Arcadis NV — Interim / Quarterly Report 2018

Oct 24, 2018

THIRD QUARTER 2018

TRADING UPDATE

Amsterdam, 24 October 2018

IMPROVING QUALITY OF LIFE

Statements included in this presentation that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements. These statements are only predictions and are not guarantees. Actual events or the results of our operations could differ materially from those expressed or implied in the forward looking statements. Forward-looking statements are typically identified by the use of terms such as "may," "will", "should", "expect", "could", "intend", "plan", "anticipate", "estimate", "believe", "continue", "predict", "potential" or the negative of such terms and other comparable terminology.

The forward-looking statements are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements.

Third quarter highlights:

• Organic net revenue growth of 4% to €613 million (Q3 2017: €585 million)
• Organic operating EBITA growth of 1% to €45 million (Q3 2017: €45 million)
• Operating EBITA margin of 7.4% (Q3 2017: 7.7%)
• Net working capital improved to 18.1% (Q3 2017:19.8%), DSO to 89 days (Q3 2017: 96 days)

Year-to-date highlights:

• Net revenues €1,833 million; organic growth +4%
• Operating EBITA of €133 million; organic growth +1%
• Operating EBITA margin of 7.3% (Q3 2017: 7.4%)
• Net debt reduced to €468 million (Q3 2017: €492 million)
• Continued improvement of balance sheet and commitment to 30-40% dividend pay-out of net income of operations

Non-core clean energy assets Brazil (ALEN):

• Gas-to-gas plant operational, certified and has started limited delivery of gas to the market
• Final negotiations with several parties, including the Rio metropolitan utility gas company (CEG) on long term off-take contracts for the remaining renewable natural gas
• The loss from the associate in the quarter was €6 million
• Re-assessment of the business case led to an impairment and provision of in total €53 million

QUARTERLY REVENUE AND OPERATING EBITA

Net Revenues and organic growth

€ millions, %

Operating EBITA (margin)

€ millions, %

• Organic net revenue growth of 4% in the third quarter, trending up from previous quarters led by North America, Continental Europe, the UK, Australia and CallisonRTKL

• Net revenues declined in the Middle East, Asia and Latin America

• Operating EBITA in the quarter increased organically by 1% to €45 million, resulting in an operating EBITA margin of 7.4% (Q3 2017: 7.7%)

• The margin improved in North America, Continental Europe, the Middle East and Australia, which was offset by a decline in Asia (partly caused by a €1 million write-off), Latin America and CallisonRTKL

* Net Revenues 2018 Q2 restated from €602 million to €621 million, resulting in adjusted organic net revenue growth (%) and (operating) EBITA margin (%)

in € millions	THIRD QUARTER			YEAR-TO-DATE
Period ended 30 September	2018	2017	change	2018	2017	change
Net revenues	613	585	5%	1,833	1,841	0%
Organic NR growth	4%			4%
EBITDA	54	50	8%	153	149	3%
EBITA	43	40	7%	122	120	2%
EBITA margin	7.0%	6.8%		6.7%	6.5%
Operating EBITA	45	45	1%	133	136	-2%
Operating EBITA margin	7.4%	7.7%		7.3%	7.4%
Free cash flow	23	41		17	12
Net working capital %				18.1%	19.8%
Net debt				468	492	-5%
Backlog net revenues (billions)				2.0	2.0
Backlog organic growth (year-to-date)				-6%

Ageing of Gross receivables

• Gross receivables at €564 million, improvement:
• vs. Q2: €40 million, reduction across all ageing buckets
• YoY: €18 million, driven by reduction long overdues Middle East

• Net Working Capital improved to 18.1% and DSO down 7 days YoY to 89 days; largely driven by collection efforts of overdue receivables

1) Excluding receivables from associates

Net revenues		THIRD QUARTER
in € millions	2018	2017	Org growth %
Americas	191	181	6%
Europe & Middle East	281	264	5%
Asia Pacific	85	87	1%
CallisonRTKL	56	53	5%
Total	613	585	4%

Americas North America: +7%, driven by all businesses Latin America: -4%, further deterioration Brazilian economy, uncertainty surrounding presidential elections

• EME UK: +12%, driven by large infrastructure projects Continental Europe: +4%, spread across most countries Middle East: -11%, strategic re-orientation and higher selectivity
• Asia Pacific Australia: +6%, infrastructure, buildings and environmental projects across major urban areas Asia: -2%, leadership changes made, simplified organizational structure. Finalizing portfolio review

CallisonRTKL +5%; back to growth, benefitted from the strong order intake in the second quarter

NON-CORE ENERGY ASSETS BRAZIL (ALEN) RE-ASSESSMENT

Re-assessment 2018
in € millions	Q2	Q3		Loss for the quarter Q3
On-balance sheet net investment	22	0	-22	shareholder loans
Off-balance sheet corp guarantees	86	78		FX effects
On-balance sheet provisions (IFRS 9)	-5	-23	-18
Net exposure	103	55
additional shareholder loans in Q3 (including FX effects)			-13
Fair value adjustment			-53
Loss from associate			-6
Total P&L effect			-59

• Gas-to-gas plant operational, certified and started limited delivery gas to market
• Final negotiations with several parties, including the Rio metropolitan utility gas company (CEG) on long-term off-take contracts for the remaining renewable natural gas
• Large power plant in commissioning
• Re-assessment of business case required considering delays in progress, increasing costs and assumed lower contract prices

Strengths to build on

• Structural changes created foundation for sustainable strong performance in North America
• Brand recognition in the UK outweighs headwind caused by Brexit uncertainty
• Presence and track record in Continental Europe provides potential for stable growth
• Selectivity and client focus generates strong results in Australia
• Re-energized CallisonRTKL to deliver on revised strategic plan

Opportunities for improvement

• Portfolio realignment/selectivity in the Middle East will enable improved results going forward
• Asia leadership changes, organizational simplification and portfolio assessment creates stronger and more focused platform
• Stability post Brazilian elections to create business improvements

Our priorities for the remainder of 2018

• Build on the growth momentum in North America, Continental Europe, the UK and Australia
• Improve performance and finalize portfolio analysis for Asia
• Continue strong cash collection
• Complete gas-to-power facilities and conclude off-take contracts for renewable natural gas. Initiate divestment process of all non-core clean energy assets

Revised outlook 2018

• Arcadis confirms organic net revenue growth and expects EBITDA in line with 2017

Arcadis. Improving quality of life.