Arun Rambocus - IR Jacques van den Broek - CEO Robert-Jan van de Kraats - CFO Chris Heutink - CEO, Randstad Group Netherlands Linda Galipeau - CEO, Americas Region Rodrigo Martin - CEO, Randstad Spain

David Tailleur - Rabo Bank Hans Pluijgers - Kepler Cheuvreux Konrad Zomer - ABN AMRO Yves Franco - KBC Securities Toby Reeks - Morgan Stanley Chris Gallagher - JPMorgan Nicholas de la Grense - Bank of America Merrill Lynch Tom Sykes - Deutsche Bank Laurent Brunelle - Exane BNP Paribas Andy Grobler - Credit Suisse Angus Staines - UBS

Okay, good morning, everybody. Welcome to the Randstad Headquarters.

A special welcome to the analysts, journalists, our Board members and all the other Randstad employees and also a special welcome to the people listening to our audio webcast. Today is the presentation of our Q4 and full year results.

We have a very predictable pattern. Jacques will walk us through -- our CEO, Jacques van den Broek, will walk us through the highlights both strategically and the key highlights and then Robert-Jan will take over on the financials and we finish off with the Q&A.

And of course, the fact that all our other Board members are present means they are welcome to support any questions you might have on the other opcos. Thank you very much.

A final remark before Jacques starts. Our annual report is also published today, so for more details on our results please refer to our website for more insight.

Thank you very much, Jacques the floor is yours.

Hello, good morning, everyone, also from my part here in the room and everybody on line, both from the financial community but also our colleagues across the world. Fourth quarter and full year and the title says it all, solid performance in Q4 and a good start of 2015.

So let me take you through a few highlights here. If we talk about our performance -- by the way, before I move on I just wanted to mention that our annual report is online and, as the Dutch people will know, we're not going to get a prize this year again for the best annual report because we're not nominated because we won two years ago.

But still, a lot of hard work by a lot of people here and we're very happy again with how it turned out. So please go online and check it.

Continued profitable growth; we've seen quite a stable year, so after Q1 where we had a little over 2% growth, we have a pretty stable 4% growth throughout the year against a more challenging comparison base. So in that sense there is strengthening and you see it also into January as we mention.

Very happy with our result in permanent placements, we've seen an increasing growth here, so growth through the year 14% with 21% in Q4. And this is very broad based, so this is also in Europe, also in countries like France and in Germany and the Netherlands.

So we provide 25,000 fixed jobs per quarter and you can imagine that a growth rate of 21% that our impact on that part of the market is definitely increasing. Pretty stable operating expenses and that, of course, translates into a great incremental conversion rate for Q4, but also for the year, 77% for the full year and 96% for Q4.

So a bit of a broad look at the markets, so the rest of the world doing very well. As you know, these are investment areas for us so, in a way, ahead of people making full productivity and making money, we invest in more people.

You should think markets like India, China, Singapore, Hong Kong, where we're creating a top-three position for the remainder of -- or for the midterm. So the BRIC countries going to be 6% of the total world market, they're expected in 2020 to be 9%, so it's an investment area, but we're a top three player in India today, we're a Top 3 player in China today and we want to really invest and stay ahead of that market development.

North America has been a very stable business for us throughout the year. As you know, economic numbers in the U.S.

are great and stable and going forward, so absolutely good. Europe a mixed picture, Iberia, Italy, Switzerland, Poland doing very well, the Netherlands improving throughout the year and France still had a tough Q4, but a far better start of the year and Germany remains sluggish, I'll get into that one definitely later.

I mentioned emerging markets, Australia is not so much an emerging market, it's a mature market but we grow more than 20% there, so very happy with that performance on the top line. We need a bit more perm, Australia is an Anglo-Saxon market, so permanent placement is very important there, that still needs a bit more growth.

And then Japan, an acquisition from -- what is it now, four years ago, four, three? Very happy with our performance there, welcome.

This is our strategic roadmap, we're going to come back on the roadmap, we presented this one to you at the Capital Markets Day which is very much what we're building in the company, where we're improving in the company. So this is the slide I showed you in November.

And a few highlights, of course starting at the bottom, today, a good improvement from 3.5% to 4.1% EBITA margin, good growth in revenue and a corresponding growth in EBITA. Our activity levels as mentioned, pretty consistent growth throughout the year, activity level meaning phone calls to clients, visits at clients, candidate send-out, so candidates proposed to clients for fixed jobs.

A 30% increase and we definitely see that into improving performance in many countries. Productivity up, perm as I mentioned and certainly SME in the Netherlands and France picking up there.

France a tough market, but still growth in SME which is a strategic target for us in that market which is a low margin market and we want to improve our business mix so as a percentage, less gross -- big clients and more SME. And in the Netherlands, very happy there, our SME part of the business at Randstad grew 15% which is ahead of the Dutch market, again a result of very consistent commercial activities in that part of the market and then of course if the economy improves somewhat you benefit from that development.

As mentioned, 60% to 70% cost savings in the back office to be realized in the next two years. You've seen us taking provisions to lay off people, certainly in the Netherlands and in some other countries.

In the Netherlands that is now behind us, so the 250 people in head office back office functions have left the company but will be in a setting where we're trying to find new jobs for them. In 2012, where people left us in the Netherlands, 80%, 80% of people found a new job in nine months, so definitely that's a target for us now, for these 250 people to help them to find a new job, but we're optimistic on that happening.

Sourceright, Sourceright is our business that takes care of the demand of large clients, organizing on their behalf, staffing suppliers so that they have one point of entry that's called MSP and then taking part of their recruitment function which we call RPO recruitment process outsourcing. In Europe, we've found that, although we're geographically organized, the Sourceright business is better organized on a European level; clients are increasingly international.

We want to run as many of the recruitments within that business through our sourcing center in Budapest which has a low cost and a high quality of the searches in there. So we think that's a good step towards organizational change, to be better equipped for the developments in the market.

Vertical approach, we've seen in our own business in the U.S., but certainly also with successful competitors that in the professionals business they organize themselves in verticals, meaning that they can provide any profile from the low-end profile to high-end profile in IT, in engineering and finance to one client. It makes you more attractive to a supplier.

We're organized like that in the U.S. We're organizing ourselves in the Netherlands as we speak, so the three companies and professionals are being brought together in Q1 into one company.

TTA, total talent architecture, our approach where we go to clients and we can improve your company, we can improve the way you treat people, you hire people, we can look at the productivity of your people -- and that feed into a growth in the MSP, RPO, but certainly also in the in-house business. It's taking shape.

We've created an international project team that's going to train our own people. As I mentioned in London, we're talking about roughly 1000 clients worldwide where really staff, flexible staff, is a big item and we're going to train around 150 people in our own organization to really be able to present our business in a strategically relevant way to our clients.

There is going to be more on that one probably going forward, but this is where we're today. On the technological developments, as mentioned in London, our ambition is to be the most agile integrator of technology in our business, so any promising development in technology, in HR technology, we're going to bring into our processes to stay ahead of the game in this development.

Four investments in our innovation fund and of course very happy on the M&A part that we're getting an increasingly solid balance sheet and Robert-Jan will talk a little bit more on that one. So North America as I mentioned, increasing performance.

Our staffing and in-house business grows roughly two times market, so the market grows 4%, we grow 8%. That is definitely something we would like to have in all countries, that's not yet the case.

We're very proud of our performance over there. But also, as you see, a gross profit growth of 8%, revenue growth of 10%.

U.S. professionals is the other way around, at 5%.

This is more a gross profit business, so perm is very important. U.S.

is picking up, our financial business is doing very well, improved throughout the year. Our engineering business is also doing very well.

Our biggest business, our IT staffing business could still grow faster, had a good improvement in Q4, ended the year well but they're getting there, also consistent improvement throughout the year. Sourceright, as I mentioned spend under management that means the revenue that we take care of on behalf of our clients has grown with 61%, so our impact and our presence with these clients has increased massively.

Canada, a somewhat sluggish market compared to the U.S. We're in-line with market, but it's modest growth, as you can see and then the result, a huge improvement.

France, as I mentioned, difficult market minus 8%, but the good thing in France is we started the year well. Quite surprisingly the return from minus 8% in Q4 getting closer to the zero mark in January.

This might be -- it's always difficult to see where this is coming from. This might be coming from the fact that politicians, so the government in France has announced that there is going to be consistent support in terms of subsidies for the private sector and this might mean that there's a little bit more, call it trust and people are investing a bit more.

Temporary business is always ahead of the game, so still a tough Q4. As you know, we concentrate on profitable clients, so we do say no to clients who want to work with us at what we think is a too low margin.

So despite the negative revenue growth you can look at the EBITA development which is quite good and that's the result of our strategy in that field. The Netherlands, ABFS paying off, activity-based field steering, so the way we go to clients, more commercial contacts, is paying off.

I mentioned this sooner or I mentioned this earlier, Chris organizes his people, every consultant one day a week in a call center calling clients, calling clients and that is paying off. Overall professionals up 13%, so our professionals business that we're now combining is definitely off to a good start also.

Permanent placement growing everywhere, but certainly in the Netherlands, this is from a small base, granted but 53% up that's quite impressive. A slight up on costs, so the 250 people of course are not in our financial numbers yet, that will be in 2015 and a good and stable EBITA margin, a rather high margin as a result of our business mix over there and also the fact that we contain our costs and certainly our margin and we grew in perm.

Germany, effectively the most difficult one at the moment, the economy in Germany is okay, it's not great, but a lot has changed; therefore, you know us well and that a lot has changed in the temporary business. Temps went to equal pay, so the price of our product has risen and that has led to less demand.

But also and that's funny, the 13-week average calculation rules you see in gross margin, it effectively pays in Germany to be ill, because then you might get more money than when you work and it also pays to be on holiday, very technical but at least this hurts our top line with 3% to 4% and it also hurts our gross margin. This is an anomaly in the system that's created in Germany, we like the fact that temps get paid better, we think that's long-term good for the emancipation of the product in Germany, but this 13-week calculation rule needs to go out, we think, because it sends the wrong message.

Our Workers' Council, the Workers' Council is actually against this system. We take out costs logically, of course, when the business is flattish which it is.

EBITA margin decreased somewhat but throughout the year a pretty solid picture still in Germany. Belgium, yes a good development in the EBITA margin, of course.

Strong operating leverage as a result of the costs we took out a year ago. Minus 1% in revenue impacted by strikes, there were three national strike days in Belgium and that hurts us, so some of our clients were closed.

Certainly in our in-house business, as you can see, the growth went down from plus 13% to 5%, but that has picked up now and Belgium starts the year very well between 7% and 8% growth, so good. UK, I call it another step.

We're definitely not there in the UK, but again we doubled our profits, second year in a row driven by a few businesses in the construction, property and engineering business. I don't know if you have visited London lately, but it looks like Dubai with bad weather.

There are a lot of cranes, there is building everywhere and we supply a lot of these people also in infrastructure, so new rail and that sort of stuff. Finance and IT is not too great yet, parts of finance is other part isn't, but our education business is doing very well and our perm fees are up 16%, UK's perm business.

Iberia, so Portugal Spain. It really looks like the Spanish economy has turned the corner.

So you see double-digit growth. It could be higher but we took out some business we didn't like too much that came with the U.S.G acquisition because of risks or because of low margin.

But again, a great start of Spain in the year, plus 23%, so very happy. Also for our colleagues in Spain, who had a very tough time in the last few years, the market halved as you might know.

So happy there, but also Portugal doing fairly well and you see the EBITA margin very good development. A quick run through the rest of Europe, Italy, Italy is an interesting one because the economy is not doing that great, but the country is becoming more flexible.

So the penetration of flexible labor, on every working Italian 0.7 was a temp, now it's above 1. So you actually see that the economy is not growing in Italy, but our sector is.

So that's, of course, a development we like. Switzerland doing well, Poland doing well and a very good EBITA performance there.

Rest of the world, Japan I mentioned, good growth, 8% in Q4. Australia doing well, Asia, a lot of investments in China, Singapore, Hong Kong, Latin America also up, but we're still not making a lot of money here.

For 2015 we're going to create a somewhat better balance between growth and profitability, quite a few of these markets are getting to a critical mass and we now have more than 500 people in China and we know we can make increasing profits there. So 2015 for this part of the world, it's still growth but it's also making money.

That's the operational update and, before I go on, for us this is definitely the moment. Leo Lindelauf worked 36 years at the company; he started when he was 14.

We're a company with values, so Randstad company values to know, to trust and to serve, striving for perfection and the simultaneous promotion of interest. You can talk a lot about that, but it's actually your leadership that creates these values has strength in these values and, Leo, you have always been the embodiment of the values in the company.

You literally grew with the company. You emigrated from Limburg in the Netherlands to Amsterdam, so you took quite some risk.

Personally I'm very happy with the role you played in my first year as a CEO. We had a slightly new team, we had a young team and your coaching role has been tremendous there.

So it's goodbye to the Executive Board, you still stay on for another year doing some tasks that we feel are very important for the company. So on this stage, thank you very much for everything you did for the company.

And with all that I give over to Robert-Jan.

Thank you. Well, both of my colleagues have said something about the annual report, so I have to say something about it as well.

Actually I hope you're going to enjoy the fact that we have moved towards integrated reporting, a step further again. We don't get a lot of feedback on it, so that's why I promote this now.

Second point is that, in the context of quite a few failures in the world, failures in companies, we have added to our risk management paragraph how we come to the conclusion that we're in control, not just that we're in control, but how we get there, so it's up to your evaluation. And the final point is that we also have included the new style audit opinion again, like we did last year but a bit more extensive.

So, we need some feedback here to make sure that we know if this lands well. That is my contribution to the annual report.

Looking at the income statement for the fourth quarter here, everything has more or less been addressed, let me just address a few points, specifically from a finance angle here and we have integration costs and one-offs €34 million. This is mostly the Netherlands it was announced extensively, the second largest part is Germany but it's only relating to reorganizations here.

Last year, actually €37 million was Belgium mostly and integration costs relating to U.S.G. It looks as if we have rhythm of announcing reorganizations in the fourth quarter of the year; this is not the case, this is just a coincidence.

If you look at the currency impact here for the final quarter, it was roughly €15 million at the gross profit line and then €13 million at OpEx which leaves €2 million positive at the bottom line. If you look at it for the full year, it's the other way around, because it's very much at the end of the year the dollar started to appreciate against the euro, but for the full year negative impact of €4 million at the bottom line.

So that's a different picture here. Final point here, net finance costs.

We have roughly €4 million of interest expenses relating to our financing at Randstad which is the result of our policy on floating interest rates, the remainder relates mostly to currency effects on our short-term positions here, book-keeping. Looking at the segment performance; staffing, in-house, professionals.

If you look at the EBITA percentages, improvements across the board; what sticks out here is the EBITA margin on the in-house, 5.8% is pretty good. Cost allocation is always a bit of an art rather than a science, so that might overstate it a little bit and staffing might be a little higher, but I think it continues to indicate that we have a very successful business here.

Let me also point out, in in-house here the second bullet, good growth continues in the Netherlands, Belgium, Iberia, North America and emerging markets, mainly in the industrial and logistics segment. And this is typically if you're well positioned here and Jacques referred to it when looking at France; if you look at January France minus 1%, if you're well positioned through in-house, in industrial segment, then typically you really benefit if activity levels are picking up.

So this is really a strong pillar in the first phase of growth if this continues and that I will get back to at the end. The gross margin connection between last year Q4 and -- last year being 2013, sorry -- and Q4 2014, actually the middle explains most of it, Jacques mentioned it already, our micro-strategy on permanent placement is working quite effectively and is clearly contributing to the gross margin.

Operating expenses, this is not year-on-year, this is sequential, so Q3 to Q4 the trend here. Mostly foreign exchange here and, if you look at the marketing expense, that's an addition that is specifically related to campaigns and it is also the seasonal pattern.

FTE growth, wherever we do see growth so we follow that. We typically are in phase one of growth.

Phase one of growth means we try to do more with the same people, paying extra bonuses and commissions, but then you get quickly to a level that you have to start adding some people, but only field, relatively limited across, the productivity should improve. Incremental conversion is typically high over a period of four quarters, it typically ends up in the range of 70%, 80% if it is well distributed across the world.

And the U.S. has been growing for a longer period of time, so there you see different numbers.

Then you move to the second phase of growth, where you start to really add people on a larger scale and then the incremental conversion, so incremental conversion indicating what is retained of additional gross profit in EBITA and the rest is spent on OpEx. And then it starts to move towards the 50% area and only in the third phase of growth which lasts long, you really start to add branches on large scale, you might start to add people in the back office, but that is really quite a phase ahead of us, we're not approaching that by any means.

We're adding branches as we speak, but most of that is in the in-house business and this is where we set-up on site of the client. Net debt, the balance sheet, it looks quite nice if we start at the bottom here, 15.8% return on the invested capital gradually improved throughout the year to this level.

So, effectively, this is like the economic return. If you look at where we put the money it's mostly in goodwill and intangible assets, €2.6 billion.

Operating working capital is €0.5 billion, so that's the balance between the receivables from clients and the payables, for example, to the social security authorities, to tax authorities and that is 2.8% of revenues. So if we grow our business we typically, on average it depends and in different shades per market, but we typically need 3% rounded of our revenues on working capital which explains that growth from a financial standpoint is almost unlimited.

There are no real limits to growth. We need to make sure we get the right receivables and we need to make sure they pay on time.

We're doing a pretty good job there, but then this tells you that this is not an obstacle at all to any growth ambitions we have. The net debt level, €422 million, that got quite a push at the end of the year because, if you look at DSO, it's been rather stable but towards the end of the year our efforts to reduce it further were successful.

We've looked at the January numbers to make sure it was not just December and also that month looks good. So it really indicates that we're rather successful here.

If you look at the 2014 full year chart for bad debt, so what hit the P&L, it was roughly €12 million which is 7 basis points of revenue. So across the board, our receivables management has been doing quite well.

The free cash flow of Randstad, up significantly to 61%. We got a little help here because 2013 the fourth quarter here included an item of €131 million which was a long-lasting and a longstanding payable to the Dutch government, where we had a special arrangement.

And this was dealt with last year, so not in this year, but we have our contribution from EBITDA, the change in working capital, so a positive here. Then we have our taxes paid, this is the provision, so we have provided in the P&L which is the spending in the New Year, that's why it's a positive here.

If you look at our net additions, this is our CapEx, €23 million in the quarter, €63 million for the full year, roughly equal to depreciation in the company. Net finance cost, I just elaborated on that one.

So a pretty solid story here and if you then dive into it a little bit, this is reflecting the net debt levels of Randstad on this axis, going from north of €2 billion to a decline and then acquiring here both SFN and Fuji staff and now reducing to a level of around €400 million. The blue line is the leverage ratio and is shown here, so we've had a few peaks north of the two that we consider to be our maximum and that was due to the volatility of our earnings.

So we're very careful here in addressing this properly and that translated also into our M&A policy going forward. We clearly are looking for bolt-on acquisitions.

We continue to do that in the countries where we operate. We're happy with the geographical footprint.

We're not looking to add countries, but we're looking to become bigger in the countries where we operate or in the segments specifically where we operate. But we have a pretty strong economic return policy here and that means it's not that easy, because the value of Randstad has increased and the value of many targets has increased.

So, effectively, that translates to us not expecting that we're going to announce to you a deal anywhere very soon from this moment, but we continue to look at relevant opportunities across the globe whenever they are available we will be involved. So again back to this slide, strong DSO performance really paying off here.

Productivity is another key element here in our financial performance. This is gross profit earned by each and every FTE in the company, including the Board and everybody in the back office.

So this is what we earn on gross profit and gross profit is the difference between revenues and the wages and benefits paid to flex workers. This is quite a high point here, after that we did go through the crisis, we never really yet returned to the level pre-crisis and, as you can see, we still have the rise at the level in the past.

So in the meantime, we had some inflation, not a lot, so that should also be compensated for. So how do you get it up here at the very end?

Well, there are a few components, activity-based field steering which means you get more GP out of the people in our company that is what it should lead to. The second point is delivery systems.

We're looking at making sure we deliver the clients in the right way, the most efficient way; large clients preferably through in-house and not the branch network, central delivery. And the final point is what we announced last year, adjustments to the head office and the back office on the back of our benchmarking exercise which we're currently addressing globally.

So that should help us to improve this number. And then very proud, of course, the dividend, we wanted to share this with you, a bit of flashback and of course we had some difficult times during the crisis to protect the balance sheet, but across the board you can see here the dividend improved towards the last 10 years and now €1.29 it's a straightforward translation of the policy.

The policy is between 40% and 50% of adjusted net profit and we choose the point in the range based on the balance sheet, good, high end of the range, that's the simple translation here. The default is cash, the choice between cash and shares, last year more than 60% of the shareholders took stock, including the founder of Randstad.

The outlook for the period going forward, our organic growth in December -- sorry, in Q4 was 3.4%. It was up 6.5% in January.

We already made the point in the press release; bridging days are always making the calculation a little bit more complicated. I'm not going to take away the positive news here.

I'm just trying to make sure that the real underlying trend is visible. So if you look at the last week of the year, the last week of December in 2013 there were two December days, working days and in '14, there were three working days, that adds one day in the calculation if you calculate the growth per working day.

But that day is in between Christmas and New Year, not many people working. So this is where the formula is correct, but the outcome you need to think about a little longer.

In January, it's the other way around and that's why our assessment is that the 6.5% might be a little high, but it's certainly north of 5%. So we do see the February volumes, we don't plan at Randstad because we need to adjust how we spend all our time and money in making sure we adjust everywhere in the world to whatever happens at a certain point and that means we expand whenever necessary, whenever the opportunity is there.

We don't have a huge pipeline, but we follow the volumes every week at Board level and if we look at the volumes in the month of February, they are in-line with what we see in the month of January. At the very end of the month we know the number in revenues, but we follow the people, the number of people working and we follow the volume of our permanent placement business every week.

Please note that the first quarter is always the weakest quarter of the year. Many of you know, but the strongest quarter is Q3, then you have Q4, then Q2, then Q1.

It's always a soft start, it seems that many companies are closing down business around Christmas and then it picks up again. Same number of working days, we expect a moderate decrease in the underlying cost base sequentially, really moderate.

But note please that, as per January 1, we have some salary increases across the globe. We clearly have growth in some parts of the company that we continue to invest in, being in countries or in segments.

The restructuring effects are coming through in the first quarter, so it starts to come in, in the course of January so we'll see that moving on and we do expect the FX sequentially to have an impact here on the OpEx, as we state here, €23 million assuming the level of the previous period. So a substantial impact here at the OpEx level.

Then we have our Annual General Meeting on April 2. These are the exit rates of the month of January, Jacques referred to quite a few of them already, but I think across the board quite nicely the Netherlands clearly sticking out, Germany was elaborated on by Jacques and, if you look at the Iberian situation -- we even have the Iberian team sitting here, or the Spanish team sitting here -- quite nice performance in the month of January adding up to the 6.5%.

And finally, this should be a bucket in which we have the balls that will help us to perform better and, just repeating it, the cost management, our ambition to save €30 million to €35 million in 2015 and 2016 in head office, back office, our activity-based field steering helping us to improve productivity, our assumptions that you gave us in your consensus estimates having been applied here. And then if we grow and if we continue to work on our strategy in permanent placement and professionals and SME, we'll see the business mix improving, also contributing to a better bottom line.

And this is just stating again, repeating what we shared with you at the Capital Markets Day, our 5% to 6% ambition is within reach -- just making sure I use the right words -- within reach for 2016. Thank you, we're now moving to Q&A.

Okay, let's start in the room first. Please will you stick to two questions?

David, go ahead.

David Tailleur, Rabo Bank. First of all, on the excess capacity, could you highlight the markets where you see the most excess capacity and maybe also broadly quantify that in percentages?

And secondly, to the Netherlands, I have in mind that during the Capital Markets Day last year you specified the margin of 6% to 7%. If you look at the current growth in the Netherlands, it looks much better than the pace in Q3 when you mentioned this, or Q4.

Is it right to assume also, looking at the cost savings you announced, that let's say it looks a bit on the conservative side to your previous margin guidance, also looking at the 6.1% achieved for 2014? Is it right to assume also, looking at the cost savings you announced, that let's say it looks a bit on the conservative side to your previous margin guidance, also looking at the 6.1% you achieved for 2014?

Thanks.

David, your first question, on excess capacity, we think we have excess capacity in the operating companies where we have just started to grow. The U.S.

clearly is in a different position; Japan is in a different position, but China and so forth. But clearly in Europe we have excess capacity and our estimates would be that it is in between 10% and 20%.

And of course you need to be a little lucky here because if you have excess capacity in Northern Germany, you grow well in Southern Germany, that's very difficult to net out because that's quite a distance. Your second point was on the Netherlands, the profitability.

The savings that we announced in the Netherlands and I think Chris was also quite clear about it, are also intended to make sure that we retain our competitive position and that we're able to continue our profitability around the level where it's now and in the meantime to, again, get back to market share and eventually gain that. That's the policy here.

Quick follow up, then, so basically you are saying that the gross margin underlying is coming down, rather than level? Probably you will not be willing to quantify that, but it's not by 10 basis points now; it's more [inaudible]?

The Netherlands -- it's a bit like what you see on a Group level. So there's definitely pressure with large clients.

We landed quite a few nice big clients in the Netherlands. That helps us grow.

But there's absolutely pressure, but then we have the growth in the SME, we have the growth in the perm business and that's offsetting. Yes, pretty stable as a result of all of that -- gross margin.

Hans?

Yes, looking at France, for this year there's an additional relief expected from the so-called family tax, a lower contribution to that. How do you see that impacting the competitive environment?

Currently your already your profitability is at 5%, so how do you see it going forward already at historically high levels? Secondly, on the cost and the incremental conversion rates what was quite high in Q4, clearly a pickup compared to Q3, you already indicated you expect it to come down but first of all there were drivers that were so high in Q4, because I can't calculate it from the numbers.

And secondly, how do you see that going forward? Do you still see the same trend, or maybe you are a little bit more positive on that number?

Well, let's do France first. We've been pretty consistent in maintaining our price levels, therefore we were below market.

There is another relief coming in, that's one. But more importantly is the fact that the French government has stated that reliefs are going to be long term.

So we think that will lead to more demand, so that's good. For 2015 we're going to be a bit more open to give some of the subsidies away, if we get business for it because we've seen some mid-sized players gaining quite some revenue on this one.

So we're happy with the fact because that's easiest to manage for your people to say, it's a no, always and now it's a no, but.

On the incremental conversion ratio, please note that we have a seasonal pattern in our gross profits, but not the same seasonal pattern in our cost base. So for that reason it makes sense to look at the ICR for a period a little longer than just a quarter; it helps you if you look at it for a couple of quarters in a row.

Actually Q1 last year was also high, so I would refer back to the model that I explained; high incremental conversion in the first phase of growth, 70%, 80%; then going back to 50% in a period which is typically starting from the second year of growth and only over time gradually converting to the level of EBITA. So for 2015 you should consider this to move from the high levels what we have been towards the 50%, but hopefully still staying north of it.

It very much depends on the speed of growth.

And there is also one specific thing on Q4 last year, if you might remember. We put in a marketing boost -- it's around €15 million.

We do still spend on marketing, but less than last year. So that's also a reason why you have a somewhat higher incremental conversion than you would normally see in the development that Robert-Jan just painted.

Yes and if you take that one out, ICR for the last quarter of this year -- of 2014 would still be north of 70, in-line with what I just explained.

Konrad Zomer, ABN AMRO. Two questions, the first on the U.S.

Can you update us on the potential impact that the integration of maybe to professional business following SFN could have on top-line growth? Second question, on the Netherlands, you told us at the Capital Markets Day in November that your SME revenues at Randstad NL were up more than 20% in the last few months of last year and that Tempo-Team was still a little bit below that.

Can you update us on the last few months and whether or not the margin difference between SME Randstad NL and SME Tempo-Team is very big or not?

Okay, well on the U.S. we have an expert in the room.

To clarify your question, because the integration of SFN is sort of behind us, so I'm not sure what you mean.

I'm talking about the integration of the professionals business. I know that the general staffing business of SFN that that integration is fully behind you, but I seem to remember that there's still some final integration that needs to be done on that other part of the business.

Yes, I wouldn't call it integration -- the business is fully integrated. We're in the process of upgrading the financial systems, so the back-office systems, various professionals companies and also our Sourceright company, so that's a separate activity.

That is going forward. We're doing it within our regular operating budget, so it's probably a 2-year process.

But it's nothing impactful or transformational. We hope, over time, also that that will play a role in bringing down our head-office cost, so every time we bring in one of the companies, we're seeing decreases.

But I think that's already been communicated, the cost savings we anticipate around that.

Yes. And on the Netherlands it's a pretty similar development we see at Tempo-Team Netherlands.

So Tempo-Team had somewhat easier comparisons in 2014 so, therefore, their growth was a bit higher. But there are also, in the same way as Randstad it, is investing a lot of time and effort in the SME and also at Tempo-Team that's paying off.

And the margin differentials in that segment are not great, so it's similar, so we're happy with both.

Yes, two questions, first on Germany. Jacques, you mentioned still a difficult market, but if I take out the pricing impact is it then fair to say that the trend move from, say, minus 5% in Q4 to around minus 2% in January, is that -- because the pricing component, I think, kicked in last year also in the first quarter.

Can you perhaps give a bit more feel on what's going on in Germany because it seems to me underlying that there is some improvement?

Underlying it's still pretty stable from a volume point of view, where we're at minus 5%, minus 6% in volume which is already what we saw. But the price -- the level is decreasing between volume and price.

Maybe to elaborate a bit on Germany, what we do see is that as a result of the price increases the clients with strategic flexibility are not toning down, so they still need these people. It's an integrate part of how they run their business which are predominantly the large clients.

The SME clients in Germany, where it's a bit more of an ad-hoc relationship, there we do see less demand. We think over time they will get used to the changes but yes an SME might -- whatever -- they might have asked for a temp a year ago and now if they ask for a temp it's very, very much more expensive, also because there was a minimum wage increase in Germany.

So we do see some fallout there. I hope that it picks up, but we don't see the signs yet.

So it's pretty stable in Germany and unfortunately no pickup yet in January compared to December, in volume. Yes.

And then my second question, on the Netherlands. Robert-Jan, did you say that profit -- that you expect profitability in 2015 to remain at the current level, say the 6.2% you reported on 2014, while the target is towards 7%?

You've got cost savings coming in; you've got productivity increases. So I'm a bit puzzled on what your statement actually means.

So we're going to involve the expert here now, please. He is already preparing his notes.

I think Robert-Jan makes the right comment in the question what was before, because we also want to invest and we want to be -- stay with the market. So we will see I think, the range of 6% to 7%, as declared also in London, so no changes there.

[Technical Difficulty] don't invest all the cost savings away and that there will be some operational leverage--

Yes, I think that -- that's also fair. So we can talk about the percentage.

The real ambition is to get a revenue volume out of this which is -- on which we get the percentage.

Yves?

Yves Franco, KBC Securities. Maybe on the Netherlands, on your professionals performance there, I seem to see a very large difference between your Randstad and Tempo-Team professionals versus your [inaudible].

Where will we see this going as from 2015, when the reorganization will be completed and what's explaining this big difference? And then the second question, still some -- an underlying stable margin in Europe -- stable gross margin, but negatively affected by the mix.

Is that a geographical mix, both, or do we see some business lines there that are less profitable? Thanks.

Okay, I'll take the last one and, Chris, you do the professional business in the Netherlands. Yes, we do see blue collar picking up, yes, so it's the mix again.

You see in-house growing faster than staffing and that's also overall the case in the Netherlands. But yes, we have a great conversion of course from gross margin.

So that's the underlying gross margin pressure business of business mix, but still translates into a good return on EBITDA.

And when it comes to the growth of professionals and the difference between Yacht Randstad and Tempo-Team, I think I tried at least to explain also in London. The job is based actually on a lot of indefinite contracts which makes it a bit more difficult to grow in certain markets.

We're changing that and Randstad and Tempo-Team professionals is more based on a mix of contracts. So there is more short-term and also you have more flexible contracts, I would say.

If you look at the last quarter, it is 13% of growth in professionals in total and I expect actually to continue that growth rate.

[Microphone Inaccessible].

Yes, also what you see is that Yacht is an established business are sometimes very difficult -- to take an established business and recreate the buzz that's very necessary in our business. What you see and also technology and also Tempo-Team or Randstad Professionals it's a younger organization with a lot of energy and we also hope that by merging this we get a little bit more of this excitement in to the total Professionals business, also helping the former Yacht old business mix up to a higher level.

Okay, thank you very much. Now we move to the call.

Please can we have some questions from overseas, please?

I've got a couple as well, if I can. You talked about the drop-through rate a little bit and I'm assuming we're moving into stage 2, so -- towards that 50%, but hopefully a little bit above this year.

Can you clarify whether you are including restructuring benefits within that or should we think of that as an underlying number? And then the second one is on -- the capital structure.

You've obviously said you are targeting bolt-ons. Could you give us an idea of what sort of size you mean by that?

And if we're not expecting any deals -- reasonably, when do you think the -- cash on the balance sheet becomes something you'll need to think about a bit more? And then as an extension to that, when you actually get the cash from the CICE -- I think it was deferred, wasn't it?

So you should start getting that in the next couple of years. Thank you.

Yes, Toby, it's a bit difficult to hear what you were saying exactly, but let me respond to what I think I heard. You were talking about the drop-through rate which is effectively the incremental conversion rate shown and, indeed, it includes the savings from the restructuring.

But it will bring us a bit higher in the range and of course, you would like to know precisely where we're going to end up in the range. Well, actually, we don't know, because it depends on the growth rates and the opportunities for investments that we're going to see.

So I expect the savings to be relatively easy to identify going forward. Your second point is about M&A and I think I heard you ask about the profile of acquisitions.

Yes, indeed bolt-on, as I said in the countries where we operate, so typically we would look at mid-sized acquisitions here with a clear ambition to fit strategically, to be able to manage it successfully and to maintain a strong balance sheet which -- balance sheet which means that the leverage ratio should not be north of 2%. And then I heard you ask questions about when will you arrive at a net cash position.

Well, if the current rate continues, it's unavoidable that we're going to end up with a net cash position somewhere next year, probably not at the end of the year if you just -- extrapolate current developments. And please note that throughout the year the second quarter shows the highest net debt level due to dividend payout and payout of holiday allowances.

But clearly 2016, if we won't -- if it will be silent, so to say on acquisitions, the balance sheet will show a net cash position. And as we said, if that happens we'll come back to you.

Okay, just two points, because I don't think I came through clearly. The first one is -- what do you mean by a mid-sized deal?

Do you -- quantify what that would entail? And then secondly, I think you get cash from the CICE which was all deferred.

When does that cash actually come into your cash flow?

Yes. Mid-sized means a few hundred millions and the CICE is paid after three years as from the moment it was -- earned.

So that means it starts to come in in 2017--

Yes, 2017, yes.

Yes, May 2017. Then we will see the first payments coming in.

The balance sheet at the end of 2014 contained €170 million of CICE.

I just want to clarify on what you see in January and February. When you talk about February being the same kind of volume levels as January, do you mean the 6.5% growth, or do you mean around 5% underlying that you had mentioned?

Yes, I meant volume and 6.5% is revenues. Because we don't measure revenues on a weekly basis; we look at volumes.

What we can share with you is the volume development and that typically -- translated more or less similar revenue levels, given the fact that business mixes don't change that quickly. And I was referring to -- if you look at revenues then it should build from the north of 5%.

I didn't say 5%, I said north of 5% in January.

Two questions, please. The first one just on France, can you give us an indication of what the underlying pace of decline might be there, because I'm just trying to interpret the weaker-than-expected 8% in the fourth quarter and the much better minus 1% in Jan.

Was the holiday impact that you discussed at group level particularly acute in France? And then the second question is just on the tax rate guidance for 2015, 27% to 30%.

Should we apply that going forward beyond 2015 or are there specific reasons why it's going to be lower this year? Thanks.

Okay. Well on France, yes, we're approaching the zero line, so that means that currently as we see we're very close to the zero mark in our growth rate in France.

So we're happy there. We also see the market getting back again, so yes, it looks like -- you can never say stable and you can never say solid, because you never know.

But a good start of the year which is not due to any technical calendar effect, but looks like an improvement for ourselves. So we're currently growing around 20% in in-house.

Yes, the tax rate indication -- we're trying to help you with your calculations and now you are asking me to give you the tax rate beyond 2015. It's 27% to 30% effective tax rate for 2015.

Beyond that I can't give it to you; it's very much depending on the mix of growth. And if we grow rapidly in, for example, the U.S., the corporate tax rate goes up.

If there's more growth in the Netherlands it goes down. And that is -- currently this is our assessment with possible scenarios; for 2016 you'll have to wait a little.

And just one quick follow on, with France -- so if there is no particular calendar effect in January that minus 1% is obviously a pretty strong number. And we've had the Prism data which showed that the number of temps that worked in France was minus 3.

So would -- do you feel that your no longer under-performing in the market there and does that have something to do with the comments you mentioned about being a bit more flexible on price discussions?

Definitely, we're getting closer to market, that's true. Also there are some comparisons which are not too great in France, so we ended with slight growth in 2013, Q4.

So therefore Q4 was a tough comparison base and then we started 2014 rather weak which continued throughout the year. So there is some easier comps there, but there's also improvement.

Just on the gross margin development in Q1, there is obviously quite a -- and specifically just on the temp gross margin -- you spoke about what may be happening in the Netherlands, that there's quite a bit going on in terms of perhaps non-wage effects in the U.S. and the annualizing of CICE, other subsidies, Germany, etcetera.

What's your view on where the overall temp margin or the basis-point movement in the temp margin is going to come out at, please in Q1 as it stands versus that minus 10 basis points in Q4, please?

It looks like a pretty stable picture, so on the one hand you do see a pricing pressure with large clients that sometimes you go ahead with it; sometimes you don't. On the other hand we do in January the perm growth continuing and, as you've seen, that offsets -- certainly in Q4 -- offsets the margin going down in staffing.

So yes, pretty stable picture, Tom.

Yes, okay, but it was really excluding the perm effect. And then when one looks at your perm growth, are you coming in at the market price point on perm too, or are you being commercial in perm to try and build up your market share, because obviously it's still coming in at 100% gross margin, but you might be a little bit cheaper than others?

Where were you on your price point there, please?

It would be a first in any servicer, Tom. You know as well we've never competed on price and we also compare -- compete on quality.

So definitely not growing perm because of pricing. No, Robert-Jan alluded to this being a micro strategy.

Certain perm and staffing, Linda's business in the U.S. has done very well and has increased their perm as a percentage of gross profit from 3% to 7%, close to 8% in her staffing business.

The European businesses are taking on board the way they've done this and so far this is very successful. The European businesses also are at like 2%, 3% of total gross profit in perm, so these are basically the same profiles you see in staffing.

But we're training our people to sell both and it works very well. So it's a profitable business; it's not on price and it's growing and we don't see the end of it yet, honestly speaking.

Two questions on my side. First regarding your activity levels, can you update compared to what you said during your Capital Markets Day?

It was up 29% in the last 6 months. Is it [inaudible] in Q4, please?

And second [inaudible] on France. I've understood that the growth is -- the improvement is driven by your in-house services, but can you maybe comment by segment?

Is it the auto sector which is picking up, or--? Thank you.

I understood your last question; not your first. In-house is of course by nature, certainly in France, a blue-collar business.

So it's in automotive, it's in food, it's in logistics and not so much sectors, because we open individual new branches and it could be everywhere, because we of course sell to many potential clients, so not one sector sticking out there.

Okay and regarding my first question, it was regarding your activity levels [Multiple speakers] communicated on a 29% increase--

Yes. So activity levels -- well, of course it's driven by quite a few countries in 2014 which came from low level.

So in the Netherlands there is quite an increase, also in Germany is quite an increase. So normally this percentage increase should go down.

That's not a problem, because also here there's sort of a cycle. You start with increasing your productivity levels -- sorry, your sales levels -- then you look at your conversion, so how much of these sales activities leads to more business.

So then you look at the quality of -- the qualities of your people; you look at the quality of your database; you look at the quality of your web presence and your candidate handling. Then you take it from there, so I would expect the increase to go down but, at the same time, the conversion to go up.

But that's always a tough one to calculate.

Just a couple of quick questions from me. Firstly, on France, you mentioned the French government has talked about more consistency in terms of subsidies.

Do you think that also applies to CICE and does that mean that you are more optimistic -- incrementally that CICE will be maintained into 2016? And then secondly, just on finance charges, you noted the FX impact within Q4.

Do you expect similar impacts through the start of 2015? Thank you very much.

I'll take the last question first, the answer is yes.

Yes.

Yes, we're also absolutely certain that we'll get CICE in 2016, because it's a 3-year scheme, so it was announced as such. It's not necessarily the effect that the pure technicality of CICE as a support package will continue into the years after, but there will be probably different or similar support packages going forward.

So the technicalities we don't know, but -- the government has been quite vocal and I met -- myself, I met with Valls personally, the Prime Minister. And they really want to support the private sector, but they do this in the French way which is through subsidies, but yes, the fact that they've -- are now so vocal and sure about it, we hope will help the confidence of investors in France which is important.

I was just hoping you could confirm that the conversion ratio guidance is seen at constant currency and, if possible, maybe even give some indication of the relevant -- or the relative currency impacts on sales compared to costs, compared to the net finances charge.

It's constant currencies, yes. Roughly, the formula is simple.

If you look at Q1 2015 and you compare year on year, taking the current levels, then the impact at OpEx level is €38 million. Then GP would be €43 million, leaving the €5 million benefit at the bottom line.

And I cannot -- get you further details on the FX; it will continue to show up, given the current trend in Q1. And this is bookkeeping.

Economically we aim at doing the things right, but bookkeeping forces you to present it in a certain manner.

Okay, thank you very much. Maybe as a final question -- we have two questions left, but first give the floor to our old colleague, [inaudible] go ahead.

Yes, a couple of things, not too difficult I think. You've been very nice in quantifying the gross margin online of year-on-year developments for almost all regions.

Could you shed a little bit of light or -- for quantification on Germany and the Netherlands as well? I think that would be consistent.

And secondly, could you elaborate a little bit more on how the volume development in Germany would go -- let's say beyond this soft patch? We were at very low levels of unemployment -- is there still scope to see, let's say, high- or double-digit numbers' growth going further into this cycle in Germany?

Shed a little bit more on the longer-term outlook for Germany.

Okay, I'll handle both questions. So, [inaudible] we don't give gross margin developments per country, because -- we do give EBIT growth and basically everything else.

[Technical Difficulty] development in gross profit.

Yes.

[Microphone Inaccessible].

Okay, so Robert-Jan will elaborate then. On Germany, politically things are going not in the right way, so Germany was the sick man of Europe some 15 years ago and then, under Gerhard Schroeder which -- probably you were still working with us -- he visited some branches from Randstad, to look at the model in the Netherlands.

And that was effectively adopted by the Social Democrats in Germany, so the HAGs [ph] law made Germany flexible, created a lot of jobs. But it wasn't good for the Social Democrats Party; they lost a lot of votes.

Now we see the Social Democrats Party coming in again with a very old-fashioned agenda; bearing down on flexibility, increasing minimum wage in the eastern part of Germany to €8.50 where it's -- as I mentioned €2.65 in Poland like 40 kilometers to the east. We think that's bad news.

We think it's old-fashioned. We're lobbying hard against it but Merkel doesn't give a lot of pushback, so they had some dogmatic points and yes, that's not great.

So that won't help penetration rates as such. So Germany was the only country in Europe which, in 2012 had a higher penetration rate than in 2008, so all what we lost in the Netherlands and France has not been gained back.

It was in Germany, but -- yes, the last 2 years have been death sentences, not been great. So yes, it remains to be seen.

But certainly also in Germany we concentrate on SME business, white-collar business and perm business, so also changing our business mix a bit away from where we were, to see some compensation there, currently not enough.

A little help from my side on gross margins, in the Netherlands it's roughly flat. There are a couple of components here.

Social securities have changed, but overall it's just a little bit below, but not much. And if you look at Germany it is below the previous year and please refer to what Jacques explained on the legislative changes, the 13-week rule.

I would say that, on an annualized basis, would be a cost of around €20 million, it's very substantial.

Yes. And of course the margin as a percentage in Germany has gone down, also because the price increases, but also the cost as a percentage has gone down.

So in that sense it talks to each other. The margin nominally is pretty flat, so that's still okay, but as a percentage it goes down.

Final question from Hans.

Yes, two questions if I may. First of all, on Spain, we saw quick a pickup in January in growth rates, or you indicated that you shut off some, let's say, four business of U.S.G operations.

So is it -- let's say that the comps are becoming somewhat more easy, that's the main reason that you see a big jump? Or are there also underlying drivers that you really see that you are gaining clients and traction?

And secondly, on your dividend policy, your M&A, so far we have let's say discussed quite a few times over the last few quarters what you should do with your cash in increasing dividends. At that moment in time you always have -- well, of course we have to look at M&A, these kinds of things.

This time the statement was quite clear, if the balance sheet is strong we will be in the upside, the top end of the range. So you have more clear, so that also means that you, let's say, see that M&A is becoming more difficult.

You already indicated that prices are a little bit on the high end. Is that really believe that M&A is really becoming so more difficult to get very interesting targets?

Yes, that's exactly what I said. So it will be a bit more complicated and the choice for dividend is clearly following the strength of the balance sheet.

We're looking at mid-sized deals, as I explained and we'll continue to do so and we might identify one or more during the year, we'll see. And we'll get back to inefficiency in the balance sheet only when we have net cash in the balance sheet.

And really we're a high-service company, of course and we've brought you, just for today, a specialist on Spain. Rodrigo, our MD there, can you comment on the Spanish developments?

Yes, I would say on Spain it's a combination of things, no? Yes, we're happy with the turnover rates we're seeing for first time in several years.

I would say it's a combination of different things. First thing is in perm, both professionals and perm staff in -- we have developed a business model that is allowing us to beat the market, quite consistently.

That's the first part. The second is linked to U.S.G, because comparables are getting better now, because the divestment that previously Robert-Jan mentioned were made at the beginning of last year.

Third thing, we have been rebalancing the company in the second half of last year, getting back to growth, because as you have seen we have got a solid improvement in profitability. So we were feeling comfortable with that and, mainly through activity-based [inaudible], we have been rebalancing back to growth to catch the market movement that we're starting to see there.

Against pretty serious comparables.

Sorry, one last question from me. The sickness thing in Germany, it was implemented in -- I don't know precisely when.

But it's the first quarter you mentioned that there's such severe gross-margin impact. So is this the first time, or was it also there previous quarters?

Or how should we see this going forward in 2015 then?

Yes. No -- of course we mentioned a total effect for the full year, so that's why it's a big number, yes?

But I or we commented on the fact that this was a funny thing and that sickness was relatively high, as for normally you would see a sickness rate of -- in the summer at least there -- of 2.8% and we were above 4% in the summer. So then you know something is wrong.

So it's a funny system, so you work with a client for a few months and then your wages go up. But that's not to say what you are going to make at the next assignment.

If you then know that it is going to be lower, something happens -- I don't know -- headache, whatever and you fall ill. In the Netherlands we're privately insured, so we take the risk of illness ourselves and we get an operation in place to assist our people getting back if they are ill.

In Germany it is still pretty old-fashioned, you can't even really call the temp, it's still the system we had in the Netherlands years ago. You go to a do a doctor, he says -- you don't look good, please take two weeks and then come back.

In temping it's a day business, so we want you to be back if you are not ill the day afterwards; we cannot really touch those people. So that's why -- and the same in a way goes for holiday.

You also go on holiday if your next assignment -- is at the low end. So these are funny effects and we saw them coming in because people get used to it.

We saw them coming in more and yes, this is also going to be part of the game for 2015. We're trying with our price increases to -- offset this to clients but, yes, compared to the fact that also the bill rates went up, yes, that's going to be tough.

Okay, thanks, everybody. Thanks for showing up.

I invite you all for some coffee and some refreshments. Thank you very much and see you next time.