Jacques van den Broek – Chairman and Chief Executive Officer Robert-Jan van de Kraats – Chief Financial Officer and Vice Chairman Linda Galipeau – President, Randstad Staffing Operations, USA

Nicholas de la Grense – Bank of America Merrill Lynch David Tailleur – Rabobank Toby Reeks – Morgan Stanley Marc Zwartsenburg – ING Paul Sullivan – Barclays Konrad Zomer – ABN AMRO Hans Pluijgers – Kepler Cheuvreux Tom Sykes – Deutsche Bank Yves Franco – KBC Securities Laurent Brunelle – Exane BNP Paribas

All right ladies and gentlemen good morning. Welcome to the call on the third quarter results for Randstad Holdings.

I am sitting here together with a team including Jacques, Arun from Investor Relations, but also Linda Galipeau from our American operations. We are going to discuss the third quarter results and since the crisis, this is the best quarter that we have seen – the best third quarter that we have seen.

Moving to Slide 5 right away and the header effectively says it all, its continued stable growth and it’s important to realize that if one compares the organic growth which came out at 4.2% in the third quarter compares to 4.5% in Q2. But if you look at the comparables of last year, the trend improved from minus 1% in Q2 last year, sorry, minus 4% in Q2 last year to minus 1% in Q3 last year.

So a delta of 3% and keeping that in mind you could say that effectively the organic growth has continued at the same level. And if you look at the month of September, it was slightly lower than the quarter.

We know it also happened in June that these lines are never linear. It’s sort of hovering around this level.

Gross profit is bit more stable. Throughout the quarter, it was around 6%.

Gross margin improved and the strategic focus on our perm business including perm in our staffing business is clearly paying off resulting in a growth rate of 15% now bringing it to around 10% of gross profit. Professionals also showed growth of 9% and I'll get back to the segmentation later on, but resulting in good profitability.

Operating expenses have increased by €6 million if you take constant currency, and by the way, the impact of foreign exchange at the bottom line is minus 1.6 million at the EBITDA line. We've seen headcount investments in selected countries or segments which are fully justified by growth and the incremental conversion ratio that is the sort of EBITDA that we have earned on the additional gross profit for which you know we have an ambition depending on the phase of growth where we are.

But it derived at a solid 66% for the Group and as such the EBITDA margin came out at 4.7% an improvement compared to 4.2% last year. On Slide 6, you can see context in which we have operated throughout the quarter.

The growth rates are clearly visible here. The developments are a bit different country-by-country, or region-by-region.

The North American market clearly catching up to a higher growth level, especially supported by our staffing business in the US. And then in Europe, we see sort of a growth rate that's hovering around the same level now for a while.

And if you look at the bullet points in the niche, you can see that the North America region and the Netherlands are showing accelerating growth in the third quarter, whereas we see stable growth in most European countries with the exception of France and Germany, which are the most challenging markets. They clearly are the most challenging markets, and I will get back to both.

And we see double-digit growth in emerging markets in Australia and we see growth at a stable level in the Japanese market, in our Japanese business. On Slide 7 and 8 we have our sort of priorities and the approach, the strategy that we are following.

I would just like to point out that the details will be discussed at the Capital Markets Day on the 20th of November. So we will get back to it by then, but very briefly for now we serve our clients typically in the SME segment through the traditional model.

It doesn't have to be, but this is sort of the standard, whereas the large accounts we try to serve is through specific delivery models. As you can see here, and the details, as I said, we will discuss further including our total talent architecture approach.

We are going to discuss that on the Capital Markets Day. On slide 8, the underlying sort of strategy, which makes us organize our work towards the growth to 5% to 6%.EBITDA in the middle, you've heard it many times now activity-based field steering that drives the commercial activities of our consultants in the various operating companies.

And to the right hand, you see our management framework, which make sure we do that in a very concise manner, very much focused on accountability also with tight pricing guidelines and especially also focused on outperformance. And then if we do it right, for example in operations like China and Spain, we put on the growth accelerator to accelerate the growth.

I'm now moving to Slide 9, starting with a more detailed analysis of the various countries or regions. To start with North America, record profitability and strong growth.

We are very proud of what we have achieved here. The incremental conversion ratio arrived at 60%, that’s pretty high taking into account that the US staffing business has been growing for quite a while now.

Effectively, it started in 2009, late 2009 and then typically you have to start adding substantial cost to support the growth, but we still achieve productivity improvements here. Gross profit is up by 8%, and the revenue trend is at 10% versus 6% in the second quarter.

We do see in the US staffing and in-house good performance in manufacturing and logistics which effectively continues compared to Q2, but now also admin is adding some power here and that creates the increase in our revenue growth. Also perm is strong here.

It is strong across the Group, but certainly in the American staffing business. Moving to US professionals, gross profit up here 3%, revenue flat, that’s also an improvement.

Gradually we see things improving here and the strongest growth we see in finance and accounting where gross profit is up 8% but also in Engineering. Sourceright, that’s record profitability and our MSP spend and the management has clearly increased by 43%.

Also Canada has improved somewhat from minus 4% to flat and slightly ahead of markets, all resulting in an EBITDA margin of 5.7%. In France, this is a difficult market.

We do see improving profitability. The recovery ratio is excellent, but I have to say that we consider this market to be very, very challenging, minus 1% in Q2, now it’s minus 4% in Q3.

If we look at the staffing and in-house segment, it’s minus 5%. But in in-house, we are growing by 12%.

We have a strong focus on client profitability. This is a challenge.

We are clearly supported in this market, if you look at the EBITDA margin, by additional low wage subsidies. The continuation of that in the longer run is doubtful, and as such we have a clear strategy on retaining those subsidies rather than sharing because it is highly likely that this will disappear.

Professionals are at plus 1% compared to 0% in the previous quarter, but also perm fees up here in the French markets. It's not an easy market as I said, so this is clearly the result of a micro strategy.

Gross profit clearly improved and by now the branch restructuring has been completed. The numbers of outlets is down by 112% and we are now at roughly 750 branches in the French market with a record profitability here as well, but again supported.

The Netherlands, we're very happy to report that we are closing the gap to the markets. The gap to the market is clearly the result of circumstances in the Dutch market.

On the one hand, too little focus on the SME segment, which has been addressed and it’s clearly paying off, and on the other hand pricing pressure, some unrealistic pricing in the Dutch market, both pricing itself but also payment terms and we have been very critical towards selecting our targets. Revenue at plus 4% now compared to the previous quarter at 0%.

Tempo Team growing above market now plus 7% and we see that continuing Randstad Netherlands at plus 3% with strong growth in the SME segments. But also professionals in this market shows significant growth 16%.

Also again here, perm up 25%. We have a slight cost increase in the Dutch market.

FTEs are up by 3% and that's a reflection of the investments in growth areas and we also spend little more on marketing and that’s a typical seasonal pattern in these opcos. EBITDA margin at 6.3%.

As you know, we are in the midst of a reorganization aiming at efficiency improvements, roughly 250 FTEs and as we always aim for, the payback period here is within one year. This is the result of integration especially of back offices of the various operating companies.

We already have shared service centers but we're taking it to the next level now and this is the result. In German y, another difficult market in Europe.

We see continued market challenges it’s clearly an effect of deregulation, Randstad is at markets. So this is a market issue.

Revenue at plus 2% but volumes are negative. The price effect is now 5% also here again, perm growing at 29%.

If you look into the details into the verticals, we see good growth in IT, but also in-house and our temple team business. We have a strong focus on SME and being very selective in the delivery models that fit our clients and we clearly see the impact of regulatory changes coming through.

As a result of those our cost price has increased and in many cases there is no margin on that increase of cost price and it also confuses the market slightly. We now see sickness pay, sometimes being higher that the salary that a flex worker can earn and this happens in the example that a flex worker moves from one assignment to another against a higher hourly rate, but then turns sick and then the sickness is paid on the basis of historical earnings which were at a higher level.

So it can be very profitable to be sick and that is of course a bad situation. Operating expenses were retained at a flat level and the EBITDA margins are at 5.4%.

Belgium, continued growth, very strong cost control. It’s the result of something similar we now doing in the Netherlands, which happened in Belgium at the end of last year.

Efficiency improvement here resulting in an incremental conversion ratio of 140%. Revenues was strong 6%, even better than Q2, but somewhat easing throughout the quarter, clear improvement in in-house, but also good growth in white collar.

Professional is up by 14% here. Gross profit improved by 10% and the EBITDA margin as a result of very strong operating leverage up to 4.9%/.

Slide 14, the UK. We have a focus on profitability as such not so much on revenue, revenue negative at minus 3%, but gross profit up by 8%.

And that’s a result of an improved mix. Construction is still performing well, like professionals, Finance and IT remain under pressure in this market.

These are more difficult segments. So as a result of our focus on client profitability, we have seen some clients exiting that we think is justified.

Perm fees are up by 12%, it’s roughly a third of our gross profit here. So it’s an important part of the business in the UK.

Operating expenses increased slightly by 3% due to investments in growth segments. In Iberia, we see stable growth; incremental conversion is amazing 203%, so we do a lot more with effectively almost the same.

Revenue growth at Spain at 9%. We see growth in Automotives and manufacturing as well as in professionals and perm.

We also see some loss of revenue with slightly below market here that is due to focus on profitability and this is mostly the result of our selective approach to the acquired portfolio of USG. Portugal, growth at 9%, also continuing strong in the manufacturing and automotive sector, but we have a pretty strong focus on profitability and that includes an EVA approach here also because of very long payment terms in the Portuguese markets.

Excellent EBITDA, 4.8%. While the selection of all the European countries, Italy continuing to do well, Switzerland, the same.

Poland, still high growth. FTEs investments continue, professionals is up 96% starting to greater good base here as well.

Overall, strong operating leverage resulting in a growth return. In Japan, growth at 6%, mainly in logistics and retail but also admin as well and also in our book we can see that going well and we have this year we have quite some investments in growth in various segments.

Australia, New Zealand, clearly improving. Also at the bottom-line, profit contribution, Asia continuing to do well, China, growth, very significant growth of 54%.

Now it really starts to count and results in additional profits. Latin America by 13% and there we have a focus on productivity, but also on repositioning.

We continue to invest significantly in those markets. Moving to the financial results and the outlook of all the P&L that’s just a reflection of everything that has been said so far at the EBITDA level, foreign currencies have an impact of 1.6 negative only and then we have some integration cost, some one-offs which relates to restructuring, €6 million.

This is mainly the Netherlands and we expect more in the fourth quarter as we have announced in our press release. Net finance cost, an increase and that is mainly due to foreign exchange as well.

If you look at our syndicated loan facility, we now pay I think like 0.6% interest. That you get if your reports are close to zero.

Q3 2014 the financial key points, our free cash flow, is slightly lower than last year in the quarter and that is completely the result of – on the one hand some growth, but mainly diesel, which showed a very clear improvement in Q3 last year, so there was a substantial benefit recorded in that quarter. So if you take these two elements out, that kind of same benefit did not occur in this quarter in Q3 2014, and if you take those out, it’s very comparable.

Leverage rates improved to 0.9 at the end of the quarter and interest expense was only €4 million. Tax rate, the effective tax rate amounted to 30% guidance for the full year remains 28, 31 and the diluted EPS is now at €0.77.

Return on invested capital, almost 14%. Looking at the segments, staffing improved, please note that perm improvement here 20%, clearly supporting the performance here.

In-house at a – I would say still remarkable 5.3%. This is our lowest gross margin business.

It includes growth in France, and it pays an EBITDA margin of 5.3% in the third quarter, an excellent performance of our business. Professionals is also catching up, that is good to see.

I already referred to China just before, but also Belgium, the Netherlands, Iberia Poland are contributing here. 5.5% EBITDA margin now.

We are not there, but it’s clearly improving. The gross margin analysis on Slide 22, not much to say here, 18.2% to 18.5% mainly an improvement as a result of permanent placement, but also margin expansion in the UK and Belgium and in the French markets.

As I said, perm fees now at almost 10% of GP. Operating expenses, this is a sequential analysis, whereas the previous one was Q3 last year against Q3 this year and we are now looking at Q2 this year compared to Q3 this year.

So sequential. And then again the foreign exchange as you can see some marketing spending little lower and then organic investment in EU and in North America reflecting our investments in growth areas and also somewhat higher commissions due to growth in North America.

I think, all in all relatively moderate increase here. Net debt down by €129 million year-on-year as you can see here.

I think the data here are all in line with what I mentioned before. Diesel more or less flat.

We continue to see a push from large clients to extend payment terms. They effectively knock on our door as if we are a bank and we are not so, that must be a mistake, some confusion here which we are trying to sort of put back on their plates, and that is a challenge, that remains a challenge, by the way clear European guidelines here that no one really seems to take very seriously.

So that is something that needs to be addressed by all of us. In the meantime, we continue to see improvement opportunities internally which we are addressing structurally.

Working capital as a percentage of revenue is at 3.5%, very moderate as well I would say. While the free cash flow which I mentioned before here €250 million against €310 million, which was explained.

If you look at the last four quarter’s comparisons to the right hand side of the page, you can see that the change in operating working capital is now 7 compared to 233 last year which is growth. Income taxes space, it’s a lot more in the last four quarters than in the previous, four quarters which is fully explained by the one-off payment to the tax authorities.

So all of this is relatively easy to compare. And then, finally, the outlook, Q4, we have included a Page 27, which gives you the September exit rates.

You can see, in France it improved compared to the quarter two minus two, the Netherlands, plus at 4%, Germany roughly in line and it’s 1% now. Belgium as well as already mentioned, easing to 3%.

Iberia, at 6% which is the result of some choices made. The UK focus on gross profit minus 6%.

The rest of Europe at 12%, North America, 5% and the rest of the world, at roughly the same level at 10%. If you look at the October developments, every week, we follow volumes and we can see that the volume of employees working and on placements is roughly flat compared to sort of the average of the quarter of the third quarter and typically, that translates into revenues that behave in the same way.

We anticipate a somewhat smaller foreign exchange impact and again the comparison base continues to strengthen at minus 1% last year in Q3 moving to plus 2% in Q4. So, a delta of 3% that has to be taken into account.

Gross profit was stable throughout the quarter at 6% and we continue also in Q4 to focus on revenue quality especially in markets like France. It’s a similar number of working days in Q4 as last year, and we again expect a moderate increase in the cost base sequentially again investments in headcount, but only in selected markets and the restructuring measures start to become effective in the Netherlands.

We expect to see the full savings of just more than €20 million in 2015. And we expect the foreign exchange impact on the cost base to be around €8 million.

We are giving this indication in order to make sure that everybody understands the developments. It’s an upward effect, €8 million extra already million extra.

And then, again, our Capital Markets Day where we hope to see on November the 20th in London. We now move to Q&A and I’d like to – I wanted to ask you to restrict yourself to two questions each.

Thank you. Operator go ahead.

Morning guys. Thanks for taking the questions.

First one on France and particularly on the wage subsidy CICE. You mentioned on the call that you see and this being highly likely to disappear.

I was just wondering if you just clarify if your kind of sentiment towards the subsidies has changed or whether that’s just the general comment about subsidies in France generally being a temporary phenomenon? And I was particularly wondering whether you – what you read from the recent French budget, which maybe sound like CICE was a bit stay at least for the next couple of years.

And then, the second question is on just the estimated impact of pricing in Germany in Q4. Obviously, volumes have gone negative now.

I was wondering if you could give an indication of what was the price metric that you think might be. Thank you

Thanks, good morning, Jacques here. Well, subsidies in France are not a temporary phenomenon and if you look at this market for 15 years and there is always been subsidies.

So CICE is just another addition. But Robert Jan tried to get across is we are trying to build a long-term business and competing with subsidies doesn’t really belong in our book.

That’s not to say that CICE is going to disappear on a short-term. As you know this is a system which will run into 2016 and it’s absolutely the case that the government has announced that there will be a similar or a different but with a similar effect package in place, because this government believes in stimulating the economy with measures like this.

So, no short-term disappearance of CICE. Impact of the wage effect in Germany is going to – is further into Q4.

We expect it to be around 4%. And volume development in Germany currently is stable in October.

Okay, thank you very much.

Yes good morning gentlemen. First of all a question on the dividend policy.

I remind you mentioned a 40% to 50% payout couple of years ago and then also stating that it would at the high end of the range, let's say close to 50% if your balance sheet would be strong and if top line trends would be supportive. So, should we use the 40% or the 50%, for, let's say the pending year as payouts?

And then also on the conversion ratio, which is at a Group level quite decent at 67%. But in some countries it's clearly below that level, if you would, for example, exclude the CICE impact in France.

Are there more improvement programs scheduled as you have, for example, already planned for Belgium and the Netherlands? Thanks.

Yes, David, you are little early for dividends.

I know.

Yes, yes, yes. And I think we try to give some guidance by setting out what drives this in our decision.

So indeed the balance sheet is getting more comfortable. As you know, we are always looking at if there are opportunities to expand also by acquisitions, but nothing eminent right now.

We’ll see how the rest of the year works out and then we’ll take all of that in account. But I think, our – sort of our decision of last year gave you some guidance.

It’s a bit too early. We haven’t even discussed it with the supervisory board.

So you have to do with sort of the behavioral analysis of what we have done in the past. And then the conversion ratio indeed there are some countries where it could improve and we are constantly looking at ways to improve that and we also indicated that we would like to go into a bit more detail on the Capital Markets Day here

Okay. That's a nice answer.

Thanks a lot.

Thank you.

Good morning guys. One on the cost base.

You're talking about a moderate increase in SG&A. I think a moderate increase is about €6 million on an underlying basis when you flagged it was going to be moderate in Q3.

And what – the question I've really got is, you usually have a larger quota for marketing expenses and you flagged that you would be doing a bit more marketing I think on the call in one or two. Should we assume that moderate increase includes the marketing expenses and that €6 million is about the right thing for Q4?

And then I've got one more.

Yes, that’s indeed last year and in the fourth quarter, we had an increase in our marketing expenses. This year we are not going to have the similar increase.

We are cautiously looking at opportunities to support our commercial activities. So, you should use last year as a base and then we expect very moderate growth on top of that.

Okay, fine. Thanks.

And then one on gross margin, which sort of got a – maybe two parts of it, sorry about that. The first one is in terms of ACA, what are you guys expecting – what sort of an impact you are expecting from next year?

And then the second one is, in France, some of your smaller peers are obviously refunding some of the CICE. Can you confirm this and what are you doing in that respect?

And should we be looking for some gross margin pressure in France going forward? Thank you.

All right, Toby, just as an addition to my previous reply, please note that the company is growing.

Yes.

And as a result of that, that has some impact at OpEx. We are now moving to Linda who is here as the ACA expert of the company and she is going to respond to your question.

Linda?

Excellent.

All right. Can you hear me?

I can.

Okay, so in terms of ACA, so, I’ll start with the top-line. There will be some, albeit quite small impact of ACA on the revenue line.

We expect less than 1% probably more in the neighborhood of 0.5% on the revenue line in the US market. So 0.5%, 2% on the revenue line not more than that.

And what does that relate to? Sorry.

Is that relating to people going more into temp working or is that more a technical impact of CICE coming in?

So, right now, I am responding in a demand to neutral way.

Okay, fine.

So, I am saying like-for-like revenue basis, just in terms of the cost increases and that being passed along to customers in a revenue neutral manner which is how we are going to address it.

Fine.

Then you will see that. Now the increased demand and the increased consolidation potentially in some of the largest suppliers like Randstad will have a yet to be seen effect.

We expect it to be neutral to positive. But I don’t see why it would go the other way, but I am talking on a like-for-like revenue basis.

We expect it to be GP neutral and we expect it to be EBITDA neutral and our GP percentage neutral. So, all costs are being passed along and there is nothing that we think so far indicate that we are going to have any sort of margin pressure associated with ACA.

Obviously, you've been having those conversations with your client base and they've said they're happy to pay the incrementals?

Yes, happy to pay, fully expected it and we have not had positioned anybody is happy to pay. Fully expected it and comfortable with the price points that are being quoted.

Because you also see that they are seeing in their own business. ACA is something that impacts all of the players.

So, I’d say of all of the conversations we’ve had over many years about this topic, this has been the smoothest.

Toby, we of course, we hope to see some impact in the markets, some complexity that is way too early to talk about that.

Fine, and then on the CICE.

Yes, you were a little naughty asking three questions,

I know, sorry.

So, we will allow to one. Can you repeat your CICE question please?

So, I think some of these mid-size players are refunding – or not refunding, are sort of prepared to give up some of the CICE. I am sure you are seeing that and that's sort of why you guys are underperforming in the market slightly.

But, what – are you guys just going to hold firm on that? You are not seeing any of the other larger players doing this, are you?

Yes, you are right. Your analysis is right.

We see the smaller players being more aggressive in this field. You see some of the smaller players with double-digit growth in France which is clearly the result of more aggressive pricing.

And the behavior gets better when the competitors get bigger. But I think there is some sensitivities also with some of the larger players clearly resulting in the gap with market as we have reported it now.

Yes, so and then to elaborate on that, we mentioned in Q2 that we shared roughly 2% of business in this way. It’s not like fully shared in clients.

But it’s just a broadened panel of suppliers and then, yes, of course, you lose a bit of share there. Funny enough, we don’t see – we don’t get this question with our in-house clients.

So, apparently when you have a value-added strategy for the clients, they don’t want us squeeze every dime out of you. So that’s good to hear.

So, also note, what we have shared is increasing in Q3. We are now looking at annualized, probably like 3%.

Again, we don’t care that much, we are the number four in – or number three in the market. So from a volume point of view does not really what we are looking for in France.

Currently, the upside is that we are growing in SME. We are growing in perm and so that’s all good.

And then, yes, if the market picks up again, due to economic development then again we’ll outperform the market as we did in 2010, 2011, 2012 based on the more than 100 points of sale we have in our in-house.

Okay. We live in hope, and see you at the Capital Markets Day.

Yes, good. Looking forward to that.

Yes, two questions from my side. First on the Netherlands, if I look to the margin development quarter-to-quarter from Q2 to Q3, it seems the development is less positive than last year, and also if I look to the leverage year-on-year over the quarter with 0% growth in EBIT, do you mentioning – I see you are mentioning more marketing spend and some investments in FTEs.

But it confused me a bit that at the same time you are running – you are continuing with a large restructuring here. I also thought that the growth should come from more focus on KPIs.

So can you perhaps update me what's going on there exactly? And what has improved in terms of KPIs on the unit steering that drives the growth?

Or what’s the key driver for the growth in closing the gap with the markets? That's my first question.

I’ll address your first point and Jacques will take care of the commercial activities. The – I understand your question.

Last year, the EBITDA margin was slightly higher in the Netherlands. You are right, indeed a bit more investment in marketing.

It becomes a bit of science, whereas we all know that at the end of the quarter you have to close the books and then you have to make estimates and last year, I think there was a bit more favorable development in some of the social security items than we have now. So, this is much more in that field than anything else.

Moreover, you’ve also seen our growth reported in perm and that is one of these examples where we have made some serious investments to accelerate growth and that is also coming through in the Q3 earnings levels. So it’s, I would say, it’s all marginal items that together sort of explained this difference.

Yes, and as you know, we also compare to peer’s profitability in our Dutch market. It’s not our problem on the contrary, we are happy with our profitability in the Dutch market.

And your question on, okay, so you grow and then you are shedding 250 people that’s a right question. But what are we doing here?

So we are doing the same thing here, we did in Belgium. So we are combining all the back offices of the two companies in Belgium and that went very smoothly.

As you can see, there is good growth in our Belgium business. So it didn’t hurt our frontline, we are not touching our frontline.

We also did this of course in Spain, I think in last year as a result of the acquisition of USC which absolutely the same way of going about as you combine two companies. And in both companies, Italy and Spain, you also see huge increase in our profitability as a result of a huge decrease in our cost base.

So in the Netherlands we have done the same thing, three companies and that results in 250 people less combining one management board, one HR department, one finance department, one marketing department and one facilities department. This 250 people, we don’t like that, because at the end of the day we fire people.

Having said that, yes, we are of course doing what we also do for our clients. So we are creating a mobility center.

Last time, we restructured an analogies two years ago, around 135 people, after nine months, 80% of these people have found a job or we have found a job for them. So that’s what we are going to do.

So bad news for the 250 people, but again optimistic on finding jobs for them.

And Marc, the cost base also includes our investments in – our efforts in the SME markets.

Yes, fair enough. But if I see no progress or EBITDA growth, and then no growth in EBITDA, you see the top-line finally accelerating a bit, and the beginning of the year the focus was really on improving KPIs and the discipline around that.

And I also expect a little bit of leverage in terms of profitable growth as soon as the growth kicks in a bit. And then I see that the number of FTEs, indeed there are some investments made at the same time.

A big cost-cutting program is running after that. That seems to be a little bit conflicting.

So how much of the cost base will be sticky? And yes, if the growth is coming and we need any more investments, then how should we think about EBITDA growth going forward?

That's a bit what confuses me.

It’s a fair analysis and it should indeed return in improvements going forward. But not yet in this quarter, so I think your assumption is right.

If you look at potential profitability of the Dutch market, it remains solid and there is clearly still an improvement potential here which we expect to see coming through. So, I fully understand your question, but it’s a matter of timing.

But it's not about pricing pressure. So that there is contracts coming in at lower price because I see – as you also see the five business your volume growth above revenue growth, also sends a bit of a message of pricing pressure continuing.

Is that what's going on?

Well, there is definitely pricing pressure of course. We also said in Q2 that we also shed business in the Netherlands roughly 2% top-line growth as a result of that.

But, on stickiness, of course, 250 people we are taking out will not come back if we grow. So because it is back office, we also rationalized the processes in there.

So if you were to grow mid-single-digit next year, and even the year after, these people will not come back. So it will result in a structurally lower cost base in the Netherlands.

So, and that will definitely help leverage.

And Marc, our gross margin is up in the Netherlands. So, that counter arguments your worry to some degree.

You are right, there is pricing issues, but we are selective and I think it’s working out relatively well. But need to see leverage coming through, absolutely.

Marc, sorry, I wouldn’t like it (Inaudible)

Hello, sorry,

I wouldn’t like you to be worried. So, no need.

Well, the gross margin statement from Robert Jan that helps a lot.

Okay.

And then I had a second question on Germany. Can you give us a little bit of a feel for the trends in October?

Yes, they are roughly flat. So, what we’ve seen is, a gradual volume decline from a little bit positive in Q1 to 2%, 3% negative, just before the summer.

We are currently around 5% and it’s staying that way.

5% yes.

So, apart from economic circumstances, a little bit of bit more color on the result of legal changes. So we have the two year rule which we lobbied against, because it’s funny and so we are bearing a problem that doesn’t exist if people have been working as a temp with a client for two years, there was a gentlemen’s agreement with unions and employers that something needs to happen with people, they either need to be replaced or hired.

We calculated this roughly puts a 2% negative effect on our volume. The other one is what Robert Jan mentioned the sickness percentage.

So normally we have 2.8 sickness percentage in the summer. It’s now a little over 4%.

So that again is a negative volume development in a way of 3%. So, there is a bit of economic, feels different than France by the way and there is a little bit of legal.

So that’s where we are in Germany.

So we're down 5% in volumes, flat on revenues and there is a 2% expected impact negative on volumes from the 18-month rule, is that a good summary?

Yes.

Yes. Yes, that’s a good summary.

Okay, thanks.

Good morning everybody. Just a question on the US and the sustainability of the US staffing outperformance through the fourth quarter into next year and just following on from the gross margin staffing decline in the US.

Is that a function of mix or pricing? And then just generally for the Group as a whole, should we still expect as usual sort of fourth quarter sequential uptick in GM in Q4?

Yes, so on the US, there has been a shift in mix over the last year. Certainly, the blue collar growth has been in the higher teens and the white collar growth has been in the low single-digits.

We are seeing continued stable growth trends from Q3 to Q4 in blue collars. So stable at a high place.

And the white collar growth trends are accelerating, as it’s typical, lot of the white collar growth trends were negatively impacted by the mortgage sector and as we kind of shed those comparables and as that sector rebounds a little bit we expect to see an acceleration in the white collar growth trends. So, I think there is some things improving.

That can offset anything that may flatten out, but right now, we’ve not seen any flattening in the blue collar trends and we will be very interesting to see as we go into next year the ACA effect, because that is yet to be determined. And on the flip side, what we are seeing is an underlying improvement in our professionals business which again will serve as an offset when you look at the overall US roll up.

So, we do not forecast any declines at this point in the US overall growth rates.

And your question on the Group as a whole, we expect a typical seasonal pattern to continue. Circumstances are relatively normal and actually, if you look at the underlying trends, the composition of growth it’s pretty much driven by blue collar across the world, there is a lot of normal patterns happening and also the gross margin in Q4, hopefully is going to follow that route.

So, that typically it comes out just a few points higher than the previous quarter. It is dependent of course on how Christmas is sort of developing.

If in Germany, factories are closing a little earlier or too early that has an impact. But normally, and that’s the way it feels now, it should be according to this typical seasonal pattern so it might be a little higher for Q4.

Great, thank you very much.

Hi, good morning. My first question is on the Netherlands.

Can you share with us what proportion of your revenues you generate in professional staffing? And whether or not the margin developments in your Dutch professionals business reflects the overall margin development of your professionals business for the Group, i.e., now that it's above the average for the Group again.

Does that also relate to your Dutch business? And my second question is on the SME segment in Holland, can you share with us whether you are seeing specific evidence that that part of the market has actually picked up in recent months?

And can you explain to us why your professionals business was up 16%, while you also reported a 1% decline in revenues?

Yes, so, we are growing quite nicely in SMEs on double-digit actually. So that’s a direct result of the pickup and cause a bit in this segment, so that’s helpful and also has of course an upward effect on our gross margin, difficult to calculate it by the way.

We grow 16% in professionals which is mainly the Randstad and Tempo Team part which is the mid to lower end of professionals and we invested a lot there. So we – in the Netherlands, we are building an IT vertical similar to what we have in the US.

And that’s a part of the investments we made in the Dutch market which is also partly a result of headcount going up. We believe that we can grow there, but we are there in the investment phase.

So it translate less into profit development. If you talk about Yacht has segments grew a lot in the engineering segment, less so now, talking companies like Philips and ASML, so you get the picture probably.

Growing fast again in the government angle. But all in all, it’s a rather flat development.

We are not happy there, it’s also a reason why we are going to combine the professionals business, building new verticals and having a clearer and more commercially aggressive in a good sense approach to the professionals market at large in the Netherlands.

If you look at the share of the total portfolio, it’s too little. And that means, it’s below 20%, just below that and the gross margin is behaving in line with the Group as a whole.

This relates to the Netherlands, right?

Correct.

Okay.

Yes, Kon, it’s correct.

And – and just one small question on your exceptional costs, you had €6 million in Q3, the press release about the restructuring mentions €R22 million. Can we just conclude that the remaining €16 million will be taken in Q4?

Most probably, yes.

Okay. Thank you.

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

First of all, looking at your activity levels after your Q2 numbers, you indicated a clear indication of clear improvement in the activity levels. Could you give some update on that, what's happening there?

And especially what's happening with the fill rates? You indicated that a few months ago that it was up 30% that those activity levels, but how do you see it filtering through to your filler rates and to your number of jobs, so you're really getting in?

And secondly, more in general on the competitive environment, you were a little bit talked on France. But could you give us maybe some other indication on your other main countries, how you see the competitive environment developing?

Or do you expect anything changing in the near future there?

Okay, yes, small. On the field steering commercial activities, we see a similar increase, so we are again, around 30% dipped a bit into the summer because there we have the combination of, of course relatively high volumes and our clients and ourselves being on holiday to a certain extent but, certainly into September, hitting the road again, so again 30% increase.

I remember us having the discussion on conversion rates and conversion rates is very much – in the US, you know, they have been doing this for a longer time and they see good conversion rates and there is also a direct link between what you put in the market and the results you get. Also in the Netherlands very well, in SME.

In Germany however, this has been a company that has grown with large clients. They are now doing 40% to 50% more activities in the SME space.

But then you get white collar demand, you need to also create a candidate funnel. That’s something we are teaching our people and therefore, we have a bit of a time lag in actually executing.

So it is different country-by-country. Overall 30% increase, conversion rate differ a bit, not so much because of the market.

We do see a bit of tightening in the US. So there you need to work harder to fill your jobs.

Overall, we will see the results coming in.

Yes and your question about the competitive fields across the globe. I think we already addressed the behavior.

In the French markets, in the Dutch markets we mentioned that it can be competitive and if you look at the Belgium market, clearly also, I think the American market Linda is smart, right now, isn’t it, pricing.

Yes, what you are seeing in the American market is the tightening of the labor market and I think that tends to be advantageous for pricing. So we are seeing tightening supply.

Especially, across the blue collar and the Professional segments, yes.

Yes, and so in the Europe, we see it continuing, I think everybody is sort of behaving relatively professional fairly. If you look at the Japanese markets, same tightening of the labor market finding candidates is the challenge.

So, I would say that is sort of the overall picture. We’ve mentioned how you need to be very, very selective in which clients to retain and which not.

Go ahead.

Going back on activity levels, you said it's still up 30%. If you look at your – how do you see the link – directly with your sales?

Of course, you see also that your number of vacancies picking up quite significantly with how do you see it filtering through to your sales? And where do you see there's still clear room to improve on those activity levels filtering through to your sales?

There is always room for improvement there. It’s the biggest room in the world as you know.

There is a direct link in perm. And perm is a very tight process and if you do that well, then you see a direct link in placements.

So there we see really good conversion. In other markets it’s different.

It, again, as Robert Jan always says, our job is an art, not a science. So, we don’t have immediate, also sometime if you’ve done a historic conversions, if you go much more into white collar and SME in Germany, we’ve done – that’s to an extent we’ve never done that before.

So we don’t have historic conversion. Then you can take it from another country.

But, every country is different than even regions within countries. So, I can’t give you a direct link up.

It is hard work, teaching our people to improve conversions. Marketing needs to chip in here to get better candidates.

IT needs to chip in here to get better web access and job boards. So you know it’s a collaborative enterprise.

But it always starts with increased activities and we are happy there.

And in the end, that should help us to outperform the competition.

As we do in the US, for example.

Okay. Thank you.

Thank you. Good morning everybody.

I just had a couple of extra questions on the US please. And just on your industrial and perm revenues, I appreciate you've obviously got some acquisitions and a sizable acquisition in, but either on a sort of pro forma basis or sort of gut-feel basis, where are your industrial revenues and your perm revenues versus their previous peak please?

And what level of staff increase are you putting in directly related to perm activity in the US please?

Yes, so, our perm revenues every quarter are at their peak. So the perm revenues we are seeing are in our staffing business still growing over 30% this quarter and our professionals perm revenue is improving.

So, I think we currently are at peak levels, but because of the investments that we are making, we are watching productivity levels very closely. Those are at, I would say optimal levels, but not – we are not under capacity, meaning we are heading – we are adding headcount in a very scientific and timely way and that headcount in perm can translate very quickly into increased revenue levels.

On our professional side, what we are seeing is a recovery. So our professionals business was understaffed.

Our professionals business has a slightly longer time to productivity. So, what we are seeing especially in our finance and accounting business is our repair efforts finally coming through and that’s helping our perm levels.

We are still slightly under market in professionals, perm. So I think there is some good upside there.

In terms of investing in headcount, I think this is something we got right this year that we had wrong in previous years. And it’s particularly challenging this year and I don’t mean challenging hard, it’s challenging in a good way.

But because of the increase in blue collar, the blue collar market we’ve had to make quite a few investments. And the good news in blue collar is those investments return very, very quickly.

This is a market with a short time to productivity. We have a very tight model.

So people we bring in are profitable for us quickly. On the professionals side of the time to productivity is a little bit longer.

So we are seeing some of the people that we invested in, in the first quarter, come to productivity now and we still think we have some productivity upside in the professionals business and we are continuing to invest in the IT business in particular where our productivity levels are at peak levels and we have lots of opportunity for additional growth in the market.

Okay, thank you. And just on the – sorry, the industrial temping revenues I guess is what I was kind of leading to.

So I don't know whether I've just misunderstood your last comment. But your industrial temping revenues compared to, say the peak in 2006, 2007 and just kind of your gut-feel relative to – obviously you've acquired some blue collar staffing revenues in there.

Where do you think you are relative to that previous peak please?

We are definitely over the previous peak, I believe, you probably want to get back to the absolute number. We have to layer back in the SSN acquisition but we are definitely high versus the previous peak.

But also the market is over previous peak also. But again, Tom, our industrial revenue year-on-year in staffing is up 18% for the third quarter, I mean, that’s pretty dramatic.

And, it is a market that where we are seeing lots of different factors at play here. We are seeing demand.

We are seeing, our strong investments were up quite a bit compared to the market and that’s for internal reasons that are very favorable and continue to be strong. But we are definitely passed the peaks as if the market.

It’s probably realized since 2006, 2007, we have added Vedior and then we have added SFN.

Right.

And finally the third component is that, the company became successful.

Right.

So, that’s quite a different base at the time.

And then final, final is within the blue collar we also shed some on profitable and/or high liability clients. So, we’ve not just growth a lot of volume, we’ve also growth a lot in quality in blue collar.

Okay, final, final. Thank you very much.

Okay, operator the final question.

Hey, good morning. Two questions from my side regarding the perm fees.

At what percentage of your total revenue and gross profit is it now? And how high were historical highs on that?

What's the target on this percentage? And then secondly, performance in France has been quite erratic now, minus 2% Q1, minus 1% Q2, minus 4%.

This quarter should be expect a deterioration of situation in Q4? Or does the high exit rate at minus 2% in September signal a bit improvement?

So what are you seeing in October so far? What is the guidance for France for Q4?

Thanks.

Yes, on France, no, unfortunately, you shouldn’t read an improvement in France in the exit rate of September. It looks a bit better indeed.

But we don’t see any improvement. And honestly speaking, we also see a bit of, yes, collared growth in shed – in our shedding the business.

So, from a volume point of view, we are not expecting too much, no decrease either, but no increase if you look at current numbers on a weekly basis, France is pretty stable at around the exit level of September, slightly lower. And – but that’s what we are seeing.

And the share of gross profit reflecting perm fees, in the old days, it was a 12%, going back to the times, Tom, just addressed, then it declined to a level of between 7% and 8% of gross profits and it’s now approaching 10%. Again, so clearly, improving.

And how fast has this grown up again and, like, the last quarter it was 7% still or…?

Two, three quarters.

Yes, so how fast, so, it’s certainly in staffing, if you are looking at a 20% increase, that, in a large part, that’s sort of new business. We didn’t have that historically.

So the larger part of our GP in perm was in our professionals businesses in the UK and in the US in better times. So, it’s partly also stuff we got from the market, which is new and we are very hopeful that if the market picks up further, also in professionals, then we will start growing faster in perm and professionals.

So, it’s actually, a certainly improving in staffing part. In US, we are already quite strong, but in Europe, this is like two three quarters.

And this is really, in implementing the activity-based field steering. Perm has been a very deliberate strategy within that.

And that’s one part of the strategy which is delivering quite quick actually.

I would just inform that, that Laurent still is waiting to raise a question. So we will take that as our last question.

Okay. Thanks

Thank you. Operator Laurent, your line is now open.

Yes thank you, and good morning. So I will be probably the last one to ask questions.

Quickly, first on the restructuring in the Netherlands. So when do you expect the finalization and what's about the professional segment please?

And second on margins, given some investments expected in Q4 is it fair to assume that the incremental conversion rate should ease from the 66% achieved in Q3? Thank you.

The restructuring in the Netherlands, I have already made that point. We expect the full impact to come through in 2015.

So, yes, from the beginning. The professionals restructuring is planned for later, details are still known to be addressed as soon as possible.

And you asked for the incremental, the anticipated incremental conversion ratio in the fourth quarter, this is really details in the spreadsheets and I have to say that, if growth continues, it follows the normal pattern. It gradually, gradually goes down, but it should remain high.

But it’s too precise to share that with you right now.

Okay, great. Thank you very much.

I think, we’ve given you the most of the ingredients to assess it. Thank you so much.

Well, this completes our Q3 discussion on the results and we thank you for participating. We hope to see you on November 20th in London.

Thank you so much. Have a good day.

Bye.