Financial Statement 2018

As a firm, we aim to shape a better world. This drives everyone at Arup to find new ways to make it a practical reality and not merely a worthy aspiration. 

I am pleased to report good progress on this front over the past year. We can always go further and do more, but across the firm there is clear evidence of our determination to expand the positive impact  we make – for our clients and for society as a whole. It is this determination that makes our work distinctive and continues to bind us together as an organisation. 

In the first quarter we launched our refreshed Group strategy to the firm, which explicitly responds to a changing world. Drivers including population growth, urbanisation, globalisation, climate change, resource scarcity and digital transformation present us with new challenges and opportunities.

As an independent firm that combines deep technical knowledge  with sharp strategic thinking and a creative mindset, we are well placed to address these issues.

Global reach

Our refreshed strategy identified certain regions of the world in  which we see opportunities to develop our practice to better meet  the challenges of shaping a better world.

Our work in China and with outbound Chinese clients has continued to flourish. Building on relationships stretching back over 40 years, we are helping the country continue its remarkable evolution. 

The pace, scale and quality of innovation involved is often breathtaking, emblematic of the ambition we are responding to. Our operations in North America have continued to prosper, with demand for our services high. Our mix of work in the region is evolving towards ever higher value services and we are continuing to establish a strong presence beyond our hubs on the East and West coasts of the US. Canada is also a growth market and our work on the new Champlain Bridge in Montreal and the Toronto Metro are good examples of our expansion there.

Combining technology and domain expertise

Another strand of development this year has been a concerted focus on digital transformation. 

We have always been a firm that is eager to embrace new technology, with iconic projects like the Sydney Opera House utilising the most advanced computers of their day. It is clear that we are now entering  a period where the impact of digital technology will increase exponentially. This has been driven by a rapid rise in computing power, richer and more widely available data, and fast emerging advances in machine learning and artificial intelligence.

We have made significant progress in five important areas: automation, data, digital services, digital products and technology.

Projects like our work on 3D Printing in Steel and Concrete and Driverless Cars demonstrate the impact we are already making.

A membership of quality

Ove Arup spoke about an organisation that is “always human, always living, always learning, always changing”. These principles remain highly relevant today and shape much of what we do to support the development of our colleagues broadly across the firm and specifically through the work of Arup University.

This work goes beyond the confines of professional development and offers insights developed with external thought-leaders, firm-wide skills networks, and cutting-edge collaborative and research tools.

Reasonable prosperity of members

I am pleased to report that we have again achieved a reasonable financial performance that is well aligned to our strategic objectives. Our revenue grew to £1.56bn, an increase of 3.6%. Our operating profit margin, before staff profit-sharing was 12.2%. Our forward order book is robust, a clear measure of the faith and support our clients continue to place in us.

Risks and risk mitigation

In recent years our industry and our professions within it have seen  a shift in risk allocation to a position that is far from ideal. As an independent trust-owned firm we are under no external pressure to take undue risk in pursuit of profit, yet we remain vigilant and continue to carefully manage threats to our strength and stability, including avoiding assignments where we consider the allocation of risk to be unacceptable. 

It would be remiss of me not to address geopolitical risk including Brexit. As a firm with significant revenue from our UK operations,  we are mindful of the potential macro-economic effects of major policy changes, including our ability to attract the highly skilled people we continue to need. We will respond as appropriate to developments as they unfold.

More broadly, it is clear that the world is becoming less predictable, shaped by a changing political, social and economic climate. It is also true that the need for collaboration to address critical global issues is greater than ever. On that front, as our alignment with the United Nations Sustainable Development Goals shows, we are eager to play our part as a firm and as a group of talented, committed professional people. It is this sense of enthusiasm and purpose from our members that gives me most hope for the future. It shines through in every Arup office I visit. It reflects a deep and shared desire to make ‘we shape a better world’ more than a catchphrase as we expand the impact we make around the world.

Gregory Hodkinson, Chair, Arup Group Ltd