 0.66 | 0.65 |
| Diluted earnings per share (in €1) | (0.40) | 0.04 | 0.17 | 0.05 | 0.09 | 0.04 | (0.45) | 0.07 | 0.65 | 0.64 |
| Dividend per ordinary share (in €1) 3 | - | 0.02 | 0.09 | 0.10 | 0.14 | - | - | - | 0.15 | 0.20 |
| Equity attributable to the shareholders of the Company | 827.4 | 902.1 | 834.3 | 852.2 | 729.0 | 628.4 | 583.4 | 653.6 | 810.6 | 920.5 |
| Subordinated convertible bonds | 124.5 | 124.3 | 112.5 | 115.0 | 117.6 | 118.7 | - | - | - | - |
| Capital base | 951.9 | 1,026.5 | 946.7 | 967.2 | 846.7 | 748.9 | 702.1 | 653.6 | 810.6 | 920.5 |
| Total assets | 4,956.0 | 4,852.2 | 4,812.0 | 4,571.2 | 4,578.0 | 4,540.2 | 5,244.5 | 4,495.9 | 3,819.4 | 3,932.0 |
| Capital ratio (in %) | 19.2 | 21.2 | 19.7 | 21.2 | 18.5 | 16.5 | 13.4 | 14.5 | 21.2 | 23.4 |
| Capital employed | 1,870.3 | 1,804.7 | 1,657.3 | 1,520.1 | 1,388.7 | 1,536.1 | 1,957.3 | 1,272.6 | 1,194.3 | 1,345.7 |
| Return on capital employed (in %) | (6.4) | 0.2 | 2.9 | 2.8 | 7.5 | 3.4 | (4.2) | 5.6 | 16.8 | 13.7 |
| Additions to property, plant and equipment | 56.3 | 64.6 | 61.9 | 82.4 | 83.1 | 82.3 | 58.7 | 64.9 | 92.9 | 80.0 |
| Additions to right-of-use assets | - | - | - | - | - | 118.1 | 78.4 | 51.3 | 43.7 | 107.4 |
| Depreciation property, plant and equipment | 79.6 | 66.5 | 60.3 | 55.0 | 63.8 | 54.0 | 54.0 | 51.4 | 39.6 | 39.3 |
| Depreciation right-of-use assets | - | - | - | - | - | 99.7 | 99.2 | 85.6 | 68.5 | 77.7 |
| Amortisation intangible assets | 3.2 | 4.1 | 4.1 | 4.1 | 6.0 | 5.9 | 6.0 | 8.4 | 8.6 | 4.3 |
| Impairments (including from joint ventures and associates) | 115.9 | 39.1 | 50.7 | 4.8 | 23.8 | 18.5 | 74.7 | 48.5 | 15.0 | 2.6 |
| Order book | 10,268 | 11,480 | 10,193 | 11,609 | 12,692 | 12,659 | 13,760 | 13,243 | 10,038 | 9,809 |
| Average number of employees (in FTE) | 23,525 | 21,916 | 20,370 | 19,720 | 20,194 | 19,433 | 18,731 | 17,001 | 14,608 | 13,344 |
1 All amounts are as reported in the respective year
2 From continued and discontinued operations
3 For 2023 dividend proposal.
BIM printer BAM Bouw en Techniek uses the so-called BIM printer in construction projects to automatically draw drawings from BIM in full size on the concrete floor to precisely position the dividing walls and doors. This robot printer ensures fast and accurate dimensioning of the elements. Robotisation is one of the building blocks that BAM uses - as an application in the field of digitalisation - to add value to projects.# Annual report 2023 Royal BAM Group nv
After the move of the hospital Groot Ziekengasthuis (GZG), the 5-hectare GZG site is being transformed into a new part of the city centre of ‘s-Hertogenbosch: the Gasthuiskwartier, AM (in joint venture).
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management & governance
Business performance
Value creation
Message from the CEO
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management & governance
Business performance
Value creation
Message from the CEO
Equity attributable to the shareholders of the Company plus subordinated convertible bond. Capital base is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Equity attributable to the shareholders of the Company | 920,495 | 810,590 |
| Subordinated convertible bond | - | - |
| Capital base | 920,495 | 810,590 |
Non-current assets plus net working capital plus cash and cash equivalents. Capital employed is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Non-current assets | 1,356,124 | 1,243,891 |
| Plus: net working capital | (767,741) | (890,849) |
| Plus: cash and cash equivalents | 757,333 | 841,246 |
| Capital employed | 1,345,716 | 1,194,288 |
Capital base divided by total assets. Capital ratio is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Capital base | 920,495 | 810,590 |
| Total assets | 3,932,020 | 3,819,395 |
| Capital ratio | 23.4% | 21.2% |
Energy consumption (GJ) and CO 2 emissions (in tonnes). The CO 2 emissions are calculated by applying conversion factors for the different energy types.
The absolute construction and office waste is representing the total construction waste generated at construction sites plus the waste produced at BAM offices.
Result before tax, impairment charges, interest, depreciation and amortisation and excluding restructuring costs and pension one-off results. Adjusted EBITDA is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Result before tax | 183,567 | 215,672 |
| Finance result | (12,839) | (2,259) |
| Operating result (“EBIT”) | 170,728 | 213,413 |
| Impairments | 3,559 | 13,473 |
| Share in impairment charges of associates and joint ventures | (917) | 1,502 |
| Depreciation and amortisation | 121,293 | 116,602 |
| EBITDA | 294,663 | 344,990 |
| Restructuring costs | 9,653 | 5,230 |
| Pension one-off | - | - |
| Adjusted EBITDA | 304,316 | 350,220 |
Some measures included in this annual report are not IFRS measures and are generally referred to as non-IFRS measures. The Group uses these as internal measures of performance to compare against budget, prior year and/or latest internal forecasts. The non-IFRS measures are reported in this annual report, as the Group believes they will support stakeholders to understand the Group’s financial position and results of operations. Included below are reconciliations of the respective non-IFRS measure to the closest financial measure under IFRS for stakeholders to appropriately understand their nature. Amounts are in thousands of euro, unless stated otherwise.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management & governance
Business performance
Value creation
Message from the CEO
Demolition waste encompasses all waste arising from demolishing or strip out of existing buildings and/or infrastructure on the construction site. It generally includes concrete, bricks, tiles, ceramics, and gypsum based materials, timber, glass, plastics, asphalt, tar and tarred products, metals, insulation materials.
Earnings before interest and tax. The amount is the equivalent of operating result as specified in the reconciliation of adjusted EBITDA.
Excavation waste encompasses all materials removed from the construction site as a result of excavation activities during preparation of construction sites. Excavation is defined as unwanted material resulting from excavation activities such as land levelling, civil and/or infrastructural works and/or general foundations. It generally includes soil, rocks and vegetation arising from site preparation.
Annual general meeting of shareholders.
Greenhouse gases which have a global warming impact.
Incident frequency for own employees on construction sites.
Incident frequency for the workforce, i.e. own employees plus subcontractors, hired workers and thirds.
The process of recovering the embodied energy of a material through incineration.
The sum of decrease/(increase) in inventories, decrease/(increase) in trade and other receivables and increase/(decrease) in trade and other payables as presented in the consolidated statement of cash flows. Cash flow from working capital is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Decrease/(increase) in inventories | 20,269 | (51,365) |
| Decrease/(increase) in trade and other receivables | (97,004) | (141,380) |
| Increase/(decrease) in trade and other payables | (22,726) | (273,527) |
| Cash flow from working capital | (99,461) | (466,272) |
The relative CO 2 emissions is the total CO 2 footprint (absolute emissions) of BAM corrected for changes in revenue. The relative emissions allow for a more relevant year on year comparison on BAM’s performance, as changes in the workload (amount and size of projects) are accounted for. The CO 2 intensity (tonnes CO 2 /M€ revenue) is calculated by dividing the total absolute CO 2 emissions by the revenue.
Construction waste consists of temporary and permanent construction materials and packaging brought on to construction sites which remain fully or partially unused during construction activities and which are to be discarded.
The construction and office waste intensity is representing the total construction and office waste of BAM corrected for changes in revenue. The construction and office waste intensity is calculated by dividing the total construction and office waste by the revenue.
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management & governance
Business performance
Value creation
Message from the CEO
Current assets (excluding cash and cash equivalents) minus current liabilities (excluding current borrowings and current lease liabilities). Net working capital is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Current assets | 2,575,896 | 2,575,504 |
| Minus: cash and cash equivalents | (757,333) | (841,246) |
| Minus: current liabilities | (2,666,680) | (2,692,881) |
| Plus: current borrowings | 7,061 | 11,968 |
| Plus: current lease liabilities | 73,313 | 55,806 |
| Net working capital | (767,743) | (890,849) |
Office waste consists of everyday items we use in the offices and then throw away, such as paper, product packaging, organic waste, furniture, clothing, bottles, food scraps, newspapers, appliances, paint, and batteries.
An unintended occurrence during a period of paid work that results in physical injury or illness, including accidents that occur during business trips (during working hours, no commuting). In the event of an accident involving multiple victims, the number of accidents is considered equal to the number of victims.
The amount of expected revenue from contracts with customers, for the next five years, that has been secured but has not yet been recognised as revenue as the respective performance obligation has not yet been satisfied. Orderbook is further specified in note 6.2 of the consolidated financial statements.
The incineration of waste without recovering the embodied energy or the disposal of waste in the ground.
The amount of cash and cash equivalents.
Cash and cash equivalents minus (non-current and current) borrowings minus (non-current and current) lease liabilities. Net (debt) / cash is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Cash and cash equivalents | 757,333 | 841,246 |
| Minus: non-current borrowings | (54,513) | (40,661) |
| Minus: current borrowings | (7,061) | (11,968) |
| Minus: non-current lease liabilities | (160,902) | (118,871) |
| Minus: current lease liabilities | (73,313) | (55,806) |
| Net (debt) / cash | 461,544 | 613,940 |
Net (debt) / cash plus (non-current and current) lease liabilities. Net (debt) / cash before lease liabilities is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Net (debt) / cash | 461,544 | 613,940 |
| Plus: current lease liabilities | 73,313 | 55,806 |
| Plus: non-current lease liabilities | 160,902 | 118,871 |
| Net (debt) / cash before lease liabilities | 695,759 | 788,617 |
Appendices
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management & governance
Business performance
Value creation
Message from the CEO
EBIT (on a rolling year basis) divided by the average four-quarter capital employed. Return on capital employed is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| EBIT | 170,728 | 213,413 |
| Average four-quarter capital employed | 1,244,433 | 1,270,400 |
| ROCE | 13.7% | 16.8% |
Return on Investment with diversity and inclusion expressed in an audit score and/or a current return in euro per euro invested in diversity and inclusion.# Royal BAM Group nv 2023 Annual Report
Other information
Financial statements
Sustainability statements
Supervisory Board
Risk management & governance
Business performance
Value creation
Message from the CEO
201Annual report 2023
Thirds (in the context of IF total)
All other parties involved in an accident arising from a work or workplace activity in which BAM is directly or indirectly involved, such as members of the public, visitors, bystanders, other road users, site inspectors from governmental agencies and vendors.
Total shareholder return (TSR)
Metric used to compare the performance of companies in BAM’s peer group’s shares over time. The relative TSR position reflects the market perception of overall performance relative to the peer group.
Trade working capital
Net working capital minus land and building rights, property development, non-trade receivables and payables (PPP receivables, other financial assets, other receivables, taxes, derivative financial instruments, provisions, other liabilities and assets and liabilities held for sale). Trade working capital is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Net working capital | (767,743) | (890,849) |
| Minus: land and building rights | (236,777) | (219,189) |
| Minus: property development | (205,689) | (238,635) |
| Minus: non-trade receivables | (135,810) | (123,132) |
| Plus: non-trade payables | 524,169 | 462,084 |
| Trade working capital | (821,846) | (1,009,721) |
Trade working capital efficiency
The average four-quarters’ trade working capital divided by revenue (on a rolling year basis). TWC efficiency is determined as follows:
| 2023 | 2022 | |
|---|---|---|
| Average four-quarters’ trade working capital | (824,778) | (1,047,410) |
| Revenue | 6,270,474 | 6,618,169 |
| TWC efficiency | (13.2%) | (15.8%) |
Reuse/recycling
The beneficial reuse of waste in its current form (either on-site or off-site). Recycling is the reprocessing of wastes, either in the same material (closed-loop) or a different material (open-loop).
Serious accident
An industrial accident that leads to the person involved being admitted to hospital for more than 24 hours or that results in electrocution, amputation or (hairline) fracture with or without lost time.
Social value
Social value is a broader understanding of value. Activities that contribute to social and local economic value are allocated appropriate monetary value, which together can be expressed as a percentage of contract value or revenue.
Social Return on Investment (SROI)
This is a method of delivering and measuring social value in projects, with a focus on getting people that have a distance to the labour market into work. Project contracts for the public sector in The Netherlands often contain contractual obligations with respect to SROI, expressed in a monetary value or percentage of contract sum.
Solvency
Equity attributable to shareholders of the Company, divided by total assets:
| 2023 | 2022 | |
|---|---|---|
| Equity attributable to the shareholders of the Company | 920,495 | 810,590 |
| Total assets | 3,932,020 | 3,819,395 |
| Solvency | 23.4% | 21.2% |
Sustainable timber
Responsibly sourced and certified timber (verified, legal and sustainable) consisting of the following categories:
• FSC 100%
• FSC mix
• PEFC mix
• Other certificates
The share of sustainable timber is calculated by dividing the sum of sustainable categories (all the above) by the total of categories. The remaining timber is reported as not certified.
The score is obtained by means of an ROI audit (external auditor) related to 20 key focus areas. The scores of the ROI audit can be categorised as follows:
1. Diamond (90+) - exemplar
2. Platinum (81-90) - leader
3. Gold (71-80) - champion
4. Silver (51-70) - aspiring
5. Bronze (0-50) - starting out
® Royal BAM Group nv
Runnenburg 9, 3981 AZ Bunnik, P.O. Box 20, 3980 CA Bunnik, the Netherlands, +31 (0)30 659 89 88, [email protected], www.bam.com
Statutory office in Bunnik, the Netherlands, Trade register number 30058019
Layout Boulogne Jonkers Design, Zoetermeer, the Netherlands
Printing Veenman+, Rotterdam, the Netherlands
Illustrations Chapman Brown Photography (cover image), Count Media - Gerard de Graaff, Diego Rosero Erazo, Egbert de Boer - architectural photography, HS2, Lisette van de Pavoordt, Marcel van Kerckhoven, Perth Museum, Sander Koning, Sky Revolutions - Patrick Rebelo/Jamie Jones, Tim Pestridge, Tomasz Kozak
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.