Adecco Group AG

David Hancock - IR Alain Dehaze - CEO Hans Ploos van Amstel - CFO

Chris Gallagher - JPMorgan Toby Reeks - Morgan Stanley Denis Moreau - UBS Alain Oberhuber - MainFirst Bank Laurent Brunelle - Exane BNP Paribas Josh Puddle - Berenberg Tom Sykes - Deutsche Bank Research Suhasini Varanasi - Goldman Sachs Konrad Zomer - ABN AMRO Bank

Thank you. Good morning.

Welcome to the Adecco Group's full-year and fourth quarter 2015 results conference call. To present to you today I'm joined by Alain Dehaze, Group CEO and Hans Ploos van Amstel, Group CFO.

Before we start please have a look at the disclaimer regarding forward-looking statements in this presentation. So let me give you a quick overview of today's agenda.

Alain will first present the operational highlights and an overview of the country performances. Then Hans will review the financials and, finally, Alain will make some comments on the outlook.

We will then open the lines for your questions. With that, Alain, I hand over to you.

Good morning, ladies and gentlemen and welcome to our full-year and Q4 2015 results conference call. First a few remarks on the results for the full-year 2015 before I go into more detail on our performance in the fourth quarter.

On this and the following slides I will give all growth rates organically unless otherwise stated, revenues for the year increased by 4% to €22 billion. General staffing grew by 6%, led by the industrial business which grew by 7%.

Professional staffing revenues decreased by 1% and we grew revenues by 5% in solutions which comprises our Lee Hecht Harrison, Pontoon and Beeline brands. Geographically, we saw strong growth in Southern Europe, Benelux and the emerging markets.

France accelerated towards the end of the year while North America at broadly stable growth. Our gross margin was 19%; up 20 basis points on an organic basis, driven by both temporary staffing and permanent placements.

Our focus on cost control was maintained. SG&A excluding one-offs was up 3% on an organic basis.

Altogether these developments led us to achieve a very strong EBITA margin excluding one-off costs of 5.2%; up 40 basis points. We had a good cash flow performance in the year with cash from operations of €799 million and an operating cash conversion of 87%.

For 2015 the Board of Directors proposes a dividend of CHF2.40; an increase of 14% over the prior year and a 45% payout ratio of adjusted net earnings. This reflects our strong balance sheet, our good cash flow performance in 2015 and our confidence in the outlook.

I will now turn to the fourth quarter results in more detail. We had revenues of €5.7 billion; an increase of 5%.

Gross profit grew by 6% and the gross margin was 19.2%; up 30 basis points year on year or up five basis points on an organic basis. SG&A excluding one-offs was up 4% year on year.

This resulted in an EBITA excluding one-off of €310 million. The EBITDA margin excluding one-offs was 5.5%; up 20 basis points year on year.

At the beginning of 2016 revenues in January and February combined were up 4% organically and adjusted for trading days. Let's have a look at the fourth quarter operating performance in more detail and I will start with the revenue development by region.

In Europe revenues grew by 6% in the quarter. This acceleration from the 3% in Q3 was driven, in particular, by improved growth in France.

In North America growth was 1%, the same as in Q3, with strong performances in industrial, medical & science and finance & legal, while office and engineering & technical declined. Growth in the rest of the world was 11% in Q4 compared to 10% in Q3.

Revenues were up 4% in Japan and were flat in Australia and New Zealand. Emerging markets' revenues grew by 16% with double-digit growth in Latin America, Eastern Europe and India.

Looking next at the revenue development from the business line perspective, we see that the industrial business continues to be the main driver of growth. In Q4 revenues in industrial grew by 9%; up from 7% in the previous quarter.

In office revenues grew by 4% compared to 3% growth in the previous quarter. In professional staffing revenues were flat compared to a decline of 1% in Q3.

Finally, growth remained strong in BPO solutions, comprising of VMS, MSP and RPO businesses. Let's also have a look at the fourth quarter revenue development by service line.

Temporary staffing is our largest service line. Growth here was 5% this quarter; up from 3% in the previous quarter.

Revenues from permanent placement continued to grow strongly; up 14% in Q4 compared to 12% growth in the previous quarter. In outplacement revenues were flat this quarter, compared to growth of 1% in Q3.

Let's go now through our main markets in more detail. In France revenues were up 5% on the prior year, revenues in our large industrial segment increased by 6%.

From an industry perspective, construction returned to growth and growth accelerated in logistics, manufacturing and automotives. Permanent placement revenues were up 14% this quarter.

The EBITA margin was strong at 7.9%; up 110 basis points year on year. Q4 2015 included a favorable item related to prior year's social security charges which added approximately 100 basis points.

In January and February combined revenues were up 6%, adjusted for trading days. We turn next to North America, where revenues increased by 1%.

In professional staffing growth was 1%, medical & science was up 21% and finance & legal was up 9%. IT grew by 1% and engineering & technical declined by 9%.

General staffing declined by 1% and we saw good growth in the industrial business up 5% which has slightly moderated versus previous quarters. The office business declined by 8% in Q4, partially due to continued weak demand from financial services customers.

In perm revenue growth was 17%; the same as in Q3. The EBITA margin was 6.7% in the quarter; up 20 basis points year on year compared to the margin, excluding restructuring costs, in Q4 2015.

In January and February combined revenues were up 1%, adjusted for trading days. Turning next to the UK and Ireland, revenues were overall up 1%.

Professional staffing was down 1%, with IT flat, finance & legal up 2% and engineering & technical declining. Office was up 7%.

Perm revenues were flat in the quarter. The EBITA margin was 3.2%; up 80 basis points from the same quarter last year, driven by good cost development.

Revenues for January and February combined were up 1%, adjusted for trading days. In Germany and Austria revenues were up 3%, helped by the positive effect of more trading days compared to Q4 last year.

Our industrial business line was up 2%, while professional staffing was up 4%. Engineering & technical which is our largest professional staffing business, was flat.

IT grew by 16% and finance & legal by 4%. In our perm business revenues were flat.

The Q4 EBITA margin was 6.3% compared to a 4.5% margin, excluding restructuring costs, in Q4 2014. This year-on-year increase was mainly driven by the timing of bank holidays.

In January and February combined revenues were up 1%, adjusted for trading days. In Japan revenues grew by 4% in Q4.

Revenues were up 3% in general staffing, where we're mainly exposed to the office business and up 8% in professional staffing. In our perm business revenues were up 40%.

The EBITA margin, excluding one-offs, was 6%; flat year on year. In January and February combined revenues were flat, adjusted for trading days.

Finally, in terms of regional performance, I will touch briefly on some of our other markets. Growth accelerated in Benelux; up 15% and growth remained strong in Italy at 19%, in Iberia at 13% and in emerging markets at 16%.

In the Nordics we continued to have good growth in Sweden and a decline in Norway, although here we're now starting to see an improvement in our performance. In Switzerland we have seen the effect of the strong Swiss franc and our profitability was negatively impacted by pricing pressure, unfavorable mix effects and costs related to adapting our business to the development in market conditions.

In Lee Hecht Harrison our EBITA margin, excluding integration costs, was 27.6%; impacted year on year by the consolidation of the Knightsbridge acquisition. And, with this, I hand over to Hans to take you through the financials in more detail.

Thank you, Alain. I will start with an overview of the P&L.

Alain already mentioned that operating highlights in his introduction, with revenues of €5.7 billion and EBITA excluding one-offs of €310 million, EBITA excluding one-offs increased by 14% or 9% in constant currency. Reported EBITA was negatively impacted by a write-down of capitalized software of €45 million, following an assessment of our IT strategy.

Going forward, we will focus more on off-the-shelf modular cloud-based applications rather than solutions developed in house. Now we look at our sequential revenue growth analysis.

This slide shows the sequential growth adjusted for currencies, acquisitions and trading days for each quarter compared to the long term trends. In this way, we show the sequential growth adjusted for seasonality.

After underperforming the long term trend in Q3, we're now back in line with the trend in Q4. Next let's have a look at the year-on-year gross margin evolution.

The Group's gross margin was 19.2% in Q4 2015; up 30 basis points. Currency effects accounted for 15 basis points of the increase, acquisitions had a positive effect of 10 basis points and the organic increase was 5 basis points.

On an organic basis permanent placement had a 10 basis point positive impact on the gross margin development and other activities added five basis points, while outplacement had a negative impact of 10 basis points. Now let me discuss how our cost base developed in the fourth quarter.

SG&A excluding one offs was up 4% organically compared to the prior year. This was mainly driven by a 3% increase in FTEs.

In Q4 2015 one-offs were €48 million. This comprised a €45 million write-down of capitalized software and €3 million integration costs in Lee Hecht Harrison related to the Knightsbridge acquisition.

Sequentially our costs base was up 5% in constant currency and excluding one-offs. This is slightly above the normal seasonal increase, reflecting some discrete cost items that are not formally treated as one offs.

The largest of these was a non-cash expense in the Netherlands of approximately €8 million related to changing the defined benefit pension plan to a defined contribution pension plan. Turning to the cash flow statement, in Q4 2015 cash flow from operations was €298 million compared to €284 million in Q4 2014.

DSOs in Q4 were 52 days; the same as the prior year. This quarter CapEx was €28 million.

In Q4 2015 we paid €93 million for the purchase of treasury shares. In January 2016 we completed our share buyback program of €250 million launched in November of 2014.

Under this program we acquired a total of 3.9 million shares. For the 2015 the Board of Directors will propose a dividend of CHF2.4 per share.

This represents an increase of 14% over the prior year and is a payout ratio of 45% of adjusted net earnings; in line with our policy of a payout ratio of 40% to 50%. Finally, net debt at the end of December 2015 decreased to €1 billion compared to €1.2 billion at the end of September.

Our net debt-to-EBITDA ratio was at 0.8 times at the end of Q4 2015. And, with that, I hand back to Alain.

Thank you, Hans. Today we have announced a recommended cash offer for Penna Consulting Plc of 365p per share, representing a total offer value of GBP105 million on a fully diluted basis.

Penna is a human resources services company with three business units, career transition, talent development and recruitment solutions. Penna works with 70 of the 100 FTSE companies and with high-profile public sector bodies.

The transaction is in line with our acquisition strategy. It will broaden and strengthen our existing operations in professional staffing and solutions, it offers meaningful synergy potential and it is expected to deliver positive EVA within three years.

Let me now comment on the current trading. In Q4 2015 organic revenue growth of 5% was slightly above the 4% for the first nine months of the year.

This was mainly due to improved growth in France. Growth in most other markets was broadly similar to the year as a whole.

At the start of 2016 this underlying revenue momentum has continued, although the comparison base is tougher than for Q4 2015. In January and February combined Group revenue growth was 4% organically and adjusted for trading days.

Growth continued to improve slightly in France, remained stable in North America and moderated slightly in Italy, Iberia and Benelux, where the base .effect is most pronounced. For Q1 please note that in 2016 Easter falls in Q1 compared to Q2 in 2015.

All else equal, this will negatively impact our gross margin compared to Q1 2015 by approximately 30 basis points. SG&A excluding one-offs in Q1 2016 is expected to increase slightly compared to Q4 2015 in constant currency.

This is in line with the normal seasonal trends. The Adecco Group remains committed to leveraging the EVA approach.

In this way we will balance revenue growth, profitability and cash generation and create shareholder value in 2016 and the long term. And now I would like to open the line for questions.

A couple of questions, the first on the changes in your strategy around IT. How could that impact the potential costs of the program?

And also the rollout both in Japan and globally? The next question then is just around any potential cost savings from Penna, maybe with any overlap with LHH, given it operates in 70 countries?

And then, finally, just on your gross margin outlook for 2016 at this point. Thank you.

I suggest that I take the first two questions and then Hans will take the third one on the gross margin. So coming back to the IT and, Hans, also feel free to elaborate, coming back to the IT.

As we said, we had planned a first full-scale rollout in Japan for later this year. But part of this process was to do an assessment of the solutions before the deployment.

And we did this in the months of January and February and the conclusion of this assessment was that we should not go ahead with the deployment and that we had to change of approach. The current approach was mainly based on internal developments and, I would say, with on-premise application.

And, with the evolution of the technology, we want to focus more on off-the-shelf, more modular, more cloud-based applications. And, as a consequence of this, you see the write-off in Japan for an amount of €12 million and at corporate level an amount of €30 million.

That's my answer on your first questions. Regarding Penna, first of all, I have to make you aware that this company is a listed company in UK so we have to follow strict governance before being allowed to elaborate on this acquisition.

Nevertheless, some color about that. Indeed, Penna is a well-reputed British company, with three businesses, career outplacement, career development and recruitment.

So, if you remember what we have said in January when we met in Zurich for the Investor Day, we told you that for the professional staffing and solutions which was one of our six key priorities, we were considering buy-and-build acquisitions beside organic growth and that we had three criteria. First that any acquisition should accelerate our strategic development and broadening and diversifying our offering, that's the case with Penna.

Second is that the Adecco Group would be a better owner of this business by allowing and achieving revenue and cost synergies with our existing activities. And that's exactly what also Penna is offering.

And last, but not least, we said also that it should create value for our shareholders, delivering positive EVA within three years. And this acquisition will also meet this criterion.

Maybe first some additional color on the IT change. So what that means and, therefore, there was the write-down, is that we will not continue with the rollout of that approach in Japan or globally.

As Alain has pointed out, we will make a change in approach to reflect how the IT environment is changing by using more, as we say, cloud-based modular off-the-shelf available technologies instead of an in-house development. And we believe that is a better approach going forward.

It had this change and [indiscernible] that we're much more comfortable with that approach going forwards. We had guided that we would make an IT investment in 2016 behind that strategy and, as we have said, that was based on the plans from the past.

We will keep that money set aside to see how we can speed up the approach with our new approach. So we keep that investment for next year set aside.

If we turn to the gross margin, following the Investor Day we gave our through-the-cycle targets over the three-year period on revenue growth, margin development and cash flow. What I would like to give is some color on Q1, because I think that's relevant, without providing an outlook for the year, because that's what we're not doing.

But on Q1 it's obviously important to know that Easter will have an impact and we think that impact is around 30 basis points, so that will be the timing of Easter. Secondly, in France there's a little bit of mismatch in the first quarter because we get the complementary healthcare cost which is in Q1, 10 basis points but there will be other benefits in other areas coming in Q2.

But in Q1 there is just a one quarter of this healthcare mismatch with another regulation in France and in Q1 2015 we had a release of some reserves which was around 10 basis points. So the operating performance continues in Q1 but we just have those three elements which will impact the first quarter.

And just to follow up on that. I think previously you'd mentioned about €20 million for the rollout in Japan.

So do you still think that you're going to spend that this year?

What we're at the moment looking what is the best approach with these cloud-based solutions. We just keep that money in the pocket but we obviously claw back that money in our pocket by not rolling out Japan.

So that money is in our pocket. We need to keep it now with the new direction that we're investing in the right technology if we want to but we park the money for now and our intent is with the better strategy to invest that money.

I've got three as well. Just following up on that IT question, could you give us an idea of how you think that affects the savings you guys were expecting to make going forwards from IT?

I think initially it was going to be happening around about now but that got pushed out and I guess they keep getting pushed out. But does your new approach mean that we won't be getting the savings or you think that the savings will be more material?

Secondly, on that one, will there be more write-offs? And, to your knowledge, are your peers all doing on-premises IT solutions as well?

And then my final question, sorry at the AGM you're going to propose a cancelation of shares under the current buyback plan completed January 20. Are you going to propose a new one or an extension of the existing one?

And what does that imply in terms of your capital allocation, please?

I will come back to your questions regarding the IT. So, somehow, when you read the words modular, cloud-based and off-the-shelf application, this will give us two advantages.

One first advantage is to be faster because by somehow deploying individual modules in different countries you can work more in parallel. Also by working together with external partners you can somehow leverage the module you have developed.

I take one example; it's the customer relationship management unit. Then you can decide to do it in multi-country at the same time because it is an off-the-shelf application and you can leverage the deployment through an external partner.

That's about the speed of deployment. Second, about the cost, it has been our experience and also somehow proven that it is always better, when available, to take off-the-shelf applications, also regarding the cost of development and the cost of deployment.

So I would say, regarding the financials, it should go into the right direction rather than in the wrong direction.

Just Toby, to quickly continue on that, so we're not continuing with the previous approach and, as Alain mentioned, we believe we have a better approach going forward by this, of course. This is also important to one element we discussed in the investor conference is to reinforce our cost leadership.

There are just better IT heads that will help us move along close to also integrate our work on the cost leadership with our IT strategy. And we want to bring those two together.

That's important. If we look at the share buyback program, we completed that.

And we will follow with the same capital discipline principles the Company always uses. So excess cash will be returned to the shareholder, we introduced a framework for that and there's a small nuance in the framework that we will not announce those at the start of the year but at the end of the year to keep the optionality of the cash flow we generate for what we discussed, buy-and-build acquisitions.

So the only nuance is that we would announce it as excess cash flow. We do a buyback at the end of the year, not at the start of the year.

And just going back on the technology side, just very quickly, do you think you are differentiating yourself from your peers by taking this off-the-shelf approach? Because my feeling is that everyone's working off legacy in-house systems.

Is that correct?

I think what is important for us here, I think, there are two different things. There is the digital strategy where you obviously have one and this is about the IT infrastructure.

What's important there that we reinforce our cost leadership and that, obviously, like any company, there are legacy systems that you have a good infrastructure, be it the billing with your customers da-da-da-da-da, that we just use the latest available technology. And it's just proven if you use modular approaches off the shelf that, when you keep upgrading your IT infrastructure, it's just a lot more efficient than these off-the-shelf solutions and just the world has moved on with that.

So we believe this is key for the whole cost leadership we want to reinforce and differentiate ourselves there.

Two questions, please. The first is on the operational leverage.

Actually, it seems that it has been relatively modest, both in France and in Benelux if we adjust for the one-offs. So I would like to get your view on that, on this moderation in operational leverage and how we should rate that for the coming quarters.

And secondly, on pricing, you've mentioned some pricing pressure in Switzerland. So could you elaborate on that, perhaps on the segments that are most affected by that and also give some color on how the competitive landscape is evolving there?

And also, if you could give some details on what are the additional costs that you are putting in place to adapt the business to this development in Switzerland. Thank you.

Shall I start with, Denis, the operating leverage? Indeed, if you look at the first glance, you see a 20 basis point improvement in margin which ends Q4 on a very strong 5.5% EBITA margin excluding the one-offs.

The comparison base is a little complex this time because Q4 of last year there were some discrete benefits in the fourth quarter which are not one-offs but discrete benefits. And they were related to the normal yearend processes of things related to healthcare costs, social charges, the true-up of accruals as part of the yearend process.

And those have last year, if you add them up, of course, all the markets a discrete benefit. If you take those away, the operating leverage in Q4 was exactly in line with what we saw over the first three quarters.

So that 40 basis point improvement if you take out would carry forward one on one in Q4. So the reason why I'm giving the details, we keep track of that to make sure that the operating disciplines remain into the countries, excluding all these discrete items.

So it's not to explain them away; it's just that we have a good underlying understanding of what is happening to the cost tax. So the summary is 5.5% margin we're happy with.

If we take the discrete benefits of last year out, we're providing the same operating leverage in the business in Q4 this year.

And then on your second question, Denis regarding Switzerland, it is clear that the country, as such, is suffering from the strong Swiss franc. And the strong Swiss franc has impact in certain industry sectors, mainly the industry or the exports, manufacturing companies.

Some are also the tourism but, for sure, for the export. So we have seen somehow the sales level worsening over the quarter.

And if you see also our outlook for the combined figure for January and February in Switzerland was minus 9%. So the situation in the sales has clearly deteriorated.

Now regarding your comment, yes, we have continued with some pricing pressure and that's normal. In such conditions everybody wants to save money and the first ones are our customers.

Second, regarding our profitability, we have this mix effect. When you are in the industry it has also impacts if you are the customers who are exporting less, needs less temporary staffing.

And then on your questions or sub-questions regarding the cost, yes, we're spending some cost to adapt our business to the development of the market conditions. In such a market, as an example, you need much more commercial hunters than farmers.

So you must make sure you increase your commercial activity and have the right profile for that. We're also in the process to adapt our organization to have the right large account delivery model.

And this had also, I would say, impact on the cost but for a better future. Everything we're doing is to do for a better return going forward.

I have three questions. The first is regarding the guidance for 2016 on EBITA margin.

Are you refraining from this 5.2% you mentioned last autumn? And the second question is regarding Lee Hecht Harrison.

We've seen that you've showed good growth in Q4. Is this an indication that the economic environment deteriorates again?

And the last question is regarding France for the current year. Is there any positive or negative impact from CICE or from the family allowances or from other issues which are supported by the French Government?

We have developed the through-the-cycle targets which we shared during the Investor Day and where we said we're focused on three elements. One is organic revenue growth at least in line with the peer group.

And we're pleased to report in Q4 that we're closing the gap on one and improving that trend. On the EBITA margin we gave through-the-cycle margin guidance.

And then we have the cash flow conversion which obviously is key. We made a one-time guidance for 2016 on the back of the change of the margin guidance for 2015 at the end of Q3.

But we will not guide on the margins for the year. That was just to reset the expectations as a follow on from the revised outlook for 2015.

Also some color about the development of the net revenues. Indeed, the Q4 net revenues were down 2%.

This is mainly coming from a couple of countries and the first one being France. And, indeed, as you see some kind of recovery in France and also the presidential election coming in, you will see less and less restructuring or major restructuring activities in France.

And, somehow, in all figures that's what we see. We saw that the activities of LHH in France went really down.

We see also some countries in deep recessions, like Brazil or even the weak economy in Canada, where we had some negative impact on the talent development business. And this explained the figure of 2%.

You also see that going forward for January and February combined we anticipate 3% growth for LHH. And then, going to your third question about France and, first of all, CICE.

And I don't expect any change regarding the treatment of CICE in 2016. So no change on this, the current President has said that going forward in 2017 he would think about transforming the tax credit in a social charge reduction but this has not been confirmed.

And, in the meantime, we will have the election. And second regarding the family allowance, what we have had and it has somehow been changed by the French Government during the game, I would say, is that since January 1 we're entitled to pay a complementary health insurance to all our temps or at least the ones having a certain number of hours.

And this has an impact for France only of 40 basis points. And originally this measure would have been somehow compensated by a further reduction in the social charges.

But, unfortunately, they decided to delay a little bit these further cuts of social charges and this will kick in on April 1st. And that was not the original plan.

This has been changed. So from April 1 we will be the beneficiary of reduction charges for about 35 basis points.

That's I would say the regulatory environment for France, Alain.

Just a follow-on question, Alain regarding the 40 basis points negative from gross margin in Q1 in France and then, as of April, 35 basis points increase again. So H1 will be no impact.

First of all, there is three months difference, Alain. And second, the one is 40 basis points and the other one is 35 basis points.

I've got three follow-up questions, please. Regarding your 2016 margin target, is it fair to say that, given that you have changed your IT investment and it will be possible to 2017, then we could potentially assume that the margin will be up, if you don't give any guidance?

Second, regarding France. Do you have the sense that you are gradually closing the gap that's appeared in terms of organic sales growth?

And what do you expect moving forward? And could you just clarify the situation on the French construction which is starting to pick up?

And lastly, can you give some 2016 financial targets, I mean CapEx, interest charges and so on, please? Thanks.

I suggest Hans will take the first one, then I will elaborate on your question on France. And regarding the guidance about the financial items 2016, Hans will come back to that.

So on the change of the accounts in IT. It is fair that that will free up money because we're not investing behind that approach any more.

And we previously said it would be 10 basis points or around €20 million additional investment on IT. What we're saying at this stage is that we want to keep that investment to put it against the new approach which we said is a more modular approach which we're developing because we just decided and completed the assessments.

If we would not make the investment in 2016, we would tell you. But you should assume in modeling the results that we keep that IT investment.

And then on France and about closing the gap, if we take the figures of the fourth quarter 2015, I again confirm that our Company is the most profitable among the peer group. Even if we take into account these 100 basis points of one-offs, we're the most profitable company in the group and we have been able to grow by maintaining this pricing discipline and profitability target.

What you see also and I never comment individual peers, but what we see is that somehow we have now catch-up with one and that we have still one order in front of us. But we do that, as always said, in a steady, structured way and in a profitable way.

And I don't want to sacrifice subsidies for the sake of the top line, so we need sustainable, profitable growth. Regarding, more specifically, the construction we always said that it would be the last segment in France to recover because it's late cyclical.

We knew, knowing the pipeline, the new building pipeline and forecast and so on, that it would rebound. So we're very pleased to see that the construction segment which is the biggest segment in France for the temporary staffing, is back to growth in high-single digit.

And, according to our clients' comments, this growth will continue and increase in the second half of 2016.

On the financial guidance on the CapEx and also interest expenses, you can assume that will be similar to the levels of 2015.

My first question is on the software write-offs. I was wondering, if you hadn't written off those costs, what would the average remaining life of those been?

And then secondly, on working capital. You had an increase of the outflow to €170 million and I was wondering at this stage what you were expecting for 2016.

Thank you.

Normally we would depreciate the software, depending on the - at around five years. So that we now - for you to start a curve that would be five years.

You saw this year only the working capital because the growth was in the back half. We've seen some increase in working capital but the DSO were stable at 54 days.

So our working capital, if you keep the receivables disciplined, would be similar to our sales curve.

Can I just follow up on the software write-offs, maybe to ask another way? If you hadn't written those off, what would the amortization have been on those costs in 2016?

Because we would only - there would be going more in the back half of the year because the go live, they would be in Q4 of the Japan. So it has a minor impact on this year.

If your questioning would be, will we see a big benefit there? Not really, because it's more in the back half when you would call it out.

Can I ask about your capital allocation again on the IT and then just industrial for North America? So on the acquisition of Penna, you've just acquired a business that the share price has doubled in the last six months, is trading on 21 times earnings, you're sitting on an all-time P/E relative low and Penna's in part counter-cyclical.

Are you trying to signal something about the growth outlook in your core business? And is that really the best capital allocation that you could have done?

On the impairment of the IT, you're the largest HR services business in the world and you're struggling to develop your own software. Tech seems to becoming ever more important.

Is there just a transfer of value from the HR industry to the tech industry? And then, on the industrial business in North America, do you think that will slow further from 5% growth, please?

Shall I start maybe with the IT? I think it's a more efficient use of resource going forward, given it's a little bit a question of vertical integration.

The own development of software in today's world, we feel, is less efficient than using what's available off the shelf and more modular, because software development has a cost and it's something you then can only apply in one company. And if you take modular approaches, then there is scale.

And that's why we believe and we did that assessment. It is actually a much more efficient capital allocation for the shareholder and would be more cost efficient for the return on the investment.

That was one of the key criteria to make the trade-off to make sure we come through on our costs leadership on all elements of the business. On Penna, we can't comment on the multiple, given where we're at in the process.

We can only provide certain comments. We're pleased with making this offer because it's a great business, has good financials and some good businesses which we can complement to the Adecco Group.

On North America, maybe [indiscernible] there's a lot of swings and roundabout, if you look at the North American results in Q4, they were up 1% on top of 6% in Q4 of last year. We see and we made mention of that during last quarter that the U.S.

growth, after five strong periods of recovery, is stable and we see a continuation of that stability into the fourth quarter with the January/February results. We have a strong margin.

Our results are in the middle of the peer group. We recognize there are businesses going up and down but, if we take it all together, we see that the business is stable, it's reflective of where the cycle is and that's what we see and that has put us in the middle of the peer group but with a very strong margin.

And are you able to just pick out the Canada drag on the North American growth and maybe just give the U.S. growth separately and if you can for January/February as well?

Thanks.

If you take Canada out, that's about 1 small percentage point on the whole North American business. So the Canada results, it's a good point, is dragging down the North American results because of what's happening in the oil and gas sector and if you correct for that that will be around one point.

Okay. And is Canada more or less of a drag January/February than Q4?

It's consistent from a drag. So that is a continued drag because of our exposure to that sector.

So it's not deteriorating.

Just a few, if I may. I know you mentioned that the combined January/February growth rate was 4% at the Group level.

I was wondering if you had seen any differences in the trends by month. Was January, in particular, stronger compared to February or vice versa?

Second question was on CapEx. At the third quarter results you gave the financial guidance where you said CapEx would be €90 million and you came out at the yearend at €97 million.

Can you just give a little bit of color on where the extra investments went? And are you worried about investments for 2016?

I know you said we should look for similar levels, but just curious to hear your thoughts on that. And lastly, on software, given you're trying to switch to the cloud-based and modular approach, I would have thought that that will mean that you can spread out the costs more evenly versus [indiscernible] on-premise software?

So do you think that you don't need to use all the amount that you've set aside for the software investments for 2016? Thank you.

Shall we start with Jan/Feb? We believe it's best that - we haven't seen any particular things, but it's good to look at January and February actually together, because we get the startup in January.

January alone is always in this business a little bit an interesting one to look at; it's that run-rate build-up between Jan and Feb. And so we did not see anything particular which says that in February we'll see a slowdown.

What we see across those months is that the growth of 4% was continuing. So that's that thing.

On the CapEx, [indiscernible] that we're not that precise. You have to give it some range.

CapEx is always a little hard to predict until the last penny. So we came out, indeed, at the number you said and that similar levels that will be plus or minus €10 million because CapEx budgets, they are relatively low in our business but if you do a project it's at that level.

So that's something to take into account.

Okay. And on the software side?

I can answer. It's not really a different way, let's say, to spread the cost and so on.

I think the two key advantages is that when you go modular and not buy a one-size-fits-all solution, you can be faster because then you can really do more parallel developments between countries, between business units and so on, especially if you have a partner at your side and so it's faster. And there was previously the question on development.

You meant resources to IT?

Yes.

The point is that we have our core competences in the human resources solutions and not in the IT development. And by taking off-the-shelf solutions, you are tapping into competences of specialists that we're not an IT development company.

So, at the end, it is faster and, for sure, rather than developing in house, it's cheaper.

A question on the operating margins in North America, can you share with us what the gap is between the EBITA margin you generate in your professional staffing business and in your general staffing business, please? And if you expect the professional staffing business to outgrow the general staffing business, going forward?

Well, my second question and last one as well is, is there any other capitalized software allocated to different countries that you might decide to write down later in 2016? Or was this the full amount?

I'll start with the last question. On the capital software, we did a comprehensive assessment and the write-down is reflective of that and there's nothing more to come.

We're not disclosing the split in the U.S. between our margin, but obviously professional staffing is margin accretive because it's one of the key reasons to do it and is a few other basis points above the gross margin of general staffing.

So it's a good business model and has continued to provide good performance, as evidenced in the strong margin we reported for the U.S. business.

Okay. And do you think that business will outgrow the general staffing business at some point, given where we're in the cycle?

Given the significant importance of our general staff, we're looking to grow both.

Thank you very much and I would say have a good day and I think for some of you we will have the pleasure to meet together in the next days or next week. Thank you for your presence.

Thank you.