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Randstad N.V. — Interim / Quarterly Report 2017
Feb 13, 2018
3880_iss_2018-02-13_200f3551-eb73-4c89-b0ac-0087f52111d0.pdf
Interim / Quarterly Report
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4th-quarter
and full-year results
2017.
human forward.
contents
Q4 & FY 2017: strong conversion of robust topline.
financial performance
performance
Q4 & FY 2017: strong conversion of robust topline.
| organic growth | ||
|---|---|---|
| + 8.7% | ||
| underlying EBITA | ||
| € 307 m | ||
| full year 2017 cash dividend per share |
||
| € 2.76 | ||
| toplinegrew11%inEurope, 1% in North America and 10% in Rest of the world |
gross margin 20.1%; pricing climate stable; perm fees up 13% (Q3 2017: 10%) |
underlying EBITA of € 307 million; EBITA margin 5.1% (+30bp); underlying ICR > 50%, full year ICR of 40% |
| fullyear2017freecashflow up 26% to |
full year 2017 ROIC of 16.7%; leverage ratio of |
monster: EBITA positive driven by cost |
| € 586 m | 0.9 | optimization program; key strategic initiatives in progress |
| capital allocation: conditional floor dividend and optional cash returns when leverage ratio < 1.0 |
proposedcashdividendof € 2.76 (up 46%); regular dividend of € 2.07 and special dividend of € 0.69; |
january 2018 organic sales growth of around |
| record high | 7% |
"We look back on another exciting year for Randstad," says Randstad CEO Jacques van den Broek. "Our revenue rose organically by 8% in 2017, the highest level of growth since 2011 and we are proud to have outperformed in mostrelevant markets. We finished the year on a strong note, despite markedly tougher comparables. Our organic sales growth remained robust at 9% in Q4, while our profitability and FCF increased substantially. We aim to gain further market share, driven by our dierentiating Tech & Touch strategy, lifting the barriers to entry. We are integrating technology into our everyday activities in such a way that we create experiences for our clients and candidates that are smart, personal and eective. The digital transformation we are going through as a company culminated in the launch of our new brand promise in the last quarter of 2017: Human Forward. Our financial position remains healthy, reflected by the proposal of a cash dividend of € 2.76 per ordinary share, including a special dividend of € 0.69, a record high. I feel very proud of all my colleagues and I would like to thank them and all stakeholders for an excellent 2017."
Our annual report 2017 is available on www.ir.randstad.com.
financial performance.
core data
| yoy | yoy | |||||||
|---|---|---|---|---|---|---|---|---|
| in millions of €, unless otherwise indicated - underlying | Q4 2017 | Q4 2016 | change | % org. | fy 2017 | fy 2016 | change | % org. |
| Revenue | 5,977.9 | 5,525.2 | 8% | 9% | 23,272.8 | 20,684.1 | 13% | 8% |
| Gross profit | 1,202.2 | 1,105.7 | 9% | 8% | 4,707.9 | 3,934.2 | 20% | 7% |
| Operating expenses | 895.2 | 838.1 | 7% | 5% | 3,642.6 | 2,987.5 | 22% | 5% |
| EBITA, underlying1 | 307.0 | 267.6 | 15% | 14% | 1,065.3 | 946.7 | 13% | 11% |
| Integration costs and one-offs | (14.7) | (36.3) | (71.6) | (54.7) | ||||
| EBITA | 292.3 | 231.3 | 26% | 993.7 | 892.0 | 11% | ||
| Amortization of intangible assets2 | (30.0) | (33.4) | (134.0) | (101.4) | ||||
| Operating profit | 262.3 | 197.9 | 859.7 | 790.6 | ||||
| Net finance costs | (2.3) | 0.3 | (22.5) | (3.8) | ||||
| Share of profit/(loss) of associates | 0.4 | (0.8) | 1.2 | (0.8) | ||||
| Income before taxes | 260.4 | 197.4 | 32% | 838.4 | 786.0 | 7% | ||
| Taxes on income | (62.5) | (44.8) | (207.0) | (197.8) | ||||
| Net income | 197.9 | 152.6 | 30% | 631.4 | 588.2 | 7% | ||
| Adj. net income for holders of ordinary shares3 | 225.3 | 202.7 | 11% | 756.3 | 688.9 | 10% | ||
| Free cash flow | 385.3 | 212.2 | 82% | 585.6 | 464.6 | 26% | ||
| Net debt | 1,025.7 | 793.4 | ||||||
| Leverage ratio (net debt/12-month EBITDA) | 0.9 | 0.8 | ||||||
| DSO (Days Sales Outstanding), moving average | 53.2 | 51.4 | ||||||
| Margins (in % of revenue) | ||||||||
| Gross margin | 20.1% | 20.0% | 20.2% | 19.0% | ||||
| Operating expenses margin | 15.0% | 15.2% | 15.7% | 14.4% | ||||
| EBITA margin, underlying | 5.1% | 4.8% | 4.6% | 4.6% | ||||
| Share data | ||||||||
| Basic earnings per ordinary share (in €) | 1.06 | 0.82 | 29% | 3.38 | 3.15 | 7% | ||
| Diluted earnings per ordinary share, underlying (in €)3 | 1.22 | 1.10 | 11% | 4.11 | 3.75 | 10% |
1 EBITA adjusted for integration costs and one-os.
2 Amortization and impairment of acquisition-related intangible assets and goodwill.
3 Before amortization and impairment of acquisition-related intangible assets and goodwill, integration costs and one-os. See table 'Earnings per share' on page 24.
revenue
Organic revenue per working day grew by 8.7%1 in Q4 to € 5,978 million (Q3 2017: up 9.0%) despite a 2.4% tougher comparison base. Reported revenue was 8.2% above Q4 2016, of which M&A contributed 3.0%. FX and working days had a negative eect of 2.7% and 0.8% respectively.
In North America, revenue per working day increased 1% (Q3 2017: flat). Growth in the US was flat, while Canada grew by 10% (Q3 2017: up 6%). In Europe, revenue per working day grew by 11% (Q3 2017: up 11%). Topline growth in France amounted to 12% (Q3 2017: up 14%) reflecting tougher comps, while the Netherlands grew by 3% (Q3 2017: up 1%). Germany was up 10% (Q3 2017: up 10%), while sales growth in Belgium improved to 10% (Q3 2017: up 9%). Italy grew by 26% (Q3 2017: up 27%) despite much tougher comps, while revenues in Iberia were up by 15% (Q3 2017: up 14%). In the 'Rest of the world' region, revenue increased 10% (Q3 2017: up 10%); Australia & New Zealand rose by 8% (Q3 2017: up 9%) and Japan increased by 9% (Q3 2016: up 6%).
Perm fees accelerated to 13% (Q3 2017: up 10%), with Europe up 18% (Q3 2017: up 18%) and North America up 5% (Q3 2017: up 2%). In the 'Rest of the world' region, perm fee growth was 14% (Q3 2017: up 5%). Perm fees made up 8.8% of gross profit.
gross profit
In Q4 2017, gross profit amounted to € 1,202 million. Organic growth was 7.9%2 (Q3 2017: up 7.7%). Currency eects had a negative impact on gross profit of € 31 million compared to Q4 2016.
year-on-year gross margin development (%)
Gross margin was 20.1%, 10bp above Q4 2016 (as shown in the graph above). Temporary staing (Q3 2017: -40bp) and permanent placements had no eect on gross margin, while HRS/others (including acquisitions) added 10bp.
operating expenses
On an organic basis, operating expenses increased by € 8 million sequentially to € 895 million. This is primarily related to investments in our organic sales growth (including digital), partially oset by the cost optimization program within Monster. Compared to last year, operating expenses were up 5% (Q3 2017: 5%) organically, while there was a € 25 million positive FX impact.
1 Including Monster as of November 1, 2017; organic growth per working day excluding Monster amounted to 9.0%
2 Excluding Monster, for comparability reasons
sequential OPEX development Q3 -> Q4 in € M
Personnel expenses were up 1% sequentially. Average headcount (in FTE) amounted to 38,380 for the quarter, flat compared to Q3 2017 and 4% higher organically YoY.
Productivity (measured as gross profit per FTE) was 3% higher YoY (Q3 2017: 3%) on an organic basis. We operated a network of 4,858 outlets (Q3 2017: 4,775).
Operating expenses in Q4 2017 were adjusted for a total of € 11 million one-os, of which € 7 million is derived from restructuring expenses related to prior M&A (primarily Monster) and € 4 million relates to other restructuring costs. Last year's cost base was adjusted for a total of € 36 million one-o costs.
EBITA
Underlying EBITA increased organically by 14% to € 307 million. Currency eects had a € 5 million adverse impact YoY. EBITA margin reached 5.1%, up from 4.8% in Q4 2016. Excluding digital investments and the adverse working day impact, EBITA margin was 5.4%. We achieved an organic incremental conversion ratio (ICR)3 of 40% over the last four quarters.
net finance costs
In Q4 2017, net finance costs were € 2.3 million, compared with € 0.3 million net financial income in Q4 2016. Interest expenses on our net debt position were € 4.0 million (Q4 2016: € 4.8 million). Foreign currency eects had a negative impact of € 0.9 million (Q4 2016: negative impact of € 0.9 million). The remaining € 2.6 million income (Q4 2016: € 6.0 million income) relates primarily to the adjustments in the valuation of certain assets and liabilities.
tax
The eective tax rate before amortization and impairment of acquisition-related intangibles and goodwill, integration costs, and one-os amounted to 26.4% for the full year 2017 (FY 2016: 26.0%). For 2018, we expect an eective tax rate before amortization and impairment of acquisition-related intangibles and goodwill, integration costs, and one-os of between 24% and 26%. This includes a positive eect of the US tax rate reduction.
net income, earnings per share
In Q4 2017, adjusted net income rose by 11% YoY to € 225 million. Diluted underlying EPS amounted to € 1.22 (Q4 2016: € 1.10). The average number of diluted ordinary shares outstanding remained almost stable compared to Q4 2016 (184.0 million versus 183.8 million).
3 Additional EBITA year-on-year, as a % of additional gross profit year-on-year, based on organic growth.
invested capital
Our invested capital mainly comprises goodwill and acquisition-related intangibles, net tax assets, and operating working capital.
| in millions of €, unless otherwise indicated | december 31, 2017 |
september | 30, 2017 june 30, 2017 | march 31, 2017 |
december 31, 2016 |
september 30, 2016 |
|---|---|---|---|---|---|---|
| Goodwill and acquisition-related intangible assets | 3,475.5 | 3,518.5 | 3,581.7 | 3,692.8 | 3,286.3 | 2,808.4 |
| Operating working capital (OWC)1 | 889.4 | 991.4 | 982.6 | 752.2 | 712.1 | 830.6 |
| Net tax assets2 | 356.8 | 403.7 | 421.4 | 449.4 | 479.6 | 464.0 |
| All other assets/(liabilities)3 | 555.7 | 555.1 | 515.4 | 121.4 | 456.2 | 399.6 |
| Invested capital | 5,277.4 | 5,468.7 | 5,501.1 | 5,015.8 | 4,934.2 | 4,502.6 |
| Financed by | ||||||
| Total equity | 4,251.7 | 4,079.8 | 3,944.9 | 3,886.6 | 4,140.8 | 3,941.3 |
| Net debt | 1,025.7 | 1,388.9 | 1,556.2 | 1,129.2 | 793.4 | 561.3 |
| Invested capital | 5,277.4 | 5,468.7 | 5,501.1 | 5,015.8 | 4,934.2 | 4,502.6 |
| Ratios | ||||||
| DSO (Days Sales Outstanding), moving average | 53.2 | 52.5 | 52.1 | 50.5 | 51.4 | 51.1 |
| OWC as % of revenue over last 12 months | 3.8% | 4.3% | 4.4% | 3.5% | 3.4% | 4.1% |
| Leverage ratio (net debt/12-month EBITDA) | 0.9 | 1.4 | 1.5 | 1.1 | 0.8 | 0.6 |
| Return on invested capital4 | 16.7% | 15.3% | 15.2% | 16.6% | 15.9% | 18.0% |
1 Operating working capital: Trade and otherreceivables minus the current part of financial fixed assets, deferred receipts from disposed Group companies and interestreceivable minus trade and other payables excluding interest payable.
2 Net tax assets: Deferred income tax assets and income tax receivables less deferred income tax liabilities and income tax liabilities.
3 All other assets/(liabilities), mainly containing property, plant & equipment, software plus financial assets and associates, less provisions and employee benefit obligations and other liabilities. As per March 31, 2017 dividend payable is also included.
4 Return on invested capital: underlying EBITA (last 12 months) less income tax paid (last 12 months) as percentage of invested capital.
Return on invested capital (ROIC) reached 16.7%, an improvement both year-on-year and sequentially. This was mainly driven by our operational performance and our strong focus on improving the returns of previously acquired businesses. Combined with our primarily organic growth focus, this should further lift the Group's ROIC going forward.
Operating working capital decreased sequentially to € 889 million, due to normal seasonal patterns in our business. The moving average of Days Sales Outstanding (DSO) increased to 53.2 days (Q4 2016: 51.4), primarily due to M&A and adverse mix eects (faster sales growth in countries with above average DSO).
The increase YoY in 'all other assets/liabilities' is mainly explained by the increase of the CICE receivable. The total CICE subsidy receivable is € 472 million, including the current portion of € 99 million.
At the end of Q4 2017, net debt was € 1,026 million, compared to € 793 million at the end of Q4 2016. A further analysis of the cash flow is provided in the next section. The leverage ratio was 0.9, compared to 0.8 in the previous year, impacted by M&A announced in 2016 and completed in 2017. The syndicated credit facility allows a leverage ratio of up to 3.5, while we set ourselves a maximum leverage ratio of 2.
cash flow summary
| in millions of € | Q4 2017 | Q4 2016 | change | fy 2017 | fy 2016 | change |
|---|---|---|---|---|---|---|
| EBITA | 292.3 | 231.3 | 26% | 993.7 | 892.0 | 11% |
| Depreciation and amortization of software | 20.5 | 20.4 | 86.9 | 74.1 | ||
| EBITDA | 312.8 | 251.7 | 24% | 1,080.6 | 966.1 | 12% |
| Working capital | 95.7 | 36.5 | (175.2) | (169.5) | ||
| Provisions and employee benefit obligations | (4.6) | 4.4 | 7.7 | (0.2) | ||
| Other items | 46.7 | (17.4) | (38.8) | (76.9) | ||
| Income taxes | (26.9) | (30.0) | (186.2) | (159.8) | ||
| Net cash flow from operating activities | 423.7 | 245.2 | 73% | 688.1 | 559.7 | 23% |
| Net capital expenditures | (31.6) | (31.9) | (95.7) | (94.0) | ||
| Financial assets | (6.8) | (1.1) | (6.8) | (1.1) | ||
| Free cash flow | 385.3 | 212.2 | 82% | 585.6 | 464.6 | 26% |
| Net (acquisitions)/disposals1 | (4.1) | (403.2) | (462.7) | (709.0) | ||
| Dividends from associates | - | - | 1.3 | - | ||
| Issue of ordinary shares | - | 0.1 | 1.1 | 0.1 | ||
| Purchase of own ordinary shares | (21.3) | (21.7) | (38.6) | (35.8) | ||
| Dividend on ordinary shares | - | - | (346.3) | (307.2) | ||
| Dividend on preference shares | - | - | (12.6) | (12.6) | ||
| Net finance costs | (4.5) | (4.3) | (17.7) | (11.8) | ||
| Translation and other effects | 7.8 | (15.2) | 57.6 | (8.5) | ||
| Net (increase)/decrease of net debt | 363.2 | (232.1) | (232.3) | (620.2) |
1 including acquired non-current borrowings.
In the quarter, free cash flow was € 385 million, up 82% versus € 212 million the prior year. Over FY 2017, free cash flow was € 586 million, up 26% compared to prior-year.
Main driver for the strong increase in our quarterly and L4Q free cash flow YoY was the significant EBITA improvement and cash-in of our CICE receivable related to 2013. Our quarterly free cash flow has also been favorably impacted by a decrease in working capital, related to timing of payments.
Other items include an amount of € 75 million from the Tax Credit and Competitive Employment Act (CICE) in France, and is composed of € 145 million non-cash gain (and hence a receivable) for the year 2017, and a € 70 million refund of the receivable related to the year 2013.
performance.
performance by geography
split by geography
| North America | Belgium & Luxembourg | Rest of the world |
|---|---|---|
| Netherlands | Italy | Global Businesses |
| France | Iberia | Germany |
| France | |
|---|---|
| -------- | -- |
Other European countries
| organic ∆ | organic ∆ | |||||||
|---|---|---|---|---|---|---|---|---|
| revenue in millions of €, underlying | Q4 2017 | Q4 2016 | change | %1 | fy 2017 | fy 2016 | change | %1 |
| North America | 1,037.8 | 1,100.3 | (6)% | 1% | 4,230.5 | 4,244.6 | 0% | 1% |
| Netherlands | 864.5 | 823.1 | 5% | 3% | 3,333.9 | 3,172.3 | 5% | 2% |
| France | 946.7 | 785.1 | 21% | 12% | 3,627.0 | 3,043.6 | 19% | 12% |
| Germany | 589.5 | 530.2 | 11% | 10% | 2,335.1 | 2,082.7 | 12% | 9% |
| Belgium & Luxembourg | 408.5 | 355.9 | 15% | 10% | 1,568.6 | 1,370.1 | 14% | 11% |
| Iberia | 372.3 | 331.7 | 12% | 15% | 1,427.4 | 1,275.1 | 12% | 13% |
| Italy | 412.4 | 332.0 | 24% | 26% | 1,504.1 | 1,006.2 | 49% | 26% |
| Other European countries | 567.1 | 518.5 | 9% | 12% | 2,151.2 | 1,983.5 | 8% | 10% |
| Rest of the world | 477.3 | 477.0 | 0% | 10% | 1,911.3 | 1,749.5 | 9% | 10% |
| Global businesses | 301.8 | 271.4 | 11% | 7% | 1,183.7 | 756.5 | 56% | 11% |
| Revenue | 5,977.9 | 5,525.2 | 8% | 9% | 23,272.8 | 20,684.1 | 13% | 8% |
1 Organic change is measured excluding the impact of currencies, acquisitions, disposals, and reclassifications. Forrevenue, the organic change has been adjusted forthe number of working days.
| EBITA in millions of €, underlying | Q4 2017 | EBITA | margin1 Q4 2016 | EBITA margin1 |
organic ∆%2 |
fy 2017 | EBITA margin1 |
fy 2016 | EBITA margin1 |
organic ∆%2 |
|---|---|---|---|---|---|---|---|---|---|---|
| North America | 62.1 | 6.0% | 62.6 | 5.7% | 6% | 235.9 | 5.6% | 239.1 | 5.6% | 0% |
| Netherlands | 56.9 | 6.6% | 55.9 | 6.8% | -6% | 201.7 | 6.0% | 188.4 | 5.9% | 1% |
| France | 61.5 | 6.5% | 43.2 | 5.5% | 30% | 221.0 | 6.1% | 169.1 | 5.6% | 23% |
| Germany | 27.7 | 4.7% | 23.7 | 4.5% | 11% | 112.4 | 4.8% | 100.2 | 4.8% | 6% |
| Belgium & Luxembourg | 28.2 | 6.9% | 27.3 | 7.7% | -3% | 99.1 | 6.3% | 87.5 | 6.4% | 6% |
| Iberia | 20.7 | 5.6% | 18.1 | 5.5% | 15% | 73.3 | 5.1% | 59.7 | 4.7% | 23% |
| Italy | 25.8 | 6.3% | 19.0 | 5.7% | 39% | 86.4 | 5.7% | 52.8 | 5.2% | 38% |
| Other European countries | 18.7 | 3.3% | 17.4 | 3.3% | 4% | 64.0 | 3.0% | 62.0 | 3.1% | 6% |
| Rest of the world | 17.5 | 3.7% | 9.0 | 1.9% | 117% | 56.0 | 2.9% | 37.2 | 2.1% | 46% |
| Global businesses | 9.1 | 3.0% | 10.0 | 3.7% | 60% | (2.3) | (0.2)% | 19.6 | 2.6% | 36% |
| Corporate | (21.2) | (18.6) | (82.2) | (68.9) | ||||||
| EBITA before integration costs and one offs3 |
307.0 | 5.1% | 267.6 | 4.8% | 13% | 1,065.3 | 4.6% | 946.7 | 4.6% | 11% |
| Integration costs and one-offs | (14.7) | (36.3) | (71.6) | (54.7) | ||||||
| EBITA | 292.3 | 231.3 | 993.7 | 892.0 |
1 EBITA in % of total revenue per segment.
2 Organic change is measured excluding the impact of currencies, acquisitions, disposals, and reclassifications. Forrevenue, the organic change has been adjusted forthe number of working days.
3 Operating profit before amortization and impairment of acquisition-related intangible assets and goodwill, integration costs, and one-os.
north america
In North America, revenue growth was 1% (Q3 2017: flat). Perm fees grew 5% (Q3 2017: 2%). In Q4 2017, revenue of our combined US businesses was flat (Q3 2017: flat). US Staing/Inhouse Services grew by 1% (Q3 2017: up 1%). US Professionals revenue was down 1% (Q3 2017: down 2%). In Canada, revenue was up 10% (Q3 2017: up 6%), showing continued acceleration. EBITA margin for the region came in at 6.0%, compared to 5.7% last year.
netherlands
In the Netherlands, revenue was up 3% YoY (Q3 2017: up 1%). Overall perm fees were flat (Q3 2017: up 4%). Our Staing and Inhouse Services businesses grew 2% (Q3 2017: up 2%), with growth impacted by a strong focus on client profitability. Our Professionals business was up 5% (Q3 2017: up 5%). Underlying EBITA margin in the Netherlands was 6.6% compared to 6.8% last year.
france
In France, revenue growth was 12% (Q3 2017: 14%), still ahead of the market despite markedly tougher comps. Perm fees were up 37% compared to last year (Q3 2017: up 37%). Staing/Inhouse Services revenue grew 11% (Q3 2017: up 13%). Our Professionals business was up 18% (Q3 2017: up 19%), again driven by Expectra and healthcare. EBITA margin was 6.5%, substantially up compared to 5.5% last year.
germany
In Germany, revenue per working day was up 10% YoY (Q3 2017: up 10%). Our combined Staing and Inhouse Services business was up 10% (Q3 2017: up 10%), while Professionals was up 11% (Q3 2017: up 11%). EBITA margin in Germany increased to 4.7%, compared to 4.5% last year, despite an adverse working day eect.
belgium & luxembourg
In Belgium & Luxembourg, revenue was up 10% (Q3 2017: up 9%), ahead of the market. Our Staing/Inhouse Services business was up 9% (Q3 2017: up 9%), while the Professionals business was up 30% (Q3 2017: up 13%). Our EBITA margin was 6.9%, from 7.7% last year.
iberia
In Iberia, revenue increased 15% (Q3 2017: up 14%) with Staing/Inhouse Services combined growing 15% (Q3 2017: up 14%). Spain was up 16% (Q3 2017: up 17%) while our focus on permanent placements (up 16%) continues to pay o. In Portugal, revenue improved by 12% (Q3 2017: up 6%). Overall EBITA margin was 5.6% in Q4 2017, compared to 5.5% last year.
italy
Revenue per working day in Italy grew by 26% compared to the prior year (Q3 2017: up 27%) osetting much tougher comps. EBITA margin improved to 6.3%, from 5.7% last year. The integration of Obiettivo Lavoro continues to deliver results ahead of expectations.
other european countries
Across 'Other European countries', revenue per working day grew 12% (Q3 2017: up 13%). In the UK, revenue was up by 11% (Q3 2017: 10%), while perm fees were down by 9% (Q3 2017: down 7%). In the Nordics, sales increased by 13% on an organic basis (Q3 2017: 12%). Revenue in our Swiss business was up 20% YoY (Q3 2017: 21%). Overall EBITA margin for the 'Other European countries' region was stable at 3.3% (Q3 2017: 3.3%).
rest of the world
Overall revenue in the 'Rest of the world' region grew by 10% organically (Q3 2017: up 10%). In Japan, revenue grew 9% (Q3 2017: up 6%). Revenue in Australia/New Zealand grew 8% (Q3 2017: up 9%), while revenue in China declined by 10% YoY (Q3 2017: up 18%). Our business in India was down by 3% (Q3 2017: up 9%), while in Latin America revenue grew 27% (Q3 2017: up 19%), driven by Argentina and Brazil. Overall EBITA margin in this region was 3.7%, compared to 1.9% last year, primarily driven by a strong profitability increase in Japan.
global businesses
Overall revenue growth per working day was up by 7% YoY organically, mainly driven by Randstad Sourceright. Monster sales growth was down by 15% (Q3 2017: down 16%). Overall EBITA margin came in at 3.0% compared to 3.7% last year, reflecting continued investments related to our digital strategy including Monster. Driven by a successful cost optimization program, Monster turned slightly EBITA positive in Q4 2017. We maintain our ambition of a break-even EBITA result for Monster in 2018.
performance by revenue category
| in millions of €, underlying | Q4 2017 | Q4 20161 | organic ∆%2 | fy 2017 | fy 20161 | organic ∆%2 | |
|---|---|---|---|---|---|---|---|
| Revenue | 3,112.0 | 3,017.2 | 6% | 12,184.0 | 11,400.2 | 6% | |
| Staffing | EBITA | 178.6 | 153.7 | 18% | 622.7 | 547.3 | 11% |
| EBITA margin3 |
5.7% | 5.1% | 5.1% | 4.8% | |||
| Revenue | 1,379.5 | 1,208.4 | 18% | 5,185.4 | 4,460.5 | 18% | |
| EBITA | 68.4 | 68.0 | 3% | 250.8 | 223.1 | 13% | |
| Inhouse Services | EBITA margin3 |
5.0% | 5.6% | 4.8% | 5.0% | ||
| Revenue | 1,184.6 | 1,028.2 | 6% | 4,719.7 | 4,066.9 | 4% | |
| Professionals | EBITA | 72.1 | 54.5 | 12% | 276.3 | 225.6 | 6% |
| EBITA margin3 |
6.1% | 5.3% | 5.9% | 5.5% | |||
| Revenue | 301.8 | 271.4 | 7%4 | 1,183.7 | 756.5 | 11% | |
| Global Businesses | EBITA | 9.1 | 10.0 | 60% | (2.3) | 19.6 | 36% |
| EBITA margin3 |
3.0% | 3.7% | (0.2)% | 2.6% |
1 Comparable Q4 2016 figures have been adjusted for Staing and Inhouse services, related to a reallocation of revenue and costs.
2 Organic change is measured excluding the impact of currencies, acquisitions, disposals, and reclassifications. Forrevenue, the organic change has been adjusted forthe number of working days.
3 EBITA in % of total revenue by revenue category.
4 Included in organic revenue growth: Monster as of November 1, 2017; for comparability reasons, organic EBITA growth is excluding Monster.
other information.
outlook
Revenue grew 8.7% in Q4 2017. In January 2018, revenue grew at around 7%. The development of volumes in early February indicates a continuation of the January growth rate.
Q1 2018 gross margin is expected to be broadly stable sequentially.
For Q1 2018, operating expenses are expected to increase sequentially.
There will be an adverse 0.5 working day impact in Q1 2018.
adjusted capital allocation strategy
We will adjust our capital allocation strategy given our primarily organically focused Tech & Touch strategy going forward, strong balance sheet and favorable FCF outlook in various economic scenarios. This amendment is twofold. First, we will change our dividend policy by implementing a conditional cash floor dividend of € 1.62 per share (based on the average DPS of 2014, 2015 and 2016). This baseline dividend level will be maintained even when the general 40-50% payout ratio is temporarily exceeded, barring (i) seriously adverse economic conditions, (ii) material strategic changes to the sector and (iii) a material deterioration in our solvency & liquidity ratios. Second, we will introduce optional additional cash returns in the event of a leverage ratio below 1.0 through (i) a special dividend (preferred) or (ii) share buybacks.
dividend proposal 2017
We will propose to our shareholders an all-time high cash dividend of € 2.76 per ordinary share for 2017, up 46% yearon-year. This consists of a regular dividend of € 2.07 (2016: € 1.89), representing a payout of 50% of the basic underlying EPS. In addition, we propose a special cash dividend of € 0.69 per ordinary share, given our year-end 2017 leverage ratio of 0.9 and our adjusted capital allocation strategy immediately applied to FY 2017.
The ex-dividend date for the regular dividend will be March 29, 2018. The number of shares entitled to the regular dividend will be determined on April 3, 2018 (record date). The payment of the regular cash dividend will take place on April 5, 2018. The payment of the special cash dividend will take place in Q3 2018, on a specific date to be determined by the Executive Board and to be announced on the Randstad website.
We will also propose a dividend payment on preference shares B and C of € 12.6 million.
other items
As announced on October 24, 2017, we oset the dilutive eect from our annual performance share plans for senior management through share buybacks. The next allocation of shares will take place on February 13, 2018. The number of shares we purchased during the period between October 25, 2017 and February 12, 2018 was 0.7 million.
The AGM will be held on March 27, 2018 (full agenda to be published on our corporate website).
EB (re)appointments: proposal to reappoint Jacques van den Broek as member of the Executive Board, proposal to reappoint Chris Heutink as member of the Executive Board and proposal to appoint Henry Schirmer as member of the Executive Board.
SB (re)appointments: proposal to reappoint Frank Dorjee as member of the Supervisory Board and proposal to appoint Annet Aris as member of the Supervisory Board.
working days
| Q1 | Q3 | Q3 | Q4 | |
|---|---|---|---|---|
| 2018 | 63.5 | 62.1 | 64.1 | 63.4 |
| 2017 | 64.0 | 61.7 | 63.8 | 62.3 |
| 2016 | 62.5 | 63.1 | 64.8 | 62.8 |
financial calendar
| Annual General Meeting of Shareholders | March 27, 2018 | |
|---|---|---|
| Ex-dividend date | March 29, 2018 | |
| Dividend record date | April 3, 2018 | |
| Payment of dividend | April 5, 2018 | |
| Publication of first quarter results 2018 | April 24, 2018 | |
| Publication of second quarter results 2018 | July 24, 2018 | |
| Publication of third quarter results 2018 | October 23, 2018 | |
analyst and press conference call
Today (February 13, 2018), at 09.00 am CET, Randstad Holding nv will be hosting an analyst conference call. The dialin numbers are:
International: + 44 3333 000 804
Netherlands: + 31 20 709 5189
To gain access to the conference please enter the PIN: 19545030#
You can listen to the call through a real-time audio webcast. You can access the webcast and presentation at https:// www.ir.randstad.com/results-and-reports/quarterly-results. A replay of the presentation and the Q&A will be available on our website by the end of the day.
For further information please contact:
David Tailleur - Director Investor Relations [email protected] or (mobile) +31 (0)6 12 46 21 33
Husayn Hirji - Investor Relations Officer [email protected] or (mobile) +31 (0)6 10 41 73 43
Saskia Huuskes - Director Group Communications a.i. [email protected] or (mobile) +31 (0)6 13 22 51 36
disclaimer
Certain statements in this document concern prognoses about the future financial condition, risks, investment plans, and the results of operations of Randstad Holding and its operating companies, 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 diering from the prognoses made in this document. These factors include, but are not limited to, general economic conditions, a shortage on the job market, changes in the demand for personnel (including flexible personnel), achievement of cost savings, changes in the business mix, changes in legislation (particularly in relation to employment, staing and tax laws), the role of industry regulators, future currency and interest fluctuations, our ability to identify relevant risks and mitigate their impact, the availability of credit on financially acceptable terms, the successful completion of company acquisitions and their subsequent integration, successful disposals of companies, and the rate of technological developments. These prognoses therefore apply only on the date on which this document was compiled. The quarterly results as presented in this press release are unaudited.
randstad profile
The Randstad Group is a global leader in the HR services industry and specialized in solutions in the field of flexible work and human resources services. We support people and organizations in realizing their true potential. Our services range from regular temporary Staing and permanent placements to Inhouse Services, Professionals, and HR Solutions (including Recruitment Process Outsourcing, Managed Services Programs, and outplacement). Randstad has top-three positions in Argentina, Belgium & Luxembourg, Canada, Chile, France, Germany, Greece, India, Italy, Mexico, the Netherlands, Poland, Portugal, Spain, Sweden, Switzerland, the UK, and the United States, and major positions in Australia and Japan. At year-end 2017, Randstad had 38,331 corporate employees and 4,858 branches and Inhouse locations in 39 countries around the world. In 2017, Randstad generated revenue of € 23.3 billion. Randstad was founded in 1960 and is headquartered in Diemen, the Netherlands. Randstad Holding nv is listed on the NYSE Euronext Amsterdam, where options for stocks in Randstad are also traded. For more information, see https:// www.randstad.com/.
actuals
consolidated income statement
| in millions of €, unless otherwise indicated | Q4 2017 | Q4 2016 | fy 2017 | fy 2016 |
|---|---|---|---|---|
| Revenue | 5,977.9 | 5,525.2 | 23,272.8 | 20,684.1 |
| Cost of services | 4,778.1 | 4,419.5 | 18,567.3 | 16,749.9 |
| Gross profit | 1,199.8 | 1,105.7 | 4,705.5 | 3,934.2 |
| Selling expenses | 630.1 | 592.1 | 2,592.3 | 2,092.6 |
| General and administrative expenses | 277.4 | 282.3 | 1,119.5 | 949.6 |
| Operating expenses | 907.5 | 874.4 | 3,711.8 | 3,042.2 |
| Amortization and impairment of acquisition-related intangible assets and goodwill |
30.0 | 33.4 | 134.0 | 101.4 |
| Total operating expenses | 937.5 | 907.8 | 3,845.8 | 3,143.6 |
| Operating profit | 262.3 | 197.9 | 859.7 | 790.6 |
| Net finance (costs) / income | (2.3) | 0.3 | (22.5) | (3.8) |
| Share of profit/(loss) of associates | 0.4 | (0.8) | 1.2 | (0.8) |
| Income before taxes | 260.4 | 197.4 | 838.4 | 786.0 |
| Taxes on income | (62.5) | (44.8) | (207.0) | (197.8) |
| Net income | 197.9 | 152.6 | 631.4 | 588.2 |
| Net income attributable to: | ||||
| Holders of ordinary shares Randstad Holding nv | 194.6 | 149.3 | 618.8 | 575.4 |
| Holders of preference shares Randstad Holding nv | 3.2 | 3.2 | 12.6 | 12.6 |
| Equity holders | 197.8 | 152.5 | 631.4 | 588.0 |
| Non-controlling interests | 0.1 | 0.1 | 0.0 | 0.2 |
| Net income | 197.9 | 152.6 | 631.4 | 588.2 |
| Earningsper share attributable totheholdersofordinary sharesofRandstad Holding nv (in € per share): |
||||
| Basic earnings per share | 1.06 | 0.82 | 3.38 | 3.15 |
| Diluted earnings per share | 1.06 | 0.81 | 3.36 | 3.13 |
| Basic earnings per share, underlying | 1.23 | 1.11 | 4.13 | 3.77 |
| Diluted earnings per share before amortization and impairment of acquisition-related intangible assets and goodwill, integration costs and one-offs |
1.22 | 1.10 | 4.11 | 3.75 |
information by geographical area and revenue category
| revenue by geographical area | ||||
|---|---|---|---|---|
| in millions of € | Q4 2017 | Q4 2016 | fy 2017 | fy 2016 |
| North America | 1,037.8 | 1,100.3 | 4,230.5 | 4,244.6 |
| Netherlands | 865.3 | 825.7 | 3,336.9 | 3,176.8 |
| France | 946.9 | 785.2 | 3,627.7 | 3,044.0 |
| Germany | 589.5 | 530.2 | 2,335.2 | 2,082.7 |
| Belgium & Luxembourg | 409.0 | 356.4 | 1,570.3 | 1,371.5 |
| Iberia | 372.3 | 331.7 | 1,427.4 | 1,275.1 |
| Italy | 412.4 | 332.0 | 1,504.1 | 1,006.2 |
| Other European countries | 568.9 | 520.1 | 2,158.2 | 1,989.6 |
| Rest of the world | 477.6 | 477.0 | 1,912.0 | 1,749.5 |
| Global Businesses | 304.8 | 272.9 | 1,194.9 | 761.7 |
| Elimination of revenue1 | (6.6) | (6.3) | (24.4) | (17.6) |
| Revenue | 5,977.9 | 5,525.2 | 23,272.8 | 20,684.1 |
1 Relates to intercompany revenue between segments
EBITA by geographical area
| in millions of € | Q4 2017 | Q4 2016 | fy 2017 | fy 2016 |
|---|---|---|---|---|
| North America | 62.1 | 62.8 | 231.2 | 239.1 |
| Netherlands | 49.7 | 53.1 | 190.5 | 186.2 |
| France | 59.6 | 40.1 | 213.9 | 165.0 |
| Germany | 27.5 | 18.2 | 112.2 | 93.8 |
| Belgium & Luxembourg | 28.2 | 27.7 | 99.1 | 87.9 |
| Iberia | 20.7 | 18.1 | 73.3 | 59.6 |
| Italy | 25.8 | 16.3 | 82.7 | 47.7 |
| Other European countries | 18.7 | 12.5 | 60.8 | 52.9 |
| Rest of the world | 17.8 | 8.4 | 52.9 | 35.3 |
| Global Businesses | 3.4 | (3.8) | (40.7) | 1.0 |
| Corporate | (21.2) | (22.1) | (82.2) | (76.5) |
| EBITA1 | 292.3 | 231.3 | 993.7 | 892.0 |
1 Operating profit before amortization and impairment of acquisition-related intangible assets and goodwill
revenue by revenue category
| in millions of € | Q4 2017 | Q4 2016 | fy 2017 | fy 2016 |
|---|---|---|---|---|
| Staffing | 3,115.6 | 3,022.0 | 12,197.2 | 11,412.6 |
| Inhouse | 1,379.5 | 1,208.4 | 5,185.4 | 4,460.5 |
| Professionals | 1,184.6 | 1,028.2 | 4,719.7 | 4,066.9 |
| Global businesses | 304.8 | 272.9 | 1,194.9 | 761.7 |
| Elimination of revenue1 | (6.6) | (6.3) | (24.4) | (17.6) |
| Revenue | 5,977.9 | 5,525.2 | 23,272.8 | 20,684.1 |
1 Relates to intercompany revenue between segments
EBITA by revenue category
| in millions of € | Q4 2017 | Q4 2016 | fy 2017 | fy 2016 |
|---|---|---|---|---|
| Staffing | 176.7 | 137.3 | 607.4 | 523.7 |
| Inhouse | 67.8 | 67.1 | 248.4 | 221.9 |
| Professionals | 65.6 | 52.8 | 260.8 | 221.9 |
| Global businesses | 3.4 | (3.8) | (40.7) | 1.0 |
| Corporate | (21.2) | (22.1) | (82.2) | (76.5) |
| EBITA1 | 292.3 | 231.3 | 993.7 | 892.0 |
1 Operating profit before amortization and impairment of acquisition-related intangible assets and goodwill
consolidated balance sheet
| in millions of € | december 31, 2017 | december 31, 2016 |
|---|---|---|
| assets | ||
| Property, plant and equipment | 154.3 | 165.3 |
| Intangible assets | 3,555.6 | 3,353.5 |
| Deferred income tax assets | 437.9 | 520.2 |
| Financial assets and associates | 529.6 | 454.7 |
| Non-current assets | 4,677.4 | 4,493.7 |
| Trade and other receivables | 4,680.0 | 4,174.2 |
| Income tax receivables | 79.2 | 72.2 |
| Cash and cash equivalents | 326.3 | 385.8 |
| Current assets | 5,085.5 | 4,632.2 |
| Total assets | 9,762.9 | 9,125.9 |
| equity and liabilities | ||
| Issued capital | 25.9 | 25.8 |
| Share premium | 2,284.3 | 2,270.7 |
| Reserves | 1,940.8 | 1,843.6 |
| Shareholders' equity | 4,251.0 | 4,140.1 |
| Non-controlling interests | 0.7 | 0.7 |
| Total equity | 4,251.7 | 4,140.8 |
| Borrowings | 639.5 | 699.2 |
| Deferred income tax liabilities | 44.1 | 42.2 |
| Provisions and employee benefit obligations | 186.1 | 194.4 |
| Other liabilities | 10.6 | 12.6 |
| Non-current liabilities | 880.3 | 948.4 |
| Borrowings | 712.5 | 480.0 |
| Trade and other payables | 3,694.3 | 3,397.5 |
| Income tax liabilities | 116.2 | 70.6 |
| Provisions and employee benefit obligations | 85.5 | 81.9 |
| Other liabilities | 22.4 | 6.7 |
| Current liabilities | 4,630.9 | 4,036.7 |
| Liabilities | 5,511.2 | 4,985.1 |
| Total equity and liabilities | 9,762.9 | 9,125.9 |
consolidated statement of cash flows
| in millions of € | Q4 2017 | Q4 2016 | fy 2017 | fy 2016 |
|---|---|---|---|---|
| Operating profit | 262.3 | 197.9 | 859.7 | 790.6 |
| Amortization and impairment of acquisition-related intangible assets and goodwill |
30.0 | 33.4 | 134.0 | 101.4 |
| EBITA | 292.3 | 231.3 | 993.7 | 892.0 |
| Depreciation of property, plant and equipment | 13.4 | 13.7 | 54.5 | 50.0 |
| Amortization of software | 7.1 | 6.7 | 32.4 | 24.1 |
| EBITDA | 312.8 | 251.7 | 1,080.6 | 966.1 |
| Provisions and employee benefit obligations | (4.6) | 4.4 | 7.7 | (0.2) |
| Share-based compensations | 7.4 | 7.7 | 32.5 | 31.3 |
| Loss on disposals of property, plant and equipment | 0.6 | 0.1 | 1.0 | 0.2 |
| Loss on disposals of activities | - | (0.2) | - | 0.0 |
| Other items | 38.7 | (25.0) | (72.3) | (108.4) |
| Cash flow from operations before operating working capital and income taxes |
354.9 | 238.7 | 1,049.5 | 889.0 |
| Trade and other receivables | 33.0 | (106.5) | (447.9) | (366.4) |
| Trade and other payables | 62.7 | 143.0 | 272.7 | 196.9 |
| Operating working capital | 95.7 | 36.5 | (175.2) | (169.5) |
| Income taxes | (26.9) | (30.0) | (186.2) | (159.8) |
| Net cash flow from operating activities | 423.7 | 245.2 | 688.1 | 559.7 |
| Additions in property, plant and equipment | (18.4) | (21.7) | (58.7) | (62.3) |
| Additions in software | (14.2) | (12.2) | (48.6) | (34.9) |
| Disposals of property, plant and equipment | 1.0 | 2.0 | 11.6 | 3.2 |
| Acquisition of subsidiaries, associates and equity investments | (4.1) | (275.1) | (356.2) | (581.4) |
| Loans and receivables | (6.8) | (1.1) | (6.8) | (1.1) |
| Dividends from associates | - | - | 1.3 | - |
| Disposals of activities | - | 0.2 | - | 0.7 |
| Net cash flow from investing activities | (42.5) | (307.9) | (457.4) | (675.8) |
| Issue of new ordinary shares | - | 0.1 | 1.1 | 0.1 |
| Purchase of own ordinary shares | (21.3) | (21.7) | (38.6) | (35.8) |
| (Net repayments of) / net drawings on non-current borrowings | (6.1) | (223.6) | (143.1) | 465.5 |
| Net financing | (27.4) | (245.2) | (180.6) | 429.8 |
| Net finance costs | (4.5) | (4.3) | (17.7) | (11.8) |
| Dividend on ordinary shares - |
- | (346.3) | (307.2) | |
| Dividend on preference shares - |
- | (12.6) | (12.6) | |
| Net reimbursement to financiers | (4.5) | (4.3) | (376.6) | (331.6) |
| Net cash flow from financing activities | (31.9) | (249.5) | (557.2) | 98.2 |
| Net increase/(decrease) in cash, cash equivalents, and current borrowings | 349.3 | (312.2) | (326.5) | (17.9) |
| Cash, cash equivalents, and current borrowings at beginning of period | (735.1) | 253.0 | (52.8) | (48.6) |
| Net movement | 349.3 | (312.2) | (326.5) | (17.9) |
| Translation and currency (losses)/gains | (0.4) | 6.4 | (6.9) | 13.7 |
| Cash, cash equivalents, and current borrowings at end of period | (386.2) | (52.8) | (386.2) | (52.8) |
| Free cash flow | 385.3 | 212.2 | 585.6 | 464.6 |
consolidated statement of comprehensive income
| in millions of € | october 1 - december 31, 2017 | october 1 - december 31, 2016 | ||||
|---|---|---|---|---|---|---|
| shareholders' equity |
non controlling interests |
total equity | shareholders' equity |
non controlling interests |
total equity | |
| Net income for the period | 197.8 | 0.1 | 197.9 | 152.5 | 0.1 | 152.6 |
| Fair value adjustment equity investments | 0.8 | - | 0.8 | - | - | - |
| Translation differences | (30.5) | 0.0 | (30.5) | 67.5 | 0.0 | 67.5 |
| Remeasurements from defined benefit pension plans |
17.6 | - | 17.6 | (6.5) | - | (6.5) |
| Total comprehensive income | 185.7 | 0.1 | 185.8 | 213.5 | 0.1 | 213.6 |
| january 1 - december 31, 2017 | january 1 - december 31, 2016 | |||||
|---|---|---|---|---|---|---|
| in millions of € | Shareholders' equity |
Non controlling interests |
Total equity | Shareholders' equity |
Non controlling interests |
Total equity |
| Net income for the period | 631.4 | 0.0 | 631.4 | 588.0 | 0.2 | 588.2 |
| Fair value adjustment equity investments | 0.8 | - | 0.8 | 0.3 | - | 0.3 |
| Translation differences | (182.8) | 0.0 | (182.8) | 16.2 | 0.0 | 16.2 |
| Remeasurements from defined benefit pension plans |
17.6 | - | 17.6 | (6.5) | - | (6.5) |
| Total comprehensive income | 467.0 | 0.0 | 467.0 | 598.0 | 0.2 | 598.2 |
consolidated statement of changes in equity
| in millions of € | october 1 -december 31, 2017 | october 1 -december 31, 2016 | ||||
|---|---|---|---|---|---|---|
| shareholders' equity |
non controlling interests |
total equity | shareholders' equity |
non controlling interests |
total equity | |
| Value at October 1 | 4,079.2 | 0.6 | 4,079.8 | 3,940.6 | 0.7 | 3,941.3 |
| Comprehensive income | 185.7 | 0.1 | 185.8 | 213.5 | 0.1 | 213.6 |
| Share-based compensations | 7.4 | - | 7.4 | 7.7 | - | 7.7 |
| Issue of ordinary shares | - | - | - | 0.1 | - | 0.1 |
| Purchase of own ordinary shares | (21.3) | - | (21.3) | (21.7) | - | (21.7) |
| Acquisition/Disposal of non-controlling interests | - | - | - | (0.1) | (0.1) | (0.2) |
| Value at December 31 | 4,251.0 | 0.7 | 4,251.7 | 4,140.1 | 0.7 | 4,140.8 |
| january 1 - december 31, 2017 | january 1 - december 31, 2016 | |||||
|---|---|---|---|---|---|---|
| in millions of € | shareholders' equity |
non controlling interests |
total equity | shareholders' equity |
non controlling interests |
total equity |
| Value at January 1 | 4,140.1 | 0.7 | 4,140.8 | 3,861.7 | - | 3,861.7 |
| Comprehensive income | 467.0 | 0.0 | 467.0 | 598.0 | 0.2 | 598.2 |
| Cash dividend on ordinary shares | (346.3) | - | (346.3) | (307.2) | - | (307.2) |
| Dividend on preference shares | (12.6) | - | (12.6) | (12.6) | - | (12.6) |
| Share-based compensations | 32.5 | - | 32.5 | 31.3 | - | 31.3 |
| Tax on share-based compensations | 7.8 | - | 7.8 | 4.7 | - | 4.7 |
| Issue of ordinary shares | 1.1 | - | 1.1 | 0.1 | - | 0.1 |
| Purchase of own ordinary shares | (38.6) | - | (38.6) | (35.8) | - | (35.8) |
| Acquisition/Disposal of non-controlling interests | - | - | - | (0.1) | 0.5 | 0.4 |
| Value at December 31 | 4,251.0 | 0.7 | 4,251.7 | 4,140.1 | 0.7 | 4,140.8 |
notes to the consolidated interim financial statements
reporting entity
Randstad Holding nv is a public limited liability company incorporated and domiciled in the Netherlands and listed on Euronext Amsterdam.
The consolidated interim financial statements of Randstad Holding nv as at and for the three and twelve month period ended December 31, 2017 include the company and its subsidiaries (together called 'the Group').
significant accounting policies
These consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations issued by the International Accounting Standards Board (IASB), as adopted by the European Union (hereinafter: IFRS).
The accounting policies applied by the Group in these consolidated interim financial statements are unchanged from those applied by the Group in its consolidated financial statements as at and for the year ended December 31, 2016.
basis of presentation
These consolidated interim financial statements have been condensed and prepared in accordance with (IFRS) IAS 34 'Interim Financial Reporting'; they do not include all the information required for full (i.e., annual) financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended December 31, 2017.
The consolidated financial statements of the Group as at and for the year ended December 31, 2017 are available upon request at the Company's oice or on www.randstad.com.
estimates
The preparation of consolidated interim financial statements requires the Group to make certain judgments, estimates, and assumptions that aect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may dier from these estimates.
In preparing these consolidated interim financial statements, the significant judgments, estimates, and assumptions are the same as those applied to the consolidated financial statements as at and for the year ended December 31, 2016.
seasonality
The Group's activities are aected by seasonal patterns. The volume of transactions throughout the year fluctuates per quarter, depending on demand as well as on variations in items such as the number of working days, public holidays and holiday periods. The Group usually generates its strongest revenue and profits in the second half of the year, while the cash flow in the second quarteris usually negative due to the timing of payments of holiday allowances and dividend; cash flow tends to be strongest in the second half of the year.
effective tax rate
The eective tax rate for the twelve-month period ended December 31, 2017 is 24.7% (2016: 25.1%).
new segmentation
As a result of acquisitions and changes in the governance and managerial reporting structure of the Group, the external (primary) segmentation (of results) has changed as of Q1 2017; comparative figures for prior periods have been adjusted accordingly for presentation purposes.
Main changes are the creation of one segment called Global Businesses consisting of Monster, Randstad Sourceright, RiseSmart and twago. Italy is reported as a separate segment due to increasing size and the UK is included in the segment 'Other European countries' due to limited size.
Ausy is included in the existing geographies mainly being France, Belgium & Luxembourg, Germany and North America.
External (secondary) segmentation on revenue categories now also shows Global Businesses next to Staing, Inhouse Services and Professionals; comparative figures for prior periods have been adjusted accordingly for presentation purposes. EBITA margin per segment is expressed in total revenue per segment.
As a result of this new external segmentation, revenues between segments are included in our tables.
acquisition of group companies, equity investments and associates
The cash outflow for acquisitions in Q4 amounted to € 4.1 million (Q4, 2016: € 275.1 million, not including the noncurrent borrowings acquired). The cash outflow related to € 3.4 million for our acquisition of eSolve AG (Germany) and for € 0.7 million for equity investments/associates.
eSolve – eectively acquired December 31, 2017 – did not contribute to the Group's revenue and EBITA in 2017. If this acquisition had occurred on January 1, 2017, the contribution to revenue would have been approximately € 17 million; the contribution to EBITA is estimated to be around € 2 million.
The net assets acquired in the acquisition in Q4, based on a provisional purchase price allocation, was € 12.7 million. Based on an estimated consideration of € 25.1 million, the goodwill is calculated at € 12.4 million. Taking into account that Randstad acquired € 4.6 million net cash and out oftotal consideration an amount of € 17.1 million has been deferred for payment, the net cash out flow in 2017 amounted to € 3.4 million.
| in millions of €, unless otherwise indicated | fy 2017 |
|---|---|
| Property, plant & equipment and software | 5.3 |
| Acquisition-related intangible assets | 208.8 |
| Deferred tax assets | 18.7 |
| Associates | 16.2 |
| Total non-current assets | 249.0 |
| Working capital | 123.3 |
| Non-current borrowings | 106.5 |
| Deferred income tax liabilities | 63.1 |
| Provisions, employee benefit obligations and other liabilities | 23.3 |
| Total non-current liabilities | 192.9 |
| Net assets acquired | 179.4 |
| Goodwill | 256.3 |
| Consideration | 435.7 |
| Net (cash) acquired, included in working capital | (71.2) |
| Non-current borrowings acquired | 106.5 |
| Net debt/(cash) acquired | 35.3 |
| Consideration, adjusted for net debt acquired | 471.0 |
| Deferred compensation | (27.4) |
| 443.6 | |
| Consideration paid, adjusted for net debt acquired | 11.1 |
| 454.7 | |
| Deduct: Non-current borrowings acquired | (106.5) |
| Acquisition of subsidiaries | 348.2 |
| Equity investments/associates | 8.0 |
| Statement of cash flows | 356.2 |
disposal of group companies
In Q4, 2017 and in the year 2017, the Group did not dispose of any businesses, while cash-inflow from disposal of businesses in Q4, 2016 amounted to € 0.2 million (2016: € 0.7 million).
shareholders' equity
issued number of ordinary shares
| 2017 | 2016 | |
|---|---|---|
| January 1 | 183,023,267 | 183,019,235 |
| Share-based compensations | 240,778 | 4,032 |
| December 30 | 183,264,045 | 183,023,267 |
As at December 31, 2017, the Group held 424,598 treasury shares (December 31, 2016: 595,141). The average number of (diluted) ordinary shares outstanding has been adjusted for these treasury shares.
As at December 31, 2017 and December 31, 2016 the number of issued preference shares was 25,200,000 (type B) and 50,130,352 (type C).
earnings per share
| in millions of €, unless otherwise indictated | Q4 2017 | Q4 2016 | fy 2017 | fy 2016 |
|---|---|---|---|---|
| Net income | 197.9 | 152.6 | 631.4 | 588.2 |
| Results of non-controlling interests | 0.1 | 0.1 | 0.0 | 0.2 |
| Net income attributable to holders of preference shares | 3.2 | 3.2 | 12.6 | 12.6 |
| Net income attributable to holders of ordinary shares | 194.6 | 149.3 | 618.8 | 575.4 |
| Amortization of intangible assets1 | 30.0 | 33.4 | 134.0 | 101.4 |
| Integration costs and one-offs | 14.7 | 36.3 | 71.6 | 54.7 |
| Tax effect on amortization, integration costs, and one-offs | (14.0) | (16.3) | (68.1) | (42.6) |
| Adjusted net income for holders of ordinary shares | 225.3 | 202.7 | 756.3 | 688.9 |
| Average number of ordinary shares outstanding | 183.1 | 182.6 | 183.1 | 182.7 |
| Average number of diluted ordinary shares outstanding | 184.0 | 183.8 | 184.0 | 183.8 |
| Earningsper share attributable totheholdersofordinary sharesofRandstad Holding nv (in € per share): |
||||
| Basic earnings per share | 1.06 | 0.82 | 3.38 | 3.15 |
| Diluted earnings per share | 1.06 | 0.81 | 3.36 | 3.13 |
| Basic earnings per share before amortization and impairment of acquisition-related intangible assets and goodwill, integration costs, and one-offs2 |
1.23 | 1.11 | 4.13 | 3.77 |
| Diluted earnings per share before amortization and impairment of acquisition-related intangible assets and goodwill, integration costs, and one-offs3 |
1.22 | 1.10 | 4.11 | 3.75 |
1 Amortization and impairment of acquisistion-related intangible assets and goodwill.
2 Basis for dividend policy
3 Diluted EPS underlying
net debt position
The net debt position as at December 31, 2017 (€ 1,025.7 million) was € 232.3 million higher compared to the net debt position as at December 31, 2016 (€ 793.4 million).
This is mainly due to the payment of dividends in Q2 2017 and net acquisitions (mainly in Q1, 2017), while a positive free cash flow (€ 585.6 million) partly compensated for these outflows.
As at December 31, 2017, the Group had a € 1,850 million committed multi-currency syndicated revolving credit facility at its disposal (2016: € 1,920 million), which matures in July 2022 (2016: July 2021). In 2017 the Group renewed its multicurrency syndicated revolving credit facility. The facility agreement contains a covenant with respect to the net debt to EBITDA ratio (leverage ratio), as well as a paragraph on material adverse changes; the net debt to EBITDA ratio has a limit of 3.5, and is calculated based on the results of the Group on a 12-month basis. In certain cases, Randstad is allowed to report a leverage ratio of 4.25x EBITDA for a limited period of time. Drawings on this credit facility at December 31, 2017 amounted to € 489.5 million.
The Group recently issued a privately placed German promissory note ('Schuldschein'), and successfully raised € 150 million, with a maximum three-year tenor. This promissory note ultimately matures in December 2020, and bears an interest that is based on 6-month Euribor (with a floor of zero) increased by a fixed margin of 0.45% per annum, payable in June and December of each year. Covenants are fully aligned with the committed multi-currency syndicated revolving credit facility.
breakdown of operating expenses
| in millions of € | Q4 2017 | Q4 2016 | fy 2017 | fy 2016 |
|---|---|---|---|---|
| Personnel expenses | 667.7 | 641.9 | 2,717.0 | 2,278.8 |
| Other operating expenses | 239.8 | 232.5 | 994.8 | 763.4 |
| Operating expenses | 907.5 | 874.4 | 3,711.8 | 3,042.2 |
french competitive employment act ('CICE')
Included in the consolidated balance sheet under 'financial assets and associates' is an amount of € 373.6 million (December 31, 2016: € 315.4 million) relating to the non-current part of a receivable arising from tax credits under the French Competitive Employment Act('CICE'). An amount of € 98.7 million (December 31, 2016: € 67.4 million) is included in 'Trade and other receivables' representing the current part of the CICE receivable.
The CICE receivable related to the credits from the year 2013 has been refunded in Q4, 2017 (€ 70.2 million).
total comprehensive income
Apart from net income for the period, total comprehensive income solely comprises translation dierences and related tax eects that may be reclassified to the income statement in a future reporting period.
related-party transactions
There are no material changes in the nature, scope, and (relative) scale in this reporting period compared to last year. More information is included in notes 22, 23 and 24 to the consolidated financial statements as at and for the year ended December 31, 2016.
commitments
There are no material changes in the nature and scope of commitments compared to last year, except for the increasing eect on the amounts for commitments due to acquired companies. More information is included in note 27 to the consolidated financial statements as at and for the year ended December 31, 2017.
events after balance sheet date
On January 31, 2018 Monster Worldwide, Inc. announced that it has signed an agreement to sell its Asian Pacific businesses. The transaction was closed on February 8, 2018 . The consideration received amounted to approximately € 10 million.