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• Net income from operations increases 5% in second quarter, in first half year by 3%
• Slight decline in gross revenues in second quarter despite positive currency effect
• Organic growth in infrastructure partially offsets decline in environment and buildings
• Margin maintained at a good level; cash flow is high
• Merger with Malcolm Pirnie creates a top position in the international water market
• Recession may lead to a slight decline in net income from operations for full year 2009

ARCADIS (EURONEXT: ARCAD), the international consulting, design, planning, engineering, and management services company in the second quarter of 2009 improved its net income from operations by 5% to      € 17.1 million. This good result was achieved because of strong margin performance, despite slightly lower revenues. Gross revenues declined 3% to € 415 million, with a positive currency effect of 4% due to a stronger U.S. dollar.

In the first half year of 2009, gross revenues increased 1% to € 833 million, helped by a positive currency effect of 4%. The recession mainly impacted the business lines buildings and environment, where revenues declined organically. This was partially offset by organic growth in infrastructure of 10%. On balance, the organic decline in net revenues was limited to 3%. Net income from operations rose 3% to € 32.6 million, despite restructuring charges of more than € 5 million, which were taken to adjust the organization to the decline in demand. At 9.8%, the margin was almost at the same level as last year. As a result of solid working capital management, cash flow was high.

In early July, the merger with Malcolm Pirnie was closed, a leading U.S.-based consulting and engineering company in the water and environmental markets with more than 1700 employees and gross revenues of $392 million. This gives ARCADIS a leading position in the rapidly growing global water market while we enter the top 10 in our industry in the U.S. with a more balanced services and clients portfolio.

CEO Harrie Noy said: "We anticipated early on the increasingly difficult market conditions by adjusting our capacity, implementing strict cost controls and focusing on clients. As a result our margin was maintained at a good level and revenue decline was limited. The infrastructure market appears best poised against the recession due to government investments. The environmental market declined as industrial clients limit spending, but here we are expanding our market share. The buildings market is under strong pressure with challenging market conditions, particularly in England. The merger with Malcolm Pirnie is a major strategic step for ARCADIS from which we expect significant business and operational synergies."

Key Figures

Amounts in € million, unless otherwise noted	Second Quarter			First Half Year
	2009	2008	D	2009	2008	D
Gross revenue	415	427	-3%	833	827	1%
Net revenue	287	289	-1%	577	566	2%
EBITA	28.5	29.5	-3%	56.3	57.0	-1%
Net income	16.6	17.0	-3%	36.8	28.6	29%
Ditto, per share (in €)	0.27	0.28	-2%	0.61	0.47	29%
Net income from operations 1)	17.1	16.3	5%	32.6	31.6	3%
Ditto, per share (in €) 1)	0.28	0.27	5%	0.54	0.52	4%
Av. number of outstanding shares (millions)	60.2	60.6		60.2	60.6

1) Before amortization and non-operational items

Second quarter

Gross revenues declined 3%, while net revenues (revenues from our own staff) were 1% lower. The contribution from acquisitions was zero. The currency effect was 4%. The organic development of gross revenues was minus 7%, net revenues declined organically by 5%. Developments were mostly in line with the trends in the first quarter. In most European countries organic growth weakened, while especially in England, RTKL and to a lesser extent in the U.S., the decline in activities was somewhat stronger than in the first quarter.

EBITA declined 3% to € 28.5 million. The currency effect was 6%, while acquisitions contributed 3% including an after payment on an earlier divestment. The 12% organic decline in part was caused by a considerably lower contribution from the sale of carbon credits. Excluding this effect the organic decline was 8%. This decline was driven by the buildings market in England, RTKL and a restructuring charge of € 2.7 million for further organizational adjustments in England and the U.S. Nevertheless, the margin (EBITA as a percentage of net revenues) at 9.9% was strong (2008: 10.2%). Excluding the impact from carbon credits the margin rose to 10.4%.

At € 1.3 million financing charges were considerably below last year (2008: € 3.1 million, excluding the effect of derivatives), also resulting from an exchange rate gain on loans in Brazil. Net income from operations increased 5% to € 17.1 million. This outperforms EBITA development, due to lower financing charges and a lower minority interest caused by a reduced income contribution from Brazil.

First half year

Gross revenues increased 1%, while net revenues (revenues from our own staff) rose 2%. Revenues were positively impacted by a 4% currency effect from the stronger U.S. dollar. The contribution from acquisitions was 1% and mainly came from expansion of the environmental activities with LFR in the U.S. (end of January 2008) and SET in Italy (mid 2008). Organically, gross revenues declined 4%. Because under the current market conditions as much work as possible is performed by our own staff, the decline in net revenues was limited to 3%.

Most European countries saw organic growth with the strongest growth in the Netherlands and Poland. In England, the real estate market was hit by the crisis resulting in a strong revenue decline. In the United States, the recession also caused an organic activity decline, in RTKL as well as in the environmental market. Brazil and Chile contributed positively to growth, in part from investments in Brazilian energy projects, but in both countries growth is softening as a result of the worsening economy.

EBITA declined slightly by 1% to € 56.3 million. Acquisitions contributed 2%, currency effects 7%. The organic decline was 10%, also from a lower contribution from carbon credits. Excluding this effect the organic decline was 7%. Against good performance in most countries, especially the Netherlands and the United States, a decline in profitability was observed in England, in RTKL and in Brazil. In England and the United States the organization was adjusted resulting in a restructuring charge of € 5.3 million. Nevertheless, the margin (EBITA as a percentage of net revenues) at 9.8% remained strong (2008: 10.1%). Excluding the impact of carbon credits the margin was at 10.1%.

In early 2009 derivatives used for hedging interest and currency risks were unwound, resulting in a book profit of € 7.5 million. Excluding the effect of derivatives, financing charges declined to € 3.7 million (2008: € 6.8 million). This decline resulted from lower market interest rates, less working capital and an exchange rate gain of € 0.9 million on loans in Brazil. Net income from operations rose 3% to € 32.6 million and developed more favorably than EBITA. Against higher taxes stood lower financing charges and a reduced minority interest resulting from a lower profit contribution from Brazil.

A strong focus on cash management helped push working capital as a percentage of revenues down to 13.8% (end second quarter 2008: 16.0%). This resulted in a cash flow from operational activities of € 34.9 million compared to minus € 43.3 million in the first half of 2008. As a result, the net debt to EBITDA ratio (calculated according to the bank covenants) declined to 1.1 (year end 2008: 1.3). Including the consolidation of Malcolm Pirnie, this ratio on a pro forma basis at the end of the second quarter would be 1.5.

Developments per business line
Figures noted below concern gross revenues for the first half year of 2009 compared to the same period last year, unless otherwise noted.

• Infrastructure
Gross revenues rose 9%. The currency effect was minus 1%, the contribution from acquisitions on balance was zero. Organic growth in gross revenues was 10% and in net revenues 6%. The difference mainly came from Brazil with substantial subcontracting in energy projects. In Europe, especially the Netherlands and Poland contributed to growth, but also in most other countries activities increased. In the Netherlands the consortium in which ARCADIS takes part was selected for a tunneling project for the highway that runs through the city of Maastricht. In the United States, the water management activities are gradually expanding. Brazil and Chile also contributed to growth, but the worsened economy is slowing down private investments.
• Environment
Gross revenues declined 2%. The currency effect was 8% and the contribution from acquisitions was 4% (LFR and SET). The organic decline was 14%, but in net revenues was limited to 6%. The difference with the development of gross revenues is caused by the completion of large projects in the United States with substantial subcontracting and the fact that as much work as possible is performed in house. The activity decline mainly came from the United States where many private sector customers are hit by the recession. For the same reason, gross revenues in Brazil declined. Because more work in Europe is performed for government clients, activities grew in that region. In Chile, mining clients were driving revenue growth.
• Buildings
Gross revenues were 6% lower with a currency effect of 4%. Gross revenues declined 10% organically, while net revenues were 12% lower. The difference comes from the growth in facility management in the Netherlands, with significant subcontracting. The strongest decline occurred in England, where the commercial real estate market has almost come to a complete stand still. Also RTKL saw a considerably activity decline, mainly resulting from the poor market for commercial projects in the United States and England. Services to industrial clients in Belgium also declined due to the recession. In the Netherlands two new clients were added in facility management: NS Poort and Essent.

Outlook

Economic conditions are still poor, while it is uncertain when and to what extent recovery will occur. The degree to which this will further impact our activities remains uncertain and differs for each of the markets in which we are active.

The infrastructure market is dominated by governments which continue their investment programs unabatedly. This is further strengthened by economic stimulus programs, especially in the United States, which are expected to have an effect starting late 2009 and in 2010. The attention for climate change drives demand for water management both in Europe and the United States. In the Netherlands considerable investments are made in improvements of rail and expansion of roadway capacity, while in Central Europe infrastructure is being extensively upgraded, supported by European financing. In South America the strong growth of recent years is softening somewhat due to reduced investments in energy and mining.

In the environmental market regulation and sustainability provide a healthy basis. Even though the economic crisis is negatively impacting demand from private clients for environmental services, we see signs of stabilization in the market in the United States. Energy efficiency and reduction in carbon dioxide emissions are new themes that generate work. By focussing on market segments with continued strong demand, on cost effective solutions based on advanced technology, on vendor reduction and outsourcing of environmental work by companies, we can increase market share. Interest in GRiPฎ is on the rise, with the U.S. Department of Defense, but also with industrial clients, with several large projects in the pipeline.

The buildings market was hit hardest by the crisis. RTKL and the project management services in England are affected most by this development. Although the bottom in the English market appears to have been reached, a recovery is not foreseen in the short term. RTKL has partly offset the decline in the U.S. and U. K. commercial market with projects in Asia (mainly China) and some parts of the Middle East. This policy is continued. For all of our services, our focus remains on non-commercial segments, such as schools, hospitals and government buildings, which will benefit from stimulus funding. Facility management appears to be a growth market, as it fills a demand for cost savings.

CEO Harrie Noy concludes: "By timely adjustments, so far we have managed to deal with the recession reasonably well. This is also due in part to our strong market positions with a good spread in geography, clients and market segments. Our backlog is stable compared to the end of 2008 thanks to a good order intake across the board, partially offset by contract cancellations in buildings. In all three business lines, we will benefit from government stimuli packages. Because we have adjusted our capacity we expect the revenue decline to continue in the coming quarters. Maintaining margins has priority, by absorbing price pressure with cost reductions and a strong client focused approach. Malcolm Pirnie has a solid backlog and will contribute to revenue and profit as of the third quarter. This is offset by the lack of a contribution from energy projects, which last year generated € 2.2 million in net income. On balance, we expect that the recession may result in a slight decline of 0% – 5% of net income from operations. This is barring unforeseen circumstances and surrounded with more uncertainty than usual."

For a full overview of the half year results including notes and risk paragraph, please refer to the Interim Financial Statements, published on our website: www.arcadis-global.com.

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