www.randstadholding.com ben noteboom, acting ceo robert-jan van de kraats, cfo february 18, 2003...
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www.randstadholding.com
Ben Noteboom, acting CEO
Robert-Jan van de Kraats, CFO
February 18, 2003
Fourth quarter and Fourth quarter and annual results 2002annual results 2002
Highlights 2002
Key data
Market developments & operational performance
Financial performance
Outlook
Strategic priorities
AgendaAgendaAgendaAgenda
Organic growth after 7 quarters of declining revenue
Growth in Belgium, France, Spain, United Kingdom, Denmark,
Italy, Portugal, Canada and United States (year-over-year)
Operating margin 2.4% (Q4 2001: 1.4%)
One-off’s € 10 million (3.7% of operating expenses)
Real estate portfolio sold
Operational performance improved throughout the year
Highlights Q4 2002Highlights Q4 2002Highlights Q4 2002Highlights Q4 2002
EPS € 0.43, an improvement of 26.5% compared to 2001
DSO reduced by 5 days to 52 (equals approx. € 100 million cash)
Net debt reduced by 48.8% to € 207.5 million (2001: € 405.3
million)
Dividend proposal € 0.17 (2001: € 0.14)
Highlights full year 2002Highlights full year 2002Highlights full year 2002Highlights full year 2002
Key dataKey dataKey dataKey data
€ mln Q4 2002
Q4 2001
change FY 2002
FY 2001
change
Revenue 1,368 1,396 -2% 5,444 5,789 -6%
Gross margin 22.2% 23.0% 21.9% 23.0%
Operating margin 2.4% 1.4% 1.8% 1.8%
Net income from ordinary operations
21 10 107% 59 48 21%
EPS from ordinary operations
0.16 0.07 0.43 0.34
Randstad North AmericaRandstad North AmericaRandstad North AmericaRandstad North America
Only light industrial segment improved
Gross margin measures effective
240
250
260
270
280
290
300
310
320
330
Q1 Q2 Q3 Q4
15%
16%
17%
18%
19%
20%
Revenue 2001
Revenue 2002
Gross margin
In mln $
European market developments*European market developments* European market developments*European market developments*
-20%
-15%
-10%
-5%
0%
5%
Q2 Q3 Q4 Q1 Q2 Q3 Q4
Germany** France Belgium the Netherlands
% -change
* prices & volume (year-over-year) ** estimate
20022001
Developments market share EuropeDevelopments market share EuropeDevelopments market share EuropeDevelopments market share Europe
Market share FY 2002
Market share Q4 2002
Market position
the Netherlands = + 1
Germany - = 1
Belgium = + 1
France ++ ++ 6
Spain - = 2
United Kingdom + ++ 10-15
Italy ++ ++ 6
Gross margin by region Gross margin by region Gross margin by region Gross margin by region
FY 2002 FY 2001*
The Netherlands 27.6% 27.7%
Germany 21.0% 22.2%
Belgium 16.5% 17.4%
France 15.0% 15.3%
Spain 16.3% 17.5%
United Kingdom 19.9% 21.7%
Other European countries 21.5% 24.0%
North America 18.3% 20.9%
Total 21.9% 23.0%
* continuing operations only
Randstad GermanyRandstad GermanyRandstad GermanyRandstad Germany
Break even in second half 2002; operational performance improved throughout the year
Structural improvement of market approach
Operating expenses significantly below 2001
In-house services expanding: 2,500 flexworkers
Legislative environment has improved
LegislationLegislationLegislationLegislation
German legislative environment has improved
- Synchronization ban removed
- Order duration for 1 flexworker at 1 client no longer limited
- Staffing in construction sector allowed under certain
conditions
- But, existing law on part-time and time limitation has to be
followed (“Teilzeit- and Befristungsgesetz”)
Draft EU directive still under discussion
Share of specific target groups among Share of specific target groups among flexworkers in the Netherlandsflexworkers in the NetherlandsShare of specific target groups among Share of specific target groups among flexworkers in the Netherlandsflexworkers in the Netherlands
2001 2000
Elderly people (> 45 years) 8% 7%
Impaired employees 3% 2%
Long-term unemployed 2% 2%
Ethnic minorities 13% 9%
Target groups (corrected for double counting) 23% 18%
source: ABU
YachtYachtYachtYacht
Reduction operating expenses by
€ 10.4 million (-13.0%)
Tight cost control and
adjustments to headcount
Focus on limited number of
product market combinations
Ratio fixed and variable contracts
has improved further (65/35%)
Market leader in finance in the
Netherlands0%
10%
20%
30%
40%
50%
2001 2002
Technology
ICT
Finance & Management
Revenue split per LoB
In-house services*In-house services*In-house services*In-house services*
Organic growth 11% in Q4 2002
Solid profitability Capac the
Netherlands
Other countries: focus on
profitability per client
46 in-house locations added
* excl. Germany and USA
the Netherlands Spain BelgiumUnited Kingdom France Italy
64%
(2001: 75%)
8%
16%
9%
2%
1%
Financial performance Q4 and 2002Financial performance Q4 and 2002Financial performance Q4 and 2002Financial performance Q4 and 2002
Robert-Jan van de Kraats, CFO
Income statement Q4 2002Income statement Q4 2002Income statement Q4 2002Income statement Q4 2002
€ mln Q4 2002 Q4 2001 change
Revenue 1,368 1,396 -2%
Organic revenue growth 0.5%
Gross margin 22.2% 23.0%
Operating expenses 272 301 -10%
Operating profit 32 19 70%
Net financial income & expenses -2.3 -5.5
Net income from ordinary operations
21 10 107%
Income statement full year 2002Income statement full year 2002Income statement full year 2002Income statement full year 2002
€ mln FY 2002 FY 2001 change
Revenue 5,444 5,818 -6%
Organic revenue growth -5%
Gross margin 21.9% 23.0%
Operating expenses 1,093 1,236 -12%
Operating profit 100 103 -4%
Net financial income & expenses -15.8 -25.9
Net income from ordinary operations
59 48 21%
Revenue split by region: unchanged in 2002Revenue split by region: unchanged in 2002Revenue split by region: unchanged in 2002Revenue split by region: unchanged in 2002
40%
10%10%
6%
5%
3%
3%
23%
the Netherlands
Germany
Belgium
France
Spain
United Kingdom
Other European Countries
North America
Total € 5,444 mln
Gross margin contribution by regionGross margin contribution by regionGross margin contribution by regionGross margin contribution by region
50%
9%
8%
4%
4%
3%
3%
19%
the Netherlands (48%)*
Germany (10%)*
Belgium (7%)*
France (4%)*
Spain (4%)*
United Kingdom (2%)*
Other European countries (2%)*
North America (21%)*
* in 2001Total € 1,193 mln
Development in operating expensesDevelopment in operating expensesDevelopment in operating expensesDevelopment in operating expenses
Operating expenses declined by € 142.3 million
Most savings in Randstad North America and Germany
One-off’s in Q4 2002 of € 10 million
200
220
240
260
280
300
320
340
Q1 Q2 Q3 Q4
in m
ln €
2001
2002 One-off’s
Balance sheet Balance sheet Balance sheet Balance sheet
€ mln Dec 31, 2002 Dec 31, 2001
Goodwill 7 7
Financial fixed assets 366 421
Tangible fixed assets 142 264
Trade receivables 820 924
Equity (goodwill absorbed) 335 350
Provisions 367 324
Net debt 208 405
Interest cover ratio* 10.5 6.8
* EBITDA over financial income and expenses
Cash flow statement Cash flow statement Cash flow statement Cash flow statement
€ mln FY 2002 FY 2001
Cash flow from operations 196 198
Cash flow from investments 27 21
Tangible fixed assets, net 12 (91)
Participation/disposal 15 112
Free cash flow 223 219
Cash flow from financing (228) (63)
Financing (185) 32
Reimbursements financiers (43) (95)
Net cash flow 3 153
DSO 52 57
Accounting topicsAccounting topicsAccounting topicsAccounting topics
IAS project status: identify issues and establish time path
Classification of amortization goodwill in the income statement: changed per January 1, 2003
Segmentation report to be changed as of first quarter 2003
Outlook Q1 2003Outlook Q1 2003Outlook Q1 2003Outlook Q1 2003
We do not yet see convincing signs of a recovery in our markets. Current organic revenue trends are close to flat (year-over-year). In the seasonal pattern of our business volume, the first quarter is the weakest quarter. Therefore, we expect the operating result in the first quarter to be close to or slightly below break-even, consequently EPS will be slightly negative as well, as it was in the first quarter of 2002.
StrategyStrategyStrategyStrategy
Ben Noteboom, acting CEO
Medium-term strategic targetsMedium-term strategic targetsMedium-term strategic targetsMedium-term strategic targets
2002 actual 4 to 6 year target
Revenue mix : 20% specialized > 30% specialized
Geographical spread : 40% the Netherlands 30% the
Netherlands
EBITA margin : 1.8% 5 – 6 %
Building blocksBuilding blocksBuilding blocksBuilding blocks
Building block Status
Strong concepts Implementation of structured work
processes and commercial approach in
almost all countries
The best people HR & MD guidelines and systems have been
defined and implemented
All training in line with
strong concepts Senior management
training tripled in 2003
Superior brands Corporate identity Randstad brand
“Good to know you”
Excellent execution
Strategic pStrategic prioritiesrioritiesStrategic pStrategic prioritiesriorities
Improve operational performance Randstad North America, Randstad Germany and Yacht
Focus on organic growth
International Randstad branding program
Implementation of standardized work processes and commercial approach
Infrastructure maintained
Maintain strong balance sheet
DisclaimerDisclaimerDisclaimerDisclaimer
Certain statements in this document comprise forecasts on Randstad Holding’s future financial condition and results from operations and certain plans and goals. By their nature, such forecasts generate risk and uncertainty because they concern events in the future and depend on circumstances which then apply.
Any number of factors can cause actual results and developments to deviate from those expressed in the forecasts stated here. Such factors can be, but are not limited to, general economic conditions, scarcity on the employment market, the variation in the demand for (flexible) personnel, changes in employment legislation, future currency exchange rates and interest rates, future corporate mergers, acquisitions and divestments and the speed of technical change.
The forecasts speak only as at the date of this document.