Financial Statement 2020

The year 2020 has been one like no other, presenting challenges that were almost unimaginable a year ago. 

It is also true that the COVID-19 pandemic has amplified many existing critical issues – from urbanisation and inequality to climate change and resource scarcity. In tackling these issues I’m proud to report that our staff members ("members") have responded with energy and determination – drawing on their huge range of skills to provide powerful solutions. It’s this capacity that’s served us well this year and will do so again, as we help our clients and communities to face the inevitably strong headwinds to come.

Looking back now, it can be hard to remember a pre-COVID-19 world, but for ten months of this financial year we were progressing well in  a very different business environment. All five of our regions were performing well as we responded to the global need for a better, more resilient built environment. Revenue has grown by 6% to £1.8bn,  with the operating profit (before staff profit-sharing) rising to 8%.

In South East Asia our members have increased to over 1,000 people across eight countries. From April 2020 our Malaysia operations became a fully integrated and flourishing part of our firm. With the growth in urbanisation and the strains on critical elements like transport, energy and water, demand for the services we offer remains strong.

Across the world, I was especially pleased to see the depth and breadth of our skills continuing to develop and combine in new ways, making us increasingly better than the sum of our parts. Digital technology is frequently a feature of this, but so is the sheer ingenuity of our members. The Shanghai Drainage Masterplan is a prime example. Combining terabytes of satellite data with machine learning technologies and deep domain knowledge, we’ve achieved results that simply would not have been possible two or three years ago.

Sustainable development continues to be a central feature of everything we are doing as a firm. Having made the decision two years ago to align ourselves with the UN Sustainable Development Goals, we have now embedded that mindset across our operations, with detailed plans and strategies that leave everyone at Arup in no doubt about what’s required to create meaningful change. The LEIQ project in Germany clearly demonstrates what this means in practice.

In these uncertain political and economic times, our work and our values have never mattered more - and a key part of my role as Chair is to ensure those values continue to be reflected in our governance. Specific activities initiated by the Board during the year included an external review of our board effectiveness and the preparation of our new Strategy for 2020-2023.

We apply our own corporate governance framework, that is based upon the same principles of good governance and long-term sustainable success as those reflected in the UK Corporate Governance Code 2018 (the "Code"), throughout Arup Group ("Arup") and all its subsidiaries. We have chosen to report against the principles and provisions of the Code in order to fully explain our governance framework against a recognised benchmark while also highlighting our unique trust ownership structure with no external shareholders.

Responding to a crisis

The values reflected within our governance framework have underpinned our actions during these challenging times of the COVID-19 pandemic. Arup’s leadership has had three fundamental priorities relating to our pandemic response. We have committed to protect the health and well-being of our members; ensure our financial resilience; and live by our existing values with our commitment to shape a better world – whatever pressures and challenges we face. 

This has required a delicate balance at times, but our ability to make decisions that put our members first, instead of meeting profit commitments to others has enabled us to position Arup to meet the challenges ahead with unity and enthusiasm. I am immensely pleased with the togetherness and sense of shared purpose that has characterised our member’s response to the crisis.

Our recent investments in digital infrastructure also paid dividends, allowing us to fast-track two years’ worth of transformation in a matter of weeks. The end result was that 100% of our members were rapidly able to work remotely, using new tools and systems housed  in the cloud.

Beyond our internal operations, we were quickly asked to address a range of COVID-19 related problems. Strong examples amongst many include: protective shields for operating theatres, rapidly deployable intensive care units, advanced modelling and planning to enable safe returns to workplaces and transport facilities, and charity partnerships making personal protective equipment available to disenfranchised communities. As I look forward it is clear that the COVID-19 crisis is far from over. It’s also true that the big issues  we were already addressing – like climate change, inequality,  resource scarcity, and urbanisation – are if anything more pressing than ever before.

This year marks the 50th anniversary of our founder Ove Arup’s  Key Speech – the bedrock of the ethos and values we still follow.  One of the tenets of that speech was the belief that our firm should be ‘socially useful’. That’s exactly what we will need to be in the months and years to come – because the challenges that the world faces require all the ingenuity we can offer.

Alan Belfield, Chair, Arup Group Ltd