Financial Statement 2023

Chair’s foreword

Last year the world faced a series of socio-economic problems and growing geo-political turbulence. The war in Ukraine, the emergence of inflation as a primary post-pandemic issue for many economies, and significant differences in the pace at which nations emerged from COVID-19 challenged all. At the same time, many cities and regions coped with floods, fires, and other signs of a global climate system under pressure. Arup’s response included close partnering with clients to address the specific complexities they were facing, many of which intensified. We also prioritised implementation of our firm-wide strategy to put sustainable development at the heart of everything we do, and which last year involved structural reorganisation.

Delivering a strong commercial performance

We delivered a strong performance for the financial year ending 31 March 2023. Our revenue grew by 14.2% to £2,163.6m and we achieved an operating profit of 8.4% (before applying our profit share scheme, which benefits all of our members worldwide). Our membership continued to grow, exceeding 18,000 at the end of the reporting period.

Beyond our top-line performance, our energy and water businesses both delivered solid growth, allowing us to continue to scale and broaden the work we undertake for many of our clients directly engaged with the climate crisis. Our energy revenue grew 22% during the year, while our water business grew by 11%. Both businesses are firmly focused on the future, working with clients to accelerate the global clean energy transition and, in the case of water, strengthening the long-term strategic planning of the water industry and supporting the resilience of the communities it serves.

Implementing our strategy

We began last year with a new organisational structure, one that allows us to deliver our strategy more effectively. From April 2022, our structure has allowed us to strengthen our outward focus and has advanced our ability to offer our clients global solutions that align with local contexts.

Last year was also the moment when artificial intelligence (“AI”) became a question of widespread public debate, with the launch of generative AI tools for mass consumer use. Our work with AI is not new and last year saw us share insights publicly about how variable the natural water-holding capacity of world leading cities is. From Singapore to Nairobi, the insights we gained from deploying our land use analysis tool, Terrain, allowed us to stimulate discussions about the interventions specific cities can make to incorporate nature-based solutions. While there are no easy solutions, such approaches can improve water-holding capacity and reduce the severity of some flood events.

Applying our expertise

It is always satisfying to witness how our members apply the depth and breadth of their expertise and allow our clients’ ambitions to take flight. Last year, we welcomed completion of two major transport projects to which our experts have contributed significantly, the Elizabeth Line in London and Admiralty Station in Hong Kong. Arup’s work on the Elizabeth Line began with its inception and design, continuing through construction and operation. Delivering a 10% expansion to central London’s rail capacity, the line provides a direct and rapid link between Heathrow Airport, the city centre and Canary Wharf. It has been instructive to observe how quickly forecasts of passenger demand were met – and then exceeded.

In Hong Kong, our experts played a central role in transforming an existing rail station into a four-line mega interchange. Today, Admiralty Station is the busiest station on Hong Kong’s underground network. The number of platforms doubled, and construction took place while the existing station remained fully operational. While it’s easy to summarise such an achievement, I know how much skill and care is needed to deliver such a success.

Meanwhile in Canada, the Arthur J.E. Child Comprehensive Cancer Centre in Calgary reached substantial completion. A landmark facility, the centre is due to open in 2024 as the country’s largest cancer treatment and research facility and the second largest in North America. Arup specialists from around the globe came together to work on a project whose impact is likely to prove transformational.

Partnering for a better future

Arup has always embraced the challenges that come with complexity. We have worked collaboratively with others for more than 75 years to create new and better solutions. It is one of the reasons why we are so pleased to be a member of the Global alliance of organisations supporting The Earthshot Prize. The prize is an annual search for the best solutions for repairing the damage humanity has done to Earth.

As a Global alliance member, our experts work with the people who have developed earth-repair solutions, supporting them to scale and to create a better future for all.

The depth and length of our partnership with many clients is notable. Our work with Deutsche Bank focuses on decision making in relation to its extensive office network across Europe, Asia, North America, and key emerging markets. As nations respond differently to postpandemic opportunities and as new geo-political challenges emerge, our experts provide the bank with a wide range of services, from project management to building engineering and architecture.

Looking ahead

I took up the role of Arup’s Global Chair in 2019. Like many leaders, I was able to see some of what lay ahead, but there was so much more to come. We knew the United Kingdom could be expected to leave the European Union. Climate scientists were already clear about the trajectory of Global climate change. Indeed, Greta Thunberg had already begun her weekly protests in Stockholm. Addressing both issues was firmly on Arup’s agenda.

Not as clearly anticipated was the emergence of the Global health pandemic. Neither was the Black Lives Matter movement. With hindsight, perhaps both were far more likely than most leaders across the Global business community had foreseen or understood.

As last year progressed, the war in Ukraine dominated and the pressures this placed on the Global energy sector in the midst of technological transition became apparent. In many parts of the world, the price of food and other essentials drove energy and food security higher up political and business agendas.

Throughout my time as Arup Group Chair, I have continuously been proud that we have focused on serving our clients and supporting our members, particularly during difficult times and circumstances. In 2019, we sadly experienced a fatal accident at our Dublin office. In addition to expressing condolences to the family and providing support to members affected by this sorrowful event, we have invested in improving our health and safety procedures and performance. This has included carrying out a Global review of our premises’ health and safety compliance. Safety – and the culture of health, safety and wellbeing that underpins it – is of vital importance to us all. It is always evolving and develops in response to our changing ways of working. We are learning more about the connection between our work, environment, and wellbeing, both physically and mentally. We also recognise that the impact we have on safety through our design and advisory services continues to grow.

In April 2024 I will hand over the leadership of Arup to Jerome Frost, a long-standing member of our Group Board and current Chair of our UK, India, Middle East and Africa region. As our next Group Chair, I know Jerome will experience one of the best aspects of Arup – our members in every corner of the world will step up and lead, just as they have done during my tenure. As a company owned in trust on behalf of its members, Our People embrace the responsibility of leading and of advancing our mission: to shape a better world.

Alan Belfield, Chair Arup Group Ltd