• Net income from operations increased 40%
• Gross revenue rose 11%, of which 5% was organic growth
• Considerable margin improvement: 8.2% compared to 6.2% in 2004
• Solid performance seen in all markets
• Proposal to increase dividend 37.5% to € 0.66 per share
• Outlook for 2006 positive: increase expected in gross revenue and income

Arnhem, the Netherlands – March 6, 2006 - ARCADIS (NASDAQ: ARCAF, EURONEXT: ARCAD), the international consulting and engineering company, today announced excellent results for 2005. Net income from operations (before amortization and non-recurring items) rose 40% to € 33.4 million (2004: € 23.8 million). Per share this was € 1.65 compared to € 1.18 in 2004. This record achievement resulted from solid organic growth, a considerable margin improvement and a good contribution from acquisitions.
Gross revenue rose 11% to € 1,001 million (2004: € 901 million) surpassing the € 1 billion threshold. Excluding currency effect, gross revenue increased 10%, of which 5% was organic growth, in line with our annual growth goal.

A cash dividend of € 0.66 per share is proposed. This dividend represents 40% of net income from operations and an increase of 37.5% compared to the € 0.48 per share in 2004.

In 2005, we implemented considerable portfolio changes. Lower margin activities were replaced by consultancy and management activities that generate superior added value and higher margins. We sold part of our facilities activities in the U.S., our 50% interest in Grupo EP in Spain and two smaller companies with activities in the donor-financed market. Against the sale of roughly € 100 million in gross revenue stood the addition of almost € 200 million in annualized revenue through acquisitions. This includes the acquisitions of Blasland, Bouck & Lee (BBL) and Greystone in the U.S. environmental market, U.K.-based project management firm AYH in the real estate market and the Belgium firm SWK in the infrastructure market.

Commenting on the results, ARCADIS CEO Harrie Noy said: "Our focus on activities with higher added value and more growth potential is yielding results. Thanks to the good performance of our employees across the board, we achieved our margin target of 8% in 2005 for the first time.  Organic growth was at a good level, particularly in the environmental market. The expansion with BBL and AYH considerably improved the strategic positioning of ARCADIS. With BBL we belong to the top five globally in environment, while AYH further enhances our position in the real estate market."

Key figures

Amounts in millions of euros unless otherwise noted	Fourth quarter			Full year
	2005	2004	D	2005	2004	D
Gross revenue	309	249	24%	1001	901	11%
EBITA	21.9	13.1	68%	60.4	35.9	68%
Net income	12.6	7.4	70%	33.4	22.2	51%
Net income per share (in € ) 1)	0.62	0.36	72%	1.65	1.10	50%
Net income from operations 2)	12.6	8.0	59%	33.4	23.8	40%
Ditto, per share (in € ) 1,2)	0.62	0.39	59%	1.65	1.18	40%

1) In 2005 based on 20.3 million shares outstanding (in 2004: 20.1 million)
2) Before amortization and non-recurring items

Starting in 2005, ARCADIS reports in accordance with IFRS (International Financial Reporting Standards). Figures for 2004 have been adjusted for comparison purposes.

Fourth quarter
Developments in the first nine months have continued in the fourth quarter. Gross revenue rose 24%. The currency effect increased to 5%, as in addition to the Brazilian Real, the U.S. dollar also increased in value against the euro. On balance, the contribution from acquisitions and divestments was 15%. Organic growth totaled 5%, and mainly came from Brazil, France and Belgium, while Germany also contributed to the increase. In the United States, organic growth flattened somewhat as a result of a reduced amount of available production days in the accounting cycle. A slight revenue increase occurred in the Netherlands.

In the fourth quarter we sold a minority participation in the Netherlands, resulting in a book gain of € 0.4 million. Adjustments of Dutch pension plans also had non-recurring effects on results. Among other things, this included the adjustment of the pension plan of PRC as a result of which this plan was classified a defined contribution per year-end 2005. This is further clarified in an attachment at the end of this release.

EBITA rose 68%, excluding non-recurring items 77%. Of this growth, 7% resulted from currency effects. The largest contribution in the increase (48%) came from the completed acquisitions. Organic growth was 22%, to which the main contributors were the Netherlands, Belgium, France and Brazil.

Financing charges were positively affected for an amount of € 1.7 million by financial derivatives used to cover currency and interest rate risks. The effect on net income was € 1.2 million. This effect is excluded in the calculation of net income from operations.

Full year
Gross revenue rose 11%, 10% excluding currency effect. Of this growth on balance 5% resulted from acquisitions and divestments. Organic revenue growth was also 5%. The largest contribution to organic growth came from the U.S., Brazil, France and Belgium. In the Netherlands, a gradual market improvement was noticeable. Despite this, gross revenue declined as a result of divestments and following the strong decline in infrastructure in 2004. Market improvement drove backlog up by 22%.

In 2005 and 2004 EBITA was affected by non-recurring items. This includes book gains from the sale of activities, the restructuring charge in the Netherlands in 2004, as well as changes in Dutch pension plans. These effects are further explained in an attachment to this release. This results in the following overview:

Amounts in millions	2005	2004
EBITA	€ 60.4	€ 35.9
Non-recurring effects	€ 3.1	-/- € 3.2
EBITA recurring	€ 57.3	€ 39.1

EBITA rose 68%, or 47% on a recurring basis. The currency effect was 3% and mostly the result of an increase in the Brazilian Reais. The contribution from acquisitions and divestments was 24%, and the organic growth 20%. The improvement in EBITA was seen across most of our activities.

At the introduction of our new strategy in mid-2000, a margin goal of 8% (EBITA as % of net revenue) was introduced. In 2005, this goal was reached for the first time, as margins (on a recurring basis) rose from 6.2% in 2004 to 8.2% in 2005, an improvement of more than 30%. This resulted from acquisitions and divestments, the restructuring in the Netherlands in 2004 and higher utilization rates, combined with favorable market conditions.

In facilities, the transition to activities with higher added value yielded the largest increase. Here, the margin rose to 7.7% compared to 1.4% in 2004. Both other service areas also saw margin improvements; infrastructure to 7.6% (2004: 6.7%) and environment to 9.7% (2004: 9.3%).

The 33.0% tax rate was slightly higher than the 32.4% in 2004. The contribution from non-consolidated companies declined as a result of the completion of a number of energy-sector contracts in Brazil. Meanwhile, a new contract for one of the projects was signed, contributing to fourth quarter 2005 profits. Minority interest was sharply higher, resulting from a strong profit increase in Brazil, where ARCADIS has a 50.01% ownership.
 
Cash flow, investments and balance sheet
Cash flow from operational activities was almost € 67 million (2004: € 45 million). This high level was achieved in part as a result of a further decrease in working capital. After subtracting replacement investments of € 15 million, free cash flow totaled almost € 52 million.

The expansion of the company through acquisitions was coupled with considerable investments amounting to € 121 million. Net of cash this was € 102 million, including € 27 million for a possible performance based after payment to AYH and the retention of part of the purchase price of BBL related to warranties. Goodwill amounted to € 61 million, while the value of identifiable intangible fixed assets was € 11 million. Divestments of companies yielded € 15 million (net of cash € 8.5 million) of which € 2.5 million is related to book gains.

The balance sheet was strongly influenced in 2005 by acquisitions completed during the year. The balance sheet total rose from € 438 million at year-end 2004 to € 650 million at year-end 2005. While net debt at year-end 2005 rose to more than € 52 million (2004: + € 5.8 million), balance sheet ratios remained strong. Net debt against EBITDA was 0.6 (2004: - 0.1) and the interest coverage ratio was 17 (2004: 10).

Developments per service area
The figures mentioned below relate to gross revenue developments and, unless otherwise noted, discuss comparisons between the full year 2005 and 2004.

• Infrastructure
Growth amounted to 5%. On balance, the effect of acquisitions and divestments was zero; the currency effect was 2%. The organic increase of activities was 3% resulting from a strong expansion in Brazil and continued growth in the United States, France and Belgium. In the Netherlands gross revenue declined by 4%, but the market recovered as a result of increased investment in rail improvement, a pick up of the municipal market and an increase in public private partnership initiatives. The German market remained weak, and Chile also saw a decline.
• Environment
At 33%, growth in environment was by far the strongest. The acquisitions in the United States market contributed 22% to the increase. The currency effect was 1% and organic growth 10%. In the United States, organic gross revenue growth was 14%. Here, almost   $ 60 million in new GRiPฎ contracts were won, especially for industrial clients. Backlog for GRiPฎ stood at $ 250 million at year-end 2005. Organic growth was also solid in almost all European countries and in Brazil.
• Facilities
Gross revenue rose 9%. Through the sale of detailed engineering in the United States and the acquisition of AYH, the portfolio was considerably improved. On balance the revenue effect of the sale and acquisition of activities was 2%. At 7%, organic growth was at a good level. Almost all countries contributed to this increase. In the fourth quarter, an important facility management contract was won in the Netherlands. It is a four-year contract for DSM and Sabic.

Outlook
It is expected that the Dutch market will continue its gradual improvement. The improving economy may lead to the release of more funds for maintenance and renewal of rail infrastructure, while Public Private Partnership initiatives will also lead to more work. In Europe, market conditions in France and Belgium are favorable. In Central Europe an increase in investments is expected, stimulated by European Union Funds. In the United States, the federal investment program SAFETEA has a positive effect on the market. The high level of investments in Brazil leads to a lot of work. In environment, the good backlog from long-term GRiPฎ contracts provides a solid basis for further growth in the United States. In Europe and South America, the emphasis will be on the expansion of services to industry. BBL client's, many of which are multinationals from the Fortune 100, offer good prospects. The transition to higher value added services has considerably increased the growth potential in facilities. Increasing investments offer opportunities for project management in schools, hospitals and in commercial real estate. In addition, the new facility management contracts will also contribute to growth in 2006.

CEO Harrie Noy concludes: "The outlook for 2006 is positive. Market conditions are favorable and with the recent acquisitions we are in an even better position to benefit. Our policy is aimed at achieving growth through synergy from strong local market positions. In doing so, we will focus on services to multinational companies and in soil remediation, rail infrastructure, bridges and tunnels as well as project management. We will continue to focus on higher value added activities to further improve margins. The integration of BBL, incorporating their client-focused business model, is a key priority in 2006. Expansion through acquisitions will continue, although at a lower pace than in 2005. Barring unforeseen circumstances, we expect continued growth in gross revenue and income in 2006."

ARCADIS is an international company providing consultancy, engineering and management services in infrastructure, environment and facilities, to enhance mobility, sustainability and quality of life. ARCADIS develops, designs, implements, maintains and operates projects for companies and governments. With more than 10,000 employees and over €1 billion in gross revenue, the company has an extensive international network that is supported by strong local market positions.