Sustained revenue growth and improved margin Amsterdam, 13 - PowerPoint PPT Presentation

Next generation thinking, sustainable delivery 2019 Q4 & FY Results Sustained revenue growth and improved margin Amsterdam, 13 February 2020 Peter Oosterveer (CEO) & Sarah Kuijlaars (CFO)

FULL YEAR 2019 RESULTS Sustained revenue growth and improved margin • Continued growth on the back of megatrends urbanization, sustainability and digitalization; • 3% organic net revenue growth • 18% increase in operating EBITA to €209 million, margin improved to 8.1% (2018:7.3%) • Improvement areas Asia, Middle East and Latin America delivered better results • Growth investments in sustainable solutions and digital offerings • People First focus improves voluntary employee turnover 2

FULL YEAR 2019 RESULTS On track to achieve strategic targets Full year In € millions 1) 2019 2018 Change Gross revenues 3,473 3,256 7% 3% Net Revenues 2,577 2,440 6% Organic Growth % 3% Organic Net Revenue Growth EBITDA 235 204 15% EBITDA margin % 9.1% 8.4% Operation EBITA 2) 209 177 18% Operating EBITA margin % 8.1% 7.3% 8.1% Free cash flow 97 149 -35% Net working capital % 16.6% 15.1% Net debt 310 342 Operating EBITA% Backlog net revenues (bn) 2.0 2.0 2% Backlog organic growth 0% -4% €97M Free Cash Flow 3 1) All figures based on IAS 17 2) Excluding acquisition, restructuring and integration-related costs

FULL YEAR 2019 RESULTS Continued growth on the back off mega trends and actions taken Total Net Revenue Key Markets Organic NR Operating DSO growth % EBITA % 84% of net revenues  North America 8.7%  Continental Europe 4 % 79  The UK ( 8.7%) (67) 16%  Australia  CallisonRTKL 84% Improvement areas Key Markets 16% of net revenues 7.1% Improvement areas 0 % 148  Middle East  Asia (1.0%) (163)  Latin America 4 Between brackets figures 2018

FULL YEAR 2019 RESULTS Continued strong performance in key markets 8.7 % 79 4 % (8.7%) (67) Organic NR % Operating EBITA DSO North America Continental Europe United Kingdom Australia CallisonRTKL  Diligent implementation  MEPC adherence  Excellent foundation  Focused execution of  New leadership team of growth strategy whilst delivered more and reputation strategic plan and transforming the containing indirect cost predictable supported growth and optimized use of profit business performance margin improvement levers created ‘Best in  Further improvement of  Focus on clients, people during Brexit class’ growth, margin voluntary employee Urbanization, and improving operating  uncertainty and cash conversion turnover rate to 9.4% infrastructure, energy performance transition and climate  Government plans  Continued strong resiliency strong £120bn infrastructure infrastructure pipeline drivers for further spending growth 5 Between brackets figures 2018

FULL YEAR 2019 RESULTS Improved results following actions identified last year 7% 9% 5% 200 135 99 -10 % 1 % 16 % (265) (125) (-2%) (120) (-3%) (5%) Org. NR % Org. NR % Org. NR % DSO DSO DSO Op. EBITA Op. EBITA Op. EBITA Middle East Asia Latin America  Selectivity towards specific services  Leadership changes and  Leadership changes and and limited number of countries has simplification of organizational organizational adjustments created paid off structure created significant margin ‘fit for purpose’ operation improvement and first organic growth  Working capital exposure reduced  Excellent performance in in 4 years Environment and turnaround in  Exited from Taiwan, Indonesia, Korea Infrastructure and abandoned D&E services in China Between brackets figures 2018 6

FULL YEAR 2019 RESULTS PF AS: innovation in remediation PFAS are one of the world’s  Multi-billion global market potential biggest emerging  Arcadis addressable market; €500+ million gross contaminants revenues annually endangering humans & the  Arcadis has significant expertise for >15 years, with environment projects at >400 client sites in 12 countries Global partnerships  Arcadis’ global, comprehensive PFAS services: • Strategic environmental consultancy • Assessment and remediation • Arcadis approach; • PFAS global expertise center clients’ point of contact • Continued training and development programs 7

FULL YEAR 2019 RESULTS Arcadis Gen: digitally connect our clients with their built & natural assets  Digitally focused, global entity, to accelerate Arcadis’ digital transformation and propositions to clients  Sectors: Rail, Highways, Water, Energy, Aviation  Footprint: UK, Europe, Australia, North America, Asia  Scalable digital products and solutions:  200 FTE  Enterprise Asset Management  Asset Performance Management Recent wins  Asset investment Planning  And... rapidly developing digital products Improve frequency and Ensure safe and reliable  Brings together asset knowledge and reliability of services to mobility for 33 million advanced analytics capabilities accommodate London’s passengers rapidly growing population 8

FULL YEAR 2019 RESULTS A 130-year heritage of sustainability-focused outcomes to clients  Within the Arcadis project related activities, our contributions focus around five SDGs Score from 70 to 73  79% of our net revenues have a positive Reduced carbon footprint by contribution to the 5 SDGs relevant for Arcadis 30% from our 2014 benchmark Celebrating 10-year collaboration Acquisition in urban planning & energy transition Peter Oosterveer member Executive Committee 9

IJMUIDEN, THE NETHERLANDS “IJMUIDEN VER” Support in producing 4,000 Mega-watt renewable energy 10

FULL YEAR 2019 RESULTS Sustained revenue growth and operating margin improvement Net Revenues and organic growth 1) Operating EBITA (margin) 1) € millions, % € millions, % 10% 9.0% 5% 8.3% 4% 09% 3% 7.6% 7.5% 2% 2% 2% 7.4% 7.2% 08% 07% 06% 05% 04% 60 53 03% 49 660 47 647 45 44 642 628 02% 613 607 01% -20% 00% Q3’18 Q4’18 Q1’18 Q2’18 Q3’19 Q4’19 Q3’18 Q4’18 Q1’18 Q2’18 Q3’19 Q4’19 Net Working Capital Days Sales Outstanding % Days 19.1% 18.1% 17.4% 20% 16.6% 16.2% 15.1% 15% 10% 95 639 89 88 616 86 82 585 80 576 569 05% 521 00% Q3’18 Q4’18 Q1’18 Q2’18 Q3’19 Q4’19 Q3’18 Q4’18 Q1’18 Q2’18 Q3’19 Q4’19 11 1) All figures based on IAS 17

FULL YEAR 2019 RESULTS Increase in Net Income from Operations and Dividend Full year In € millions 1) 2019 2018 Change EBITDA 235 204 15% 15% Depreciation -46 -43 8% EBITA 189 162 17% Amortization & impairment -17 -63 -74% EBITDA growth EBIT 172 98 75% Net finance expense -30 -27 10% Taxes on income -41 -30 35% 43% Normalized income tax rate 2) 27% 27% Expected credit loss on shareholder loans -82 -54 and corporate guarantees Net income from Operations Minority interest -3 -1 168% growth Net income 18 -27 Net income from operations 3) 125 88 43% €0.56 EPS 4) 0.20 -0.31 EPS from operations 4) 1.42 1.01 41% Dividend (proposal) per share (€) 0.56 0.47 19% Proposed Dividend, +19% vs. LY 1) All figures based on IAS 17 2) Excluding Expected Credit Loss relating to ALEN and goodwill impairment (2018) Payout ratio of 40% 3) Corrected for non-recurring items (e.g. acquisition & restructuring costs, expected credit loss and impairment) 4) Average number of shares 2019: 88.4 million (2018: 87.1 million) 12

FULL YEAR 2019 RESULTS Cash flow held back by Oracle implementation in the U.S. Full year In € millions 1) 2019 2018 EBITDA 235 204  Return to normalized working capital levels after Changes in net working capital -85 31 Oracle implementation U.S. takes more time than Changes in other working capital 36 38 earlier anticipated Tax paid -34 -35 Net interest paid -25 -22  NWC impacted by 8% gross revenue growth in Q4’19 Other 16 -2 Cash flow from operations activities 143 214  Other NWC driven by higher accruals for employee Capital Expenditures -46 -65 benefits Free cash flow 97 149  Other includes €10 million ALEN orderly wind down  Capex control led to 30% reduction 13 1) All figures based on IAS 17

FULL YEAR 2019 RESULTS Return to normalized working capital levels in due course € millions Dec-18 Sep-19 Dec-19 % of GR* % of GR* % of GR* Gross receivables 643 524 662  Progress made in Q4 in North America: Provisions -61 -58 -60  Trade receivables normalized Provisions % 10% 11% 9% Unbilled receivables significantly reduced  17% 14% 16% Trade receivables 582 465 602  Monthly billing rate higher than gross revenue Unbilled receivables 464 13% 690 21% 600 16% Billing in excess of costs -290 -8% -283 -8% -305 -8% Net Work in Progress 174 5% 406 12% 294 8%  Working capital and cash collection remains top priority Accounts Payables -236 -7% -232 -7% -280 -7% Net Working Capital (%) 521 15.1% 639 19.1% 616 16.6% Ageing of gross receivables € millions  Ageing > 31 days overdue improved year-on-year by 662 643 111 16% or €35 million 127 524 >120 67 86 113 102 31-120 106 98 0-30 68 381 Not past due 324 244 Dec-18 Sept-19 Dec-19 Jan-00 Jan-00 Jan-00 * Based on annualized Q4 2019 Gross Revenues 14