Robert-Jan van de Kraats – CFO and Vice Chairman Jacques van den Broek – Managing Director

Margo Joris – KBC Securities Paul Sullivan – Barclays Matthew Lloyds – HSBC Teun Teeuwisse – ABN AMRO Toby Reeks – Bank of America David Tailleur – Rabobank Arun Rambocus – Kempen Marc Zwartsenburg – ING Tom Sykes – Deutsche Bank Konrad Zomer – Berenberg Bank Lavern Oliver – Natixis Hans Pluijgers – Cheuvreux

Thank you. Good morning ladies and gentlemen.

Welcome to the conference call discussing the Randstad’s first quarter 2013 results. Ben and I are here supported by quite some people including Jan-Pieter van Winsen and Jacques van den Broek.

And I'm going to take you through the presentation and then we'll move to Q&A afterwards, and I'm sure you don’t want me to me to elaborate on page two. So I am moving on to slide 5, which has the head of that reflects the climate that we have experienced in the first quarter of the year.

It was a good start of the year and strong efficiency improvements have supported the return of 2.4% EBITDA margin, €92 million for the first quarter. And organic growth through the first quarter improved slightly.

Organic growth per working day was down 3.7%, which compares with 5% just north of 5% for the fourth quarter and this improvement was not the result of easing comparables. If you look at last year, 2012, January was just below zero and March was just north of zero.

And we do see continued growth in Japan and decline in Europe eased. And please note that seasonally this is the smallest quarter of the year.

We've got 1.8 fewer working days versus last year. Last year, it was a leap year; it included an extra day in the month of February.

And if we look ahead Q2 will generate 0.4 more working days, Q3, 1.0 and Q4 will be almost flat which leaves out most of the lead day that happened in 2012. We would love to see more of these years by the way, but it only happens once every four years.

The gross margin expansion that we have noted in North America was offset by a lower gross margin in Europe which was mainly reflecting legislative changes in Germany, the Netherlands and France. The decline in our business was to quite some degree compensated by good cost management operating expenses were down €24 million sequentially which includes €9 million of foreign currency effects.

And if one looks back at on a constant currency basis to Q2 2012, the decline by now is €43 million for the quarter. The FTE reduction supporting this was 2360 measured on a year-on-year basis and the EBITA arrived at 2.4 reflecting a recovery ratio of 71%.

And I would not have been surprised to see the same EBITDA margin at the bottom line if the working days effect would not have impacted us. Slide 6, the trends.

These are the Randstad trends. The growth development slightly improving throughout the quarter.

What we see here is a gradual improvement in Europe, which is the pink line here. At the edge you can see it’s going up somewhat.

In North America, we have a strong focus on profitability which resulted in better gross profit level and better return. Please note that in North America, through the quarter, we moved from minus five at the beginning to minus three in the month of March.

We see continued growth in Japan and emerging markets and as mentioned, it improves through the quarter. Slide 7, North America, as I said, focus on the profitability and if you look at the bottom of the slide, you see the EBITDA margin improving.

So I would say this is strategy coming through. Revenue was down 3% Q4 was flat and in the month of March it was minus 3%.

Strong gross margin improvement both in staffing and professionals as a result of focus on client profitability and also perm contributed again positively.

Slide 8 is reflecting the usual integration process and synergies, the progress made. We again made steps, and to the right-hand bottom of the page you see annualized cost synergies.

Please note that these are euro amounts so this reflects the ambition of at least €50 million. Slide 9, France ensuring asset stability, that's not easy in France.

That's a rather lengthy process to adjust the organization. That doesn't make life easy in this country.

Revenue is down 12% still an improvement compared to Q4. We did see a stable trend through the quarter and in-house showing growth including transfers, whereas professionals was that minus 15% impacted also by perm.

Gross profit down less 9%. The gross margin was up 80 basis points and this includes the impact of the low wage subsidies, the finance act or the CICE subsidies in France.

And I have some information about this at the right bottom corner of this page. This is where you see the CICE low wage subsidies coming in and it is being settled in the corporate income tax.

So that means the cash is only transferred when offsetting it against CIT payments. And given the developments in France, given the reorganizations running in France and the cost related to that, this means and you can see at the bottom here, cash receipt after three years it takes a while before cash comes in.

So this has a substantial impact on working capital. It might well increase to a very substantial amount over time.

On the right hand of this picture you see training and innovation. It’s yet a little unclear, how much we are going to invest but it’s clear we will invest in training and innovation and we have also included that in our assessments, which we consider to be competitively sensitive.

So I will not disclose the details, but it's clearly included in the 80% improvement in the gross margin. There's two more things to mention here.

First of all, the gain as such is not taxable, because it’s offset against CIT payments. The expenses in training and innovation are tax deductibles.

So it’s a pretty complex story here, but it supports the return in our French business. The mix in our gross profit had an impact because in-house grew versus a decrease in professionals and as mentioned in perm.

Costs were down 6% year-on-year. This is the result of field steering.

It does not yet include the reorganization and the reorganization looks at the new organizational structure and we are anticipating a start in the month of June, as I said lengthy discussions always in a process like this. EBITDA margin at 1.7, also reflecting 1.5 fewer working days in France.

In the Netherlands, the gross margin pressure continued, but this time it was very much the result of higher social security charges. Price increases are being implemented but in a competitive environment and we do have various other initiatives in scope like we are retaining the cost of sickness of the flex worker and we believe that that will positively contribute to the bottom line.

Also we're looking and implementing delivery model improvements to serve clients when prices are not at the level we would like to see them. Revenues down 1% and this includes yacht at minus 13 where we still see an improved utilization rate.

But still a minus 13, a significant minus 13. Costs are down 8% versus the previous quarter.

So on a sequential basis also including lower marketing costs, but also the restructuring programs that we have announced are starting to materialize as the results of which next to field steering FTEs is down by 4%. EBITDA margin at 4.7.

Last year, we reported a divestment which included a book profit. So that supported the results, we’ve got two working days left and happy to see the recovery ratio in the Netherlands at 58%.

In Germany, we see also an easing decline. Revenues down 4%, this compares to 9% in the fourth quarter.

It does include a significant price effect as stated here. But also through the quarter we did see an improving trend towards the month of March.

We don’t believe there is a demand yet from equal pay. But it has an impact on the gross margin.

Professionals did slow, but we did see good performance in the IT business in this segment. Gross margin in Germany, there is some pressure here and it's quite a cocktail of elements.

The implementation of equal pay does have an impact here and that is reflecting the fact that we charge it on to clients, but we do not generate the – if it relates to sickness – sorry to holidays, we do not generate the gross, the typical gross margin on this and we do still have some discussions with clients on how to charge this. We also did experience a flu epidemy in the first quarter.

Higher sickness and we believe it impacted the gross margin by roughly 40 basis points. We’ve also changed the accounting methods for surcharges during the holidays, typically we were taking those in the quarter in which the holidays appeared and now we are cooling throughout the year and the three fewer working days in Germany clearly had an impact.

Strong cost control, FTEs down by 4% and we have adjusted the results for an additional restructuring charge of €1.1 million EBITDA right at 3.1%, the recovery ratio close to target at 49. The focus in Germany is on client profitability, and delivery models.

Belgium, a difficult market. Not easy at all.

Taking into account remark in the middle year wage inflation. This country has an automatic wage inflation system, which increases the cost base by at least 3% to 4% and has a serious negative impact, but also I would say makes the country less and less competitive.

It's not a system that can continue forever. Revenues at minus 9, almost the same as in Q4, but stable through the quarter focus that we have is on profitability client profitability supported by field steering cost management, and the EBITDA margin arrived at 3.1%.

The recovery ratio tells you some of the story, 39% need to do a little more here. The UK, the positive trend continues, internal discipline drives the results here.

Field steering clearly supporting the improved profitability in the UK. Revenue and minus 1.0 compared to minus 7 in Q4.

We do see improving trends also here throughout the quarter and good growth in professionals including the public sector education and we see further decline in in-house, but that is reflecting the focus, the internal focus, the discipline. We continue to see good growth in MSP and RPO, and perm fees are now at minus 9 compared to minus 16 in Q4.

Back-office centralization well on track and EBITDA now at 1.4 reflecting the improved business mix more professionals and two working days less in the UK. Iberia, finally a plus, it’s only in the month of March, revenue for the quarter in Spain was minus 1, that compares to minus 4 in Q4, but March showed a plus of 4%.

And this clearly is our own performance also in the market doing well. And Q4 still at minus 12, that was quite a difficult quarter at minus 1 now.

We feel somewhat better I can say, trends are positively impacted by Easter because of hospitality business and the improving trend is also driven by manufacturing. You might all have read that some of the automotive manufacturers have moved or are moving activities to Spain because of more attractive conditions and given the story on France that I just shared with you this is understandable I would say.

Professionals also showed continued growth. In Portugal, not an easy context there minus 14 in Q4, minus 8 in Q1 and March now by 1% plus good performance in our call center business which is a substantial part of our Portuguese business, and a decline, a continued decline in manufacturing but also in automotive here, costs down, good cost management, FTEs down by 12% resulting in an EBITDA margin of 2% with three fewer working days.

In a rather competitive environment everybody is searching for business at a very good recovery ratio as you can see. Looking at the revenue development per industry, per segment, these are Randstad data.

While I think the pluses and minuses speak for themselves, food in the US is better than in Q4. But quite some sectors in the in negative territories, some of that also because of choices that Randstad has consciously made.

In Germany, the minus at automotive is still a below minus but has improved versus Q4. Moving on to the financial results now.

The outlook on page 17, the income statement reflecting the numbers that I've just elaborated on, I’m just adding a comment here on amortization and impairment, it’s less than the previous year. This is sort of reflecting bookkeeping rules and it’s a little less because we have finalized some of the amortization and as a result of that the rhythm has changed now €41 million in the quarter.

Slide 18, summarizing the key financial points. Free cash flow at €42 million versus €58 million last year.

It’s a little lower profitability as stated at the beginning of my contribution and we have a reinforced focus on the collection of trade receivables. It’s always difficult at the end of a quarter, typically there is a weekend that has an impact.

Easter has more of an impact in the Friday before Easter and some of the banks are closed in some countries and that has an impact on the working capital and also the timing effect on the French subsidies as I explained will have an impact. Leverage ratio, at comfortable 1.5% within the range clearly DSO improved again one day year-on-year.

The story continues, our overdues are still close to 20%. So we believe there is still room to improve.

We issued the preference shares for €140 million against 5.8% yield and which is fully committed long-term capital. So cheap equity and it’s used to reduce the net debt position.

The effective fixed rate amounts to 31% again, very little impact from the French subsidies because we are conservative taking that given the tax position in the French business. Diluted EPS now down to $0.33 compared to $0.39 in the first quarter of last year.

Dividend cash, €84 million and we are going to issue as we have announced in a separate press release €4.5 million ordinary shares to cover the stock dividend which compares to a dilution of 2.6%. Our segments, I would like to point out the EBITDA margin improvements in the in-house business and in the professional business.

So, it’s clear that clients – selective clients that have been transferred to in-house is reflecting win-win both the clients are more satisfied. We freed up the capacity in the branch and we serve them with high efficiency as you can see here.

I’d like to mention in the staffing segment again improved profitability in the HRS segment which includes our placement MSP RPO. Gross margin bridge on slide 20, last year first quarter, again the first quarter is different from Q4 sequentially comparing gross margins does not make sense.

Q1 last year arrived at 18% we are now at 17.8% and as you can see in between an additional 0.2% impact in the first quarter of this year which is explained here in the boxes below. We have margin expansion, so a plus in North America.

We have the benefit of the subsidies in France, but we have fewer working days compared to last year and the changes in social securities and the system and sort of the legislated context in Netherlands and in Germany. HRS continues to grow and contributed to positive 20 basis points here and perm fees now arrived at 10.1% of gross profit compared to 9.9% last year.

Still a while ago, we were above 10% of gross profit. So back to that level now, but still way to go to the historical levels of 2007 where it was between 12% and 13%.

Operating expenses down on slide 21, comparing the sequential development at the upper part of the slide, Q4 last year, 6.16 and now it’s 5.92 and I would say next to foreign exchange and synergies and disposals, so difficult adjustments. Organic in Europe and organic in the rest of the world.

FTEs are down by 890 people sequentially from Q4 to Q1. If we compare year-on-year, 638 and I already mentioned if you go back to Q2, it was 635, on a constant currency basis.

If you take Q1 as the base, so we are well ahead of our targets of €70 million to €100 million within a year as from Q2 last year onwards. Impact of wage inflation plays a role here.

So that is something that is hard to compensate, but we are working on it. Cost reduction initiatives, the slide that we always provide you here at the bottom slide 22, you see a plus this time in the flexibility.

So out of the total of 13, it combines both an increased cost because of again the wage inflation and some adjustments including marketing here, which we anticipate to adjust going forward, but I'll get back to that. Moving on to the balance sheet elements here, slide 23, again DSO, a good development, one day down, not much to mention here.

We continue to see good performance on bad debt. So, leverage ratio, 1.5% I would say good balance sheet.

Looking at the next slide which is cash flow. It reflects the somewhat lower EBITDA to start with the typical trend in working capital in the first quarter.

Very little additions to CapEx, only €3 million, that's also because of the reduced infrastructure. Some impact of the French subsidies here in the free cash flow limited though.

And in the lower part you can see the purchase of ordinary shares which was related to the performance share plan and the issuance of preferred shares of €140 million arriving at a net debt increase of €165 million. That brings me to the outlook.

Again stable trends from minus five in January to minus three in March, some signs of improvement in some countries, but please note again that there is never a linear trend here. It’s always a bit erratic and forward visibility is very limited.

Comparison basis, rather stable last year and a positive working day effect this time of 0.4 days in Q2, which includes 1.68 more in Germany and there might be some impact of bridging days that are days in between public holidays and the weekends. We believe we are well positioned for 2013.

The strong efficiency improvements that have been carried through create a foundation of platform going forward and we’ll also continue to see some of the cost reductions coming in. We anticipate a limited organic cost increase in Q2 due to higher marketing costs that might be few tenths of a percent going forward and of course it will depend on the developments in the market and will also in the gross margin continue to see the impact of the legislative changes that has impacted Q1 which again will be compensated to the degree possible by price increases and good cost management.

The USG closing process continues to move as announced in the press release. So our key priorities are capturing profitable growth in North America, Asia and Latin America, diversification of the portfolio field steering, it won’t disappear from the plate.

Client profitability focus and this is supported by delivery models and focus on cost and I am going to move to the exit rates for the month of March and then we’ll move to Q&A. March 2013 for the Netherlands it was at minus one, France, minus eleven, Germany minus one, Belgium, minus eleven, that looks a little bad, but that was especially because of the developments in March 2012 , so I think underlying it’s kind of flat through the quarter.

The UK at zero, Iberia, plus three, and North America, minus three, rest of Europe, plus seven, rest of the world, plus eight and that brings the total to minus three for the month of March. We now move into Q&A.

Please go ahead.

Good morning gentlemen. My first question is on Germany.

The EBITDA margin declined by around 40 basis points and you mentioned 40 basis point negative impacts from the sickness rate in the first quarter. Could you also share the impacts from equal pay and fewer working days, please?

And then my second question is on the North American business, could you shed a little bit more light on the trends in the perm business please? Thank you.

Yes, good morning Margo Joris on Germany. So the impact of the sickness rate as mentioned was 40 basis points and this was mainly January, February.

So, we do think this will not be recurring in Q2. So that’s the good news.

Your second part of the question is a bit more complicated, because, on the one hand you see the impact of equal pay increasing, because after six weeks you see an increase for some people. We do see more and more collective labor beam is coming into play.

There is now roughly some 40% of people such. But we don’t know yet what clients will do, as Robert-Jan stated, we don’t see less demand as a result with this system.

So currently, you’ve seen exit rates in Germany, we are looking at a roughly stable volume, but an increase in price effect, post this price effect. So that’s roughly where we are in Germany currently.

And if you look at the perm development in North America then we see that professional is more or less flat and we see over 40% growth in staffing perm placements. So there we are doing very well.

And including RPO indeed and excluding RPO. So achieving more on that, but the RPO is a different view.

So it’s getting better there again, but professional slight, but staffing is doing very, very well.

And you are outperforming the market there?

I don’t know, we don’t have reliable data on perm placement in the market.

Okay.

What we do know is if you look at our total North American performance that top line we are in the markets we don’t care. Those margin line we are at least that market I am sure, because we are really improving there.

Okay. Thank you.

I have maybe third question, what kind of measures are you taking in Belgium to improve the recovery ratio there?

Yes, Margo, this is Jacques again. So we are disappointed with the bottom-line and of course, yeah, as always, it’s about a focus on cost.

What can we do in this trend which at first sight doesn’t on the short-term improve.

Operator, next question.

Yeah, good morning guys. A couple of questions, firstly, just on the cost.

Can you just give me a little bit more color on the development from here? Is the fourth quarter restructuring that you did, is that largely over reflected in the Q1 SG&A now?

And then you mentioned a slight step-up in Q2, we should then see a step-down in Q3, because of the French business kicking in, is that correct? Is that was the way we should be looking at it?

And in terms of the underlying cost inflation and any further investment, what are your thoughts on that? Can you still mitigate that or should we start to see a bit of cost creep as – as things in Europe improve?

I think the second…

Yeah, as I mentioned, the French restructuring will kick in as from Q3.

Yeah.

That’s one point. It’s – we hope that we will come to a conclusion in Q2 and we’ll see an increase in marketing expenses as I mentioned in Q2.

And I have to say that Q3 expenses will be a function of field steering. It depends on the trend that we’ll see and I can actually say, I hope it’s going to go up because that would reflect a positive business trend.

So we should view, unless things get worse, we should view Q1 definitely as the trough in cost?

Yes, it very much depends. If Q3 is going to show a negative – a more negative development, which we at this point in time do not see, but then we'll make sure we'll adjust the cost base.

I think that is exactly the story that has come through in Q3 and Q4. Randstad is adapting to whatever trend we see in the markets.

And we would – we are just going to make sure, to ensure, that our marketing investments will be appropriate. That is a long-term issue that we need to address.

Okay, I mean just following on to that, in France, the – your ability to retain the gross margin from the tax rebate, do you think, I mean how do you view that over time? Is there a risk that it will be competed away?

You never know, well it depends of course on markets that would be actually strange, because we’ve gotten explicit instruction from the French government stating clearly that the subsidies belong to us and being the employer we are spending the money that we should spend it on training et cetera. So we are optimistic about the fact that we can retain a fair share of that money.

Okay thanks, and then just point on page 32, the outlets. Some things just caught my eye, but is the step-up in Holland?

What was behind that?

Yes there were some – a number of in-house locations that were not actually counted for us. So that was a correction for the – in the past.

It's not a big increase as you would conclude from looking at the numbers, our apologies for that mistake.

There is no debit and credit here. So, sometimes you are not completely on the right line.

Well, we’ll get you that one. All right, thanks guys.

Next question.

Good morning guys. I just want a little help in understanding something.

If I look at your French website, it shows 3167 temp vacancies in April and 837 for March. Now, I never looked at the March vacancies will have been filled, but the same – you see a similar level of step-up in the CDD and in perm.

Are you seeing a lot more vacancies coming in or is that the normal rate at which I would see that number?

I'll answer because everybody is smiling I'm pointing at somebody else. We don't know how the website actually refers to the actual number of vacancies.

What we do know is if we look at Randstad.com, then you will see our global number of vacancies, which is an interesting indication. But, I obviously don't know how they came to the 800 or nor to the 2100.

Okay.

It seems extremely lower, given the fact that we employ some 80,000 people in France.

I accept that it's probably got multiple vacancies for each things as this 10 people in a factory and stuff like that. Just one quick follow-up question, CDD, are you still booking that as a fees like its perm?

Or are you starting, as I think the law enables you to do now to start, as anybody asked you to treat that like a temp placement for the one-year fixed or the 18 months, is there a change in the CDD market?

Jacque

Not yet feasible in our numbers. If we have CDD, we still would quote it as we’ve done.

Thank you very much.

So, although we are happy with the opening to have more CDD in our own base as we also had in the Netherlands for example. We’ve been lobbying for this a quite a while.

So, we are happy on the development as such.

Do you have sales people that are actually selling the concept of doing it to your clients that use CDD, because if I understand it correctly 70% of French jobs start at CDD.

Yeah, we have been, what we would call an integral selling model. So, all our consultants sell, all possibilities in terms of staffing and CDD on the same profile and then we let the client decide on what he wants.

Okay, thank you very much.

I have two questions. I think someone should put a mute, because we hear some rumors in the background and the second question asking and limit yourself to two questions please.

Operator, please go ahead.

Yes, good morning gentlemen. I'll stick to two questions.

First is on the cost reduction you mentioned and you mentioned an underlying cost reduction of €5.1 million, which is reduction from field steering and restructuring offset by wage inflation. Can you give a split for that what the reduction is from the field steering and restructuring and what's the rate inflation and bonus accruals would have been?

And then my second question is on the profitability that you've shown in the staffing in-house and professionals, we see in-house and professional is going up. Does that imply that the efficiency improvements that you've seen are not feasible in the staffing?

So, your first question on slide 22, the €13 million cost reduction, so that's net after FX effect is broken down into restructuring and synergies. Synergies out of that is limited because we have reinstated that at the slide on SFN.

So that's only a very limited amount. I think a bit more than €1 million, the change.

So €6.1 million includes the synergies, so that leaves €5 million roughly for restructuring and flexibility is the €7 million. That includes a reduction in marketing expenses, which we'll always see from Q4 to Q1.

So I think that answers your question. And the second part?

Yes, the effect, of course, of the reorganizations was mainly ahead of us. It means it reduces the charges on top of let’s say, the operational results.

And that's equal for all the countries of course, and especially it means it's equal for relatively for in-house professionals and staffing. The thing that of course, staffing suffers is that both in Holland and Germany, we show lower profitability.

Then that's the impact. So it's going to look better rest of the year.

All right. On your first answer, because I didn’t fully understand it, because in the press release for operating expenses, you mentioned that the marketing costs were €8 million below level of Q4 and that the remainder, €5.1 million was in the net result of restructuring and field steering.

So the, and the fact that we have lower marketing cost is compensated by the wage inflations that we referred to earlier.

Okay, but can you split the €5.1 million into the restructuring and field steering versus the wage inflation and higher bonus costs?

No, no, Teun, that would be too detailed.

Okay, thank you very much.

Thank you.

Hi, could I ask one on gross margin? I think in the past you said you think you get 50% of the gross margin from the changes in France.

Do you still stand by that? Or it sounds like you're bit more positive?

And on that French gross margin, I mean, if you look at the long-term, clearly gross margins have been coming over time. What do you say – it's just in the temp gross margin, what do you think your ability is to actually raise that going forward?

Obviously it's difficult to see over the short-term. But it does seem that getting back gross margin is much harder sort of giving it up.

Yeah, I know, when we took 0.5% in Q4 of the CICE and of course the margin to a large extent, the development, is due to mixed effects, because we see a bigger decline in professionals than we see in other businesses. And Jacques is waving that he wants to add another point.

Yeah, and maybe also please take into account that on the subsidy level, we also saw a decrease of more than 1% two years ago due to the large mass which we fully compensated. So it’s quite an uphill or downhill ride.

However you look at it. Again it needs to come from business mix.

We have invested a lot in units aiming at specialty businesses. That’s also the basis for our reorganization, larger branched in the cities to sell more – a broader portfolio, not just look on perm and specialties.

And we are quite confident that over time that that business mix will take our gross margin up, although France will always be a tough market from a gross margin point of view.

I have a correction. We had no CICE in Q4, but we forecasted that the result of Q4 that we would have an impact of about 0.5% on our gross margin It turned out to be a bit higher this quarter.

We had zero in Q4.

It’s still uncertain, it’s still in its infancy.

Okay, and then second one is on the cost base. I am just picking up what you said earlier and that's – I think you said that unless in Q3 was more negative i.e., the revenue growth, trajectory was more negative than Q2, you wouldn't be taking any more costs out.

But I think in the last quarter, you were sort of talking about further field steering, restructuring programs that still are yet to be executed. Is it the case as long as we are in negative territory you will continue to take our costs?

So are we actually seeing some of that costs coming some of that costs will start to come back and even if we are in negative territory? And then the other point is could you actually quantify the increase in the marketing expenses on a sequential basis expected in Q2 please?

c

Your first question, we are looking at this country-by-country and effectively within the country even at more detailed level. And we have shared with you that we've got field steering and from the top we put pressure on it.

In case of growth, we aim at return as an incremental conversion ratio of at least 50% and then a scenario of decline. So if that happens, we will be aiming at a 50% recovery ratio, which means a compensation of at least 50% of lost gross profit through cost reduction.

So that will also apply to the scenarios that will happen in Q3. So that will drive our decisions.

Okay, very clear and then quantifying me the costs for marketing is sequential increase?

Yeah, I am not going to give the exact number, but…

The rough number?

No, let me finish first and then you can ask again. From Q1 to Q2, there's no additional actually initiatives.

The increase will be actually more or less equal to last year. So it's a normal seasonal effect.

In Q3, we plan to spend a couple of pence of revenue extra. Well, a couple of pence of extra on revenue is easy to calculate.

Okay, thank you.

Yeah, good morning, gentlemen. A follow-up on the CICE impact in France.

If you look at the gross margin impact, how much that’s filtered through into EBITDA margin? Is that for the full extent or is that let’s say, half of it?

Maybe you can get some color on that? And then secondly in terms of improvements in March and also into April and I'm clearly looking at volume base, what kind of markets are improving at a volume level year-on-year compared to the Q1 trends?

Thanks.

Yeah, David I’ll take your question on the French subsidies first. I made the point in the presentation.

The gross margin is up 80 basis points and that includes the contribution of the CICE and that means, it is already taking into account provisions for future investments which is only an assessment at this point in time, because we still don’t have all the details that we need to come to a final conclusion and that comes through at the bottom-line.

So the full impact is feasible?

Yeah, but again, taking into account the provisions that we deem necessary, the accruals I should say that we deem necessary. And what was your second question, David?

On the volume trends, because for example Germany is improving that is more driven by price effects if understand correctly. So, let’s say, volume base is what kind of markets are improving the most into April?

That’s rest of Europe, and then for example, Sweden, have you – slow markets, that’s Spain as we said with growth in Q4. We see – actually, as you got the exit rates, inflation in general is not very high with the exception of Germany and Belgium – yeah Belgium too – but more or less actually, those trends and translate into volume, David.

Okay and maybe a quick follow-up on CICE again, for next year, it will be an impact of $0.06. So, could you share with us your thoughts on next year what the impact would be on the gross margin?

Yes, David, that’s exactly, your assumption is right, it will move from 4% to 6%. That will be again offset through corporate income taxes.

So the impact will increase in terms of working capital absorption and that’s going to be substantial number north of €100 million clearly. And the way we go into sort of see that coming through at the bottom-line will be very dependent on the same issues that I just shared with you.

We need further details which we don’t have today.

So, thanks a lot guys.

Well, of course we have an ambition here.

I can imagine, thanks.

Next please.

Yes, good morning gentlemen. A couple of questions on the Netherlands.

Can you talk about the difference between the private sector and the government's protocol, is there any sign of bottoming out in the government as well? And the other question was about going back to slide number 10, the comment made about pricing in a competitive environment, why would you be able to raise prices in a competitive environment?

What's behind that? Can you explain the rational?

And finally, can you update us on what higher social charges are all about? And what the impact was on the growth margin and what kind of impact we should expect further in the year?

Thank you.

Yeah, on your final question, that was 3%, and that also then again refers back to price increases. We had to increase prices with anything between 4% and even 7% I think.

So that was why – and we manage to a certain extent, but not completely. That's the effect on the pricing and that's the pricing initiative.

On government, as you can see, I think it's slide 15, you see that we are growing. But it's still the same picture as we've seen in the last couple of quarters whereas the growth is not in the professional segment.

It's in the staffing segment. So we see Randstad in the Netherlands for example, really growth.

We've also taken share obviously. But that sector is doing better, but not for professionals and I hope to say in brackets not yet..

So you are close to sort of 0% in the professional sector and public, is that what you are saying?

No, not yet.

The decline in professionals in the Netherlands move from double-digit decline to single-digit decline, that’s a gradual improvement.

Okay, thank you very much.

Yeah, good morning gentlemen. Two questions from my side.

First, I want to drill a bit into the gross margin. Could you share with us the impact on the Dutch gross margin from the social security premiums?

And you mentioned also the initiatives on sickness days. And following up on that on gross margin, what do you feel – what could be the trends going into the second quarter?

You have a little bit of tailwind from working days, but nevertheless, would you expect to see the gross margin trending up a bit? Or do you expect a more flattish trend into Q2?

That's the first. And the second one on trends, topline trends, going on to the second quarter, you mentioned in April seeing the gradual improvements continuing like seen in Q1.

But, you mentioned it's working day adjusted, but I can imagine that only with three weeks in, with an week including Easter, it is hard to guesstimate the working day impact, because people might have taken more holidays. Would you say that the trend is really improving or is it more like manpower shed and a stable trend?

I don't know what a stable trend is?

Then you say similar rates in terms of volumes, because if I hear you are saying rest of your Spain and smaller companies seeing some improvements, but the big countries not, I would suspect this more on a flat line?

Yeah, I think the improvement in Sweden is something like 62%. So that’s not small.

But it’s a small country. So the effect is small, that’s why I refer to small.

With the expansion, by the way, your first question, I just answer to volume, it’s a 3% effect on social security charges and the sickness – actually. Again, we of course obviously build the business case and what we have had for years is an organization within our Dutch OPCOs that actually make sure that we reduce limits and the sick leave to minimum and if people get sick to get them back to work as it be.

So we have eight years of reliable data, based on that we build the business case and if we would take the risk ourselves instead of being charged with the average, we could make money. And there is no reason to actually not see that happening.

Obviously, in the first quarter we see that it had a limited impact, because we are building up the provisions et cetera. But that’s going to have a positive effect.

I don’t want to quantify it yet, but I am sure we can share more insight in the course of the year.

It is really sizable.

It is sizable, yeah, yeah.

And the 3% social security charge, how do we calculate that – just like doing the margin?

But actually, that was of course 100% margin and then we compensated a bigger part of it by price increases and are still working on that, because that’s always a process that takes a bit more time. Not every client is happy to increase his charges in the midst of a complex, for example.

So you need sometime to compensate for that.

Well, what do you think the balance will be of the two?

On balance, because you also asked our expectation for the second quarter and margin, normally of course the margin goes up through the year, based on different things. One of them is the different initiatives we have, more efficient, better price management.

Again, more working days as I said, et cetera, et cetera. So all these effects normally lead to a higher gross margin in Q2, Q3, and Q4 and I don't see any reason why that will not happen this time.

So you don’t think that the equal pay either ramp up on debts, we will mitigate a bit in all the seasonal trends.

I think we said we have a season trends, we have a few tenths of a difference that’s too early to call that. But, again, I think we are doing a lot both on the pricing and on the efficiency internally to compensate for those effects.

And of course the gross margin in the US continues to expand. So that is also an opportunity.

Thank you very much.

Thank you. Tom Sykes from Deutsche Bank is on line with a question.

Yeah, good morning everybody. It's just a couple of questions on North America, please.

Firstly, do you have a view on how much more revenue you may shed in North America? And secondly, just if I space on the market data, if we look at it, the number of temp is sort of back to peak, the penetration is back to peak.

But one presumes the mix of that is different while we were in 2007 and that we are now getting some signs of sort of clerical improving and you allude to clerical improving. So, would you expect that to push the penetration rate higher?

And so what are you actually seeing in the clerical market, please?

Yes, I would expect the penetration rate to go up. And again, as rightly sure as you mentioned the effect the double; price times, quantity price going up because penetration rate is structurally increasing.

The amount of revenue we want to share that was obviously difficult to forecast, because what we do is we go to the client and tell him, listen, we love you, but we don't like you anymore. So we will stay good friends, but we leave, and a number of them actually accept price increases.

So it's difficult to actually call back that number exactly. I am also not too focused on that, because I look at our gross margin development and that's favorable and that's what we're looking at a lot more than on our top-line.

Okay, thank you very much.

Thank you.

Hi, good morning. Two questions.

First on the automotives business, both in Germany and France. You mentioned at the top of the full year results that volumes were down at a double-digit rate in January.

And if we look at the numbers from the car manufacturers, they have been very poor, particularly for March. So we're slightly surprised you mentioned earlier that the automotives business in Germany had actually slightly improved throughout the quarter.

Can you maybe share with us is that a company-specific thing or is that something you see different in the market? And my second question, I may have missed this earlier, but can you explain a little bit more what the working capital impact could be in France from this tax credit?

And then why it would have such an impact on working capital going forward?

Yes, the remark in automotives Germany was that the decline was less than it was in Q4. And as you can see on our slide 5, 15 I think it is, you also see that, for example, automotive in the Netherlands and that's mainly truck manufacturers, is actually double-digit improving.

But anyhow, for Germany anyhow it's a lesser decline than it was in Q4 going out. Maybe that – we didn't make it clear – express that clear enough and then…

No, I expect that to be decline anyway, but it has actually in terms of the output and the production of the car manufacturers the decline in March was actually a lot worse than the decline in January?

Yes, well it can be, maybe their work is less efficient, I don’t know, I don’t know the insights on – that details on the automotive. I am sorry.

Right, okay.

And I think the quarter as a whole, your question about the working capital impact of the French subsidies, as I mentioned, it will grow to a level over time, because next year it goes from 4% to 6% to an amount north of €100 million and I still think below €200 million, but somewhere in between. So, very substantial.

And the last three years before the money is collected, so before the cash flow arrives in the company, that's our assessment now and this again relates to the tax position of the company.

Okay.

So, effectively it means, you have to pay the tax before you can get the money. So if we come to the point that we're going to pay tax, if this will the one to offset it against.

Okay, thank you.

Thank you.

Good morning. Oliver Lavern, Natixis.

My first question relates to the US staffing. Will the focus on profitability continue in Q2?

And will it continue to affect the organic sales growth in Q2? Second question is on France and on CICE, it is already possible to quantify the full year positive impact of CICE on gross margin in France, please?

The first question, the answer is yes.

And the second question, the answer is no.

No, obviously we keep on focusing on profitability. That's clear.

And again, I don't care about top0line. I care about gross margin increases.

We're doing very, very well here. We have started some low margin contracts.

Our perm is growing over 40% in Q1 in staffing. The mix is better, there is more white collar that's actually doing well.

So, we're very pleased about that. On the CICE, we already mentioned that the result of the calculation is a result of quite a few variables and a few of them actually we cannot forecast, because its behavior of clients, competitors, government et cetera, et cetera and by the way also temps, because if that's training available there, they have to go and follow trainings.

So that's still too flexible mix we actually fail to forecast it exactly.

Okay, thank you.

Thank you. Final question, I guess.

Are we getting to the final question now?

Yeah.

Yes, good morning gentlemen. Two questions from my side.

First, looking at the gross margin, you indicated that at the EBIT level, the workers' less working day had an impact of about 30 basis points. At least others could read from your – that you're saying that it would be – that's equal to last year.

Is that correct? And also gross margin, the impact is about 30 basis points.

And secondly, looking at yacht, a clear decline in sales. You said the build rates are clearly under pressure.

But how long are you able to adjust your own capacity to keep going on with such a decline in hours worked and the build rate. How flexible are you in that side?

It is simple because, yeah, it’s profitable based on the reorganizations we have had. So we – and obviously we can still reduce costs.

But the main thing and the main effort today is to be more efficient in sales and recruitment. There's an ongoing increase in productivity.

So again, now I would like to be a reasonable profitability. We're actually not – more than happy there.

It's quite an improvement.

Yes, and the extra working days, if we would have had them, would have brought additional revenues, additional gross profit and that then comes through with a sort of controlled cost base at the bottom line and that was the base for my remark that I believe that it might have arrived at the same percentages last year. So it's the contribution to gross profit rather than to the margin.

And you will only look, for example, at Germany again. As we know, the impact of three working days is huge.

So that's sort of the affect, of course, but then you have to quantify in for the whole Group, but anyhow…

But in principle that means that if you let show the impact on the EBITDA level, it’s about 30 basis points and also it would be also be at close – or I just talking only about absolute numbers here.

Yes, correct, so gross profit rather than gross margin. That’s arrived so good.

So it’s more revenues with gross profits and good conversion to the bottom line that’s it.

All right.

One follow-up on yacht with respect to the cost, if the build rates are under pressure and how able are you to also reduce let’s say your wage you pay to your temps or your company people? It’s a still bit consistent of course and also if you are able to do that otherwise if it would come, let’s say your gross margin would come under pressure?

No, because actually, again we’ve taken the provisions to reduce the number of people we employ permanently. In general those were the people that were if you want not adversely but let’s say a rebate if you would position them in the current market.

So for those people, we could not get the right rates and/or we could not get the jobs. So we have actually reorganized that.

So we have done it on two sides and we reduced the number of people. We cannot put work or difficult one to replace and we’ve made the internal organization lot more efficient.

Resulting in again, set a very reasonable, especially given the €5 million in the first quarter. Very reasonable profitability for yacht with a good outlook for the rest of the year.

Okay, thank you.

All right. I think we – this is – we're going to complete the call now.

Thank you very much for joining us and we look forward to speaking to you again at the end of July when announcing the first half year results. Thanks again, bye.