Arcadis N.V.

Jurgen Pullens - Director, Investor Relations Renier Vree - Chief Executive Officer Jan-Oege Goslings - Group Controller

Hans Pluijgers - Kepler Cheuvreux Philip Scholte - Kempen & Co Philip Ngotho - ABN AMRO Dirk Verbiesen - KBC Securities Luuk van Beek - Petercam Quirijn Mulder - ING Joost van Beek - Theodoor Gilissen

Ladies and gentlemen, good morning and welcome to the Arcadis Q3 trading update analyst call. Before we will provide further insights into the Q3 results and our priorities for the remaining of the year.

I would like to point out that Arcadis today announced that Neil McArthur, CEO, since May 2012 is leaving the Company by mutual agreement. Renier Vree currently Arcadis CFO, will serve as CEO on an interim basis with immediate effect.

Now I would like to hand over the presentation to Renier Vree and Jan-Oege Goslings our Group Controller to comment on our Q3 results.

Thank you, Jurgen. Good morning, everyone.

Also from my side, I’ve worked with Neil for the last five years, which four years when he was our CEO - worked very well with him. And he did many great things for the Company for which I and everybody at Arcadis is very grateful and we wish him look for his personal future as well.

Then moving into the results of the third quarter and as you heard Jurgen say I asked Jan-Oege Goslings to support me on the financial part. Looking on Slide 4 of the presentation.

Our gross revenues for the quarter were just under €800 million, which was an organic decline of 4% while net revenues at €596 million were down 5% and the reason for the reduction in revenues was especially because of the emerging markets and in North America. Well for a total level of revenues also the currency impact was negative, particularly due to the weakening of the British pound in the third quarter.

Our EBITA was €38.6 million level with non-operating cost of €4.7 million which brought the operating EBITA margin to 7.3% and as compared to 10.3% in the third quarter of 2015 and impact from lower revenues. As well as the Brexit which is felt in our U.K.

business, price pressure and also capacity imbalances in some of our businesses, were the reasons quarter lower EBITA. We have the net cash flow of almost €40 million in the quarter just half of the cash flow in the third quarter last year.

Also year-to-date free cash flow is at negative €22 million and the reason that’s lower than where we were a year earlier is drop in our EBITA. Working capital is at 20.9% which is 1.6 percentage points higher than a year ago and this is attributable to the business in the Middle East that we have a number of milestone based projects that lead to higher working capital.

Backlog €2.2 billion which is in the equivalent of 11 month of revenues which is stable compared to prior quarters. Backlog has grown this year in the developed markets somewhere between 6% and 11% organically.

While in the emerging markets we have first seen a decline of the backlog by approximately 17%. With that, I ask Jan-Oege to talk about the financial results in more detail.

Thank you very much Renier. And I would like to just take you through the headlines in addition to what Renier has just presented.

Again my name is Jan-Oege Goslings I am the Group Controller of Arcadis. While we look at EBITA we reached result of about €59 million compared to the €41 million you’ve seen in the second quarter.

Whereas in the third quarter the operating EBITA with the difference being the restructuring and other integration-related charges being €43 million compared to €46 million we’ve seen in the second quarter. Renier already mentioned that the Brexit affect other price pressure in various markets and capacity balances in different places in the world are the key contributors to that result.

The cash flow again quite healthy at €40 million net working capital we will come back on later in the presentation. You’ve had an extended updates on that in the second quarter and as we said earlier there is some more work to be done there.

Let’s move to the next page, Page 7 where we go a little bit further into the business of the various regions. We start with North America, as said really the organic growth in revenue was minus 6%, in fact 6% where we are facing really strong competition.

The good news in Americas is really that order book is increasing definitely year-to-date by some 6%. We’ve seen decline in environment in water, parking and architecture, but on the other hand there’s good growth in infrastructure with a double-digit growth, but also in building growth in a number of projects that we are winning.

Key challenge in North America is aligning the backlog with the staff capacity as was already referred to earlier. Moving to the emerging markets, Brazil still an organic decline which is significant, it’s 38% at the moment due to recession.

As Renier already mentioned they are some positive signals particularly after the new President has been elected and there are signals and press statements about to bottoming out of the market and new growth being possible in the coming quarters. In Asia, there was 12% lower revenue whereas in the Middle East it was rather flat and in the other parts of Asia like Hong Kong and Singapore we’re still seeing a decline.

Australia remains very stable growing and profitable particularly in the infrastructure business. We saw solid revenues in China, slight growth even and including the business of CallisonRTKL in China.

Moving on to Continental Europe, we saw an increase of the - probably on the business of 3% particularly in the buildings, infrastructure, but also in environment. Water on the other hand was lower than before.

We saw a healthy order book also in Europe with the growth of 6% and there was a good signal moving forward. Moving on to the UK then, we saw growth in infrastructure and water, but also a little bit the environment business increasing there.

Buildings as we’ve already mentioned is having a hard time particularly after Brexit and therefore we see a shift from buildings business into more water and environment projects since a lot of property developers have delayed or even cancelled their buildings and property project. And apart from that we had an excellent currency effect on the weaker British pound as it was already referred to earlier.

Moving on to Page 8. So net revenue, this is the trend that we’ve talked about particularly the growth in Continental Europe, UK and Australia whereas the emerging markets are really facing macroeconomic headwinds where the revenues are in decline.

The intense competition in the U.S. I’ve already mentioned.

So when we look at the organic net revenue growth which stands at 4.9%. That is particularly due to the North American emerging markets.

Continental Europe and UK the organic net revenue growth is still positive particularly in the UK where it is almost 3%. The operating EBITA margin, as I mentioned earlier, the same as last quarter with various effects that I mentioned.

In North America, the margin was higher than 7.3%, it was about 8% whereas in emerging market it was 5% in Europe, roughly 7% and in UK 10%. We are focusing on winning work with our client’s one of our strategic priorities and also we’re stepping up to a pace in aligning the cost structure to align with the new markets reality.

Moving on to Page 9 then, the working capital. Working capital at the moment stands at 101 days, 20.9% and if you look at that it’s a mix between the revenue effect, currency effect and what happens really underneath in terms of accounts receivable, accounts payable if entry and then work in progress.

Obviously, we have plans in place to reduce this percentage to lower level, but you can - at the same time also measure that there are some lagging effects from the actions we take in the results. We book in that respect.

If you look at the number of days, in North America it’s pretty stable, particularly in the Middle East and Latin America in emerging markets are the key focus areas for us to make sure that not only to billings, but also the payments are being accelerated and we are in contact and negotiation with our clients to make that happen. In Europe, there was - the number of days creeping up a little bit during the quarter and we are taking measures to try and reduce that in a very short-term.

Moving on to next page, Page 10, which means that I will be handing back to Renier Vree, Interim CEO. Thank you very much.

Yes. Thank you, Jan-Oege for stepping in here.

Let me now I will conclude on Slide 11 with our business priorities. They are clear and I think for those of you’ll who made the comparison with previous one, there is some shift in our priorities.

The number one, making sure the organization is focused on winning work with our clients and keep the backlog at the good level and possible increase order intake, cash collection to deal with the level of working capital. And then we added to align the cost structure to the new market realities, because of the number of markets being challenging.

We have to align our cost structure quickly to that new reality and with that also comes a simplification of the organization management structure and we have many initiatives are going on in the Company and we become a global company over the last years. But anyway we organized that as we see opportunities for making that doing that in a simpler way and also in that process that taking out costs.

And with these actions combined the focus is on improving our financial performance. That happens in a market in the fourth quarter which we expect not to be too different from what we have seen in the prior quarters, so business conditions that we expect to be similar.

I think with that it’s an opportunity to ask questions about our performance, so the floor is open for that.

Yes. Good morning gentlemen.

A few questions from my side. First of all, the change in management or the departure of Neil, few question that first of all could you maybe give some more detail on where do such a difference from [plan] on the progress or the Company start going forward.

Secondly, I understand you are saying respect to align the cost structure to new markets Arcadis, but how are you looking at the cost is of course, it required people’s business you know and so already detail on let’s say where do you want to cut costs which levels because I understand also you have let’s say still a high level of higher paid people, management layers which still are in a company and also let’s say more expensive fee and within the business or you do expect to change something on that and how do you believe you could manage it keeping all for the company focused on gaining clients. Furthermore, you said still looking for bolt-on acquisition understand from a statement on the wires.

How do you see that let’s say have you already started seeing in a buyer plan or is it more from the longer-term and only focus on priorities given in the sheet 11? Is it really for the next 18 months, could you give some feeling on that.

And then coming back on the DSO, saying it taking measures on to really bring it back in the negotiation was also with clients. Could you give some more detail on that what do you see, do you also see some risk of maybe it will be some write-downs on some clients, you could give some more detail on what you’re doing there to really reduce debt level for working capital?

Yes, thank you, Hans for those questions. Well the first one on the departure of Neil, yes as we put in the press release a difference of opinion on the path then moving forward and we don’t talk about strategy and I talk about the way we were in the Company that’s why the difference of opinion has been despite a supervisory board to agree with Neil that was better for him to step down.

On the cost structure, yes, we have a number of initiatives in place very recently that sell up our ratio impact in the fourth quarter and if you look at the amounts involved in that accept to approximately €20 million of costs that will be taken out of the structure. And that’s focused on the non-fee earning staff, so that’s management layers and also as part of the operating model.

Today we are organized we see opportunities and we have defined opportunities still to be worked out in more detail in the next weeks to simplify that and therefore get more people available to work directly with clients and make sure the order intake remains strong. On bolt-on acquisitions I think you have seen that we did the small acquisition Australia Pacific and that’s what I also meant and said the bolt-on acquisitions is in Australia Pacific for the environmental business or say a small one that when we think we can scale very quickly given that we have in Australia as well as leveraging the knowledge we have globally for the environmental business.

And if more of these become available and there are a number in the pipeline then we are open for business in that sense. On DSO, yes we have taken the good measures I think we have full control from the inside of Arcadis on the way we invoice on the collection.

But we also have a number of clients in regions where it is not easy for them to make payments. And particularly in the public sector in the Middle East, we see the same for a public sector in Brazil.

Also Belgium is regularly mentioned also in the past as a country where the public sector is slow in paying. And we have seen oil and gas sector increasingly lengthening payment terms it’s not that their payment discipline has changed, but they have changed the conditions of contracts one-sidedly and extended terms which impact days of sales outstanding for that.

But given the reasons for the increase, I’m not afraid of risk that we have to take right option when it comes to receivables.

But yes, follow-up on that, but how do you are going to be - let’s say see that you could let’s say speed up their payments and reduce DSO because you’re giving all of the reasons why they are or let’s say paying slower, but how do you could let’s say really special so in the governmental sector changed that pattern, because I think you already said they are doing it from one-sided. So would you probably not really listen to your arguments?

No. I think they are well aware of the arguments and also that our clients within the government want to pay, but need to have the funding and there are number of countries where we see funding improving the expectation is that in Brazil will become easier there are clear signs of debt.

And I think you’ve also seen that in Saudi Arabia bonds were issued to make more funds available for the government for payments which is also an area where we have a number of projects with receivables outstanding. In Qatar, the receivables there were linked to milestones.

So there it’s not so much defending, its execution of the project based on the contract conditions that put in place that is at the peak. That work we do there also linked to the World Cup that will take place in a few years and payments for that should follow from the milestones that have been reached and will be reached on those projects.

Some of that will continue like the ones in Qatar till we expect in middle of 2017. On others I expect to see cash collection there improved.

Okay. Coming back on the cost savings.

How detailed [indiscernible] information or who is performing. We had it on an individual basis or more or less let’s say on a unit basis or on division basis, hardly those instant information.

So how quickly can you act?

At Arcadis headquarters we have a pretty detailed insight say on the country level by division on the performance of the business. And so when we have the reviews of the third quarter results two weeks ago with the eight regions, but that’s how we are organized internally and we make agreements with a number of the regions where the cost structure needs to be aligned which has been worked out in the meantime in a detailed level which ultimately boils down to where the level of individual names.

And maybe then a last question follow-up because you said the difference was mainly in how to run the Company, yes, that’s very broad statements. Could you give some feeling on - the difference on the operational focused and…

I don’t think there is a lot more to say about that, but probably also received from the style, this press release was written and the shift in priorities. It’s the focus on the day to day and the operational execution of our plans where we are going to make a shift.

Okay. Maybe then the last question.

How far you away in the process or how quickly do you expect that you can actually appoint a new CEO?

Well that’s really up to the supervisory board, of course. They are starting this process as we speak and that will take a bit of time.

But I am not in a position right now to indicate any timeline to that.

Okay, thanks.

You’re welcome.

Yes. Good morning.

My first question is around your debt covenants. I noted there is quite a bit of discussion already around that.

Can you talk us through the debt covenant levels and how you currently feel about that? Maybe also slightly looking at 2017 already.

My second question is on your outlook statement where you say a similar market circumstances. Does that - and what do you exactly mean with that.

Does that mean that the margin will stay at about the same level despite that usually Q4 is seasonally a bit better in terms of margin. Can you maybe shed some more light on what you exactly mean by that?

Okay, yes. Thanks Philip.

Well on the debt covenants, that’s a measurement we do with our lenders in June and in December. Debt went down in the third quarter as you have seen, also EBITA went down and the ratio, we have to stay in ratio three times EBITA.

And I have terms about the level of our debt, when it comes to our debt covenants Philip also note for 2017. And on the outlook statement, I really want to say here is that’s the markets we operate in both the ones where we are growing.

That’s the ones where we have more challenging conditions. We don’t expect these conditions to change from what we have seen in previous quarters particularly the third quarter, but it is also the reason why we have accelerated the number of initiatives to improve our performance like the ones I mentioned on cost reductions and simplification in the way we are in Arcadis.

Right. But that’s actually more refers to general market circumstances than per se a marginal level.

Yes. So we are not guiding here for a specific margin in the fourth quarter.

But I think what we do say is the conditions that we operate in qualify debt as well as indicate the initiatives we take to improve our cost structure which in the end it work its way also in the margin.

Right. Right, okay.

Thank you.

Thank you, Philip.

Yes, good morning and thanks for taking my questions. I have a few let me start first with and maybe on the restructuring that you indicate you will be taking out some €20 million of cost.

I was wondering if you could also give a guidance on what your restructuring provisions will be in Q4 and also going into 2017. Then my other question is on the net debt.

Maybe whether you can give an indication of what you expect and how to look like at year-end the developments year-over-year. And also maybe another point that I would just like to clarify because I asked folks here from this morning and understood that’s what at least the guidance that was given is in working capital.

The expectation is that it has peaked at in this quarter. I was just wondering if you could confirm is indeed is that’s also your view.

And then my last question is on Brazil. I was just wondering how large the operational loss was in the quarter and previously you guided for a breakeven result in the second half of the year, so I guess that’s no longer the case and I’m wondering when you expect to see that breakeven results to be achieved?

Yes. Thanks, Philip.

Restructuring charges, well I think we have said throughout the year as we expect them to be half of 2015 which is around €20 million. I always thought a bit of a cushion in staying below that level.

I think now we will be around that level, so the amount we will spend on restructuring will be a bit higher than I was in fact internally expecting by the end of the year, but it will still be around that level of €20 million. And currently have no specific information when it comes to 2017.

When it comes to net debt I expect it to come down in the fourth quarter, I said always this also based on the payment behavior of clients which would also help of course our leverage. And net working capital therefore also is expected to come down in the fourth quarter.

And then when we start to see the payments in the Middle East accelerating based on the milestone based projects that should give comfort. That working capital indeed has peaked in the third quarter as you heard this morning.

Brazil, year-to-date is operating loss in the quarter, actually below breakeven, so in that sense we have achieved there what we had said earlier in the year.

Okay. That’s very clear.

Just maybe still on the restructuring cost because €20 million that you just referred to during the presentation. That’s actually or with the previous question so that’s - was that actually already part of their plans that you had during the year, right.

It’s not really an additional cost that I’ll been thinking on, because otherwise the step up in provision seems bit low.

Yes. Well a number of plans were in place and remember we also added and accelerated in the fourth quarter.

But I was thinking still the middle of the year we would stay well below the €20 million, but now I expect that we will be around €20 million that sense the provision has increased.

Okay. Thank you.

You are welcome.

Yes. Good morning, gentleman.

Question on the trends you see in the UK, you’re also referring to the impact of Brexit also on the margins if I understood correctly, but we see the backlog growing a bit countercyclical maybe in the third quarter but it’s a bit of discrepancy and margin pressure coming through so rapidly after the [indiscernible] and also working through a backlog in general, so just growth in the backlog we see occurring in the Q3 versus the first six months. So maybe you can share some light on the moving parts there.

Also with referring to the covenant side. I understand correctly you also have an interest for covenant that you need to comply with.

You will see the same safety there as in net debt EBITA probably that maybe you can confirm. And then on the strategic update just to make sure I also discussed it already with you this morning but the beginning of 2017 as you state in the press release is probably not before the full-year 2016 results publication is that right?

Thanks Dirk. Yes, on the UK I think there we benefit from being diversified and well diversified we have two large businesses.

One is infrastructure and one is buildings and the smaller businesses in water and environment. We see growth in infrastructure and continued growth also in the backlog that’s the main reason why the backlog went up operated also see their backlog in local environment is developing well.

In building has to decline but then it comes to margin to build this business as the most profitable business. So the mix shift in the UK from buildings to infrastructure puts pressure on the average margin we have realized in that market.

On the covenants yes on interest coverage absolutely fine it’s even more comfortable than - comes to the senior leverage ratios with our lenders. Strategic update we will be in a close stay at pretty early in 2017 and therefore the update today indeed will take place after we have published results for full-year 2016.

Okay. Yes, thank you.

You’re welcome.

Yes, good morning. First of all you mentioned price pressure is one of the reasons for the margin pressure?

Can you comment on the price levels in the backlog, but below the Q3 level [indiscernible] out there? That’s my first question.

Okay. [indiscernible] as probably see that particularly in Latin America like we are seeing earlier to give the indication where we see most of that and then especially in the environmental business or as you know oil and gas is a key client sector there where the low oil price has raised to work its way through their suppliers in that sector.

And with overcapacity in that market that put price pressure there. Latin America for the same reasons there are enormous reduction in overall market size.

Also here there is overcapacity which leads to lower prices and in parts of the Middle East we see that also with clients postponing which also shown in the backlog with postponing decisions on new infrastructure developments and therefore also being more overcapacity in the market impacting pricing. For the backlog I would say it’s a stable level we haven’t seen prices moving back up there in those markets.

It’s more positive in parts of Asia, its good in Australia; it’s also relatively stable in Continental Europe. In UK quite good for infrastructure a bit weaker also here in buildings so the link with the revenue development is also here quite visible.

Okay. And my second question is on the cancellations that you mentioned it obviously made it much more difficult for you to adjust your capacity in various regions.

Do you still see there is risk going forward and there is anything that you can do in your context just rendering approach to avoid those fluctuations in the coming year?

Yes, good point Luuk. And usual in the second quarter we have seen - in the second quarter were down in the third quarter again.

And usually you see that when a client awards work for a project management or engineering. They do that because they have finished that project and we can crack on with it when work has been well.

In the emerging markets I think given the significance of slowdown as different this year as well in Brazil, China and parts of the Middle East we have seen cancellations. And I also think that for the fourth quarter there no signals from clients that we should worry about over large cancellations.

In the contract it always difficult because depends a bit on the type of work we do so sometimes we get paid something when a project is cancelled and of course we already have done work within the clients as well you have to stop now you get paid for the work, you have done till then that’s not the issue. In architecture that’s even more so the case which is of course a typical front-end work we do where you get paid when the client in the end decides to not continue with the project.

You also get paid. So we have conditions in our contracts, but in the end clients have a pretty strong position when there are significant events happening.

Okay. That’s clear.

Thank you. Those are my questions.

Thanks, Luuk.

Yes. Some follow-up questions.

First of all on Brazil, you indicated that the result is now around at breakeven level, but at the same time you see still sequentially still it’s trending down quite significantly. How is the visibility now in Brazil?

I hear what you are saying with respect to let’s say some signs of improvement, but I think it’s more a general signs and you’re seeing already - you’re already are seeing your own discussions with clients. I would say that sequentially developments in backlog or discussions on projects that could be maybe some pick up again there.

Secondly, could you give some feeling on the sequential trend in profitability by region? So has it improved or declined further compared to what the number we seen at EBITA level in Q2?

And thirdly, on the Middle East with respect to also cancellation I mean especially also respect to finding new projects. Let’s say more cautious currently with getting new projects before and let’s say yes visibility on payments which is really also hampering your backlog there.

Could you give some feeling on that how big that impact is feasible?

Yes. Thanks, Hans.

Yes on Brazil, the breakeven result was really achieved because of cost reductions. On the revenue side, revenues continue to be down.

Visibility is quite limited. What give us I would say more positive vibes is that the activity from clients to ask for proposals is increasing?

Opportunity in the markets are starting to come back. Also projects that were in the market a while ago and which we were asked to make a proposal, but I put on hope and obviously clients coming back, so well can you have an overlook because we may not go forward with this project.

And so that means sequentially I would say Q4 that still be lower than Q3, but not by a lot and then it will start to stabilize and we expected then also to improve in the quarter for 2017 given also the measures that new government has put in place and are still planning to pass through Congress. On sequential margin by region, but this is trading update.

So we typically don’t get to that level of detail. And I think in our press release, we did mention the developments in general and also Jan-Oege gave already some more flavor to that and I would like to leave it at that.

When it is about Middle East, yes, we have become more cautious for sure particularly when it comes to public clients. And the objective is about our Middle East business, is really about making sure we have projects that have a good structure in the way the contract is being designed at acceptable rates and if that means those conditions don’t make it possible to win the projects.

Then we step away from them and reduce our presence in the Middle East which we have seen in the third quarter reduction in revenues. And also in the next quarters, I expect revenues in the Middle East to come down also as an effort to balance the risk of our case.

And too larger presence in the Middle East is not good from a risk management point of view.

Maybe then some last question on improvement in trends still maybe get some feeling. I understand in North America, sequentially you have seen some slight improvement in profitability.

And if I look at the organic growth also there let’s say the decline is coming down slightly. Is it fair, let’s say analysis I am doing?

Yes. I think in North America the business - the decline was similar in the first half as we have seen in the third quarter so that’s a correct assumption.

But also don’t forget we did have last year a project write-down in the second quarter. So therefore, like-for-like the margin is indeed sequentially better than - that one-off should also be taken into account.

And I would say underlying the margin is more or less stabilizing.

Okay. If you will have to exclude for that one-off in Q2 of last year.

Right.

But looking at the topline because you’re saying that’s in line with H1, but H1 is slow, Q1 still slightly or it’s not better than Q2, sort of things that compared to Q2 at least let’s say decline is leveling off.

Yes. That’s correct.

Okay. Thanks.

Yes, thanks. Your backlog in North America is actually up already for some time.

And can you comment a bit more on the development of the Field Tech Solutions and when do you expect in general the North American business to return to a positive growth? And partly related to that but there’s more for the whole group I actually hope that your margin would recover a bit more first in the Q2, because at Q2 you said you had maintained a bit of capacity I think also in North America related to some upcoming water contracts.

What happened there and that indeed materialize and did that margin improve?

Yes, so on backlog North America, one of the main reasons the backlog is the work we have one with Arcadis Field Tech Solutions, yes, for the transformation we’ve put that in place to be comparative in a more commodity size of remediation of projects, so that business has continued to grow also in the sequentially in Q3 from Q2. Overall, the environmental market is difficult as I mentioned as well as the water business.

So in combination with what we do and the strong growth in infrastructure and buildings right now I don’t want to indicate when that growth starts to happen and already happy with the stabilization that we have seen. But it will take some time before we can really indicate the moment organic growth that is starting to take place.

And correct on the capacity balance in North America, we held on two resources in both because of projects and that was the right decision because we have seen those project are coming, but still some in-balancing capacity because capacity is around the country and projects can be - at sometimes not just exactly where the resources are which means we are looking for people to recruited more in the Southwest part of the U.S. Well in the Northeast, the capacity is bit higher than we need it to be, so that is also part of the rebalancing exercise that we are doing in North America.

Right. Thank you.

Welcome.

Yes. Good morning, everyone.

Many questions have been answered. Couple of questions left, if you could speak about [NJ] to limit your exposure to the Middle East, are you aware that your biggest acquisitions in the recent past were especially done because of the position in the Middle East like EC Harris and Hyder.

So what will be the effect on your reduction? And then the second one is on Belgium and France, there you see an overcapacity in engineering.

What measures are you going to take there because I think it’s already for a couple of quarters? And then finally, on the U.S.

part of the organic growth is related to price pressure and in Field Tech Solutions is to continuing at low let me say at lower levels than the original activities. Is it not so that we can expect the price - let me say that the margin pressure will continue and return to old levels?

That’s where my question is.

Well, thanks Quirijn. Yes, I’m fully aware that the Middle East business consist partly of the acquired activity set from EC Harris and Hyder part of it.

And I’m also sure we continue to be a good player in the Middle East. We have seen also some strong growth over the years, but right now given the current conditions we also have to make sure we do the work which gets paid and is profitable.

And if that means if we have to reduce our capacity in some countries in the Middle East then that’s the right thing to do. There overcapacity in Belgium and France is indeed and they are closed out in the press release and we are taking a measures there as you can appreciate that’s not always easy given the process you have to follow given the labor market rules and programs in places particularly in France are to deal with that.

So we have a plan to reduce capacity outside the largest cities in France where our business is pretty strong like Paris and Leone. We see strong business in infrastructure and also in other activities some of the regional offices and I think we have mentioned it also in the past the level of the work is slowing down given the lower level of our government spending there which we are therefore addressing.

I think it’s good to mention on North America the Arcadis Field Tech Solutions that business is at lower prices, but had good margins. So it’s a business that is doing in fact performing at higher margins than other parts of our North American business.

So in that sense I like the Field Tech Solutions business to continue to grow at a good pace because it’s supported to the margin development.

Thank you.

You’re welcome.

Yes, thank you. And one final question from my side and it’s related to the strategic update and I understand that in terms of for example business priorities for the short-term are very clear and logical given the Company’s performance over the past.

And I understand that you also don’t need a new CEO to formulate these projects and just executions are already challenging. But I’m wondering why you’re still planning to go ahead with the strategic updates and not wait for a new CEO to be on Board and part of the strategic discussions.

Fair point. So that’s also why we haven’t indicated the timing of that.

So I think in the next month the developments around the CEO search. We will look at that in that context with the best timing for announcing our strategy.

Okay.

There is no date mentioned here in the press release.

Okay. Now I was Renier it’s a misunderstanding I thought that you would still probably announce that before a new CEO is in place, but okay…

It could be the case so we haven’t made up our minds what the best way to do is and I think also like I said before our strategic is really on updates is not that we develop a new strategy. So I think the one we have in place is good was very well developed and we will make some changes and enhancements and updates to it, if not that we are developing a completely new strategy.

And therefore the focus right now and that’s a good reason also to postpone the communication of the update is a focus right now is on the execution to simply the organization win work with our clients and take out the cost and improve the operational performance.

Yes, but I can imagine that I mean so maybe some part of the strategic targets before were good, but not all - releasing that all really turned out very well and I can imagine it just - it would sound to me like a kind of a very important part of the business going forward if you want to restore margins and growth.

Yes correct. There is definitely a part of the strategy update the process and the initiatives to do that on an ongoing basis.

Correct.

Okay. Thank you.

Yes, good morning and obviously some of the questions have been answered. Firstly, on the profile of the new CEO maybe can elaborate are you looking for a candidate who should focus on growth like McArthur did or is it more someone was very good at let’s say running the business instead of just focusing on growth.

Okay. Let me first take this one the supervisory board has now begin the search for a new CEO and of course that starts with developing the profile what they are looking for and right now there is nothing to share about how the profile should look like.

Okay. Then on - well in the mining industry we’ve seen the commodity prices rising quite a lot.

I can imagine that also in Brazil that as you mentioned that you see slowly pick up visible that this is also related to the mining industry, but maybe you can write bit more on your exposure to the mining industry in the different regions and the perspectives there?

Yes, thanks. The commodity price is going up and historically we have a very strong position indeed in Brazil, but also in Chile.

When it comes to the mining sector in Brazil, we haven’t seen much positive developments there yet when it comes to order intake from the mining sector. I think they’re still in a mode of having a high capacity.

So I haven’t seen proposals that we can bid on large new investments probably will take a bit longer. Chile in that sense a bit more stable I would say not increasing, but it didn’t also go down as much as in Brazil at the stable level.

And then we have an environmental work we do for the mining sector particularly in North America and that’s at a good level. Sometimes also their work is related to permitting or to closures of mines, so that activity level in North America is at a more stable level as well.

Okay. Then on staff turnover, where we’ve seen quite a number of new management leaders hire in the last few months.

What about let’s say the unwanted staffs in Africa and I mentioned with all the hectic going on right down that maybe some competitors, approach your best managers to take them away and how is that situation?

Well I think the industry as such is a pretty challenging time which you also can see from the performance of many of our peers. And yes, you are correct that Arcadis staff is being sought after because people know what they can do when there is good pedigree.

But we haven’t seen significant changes in staff turnover and also vice-versa we don’t shy away from that attracting staff from our competitors when we have vacancies or when good people are available in the marketplace, but nothing significant to mention here.

Okay. Thanks.

And final question on DSO, and if you made the use of factoring or you considering to make use of factoring?

No we don’t use factoring more are we planning to do that.

Okay. That’s clear.

Thanks.

You’re welcome.

Yes. Good morning.

Two follow-up questions on working capital change or let’s say the upward pressure maybe temporary in Middle East. As it more to do with receivables becoming overdue, let’s put it like that and it’s not stock in work in progress or maybe you can shed some light on that.

And also coming back to the Field Tech Solutions concept and the launch of that I understand it’s widely supported still in the organization is one of the key drivers for future growth in that environmental. And coming back to the margins and the profitability the comment you gave on that Renier, but previously you also said that it should be close to a double-digit, let’s say the double-digit margin target that was there.

Do you see that still is realistic with that concept?

Yes. Thanks Dirk.

Indeed the Field Tech Solutions business is running at a double-digit margin and because this concept works well in North America we also now start to apply the same concept in Continental Europe also here we often cater for the oil and gas sector where we see a similar pressure on the rates and we’re organizing our execution differently, we can be - remain competitive by applying the Field Tech Solutions concepts. That’s also a change we made in the last quarter to take advantage of what we developed in North America.

Working capital in Middle East, we have seen a shift from work in progress towards accounts receivable, so good to adopt this and also because we reached a number of the milestones and therefore we could invoice the clients, so which also I think indicates that moment that cash comes in and staff are also improved.

Okay. Thank you.

You’re welcome.

Yes. One follow-up question still on France and Belgium, on the overcapacity, you’ve already discussed that at the end of Q2.

Do you correctly understand that take some time, but do you really expect that the improvements will filter through in Q4 or there is really something more for next year? And secondly, on Belgium more specifically you indicated that you expect initially it was more temporary, do you know it’s coming more structural so that you have also that you have to take some more measures and still that it could take somewhat longer, could you get some feel on that?

Yes. Thanks, this is Jan-Oege.

In France, I would say given throughput times that impact on Q4 will be limited for 2017. It will become more visible from the results.

In Belgium it also depends on the number of large projects here as you may know there are some large infrastructure projects has been announced by the government either on the regional and on federal level and depending on our hit rate in winning that work. That will indicate whether we have to take further measures particularly around infrastructure.

The environmental business is relatively soft in Belgium and also the area we are currently addressing.

Okay, thanks.

Yes. Quirijn Mulder, Jan-Oege again.

One question left for me. How are you looking at your total portfolio?

We have seen in the past couple of measures including the debt and given all the activities in different counties. I would suggest I would ask you to look, let me say to look at this data or are you so happy with all these sort of activities that you are large enough for you to make a good returns?

Yes, so I think is your question is, are we looking at our total portfolio then the answer is yes. And that’s in fact one of the vital elements of that strategy update.

Why it’s important to repeat at every year, two years. And from that portfolio, we have a pretty good few where we are and also what we can expect in the various markets and where we should look for investments and if it makes sense to not to grow or even by faster business in certain market then that’s absolutely where opened for doing that as well.

So that portfolio analysis plus the consequence are part of our strategy with the logical outcome in terms of actions from that.

Okay. So but that doesn’t mean that you’re going to look at let me say countries relatively small countries with big activities or looking at large countries with small activities?

Yes. Well we look at the whole portfolio, but I think answering this question is really what should be part of the strategy update so not so much this trading update.

Okay. Thank you.

You are welcome.

Yes, sorry about that. Do you have an updated few on the sales process of the Brazilian biogas assets?

Yes. I think Philip the last time we spoke, I indicated that we have made progress with a party to an external party that were starting to go invest in the biogas business, that’s progressing and I think the fact that we the countries starts to stabilize also has increased the sentiment around this transaction.

So we continue to make progress and like you I look forward to the moment that I can make a more definite announcement about that.

Right. Do you still expect that to turn profitable in 2017?

Well we haven’t guided it for a timing whether it’s 2016 or 2017. But when a transaction happens that should help our bottom line.

No but I think previously you said that due to the partner that is going to invest and I think there’s just a bit more development going on that it will turn profitable in itself.

Yes, well there are two elements. One is the transaction itself and the second part is that because all for this partner there the capacity utilization of the biogas assets will improve which will benefit the bottom line in terms of operating results as well.

Exactly. And do you still expect that to happen?

Correct.

All right. Okay.

Cool. Thanks.

Okay. When we have no further questions I would like to thank you for your participation and I will close the call.

Thank you.

Thank you.