Adecco Group AG

Patrick De Maeseneire - CEO Dominik de Daniel - CFO

Kean Marden - RBS Laurent Brunelle - Exane BNP Paribas Mario Montenare - NZB Teun Teeuwisse - ABN Amro Tom Sykes - Deutsche Bank Marc Zwartsenburg - ING Jaime Brandwood - UBS London Toby Reeks - Bank of America/Merrill Lynch

Thank you Karen. Good morning ladies and gentlemen, welcome.

I'll start with the highlights of the third quarter. We continue to see very good demand for our services across most markets and year-on-year organic revenue growth even increased in the third quarter.

Our revenues were up 17% organically in Q3 again driven by robust trading conditions in our main markets France and North America. We increase the base in Germany, Benelux, Italy, Nordics and Switzerland where we delivered round double digits revenue growth and good profitability.

Growth in the investment business segment continued to be very strong, but also our office business returned to organic growth during the quarter. Also, the growth in the professional staffing business clearly accelerated.

The gross margin in Q3 was 17.8%, same as in the previous quarter. As we said in the past, pricing in the temporary staffing business stabilized and we benefited from the increased exposures to professional staffing.

We achieved strong profitability in Q3. EBITDA before integration costs was EUR 239 million and the margin was strong 4.7%, up 90 basis points compared to the adjusted prior year's third quarter.

Revenues in September were up 17% organically and adjusted for business days. In October revenues developed similar to September with no signs of a slowdown.

Based on the recent encouraging trends and accelerating growth in the higher margin professional staffing business, we are confident of continued goods revenue development near term. I'll now go through the key figures in more detail.

As in the previous quarter we adjusted for the French business tax and for exceptional items in 2009. Dominik will discuss the adjustments in his part of the presentation.

Revenues in the third quarter of 2010 were up 36% to EUR 5.1 billion, organically revenues increased by 17%. Gross profit amounted to EUR 898 million.

Our gross margin was 17.8% equal to (inaudible) and down (inaudible) year-on-year organically and adjusted. SG&A increased by 28% or was up 5% organically and adjusted compared to Q3 last year.

Sequentially in constant currency SG&A was actually down 1%. In the third quarter EBITDA before integration costs was EUR 239 million and the margin was 4.7%, up 90 basis points year-on-year.

Net income was EUR 128 million in the quarter under review. We'll now go through the organic revenue development by region.

Compared to the second quarter of this year, all regions accelerated in terms of organic growth. North America achieved 20% organic revenue growth in Q3, driven by strong growth in general staffing business but also the professional staffing business clearly accelerated.

When excluding the counter-cyclical outplacement business, revenues in North America were up to 25% organically. In Europe revenues in Q3 were up 18%.

The revenue momentum accelerated in most countries. Whereas growth in France remained robust, Germany, Italy and the Nordics further bit accelerated their double-digit growth rates and Benelux and Switzerland further improved return to double-digit growth.

The European region was still held back by UK and Ireland. Net revenues were down 1% organically and by Iberia where the growth rates was 7%.

Rest of Europe was up 9%, revenue growth in Q3 was still held back by Japan but revenues were down 7%. On the other hand growth in Australia and New Zealand accelerated to 25% and the emerging markets also continued to deliver strong growth with revenues up 26%.

The group's gross margin was 17.8% assets in Q3 flat year-on-year and down 70 basis points organically and adjusted. For easier comparisons we adjusted Q3, '09 to reflect the French business tax law impact which was 40 basis points as well as the reassessment of accruals in France in the third quarter of last year which had a positive impact of 30 basis points then.

The temporary staffing business had a negative impact of 50 basis points on the group's gross margin in Q3. The permanent placement business positively contributes to the group's gross margin with 20 basis points in Q3.

Our perm revenues were up 83% in constant currency and 35% organically in the quarter and [review]. The outplacement business had a negative impact of 50 basis points in this quarter.

Note that our placement negatively impacted Q2, '10 by 70 basis points. Acquisitions had a positive impact of 70 basis points in the third quarter same as in Q2.

As stated previously, pricing in temp business stabilized are increased exposure to professional staffing through the MPS acquisition together with our disciplined pricing approach clearly contributed to this quarter's good performance. We'll now review our main markets in more detail.

France our largest market did 19% revenue growth in the third quarter. Revenues were EUR 1.5 billion.

Growth was mainly driven by strong demand in automotives, chemicals and manufacturing. In Q3, 2010 the EBITDA margin was 4.4% up 50 basis points compared to the adjusted prior year's third quarter.

The temp gross margin has been stabled since the beginning of the year. Revenue growth in September continued to be sold plus 18% adjusted for business days.

In North America, revenues were up 58% in constant currency. On an organic basis we achieved 20% revenue growth in Q3.

The amount was strongest in the automotive, consumer goods, industrial and technology sectors. Excluding the declining counter-cyclical outplacement business, revenues were up 25% in North America organically for the quarter.

In September we had similar growth of 25% organically and adjusted for business days. Generally staffing revenues grew very strongly increasing by 28% organically, while professional staffing excluding outplacement business generated 19% revenue growth on an organic basis.

The EBITDA margin was 4.8% in Q3. Acquisitions added to 80 basis points this quarter.

Integration costs for MPS amounted to EUR 6 million in the quarter under review. Revenues in the UK and Ireland increased by 88% in constant currency, positively impacted by the acquisitions of Spring Group and MPS.

Organically, revenues declined by 1%, a slight improvement compared to the 3% organic revenue decline reported in the second quarter of this year, whereas our temping business is still held back, especially in the general staffing segment, the perm business has delivered a solid growth rate of 38% organically. The region contributed a very solid EBITDA of EUR 11 million, despite integration costs related to Spring and MPS which amounted to EUR 3 million in Q3 2010.

EBITDA margin before integration costs was 3.2%. The integration of Spring and MPS continues to be fully on track.

In Japan, revenues in Q3 2010 declined by 7% in constant currency to EUR 340 million. Slow demand in the late cyclical office segments which accounts for close to 80% of the cost revenues in Japan continue to wait on growth.

EBITDA declined by 25% in constant currency and the EBITDA margin was 5.4% compared to 6.7% in Q3 '09. Costs remain well under control, resulting in still better profitability compared to our competitors in the Japanese market.

While market conditions have further stabilized in Japan, we still don't see any signs of a pickup in the market overall, however, we have recently won long-term outsourcing contracts which are expected to ramp up early next year and should bring us back to growth at the beginning of 2011. In Germany I must say the revenue momentum picked up in the third quarter, organically revenues increased by 29% compared to an increase of 20% in Q2 driven by the automotive chemicals and industrial sectors.

We achieved strong profitability in our German business. The region generated an EBITDA of EUR 31 million in Q3.

The EBITDA margin was 9.2% in the quarter up 160 basis points versus prior year's Q3. Our general staffing branch in Germany grew 38%, a further improvement from the 30% growth in Q2, whereas the professional staffing brand, DIS also slowly accelerated to revenue growth of 18% following 5% growth in Q2.

Germany and Austria overall exited the quarter at 30% organically. Finally, we'll discuss Adecco's development by business line on an organic basis.

In Q3 2010, revenues in office and industrial were up 17%, a slight increase compared to the 15% growth rate in Q2. In the industrial business revenues increased by 24%, the same growth rates as in Q2 2010.

Growth was strongest in North America where the year-on-year revenue trend improved from plus 37% to plus 40%. In Germany and Austria where revenue growth improved from plus 33% to plus 39% in Q3 and in Italy where revenue growth accelerated from plus 29% in Q2 to plus 40% in Q3.

On the other hand, growth in France went from 24% to 21% and in Iberia from 8% in Q2 to 3% in Q3. The office business returned to growth in the third quarter.

Revenues increased by 3% in Q3, following a decline of 2% in Q2 2010. In Japan the revenue decline rate improved to minus 6% in Q3 from minus 13% in Q2.

North America grew 14% after an increase of 11% in Q2. And revenue growth in the Nordics was particularly strong with plus 30% in Q3 up from plus 19% in Q2.

In the professional staffing business, revenue growth in Q3 accelerated to 10% following an increase of 2% in Q2, 2010. And with this I conclude the first part of my presentation and hand over to Dominik.

Thank you, Patrick. Good morning ladies and gentlemen and welcome from my side as well.

I would like to begin with an overview of the profit and loss statement. In Q3 2010 we had revenues of EUR 5.1 billion up 36% on a reported basis and an increase of 17% organically.

The gross margin was 17.8% in Q3, '10 up 10 basis points compared to the prior year and sequentially stable. On an adjusted basis and organically, the gross margin was down 70 basis points year-on-year.

A better comparison, we adjusted the prior year third quarter for the reassessment of accruals in France of EUR 11 million and for the negative impact on SG&A of EUR 1 million related to restructuring costs. As well, we had trusted Q3, '09 for the impact of the change in the French business tax law of EUR 16 million on cost of services and EUR 1 million on SG&A.

SG&A was up 28% in Q3 '10 compared to the prior year. Organically and adjusted, SG&A was up 5% year on year.

Sequentially and in constant currency SG&A was bound by 1% hardly due to seasonality. The group's EBITDA was EUR 230 million up 35% on an adjusted basis and organically.

Excluding EUR 9 million in integration cost, EBITDA was EUR 239 million and the margin was 4.7% up 90 basis points on an adjusted basis. Net income was EUR 128 million in the quarter under review.

Now let me discuss in more detail how our cost base developed in the third quarter. We continue to maintain strict cost control throughout the quarter despite a sort of increase in the revenue growth rate.

SG&A increased by 28% on reported basis compared to the prior year third quarter. Organically and when adjusting last year's Q3, SG&A increased by 5% year-on-year.

On organic basis, the number of FTEs were unchanged compared to last year whereas the number of branches were down 8% year-on-year. Sequentially and in constant currency, SG&A was down by 1% partially due to seasonality.

On the other hand we have done some selective investments and increased the headcount sequentially by 2% mainly in the emerging markets and Germany. We continue to benefit from the structurally optimized cost base and we keep a tight grip on costs in order to achieve attractive operating leverage.

Moving on to the balance sheet. At the end of the quarter we had cash and short term investments of EUR 443 million.

DSO were 53 days in the third quarter equal to Q3 '09. Goodwill and intangible assets amounted to EUR 3.8 billion at the end of September '10.

Compared to year-end '09, goodwill and intangible assets increased by EUR 862 million, primarily as a result of the consolidation of MPS Group. Adecco's shareholders equity was at EUR 3.4 billion at the end of September, up EUR 262 million compared to year-end '09, driven by net income, the dividend payout and currency fluctuations.

Turning to the cash flow statement on slide 19, the operating cash flow generated in the first nine months of '10 amounted to EUR 204 million compared to EUR 349 million in the prior year. Given the growth in revenues, working capital needs increased in the first nine months of this year compared to the same period last year.

Nonetheless, we were able to generate a solid operating cash flow during the period. Cash flow from investing activities was impacted by the purchase price consideration for MPS group.

The cash paid for MPS in January '10 amounted to EUR 831 million net of cash acquired. In addition, we invested EUR 71 million in CapEx in the first nine months of 2010.

Included in the financing activities of the first nine months of '10 is the repayment of CHF 433 million or the equivalent of the EUR 390 million of the zero-coupon Convertible bond due in 2013 for which fund holders exercise the foot option in August '10. On October 22nd Adecco announced that it had exercised its call option for the remaining outstanding portion as of November 2010 in order to fully repay the [conductible] point.

The remaining outstanding portion approx EUR 20 million will be repaid during the fourth quarter. In addition, included in the financing activities in the first nine months of '10 is the payment of EUR 91 million EBITDA.

Net debt at the end of September '10 was EUR 958 million, an increase of EUR 848 million, compared to the year end 2009. The increase in net debt was mainly a consequence of the purchase price conservation for MPS Group.

And finally, I would like to update you on our financial guidance for 2010. As previously stated, we are planning for CapEx of around EUR 100 million for the year '10.

Our previous guidance for around EUR 65 million in interest expense excluding interest income, CapEx cost of around EUR 70 million and amortization of intangibles of EUR 55 million remains unchanged. In Q4 '10 we expect a tax rate of approx 34%.

Now I'll give forecast for Q4 '10. Keep in mind that we had some one-time items in Q4 were none.

Gross profit was positively impacted by EUR 7 million in Q4 '09. There was EUR 14 million positive impact due to the reassessment of existing accruals in France, partly offset by the negative impact of EUR 7 million due to a state tax accrual in the UK.

SG&A was negatively impacted by EUR 30 million, restructuring costs in Q4 of last year. In terms of Spring, remember that the consolidated Spring as of November '09.

Spring added EUR 65 million sales in November and December of last year. With this, I hand it back to Patrick.

Thank you, Dominik. Let me now comment on the outlook for our business.

In Q3, our organic revenue growth further improved compared to Q2 and we exited the quarter with organic revenue growth in September of 17% adjusted for trading days. The office business returned to organic growth and also encouraging for us is that growth in the later cyclical professional staffing business continued to accelerate in Q3.

October showed a similar pattern with no signs of a slowdown. This gives us confidence that we will see continued good revenue development in the near future.

We saw very good progress in profitability in the third quarter of 2010. Proof that the increased exposure to professional staffing through the acquisition of MPS and the lean branch network, as well as the optimized delivery channels are paying off.

The acquired MPS Group continues to contribute above expectations and targeted synergies are fully on track. While we selectively invest in high growth segments and markets, tight cost control and prior discipline continue to be the top priorities in our company.

Seasonally, the cost base in Q4 is expected to increase slightly, excluding currencies and integration costs. The management team is sticking to the value-based strategy and remains fully committed to achieve the mid-term EBITDA margin target of above 5.5%.

And with this, I would like to open the lines for your questions.

I have a few questions. First of all a kick off on MPS, am I right in thinking that the EBIT margin for MPS stepped towards the sort of high single-digit region in the third quarter and consequently if it's getting close to the target that you established for it when you purchased the business, should we see margins pattering from here or can you push them further ahead?

That's true that the EBITDA margin target, especially in the US went well up. So we are above 8%.

We are not yet really looking in the mid-term where it should be but we continue to focus on the profitability there.

So, would you be in a position to raise your guidance over a high single-digit EBIT margin target for MPS or is it too early?

That's not the right time now. We have to fully integrate the business but later it will be progressing better than initially expected.

Secondly in the UK, you gave us an indication I think of the perm growth, could you give us an indication of what's been happening with RPO there as I understand there has been some success in picking up contracts and what implications that has the EBIT margin development of that business?

The RPO business if of course growing and it's growing stronger than the average of the UK. The real RPO business has a slight positive impact on the margin whereas the more let the MSP related business in the UK and the market in the UK is more cost revenue recognition, not like we do it in other market, net revenue recognition.

This likely that would have.

How fast is RPO growing in the UK at the moment, Dominik?

About 20%.

And then finally, as we look into the fourth quarter of this year, you kindly flagged up some one-off which impacted the fourth quarter of 2009. Do we have any potential swing factors this year?

I am thinking I guess particularly in terms of bonus accruals given that you seemed to be trading ahead of expectations at the moment. Is there a catch-up that would take place in Q4?

And its not the expected, we've mentioned in Q2 that given the trading from Q1 and Q2 the catch-up in terms of bonuses but the bonuses are always based on the full year expectation so they should have painted lets say extraordinary catch ups or through ups.

Yes, good morning Laurent Brunelle, Exane BNP, couple of questions if I may. First can you may be give some targets income of SG&A and could you elaborate on your gross margin forecast for the coming quarters.

Second, do you expect further integration costs for MPS and Spring in Q4 and last point, how do you explain the strong growth in the French markets moving into Q4 and I think that the French think that was 17.5% for October given the circumstance, so is it still mainly driven ridden by your restocking effects? Thank you.

Still mainly driven by?

A restocking effect.

If you look to the SG&A development we said when we had the Q2 results we said that we expect from Q2 to Q3 in constant currency basically flat SG&A development nonetheless that we make key on their some selected investments. It was then finally mine as 1% and we hired 2% more people.

So the reason is that if some seasonality so from Q2 to Q3 and if it goes to cost base seasonally a little bit down, so therefore it should go from Q3 to Q4 vis-à-vis a little bit up and then we make some very selective investments. And then if we look to the gross margin development, overall, you have to note that the gross margin in the temping business in Q3 is in some countries like Germany, like Sweden but also Netherlands are pretty strong as in we have no bank holidays and in Germany we have the people on the book, so we have extraordinary strong gross margin which will not happen in Q4 just from the business space and overall we indicated also this morning the press release that since the beginning of the year, pricing has stabilized sequentially, so the temp gross margins are sequentially stable by not considering this kind of bank holidays and stuff like this in countries like Germany and promise doing well, we had 35% growth.

Of course outplacement is not yet at the trough in absolute terms. I hope that helps.

And integration costs there were up in Q3 EUR 9 million and for Q4 you can assume a couple of million more but not much more.

But Laurent on the French business, the current demand as you have seen we had 19% in the quarter with an exit rate of 18% in September and a similar development in to October. Now this is mainly driven by, like we said, by automotive, by chemicals, by manufacturing metals; but also logistics and transportation again increased and also quarter-on-quarter the increase for logistics and transportation was quite solid.

So especially the companies again that are export oriented are doing very well and continue to give us a pretty positive outlook until the end of the year in France.

Okay so you still believe that this kind of growth is just to enable despite the circum and one more if I may.

Can I just give one comment on there, it's indeed the case that our investment business in France and in the US started to increase from December of last year and especially accelerated into the fourth quarter, so on the industrial side comparisons will be slightly more difficult. And again you have seen that our office business now turned into a positive territory as well as our professional staffing that is accelerating into certain extent that should compensate for it.

But on the industrial side you already have seen that in Q3. We had a bit more difficult comps for France.

And did you confirm that your key plans are still looking for more flexible cost module i.e. serving Temp more than Perm?

Laurent across the board it is the case and we're saying that since the year and a half, we said that also during the investors days our customers want to have a bigger part of flexible workforce going forward. This in order to stay competitive, this also because their philosophy of manufacturing has totally changed from manufacturing into inventory to more made to order.

So we are long term pretty confident that penetration rates, deep penetration rates that we have had in 2006, 2007 will be surpassed because our customs clearly want to have now a bigger part of flexible work force as part of the total workforce.

Yes good morning everyone, most of my questions have been asked already but I have three of them still for you. The first one is about conversion rates.

I guess you are back to quite a big level in terms of conversion rates in Q3 2010. I was wondering if you have any target on that looking into Q4 and next year.

The second one is on DSO. You managed to remain stable in terms of DSO in Q3 of 53 days.

So I was wondering if you have any kind of guidance looking into Q4 in next year and the last one is refer to the very last question on my colleague earlier, I think one of your competitor mentioned in the occasion of a Q3 2010 figures that there is a kind of a secular shift in terms of growth in these staffing markets, so this uncertainty we have on the market prospective is as we are providing some very secular good and growth catalyst for temp staffing and I was wondering if there is any change in this kind of approach or a secular trend you look at or you consider looking into 2011 and 12, so the next upcoming cycle is, it would be different from the one we saw so far or in other words, if you think that you can beat as well organic growth rates we saw in the past cycle on the back or lower GDP growth rates. Thanks.

If we look to the conversion rates they obviously improved since last year, no doubt about it, but the conversion rates in the majority of the countries, they are where they should be. So we expect a cost-to-conversion rates of the countries we'd improve but we're not guiding year on a certain number.

Now regarding the DSO, when we introduced EVA back in 2006, we said in 2009 we want to have a DSO of at least 55 days. We had at the time 60, we are now by 53.

Of course partly this was also had this in new law in France of shorter payment terms but with the 53 days we are more or less on our targeted corridor and I think this is a fair assumption going forward. Talking about the shift towards more temporary staffing as part of the total workforce, I already covered that partly, this is also clear if you look at the job report from North America and also again the last one where 850,006 jobs were created but then again the unemployment rates stayed at the same level of 9.6 which means that the jobs that were created were just sufficient enough for the new entrants into the work force whereas 35,000 new temporary jobs were created bringing the number now seems the pickup to more than half of the total number of jobs of 900,000 that was lost during the crisis.

And we clearly see, we've shown a chart on this during our investor days in Miami, we clearly see that compared to other cycles, the temporary staffing is picking up a lot faster now and we expect this to indeed to continue again because our customers are telling us that they want to have a bigger part of flexible workforce going forward. Now of course we need underlying GDP growth also into next year.

This year was a kind of a bumpy recovery, the year started with quite some optimism. Then the summer as you all know was very pessimistic and now we are back to more realism and more slight optimism I would say.

So next year we expect growths rates that on the economical environment might be slightly below this year's but less bumpy and more predictable which is good for our customers because it means that they can plan better but with the underlying GDP growth that is forecasted now for next year plus the higher penetration, we are confident for a good growth for next year but of course we're going to have a base effect.

Good morning, gentlemen. A question on your temp margin, because you still reported a 50 basis point pressure in temp margin, but last year compared to the second quarter, your third quarter took a pretty big hit on the temp margin and doesn't seem to recover although the comparison basis improving.

Can you explain what the reason is for that?

Actually there was a little bit hit but it was really not so much from Q2 to Q3 our company maybe in some years it was a little bit stronger and so basically we see since the beginning of the year stable temp margin but since last year the price pressure was not that strong over the course of the year, there was rather a little bit of hit from Q4 to Q1. We are not surprised that the temp margin year-on-year is still 50 basis points down.

Okay, so that you reflect going into the fourth quarter as well?

As I said temp margins are since the beginning are pretty stable.

Okay, all right. Can you indicate if there is any currency or mix effect in your temp margin, if you identify that?

That's really not a major point because you have to see that we basically in everything a country we sell and source in the same currency. So basically that's a natural hedge.

All right. And then on your cost base, can you indicate what your spare capacity is in your network right now because your cost base expansion has been very low and how long can you keep up with this, given the current growth rates.

I mean as always (inaudible) it's not black and white. As you cannot say, we filled the capacity 10 to 15% but its not that you grow 10 to 15% before how you can keep it sharp not how the model is working.

So this is our capacity in principle in the years to come. On the other hand we have to make here and there some selective investment, what we have done also from Q2 to Q3 we added 2% headcount primarily emerging markets which of course has not such a big impact on the cost base because people have gotten these countries little bit cheaper.

And but also we added in Germany and going forward we look how our sales are, how our capacity is and we do selective investments.

But can you give an indication given the current growth rate how long you can keep with these SG&A levels.

As Dominik said, we estimate ourselves that we still have between 10 and 15%. You have seen that in Q2 we had a 13% increase in revenues with 7% less FTE's.

Now we have a 17% increase in revenues with the same FTE as last year. So which means an increase in productivity around 17 to 20% over these quarters and off course that will ease out because you cannot continue like this.

But you have seen that quarter-over-quarter we only added 2% of FTEs for additional growth. So we will continue to manage that very well and have good leverage.

Okay thank you and final question, can you give any assessment on what you believe that the working day impact will be in the fourth quarter. I know it is difficult given Christmas and (inaudible) but what is your assessment of that?

Let's say you're right, I mean this Christmas it is always difficult to assess, I would say that it's less than 1% negative but its really less than 1%, so.

All right and that's sequential?

Year-over-year.

I just wanted to ask about some of the businesses which may have lagged the overall good growth rate. In particular, I know it's the wrong time of year, but perhaps the construction business in France what the forward order book is like there maybe your US IT business and what's happening on the organic growth side in that business?

And also in Japan, just how big are the outsourcing contracts that you signed please?

And if we talk soft about the US business, first of all I think if we look to professional staffing in the whole US and if I exclude our placement because it was staffing. So our professional staffing in the US is growing 19% and with it I think it's pretty strong in the recent quarter.

But it's true, if we look to the segment we lack in organically a little bit in the IT segment which is still down 3%. On the other hand, our engineering business in the US is growing 46% and of course engineering and IT, sometimes is very close together, the people which we provide.

On the other hand, look also to our acquired businesses MPS and IT we have currently accrued rate of 16%.

Okay.

And coming back Tom to your question about the construction in France, quarter-over-quarter if we look at it from the mid of last year we saw declines and now recently we have seen a pickup in our construction business, it is a substantial part of our business, it is slightly above 50% of our total business but now from Q2 to Q3 we have seen a single digit increase again on the business and we continue to forecast for that.

Okay, the last single digit year-on-year prices.

No quarter-on-quarter and year-on-year as well.

How big are the contracts you said you had won in Japan?

So basically they are quite important for us but then overall it will have let's say mid single digit percentage impact on the growth rate.

Thank you. I just also wanted to ask sort of seasonal factors with regards to factory shutdowns and maybe what your large retail clients are telling you about their seasonal retail hiring.

Do you have any indications as to these sort of year-on-year effect on those particular seasonal issues in Q4 please?

For the factory shutdowns no (inaudible) news on the retail side especially from the US rather positive. So there the retailers are really ramping up for the season end of the month now for thanksgiving.

So there we had positive signals on the order books of our customers that are a manufacturing (inaudible) news they still say that the order books, they said in the summer by the way as well, and it appears to be the case that the order books were still pretty solid. So this will continue until the end of the year.

Okay, fantastic. Thank you.

And your US like industrial business, how far of the peak levels is that actually running at the moment?

We have the growth rate in the US investments currently 40% and if you look back to the peak level it is still up 10-15%. I think close of that below prior peaks.

Okay, thank you. And then just my final question please, is just on the subsidies cancellations in France and also you potentially faced a slow increase and I don’t know whether you've been told anything more about whether the higher acts will be extended into the US next year.

But could you just make some comments perhaps on what the incremental gross margin pressures if any are coming through the beginning of next year, please?

This hiring act probably benefited this year a little bit by this medium of significant, but actually now millions of dollars because of this hiring act. It’s leading up so much for the US and if we look to France, it is the case that their whole calculation also as a text we based the concept will be redone and that will lead to less kind of also the text rebates for lower scale people or basically for people on the minimum wage or closer to the minimum wage effective as of January 1st.

Now that said, this is not the impact related just to the temping industry, this is an impact related to the whole French labor market, so also our clients which have also people with lower skills that will benefit from or will not anymore benefit so much than before. We believe nonetheless that the rules are not finalized and how much the impact will be.

This is still growth in progress and we believe the overall increase is rather moderate and debts under normal circumstances given that this is not only related to the temping industry as it should situation. We are ready and also the market to pass it on to the clients also taking into account the French temp margin are rather very competitive and already at the lower end.

And there maybe a slight remaining impact that could well be but we believe this is rather low for the time being.

A follow-up question on the outsourcing contract in Japan. What will be impact on your margin for Japan, is the outsourcing contract potentially the one diluted for the margin or will it edge margin.

Can you maybe add a bit to that? And my other question is on the Netherlands, your report plus 30 for the balance.

But could you maybe split it out between Holland and Belgium. And could you maybe also comment a bit on the latest trends in Holland.

We've had a few peers reporting quite accelerating trends over the last week. You also the how these figures improve, could you maybe give a comment whether you, can you confirm whether that you see in the last couple of weeks also on acceleration in Holland.

Mark, you will have to allow me not to split Belgium and Holland, it is already good at Belgium, are trying to split Belgium so we should not split it further, so reporting on the BannerX and we also continue to do so. Now indeed in Holland we see a very development also in the last couple of weeks.

We have been very strong in that market, and we continue to be very strong and now also the office business is increasing as far as the professional staffing. So that should continue to be good news into the next couple of months.

On the margin for the Japanese contracts, Dominik could answer.

The outsourcing contracts overall, they have pretty similar margins than the whole end of our company so we expect similar EBIT levels due to these outsourcing contracts. The good thing about the country’s order, these are quite long lasting contracts so they have duration of 3 to 4 years, so it's pretty good, pretty stable business.

And since it is outsourcing in the beginning, you have a little bit of ramp up costs because its outsourced and you have to buy some equipment, you have train people but this is not material.

And I was looking to Japan, a bit of a follow-up, would you expect given the measures you have taken there and that the market is both coming out a bit, that you will see some positive operational leverage next year?

We are optimistic that we are starting of next year growth, and if you have growth we should also have operational level.

Could I start by asking again about the acquisitions because again they do seem to be performing pretty well. I think based on the disclosure that you give us in terms of organic EBIT increase and the other information, so we can just about calculate that the EBIT contribution from the two acquisitions must have been about EUR 30 million in Q3.

I was wondering if you could confirm that number and then also if you could give us the split between US and the UK on that EUR 30 million?

We have ordered some smaller expeditions which we had but not only MPS and Spring and also (inaudible) they were basically there and lets say its not only documented in Euro, it's really a little bit less, but hardly there was some integration costs included. But overall I think we have in the -- in the recent quarter, we had in our US acquired a business, we have an EBITDA margin of about 8% and this is the big portion of the business and acquired all of the UK that constituted positively to the EUR 11 million which we're showing on the profit for Q3 and it also, its not only the cost savings of the integration it's also related that (inaudible) and also more than head of profit about 5%.

But the impact of MPS and Spring is not fully (inaudible).

And just on the UK specifically, I think you gave us September exit rates, so a few of the bigger countries, but did you comment on the trends in the UK in September and October organically?

Lets say in the UK our decline rate was pretty stable and this is no major change now in the UK you've both the two countries given that we brought MPS and Spring a year ago here and therefore last year count that makes then you start integrating benefits that basically both from our branches or national team bit on the same base so the pro forma growth of our UK business, if we do so like all the acquired business, you would have already one year ago would be rather 4% than the minus 1% which we show organically.

And what percent did your pro form UK revenue is public sector?

15%.

15 perfect, Okay. And then just moving on to permanent recruitment the other 35% growth rate and I think you mentioned 38% in the UK, could you give us some of the growth rates for some of the other key countries that have a reasonable amount of perm exposure like the US and so forth?

If we look to the North America and I talked to you of course about organic growth rates and we have growth in terms of 22% in Q3 and France had a growth rate of 17%, the Russian markets are also quite important for us, there we have organic growth rate of 71%, in the UK as that before 38%. These are the most important markets.

And the US, that 22 was that a little bit slower than Q2?

It was accelerating. We had in Q2, we had 14%.

Morning guys, couple of if I can. First of all is just trying to get a hand on the seasonality of costs.

The costs went down 1% sequentially and can you give an indication of just how much of that is the seasonal impact and what we should expect going back in percentage terms as we go into Q4?

So basically the seasonal impact is between 2 and 2.5%, just from a business point of view.

And should all of that reverse into Q4?

Yes, and then there is some selected investments we are also doing a headcount on top.

And just finally on the outlook I guess, and your conversations, has your visibility changed at all in any terms of length, and are you actually talking to clients now about contracts and where you think growth will be in Q1 next year. I know you sort of alluded to speaking to retailers and manufacturers in the US.

Are you having conversations about Q1 2010, or is that just way too far off at the moment?

You have to allow us not guide now into Q1 we are talking to our customers they still have limited visibility themselves. There pretty confident until year end with their order books.

So going into next year should be a bit more or a bit less volatile than it was at the beginning of this year, but more than that we should know that at this moment.

And then finally any chance of indication of tax rate for next year?

I mean the tax rate for next quarter is 34% and under normal considerations you have to see that the principle also for the mid-term that underlying tax rate before French business tax will go somewhat up on the other hand the French business tax and that will maybe go somewhat down. So the current run rate tax rate is a pretty good assumption.

Okay ladies and gentlemen, I would like to close the call here and like to thank you for your interest in our company. For your information, we will report on our fourth quarter on the 3rd March of next year.

So I would like to wish you very good days ahead happy year end and hope to see you all very soon.