Annual Report 2020
Annual Report 2020
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When
the 2020 budget was approved at the end of 2019, it was a challenging target,
close to €500M in revenue. For the first couple of months in 2020, the
business was performing tremendously well across all areas with figures some
15-20% ahead of budget. However, in the first week of March
everything changed as the effect of the pandemic struck throughout Europe and
beyond. A situation the like we have never seen before, on both a business and
personal level, it was difficult to understand and decide the direction to
take.
RINA
responded swiftly
.
We set up a crisis unit and immediately switched to smart
working. On the finance side, the liquidity of the business was paramount,
and the pandemic created a situation that made forecasting virtually
impossible. We worked with all business units to review and re-assess the
assumptions we had made for 2020 and created two forecasts to present to
the board: a best-case scenario which showed growth from 2019 and a
worst-case scenario with figures below those of 2019. The year ended
showing the best-case scenario as the real situation, with figures in the
region of 4% higher than 2019.
Previous foresight
and work to change the balance of our activities from CAPEX to OPEX in oil and
to add new business based on our competencies in renewables, offshore
wind, etc., supported our energy business.
Although
a challenging year, the pandemic had some effects on our margin and
EBITDA. Firstly, working from home and the reduction in
travel provided a significant base cost saving for 2020. We also learned
that we could grow revenue despite working from home, which shows us we can work
from home. Of course, there are advantages in personal contact particularly in
business and commercial activities, but we can also reduce our travel cost base
for the future.
Another
effect of the pandemic was the necessary focus on margins.
This created an
attitude to extract value and work efficiently. We worked to drive greater
efficiencies into our business, using digital tools to optimize and simplify
processes. We leveraged tools and technologies to create new services and
reduce the time to market.
The
pandemic accelerated many transformational processes that were
already in place. It stressed the importance of our working capital and
increased awareness of key financial KPIs throughout the business. As lockdowns
started, we focussed on order intake and commercial close, re-inventing our
commercial efforts without travel. We quickly put in
place daily order intake monitoring to increase visibility, something
which will remain part of our structure. The importance of cash and cash
monitoring was highlighted and, overall, the entire business emerged from 2020
more financially aware.
The
most important point about 2020 is not that we grew from 2019, it is that,
despite COVID-19 and extreme volatility in oil prices, despite a lack of
visibility of markets and the inability to travel, we continued to grow and
maintain levels of order collection. We start 2021 with a comparable
backlog to previous years, have a sustained current trading baseline, and
have assured financial stability.
Despite
hopes of 2021 being a ‘normal’ year, it is now clear this will not be the
case, but RINA is in the right position to grow with focus on key market trends
including sustainability, new energy and decarbonization. If we continue to
work to reduce our time to market, we are in a strong position to
stay ahead of our competition and provide the agility to meet changing client
demands.
RINA’s present organisation and governance model was developed in 2012, following the acquisition of RINA Consulting (formerly D’Appolonia). As a combined TIC and consulting engineering company, it is focused on impartiality and that means that, in full compliance with all applicable rules and regulations, the group can be involved in all areas of a project, from concept design to certification and recycling. To achieve this, we have a financial holding company and two autonomous operating companies. Our governance model is continually updated to account for changes in the market, new acquisitions, organisational changes, etc.
Of course, COVID-19 dominated 2020. At the start of the outbreak, we had to manage the emergency at a central level and put in place urgent actions in the field to ensure business continuity, which was helped by the digitalisation strategies and the organization we already had in place. We had to anticipate mitigating or controlling measures in different countries and ensure compliance with applicable national laws. This meant some variance in approaches in different countries, but we always carefully monitored the number of infections and, to protect our colleagues, sometimes put even stricter rules in place than those imposed at a local level. Less than 10% of colleagues still had to attend a workplace. For these we performed risk analyses and put dedicated measures in place for their protection.
RINA is sustainable in its behaviours as a
company as
well as in its support of clients to be sustainable, in fact ESG is one of the
pillars of the 2021-23 development strategy. In 2020 we identified a target to become carbon
neutral
in 2023. We already use energy coming from renewable sources in Italy and have
implemented schemes to reduce our use of plastic and paper.
In 2021, we aim to have all energy from renewable sources
worldwide, wherever this is possible and will continue to reduce CO2
emissions in an organic way through strategies such as the use of hybrid cars
and continued reduction of paper and plastic, etc. Once we have identified a
level of emissions that are intrinsic tour business and cannot be further
reduced, we will compensate this through the purchase of selected carbon
credits, which often relate to reforestation.
These sustainability initiatives will be rolled
out
worldwide in the coming years. Of course, our ESG strategies do not just relate
to the ‘E’. We continue with other initiatives such as smart working (which
also helps with reducing CO2 emissions) and gender equality. In
2021, we will also be launching an initiative to counter harassment at work.
The pandemic accelerated many processes relating to digitalisation and sustainability that were already underway. Our challenge for 2021 and beyond is to turn the progress we made because of the emergency into growth and opportunity. The NextGenEU fund, which is €750 bn, requires investment in solutions which lay the foundations for a modern and more sustainable Europe, which aligns with RINA’s strategy and places us in a strong position to grow. Measurability is a requirement of the stimulus package and, as a TIC company with competencies, independence, and impartiality, we are in a position to help both companies and the managing institutions in establishing this.
RINA
is very much about people and HR has
a crucial role in engaging and motivating
colleagues and freeing them to innovate. It is a vital connection between
people and markets.
The
major topic for 2020 was, of course, the COVID-19 pandemic. Fortunately, we
were able to take advantage of our smart working policy already in
place and were well prepared. Our ability to quickly change over to fully
remote working was one of the main factors in our success in 2020, a year in
which the unforeseen events meant we did not meet our
original budget, but we still experienced growth from 2019. This was
a success for a service-based group based strongly around people. Although
remote working was successful, people still need a sense of belonging in their
workplace. Towards the end of the year, we
spent time collecting feedback to discover which aspects
of the remote working experience of
2020 colleagues would like to
keep
and which they would rather
not be part of their working day.
We are
already preparing new strategic pillars to support a ‘new
normal’ with flexible working rules within the group. This will provide
colleagues with much greater freedom to
organise their own workday,
enabling them to work from anywhere and find a better work-life balance. In
2020 our Human Capital Management (HCM) project continued, which will
deliver the main tools and enablers for the HR strategic plan, with work on
more than 11 processes including talent
acquisition, talent retention,
rewarding and technical recruitment. Processes are being in
collaboration with our business colleagues, to ensure they are
not just an ‘ideal’ HR model but are pertinent and meaningful to our
business, structure and people.
We want to be ready to capture every opportunity the market presents to us. To do this, we need to upskill, re-skill and attract the best talent. Alongside the next phases of our HCM project, we will continue to transform our way of working with a focus on soft skills and managers who coordinate, motivate, engage and get the best from their teams whether they are at home or in an office. We will continue with feedback processes, listening to our colleagues and delivering initiatives that our well thought out, relevant and engaging. To ensure we achieve this, we will concentrate on fewer initiatives to ensure they are delivered well and are of professional high quality.
Digitalisation
is a core strategy within the RINA business, both in terms of internal capability and
the services we deliver to our customers.
With
the outbreak of COVID-19, our priority was to move the entire RINA operation to
fully remote working as lockdowns began. Although we were able to do
this quickly and smoothly, it inevitably presented security challenges
with colleagues working from external networks. In November 2020, we
experienced a lateral cyber-attack on
our systems, but were able defend against this and the event did
not compromise or limit our activities. This event allowed us to raise to the best industrial safety standards
and allowed us to align with the best
practices. We have since further increased the robustness of our security,
with an architecture that can track any activity on our network to any PC or
mobile device working with company capabilities.
Our
IT strategy is aligned with the overall RINA strategy in the form of three
pillars: security, digitalisation, and simplification.
Security is an
essential part of our digitalisation programme and we think about security in
every solution we provide. As a business we previously produced many
highly customised applications to meet specific customer demands. Our
simplification pillar is changing this approach and increasing
operational efficiency through standardised platforms that meet the
majority of customer or colleagues’ needs and then working to
identify simple ways to cover remaining areas.
With
solutions such as Optimum and
our Electronic
Logbook (ELB),
RINA is far ahead of its competitors in terms of the quality and completeness
of its digital solutions. During 2020 we provided nearly 50 new software
releases (which equates to a release around every three days) to
support our customers. Our level of efficiency for new
releases is comparable even with a dedicated software company.
During
2020, we migrated our content management system from a simple network
share to a new system with advanced storage and AI search capabilities similar
to those found in web browsers such as Google. We also started a major
foundation project to migrate our ERP and CRM systems to the cloud, which should
be completed around the middle of 2021. This background work will
facilitate the movement of other platforms to the cloud and enable further
simplification of our business, helping our efficiency and reducing time to
market. Other major projects in 2020 include the start of
our HCM (Human Capital Management) system, which
will move all our HR capabilities to a single, cloud-based solution.
RINA
is not a software provider, we are a
service provider that uses digital tools
to provide distinctive services which set us apart from our competitors and,
indeed, software vendors. Our digitalisation programme is not the realisation
of tools in a digital way, it is the invention of new services and ways of
working that use digital tools as enablers. This will enable us to maintain a
leading position in the market in terms of innovative, digital services and
business efficiency and agility.
Although
traditionally the RINA business consists in activities that are concluded with
the issue of documents, whether that be reports or certification, 2021 will see
us working to change into a producer of data. Rather than
managing documents, we will create tools
to manage data securely, effectively
and efficiently and produce visualisation of this data in terms of reports and
certificates as and when this is needed.
Despite
the clearly challenging conditions presented by 2020, our R&D
business met its targets and strengthened RINA’s position as one
of the leading industrial players in research in Europe. Indeed, within the EU
Commission’s HORIZON 2020 framework, RINA was the second largest
participant in terms of the number of projects awarded, in total
securing more than €10M in EC funding in 2020.
The
COVID-19 pandemic dominated the landscape of 2020 but, rather than stop
projects, we found new and efficient ways of working by engaging in digital
events to demonstrate the results of our projects and continuing our work and
close relationships with our partners online.
Sustainable
decarbonization is an important area of research, not just for RINA but for the
whole world. It comprises renewables
and new energies, such as hydrogen;
increasing energy efficiency of processes; integrating smart grid demand
and response and informing users how they can save
energy. During 2020, we continued research into the use of hydrogen
as a fuel, including ongoing coordination of the ‘EVERYWH2ERE’ project
for the development and demonstration of a hydrogen portable generator to
provide power for large events or to reach areas where electricity is not
available. This project won the award for the
‘Best Outreach’ project from the Fuel Cells and
Hydrogen Joint Undertaking (FCH).
At
‘Sustainable Places 2020’, RINA demonstrated several different
projects. Within the “Energy Transition on European Islands” projects, which
work towards decarbonization of EU islands, we presented the Smart Islands
Energy System (SMILE),
which
uses different smart grid technologies across three islands. For “Deep
Renovation”, which deals with development of technologies to make buildings
more sustainable, we showcased the EENSULATE project for development
of innovative, energy efficient materials and components for
retrofitting and new buildings. Within the “Energy Community” area we
presented the Multi
Utilities Smart Energy (MUSE) GRIDS project,
showing technological and non-technological solutions to targeting the
interaction of local energy grids to maximise local energy
independency through optimized production management.
In
other areas, our continued work in offshore energy, combining renewables
and ‘solutions inspired by nature’ all offer exciting prospects for
the future.
Digitalization is a core part of our R&D business. During 2020 we worked with partners to develop solutions and tools aimed at increasing effectiveness and efficiency. Projects including supporting industry in sustainable production, with processes that have reduced environmental impact, greater energy efficiency and increased autonomy. Examples include solar heat for industrial processes (SHIP2FAIR), an integrated tool to support industries and energy utilities in comparing alternative technologies to exploit waste heat and cold (SO WHAT), and increasing variable bio-based and circular feedstock in process industries (RETROFEED).
2021 marks the start of Horizon Europe, a €95.5 bn 7-year EU funding framework. This is an exciting and challenging time as we work to prepare proposals in line with the core objectives of this funding program, with an aim to continue or surpass the success we had with HORIZON 2020. We will also be looking at ways of further sharing and exploiting the vast capabilities and expertise within the RINA group.
At the end of 2020, RINA combined its Mobility business with Energy. This reflects the energy transition we are seeing throughout the world, whereby power and oil & gas markets are converging as we look for new carbon-free resources to power the world – and this includes the energy required for transport, industry and domestic use. With a third of the world’s energy consumed by the transport sector, its links to the energy market are inevitably strong. To achieve sustainable decarbonization we need more carbon-free energy resources, an increase in efficiencies to consume less energy, and a change in people’s habits. A key part of a smooth energy transition is also related to low-carbon technologies in the field of carbon capture and hydrogen. With RINA’s experience in new energies and renewables combined with our breadth of competencies and research project; we are in a pivotal position to help facilitate the world’s energy transition.
read moreThe marine part of the RINA business met 2020 targets that were revised in March because of the COVID-19 pandemic. We successfully limited the impact of the pandemic, exceeding the target margin and growing revenue from 2019 by 6%, closing the year at €135 M.
READ MOREThe COVID-19 emergency halted many projects, significantly affecting infrastructure projects as market uncertainties stopped investors, although there was a more positive outlook towards the end of the year. Our Real Estate business, on the other hand, had a good year, exceeding targets by around 20%. Providing engineering and evaluation services for all kinds of buildings with dedicated technical and financial competencies, was helped by a new Italian regulation offering financial benefits for energy and seismic efficient renovations.
read moreRINA’s certification business showed both resilience and agility in our response to an unprecedented situation in 2020, meeting our margin target and growing in several areas with the introduction of new services. In some areas of certification, we gained authorisation to carry out work remotely and, with the support of RINA corporate functions, we were able to restart some on-site activities and keep our colleagues safe through safety procedures and PPE.
read moreCovering a wide range of competencies across Materials, Technology and Innovation (MTI) and the Space & Defence (S&D) sector, the Industry business unit showed resilience in a volatile, uncertain, complex and ambiguous year. Although below target for revenue, we performed well against target for margins. The COVID-19 pandemic had a big impact on manufacturing industries, particularly affecting our MTI business. Margins were supported by a reduction in travel with the S&D business delivering a positive financial performance, exceeding 2019 performance and MTI equalling 2019 in terms of contribution margin.....
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