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Randstad N.V. — Annual Report 2006
Feb 15, 2007
3880_iss_2007-02-15_f31851cb-c62e-4c24-ab7b-2bd234339196.pdf
Annual Report
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Randstad Holding nv
Diemermere 25, Diemen
P.O. Box 12600, NL-1100 AP Amsterdam z.o.
randstad holding
Press release
Fourth quarter and annual results 2006
Date
February 15, 2007
For more information
Bart Gianotten/Frans Cornelis
Telephone
+31 (0)20 569 56 23
2006 a record year: revenue up 23% to € 8.2 billion and net income up 49%
Highlights full year 2006
- All 20 countries contributed to very strong revenue growth of 23% (19% organic growth¹)
- EBITA² margin up from 4.5% to 5.3%; 2007 EBITA margin target of 5-6% reached a year early
- Diluted EPS³ up by 47% to € 3.17 compared to € 2.15 in 2005
- Dividend proposal of € 1.25, an increase of 49% compared to last year's € 0.84
Highlights fourth quarter 2006
- Group organic revenue growth remained strong and reached 18%
- Diluted EPS up by 49% to € 1.18 from € 0.79. Adjusted for non-recurring tax gains of € 22.7 million (compared to a gain of € 10.5 million in Q4 2005) diluted EPS increased by 41% to € 0.99 from € 0.70
- Strong momentum maintained across all European markets
- Continued outperformance of market in North America (6% organic growth) combined with high EBITA growth
Outlook first quarter 2007
- Diluted EPS is expected to amount to at least € 0.53, an increase of at least 23% compared to € 0.43 in Q1 2006
"As a result of our fast growth, 2006 has been a record year in Randstad's history" says Ben Noteboom, CEO Randstad Holding. "We have captured the global number three position in HR services. Highlights include important growth in geographies where we have a recent presence like Poland and Asia, and being the largest job creator in Germany. Our innovative in-house concept keeps gaining market share in all markets, while we made significant progress with interim professionals and HR solutions. Our 15,380 employees put an average 312,300 people to work each day, which means that we put 50% more people to work than 4 years ago. Our focus on people, concepts, execution and branding is working well. We face the future with confidence."
| In € million | Q4 2006 | Q4 2005 | change | FY 2006 | FY 2005 | change |
|---|---|---|---|---|---|---|
| Revenue | 2,226.6 | 1,836.6 | 21% | 8,186.1 | 6,638.5 | 23% |
| EBITA | 144.1 | 101.4 | 42% | 436.1 | 299.1 | 46% |
| Net income | 134.5 | 85.6 | 57% | 360.3 | 241.9 | 49% |
| Diluted EPS (in €) | 1.18 | 0.79 | 49% | 3.17 | 2.15 | 47% |
¹) Organic growth is measured excluding the impact of currency effects, acquisitions and transfers between segments ²) EBITA: operating profit before amortization other intangible assets and impairment goodwill ³) Definition: diluted EPS before amortization other intangible assets and impairment goodwill
Summary of Group financial performance
Revenue
Revenue growth remained strong throughout the quarter. Revenue totaled € 2,226.6 million in Q4 2006, up by 21% compared to € 1,836.6 million in Q4 2005. Organic growth was solid and amounted to 18%. Acquisitions added close to 5% to the growth while currencies had a negative impact of slightly more than 1%. On average Q4 2006 had 1 working day less than Q4 2005. Organic growth per working day was 19%, compared to 20% in Q3 2006.
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For the full year growth was double digit in all countries we operate in with the exception of North America and Portugal, which had growth of just below 10%. In 2006, revenue increased by 23% to € 8,186 million, while organic growth was significant with 19%. We had strong growth in all our segments. Within this high growth environment we still managed to increase specialty revenue to 30.1% of total revenue compared to 28.4% in 2005. The 30% target was initially set for 2007.
We note that in 2006, the worldwide staffing market has grown substantially. We also gained market share across our segments and markets. An important development is that in a developed market like the Netherlands, with a relatively higher penetration of flexwork, substantial growth rates have continued. This is certainly also due to the growth of new service concepts in addition to the traditional staffing services. The other significant factor is the job creation potential that is demonstrated in the German market. These developments clearly show the added value of flexibility for the labor markets. This fits with a trend from focus on "job security" towards "work security", which is beneficial for our activities in the field of secondment of interim professionals. Another trend is towards increasing the efficiency of HR factors for production processes in western economies. This plays a major role in maintaining employment in industrial sectors. The rapid growth of our in-house concept is directly linked to this trend. Finally, the HR services industry is moving from a role as "processor" to a role of "facilitator". This is where we can add value with our search & selection and HR solutions services. All in all, growth potential is significant.
| In € million | Q4 2006 | Q4 2005 | growth | organic growth | FY 2006 | FY 2005 | growth | organic growth |
|---|---|---|---|---|---|---|---|---|
| Revenue | 2,226.6 | 1,836.6 | 21% | 18% | 8,186.1 | 6,638.5 | 23% | 19% |
| Gross profit | 483.5 | 398.4 | 21% | 16% | 1,730.6 | 1,405.2 | 23% | 18% |
| Operating expenses | 339.4 | 297.0 | 14% | 8% | 1,294.5 | 1,106.1 | 17% | 11% |
| EBITA | 144.1 | 101.4 | 42% | 37% | 436.1 | 299.1 | 46% | 43% |
| Amortization other intangibles and impairment goodwill | 4.5 | 6.0 | 12.5 | 8.2 | ||||
| Operating profit | 139.6 | 95.4 | 46% | 423.6 | 290.9 | 46% | ||
| Net income | 134.5 | 85.6 | 57% | 360.3 | 241.9 | 49% | ||
| Diluted EPS (in €) | 1.18 | 0.79 | 49% | 3.17 | 2.15 | 47% | ||
| Diluted EPS (in €) ex tax gain | 0.99 | 0.70 | 41% | 2.98 | 2.06 | 45% | ||
| Gross margin | 21.7% | 21.7% | 21.1% | 21.2% | ||||
| Operating expenses as % revenue | 15.2% | 16.2% | 15.8% | 16.7% | ||||
| EBITA margin | 6.5% | 5.5% | 5.3% | 4.5% |
Gross profit
Gross margins are improving in various countries including the Netherlands, Belgium, France, Italy, and some smaller markets. In Q4 2006 the gross profit increased 21% to € 483.5 million, while the gross margin of 21.7% was equal to the gross margin in Q4 2005. Gross profit included prior year related releases of social security accruals of close to € 2 million, primarily in the Netherlands.
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In Q4 2005 gross profit included one-offs of in total € 10 million. The acquisition of the Dutch HR administration and payroll processing company PinkRoccade HR Services had a positive impact on group gross margin of 0.2%. Excluding these items the Q4 2006 gross margin was up 0.3% for the group and 0.9% in the Netherlands, when compared to Q4 2005.
For the full year our gross margin was almost flat at 21.1% (21.2% in 2005). In the first part of the year gross margin declined but in Q4 2006 we saw further proof of the improvement that started in Q3 2006. Gross profit per average corporate FTE, a key performance indicator, increased by 8% in 2006.
Operating expenses
In Q4 2006 we continued to invest to capture future growth. Capacity was expanded which is visible in 259 extra outlets (+135 organic) and 1,950 additional FTEs (+1,060 organic) compared to Q4 2005. As a result, the number of outlets and employees is respectively 11% (+6% organic) and 15% (+8% organic) higher than a year ago. Personnel costs also included additional accruals for variable pay while marketing costs increased on the back of additional pushes in several countries. Operating expenses excluding amortization other intangibles and impairment goodwill grew by 14%, of which 8% organic. Operating expenses as a percentage of revenue were reduced from 16.2% in Q4 2005 to 15.2% in Q4 2006.
For full year 2006 operating expenses as a percentage of revenue were 15.8%, compared to 16.7% in 2005. This efficiency improvement is based, amongst other factors, on higher productivity per FTE and more efficient use of our branch network.
EBITA
In the fourth quarter of 2006 EBITA increased by 42% to € 144.1 million compared to € 101.4 million in Q4 2005. On an organic basis EBITA increased by 37%. The EBITA margin improved from 5.5% to 6.5%.
Our focus on the combination of revenue growth ahead of market and improving returns is paying off. For the full year EBITA grew by 46% to a level of € 436.1 million, compared to € 299.1 million in 2005, while the EBITA margin improved to 5.3% from 4.5%. With this strong performance we achieved our 2007 EBITA margin target of 5-6% a year early.
Net income
In Q4 2006, net income amounted to € 134.5 million, an improvement of 57% compared to € 85.6 million in Q4 2005. Net profit included a non-recurring tax gain of € 22.7 million. Randstad's tax structure enabled the company to benefit significantly from the further downward adjustment of the corporate income tax rate in the Netherlands. This gain was somewhat reduced by the effects from a corporate income tax rate adjustment in Spain and an adjustment following a year-end assessment of all our deferred tax assets. Net finance costs, including dividend on preferred shares, amounted to € 2.2 million in Q4 2006.
For the full year 2006, net income amounted to € 360.3 million, a record in the history of our company.
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Cash flow and balance sheet
Cash flow was solid. In Q4 2006 the free cash flow amounted to € 183.0 million, versus € 101.5 million in Q4 2005. For the full year 2006 free cash flow amounted to € 350.0 million, almost double the figure of € 180.3 million in 2005. The improvement chiefly stems from increased operating results, a reduction in days sales outstanding (DSO) and flat capital expenditure. Our continued focus on working capital paid off. The moving average of DSO improved by another day, to 52 in Q4 2006 from 53 in Q4 2005. Full year capital expenditure amounted to € 61.8 million, compared to € 62.0 million in 2005. We continued to invest in our house style, office refurbishment, and IT. However, IT investments were lower than in the previous year as the majority of investments for the new Dutch front/back office system were done in 2005.
Out of our free cash flow we spent € 219.2 million on acquisitions, such as Bindan and Teccon in Germany, Team4U in India, PinkRoccade HR Services in the Netherlands and a 47% stake in Talent Shanghai in China. The net cash position excluding preferred shares was € 250.3 million at the end of 2006 versus € 206.0 million at the end of 2005.
Fourth quarter by segment
Mass-customized Europe and Asia: strong top-line growth and improving profitability
Market conditions remained positive and based on strong execution we generated solid growth. The organic revenue growth amounted to 21%. Notwithstanding the fact Q4 2005 was already very strong, we maintained high growth levels in our 2 largest markets; the Netherlands and Germany. Furthermore, based on own strength we saw some acceleration in Belgium, France, Spain, Portugal, and Scandinavia. Underlying gross margin trends are positive, a clear difference compared to the trend in the first two quarters of 2006. EBITA increased by 29% to € 108.9 million while the EBITA margin reached a healthy 7.3% compared to 6.8% in Q4 2005.
Mass-customized and in-house services North America: solid improvement in profitability
With 6% organic growth our North American businesses outperformed a market that has been slowing overall. The focus provided by the clear segmentation between mass-customized and in-house enables continued gain of market share. Our Canadian operations also turned in another strong performance. The sale of PL Services had a negative impact on the combined North American gross margin of 0.9%, as in the previous quarter. Continued growth in large accounts and wage increases which were not fully passed on to clients also caused some gross margin pressure. On the back of solid productivity gains profitability improved significantly. The EBITA margin for our combined North American businesses increased from 2.4% to 3.3%. From Q2 2005 until Q4 2006 the average number of corporate employees has come down from 2,400 to 2,120. In December the number of FTEs increased again as we started with our earlier announced plan to open 70 units (each consisting of 2 consultants) within existing branches to gain further traction in the mid-market.
In-house services Europe: 42% revenue growth and EBITA more than doubled
The in-house concept again proved to be a very effective offering for our large industrial clients. Revenue growth continued to be very strong. Organic revenue growth amounted to 20% in Q4 2006, while total growth including transfers from mass-customized was 42%. Growth was well spread across our different geographies. Both in Germany and Belgium we opened our 100th in-house outlet. In total we now operate from 549 in-house locations. The gross margin improved from 13.9% to 14.4%. EBITA more than doubled from € 9.0 million to € 18.9 million while the EBITA margin reached 6.5% compared to 4.4% in Q4 2005. All regions where we offer in-house services contributed to the improved profitability.
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Interim professionals, search & selection: continued strong growth
Organic revenue growth of interim professionals, search & selection was 26% in Q4 2006. Including acquisitions, revenue increased by 70% to € 142.9 million. We continue to see strong growth in secondment. We had strong performance in large segments such as IT and Finance (Yacht NL) and Engineering (including Germany) but also in other competences such as Legal and Marketing & Communications. The gross margin increased from 27.1% to 30.5%, a reflection of growth in higher segments, more recruitment fees (including contributions from our acquisitions in the UK and India), pricing and reduced idle time. The EBITA margin increased from 7.7% to 9.7%. Scarcity is a topic in areas like IT, Finance and Engineering but not to the extent that it is limiting growth across the board.
We continue to see many opportunities to keep adding to the number of interim professionals employed while there is also scope for improvement in recruitment.
Other developments
As of 2 March 2007, the Randstad Holding ordinary share will be promoted from the Euronext Midkap Index (AMX) to the leading AEX Index of 25 most traded stocks on Euronext Amsterdam. We welcome this change as it can lead to more visibility for candidates and clients, and further improvement in liquidity for investors.
The potential upcoming corporate income tax rate reductions in Germany will have a positive influence on the future weighted applicable tax rate and on future cash flow. This reduction will also lead to a non-cash and non-recurring charge to the income statement in the quarter that the plan will be formally enacted in the magnitude of € 1 million to € 2 million for each percentage point reduction in the German corporate income tax rate.
In December 2006 we divested a small business in Spain, which did not fit our portfolio, as it was mainly active in parcel delivery, logistics and meter reading rather than staffing. 2006 revenue of this business was approximately € 23 million. Revenue of our total Spanish operations amounted to € 498 million in 2006.
Outlook Q1 2007
We started the year well. Growth remains very robust across our European operations. We see limited growth in North America at the moment while growth in Asia is strong. Given these market trends, we expect diluted EPS before amortization other intangibles and impairment goodwill to amount to at least € 0.53, an increase of at least 23% versus a comparable figure of € 0.43 in Q1 2006. We expect the effective tax rate to amount to 26% in 2007 compared to 18.5% in 2006. We also note that the first quarter of 2007 will have on average 1 working day less than Q1 2006.
Financial calendar
Publication annual report on website (electronic version) March 12, 2007 Publication annual report (printed version) March 19, 2007 Publication first quarter results 2007 April 25, 2007 General Meeting of Shareholders May 8, 2007 Publication second quarter results 2007 July 25, 2007 Publication third quarter results 2007 October 24, 2007 Publication fourth quarter and annual results 2007 February 14, 2008
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Conference call
Today, at 9.00 CET, Randstad Holding will host a press conference at our headquarters in Diemen. At 13.00 CET, we will host a video webcast and conference call for analysts. The dial in number is +31 (0)20 712 13 04 and for participants from the UK +44 (20) 7138 0816. You can watch the analyst conference through real time video webcast. A replay of the presentation and the Q & A will also be available on our website as of today 18.00 CET. The link is: http://www.ir.randstad.com/presentations.cfm
Additional information
The full-year figures (figures for the twelve months ended December 31, figures YTD) included in this press release are derived from but reflect only parts of the financial statements 2006. On the financial statements 2006 of Randstad Holding nv an auditor's opinion was issued, dated February 13, 2007. The financial statements 2006 have not been published yet and are not yet adopted by the Annual General Meeting of shareholders.
Certain statements in this document concern prognoses about the future financial condition and the results of operations of Randstad Holding as well as certain plans and objectives. Obviously, such prognoses involve risks and a degree of uncertainty since they concern future events and depend on circumstances that will apply then. Many factors may contribute to the actual results and developments differing from the prognoses made in this document. These factors include general economic conditions, a shortage on the job market, changes in the demand for (flexible) personnel, changes in employment legislation, future currency and interest fluctuations, future takeovers, acquisitions and disposals and the rate of technological developments. These prognoses therefore apply only on the date on which the document was compiled.
Randstad Holding nv specializes in solutions in the field of flexible work and human resources services with group companies in Europe, North America and Asia. The Randstad Group is one of the largest temporary employment organizations in the world and market leader in the Netherlands, Belgium, Germany, Poland and the southeastern United States. Randstad is dedicated to matching at the right time, the demand by individuals for challenging and well-paid employment to the demand of organizations for employees of the right caliber and the right qualifications. The Group is active under the brand names Randstad, Yacht, Capac Inhouse Services, Tempo-Team, EmmayHR, Team4U, Martin Ward Anderson and Otter-Westelaken. Randstad Holding nv (Reuters: RAND.AS, Bloomberg: RAND NA) is listed on the Euronext Amsterdam exchange, where options for stocks in Randstad Holding are also traded. For more information about Randstad Holding see http://www.randstad.com.
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Q4 unaudited
Consolidated income statement
| Three months ended December 31 | Twelve months ended December 31 | |||||
|---|---|---|---|---|---|---|
| In millions of € | 2006 | 2005 | Change 2006/2005 | 2006 | 2005 | Change 2006/2005 |
| Revenue | 2,226.6 | 1,836.6 | 21% | 8,186.1 | 6,638.5 | 23% |
| Cost of services | 1,743.1 | 1,438.2 | 21% | 6,455.5 | 5,233.3 | 23% |
| Gross profit | 483.5 | 398.4 | 21% | 1,730.6 | 1,405.2 | 23% |
| Selling expenses | 241.1 | 206.1 | 910.6 | 771.6 | ||
| General and administrative expenses | 102.8 | 96.9 | 396.4 | 342.7 | ||
| Total operating expenses | 343.9 | 303.0 | 13% | 1,307.0 | 1,114.3 | 17% |
| Operating profit | 139.6 | 95.4 | 46% | 423.6 | 290.9 | 46% |
| Dividend preferred shares | -1.8 | -1.9 | -7.2 | -8.4 | ||
| Financial income and expenses | -0.4 | -0.1 | -2.0 | -0.8 | ||
| Net finance costs | -2.2 | -2.0 | -9.2 | -9.2 | ||
| Income before taxes | 137.4 | 93.4 | 414.4 | 281.7 | ||
| Taxes on income | -2.9 | -7.8 | -54.1 | -39.8 | ||
| Net income | 134.5 | 85.6 | 57% | 360.3 | 241.9 | 49% |
| Earnings per share attributable to the ordinary shareholders of Randstad Holding nv (expressed in € per ordinary share): | ||||||
| - Basic earnings per ordinary share | 1.16 | 0.74 | 3.11 | 2.10 | ||
| - Diluted earnings per ordinary share | 1.15 | 0.74 | 3.10 | 2.09 | ||
| - Diluted earnings per ordinary share before amortization other intangible assets and impairment goodwill | 1.18 | 0.79 | 3.17 | 2.15 | ||
| Margin | ||||||
| Gross margin | 21.7% | 21.7% | 21.1% | 21.2% | ||
| EBITDA margin | 7.1% | 6.1% | 5.9% | 5.1% | ||
| EBITA margin | 6.5% | 5.5% | 5.3% | 4.5% | ||
| Operating margin | 6.3% | 5.2% | 5.2% | 4.4% | ||
| Net margin | 6.0% | 4.7% | 4.4% | 3.6% |
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Information by segment
unaudited
| In millions of € | Three months ended December 31 | |||||
|---|---|---|---|---|---|---|
| 2006 | 2005 | Change 2006/2005 | Organic growth * | Margins 2006 | Margins 2005 | |
| Revenue | ||||||
| Mass-customized Europe and Asia | 1,493.0 | 1,231.8 | 21% | 21% | ||
| Mass-customized North America | 248.1 | 272.1 | -9% | 3% | ||
| In-house services Europe | 288.9 | 203.7 | 42% | 20% | ||
| In-house services North America | 65.4 | 50.5 | 30% | 18% | ||
| Interim professionals, search & selection | 142.9 | 84.2 | 70% | 26% | ||
| Eliminations | -11.7 | -5.7 | ||||
| Total revenue | 2,226.6 | 1,836.6 | 21% | 18% | ||
| Gross profit | ||||||
| Mass-customized Europe and Asia | 345.2 | 285.9 | 21% | 16% | 23.1% | 23.2% |
| Mass-customized North America | 46.6 | 55.5 | -16% | -2% | 18.8% | 20.4% |
| In-house services Europe | 41.6 | 28.3 | 47% | 28% | 14.4% | 13.9% |
| In-house services North America | 7.5 | 6.3 | 19% | 8% | 11.5% | 12.5% |
| Interim professionals, search & selection | 43.6 | 22.8 | 91% | 35% | 30.5% | 27.1% |
| Eliminations | -1.0 | -0.4 | ||||
| Total gross profit | 483.5 | 398.4 | 21% | 16% | 21.7% | 21.7% |
| EBITA ** | ||||||
| Mass-customized Europe and Asia | 108.9 | 84.3 | 29% | 26% | 7.3% | 6.8% |
| Mass-customized North America | 8.2 | 6.5 | 26% | 65% | 3.3% | 2.4% |
| In-house services Europe | 18.9 | 9.0 | 110% | 90% | 6.5% | 4.4% |
| In-house services North America | 2.0 | 1.1 | 82% | 59% | 3.1% | 2.2% |
| Interim professionals, search & selection | 13.8 | 6.5 | 112% | 65% | 9.7% | 7.7% |
| Corporate | -7.7 | -6.0 | ||||
| Total EBITA | 144.1 | 101.4 | 42% | 37% | 6.5% | 5.5% |
- Organic growth is measured excluding the impact of currency effects, acquisitions and transfers between segments. ** EBITA: operating profit before amortization other intangible assets and impairment goodwill.
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Information by segment
| Twelve months ended December 31 | ||||||
|---|---|---|---|---|---|---|
| In millions of € | 2006 | 2005 | Change 2006/2005 | Organic growth * | Margins 2006 | Margins 2005 |
| Revenue | ||||||
| Mass-customized Europe and Asia | 5,455.4 | 4,470.1 | 22% | 20% | ||
| Mass-customized North America | 1,023.2 | 992.6 | 3% | 8% | ||
| In-house services Europe | 974.2 | 720.8 | 35% | 25% | ||
| In-house services North America | 247.5 | 188.4 | 31% | 12% | ||
| Interim professionals, search & selection | 518.0 | 288.3 | 80% | 34% | ||
| Eliminations | -32.2 | -21.7 | ||||
| Total revenue | 8,186.1 | 6,638.5 | 23% | 19% | ||
| Gross profit | ||||||
| Mass-customized Europe and Asia | 1,213.7 | 1,002.1 | 21% | 17% | 22.2% | 22.4% |
| Mass-customized North America | 198.4 | 201.6 | -2% | 6% | 19.4% | 20.3% |
| In-house services Europe | 138.9 | 101.2 | 37% | 28% | 14.3% | 14.0% |
| In-house services North America | 28.8 | 22.4 | 29% | 10% | 11.6% | 11.9% |
| Interim professionals, search & selection | 152.7 | 78.9 | 94% | 38% | 29.5% | 27.4% |
| Eliminations | -1.9 | -1.0 | ||||
| Total gross profit | 1,730.6 | 1,405.2 | 23% | 18% | 21.1% | 21.2% |
| EBITA ** | ||||||
| Mass-customized Europe and Asia | 322.0 | 257.8 | 25% | 25% | 5.9% | 5.8% |
| Mass-customized North America | 30.9 | 14.3 | 116% | 190% | 3.0% | 1.4% |
| In-house services Europe | 54.0 | 26.8 | 101% | 89% | 5.5% | 3.7% |
| In-house services North America | 8.5 | 4.8 | 77% | 50% | 3.4% | 2.5% |
| Interim professionals, search & selection | 46.6 | 18.9 | 147% | 90% | 9.0% | 6.6% |
| Corporate | -25.9 | -23.5 | ||||
| Total EBITA | 436.1 | 299.1 | 46% | 43% | 5.3% | 4.5% |
- Organic growth is measured excluding the impact of currency effects, acquisitions and transfers between segments.
** EBITA: operating profit before amortization other intangible assets and impairment goodwill.
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Information by geographical area unaudited
| In millions of € | Three months ended December 31 | |||||
|---|---|---|---|---|---|---|
| 2006 | 2005 | Change 2006/2005 | Organic growth * | Margins 2006 | Margins 2005 | |
| Revenue | ||||||
| The Netherlands | 796.2 | 688.4 | 16% | 15% | ||
| Germany | 370.7 | 226.7 | 64% | 39% | ||
| Belgium/Luxembourg | 254.5 | 210.8 | 21% | 20% | ||
| France | 145.8 | 124.9 | 17% | 17% | ||
| Spain | 133.9 | 110.3 | 21% | 21% | ||
| United Kingdom | 69.3 | 51.3 | 35% | 8% | ||
| Italy | 71.9 | 54.8 | 31% | 31% | ||
| Other European counties | 64.3 | 46.7 | 38% | 38% | ||
| North America | 313.5 | 322.6 | -3% | 6% | ||
| Asia | 6.5 | 0.1 | - | - | ||
| Total revenue | 2,226.6 | 1,836.6 | 21% | 18% | ||
| Gross profit | ||||||
| The Netherlands | 205.1 | 175.8 | 17% | 12% | 25.8% | 25.5% |
| Germany | 92.8 | 58.2 | 59% | 32% | 25.0% | 25.7% |
| Belgium/Luxembourg | 49.7 | 41.0 | 21% | 18% | 19.5% | 19.4% |
| France | 20.2 | 17.2 | 17% | 17% | 13.9% | 13.8% |
| Spain | 21.9 | 18.5 | 18% | 18% | 16.4% | 16.8% |
| United Kingdom | 14.3 | 8.7 | 64% | 7% | 20.6% | 17.0% |
| Italy | 12.6 | 8.5 | 48% | 48% | 17.5% | 15.5% |
| Other European countries | 11.8 | 8.6 | 37% | 37% | 18.4% | 18.3% |
| North America | 54.1 | 61.8 | -12% | 0% | 17.3% | 19.2% |
| Asia | 1.0 | 0.1 | - | - | - | - |
| Total | 483.5 | 398.4 | 21% | 16% | 21.7% | 21.7% |
Information by geographical area
| In millions of € | Twelve months ended December 31 | |||||
|---|---|---|---|---|---|---|
| 2006 | 2005 | Change 2006/2005 | Organic growth * | Margins 2006 | Margins 2005 | |
| Revenue | ||||||
| The Netherlands | 2,912.2 | 2,457.6 | 18% | 18% | ||
| Germany | 1,307.4 | 787.8 | 66% | 40% | ||
| Belgium/Luxembourg | 923.6 | 795.2 | 16% | 16% | ||
| France | 532.2 | 469.2 | 13% | 13% | ||
| Spain | 498.0 | 415.1 | 20% | 20% | ||
| United Kingdom | 249.0 | 184.3 | 35% | 7% | ||
| Italy | 253.2 | 187.6 | 35% | 35% | ||
| Other European counties | 223.4 | 160.6 | 39% | 39% | ||
| North America | 1,270.7 | 1,181.0 | 8% | 9% | ||
| Asia | 16.4 | 0.1 | - | - | ||
| Total revenue | 8,186.1 | 6,638.5 | 23% | 19% | ||
| Gross profit | ||||||
| The Netherlands | 708.1 | 609.8 | 16% | 14% | 24.3% | 24.8% |
| Germany | 325.4 | 197.4 | 65% | 37% | 24.9% | 25.1% |
| Belgium/Luxembourg | 173.6 | 145.7 | 19% | 16% | 18.8% | 18.3% |
| France | 75.5 | 64.7 | 17% | 17% | 14.2% | 13.8% |
| Spain | 80.3 | 68.1 | 18% | 18% | 16.1% | 16.4% |
| United Kingdom | 53.3 | 33.0 | 62% | 3% | 21.4% | 17.9% |
| Italy | 42.9 | 32.2 | 33% | 33% | 16.9% | 17.1% |
| Other European countries | 41.2 | 30.2 | 36% | 36% | 18.4% | 18.8% |
| North America | 227.2 | 224.0 | 1% | 7% | 17.9% | 19.0% |
| Asia | 3.1 | 0.1 | - | - | - | - |
| Total | 1,730.6 | 1,405.2 | 23% | 18% | 21.1% | 21.2% |
- Organic growth is measured excluding the impact of currency effects, acquisitions and transfers between segments.
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Fourth quarter and annual results 2006
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Consolidated balance sheet
In millions of €
| December 31, 2006 | December 31, 2005 | |
|---|---|---|
| Assets | ||
| Property, plant and equipment | 117.1 | 99.3 |
| Intangible assets | 324.2 | 111.3 |
| Deferred income tax assets | 329.0 | 339.7 |
| Financial assets and associates | 11.9 | 4.9 |
| Non-current assets | 782.2 | 555.2 |
| Trade and other receivables | 1,443.0 | 1,289.3 |
| Income tax receivables | 6.1 | 3.2 |
| Cash and cash equivalents | 346.5 | 453.8 |
| Current assets | 1,795.6 | 1,746.3 |
| Total assets | 2,577.8 | 2,301.5 |
| Equity and liabilities | ||
| Issued capital | 11.6 | 11.6 |
| Share premium | 404.6 | 384.7 |
| Reserves | 374.1 | 139.9 |
| Shareholders' equity | 790.3 | 536.2 |
| Preferred shares | 165.8 | 165.8 |
| Borrowings | - | 130.5 |
| Deferred income tax liabilities | 298.9 | 357.4 |
| Provisions | 49.4 | 34.6 |
| Non-current liabilities | 514.1 | 688.3 |
| Trade and other payables | 1,095.7 | 899.0 |
| Income tax liabilities | 48.4 | 27.9 |
| Borrowings | 96.2 | 117.3 |
| Provisions | 33.1 | 32.8 |
| Current liabilities | 1,273.4 | 1,077.0 |
| Total equity and liabilities | 2,577.8 | 2,301.5 |
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Q4 unaudited
Consolidated cash flow statement
| Three months ended December 31 | Twelve months ended December 31 | |||
|---|---|---|---|---|
| In millions of € | 2006 | 2005 | 2006 | 2005 |
| Net income | 134.5 | 85.6 | 360.3 | 241.9 |
| Taxes on income | 2.9 | 7.8 | 54.1 | 39.8 |
| Net finance costs | 2.2 | 2.0 | 9.2 | 9.2 |
| Operating profit | 139.6 | 95.4 | 423.6 | 290.9 |
| Depreciation property, plant and equipment | 8.3 | 6.0 | 32.3 | 26.1 |
| Amortization software | 4.6 | 5.3 | 15.8 | 14.0 |
| Amortization other intangible assets | 3.5 | 1.2 | 11.5 | 3.4 |
| Impairment goodwill | 1.0 | 4.8 | 1.0 | 4.8 |
| Share-based payments | 1.3 | 0.0 | 4.6 | 4.3 |
| Provisions | -0.1 | -20.3 | -0.6 | -22.1 |
| Income taxes (paid) / received | -33.9 | 4.0 | -105.6 | -3.9 |
| Cash flow from operations before operating working capital | 124.3 | 96.4 | 382.6 | 317.5 |
| Trade and other receivables | 27.2 | -8.4 | -130.2 | -187.3 |
| Trade and other payables | 53.0 | 31.5 | 157.2 | 108.0 |
| Operating working capital | 80.2 | 23.1 | 27.0 | -79.3 |
| Net cash flow from operating activities | 204.5 | 119.5 | 409.6 | 238.2 |
| Additions of property, plant and equipment | -16.3 | -15.4 | -50.8 | -48.4 |
| Additions of software | -7.0 | -3.5 | -11.0 | -13.6 |
| Acquisition of subsidiaries and associates | -72.9 | -32.1 | -219.2 | -34.3 |
| Financial receivables | 0.6 | -0.5 | -0.5 | 0.0 |
| Disposals of property, plant and equipment | 1.2 | 1.4 | 2.7 | 4.1 |
| Disposal of subsidiaries | 2.7 | - | 3.7 | - |
| Net cash flow from investing activities | -91.7 | -50.1 | -275.1 | -92.2 |
| Re-issue of purchased ordinary shares | - | 0.5 | 1.0 | 2.7 |
| Issue of ordinary shares | 2.5 | - | 3.9 | - |
| (Repayments of) / proceeds from non-current borrowings | -190.1 | 0.1 | -130.5 | 0.1 |
| Financing | -187.6 | 0.6 | -125.6 | 2.8 |
| Financial income and expenses received | 0.3 | 0.5 | 0.4 | 0.9 |
| Dividend paid on ordinary shares | - | - | -90.7 | -76.2 |
| Dividend paid on preferred shares B | - | - | -8.4 | -8.6 |
| Reimbursement to financiers | 0.3 | 0.5 | -98.7 | -83.9 |
| Net cash flow from financing activities | -187.3 | 1.1 | -224.3 | -81.1 |
| Net (decrease) / increase in cash, cash equivalents and current borrowings | -74.5 | 70.5 | -89.8 | 64.9 |
| Cash, cash equivalents and current borrowings at begin of period | 324.1 | 268.1 | 336.5 | 279.4 |
| Net (decrease) / increase in cash, cash equivalents and current borrowings | -74.5 | 70.5 | -89.8 | 64.9 |
| Translation gains / (losses) | 0.7 | -2.1 | 3.6 | -7.8 |
| Cash, cash equivalents and current borrowings at end of period | 250.3 | 336.5 | 250.3 | 336.5 |
| Free cash flow | 183.0 | 101.5 | 350.0 | 180.3 |
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Fourth quarter and annual results 2006
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Consolidated statement of changes in shareholders' equity
Q4 unaudited
| In millions of € | 2006 | 2005 |
|---|---|---|
| Value at October 1 | 660.4 | 445.9 |
| Net income for the period | 134.5 | 85.6 |
| Translation differences | -8.4 | 4.2 |
| Total recognized income | 126.1 | 89.8 |
| Share-based payments | 1.3 | 0.0 |
| Re-issue of purchased ordinary shares | - | 0.5 |
| Issue of ordinary shares | 2.5 | - |
| Value at December 31 | 790.3 | 536.2 |
| 2006 | 2005 | |
| --- | --- | --- |
| Value at January 1 | 536.2 | 338.8 |
| Movements in the period: | ||
| Net income for the period | 360.3 | 241.9 |
| Translation differences | -25.0 | 24.7 |
| Total recognized income | 335.3 | 266.6 |
| Dividend paid on ordinary shares | -90.7 | -76.2 |
| Share-based payments | 4.6 | 4.3 |
| Re-issue of purchased ordinary shares | 1.0 | 2.7 |
| Issue of ordinary shares | 3.9 | - |
| Value at December 31 | 790.3 | 536.2 |
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Accounting policies
In this quarterly report the accounting policies as included in our annual reports 2006 and 2005 are applied.
The following during 2006 acquired companies have been included in the YTD Q4 consolidated figures: Gamma Dienstverlening bv, Bindan GmbH & Co KG, Teccon GmbH & Co KG, Galilei nv, TeamHR Limited, Worktoday (activities), Pink Roccade Public Sector bv and Talent Academy bv. Talent Shanghai Co. is not included as a consolidated company in the YTD Q4 figures.
Free cash flow: net cash flow from operating and investing activities excluding acquisition and disposal of subsidiaries and associates.
Core data
In millions of €
| Balance sheet | December 31, 2006 | December 31, 2005 | ||
|---|---|---|---|---|
| Operating working capital * | 354.5 | 398.7 | ||
| Borrowings (excluding preferred shares) | 96.2 | 247.8 | ||
| Net cash / (net debt) (excluding preferred shares) | 250.3 | 206.0 |
- Operating working capital is defined as trade and other receivables minus trade and other payables plus dividend payable preferred shares.
| Split up operating expenses Q4 unaudited | Three months ended December 31 | | Twelve months ended December 31 | | | --- | --- | --- | --- | --- | | | 2006 | 2005 | 2006 | 2005 | | Personnel expenses | 241.4 | 205.8 | 898.7 | 759.6 | | Other operating expenses | 98.0 | 91.2 | 395.8 | 346.5 | | Operating expenses | 339.4 | 297.0 | 1,294.5 | 1.106.1 | | Amortization other intangible assets and impairment goodwill | 4.5 | 6.0 | 12.5 | 8.2 | | Total operating expenses | 343.9 | 303.0 | 1,307.0 | 1,114.3 |
Depreciation and amortization software
| Depreciation property, plant and equipment | 8.3 | 6.0 | 32.3 | 26.1 |
|---|---|---|---|---|
| Amortization software | 4.6 | 5.3 | 15.8 | 14.0 |
| Total depreciation and amortization software | 12.9 | 11.3 | 48.1 | 40.1 |
EPS calculation
| Net income for ordinary shareholders | 134.5 | 85.6 | 360.3 | 241.9 |
|---|---|---|---|---|
| Amortization other intangible assets and impairment goodwill (after taxes) | 3.3 | 5.6 | 8.6 | 7.2 |
| Net income before amortization other intangible assets and impairment goodwill | 137.8 | 91.2 | 368.9 | 249.1 |
| Basic EPS (in €) | 1.16 | 0.74 | 3.11 | 2.10 |
| --- | --- | --- | --- | --- |
| Diluted EPS (in €) | 1.15 | 0.74 | 3.10 | 2.09 |
| Diluted EPS before amortization other intangible assets and impairment goodwill (in €) | 1.18 | 0.79 | 3.17 | 2.15 |
| Average number of ordinary shares outstanding (mln) | 116.0 | 115.5 | 115.8 | 115.4 |
| --- | --- | --- | --- | --- |
| Average number of diluted ordinary shares outstanding (mln) | 116.5 | 116.1 | 116.3 | 116.0 |