Robert Jan van de Kraats - CFO Arun Rambocus - Director, IR Jacques van den Broek - CEO Linda Galipeau - CEO, North America

Chris Gallagher - JPMorgan Nicholas de la Grense - Bank of America Tom Sykes - Deutsche Bank Toby Reeks - Morgan Stanley Yves Franco - KBC Hans Pluijgers - Kepler Cheuvreux Paul Sullivan - Barclays Marc Zwartsenburg - ING Konrad Zomer - ABN AMRO Suhasini Varanasi - Goldman Sachs Matthew Lloyd - HSBC

Good morning, ladies and gentlemen. This is Rob Jan van de Kraats, CFO of Randstad Holding.

I’m going to take you through the presentation on the third quarter results and then we’ll be available for Q&A, and that will be the team consisting of Jacque van den Broek, Linda Galipeau and we are also supported by Arun Rambocus. The third quarter results of Randstad, please note that Q3 seasonally is the most relevant quarter of the year, typically it’s the best quarter of the year and then the next one in line would be Q3 and then Q2, and then Q1, that’s the seasonal pattern in our business.

Moving on to Slide 5, with the resilient trends, think that sort of describes it rather well for Q3. We have seen top line growing at the group level by 4%, which is feeding somewhat like a hovercraft for quite a while now.

More than three years, we have seen growth in the range of 1% to 6%, 7% even, and that’s feels like a bit sitting in hovercraft a little higher, a little lower for quite a while now. But in many ways, this is a rather satisfying growth development in the third quarter.

Gross margin down slightly by 10 basis points, but currently is up as you can see here in the middle to the left an important indicator. How much do we see as a drop through from our additional gross profit into EBITDA, that’s an indicator we use for our financial steering, it the ambition is to have it at a level of around 50%, and we have arrived at 53% for the last four quarters, that means Q3 haven’t growing back another three quarters.

Adjusted net income up to 193, but more relevant to the return on invested capital at 18% now, the balance sheet looks good to leverage ratio of 0.6%, compared to 0.5% last year at the end of the year including the amount of transaction is that when comes to a Q4, we still anticipate to be below one-time EBITDA. Over the last four quarters, we have realized EBITDA of 4.6%, which is an improvement of 20 basis points.

And another key point here, the volumes in October so far indicates a continuation of the trend. We always measure volumes by a week, and we’re looking at the October weeks now, which confirm the trend that we have also seen in the month of September.

In Q3, we have processed the acquisition of Obiettivo Lavoro in Italy, Careo in Japan and the small one Twago in Germany; and most is expected to be closed in Q4. And the acquisition of Ausy is still running as you can read in our press release that we anticipate closing in Q1 next year.

Slide 6, the overall stock stable mid-single digit growth. This way you can see the leverage coming through gross profit this time 1 billion, and if you look at the conversion of gross profit into EBITA, it's an easy calculation this time 27.1% which in improved compared to the 26.7% in the previous year.

So, good organic growth over the last four quarters as 5% gross profit at 4% for the last four quarters as well and the last four quarters operating expense of 3%, and this confirms the operating leverage that has come through every year at the bottom line. Next Slide 7, regional split also again resilient performance.

You can see here, I think this picture describes it rather well this hovercraft feeling. We’ve seen a slight improvement in quite a few markets in the last quarter.

And we’ll see what happens after this, but for now at least, we have enjoyed it. If I move to North America on Slide 8, solid profitability here, revenue was up 1% compared to Q2 where it was flat.

Specifically, the U.S. staffing and in-house business revenue growth was up by 2%, and this also includes growth in the staffing business in the blue-collar segment.

U.S. professionals, revenue down 3%, still working on that.

Canada improved from 2% in the previous quarter to 5%, which is clearly ahead over challenging market; and all of these bring us to strong EBITA margin of 6.5%, which is confirmed in the graphics to the right hand side. Slide 9, the Netherlands, still affected by the pay rolling business.

Revenue grew by 2% with, it’s just such lower than Q3, so again Q2 at 3%. We continue to see the decline of the government pay rolling business which was announced last year and which has been kicking in for the last quarters.

Pricing pressure clearly continues in the Dutch markets. And our client reviews on profitability have made us decide to even at gross compliance or to continue with these clients as somewhat reduced pricing.

Closing the gap to market takes a bit of time here. Perm is up of 26%, final improvement, again like all the market is the result of our strategic focus on this segment through a standardized cost and rolled out throughout the world, and also in the Netherlands, we can announce the effect of that.

It is coming from a small base, but it excellent growth. The combined staffing in-house business grows by 3% in quarters and improvements with professional is down by 4%, compared to the previous quarter with a lot of growth.

This is clearly not satisfactory, but we also should point out that the comparables of last year are bit challenging in this quarter. The professional business is working hard on setting its commercial focused organize in terms of gain market share again and somewhat through growth rate.

The EBITA margin at 5.8 compared to 6.1. France on Slide 10, actually solid across the Board, continued mid-single-digit growth here.

Revenue up 5%, compared to 4 last quarter. Staffing and in-house doing well especially professionals and perm growing significantly.

Perm includes the effective using big data tools. This is quite a good performance we would say.

Also at the EBITA margin line, 5.9 against 5.8, underlying some developments or some statements in the space of CICE and the outlook for that continues to be good. Germany on Slide 11, steady growth and improved profitability, here we see growth at 5% level continuing.

And also SME continues to outgrow large clients. Staffing and professionals are up on by 4 the other by 8, and increased profitability here as well, 5.9 now.

Belgium on Slide 12, it’s closing the gap to the market, revenue up by 5% now. So, we’ll that explain by the comparables of last year.

In queue, it was still negative. Staffing and in-house also here growth at 5 compared to the decline previously.

Gross profit up clearly by 8%, which is the result of some focus on client profitability, we're gearing up for more growth in this market and the EBITA margin arrived at 5.9. In Iberia, we also see improving results across the Board, I would say, both Spain and Portugal doing quite well.

Revenue growth in all segments and also the perm business is expanding rapidly with a good return at the bottom line 4.8. The UK, no visibility on impact of Brigit.

On Slide 14, actually revenues improved slightly and also perm improved a bit EBITA margin at 1.8 now. Perm is down by 4%, but relative to Q2 was improved slightly.

So we'll never impact from the Brexit, nothing clearly visible as we think. If you look to the graph at the right lower corner, the EBITA margin overtime is continuing to improve.

Slide 15, the other European countries. Italy, the first one to mention that revenue growth very solid at 15%, improvement as compared to Q2 and also the focus on specialties and perm, up by 33% is clearly paying off.

The acquisition of Obiettivo Lavoro is on track with substantial upside in terms of value creation. It has an impact on the group consolidated numbers however because it comes in with a lower gross margin, lower EBITDA and higher working capital; and that's what we see coming through on all these lines in the consolidated numbers.

Switzerland, it turned the corner a while ago, and it clearly continues here. In the Nordics, the integration of Proffice is well on track, but we have to keep that moving on.

EBITA at 4.5, but this is impacted by M&A. As I mentioned, specially, the Italian acquisition comes in with a lower than average EBITA contribution.

The rest of world on Slide 16, also the growth accelerated in Japan, growth arrived at 5%. Perm even grew by 44%.

That clearly contributed to the EBITA margin growth from 1.5 to 2.7, also Australia grew also in-house and in perm very helpful. Moving on to Slide 18, the income statement of Randstad.

If you look at the column, we're gaining percentage. You see a revenue growth by 4.

Gross profits, operating expense by 5 and that is the operational leverage that helps us both for this quarter and for the last four quarters to clearly it's contributed the improvement of EBITA. Integration cost and one-off that have been included here have been taken out of underlying EBITA are relating to M&A to smart to an adjustment of IT.

We have changed our focus here. We are moving our datacenters and data communication into a shared service center.

We have moved that and have outsourced that, and as a result of that we have some obsolete IT that is being depreciated in one go here. The amortization and impairment has declined compared to last year with following the recent acquisition, this will increase again.

Slide 19, performance by revenue category staffing in-house and professionals and staffing focused on delivery models through central delivery as much as possible, but also withdrawing as I mentioned from some low margin business 5.3% EBITA now the improvement. In-house, both growth at the revenue line and EBITDA of 10%, this is rather straightforward expansion comes and immediately sort of the 50-year-old model and at 5.3% down.

Professionals, operational leverage announce as the year revenue growth of 2% and EBITDA growth of 3%. Gross margin bridge, on Slide 20.

The temp margin down by 10 basis points and the impact of perm replacements and HRS, it's roughly zero, as perm fees grew by 75 organically which compares to be 11% in the previous quarter, 7% in the first quarter and this has been a high growth area. Last year, we did see quarters with 13% through.

Staffing, perm is outperforming, professionals perm here. And there is an immaterial impact from acquired companies here because it kinds of nest out the postpaid contribution from process in Nordic and the negative contribution from Italy and again goes with smaller contribution from Japan.

Operating expenses on Slide 21, the biggest impact comes from M&A, as both M&A expenses, but this is the contribution of both acquired start up to the cost base of staffing. We exclude this and look it organically.

OpEx is down sequentially by 8 million. So the previous slide compared to last year Q3, with this year Q3, as operating expenses, we look at the sequentially development from Q2 this year to Q3 this year.

There is a minor unfavorable impact of foreign exchange of 1 million included here. The balance sheet, net debt 561 million, leverage ratio 0.6.

As both of you can again see the return on invested capital being 18% like that. Day sales outstanding and working capital both are slightly impacted by the acquisition in Italy.

We have included in the balance sheet a receivable for CICE which is north of the €300 million. It's the receivable of the sanctioned state.

On Slide 23, free cash flow the overview here, we have a bit of the impact of timing here. The change of the working capital, but nothing specific that it is of any relevant meeting, we do have net capital expenditures; however, that are a bit higher than normal which is clearly a one-off and it relates to specific projects.

The outlook, finally, on Slide 24. Organic revenue growth was 4.2% in Q3, and September revenue grew by 4%.

And as said the volume that we see early October, indicates continuation of the growth rate in Q3. As looking at the month of September, the exit rate here, the exit rates for the Netherland is low-single digit, for France mid-single digit, for Germany mid-single digit, Belgium mid-single digit, UK thrash, Iberia mid-single digit, North America, I'm going to give the precise number because it's a 1% as more clear for you; the rest of Europe low double digit and the rest of the world high single digit adding up to 4%.

Gross margin for Q4 is, expected to remain at least stable sequentially we hope this provides some guidance for you. And also we expect the minus sequential increase of operating expenses on an organic basis.

In Q4, we do not just expect we sure that we'll have 1.1 less working day versus last year. And as I mentioned previously with regards to the balance sheet, we do anticipate including the acquisition from most the Board to see average ratio of below 1.0 times EBITA.

Well, this concludes the points that we felt we're relevant to elaborate on. We're now moving Q&A and I ask you to limit the number of questions you have to make proportion at least in the first round.

Thank you. Operator?

Good morning and couple of questions. Just first on funds.

You don’t seem to necessarily have seen the margin pressures though one of your peers reports that recently has seen. Can you explain, where you think of the market there in terms of pricing and also any impact of [0:17:06.4] that might have next year?

And the second question is around IT costs, CMD last year you talked about wanting to reduce those probably 20% overtime, and you’ve signed the BT deal, so do you have view on the timing or do you think of particular saving? Thank you.

Chris, good morning, Jacques van Broek here. Well, actually it's an interesting picture.

We are very happy with our French performance. We actually said goodbye to some quite low margin clients and still we saw ourselves at market in September.

With the best of business mix, you’ve seen our growth in SME improved, so there is absolutely price pressure. But we’ve made the right choice as we think and therefore, it doesn’t show in our reason.

Yes, and Chris, following up on the IT savings. The last year at the Capital Market Day, we indicated that we would be able to save overtimes €50 million from the IT expenses.

This is - you're referring to the first step which is the shared service center and the outsourcing of our data centers and data communication. And that’s a small part of it, and we expect to see the first savings.

But again, that’s a small contribution coming in, in the course of 2017 and more meaningful in 2018.

Okay. Thank you.

And just follow-up on the first question in terms of the changes in CICE, how do you think that plays out next year and when you look at gross margin in front?

Yes, well, this is more than rumors we think, but still to be confirmed that there is a percentage of CICE up from 6% to 7% in the current program. No news on any prolonging of course after the elections, but that’s approved to be good news, but then we need agencies get that to confirm in December through the French government.

Hi, good morning, guys. Just a quick follow-on from the CICE question just then, I mean, it looks like either CICE going to increase to 7% of wages next year.

I know we have to still wait as I mentioned. What would be your view on the impact of that could have on French margins of the share because, do you think that would be sufficient to offset any kind of the system gross margin pressure that you’re seeing across the market there?

And then I wondered, if you had a view on CICE post-2017 given the most of the candidates of presidential election have exited preference for switching CICE to a more production social charges? Thanks.

Yes, I think it would be in a way bad news, if wages would be increased in France. I think France itself has a labor cost problem to start with, also still quite high unemployment.

So, we think, it’s too early in general as you probably know. And in Mainland Europe, these wage increases are far less volatile up or down as our annual section market.

I’ve got no view on anything post election. As you know, we don’t know who is going to be elected.

Let alone with the program is going to be. The only thing I do know is the CICE is wildly regarded as one of the most successful project of the [Indiscernible] administration with good effect on the French economy.

Okay. Thank you.

And just one quick follow-up on the margins again, the mid-term I guess 5% to 6%, I guess it's still valid, but the macro has been unhelpful to you over the last 12 months or so. Are you still comfortable with that 5% to 6% aspiration or do you think you'll get this cycle, and if so, what conditions would you need to see operating leverage kind of kick-in again and see the margins start rising?

Thank you.

Yes, this is a relevant question and the answer is, yes, we still feel comfort when we made the point in two years ago, the capital market stay, we indicated it would require high-single digit growth at least one year ago, October to November 2015. And we said, it requires high-single digit growth.

That’s not what's coming through. And the effective mean, it's taking a longer but at this mean [Indiscernible] opposite.

I just wanted if you could pick out the main points for why the leverage wasn’t a little bit better please because obviously Q2, you had 3% organic growth and 10% organic EBIT growth. In Q3, you’ve accelerated, but your organic EBIT growth is 5%.

And I know you said another year, you added lower margin business, but organically your other Europe EBIT is down versus being up 30% in the last quarter. And then obviously Belgium, you’ve alluded to some extra costs going in.

Can you please just explain why there is not the leverage why you’re accelerating please?

Hi, Tom, it's early. I think the early thing what is different compared previous quarters, that on a group level, the gross margin is down 10 basis points.

But previous quarter was up and we explained why that happened. But that sort of hasn't impacted on the overall operating leverage of the Company, right.

That is the big difference. Tom, and as management felt that, we are still happy with the result, so this question we wanted to pass onto Arun [ph]?

Fine, can you pick out specific in the Europe? I mean, it’s obviously becoming a more meaningful division for you now, with all the acquisitions that you’ve added.

Why would that be organically, why would other Europe be organically down as I mean, you are adding low gross margin business, is you obviously pick out the gross margin that you were leading to the fact that you can't add business decent gross margin that I know. You pick out what the reason is?

Those are simply about order Europe and order Europe as we indicated in the presentation; there is impact from acquisition in the EBITA margin development, right. We add two companies.

Organically, you’re EBIT down another Europe business.

Yes, let me take the one of line, okay, to get back to you. But on reported number, it has impacted by the acquisition [Indiscernible] and profit.

Let me get back to you with the organic number.

Okay. And then can I just ask on the U.S.

What is the relationship between how quickly you're growing MSP? And then how quickly your U.S.

revenues organically might benefit from that? You haven't picked what's your spend under management is done year-over-year in this quarter, it was up over 30% last quarter, is there a, is that a positive lead indicator for your inorganic growth you think in the U.S.?

Yes, that's a good question. Overtime it should be, right now, if you look at the organic growth in the U.S.

staffing business, it's actually mass customized, it's leading the way, So it's not growth, I mean our growth remains solid in [RIS], it's actually mass customized growth where we're seeing an acceleration. So, although, both the MNC and the mass customized businesses seem to do well.

Those numbers are unrelated at the moment.

Okay, thank you, and I'm really sorry - but can I just clarify that 1% U.S. sorry North American growth, is that also the same that Canada and the US are the same as they were in Q3 or has there been further acceleration in Canada in the exit rate sorry, and the exit rate you gave is the 1% September I just wondered where Canada was versus that North American 1%>

Hold on a second. The U.S.

seems a bit stronger than Canada in an exit rate. But let me take this one offline, I'm looking at the headline number.

Could you expand the comment on pricing pressure that we heard about in France to penalize the market, which was the market you guys had flagged as also under pressure, and I think it's also one where you said, we're preparing for growth? I think Belgium you said you're preparing for growth.

And then my other one would be, you talked about some acceleration depreciation on some IT platforms, could you quantify that and given that we are shifting to more technology driven models than that involving of the change the I guess in the lesser investment than the price investment guys you're making? And how much more that will be and how much would a potential acquisition of a new technology platform change the strategy around that?

Toby, I'll take your second question first, IT the impact is roughly €4 million included in the one-off in the P&L. And it’s too early to give you an answer to your question because the co-operation with Monster would give us a new platform to rethink our strategy from so.

That is something we'll address later.

You said better looks but we flagged the fact that in Belgium very happy with our profitability, little bit less happy with our growth rate. So we allowed Belgium management to invest a little bit more at the front end, to increase growth.

That way, it looks like that's kicking in, so that's really deliver strategy to get goes to market. In Belgium, we don't experience price pressure as much as we do in for example in the Netherlands.

Okay, then the pricing pressure continues?

Yes, it is.

Good morning gentlemen, question on the Netherlands. Past quarters, your margin excluding the [Indiscernible] margin was down over a 100 bps.

It's priced positively for me now this quarter, can you talk about what changed on the pricing or other things because you report strong pricing pressure while the above figures report positive 1% effective price mix over to past quarters, the first question. And the second one, the UK markets Manpower report to see that you can seen some opportunities of in the perm space in the UK market while one would expect that given the uncertainty around Brexit that would be the first market to suffer versus the first the temp staffing market.

Are you seeing same thing and how are you perceiving the behavior of clients so far in the UK? Thanks.

On the Netherlands the pricing pressure continues and you will see that the larger accounts and the bigger tenders are still under pressure and we are of course having a lot of revenue in that sector. So that's the reason why there is still the pressure and although if you compare Q2 to Q3 you will see its stabilizing there.

Yes, but how do you compare the new reporting pricing pressure while the AB figures don’t?

But I think we are more exposed to the bigger standard contract.

Okay, I understand.

Yes on the UK indeed our perm numbers have been under some pressure, we are largely seeing that in the F&A sector where we still have quite a robust retail F&A perm practice and that's definitely under pressured. Where were getting perm growth is more in our fuel contracts the largest fuel perm contracts that's doing quite well, but those come at a lower price points than the retail market.

So it's primarily the shift between models that stopping us.

Okay, but so far that as reported by peers you don’t see any business confidence deterioration so far in the UK no.

Correct.

Okay.

Yes good morning everybody. Two questions from my side.

First, looking at the U.S. could you give some indication or breakdown of volumes and price impact in the 1% growth in the North America talking about.

Secondly, on Germany still continued growth can you give some feeling or segments with some size you are indicating SME, which can give some feeling or that's very specific industries which had different trends and also on the Germany professional and let's say also any segments where are you seeing stronger growth or less changing trends?

Yes Hans good morning. I'll answer the German question.

We are very happy that started like two quarters ago and then SME is out growing large clients very much we sell both our improved activities in the market that has been going on to two years now in Germany and that's we think the results. We are very happy there.

that's of course means that's the growth in large clients in general is a bit more sluggish through flat, manufacturing fees good growth. Automotive declined partially because of closings in Q3, but partly also because our automotive clients had highest growth people or this gentlemen's agreement that offer two years people again higher something they arranged with the works counsel.

And then transport and distribution solid growth. So pretty much what you normally see in the first the phases of a growth market.

So quite happy with our given performance and professionals it’s mostly our temp business that double-digit growth and that carry the growth in our professional business in Germany.

In the closing chart, they relate to holiday...

Yes there is more as more seasonal than that it is driven by the economies.

The U.S.?

Yes the U.S. it’s a complicated question because where our growth is coming from.

So right now, overall in the U.S. market the commercial staffing side we’re seeing just a little bit north of 2% wage inflation and we have, which we are paying, but then we see a stable deposit gross margin.

So however, the fact that our general staffing business is growing faster than our professional staffing business means that we are making our revenue as lower in our high bill rates and higher in our lower bill rates. So that’s sort of offsetting the volume versus price impact that we’re seeing.

But overall, there is definitely wage inflations about 2% and that margins remain good.

So one follow-up on Germany looking at a mix in changes, we should expect slightly better growth also looking at strong growth professionals, looking slightly better operational leverage, are you already investing to support the growth in Germany or still [Indiscernible] there?

The growth in the IP payroll business doesn’t come in at high level then performance order profitability in our staffing business, so that’s much [indiscernible].

Okay yes. Thanks.

Yes, good morning, everybody. Just a couple from me.

Are you seeing any signs of wage inflation coming through in Europe and currently that’s a first question. Secondly, the strong growth in rest of Europe and rest of the world.

Is that - do you think that is more market or ranch out driven what is your feeling there in terms of the performance? And then just finally on the professional business in Holland any timeframe for improving performance.

So or do you think we’ve got a couple of quarters two or three more quarters of the clients that work through that before they start to turnaround? Thank you.

I will take the first the last one sorry. On the professionals business in Netherlands a bit of a complicated story, Robert Jan mentioned already comparable.

So if you look at the Q3 2015 and Q2 2016 as it was bit overstated in the reported growth, because there was a delay in billing and there was a healthcare, the revenue shift from the [indiscernible] around certain booking. And these results also end up underlying growth in Q3 2016 is actually not four as reported, they are reported minus four but its four.

So it’s a bit overstated in the Q3 2015 and the Q2 2016 we’ve understood that in Q3 2016 so the [indiscernible] has been better than the reporting gives you the impression. Secondly, there is a reason of course, because we shifted from a 360 model through a split mode in Q2 2015 with the New York, what you see there is that people make a choice for recruitment either sales and in a few quarters time they either underperform either they regret the choice.

So we see outflow of consultants and these are replace by junior new consultants and it typically takes three quarters to get to full productivity. So the coming quarters, hopefully we will see improvement in terms of growth.

So no wage inflation Europe yet its early days. No.

Actually in the rest of world, in the rest of Europe, it’s a bit us. So Italy was 15%, this is the organic growth rate, so this is excluding [indiscernible] we are very happy with our performance that’s quite above market.

Switzerland is also above market, Japan is off mark and Australia is off mark. So yes, I don’t regret to say it’s us.

And wage inflation in Europe is there minimal it relates to collective labor agreement adjustments but its low end operation.

Great. Thank you very much.

Yes. Good morning.

Thank you for taking my questions. First going back on the Netherlands, you see the gap with the market being about stable in Q3 versus Q2.

We see some improvement in margins and with that interval strange, you’re looking to the growth versus margins would you now perhaps take a sort of Belgian approach and you put a bit more investments into the flow of that to get back to market to repair for the usual payrolling business. And on the back of that, could you also give a bit more detail on what is going on the story of fresh and just what you mentioned plus 16 and all of that I didn’t really get that what happened there.

Could you give perhaps picture for Europe and what you expect in terms of margin development there going forward, if you have the layoffs in there and the change of model. When should that phase out until we see some improvement in margins there.

So that’s my first question on the Netherlands.

Let’s do it one by the time [indiscernible]. First of all, I will repeat, let’s say the underlying growth rates for Europe.

In Q3 2015 is 13%, in Q2 2016 is 8%, in Q3 2016 is 4% due to delay billing and healthcare as I’ve mentioned before. So that’s the reason there.

If you look at the verticals of that market, I think in engineering and finance we are more or less at market or probably bit below in IT we continue strong growth of 23% in Q3, in Q2 that was also double-digit, so that’s come in the right direction. If you look at the margin development, I think I’m happy with the margin development, specifically we have to work a bit on the basic in terms of interim professionals and pre-launch and as you know pre-launch has a bit lower margin, but we will work on that and that will come through in the in coming quarters.

If you look at the staffing business, if you exclude actually the payroll then we are close to 6% in staffing in in-house in terms of growth. So that’s close to the 7% reported in September favorable growth, so we are just below market.

Something to do with that we also let go of some unfavorable margin contract so that’s the reason why the margin has stabilized.

Okay. In terms of investments, we push a bit harder on top-line to repair that the gap on the payroll or is that [indiscernible]?

Yes. We try to invest of course where we have to invest, so our in-house business is growing at 10% so we are still investing there, and of course we [indiscernible] and that is why we also grow with 25%.

But the focus remains that that we want to get close to mark, but it takes some time because of the headwind we have in payrolling these.

Yes, well that's very clear. Then my second one, Robert Jan you mentioned something on the leverage ratio, I didn't get it completely, was it including also the cash out for [indiscernible] or is that expected in Q1 next year.

That's expect Q1 next year, so it includes the most outflow for the acquisition. But below 1.0 times EBITDA.

And maybe on the last one, digitization. Is there a plan B if Monster because there is still few days I mean early days, but what if you don't reach your target its tender ratio.

Is there a plan B that you say then we have to go a different route and more in line with what Manpower was saying last week that they have a different approach to digitization.

Mark, too early, our offer runs until Friday midnight, it's a good offer, it has support of the board of Monster Worldwide and we'll know more at the end of Friday.

Yes sure, okay. Maybe a last one on Germany if I may.

Do you expect some impact from legislative changes that came through the first of January, is that going to impact, do you see any clients reacting to that.

We got it, the legislative changes probably won't kick in the 1st of January Marc. So the new bill on temporary labor and freelancing is being read in the Bundestag last week, so it means that it's getting closer and closer to final.

But then as you know Germany the law is sort of the basis for negotiation, but when negotiation starts on the [indiscernible] it's a bit early to really know what the end effects will be, but we'll keep you posted as we get more clarity.

That was the final question Mark right.

Yes, yes, thank you for taking all my questions.

Hi, good morning. My first question is on Monster, can you share with us why you sound so confident you will be able to close this deal in the fourth quarter and my second question is on Obiettivo Lavoro.

From memory revenues of that company before you acquired it were down sequentially for quite a few quarters, can you confirm that is because they were so busy talking with you or do you think that might be something to do with their business profile in the Italian market.

You will see that Randstad Italy is growing at a very high pace, double digit as mentioned before. OL is more on the flat growth ratio but that's also the market in Italy, so we're performing very well as Randstad Italy, OL is compared to market more or less flat and we will of course try to improve that growth of OL when we go to the integration.

And Konrad on Monster, in the documentation you can read that we thought quite well about our offer and so I stick to the comments that I just gave, we'll know more on Friday.

Okay, well if I can just ask one more question on Monster then, we've seen the revenue declines at Monster in the last few years. Do you think that if they become part of Randstad that the opportunity is that some of your bigger competitors have to keep using Monster that they remain unchanged or would it make sense for some of them to move to another online job board if I can say it like that?

Yes Konrad, these are sensitive details that you should assume like in previous acquisitions where we built the private track record that we put everything into account when coming up with our valuation and from that we have derived our pricing. So we have included whatever we told was and rightful to include.

And Konrad we are very happy to talk to you about the plans with Monster if it's part of the Randstad Group so stay tuned.

Okay, I understand. Thank you very much.

Good morning gentlemen. I also have a question about Monster and the transaction actually quite surprisingly given your strategy in U.S.

professionals. You also say that for now you will not acquire let's say anymore at least for the time being in U.S.

professionals or at least overall. I think that was one of your ambitions to step up.

I heard your commentary towards Konrad in saying they are happy to talk about more whether a Monster is part of their Randstad, but can you please elaborate a little bit more about the strategic rational, why you intend to buy Monster and what is the further expectation and developments you anticipate for a U.S. professionals business.

No the answer is no. So you have seen us we issued a press release that's the information that we are ready to give now and we don’t think it's right moment to elaborate, surely not on the quarterly goal on [Indiscernible].

So again like Konrad stay tuned more to follow if the deal is concluded.

And behind our M&A strategy we have identified sort of three dimensions one was to improve our footprints in staffing space. Secondly, we said we have we see an opportunity to improve our footprints in the professional space in selected markets and finally we said we have to gear up our digital capabilities.

These three were drivers for our M&A and that's why this at least professional perspective fits in.

I eagerly anticipate more news coming from you on this deal. Thank you.

Operator The next question comes from Suhasini Varanasi from Goldman Sachs. Please go ahead.

One thing on temp gross margin please, with the pricing pressure that you mentioned and the affect of negative 10 basis points impact and that compared for the last four quarters, but you have been either improvement in temp gross margin or stable gross margins? Should we understand that the market conditions have not tightened and probably these pricing pressure is here to stay?

Yes, this is the question that we are very much understand, we look it at ourselves, its fully explained by the recent M&A. So the acquisition in Italy came in with lower of an average gross margin and earnings.

And the Japanese one came in as well with higher, but that's a less significant in size it's roughly one sixth of the size of the Italian acquisition.

Okay, understand. Thank you.

And when it comes to perm business growth appears to have moderated a little bit in Q3. Do you find that maybe the macro has - it’s just a reflection of the macro conditions that have changed it would be happy to get your views on what you are seeing out then market on perm?

Well, we remain clearly focused on this, we remain with quite some expectations here. Last year we have seen 13% growth in I think Q2, Q3 and Q4 and the first part 17% growth of the comparables aren’t easy, but we continued to have quite an ambition at this state.

Thank you.

Thank you.

Good morning, gentlemen. I just want a follow-up on the subject price pressure.

I know, trying to understand if we take perhaps the temp margin, how much of that is the markup for the gross margin over wage on placement moving and how much of it is rolling in evermore ancillary services on boarding all of those sorts of things and is that largely why the SME margin is better?

That’s some broadly formulated question and the temp margin we are talking to is pretty much like-for-like temp margin and clean which is again as Robert Jan alluded negatively influenced by the [Indiscernible] broader margin by the way as Chris said the hope your people are were start integrating and create synergies as of Q1 next year. But then the overall improvement [Indiscernible] increased again.

But yeah [Indiscernible].

But an IPO was included in the temp margin that’s why we mentioned that privately.

Okay. Thank you.

Yes, one question. Yes, on SG&A quite a bit on your guidance.

Can you explain just what has driven that because your growth is accelerating regarding more and more less flattish developed going into Q4, while the driving how should we look to that SG&A going into next year, while slightly [indiscernible] that’s going to drive your conversion ratio to more 15% perhaps next year?

Yes, Marc with relatively limited growth and uncertainty when we exited Q2 into Q3, organizing our OpEx development becomes more and more relevant. So we have been managing it very throughout the quarter and that’s what you see coming through.

And as you know in our business we can’t manage it roughly on the short-term. So our operational leverage through the increment conversion ratio is a very relevant indicator in our business.

And perhaps final one the gross margin impact [Indiscernible] perhaps that should be positive margin next year but you indicated how much space the margin would have.

You can follow the results of OC there are also list so you can make the calculation.

And they are clearly contributing positively both through GM gross margin and EBITDA.

Yes, all right. Thank you very much.

You sure Marc. No further questions.

No, this is it.

Operator?

Excellent. Thank you so much.

Well thank you for joining us in this call and we are looking forward to next, again that will be next year February. We have decided to also have a Capital Markets Day in month of November, because we have insufficient things to share with you at that point in time.

But one way or another we’ll make sure that we’ll plan to be back with you on that as soon as possible. The publication of our fourth quarter result is planned for February 14th next year.

Thank you so much. Have a good day.

Bye.