• Gross revenue first six months increased 27%, of which 8% was organic
• Strong organic growth continued in all segments
• Net income from operations rose 60%, margin improved considerably
• More than $80 million in new GRiP® contracts in second quarter
• Expected increase in net income from operations for full year 2006: 30 to 35%

ARCADIS (NASDAQ:ARCAF, EURONEXT: ARCAD), the international consultancy and engineering company, reported a strong performance in the second quarter of 2006. Gross revenue rose 26% to € 293 million. At 8%, organic growth again exceeded the Company's goal of 5%. The currency effect was limited. Net income from operations increased 60% to € 11.8 million. In the United States, the Company won more than $80 million in new GRiP® Remediation Program contracts.

In the first six months of 2006 gross revenue increased 27% to € 581 million. Excluding currency effect, growth was 24%, of which was 8% organic. Net income from operations rose 60% to € 21.2 million. This strong profit increase mainly resulted from activity growth in our three service areas, a good contribution from the acquisitions that were completed last year, as well as further margin improvement, resulting in part from improved market conditions in the Netherlands. The margin (recurring Ebita as a percentage of net revenue) improved to 8.6% in the first six months, compared to 7.0% in the same period last year.

At the beginning of the second quarter, the Company acquired In Situ Technieken, in the Netherlands (gross revenue € 1.5 million, 10 employees) strengthening its position in soil remediation. At the end of July Berkeley Consulting was acquired (gross revenue € 10 million, 100 employees), an important expansion of the project management activities of AYH in the United Kingdom.

CEO Harrie L.J. Noy about the results: "Our strategy to speed up organic growth is yielding results. In all three service areas, organic growth is at or above our goals. This is the result of continued recovery in the Dutch infrastructure market, the success of the GRiP® Remediation Program and growth in services to corporations in the environmental market, as well as expansion in management services in the market for facilities. Portfolio adjustments have strengthened our positioning and brought the margin structurally to a higher level. Our employee focus on delivering added value is appreciated by clients and also contributed to the margin improvement. The intregration process for Blasland, Bouck & Lee, acquired last year, is going well. The size of jointly won projects exceeds expectations and demonstrates that we have improved our position in the environmental market."

Key figures

Amounts in € 1 million, unless otherwise stated	Second quarter			First half
	2006	2005	D	2006	2005	D
Gross revenue	293	233	26%	581	457	27%
Ebita	19.2	15.0	27%	35.3	25.4	39%
Ebita recurring	19.2	13.0	47%	35.3	23.4	51%
Net income	10.6	9.0	18%	19.6	14.5	35%
Net income per share (in €) 1)	0.52	0.44	18%	0.97	0.71	35%
Net income from operations 2)	11.8	7.4	60%	21.2	13,3	60%
Ditto, per share (in €) 1,2)	0.58	0.36	60%	1.05	0.65	60%

1) In 2006 based on 20.2 million shares outstanding (in 2005: 20.3 million)
2) Excluding amortization and non-operational items

Analysis

Second quarter
Of the gross revenue growth of 26%, 17% resulted from acquisitions and divestments. The currency effect was limited at 1%. Organic growth was 8%, in part the result of improved market conditions in the Netherlands, where all service areas saw an increase. The United States, Brazil and France also yielded high organic growth. Despite an excellent backlog, administrative procedures in Poland caused delays in the start of projects, negatively affecting both revenue and income in that market.

Ebita rose to € 19.2 million. Ebita last year included a book gain of € 2.1 million on the sale of certain activities as previously announced. Excluding this, recurring Ebita rose 47%, of which 32% was a result of acquisitions and divestments and 2% from currency effects. Organically, Ebita rose 13%. This was the result of activity growth combined with margin improvement.

Financing charges were impacted positively by a non-recurring interest gain of € 0.5 million. The contribution from associated companies declined as a result of start-up problems in new contracts for energy projects in Brazil. Net income increased 18%. Excluding amortization, the book gain of € 2.1 million in the second quarter of 2005 and the effect of derivatives, net income from operations rose 60%. This was more than the increase in recurring Ebita, mainly as a result of lower taxes.

First half
Of the increase in gross revenue of 27%, 16% came from acquisitions and divestments and 3% from a positive currency effect. The contribution to organic growth of 8%, mainly came from the Netherlands, the United States, Brazil and France.

Ebita increased 39%, or by 51% on a recurring basis. The contribution from acquisitions and divestments was 34%, while the currency effect yielded a 4% gain. The 13% organic increase mainly resulted from continued strong business conditions in the United States and Brazil as well as the profit improvement in the Netherlands.

Financing charges include the effects of the use of derivatives to hedge interest rate risks. In the first quarter, this led to a reduction of financing charges by € 1.0 million. The effect on net income was €0.7 million. In net income from operations this effect is excluded.

Net income from operations (excluding amortization, the book gain in 2005 and effects from derivatives) rose 60%, more than the increase in recurring Ebita. This was mainly a result of lower taxes.

Developments by service area
The figures mentioned below relate to gross revenue developments and, unless otherwise noted, discuss the comparison between the first half of 2006 and the same period last year.

• Infrastructure
As a result of earlier divestments, gross revenue decreased approximately 2%. The currency effect was positive at 3%. Organic revenue growth was 6%. The strongest growth occurred in Brazil, where mining and energy investments created continued favorable market conditions. The United States also saw good growth. Here, the market for land development is slowing, impacted by interest rate hikes, but activities in transportation and tunnels increased. In Europe, the main growth contributors were the Netherlands and France. Increased interest in Public Private Partnership (PPP) projects lead to work in preparing these initiatives.
• Environment
Gross revenue almost doubled, mainly as a result of last year's acquisitions of BBL and Greystone. The currency effect was 4% positive. Organic growth amounted to 10%. The main contribution came from the United Sates where GRiP® projects as well as environmental work for private sector companies yielded growth. The backlog in the GRiP® program has increased to more than $ 300 million at the end of the second quarter. In Europe, particularly the Netherlands and England saw increased activity. Strong growth also occurred in Brazil and Chile, in part as a result of increased demand for mining-related environmental consultancy.
• Facilities
Gross revenue rose almost 30%, predominantly as a result of the mid-2005 acquisition of the English project management firm AYH. The currency effect was limited. Organic growth was well above 10%. In the Netherlands, the facility management contract with DSM and Sabic led to an expansion of activities. In England, the new Arsenal stadium, for which AYH did the project management, was completed. The favorable investment climate in Belgium, France and Brazil also yielded growth. The reduction of the poorly performing detailed engineering activities in Germany negatively impacted gross revenue growth.

Outlook
The improving economy in the Netherlands exerts a positive effect on the investments of governments and companies. In many European countries, there is a strong need for new infrastructure. Increasingly, PPP initiatives are developed to meet this need by applying private financing. In America the land development market growth rate is slowing , but this is being offset by the increase in work coming from the federal transportation SAFETEA program and coastal flood protection work near New Orleans. Continued strong demand for raw materials creates favorable market conditions in Brazil. In the environmental market the backlog in GRiP® and the expansion of services to corporations, in part as a result of the synergy with BBL, offers an excellent basis for further growth. In the facilities service area, growth must mainly come from expansion of management services for companies and institutions. In the second half of this year ARCADIS Worldwide Project Consulting will be launched. Under this label, project management services for international real estate investors will be offered.

Because of its Nasdaq quotation, ARCADIS has to comply with the Sarbanes-Oxley Act (SOX 404) by the end of 2006. In addition, the integration of BBL – which, according to plan should be finished in the first quarter of 2007 – will require a considerable effort. As previously reported, total external costs related to these two actions are estimated at € 3 to 4 million. Of this amount, approximately € 1.5 million was charged to income in the first half.

CEO Noy concludes: "The outlook for full year 2006 remains positive. Market conditions are favorable and ARCADIS is well positioned to benefit from this. For 2006 the integration of BBL is a main priority. That lays the basis for continued expansion in the environmental market, particularly with multinational clients. We will continue to expand through acquisitions although the pace will be lower than in 2005. Barring unforeseen circumstances, we expect and increase of net income from operations for full year 2006 of 30 to 35%."

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. 

Except for historical information contained herein, the statements in this release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include, among others, risks associated with possible changes in environmental legislation and risks with regard to the Company's ability to acquire and execute projects. These are other risks are described in ARCADIS' filings with the Securities and Exchange Commission over the last 12 months, copies of which will be available from the SEC or may be obtained upon request from the Company.