Arcadis NV — Earnings Release 2011

Aug 3, 2011

PRESS RELEASE

ARCADIS NV Gustav Mahlerplein 97-103 P.O. Box 7895 1008 AB Amsterdam The Netherlands Tel +31 20 2011 011 www.arcadis.com

ARCADIS MAINTAINS PROFIT AND CONTINUES ORGANIC GROWTH

• Net income from operations stable in second quarter, in the first half year up 4%
• Organic activity growth in second quarter 3%, in the first half year 4%
• U.S. environmental market, South America and Asia main growth markets
• Gross revenues in second quarter decline 4% due to currency effects and divestments
• Weak public sector market causes margin pressure; cost reduction measures taken
• For full year 2011 an increase in net income from operations of 0 5% is expected

August 3, 2011 – ARCADIS (NYSE EURONEXT: ARCAD), the international consultancy, design, engineering and management services company, in the second quarter maintained profitability and continued organic growth of activities at 3%. Net income from operations rose 1% to € 18.5 million. This is excluding the gain of € 7.4 million from the sale of the 50% share in ARCADIS AQUMEN Facility Management (AAFM). Revenues and profits were positively impacted by the sale of a number of energy projects in Brazil, but negatively affected by currency effects (especially a weaker dollar against the euro). On balance, gross revenues declined 4% to € 492 million. The organic growth came from the U.S. environmental market, South America and Asia. In Europe government austerity programs resulted in a decline of activities and margin pressure. To improve the margins, cost reduction measures were implemented, for which in the quarter a reorganization charge was taken of € 6.9 million.

In the first half year gross revenues were € 956 million, almost equal to last year. The organic activity growth was 4%. Net income from operations rose 4%.

Mid-July the acquisition was completed of the remaining 50% less 1 share in the consulting and engineering activities of ARCADIS Logos in Brazil. This was partly financed by the issuance to the sellers of 1.16 million ARCADIS shares. In June, most of the bank loans were refinanced, among other things through a private placement of \$110 million with private investors in the United States.

CEO Harrie Noy said: "I am pleased that organic growth of our activities remained at a good level. Even though we suffer considerably from government austerity programs, we also see positive developments. In the U.S. environmental market we are expanding our market share, in Europe private sector investments are also picking up, in Brazil and Chile we benefit from investments in mining and energy and RTKL is performing well in Asia. Especially in Europe, increased competition causes price pressure and to counter this, measures have been taken to improve margins. In addition, a Director Europe was appointed to increase market synergies and enhance efficiencies. Through the expansion of our share in Brazil we are even better positioned to benefit from the continued strong growth in this region."

Key figures

	Second quarter			First half year
Amounts in millions unless otherwise noted	2011	2010		2011	2010
Gross revenue	492	512	-4%	956	960	0%
Net revenue	354	353	0%	702	679	3%
EBITA	42.9	31.8	35%	75.7	61.1	24%
1) EBITA recurring	35.5	31.8	12%	68.3	61.1	12%
Net income	23.9	17.4	37%	41.4	33.3	24%
Ditto, per share (in €)	0.37	0.26	39%	0.63	0.50	25%
Net income from operations 2)	18.5	18.5	1%	37.0	35.6	4%
Ditto, per share (in €) 2)	0.28	0.28	2%	0.56	0.54	5%
Avg. # of outstanding shares (million)	65.2	66.1		65.9	66.3

1) Excluding gain on sale of 50% share in AAFM

2) Before amortization and non-operational items (gain on sale AAFM, non-recurring financing charges, costs Lovinklaan)

Second quarter

Gross revenues declined 4% mainly due to a negative currency effect of 6%. As a result of the sale of AAFM1) on the one hand and the acquisition of U.S.-based Rise (fourth quarter 2010) and smaller companies on the other hand, the contribution of acquisitions and divestments on balance was 1% negative. Excluding the sale of a number of energy projects in Brazil, gross revenues rose organically by 2%.

Net revenues (revenues generated by own staff) were almost level. The currency effect was 6% negative. Because AAFM had a large amount of third party work, the effect of the sale was much smaller than in gross revenues resulting in a contribution from acquisitions and divestments of on balance 1% positive. Excluding the sale of a number of energy projects in Brazil, the organic growth was 3%, mainly coming from South America, the United States and Asia. Due to reduced demand from governments, European activities declined, with the Netherlands and Poland declining most.

EBITA amounted to € 42.9 million, including a (tax free) gain of € 7.4 million from the sale of AAFM. Excluding this contribution, recurring EBITA rose 12% to € 35.5 million. The currency effect was 9% negative. Excluding AAFM the contribution from acquisitions and divestments on balance was 1%. The recurring EBITA included the following special elements:

• The sale of a number of energy projects in Brazil delivered a contribution of € 9.5 million (pre-tax), while in 2010 one of the projects still generated a loss of € 2.6 million.
• The contribution from carbon credits from Brazil was zero (2010: € 0.1 million).

¹⁾ The sale of the 50% share in AAFM was completed early June 2011, but the interest in AAFM was already deconsolidated as per ultimo December 2010.

The reorganization and integration charges at € 6.9 million were clearly higher than last year (2010: € 2.6 million). The majority of this concerns measures taken in Europe (including the Netherlands) to reduce costs and improve margins. Costs were also taken related to the integration process in the United States.

Taking these effects into account, EBITA declined organically by 5%, mainly caused by lower profits in the Netherlands, the U.K. and Poland, partly offset by higher profits in North and South America.

The margin (recurring EBITA as a percentage of net revenue) came out to 10.0% (2010: 9.0%). Adjusted for the special elements referenced above, the underlying margin was 9.6% versus 10.4% last year, caused by price pressure, mostly in European markets.

Financing charges were € 7.7 million (2010: € 4.7 million). This includes a non-recurring effect of € 3.9 million for accelerated repayment of existing loans and closure of derivatives related to the refinancing of loans. The tax rate was 21.1% (2010: 33.5%), based on the expected tax rate for the full year. Net income from operations rose 1%, clearly less than recurring EBITA, especially due to the larger profit contribution from Brazil, where ARCADIS in the second quarter still had an interest of 50% + 1 share.

First half year

Gross revenues were almost in line with last year. The currency effect was 3% negative, while the contribution of acquisitions and divestments on balance was 1% negative. Excluding the sale of a number of energy projects in Brazil, gross revenues organically increased by 2%.

Net revenues increased 3%. Here also, the currency effect was 3% negative, but acquisitions and divestments were on balance 1% positive. Excluding the sale of energy projects, the organic growth was 4%.

EBITA was € 75.7 million. Excluding the gain from the sale of AAFM, recurring EBITA rose 12% to € 68.3 million. The currency effect was 3% negative, the contribution from acquisitions and divestments on balance zero (excluding AAFM). Recurring EBITA includes the following special elements:

• A contribution of € 9.5 million (pre-tax) from the sale of energy projects, while in 2010 a loss was taken of € 4.5 million.
• A contribution from carbon credits of € 2.2 million (2010: € 0.1 million).
• Charges for reorganization and integration of € 8.6 million (2010: € 3.3 million).

Taking into account these effects, the organic EBITA decline was 3%. The margin (recurring EBITA as a percentage of net revenue) came out to 9.7% (2010: 9.0%). Adjusted for the special elements referenced above, the underlying margin was 9.4% versus 10.1% last year.

Financing charges amounted to € 12.3 million and excluding the non-recurring effects of the refinancing to € 8.4 million (2010: € 8.7 million). The tax rate of 25.5% (2010: 34.0%) is based on the expected tax rate for the full year. This is considerably lower than last year, also as a result of the tax free gain on the sale of AAFM. Net income from operations rose 4%.

This is less than the increase in EBITA especially due to a larger profit contribution from Brazil.

Due to the seasonal pattern in the working capital, cash flow was negative in the first half year. At minus € 33.5 million, this was lower than last year as working capital at the end of the quarter was higher than last year (17.1% versus 16.0%), partly caused by the integration of activities in the United States. In the meantime a program was started to structurally lower working capital. Net debt was € 283 million (mid 2010: € 299 million). Balance sheet ratios remained strong. The net debt to EBITDA ratio (according to bank covenants) was 1.3 (2010: 1.4), the interest coverage ratio was 8 (2010: 8).

Developments by business line

Figures noted below concern gross revenues for the first half year 2011 compared to the same period last year, unless otherwise mentioned.

Infrastructure (28% of gross revenues) Growth figures excluding sale of energy projects in Brazil. Gross revenues grew 5%. The currency effect was 1%, the contribution from acquisitions minus 1%. Organically gross revenues increased 5%, net revenues 9%. Growth mainly came from Brazil and Chile, driven by investments in mining and energy. In the U.S., activities were relatively stable, while in many European countries, revenues declined due to government austerity programs. Large projects in general continue, except in Poland where ongoing projects have been delayed. In the Netherlands a large project was won for the completion of the Noord-Zuid subway line in Amsterdam.

Water (16% of gross revenues)

Gross revenues declined 15%. The currency effect was 3% negative. Organically, gross revenues declined 12%, net revenues 6%, with the difference coming from the completion of projects with substantial subcontracting. The decline partly came from the finalized New Orleans project where ARCADIS worked on coastal protection since 2007. Although in the United States several large projects were won, budget issues at local governments have a negative effect on the starting of projects and the number of projects awarded. Also in Europe the water activities are affected by government austerity measures.

Environment (38% of gross revenues)

Gross revenues rose 6%. The currency effect was 5% negative. Organically, gross revenues grew 11%, net revenues 7%. This solid growth mainly came from the United States where private sector demand is strong and many remediation projects are getting executed. In Brazil and Chile, investments in mining and energy are generating significant environmental work. In Europe the government market is under pressure, resulting in less environmental impact assessment projects, however private sector demand is picking up. This resulted in growth in Germany and France, while the U.K. showed signs of recovery.

Buildings (18% of gross revenues)

Gross revenues declined 9%, net revenues rose 3%. The difference came from the deconsolidation of AAFM with a lot of subcontracting and on the other hand the acquisition of Rise and a number of smaller companies. The currency effect was minus 3%. Organically gross revenues declined 1%, while net revenues rose 1%. In the Netherlands and the U.K., activities declined, also due to restraints in government

spending. RTKL grew in Asia and the Middle East, mainly due to success in commercial real estate in China. In Belgium and Germany private investments generated growth.

Outlook

It is expected that the trends from the past period will continue into the coming quarters. Continued unrest in financial markets and the possible consequences this may have for the economy, has caused uncertainty to increase.

In the infrastructure market government austerity programs have a negative effect in Europe and the U.S. This is offset by the continued strong growth in Brazil and Chile, further fuelled in Brazil by the 2016 Olympics. European governments are making an effort to safeguard large projects, in part through private financing. Our backlog is healthy, with large projects for which financing is in place. The situation in local markets is not expected to improve as a result of which price pressure will remain.

Also in the water market tight government budgets cause pressure on revenues. In the U.S., the new major project wins, show our focus on expansion, renewal and efficiency improvement of existing facilities in large cities. Because of the utility character of the water market, the basis for investments in water facilities remains solid. In addition we are targeting growth in the attractive markets of South America and the Middle East.

The environmental market is developing favorably. In the U.S. we benefit from the trend that companies are outsourcing non-core activities, allowing us to gain market share. The recently won large projects lay the groundwork for continued growth, while the pipeline with GRiP® projects is well filled. Mining and energy projects are creating ample demand for environmental services in Brazil and Chile, with opportunities to also assist clients in other parts of South America. In Europe demand from private sector companies is increasing, offsetting the decline on the public sector side.

The situation in the buildings market has improved. The commercial real estate market in Europe and the United States is stable with increasing demand for redevelopment of existing properties. RTKL offsets the stagnation in the U.S. market by fully focusing on expansion in Asia and the Middle East. The public sector market is under pressure, but private sector demand is increasing with opportunities for project management and design work as well as increased interest for international framework contracts.

CEO Harrie Noy concluded: "Our backlog is strong and stable compared to year-end 2010. Government spending in Europe and the U.S. is under pressure, but private sector spending is increasing with positive effects on the environmental and buildings markets, while Brazil, Chile, Asia and parts of the Middle East offer ample opportunities. The cost reduction measures taken are expected to positively impact margins in the second half year. Further expansion through acquisitions is high on our priority list. The consolidation in our industry offers many opportunities in this respect. With the refinancing we have created the financial headroom to realize our strategic ambitions. For full year 2011, we expect an increase of net income from operations of 0 – 5%. This is excluding the gain from the sale of AAFM and barring unforeseen circumstances."

For more information, please contact Joost Slooten of ARCADIS at +31-202011083 or outside office hours at +31-627061880 or e-mail joost.slooten@arcadis.com

About ARCADIS:

ARCADIS is an international company providing consultancy, design, engineering and management services in infrastructure, water, environment and buildings. We enhance mobility, sustainability and quality of life by creating balance in the built and natural environment. ARCADIS develops, designs, implements, maintains and operates projects for companies and governments. With 16,000 employees and more than EUR 2 billion in revenues, the company has an extensive international network supported by strong local market positions. ARCADIS supports UN-HABITAT with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. Visit us at: www.arcadis.com

• • • Tables follow - - -

ARCADIS NV CONDENSED CONSOLIDATED STATEMENT OF INCOME

Amounts in € millions, unless otherwise stated	Second quarter		First half year
	2011	2010	2011	2010
Gross revenue		511.8		960.0
Materials, services of third parties and subcontractors	491.5 (137.6)	(158.8)	956.2 (254.2)	(281.5)
Net revenue	353.9	353.0	702.0	678.5
Operational cost	(311.7)	(314.3)	(620.6)	(604.1)
Depreciation	(6.7)	(6.9)	(13.2)	(13.4)
Other income	7.4	-	7.5	0.1
EBITA	42.9	31.8	75.7	61.1
Amortization identifiable intangible assets	(1.0)	(1.6)	(2.1)	(3.2)
Operating income		30.2		57.9
Net finance expense	41.9	(4.6)	73.6	(8.7)
Income from associates	(7.7)	0.1	(12.3)	0.8
Profit before taxes	0.4	25.7	0.9	50.0
Income taxes	34.6 (7.2)	(8.5)	62.2 (15.6)	(16.7)
Profit for the period	27.4	17.2	46.6	33.3
Attributable to:
Net income (Equity holders of the Company)	23.8	17.4	41.4	33.3
Minority interest	3.6	(0.2)	5.2	-
Net income	23.8	17.4	41.4	33.3
Amortization identifiable intangible assets after taxes	0.6	1.1	1.3	2.1
Lovinklaan employee share purchase plan	-	-	0.2	0.2
Net effects of financial instruments	1.5		1.5
Result on divestment of AAFM activities (non-recurring)	(7.4)		(7.4)
Net income from operations	18.5	18.5	37.0	35.6
Net income per share (in euros)	0.37	0.26	0.63	0.50
Net income from operations per share (in euros)	0.28	0.28	0.56	0.54
Weighted average number of shares (in thousands)	65,190	66,131	65,857	66,327

ARCADIS NV CONDENSED CONSOLIDATED BALANCE SHEET

Amounts in € millions Assets	June 30, 2011	December 31, 2010
Intangible assets	348.8	373.4
Property, plant & equipment	98.4	93.4
Investments in associates	30.1	30.5
Other investments	0.2	0.2
Deferred tax assets	30.5	29.1
Derivatives	0.1	0.1
Other non-current assets	23.2	24.4
Total non-current assets	531.3	551.1
Inventories	0.5	0.4
Derivatives	5.4	0.4
(Un)billed receivables	591.4	591.9
Corporate income tax receivable	5.2	4.1
Other current assets	77.2	44.4
Assets classified as held for sale	-	24.4
Cash and cash equivalents	156.7	207.8
Total current assets	836.4	873.4
Total assets	1,367.7	1,424.5
Equity and Liabilities
Shareholders' equity	379.5	392.8
Non-controlling interests	20.2	18.4
Total equity	399.7	411.2
Provisions	25.2	26.6
Deferred tax liabilities	17.7	11.0
Loans and borrowings	360.3	318.2
Derivatives	7.6	7.2
Total non-current liabilities	410.8	363.0
Billing in excess of cost	141.1	157.2
Corporate tax liabilities	7.7	14.8
Current portion of loans and borrowings	17.5	68.1
Current portion of provisions	10.2	6.4
Derivatives	3.0	3.9
Accounts payable	110.4	139.6
Accrued expenses	10.8	15.9
Bank overdrafts	8.2	9.5
Short term borrowings	49.2	12.7
Other current liabilities	199.1	199.0
Liabilities classified as held for sale	-	23.2
Total current liabilities	557.2	650.3
Total equity and liabilities	1,367.7	1,424.5

ARCADIS NV CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Amounts in € millions	Share capital	Share m miu pre	Hedging Reserve	mulative translation reserve Cu	Retained earnings	Total shareholders' equity	Minority interest	Total equity
Balance at December 31, 2009 Profit for the period Exchange rate differences	1.3	106.8	0.1	(28.4) 10.9	271.9 33.3	351.7 33.3 10.9	16.8 - 2.2	368.5 33.3 13.1
Effective portion of changes in fair value of cash flow hedges			(3.1)			(3.1)		(3.1)
Other comprehensive income			(3.1)	10.9	-	7.8	2.2	10.0
Total comprehensive income for the period			(3.1)	10.9	33.3	41.1	2.2	43.3
Transactions with owners of the Company Dividends to shareholders Share-based compensation Taxes related to share-based compensation Purchase of own shares Options exercised					(30.0) 4.5 (0.9) (18.7) 2.3	(30.0) 4.5 (0.9) (18.7) 2.3	-	(30.0) 4.5 (0.9) (18.7) 2.3
Acquisition of non-controlling interests					(0.2)	(0.2)	0.2	-
Total transactions with owners of the Company					(43.0)	(43.0)	0.2	(42.8)
Balance at June 30, 2010	1.3	106.8	(3.0)	(17.5)	262.2	349.8	19.2	369.0
Balance at December 31, 2010 Profit for the period Exchange rate differences	1.3	106.8	(3.9)	(20.9) (7.0)	309.5 41.4	392.8 41.4 (7.0)	18.4 5.2 (0.5)	411.2 46.6 (7.5)
Effective portion of changes in fair value of cash flow hedges			(3.3)			(3.3)		(3.3)
Other comprehensive income			(3.3)	(7.0)	-	(10.3)	(0.5)	(10.8)
Total comprehensive income for the period			(3.3)	(7.0)	41.4	31.1	4.7	35.8
Transactions with owners of the Company Dividends to shareholders Share-based compensation Taxes related to share-based compensation Purchase of own shares Options exercised Acquisition of non-controlling interests Total transactions with owners of the					(30.9) 3.2 (0.1) (18.2) 1.9 (0.3)	(30.9) 3.2 (0.1) (18.2) 1.9 (0.3)	(2.2) (0.7)	(33.1) 3.2 (0.1) (18.2) 1.9 (1.0)
Company					(44.4)	(44.4)	(2.9)	(47.3)
Balance at June 30, 2011	1.3	106.8	(7.2)	(27.9)	306.5	379.5	20.2	399.7

ARCADIS NV CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

First half year Amounts in € millions
2011	2010
Cash flow from operating activities
Profit for the period 46.6	33.3
Adjustments for:
Depreciation and amortization 15.3	16.6
Taxes on income 15.6	16.7
Net finance expense 12.3	8.7
Income from associates (0.9)	(0.8)
88.9	74.5
Share-based compensation 3.2	4.5
Sale of activities and assets, net of cost (7.4)	-
Change in fair value of derivatives in operating income (0.3)	(0.1)
Change in inventories (0.1)	-
Change in receivables (58.3)	(49.9)
Change in provisions 3.7	(0.9)
Change in billing in excess of costs (9.5)	(4.1)
Change in current liabilities (25.5)	(12.7)
Dividend received 0.2	0.3
Interest received 1.6	1.6
Interest paid (12.3)	(8.8)
Corporate tax paid (17.7)	(12.2)
Net cash from operating activities (33.5)	(7.8)
Cash flows from investing activities
Investments in (in)tangible assets (19.0)	(13.0)
Proceeds from sale of (in)tangible assets 0.1	0.4
Investments in consolidated companies (5.3)	(5.7)
Proceeds from sale of consolidated companies 9.1
Investments in associates and other financial non-current assets (6.2)	(5.1)
Proceeds from sale of associates and other financial non-current assets 6.3	3.4
Net cash used in investing activities (15.0)	(20.0)
Cash flows from financing activities
Proceeds from options exercised 1.9	2.3
Purchase of own shares (18.2)	(18.7)
Settlement of financial derivatives (5.9)	(6.5)
New long-term loans and borrowings 331.7	4.4
Repayment of long-term loans and borrowings (313.8)	(6.2)
Changes in short-term borrowings 37.1	5.9
Dividend paid (31.7)	(30.0)
Net cash from financing activities 1.1	(48.8)
Net change in cash and cash equivalents less bank overdrafts (47.4)	(76.6)
Exchange rate differences (2.3)	18.5
Cash and cash equivalents less bank overdrafts at January 1 198.2	212.5
Cash and cash equivalents less bank overdrafts at June 30 148.5	154.4

ATTACHMENT TO PRESS RELEASE SECOND QUARTER AND FIRST HALF YEAR 2011 OF ARCADIS NV

Geographical information

Amounts in € millions or %

Gross revenue 1)			Geographic mix (gross revenue), %
	2011	2010
Netherlands	164.0	200.6
Other European countries	161.0	165.2
United States	510.1	509.8
Rest of world	121.1	84.4
Total	956.2	960.0

	2011	2010
Netherlands	17	21
Other European countries	17	17
United States	53	53
Rest of world	13	9
Total	100	100

1) Based on origin of production

EBITA 1)

	2011	2010
Netherlands	7.6	13.3
Other European countries	1.2	6.6
United States	39.0	39.2
Rest of world	20.5	2.0
Total, recurring (AAFM)	68.3	61.1
Non recurring	7.4
Total	75.7	61.1

, reported Margin, reported %

	2011	2010
Netherlands	5.8	9.2
Other European countries	0.9	4.9
United States	11.1	11.1
Rest of world	23.6	4.5
Total, recurring (AAFM)	9.7	9.0
Non recurring
Total	10.8	9.0

1) Based on origin of production

EBITA 1)

	2011	2010
Netherlands	11.5	13.8
Other European countries	4.2	8.0
United States	40.6	40.5
Rest of world	8.8	6.4
Total, recurring	65.1	68.7
Non recurring (AAFM)	7.4
Total	72.5	68.7

Buildings 169.5 186.6 Total 956.2 960.0

, operational 2) Margin, operational %

	2011	2010
Netherlands	8.8	9.5
Other European countries	3.2	5.9
United States	11.5	11.5
Rest of world	11.9	12.8
Total, recurring	9.4	10.1
Non recurring (AAFM)
Total	10.5	10.1

1) Based on origin of production

2) Adjusted for energy projects Brazil, carbon credits and restructuring cost

Information about business lines

Gross revenue Activity mix (gross revenue), % 2011 2010 Infrastructure 266.7 244.4 Water 158.8 187.9 Environment 361.2 341.1

	2011	2010
Infrastructure	28	25
Water	16	20
Environment	38	36
Buildings	18	19
Total	100	100