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Capital Markets Day London November 17th 2015

Robert Jan van de Kraats, CFO

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disclaimer & definitions

Certain statements in this document concern prognoses about the future financial condition, risks, investment plans, productivity and the results of operations of Randstad Holding and its operating companies as well as certain trends, plans and objectives. Obviously, such prognoses involve risks and a degree of uncertainty since they concern future events and depend on circumstances that will apply then. Many factors may contribute to the actual results and developments differing from the prognoses made in this document. These factors include, but are not limited to, general economic conditions, a shortage on the job market, changes in the demand for (flexible) personnel, achievement of cost savings, changes in the business mix, changes in legislation (particularly in relation to employment, staffing and tax laws), the role of industry regulators, future currency and interest fluctuations, our ability to identify relevant risks and mitigate their impact, the availability of credit on financially acceptable terms, the successful completion of company acquisitions and their subsequent integration, successful disposals of companies and the rate of technological developments. These prognoses therefore apply only on the date on which this document was compiled.

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EBITA: operating profit before amortization and impairment acquisition-related intangible assets and goodwill, badwill, integration costs and one-offs.

organic growth is measured excluding the impact of currency effects, acquisitions, disposals and reclassifications.

diluted EPS is measured before amortization and impairment acquisition-related intangible assets and goodwill, badwill, integration costs and one-offs.

November 17, 2015 Capital Markets Day 2015 2


agenda


current trading

funnel update – where do we stand?

capital allocation/ dividend policy update


current trading


7.7% revenue growth in October (vs. 5.7% in September)

Q3 revenue growth was 5.4%

Gross profit growth in October was 8.4% (+5.8% in Q3)

Perm fees up 9% (vs. 13% in Q3)

volume trend in November so far appears to be in line with October

North America +5% (vs. +4% in Q3 and Sept)

US business up 6% (+5% in Q3)

European countries up 8% (vs. +5% in Q3)

France +8% (vs. 3% in Q3)

Netherlands +10%, in line with Q3

Belgium +10% (vs. +1% in Q3)

Iberia +14% (vs. +8% in Q3)

Italy +26% (vs . +20% in Q3)

Germany +2% in line with Q3

Q4: minor (sequential) increase to SG&A as per outlook


agenda


current trading




targets within reach


growth &

activities +14% YTD, productivity (GP/FTE) +4% YTD

Perm/SME double-digit, competitive market

on track, though 8Qs of low growth

on track, more to come

L4Q15 at 4.4%


-40%

-30%

-20%

-10%

0%

10%

20%

30%

1Q02 2Q03 3Q04 4Q05 1Q07 2Q08 3Q09 4Q10 1Q12 2Q13 3Q14

8Q's of low-mid single digit growth

organic growth in a historical context

consistent mid-single digit topline growth

Europe still ~20% below peak


topline growth

USA above peak and still growing

Opportunity in EM remains


strong relative performance


topline growth

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15

The Netherlands

Randstad Market (ABU)

-15,0%

-10,0%

-5,0%

0,0%

5,0%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15

France

Randstad Market (Prism)

-10,0%

-5,0%

0,0%

5,0%

10,0%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15

USA*

Randstad Market (ASA)


field productivity


ABFS

addresses largest component of our operating expenses

PE field staff

ABFS

management layers, span of control, support staff ratio

further centralization of sourcing and delivery models

PE HO staff

accommodation, IT, marketing & general costs

OPEX FY

€2.5bn

~60%

~40%


-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

Gross Profit Personnel expenses

what has ABFS brought us so far?


productivity trend – YOY growth for GP & PE field

ABFS


conversion of activities


growth in commercial activities vs. productivity (GP/FTE Field)

ABFS

activity levels up to +14% YTD (2014 >30%), productivity (GP/FTE) up 4%

70%

80%

90%

100%

110%

120%

130%

140%

150%

160%

90% 95% 100% 105% 110% 115%

acti

vit

y g

row

th v

s L

Y

GP/FTE field growth vs LY

conversions activities OPCO’s staffing & professionals activity growth vs productivity growth YTD


perm: a major opportunity

In 2014 perm made up 10.0% (Q3’15; 10.5% or 12.9% Inc. RPO) of group GP (~12% in 2007)

We have the potential to double in established markets

Strategic focus paying off as we outgrow our peer group average


business mix

Chin

a

UK

AU

S

gro

up

US s

taffin

g

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

perm as % of GP

primarily established temp markets

embryonic/developing markets

1 revenue includes perm + RPO 2 Competitors; Page group, Hays, Adecco, Manpower & Robert Half

YTD perm growth

13%

15%

16%

avg growth competitors

1

2


0%

20%

40%

60%

80%

100%

120%

France

The Netherlands

Germany

Iberia

% of GP growth (2013-15*)

perm growing double-digit


business mix


€ 60-70M cost savings in 2015-16


cost

~€ 50M realized so far (annualized) mainly in HO/BO functions

PE field staff

span control and field support

PE HO staff


OPEX FY

€2.5bn

~60%

~40%

internal HO benchmark

sustainable reductions

size and location of branches

digitization

procurement


next steps are taken...


cost

IT costs (~10% of SG&A) should come down 20% over time

PE field staff

PE HO staff


OPEX FY

€2.5bn

~60%

~40%

increase in business systems which drive GP

create global IT infrastructure SSC

utilize purchasing power in generic IT (telco, networks and hardware)

Support function benchmark continues

benchmarking continues


agenda


current trading




solid free cash flow & conservative leverage ratio


-

0,5

1,0

1,5

2,0

2,5

3,0

-

100

200

300

400

500

600

700

800

2008 2009 2010 2011 2012 2013 2014

Free cash flow (€M) Leverage Ratio

str

ate

gic

ta

rge

t


capital allocation priorities


1 investments in organic growth

3 dividend

4 share buybacks

5 special dividend

2 M&A activity

invest in tech / innovation

payout of 40-50% of adjusted EPS

anti-dilution measures when financial position allows for

potentially when net cash for a longer period

bolt on (supplement current geographical mix, strengthen professionals

invest FTE in growth markets

optional dividend based on current leverage ratio of 0.5

not being considered currently

strategic M&A not likely


dividend policy


proposal to pay full cash dividend for year 2015

dividend policy since 2013: payout of 40-50% of adjusted EPS

optional dividend:

leverage ratio < 2.0x: optional dividend

leverage ratio < 2.5x: optional dividend with premium on stock dividend

leverage ratio > 2.5x: stock dividend

anti-dilution measures when financial position allows for it:

performance share plans

optional dividend

dividend policy 2007-2012: €1.25 cash per ordinary share

payout ratio between 30% and 60% of adjusted EPS (amortization, etc)

financial position must allow for it

dividend policy until 2006: 40% of net income (basic EPS), cash only


key criteria when considering an acquisition


randstad perspective

1 strengthens our strategic position

2 provides significant value creation

3 manageability

create base for growth in existing markets (support global clients, high growth markets)

professionals is the preferred growth segment (profitability and market growth)

increases our market share (“Big is beautiful”, density of network is critical)

create an entry point into new markets through diversification

acquire capabilities in outsourcing/SOW space

minimum size of € 100M revenue (or at least 80 FTE’s when in small markets)

DCF valuation for entire business cycle (different scenarios to be considered); Considerable cost synergies give best safety net in worst case scenario

cost synergies identified and valued (including the costs to realize and possible loss of revenue)

tax and revenue synergies to be treated separately from valuation

EVA positive within 3 years, including post-deal tracking

agreed price negotiation framework before first indicative offer

management selected and approved integration plan prior to closing the transaction

we have sufficient understanding of the target and its business environment (Due diligence with the involvement of all disciplines and business people)

OPCO concept needs to be proven prior considering local acquisitions

OPCO management able to deal with acquisition and integration and the target has a good cultural fit and strong management


aiming for leading positions


US has largest HR services industry worldwide

source: various staffing associations et al., Randstad estimates

2014

ran

dsta

d m

ark

et

po

sit

ion

0 20 40 60 80 100 120

India

Iberia

Switzerland

Brazil

Italy

Canada

Belgium

Australia

Netherlands

France

Germany

United Kingdom

Japan

USA #3

#6

top 5

#1

#1

#6

#1

#1

top 5

top 10

#3

#1

#2

#3


M&A: easy to buy, difficult to make it successful


challenging to manage emotions

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