Combined independent auditor’s report on the 2019 financial statements and sustainability information

To: the shareholders and Supervisory Board of Royal BAM Group nv

Please find below the main conclusions and main features of our audit and review. For the full text of the independent auditor’s report, which includes the assurance report on sustainability, please refer to the next pages.

Summary

Conclusions

Object of audit or review

Outcome of work performed Level of assurance

Financial statements 2019 (consolidated and company
financial statements)

True and fair view


Reasonable assurance



Sustainability information 2019
in Material themes, Business
conduct and transparency
and Safety

Reliable and adequate view



Reasonable assurance




Sustainability information 2019 in selected chapters and appendices

Reliable and adequate view  Limited assurance

Other information, including the reports from the Executive Board and the Supervisory Board

 No material misstatements

 

Main features of our audit and review

What we have done

Scope of our work

Materiality

Key audit and review matters


Audit of financial statements2019 (consolidated and company financial statements)

Worldwide

€ 35 million, based on 0.5% of revenue  

Valuation of projects and revenue recognition, implementation ofIFRS 16, valuation of deferred tax assets and valuation of land and building rights


Audit of the sustainability information 2019

Material themes, Business conduct and transparency and Safety

Specific materiality levels for each element of the sustainability information in scope

Completeness registration of safety incidents 


Review of the sustainability information 2019

Selected chapters and appendices

Specific materiality levels for each element of the sustainability information in scope

None


Procedures for other information

Full reports

Similar materiality levels as our audit and review scopes

None


Our conclusions

We have audited the financial statements 2019 of Royal BAM Group nv based in Bunnik. The financial statements include the consolidated financial statements and the Company financial statements. We have reviewed the sustainability information and audited selected sustainability information in the integrated report for the year 2019 of Royal BAM Group nv (‘the Report’). The scope is described in the section Our Scope. A review is aimed at obtaining a limited level of assurance. An audit is aimed at obtaining a reasonable level of assurance.

In our opinion:

  • The consolidated financial statements give a true and fair view of the financial position of Royal BAM Group nv as at 31 December 2019 and of its result and its cash flows for 2019 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
  • The Company financial statements give a true and fair view of the financial position of Royal BAM Group nv as at 31 December 2019 and of its result for 2019 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
  • The sustainability information in Material themes (pages 20-21*), Business Conduct and transparency (pages 37-38*) and Safety (KPI: IF BAM, KPI: number of serious accidents, KPI: safety behaviour audit) in chapter Social performance (pages 30-41*) in the integrated report 2019 of Royal BAM Group nv is prepared, in all material respects, in accordance with the Sustainability Reporting Standards (core option) of the Global Reporting Initiative (GRI) and the applied supplemental reporting criteria as disclosed in appendix 9.6 Non-financial reporting process and methods.

Based on our procedures performed, nothing has come to our attention that causes us to believe that the sustainability information does not present, in all material respects, a reliable and adequate view of the policy and business operations with regard to corporate social responsibility and the thereto related events and achievements for the year 2019 in accordance with the Sustainability Reporting Standards (core option) of the Global Reporting Initiative (GRI) and the applied supplemental reporting criteria as disclosed in appendix 9.6 Non-financial reporting process and methods of the Report.

Based on our procedures performed according to the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720, we conclude that the other information included in the Report, including the Executive Board report and the report from the Supervisory Board:

  • Is consistent with the financial statements and does not contain material misstatements.
  • Contains the information as required by Part 9 of Book 2 and section 2:135b of the Dutch Civil Code.

Basis for our conclusions 

We performed our assurance engagements in accordance with Dutch law, including the Dutch Standards on Auditing and the Dutch Standard 3810N ‘Assurance-opdrachten inzake maatschappelijke verslagen’ (Assurance engagements relating to sustainability reports), 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 under those standards are further described in the section Our responsibilities in this report.
We believe the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusions.

Our independence

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. This includes that we do not perform any activities that could result in a conflict of interest with our independent assurance engagements. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics)’. 

Our scope

Our engagements scope
The Report of Royal BAM Group nv consists of the financial statements and other information, including the Executive Board report and the report from the Supervisory Board, that provides altogether an overview of the policy, activities, events and performances related to both the financial position and the sustainable development of Royal BAM Group nv during reporting year 2019. The following information in the Report has been in scope for our assurance engagements: The consolidated financial statements comprise:

  • The consolidated statement of financial position as at 31 December 2019;
  • The following statements for 2019: the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows;
  • The notes comprising a summary of the significant accounting policies and other explanatory information.

The Company financial statements comprise: 

  • The Company statement of financial position as at 31 December 2019;
  • The Company income statement for 2019;
  • The notes comprising a summary of the accounting policies and other explanatory information.

The sustainability information comprises: 

  • Reasonable assurance – Sustainability information in the following paragraphs/chapters: Material themes (pages 20-21*), Business conduct and transparency (pages 37-38*) and Safety (KPI: IF BAM, KPI: number of serious accidents, KPI: safety behaviour audit) in chapter Social performance (pages 30-41*) - hereafter: the selected sustainability information.
  • Limited assurance – All other sustainability information reported in the paragraphs/chapters Business model (pages 11-13*), Strategy (pages 14-18*), Stakeholder engagement and material themes (pages 19-21*), Social performance (pages 30- 41*), Environmental performance (pages 42-49*), Non-financial reporting process and methods (pages 214-216*), GRI Disclosures as disclosed on the website of Royal BAM Group nv – hereafter: the other sustainability information.

The other information comprises:

  • Key figures.
  • Executive Board report.
  • Report from the Supervisory Board.
  • Remuneration report.
  • Other information pursuant to the requirements of Part 9 of Book 2 of the Dutch Civil Code.
  • Chapter: appendices.

Limitations to the scope of our assurance engagement on the sustainability information
The sustainability information includes prospective information, such as ambitions, strategy, plans, expectations and estimates. Inherent to prospective information, the actual future results are uncertain. We do not provide any assurance on the assumptions and achievability of prospective information in the sustainability information.
The references to external sources or websites in the sustainability information, except for the GRI Disclosures, which are available on the website of Royal BAM Group nv, are not part of the sustainability information as reviewed and audited by us. We therefore do not provide assurance on this information.

Reporting criteria

The financial statements and the sustainability information need to be read and understood together with the reporting criteria. Royal BAM Group nv is solely responsible for selecting and applying these reporting criteria, taking into account applicable law and regulations related to reporting. 

The absence of an established practice on which to draw, to evaluate and measure sustainability information allows for different, but acceptable, measurement techniques and can affect comparability between entities and over time.

The reporting criteria used for the preparation of the financial statements and the sustainability information are presented below.


Consolidated financial statements

International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code


Corporate financial statements, report by the board of management and report of the Supervisory Board

Part 9 of Book 2 of the Dutch Civil Code


Sustainability information

Sustainability Reporting Standards of the Global Reporting Initiative (GRI) and the applied supplemental reporting criteria as disclosed in appendix 9.6 Non-financial reporting process and methods on pages 214-216* of the Report.

* For page numbers please check the PDF file. 


Our focus on fraud and non-compliance with laws and regulations

Our responsibility
Although we are not responsible for preventing fraud or non-compliance and 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.  Non-compliance with laws and regulations may result in fines, litigation or other consequences for the Company that may have a material effect on the financial statements.

Our audit response related to fraud risks
In order to identify and assess the risks of material misstatements of the financial statements due to fraud, we obtained an understanding of the entity and its environment, including the entity’s internal control relevant to the audit and in order to design audit procedures that are appropriate in the circumstances. As in all of our audits, we addressed the risk of management override of internal control. We do not audit internal control per se for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

We considered available information and made enquiries of relevant executives, directors (including internal audit, legal, compliance, human resources and regional directors) and the Supervisory Board. As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption.

We evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness of internal controls that mitigate fraud risks. In addition, we performed procedures to evaluate key accounting estimates for management bias in particular relating to important judgment areas and significant accounting estimates as disclosed in Note 4. ‘Critical accounting judgements and key sources of estimation uncertainties’ in the financial statements. We have also used data analysis to identify and address high-risk journal entries.

We incorporated elements of unpredictability in our audit. We considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance. If so, we reevaluate our assessment of fraud risk and its resulting impact on our audit procedures.

Our audit response related to risks of non-compliance with laws and regulations
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 management board, 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. Finally we obtained written representations that all known instances of non-compliance with laws and regulations have been disclosed to us.

Going concern

In order to identify and assess the risks of going concern and to conclude on the appropriateness of management’s use of the going concern basis of accounting, we consider based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern.

Materiality

General
The scope of our assurance procedures is influenced by the application of materiality. Our assurance engagements aim to provide assurance about whether the financial statements and the sustainability information are free from material misstatement. Misstatements may arise due to fraud or errors. They are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the (economic) decisions of users taken on the basis of the financial statements and the sustainability information. The materiality affects the nature, timing and extent of our assurance procedures and the evaluation of the effect of identified misstatements on our conclusions.

Financial statements
For the audit of the financial statements our considerations regarding the materiality are as follows:


Materiality

€ 35 million (2018: € 34 million)


Benchmark used

0.5 per cent of revenue


Additional explanation 

Based on our analyses of the common information needs of users of the financial statements, we consider profit before tax the most appropriate benchmark to determine materiality. However, profit before tax has been volatile in recent years and is not yet at a representative level, given the size of the business. For this reason we considered revenues to be a more appropriate benchmark to determine the materiality


We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.

We agreed with the Supervisory Board that misstatements in excess of € 1.75 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.

Sustainability information
Based on our professional judgment we determined materiality levels for each relevant part of the sustainability information and for the sustainability information as a whole. When evaluating our materiality levels, we have taken into account quantitative and qualitative considerations as well as the relevance of information for both stakeholders and the Company.

We agreed with the Supervisory Board that misstatements which are identified during the review and which in our view must be reported on quantitative or qualitative grounds, would be reported to them.

Our scope for the Group audit of the financial statements

Royal BAM Group nv is the head of a group of entities primarily located in BAM’s home countries (Belgium, Germany, Ireland, the Netherlands and United Kingdom), along with certain corporate functions part of Royal BAM Group nv’s headquarters. The financial information of this group is included in the consolidated financial statements of Royal BAM Group nv. 

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 entities within the Group. Decisive were the size and/or the risk profile of the entities within the Group or operations. On this basis, we selected entities within the Group for which an audit or review had to be carried out on the complete set of financial information or specific items. 

Our Group audit focused on significant entities within the Group. Entities are considered significant either because of their individual financial significance or because they are likely to include significant risks of material misstatement due to their specific nature or circumstances. On this basis, we selected entities for which an audit or review had to be carried out on the complete set of financial information or on 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-)Ernst & Young Global member firms operating under our instructions.

For the foreign BAM home countries, we involved EY component auditors, who are familiar with local laws and regulations and who applied full scope audits. In order to take responsibility as Group auditor in line with current auditing standards, we visited our component auditors in the Belgium, Germany, Ireland and United Kingdom and furthermore, we discussed the outcome of audit procedures with all component auditors.

BAM International has, for purpose of the 2019 audit, engaged EY Canada for the audit procedures on a project in Canada. For the Middle East projects, BAM has involved a local non-EY audit firm who we visited and we reviewed their work. We concluded that we can rely on both the EY and non-EY component auditors and their work performed in relation to the audit of the consolidated financial statements of Royal BAM Group nv.

We have performed audit procedures ourselves for entities within the Group located in the Netherlands, thereby focusing on the key risk areas. Apart from focusing on significant entities within the Group, we also reviewed and selected projects on a risk basis, thereby taking into consideration the size and nature of projects, as well as the countries in which projects are being executed. 

As a result of the above mentioned procedures, we have covered all entities and foreign locations that are material to the consolidated financial statements of 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 entities within 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 about the consolidated financial statements.

Our key audit and assurance matters

Key audit and assurance matters are those matters that, in our professional judgment, were of most significance in our assurance procedures for the financial statements and the sustainability information. We have communicated the key audit and assurance matters to the Supervisory Board. The key audit and assurance matters are not a comprehensive reflection of all matters discussed. These matters were addressed in the context of our assurance procedures for the financial statements and the sustainability information as a whole and to conclude thereon, and we do not provide a separate conclusion on these matters. 

As per 1 January 2019 IFRS 16 ‘Leases’ is effective, which has a significant impact on BAM’s financial statements as from 2019. We therefore consider this topic to be a key audit matter for the audit of the financial statements 2019. As BAM has adopted IFRS 15
‘Revenue from Contracts with Customers’ in 2018 we do not consider this to be a key audit matter for the audit of the financial statements 2019 anymore. Furthermore, we paid additional attention to Royal BAM Group nv’s reassessment of the forecasted results due to the lower than expected results of certain CGU’s as part of the annual impairment tests on goodwill in 2019.

For the audit of the financial statements 2019 we identified the following key audit matters:

Valuation of projects and revenue recognition
Refer to Executive Board Report, Critical accounting judgements and key sources of estimation uncertainties and Note 6. Projects. 


 Key audit matter

How our audit addressed the matter

 Key observations


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 percentage of completion method. We therefore considered this to be a key audit matter. BAM is involved in large and complex construction projects for which the Company applies the percentage of completion 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 is influenced by the valuation of variation orders and claims. This often involves a high degree of judgment 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, thereby taking into account the various parts of the world BAM operates in.

Our audit procedures included an assessment of the internal control environment of BAM, testing existence of relevant controls, performing site visits, vouching project valuations and testing the Executive Board’s position against supporting documentation and BAM’s accounting policy. In cases where a high amount of judgment is involved, we gained additional comfort by comparing the Executive Board’s positions to opinions from external parties such as lawyers or surveyors. For long-term contracts, we also compared BAM’s current positions taken to the positions taken in previous year, to ensure consistency in the valuation and to perform back testing on this estimate.

Overall, we are of the opinion that projects have been valued in accordance with IFRS as adopted by the EU, thereby taking into account the disclosures with respect to risk and uncertainty mentioned on the pages referred to above. The Report also includes references to those projects valuations considered most significant by the Executive Board.

 

 

* For page numbers please check the PDF file. 


Implementation of IFRS 16
Refer to pages 97-115* (Summary of significant accounting policies), page 122-124* (Critical accounting judgements and key sources of estimation uncertainties), 132* (Note 8. Right-of-use assets) and 151-153* (Note 20. Lease liabilities)


Key audit matter

How our audit addressed
the matter

Key observations


BAM has adopted IFRS 16 ‘Leases’ with effect from 1 January 2019, using the modified retrospective transition approach whereby comparative figures were not restated. BAM chose to apply the transition option whereby the right-of-use asset is measured at an amount equal to the lease liability at transition date. 

Implementation of the new standard has resulted in a significant impact on BAM’s financial statements as from 2019. At transition date the total assets increased with € 265 million and the total liabilities with  € 271 million. We therefore considered this to be a key audit matter.

 

Our audit procedures focused on auditing BAM’s transition adjustments and disclosures and assessing the appropriateness of the applied practical expedients, judgments and assumptions. Specific attention was paid to the completeness of the population of leases by among others an expense analysis on lease costs and a lease commitment reconciliation.

We evaluated the completeness and accuracy of the data used to calculate the transition adjustments, which included an assessment of the reasonableness of estimates with respect to the lease term and the incremental borrowing rate.  

We also determined the accuracy of the lease calculations by the lease accounting tool applied by BAM. 

We concur with the IFRS 16 opening balances. 

We concur with the accounting for leases based on IFRS 16 including the relevant (transition) disclosures made in the Report.

* For page numbers please check the PDF file. 


Valuation of goodwill and deferred tax assets
Refer to page 27* (Executive Board Report), pages 122-124* (Critical accounting judgements and key sources of estimation uncertainties), pages 133-134* (Note 9. Intangible assets) and pages 161-163* (Note 24. Deferred tax assets and liabilities)


Key audit matter

How our audit addressed the matter

Key observations

As per 31 December 2019, BAM recognised goodwill (€ 380 million) and deferred tax assets (€ 154 million). The valuation of both goodwill and deferred tax assets is primarily based on expected future cashflows and forecasted results, among others derived from the 2020 operating plan as approved by the Supervisory Board and the Executive Board’s outlook based on order intake and expected margins for new projects for 2020 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. The Executive Board has re-assessed the ability to realise projected future results to meet the recognition criteria under IFRS. To reflect for the lower than expected results in amongst others Germany, Belgium and the Netherlands, the Executive Board reduced the expected forecasted results for 2020 and onwards. For goodwill valuation purposes, BAM’s re-assessed whether projected future results would reduce the available headroom for certain CGU’s. CGU’s with limited headroom are disclosed on page 134* of the Report. The reduced expected forecasted results led to an impairment of € 24.6 million of the recognized deferred tax assets related to tax losses carried forward in the Netherlands and Germany.

Our audit procedures included an assessment of the Company’s assumptions underlying the estimated future (taxable) results for their reasonableness and consistency with internal budgets, strategic plans for future years, order intake and expected margins for new projects for 2020 and beyond. We also challenged the Executive Board’s expectations of future (taxable) results, challenged risk adjustments made by the Executive Board and we assessed the historical accuracy of the Executive Board’s assumptions (back-testing) and analysed the rationale for differences between expected results and the actual results.

We involved a tax and valuation specialist to determine the reasonableness of the assumptions and models used by BAM in determining the valuation of goodwill and deferred tax assets. 

In our opinion, the Executive Board’s assessment on the recognised goodwill and deferred tax assets is reasonable and within the acceptable range of the requirements of IFRS. 

Realisation of the forecasted results should further evidence assumptions and the related valuation of goodwill and deferred tax assets. We do note assumptions may be impacted by future changes in the assessment and/or outcome of  variable considerations on various projects as well as the long term expectation on the operational performance of BAM.  

* For page numbers please check the PDF file. 


Valuation of land and building rights
Refer to pages 122-124* (Critical accounting judgements and key sources of estimation uncertainties) and pages 128-130* (Note 6. Projects)


Key audit matter

How our audit addressed the matter

Key observations

The estimates for valuation of land and building rights relate to terms which vary from one year to more than thirty years, because of which the estimation uncertainty is significant. We therefore considered this to be a key audit matter.

We have assessed the calculations of the land’s net realisable values 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 compared the Executive Board’s assumptions concerning the development of house prices with independent expectations of external parties and institutions.

In our opinion, the valuation applied by BAM is in line with IFRS as adopted by the EU.

* For page numbers please check the PDF file. 


For the assurance engagement on the sustainability information, we identified the following key assurance matter:

Completeness registration of safety incidents
Refer to pages 30-41* (Executive Board Report) and pages 214-216*(Appendix 9.6 Non-financial reporting process and methods)


Key assurance matter

How our assurance engagement addressed the matter

Key observations

Royal BAM Group nv uses and discloses own reporting criteria for the KPI ‘Incident Frequency BAM’ (hereinafter: IF BAM) and the ‘number of serious accidents’.

The complexity of the scoping of the indicators and the decentralised organisation of BAM inherently involves risk that not all safety incidents are registered.

Our assurance procedures focused on the suitability of the reporting criteria, inquiry of responsible personnel from different levels within the organisation on how BAM monitors this risk and which controls are in place to mitigate this risk. We performed testing procedures, on group and operational Company level, to verify the completeness of the registered safety incidents. We have also reviewed whether the disclosures in the Report, including any inherent limitations in measurement, are adequate.

Our assurance procedures focused on the suitability of the reporting criteria, inquiry of responsible personnel from different levels within the organisation on how BAM monitors this risk and which controls are in place to mitigate this risk. We performed testing procedures, on group and operational Company level, to verify the completeness of the registered safety incidents. We have also reviewed whether the disclosures in the Report, including any inherent limitations in measurement, are adequate.

* For page numbers please check the PDF file. 


Report on other legal and regulatory requirements

Engagement
We have been appointed in the shareholders meeting on 22 April 2015 as auditors of Royal BAM Group nv as of the audit for the year 2016 and have operated as statutory auditor since that date.

No prohibited non-audit services
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.

Other non-prohibited services provided
In addition to the statutory audit of the financial statements we provided the following services:

  • Agreed upon procedures on debt covenants and other financial ratios;
  • Assurance on other items than the consolidated financial statements of Royal BAM Group nv (such as local statutory audits and assurance on the Carbon footprint Scope 1 and 2 as included in the Report ‘CO2 emissie inventaris’ of Royal BAM Group nv;
  • Assurance on sustainability information as described in the section ‘Our scope’ of this report.

All other non-prohibited services provided have been pre-approved by the Audit Committee.

Responsibilities

Responsibilities of the Executive Board and the Supervisory Board
The Executive Board is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the other information, including the Executive Board report in accordance with Part 9 of Book 2 of the Dutch Civil Code,the other information pursuant to Part 9 of Book 2 of the Dutch Civil Code and the remuneration report in accordance with Section 2:135b of the Dutch Civil Code.

The Executive Board is also responsible for the preparation of reliable and adequate sustainability information in accordance with the Sustainability 

Reporting Standards of the GRI (core option) and the applied supplemental reporting criteria, including the identification of the stakeholders and the determination of material issues. The choices made by the Executive Board with respect to the scope of the sustainability information are included in paragraph Non-financial reporting processes and methods (pages 214-216*) of the Report.

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 and the sustainability information that are free from material misstatement, whether due to fraud or errors.
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 frameworks 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.

The Supervisory Board is responsible for overseeing the (financial) reporting process of Royal BAM Group nv.

Our responsibility
Our responsibility is to plan and perform the assurance engagements in a manner that allows us to obtain sufficient and appropriate assurance evidence for our conclusions.
Our audit of the financial statements and our audit of the selected sustainability information have 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.

Our review of the other sustainability information is aimed to obtain a limited level of assurance. The assurance procedures performed to obtain a limited level of assurance are aimed to determine the plausibility of information and vary in nature and timing from, and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained in a review is therefore substantially less than the assurance obtained in an audit.
We apply the ‘Nadere voorschriften kwaliteitssystemen’ (NVKS, Regulations for Quality management systems) and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and other relevant legal and regulatory requirements.

A further description of our responsibilities is included in the Annex to the combined independent auditor’s report.

Amsterdam, 20 February 2020
Ernst & Young Accountants LLP
Signed by A.A. van Eimeren

Annex to the combined independent auditor’s report

Work performed

We have exercised professional judgment and have maintained professional skepticism throughout the assurance engagements performed by a multi-disciplinary team, in accordance with the Dutch Standards on Auditing and the Dutch assurance standards, ethical requirements and independence requirements.

Our audit to obtain reasonable assurance about the financial statements (consolidated and corporate) included the following: 

  • Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or errors, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control
  • Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
  • Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Executive Board
  • Evaluating the overall presentation, structure and content of the financial statements, including the disclosures
  • Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

Our review to obtain limited assurance about the sustainability information included the following:

  • Performing an analysis of the external environment and obtaining an understanding of relevant social themes and issues and the characteristics of the Company
  • Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures in the sustainability information. This includes the evaluation of the results of the stakeholders’ dialogue and the reasonableness of estimates made by the Executive Board
  • Obtaining an understanding of the reporting processes for the sustainability information, including obtaining a general understanding of internal control relevant to our review
  • Identifying areas of the sustainability information with a higher risk of misleading or unbalanced information or material misstatements, whether due to fraud or errors. Designing and performing further procedures aimed at determining the plausibility of the sustainability information responsive to this risk analysis. These further review procedures consisted of:
    • Interviewing the Executive Board and relevant staff at corporate and local levels responsible for the sustainability strategy, policies and results
    • Interviewing relevant staff responsible for providing the information for, carrying out internal control procedures on, and consolidating the data in the sustainability information
    • Determining the nature and extent of the review procedures for locations. For this, the nature, extent and/or risk profile of these locations are decisive. Based thereon we selected the locations to visit. The visits to multiple sites and offices of BAM’s Operating Companies in Belgium, United Kingdom and The Netherlands are aimed at, on local level, valuating source data and evaluating the design and implementation of internal controls and validation procedures 
    • Reviewing, on a limited test basis, relevant internal and external documentation
    • Performing an analytical review of the data and trends
  • Evaluating the consistency of the sustainability information with the information in the Integrated Report which is not included in the scope of our review
  • Evaluating the presentation, structure and content of the sustainability information
  • Considering whether the sustainability information as a whole, including the disclosures, reflects the purpose of the reporting criteria used.

In addition to the procedures mentioned above, for the selected sustainability information we designed and performed further audit procedures responsive to the risks identified and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk that the other sustainability information is misleading or unbalanced, or the risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from errors. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. These further audit procedures included the following procedures:

  • Obtaining a more detailed understanding of the systems and reporting processes, including obtaining an understanding of internal control relevant to our assurance engagement, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
  • Evaluating the design and implementation of the relevant internal controls during the reporting year
  • Conducting more in-depth analytical procedures and substantive testing procedures on the relevant data
  • Evaluating relevant internal and external documentation, on a test basis, to determine the reliability of the selected sustainability 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. The scope of the procedures performed on the other information is substantially less than the scope of those performed in our audit of the financial statements or in our review of the sustainability information.

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 entities within the Group. Decisive were the size and/or the risk profile of the entities within the Group or operations. On this basis, we selected entities within the Group for which an audit or review had to be carried out on the complete set of financial information or specific items.

We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the assurance procedures and significant findings, including any significant findings in internal control that we identify during our assurance engagements. In this respect we also submit an additional report to the audit committee 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 those matters that were of most significance in the audit of the financial statements and the assurance engagement on the sustainability information of the current period and are therefore the key audit and assurance matters. We describe these matters in our combined independent 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.

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