Q3 2005 Results

27 October 2005 Q3 2005 Results Presented by Zach Miles Chief Executive Frits Vervoort CFO This presentation includes forward-looking statements that reflect our intentions, beliefs or current expectations and projections about our future results of operations, financial condition, liquidity, performance, prospects, growth, strategies, opportunities and the industry in which we operate. Forward-looking statements include all matters that are not historical fact. We have tried to identify these forward-looking statements by using words including “may”, “will”, “should”, “expect”, “intend”, “estimate”, “project”, “believe”, “plan”, “seek”, “continue”, “appears” and similar expressions or their negative. These forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by these forward-looking statements. Important factors that could cause those differences include, but are not limited to our financial position and our ability to implement our business strategy and plans and objectives of management for future operations, our ability to develop, balance and expand our business, our ability to implement our long-term growth strategy (including through organic growth and acquisitions), our ability to make improvements to our capital structure, industry and market trends and volumes, including the speed and strength at which the staffing services industry and the sectors in which we operate, rebound from economic slowdowns and recessions, the effects of regulation (including employment and tax regulations), our ability to improve the efficiency of our operations and to reduce expenses in our operating companies and their network of offices, litigation and our ability to take advantage of new technologies. In light of these risks, uncertainties, assumptions and other factors, the forward-looking events described in this presentation might not occur. Additional risks that we may deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this presentation not to occur. Except as otherwise required by applicable law, we undertake no obligation to update publicly or revise publicly any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this presentation. 2 Presentation Agenda Highlights and Operating Summary Financial Summary Management Outlook 3 Q3 2005 Highlights Sales of €1,808m (2004: €1,728m) • Up 6% organically • Professional/executive sales up 8% organically • Permanent placement fees up 18% organically Operating income of €66m (2004: €61m*) • Up 7% organically* Net income increased to €40m (2004: €32m*) • Up 25% organically* EPS of €0.24 (2004: €0.19*) • Up 26% organically* A busy quarter for acquisitions and organic developments *Excluding Special Items in Q3 2004 4 Geographic Breakdown – Q3 2005 Sales ROE 20% Netherlands 7% Operating income ROE 14% Netherlands 5% UK 12% UK 15% France 45% US 15% ROW 8% France 41% US 8% ROW 10% 5 Sector Breakdown – Q3 2005 Sales Education 1% Engineering 6% IT 9% Accounting 4% Healthcare 6% Traditional 68% Other Sectors 6% Operating income Other Education 1% Sectors 5% Engineering 10% IT 15% Accounting 6% Healthcare 11% Traditional 52% 6 Organic Growth by Region +30% +20% +10% 0 -10% -20% -30% Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 7 Q3 2005 Operating Summary France organic sales increased by 6% • Gross margin declined but operating income improved by 13% organically assisted by good cost control • All segments within VediorBis showed growth • Permanent placement develops encouragingly • Engineering and accounting sectors grew by more than 10% and the decline in healthcare eased 8 Q3 2005 Operating Summary UK organic sales were flat • Good performance from engineering sector offset by slowdown in traditional and healthcare sectors which both declined by 6% organically • Operating income decreased organically by 18% • Gross margins increased reflecting higher permanent placement 9 Q3 2005 Operating Summary US organic sales growth remains high at 12% • Very strong increase in organic operating income; up 36% • Professional/executive recruitment sales up 11% organically led by accounting recruitment • Traditional recruitment continued to grow well in advance of US market trends with an organic sales improvement of 20% 10 Q3 2005 Operating Summary Netherlands organic sales growth accelerates to 12% • Operating income increased organically by 62% due to continuing operational leverage and cost control • Professional/executive sectors showed a strong improvement in organic growth of 10% • The Vedior brand, our largest operating company in the Dutch market grew by 17% organically 11 Q3 2005 Operating Summary Other Countries • Rest of Europe sales improved by 4% organically • Australian operations continue to perform well with increased sales, profitability and efficiency • All operations in Latin America achieved excellent growth in sales and profitability • Indian sales increased by 65% organically 12 Organic Growth by Sector +40% +30% +20% +10% 0 -10% -20% Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 13 Business Development Organic initiatives Andrew Farr Supreme Education Ma Foi Select Interservices Vedior Career Vedior Contec Date Mar 05 Mar 05 Jul 05 Jul 05 Sept 05 Oct 05 Sector Accounting Education HR BPO Travel/Tourism Perm Plcmnt Engineering Market UK UK Oman Cyprus Japan Japan 14 Business Development Acquisitions Becker Locum Medical Mandeville Consulteam Qualitair Compliance Date Jun 05 Jun 05 Jul 05 Jul 05 Aug 05 Oct 05 Sector Accounting Healthcare Sales/Retail Traditional Engineering Legal Market US US UK Eastern Europe UK/Netherlands US 15 Presentation Agenda Highlights and Operating Summary Financial Summary Management Outlook 16 Income Statement Three months ending 30 September € million Sales Gross profit SG&A Operating income* Net income* Earnings per share* 2005 1,808 315 (249) 66 40 0.24 2004 1,728 300 (239) 61 32 0.19 Increase +5% +5% +5% +7% +25% +26% Organic +6% +6% +6% +7% *Excluding Special Items in Q3 2004 17 Temporary Gross Margin Trend Mix +0.3% +0.2% +0.1% 0 -0.1% -0.2% -0.3% -0.4% -0.5% -0.6% -0.7% -0.8% Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Acquisitions /Disposals FX Pricing Each quarter compared to the equivalent quarter in the prior year 18 Balance Sheet & Cash Flow DSO unchanged at 65 days Net debt reduced €33 million to €559 million • Redemption of Preference Shares A = €51 million Cash generated from operations increased €25 million to €73 million • Benefit from lower working capital requirements 19 Presentation Agenda Highlights and Operating Summary Financial Summary Management Outlook 20 GDP Forecasts 2005 GDP Belgium France Germany Netherlands 1.3% 1.4% 0.9% 0.6% 2006 GDP 1.7% 1.6% 1.1% 1.6% UK Euro area Japan US Source: The Economist Poll, 22 October 2005 21 1.9% 1.2% 2.2% 3.5% 2.1% 1.5% 2.0% 3.2% Management Outlook Latest developments in the majority of markets encouraging • Look forward to continuation of positive trends in Q4 2005 and into 2006 More difficult operating environment in UK • Costs being reduced and other measures taken to protect profitability A healthier operating environment combined with continuing structural growth driven by demographic changes, deregulation and increasing skill shortages 22 Any Questions?