Randstad N.V. (AMS:RAND)

CMD 2024

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Nov 20, 2014

Hello. Good to see everyone. I shook hands with almost all of you. Anyway. Welcome in London. Andrew Cook is also with us. He was in Investor Relations not so long, and he thought it was a great idea. Now you live in Amsterdam, but I think it's good we're closer to you, so we're very happy with a good turnout of people. Program. What am I going to do? Some introductory remarks. Evolution, where are we coming from? We talk a lot about today, it's also important to look a few years back. Our current strategy and the building blocks around that. Total Talent Architecture, our new approach towards our large clients. Business segments, where are we in all the business segments we are addressing and trying to sell. Activity-Based Field Steering. No presentation I'm doing currently goes without ABFS, as we call it. Some conclusions going forward. If you look 10 years ago, we've definitely changed as a company. I don't think it's a coincidence that we use GP. We talk about top line, but certainly we see in our Anglo-Saxon environments, growing in perm, also in our U.K. environment, it's all about gross profit. If you look at our gross profit in 2003, not only, of course, is it a lower amount of money, but it's a totally different mix. Perm is very limited, and also professionals is very limited. Of course, that was the conclusion we made in 2007, '08, being a successful staffing company. What goes on in the world? What are we expecting in terms of growth in European markets, in American markets? It's all going to be about professionals. Hi, Mark. You see where we are today, 2013. Profs is a very sizable part of our gross profit, and also perm is very sizable. We do think, I'm not talking about countries, of course, because 2003 was around 10 countries, and today it's 39. When I started in the business 26 years ago, we had one business model. I visited a client, I asked if he needed a temp, I then found a temp, and I made a match. I even had a computer to do the billing. That's it. Today, this is not all of it, by the way, we have around 20 different delivery models. Therefore, it's all the more important that we train our people and we run our businesses in a very standardized way, in a way that everyone knows what he needs to do, that the support is very targeted around the world. Otherwise, it's very complicated to run our business today, and you might get caught in all the different businesses and not do anything right. Chris, but certainly also Tracy, will show you in our more developed businesses how they deal with this ongoing challenge. Of course, at the end of the day, it's our clients that demand us to change, but we also propose solutions to our clients to be a better-performing organization. A quick look outside. There are definitely some fundamental structural shifts going on. Globalization and demographics. We do see increasing skill mismatches and migration flows. There's this funny political debate that countries don't want immigration, while many countries definitely need immigration and qualified immigration going forward, and we do know we can play a role there. One of our important market is Japan, second market in the world, and if you look at their demographics, they really face some serious challenges, and we're still a small company there, relatively, but we do get more board access, also in Japan, to talk about the challenges that our clients are facing there, and they will be huge. Clients looking for fewer suppliers within and across countries. This is something we've seen in our temping business. Many large corporates work with two to three suppliers worldwide. There's a very close-knit cooperation supported by IT. We definitely think that's the way forward in professionals. It's also going to be the way forward in perm. I'm going to talk more about that when I talk about TTA. Shortages and surpluses. If we talk in the U.S., we already certainly in our professional, but sometimes also in our staffing situation. We do see already some shortages. Engineers, a space in Europe which is definitely seeing a lot of scarcity. Two years ago, I asked the CEO of Siemens what was his biggest nightmare, if you will. He was already 1,500 engineers short versus his ambition. There's already shortages. In R&D, research and development, a lot of questions. Companies like ASML in the Netherlands, we already recruit around the globe for them. Some 40 to 45 nationalities we deliver there on the daily business. In the U.K., if Mark were to talk to you about the CPE, construction, property, and engineering business, a booming sector, doing very well. It's tough to find people. Japan, I already mentioned. Flexibility. There's no company that can be competitive with 100% people full-time on their own payroll. They need to look for flexibility, and we are working with them to create long-term strategies there. Regulation. We used to call it deregulation, but it's a funny word. It's about regulation. We do see some worrying political tendencies in Europe currently. Germany as an example. Germany was the sick man of Europe some 15 to 20 years ago. They changed the labor market to become more flexible. The economy has done well ever since. Of course, it's just part of what happened in Germany. What you now see is that the same Social Democrat party is adopting a very old-fashioned agenda, an unproven agenda. We always say it's not about yes or no flexibility, it's about well-regulated flexibility. We do have a well-regulated sector to help companies, to help countries to become flexible, to use labor markets, and to be very competitive. Again, Germany putting in a minimum wage in the eastern part of EUR 850, where the neighbors in Poland have EUR 265. That might sound great. We don't think it's the way to go. We do take up our own responsibility here towards governments in lobbying and, of course, also in presentations like this. When I got asked for the role, first question was also from the audience here, what about the strategy? What a new CEO apparently does is change the strategy. Well, in the core, we think there's nothing wrong with our strategy. If you talk about strong concepts, there's many more strong concepts than 10 years ago. Then it was 4, now it's 20, as I mentioned. In best people, we train many more people. Our workforce is far more diverse. We train staffing people, we train workforce consultants, we train perm consultants. That puts pressure on the business. In the core, it's absolutely still the same strategy. Excellence and execution. We're going to talk to you about the effect that technology has. The funny thing is, when I get asked about technology, it's always being approached like, which dangers does technology pose for Randstad? We think there's many opportunities. There's also a lot of technology that we are using today in our business. Therefore, a presentation of Ryan, which is not so much aimed at the Netherlands, but aimed at what we are putting into mature businesses today, I think is very interesting for you going forward. The growth drivers. The gist of my story is we're a growth industry with lots of opportunities. There's a cyclical part and there's a structural part of our business, of staffing, of labor markets. We think we're well-positioned. We will be growing over time. This is our strategic roadmap and also is, in a way, an agenda for today. Where are we? EUR 17 billion company, number 2 in the world. Not yet the number 1 to 3 in any market. We still have challenges there. Compared to 2007, 2008, strategically, we're well-positioned. We don't need strategic acquisitions to really fill gaping holes in our portfolio. They were there in 2007, 2008. Anglo-Saxon markets, just light industrial, almost no presence in Asia-Pacific, no presence in Japan. We're all there. It's about organic growth and probably some bolt-on M&A. Activity-based field steering. Honestly speaking, there's nothing new. Tracy will not have a presentation on the fact that she saw the light May this year when we first talked about ABFS. She even called me and said, "You know, Jacques, what's new? I'm doing this for a few years now." I said, "That's great. Then you can show what happens if you run a business in the best possible way forward in our performance compared to market. Great that you're here today, Tracy. Organizations. World League. What do we mean with World League? In our support departments, HR, finance, and marketing, we want to have World League people. We're driving programs across the globe that people can be a good partner for our own businesses to support them in the best way possible. We look at organizational structures. Chris is going to do that. We've had 3 businesses in the Netherlands for years, which is great and definitely necessary at the front end. Is it also necessary at the back end? Mark in the U.K. is going through a massive restructuring, really creating a business for the first time in the U.K. from 28 small companies into eight companies that are learning to work together with one shared back offices. Total Talent Architecture. The slogan, Creating Quantifiable Business Impact, Addressing the Entire Workforce of Our Clients says it all. I'll spend some more time on that one. Technology, I mentioned. Robert Jan is going to spend some time looking at M&A historically, how we did. Then there's the goals, of course, which to a certain extent have been in our press release. But again, Robert Jan will see and will show you how much we are doing towards those goals and what we are doing towards these goals. Total Talent Architecture. Again, creating quantifiable business impact. If we historically went to clients, and this is a bit black and white, we were like, "We're Randstad, we're blue, we're the number 2 in the world. We're great. Let's work together." Which is not necessarily a great USP. Now we go to our clients, and we say, "We know you. We know your company. We know your sector. We've compared you to your peers. We've looked at your employer brand, we looked at your HR processes, we've looked at your productivity, we've looked at your flexibility, and we do think there's upside there. We can show you the opportunity you have if we change, if we improve, and we can also show you the proof if you want to change. Is that interesting?" That's the new way to approach our big clients. It's not a business line. We will not sell bills from TTA Limited, but this is the way we approach our big clients, which is definitely different than our peers and brings us closer to an Accenture, an IBM, more a consultative part. This is what it looks like. Now let me take you back to yesterday. Yesterday, I was with a large client of ours. It's a client, currently, they do business with us. They buy 4 types of services in nine countries. We looked at their issues. TTA, again, is a very well-prepared sales call. What did we find on this client? Two-thirds of his business in some countries, of his people in some countries are over 50. We did a mystery shopping tour, registering on his website as a job seeker, and we shared the experience. We also compared him with his peers in the sector. We also made an analysis on the amount of people the company would recruit just to keep up to speed, not even growing. We asked them how they were organizing it. We also showed them the way sourcing on the internet, and probably Ryan is going to talk about that, goes nowadays. We asked him how his HR department was doing this. He didn't know. He is the worldwide CPO for indirect services, so he's my counterpart. We said, "What would you like to work upon?" We're going to work upon this recruitment funnel and how to handle it, and we're going to work on the way he communicates with the labor market. We identify the stakeholders who say, "Okay, so if we do this, who needs to be involved in your company? I will bring my experts to work with you." We assemble the facts and figures. We compare them with his peers. We have compelling messages. Sometimes these messages are business cases. They are like, "Okay, today, your whole recruitment process takes you so much in direct money, in indirect money, and you also have a time to fill of X days." If we bring that down, that's going to be our solution. We create an action plan. That's what we're doing, and you can imagine that this is a different situation. The clients don't tend to go into a tender mode like, "Great idea, let's invite 40 people." No, they work with us on really getting to the next step. We identify a problem, we present a solution, and we create a proof. Assembling the facts and figures, we are currently building a worldwide database where we say issues. Issues are pretty clear across organizations, across sectors. On the proof, we use a lot of external sources. If your employer brand is below par, what kind of disadvantage do you have? What happens if you solve this? Of course, the proof is internal. What did we do with comparable clients, and what would it bring you? If you talk about the target group, of course, it's our 150-200 international clients we are currently working with, and it's probably the top 50-100 local clients, large corporates. We're now training around 150 people in our organization, management team members, and the more experienced senior account managers to work on this. If you look at business impact, you can see this here. Sort of works. You'll see many different phases at which we work with clients. Here you also see, what I earlier said about, the way that staffing, that temping is more developed than it is professionals on a client point of view. Ad hoc. Preferred supplier list, that's what we most see in professional still, right? A professional buyer will have a preferred supplier list. 10 companies that he works with, which is still pretty transactional. In our staffing, in our in-house, we move towards total cost of ownership, and then it becomes more interesting. Many more engagement models. I'll talk to you about MSP and RPO, where you have a structural buy-in with the client, fueled by technology, where we do think that professional is also moving in that space. Total Talent Architecture. Honestly speaking, today is about honesty, we have some 25 programs currently running. As I said, the target group is around 1,000 clients. This is something for us which will be years, because this is not a quick sales call. This is really getting the message out there and always talking to the client on the roadmap of becoming a better company. It's never finished. This is sort of a way to present our company. For many large corporates, the target group of 1,000, the Total Talent Architecture brings the whole Randstad organization to them. They buy many sectors. They buy many services in many countries. There are also still a lot of clients who just buy one of our services. The whole company, of course, and again, back to Chris, the whole company, such as the Netherlands, will harness all these businesses supported with a very efficient shared service center, and then, well, general marketing, but more dedicated marketing in all the verticals, as we call them. This is our company. It's a different company for a large client than it is for a small client, but that's okay. Let's take a look at the business segments. How are we doing in all these verticals and what's there to mention? If we look to 2007, 2008, it's undeniable that the gross margin we get for a comparable service with a comparable client has gone down. We are offsetting that with new delivery models. Of course, most telling historic example is in-house. You see two things. On the left-hand side, the percentage of revenue currently, and on the right-hand side, the conversion. In-house segment is still, in absolute terms, the lowest gross margin, but it has a high return. In staffing, and again, Chris, will you touch upon delivery models in staffing? When it's not in-house, we still see a change in delivery models. In staffing, more low touch, more high productivity, and at the same time in staffing, we see a business mix change towards more perm, towards more SME, certainly. Big offensive in SME in the Netherlands, really paying off. Tracy will talk to you about very targeted segments that she has in her business and the way she delivers with totally different unit sets, different skill sets. There's nothing wrong with a decreasing margin as long as you've got the right delivery model to match it. In professionals, it's improving. It's improving quite rapidly. It's pretty broad-based. It's partly the cycle, it's partly things picking up in Europe, but I also think internally, we're improving. As you know, in our total mix towards the 5%-6% professionals should return the highest. At least we're getting to decent numbers in terms of productivity and profitability, but we're not there yet. We like the trend. It is a big opportunity. If you look at the total world market, EUR 310 billion, that's us. Our market share is 5.4 whatever, because the total world market is tough. It's still a very fragmented place. Number two has 5%-6%. You see staffing, a bigger piece of the pie with a higher market share, and you see professionals, a smaller market, but we think a growing market with a lower market share. On the right-hand side, you see our global clients. Roughly in staffing and in professionals, they spend the same amount of money. On the left-hand side, you see our market share in staffing with these clients. On the right-hand side, you see the professionals market share. Clients know this, and they want to work with less suppliers. By the way, the profit pool with these clients and professionals is bigger as it is in staffing, which you're probably aware of. There's not just a big opportunity in the market as such. There's even a big opportunity with our current global clients that we see every day. Is it then just us? Why does it take so long? It's also the client. It is a big change for the clients, and we've seen this in staffing. To move from many suppliers to being in-house, doing everything, the client needs to say to his people, "You can't order with suppliers across the corner. You need to work in this framework." That's still not yet the case in professionals, but clients are worried. They're worried about the right talent being available. They're worried about compliance in freelancers. They're worried about, do I spend enough? Where do I go with my R&D center? We think there's a big opportunity for us. Why are we improving? Well, getting our act together. Honestly speaking, it took us too long in the last few years to get our act together in professionals and to really use the powers we have into improving our professional performance. We've made some management changes because sometimes it needs to start there, in U.S. profs, in the U.K. and Australia, we do see improved performance. It's not just about changing people, but it's about changing people and improving processes. In Northern Europe, we're creating the vertical approach like we have in the U.K., like we have in the U.S. We've analyzed successful professionals companies, they're all verticals. They are dedicated to a segment of the market, biggest one, IT, engineering, or finance, they've organized themselves into verticals. If not yet the case, that's what we're doing. Again, Chris will explain to you what we're doing in the Netherlands. Most new markets are professionals markets. We don't build a staffing business in Brazil. We don't really build a staffing business in China. We're building professionals businesses over there. We've got this kit to grow fast, which brings in the right focus and the right marketing support. I think China is a great example. Growing more than 50%, now being the number 3 in any big regional market in China, probably the number 2 in the whole of the market in professional staffing. I visited Huawei, a big telco, as you probably know, they said, "We're so happy with Randstad. You provide us with just the key people we need." Very hard to find profiles, which is pretty new to me because normally we've provided historically the big numbers in staffing, then they went to someone else to find what they think are the key people. That's what we do in China. It's probably now in terms of absolute numbers, perm fees, our number 4 market in the world already, they're never going to look back. Also Spain in the European environment, going from scratch 2 years ago in professionals to the number 3 in the Spanish market, purely organic. Spain is one of our strongest staffing markets. The market has been hit, the way we execute, again, field steering is pretty good. They decided, we're going to build professionals and they're engineers. They took the way we need to work, they built it's going very well. India is going to be a massive change. We're going to change our business mix. India is a tough place to do business. It's a big place. We do have a large payrolling business. That's not the way forward. We're going to look into professionals. The funny thing is, China and India can compare notes because we do think they are comparable in a way. Perm. You've seen our growth numbers in perm. We're very happy with the above 20% growth we've seen in October, and it's a huge opportunity. These are our markets, and these are our percentages of perm on the gross margin. This is like Singapore and Hong Kong, where we are a pure perm player. This is China, as I mentioned, a big perm player. The red one is the group average. As you can see on the right-hand side, the really small ones are the big businesses. It's the Netherlands, it's Belgium, it's Germany. Tracy will tell you what we've done in our American staffing business in the last three years to grow perm, and she's even more bullish about it than she was before. We see a big opportunity, not just because we focus on it strategically, but also of course, because if markets get more mismatched, there's got to be more perm demand. Sourceright, MSP, RPO. I think we've done a lot. We were late to the party on MSP. We started MSP probably four years ago, really trying to build it, starting in the U.S. and the U.K. Then through the acquisition of SFN, we got a great RPO business, and we started creating a worldwide company in a way called Sourceright, where we blend staffing, professionals, MSP, and RPO. In the U.S., these are still two different animals. MSP manages staffing supplies, basically, and RPO insources the recruitment function of the client. In the U.K., it's far more blended, and we do see it moving to Europe also in a far more blended way. We also organize this as a vertical. You've seen it in the picture I showed you on the total Randstad organization. We've decided that in Europe, we're not going to have our Sourceright offering in the country anymore. We are creating a European vertical because clients want that. Clients need it. It's increasingly, as you can see here, an international business. We have the vertical, and then within the vertical, we've got a recruitment hub. The recruitment hub in Europe is in Budapest. The recruitment hub in Asia-Pacific is in Malaysia, and in the U.S., we have several recruitment hubs. They are not only low cost, but they are also centers of excellence. In Budapest, there are 80 people now. A year ago it was three. There are 80 people now speaking 21 languages amongst themselves. If ever I spend the day there, I'm very tired. They are sourcing specialists. They can find people in Budapest better than our people in the country can find the profiles. It's pretty scary, honestly speaking, how much people leave on the internet on who they are, where they work, what they would like to be when they grow up professionally. That's not the challenge. Finding people is not the challenge. The challenge is really getting people interested in what you have to offer. High-employable professionals don't open, in a way, 70% of the approaches they get from recruitment agencies or whomever. Our people are not just specialists in sourcing, they're also specialists in presenting themselves as fellow professionals. Just to get back to the European vertical of Sourceright, multinational recruitment will go through Budapest, which is 60% less expensive from a cost point of view, which is also a center of excellence. That's an interesting change for our company. It's also important to put it in the vertical because the people who run this are very hard-to-find profiles. It's a very consultative sell. There's technology involved. You need to implement a vendor management tool on every client level. We are using the English, the German, the French colleagues in this business in an international approach, which makes it far easier to organize. Also clients like it. Clients want us, of course, as always, to have a friction-free, one-point-of-entry solution. We can offer that now in the U.S., in Europe, and in Asia-Pac. Of course, for international clients, we do have a few, not many yet. They then come together at the top level globally, and they define it for the client, which is easy if you have the same way of working across the globe. Doing pretty well in MSP, spend under management, quite some spectacular growth. In the U.K., we stepped up, but at the same time, we also saw some clients we were not too happy with. Hey, Mark. It's always tough to say no to a client, but sometimes we do. In Europe, certainly in Germany, it's growing fast. You should think one client, EUR 100 million spend under management, EUR 800,000, EUR 1 million RPO fees. It goes quickly. We do feel that the European market is adopting these concepts really quickly. We were late in the U.S., honestly speaking. We were late-ish, Mark, in the U.K. Very. Yeah, very. We were pretty timely, and we are pretty timely in EMEA and probably also in Asia-Pac. Activity-based field steering. What is it? It's a way we run our company. There might be a bit of emphasis just on the activity part. We did that deliberately, by the way, but it is, in all instances, the way we run all our businesses. Here on the left-hand side, you see all the questions you need to answer before you start, in a way, running your business. Is the market mapped? Do we have the best people on board, well-trained? Do we have the business logics? Business logic meaning, how many visits, how many phone calls do you need to do to make a sale? That is sort of a baseline that you need to do before you start measuring success. Is there a clear growth model, as in when will we put in more people, and are they lined up already? Of course, do we have the right meeting frequencies and the right content on discussing it? The incentives, very important, because sometimes you take out a large client, you then give that large client to a different delivery model. You need to have the right bonus system in place so that people do that, and then also that the way they sell and what they sell can be commissioned in the right way so that you make money, your consultants make money, and you grow your earnings at the same time. The whole support from a marketing point of view, from an HR point of view. This is it, you go into the triangle, as I explained before. It's for all services. The content might be different, but the approach is absolutely the same. What does that really mean? Again, certainly in Tracy's story, you will see this in the way we apply this in the staffing business in the U.S. You need to, in a way, tick all the boxes. You cannot just look at the business performance. Sometimes when your business performance isn't great, you need to go back to your organizational readiness. There might be something wrong with your onboarding program, as we've seen in quite some countries, by the way. Bring people on board, give them the same training with great buy-in of management, very important, and then ramp them up to productivity. If they don't like it, if they're not good, you need to say goodbye. If they're good, invest in their growth. The role of management is crucial here. We are going through, in a way, a cultural change to be more accountable, to be closer to people, to really invest in your people and be an exemplary leader. Again, talking about the culture and the way Tracy leads, it's close. Close in the good sense of the word, as in supportive, but also close as in this is not good enough. Taking measures. There's the profitability, of course, the business performance, the revenue GP growth, and the order pipeline. You might have this, and you might have this, but if this doesn't look great, then you know this is going to be under pressure. If this is great and this is great and this is great, then you know you can invest. Tracy will talk to you about headcount steering. She knows when people need to be brought in, and it's not like, "Ooh, we're growing. Let's find someone." No, these people are selected, ready to move, and she brings them in. You need to be far more proactive there. The consultant capacity. Activities, in many markets, this is different. Sometimes people find phone calls far more effective than visits. Depends on where you are, how dominant you are in the market, how densely populated the market is, and then, of course, there are the ratios. At the end of the day, we measure on the closest entity possible. If you are here, you're just not doing enough. You're not just commercial enough, and you're also not making your budgets in terms of output. If you are here, you're doing well in terms of visits, but the result is not there yet. This, we call the luck quadrant. You are not doing enough commercially, but you are still making your budget. This will never last. Then you need to move. If you are here, and ideally you then move there, then you will get here. We have this, I have this, on a group level for all entities in a EUR 17 million company. Every week, we know which units all the way down, and then I give Tracy a call. I said, "You are not doing great in Cleveland," Cleveland South or West, but you need to be very close. Field steering, what does it look like? For the people on the webcast, I am now going to show a film. It lasts two minutes, but it demonstrates what happens if you do field steering in the right way, in the old way, or in the new way. Holland comes in for a pit stop. Time to refuel and change tires. Ludmore himself changes the tires. Only four crew members, including the driver, are allowed to work on the car. It is a tense time. Holland stays in his seat, anxious to get away. Let us watch. The tires are changed at last. A crew man polishes the windshield as Holland moves away just 67 seconds after he stopped. This is what we are trying to achieve. Does it work? Yes, it does. Please bear in mind that Tracy has been at this for quite a few years. Her success is not an instant success. It starts somewhere. This is the activity level of the whole company, 30% more consistently throughout the year, visits and calls. This will have an effect, and probably Chris also will talk about the SME approach, what we have done and the results there. It has also brought us quite some productivity increase, which is crucial. It is not just about productivity, because the good news is if a business is well run, then being a consultant is a nicer job, and people stay with you longer, they get more pride, and that is absolutely what we are trying to achieve. My conclusion, I talked to you about the fact that we are a growth business. Yes, if you see the bottom, there is a structural I am sorry, the cyclical element, but there is also an underlying structural element. I am not talking about staffing. We are early cyclical, as Robert Jan will show you. We think in Europe on staffing. Staffing is what we do well. It is in our DNA. If you look at perm, what I showed you. If I look at the MSP and RPO business across the globe, but certainly in EMEA, the professional performance, I can only conclude that we have a great road ahead of us and watch this space. Thank you. Thanks. Well, good afternoon. I'll talk a bit about the financial strategy of the company. I will elaborate on current trading, on the strategic targets and the performance, the balance sheet, the capital allocation. Then I'll summarize with some key takeaways before getting to Q&A. Let me start with the trading update. Most recently, revenue growth, as we actually said when we announced the Q3 results, we mentioned to you that volumes were sort of in line with Q3 in the month of October. That typically should translate into revenues being also in line. Well, Q3 was 4.2% organic growth. Now October came out at roughly 4%, per working day that is. That compares to September being at 3.4%. I'm going to sort of go to the middle bullet point here. If you look at the underlying developments in North America, it continues to show good performance, solid performance, 5% growth. If you look at the staffing company, we can even see growth at the level of 10% in the month of October. If we then look at most of the European markets, we can see that the Netherlands continues to improve at Randstad, getting closer to the market. We also see challenging market circumstances in the German market. Jacques referred to it just before. It's going very slowly. It's clearly a reset of the market in terms of circumstances, in terms of underlying foundation, which has changed somewhat to the negative. That has been absorbed by the market by now. It is currently at a very low level. The same effectively applies to circumstances in France, where we have a very strong focus on customer profitability. It has always been difficult to be profitable at the customer level in the French market. That continues to be the factor. That is the key focus that we have here. In Iberia, was also mentioned, a strong operator in our company. We see business being up 10% in the U.K., up by four. If you then look at the gross profit, it was stable, you might remember my statement, throughout the third quarter. That effectively continues. 5%-6% growth also into the month of October. Back to the top. Permanent fees up 21%. We see growth almost everywhere. We see significant growth in the Netherlands. We see nice growth continuing in the U.S., good growth in the U.K. We also see growth in France in this segment, which is clearly the result of a very micro strategy targeted at this segment. Please note that the overall trends here compare to last year's comparables that have clearly improved from a small decline in Q3 of -1% into growth of 2% into Q4. If we look at the volume trend in the month of November, again, that seems to be sort of in line with the month of October. Well, our forward visibility is very little. Sometimes we debate whether it's six weeks or four weeks or three weeks. Somewhere there is a forward visibility. I'm moving on now to a slide where we have emphasized the lower part of it. That is the targets. The targets effectively remain as they were, and they are much more achievable than they have been before, and I'll get back to that. Our EBITDA target at the bottom, that's the first point, a margin of 5%-6% that we aim at over time, and that is something we should achieve through revenue growth and mix improvements. The second point is that we measure ourselves against the market. Sometimes we have good explanations, like the French situation, or like in the past, the American situation, where we were aiming at customer profitability, improved customer profitability. We always compare to make sure that we know how the match is being played. Finally, at the bottom, financial solidity, leveraging the balance sheet between 0 and 2 times EBITDA, and I'll get back to that point later on. If you look at the strategic targets that we have, you look at how we have performed in the past, this is where you see slide 36, where you see the EBITDA % coming from 2004, just below 4%. We achieved quite wonderful returns just before we got hit by the severe crisis in 2009, taking a massive hit, in 2009, a revenue decline at that time of 27%. We thought party time was starting again. Unfortunately, after just a while enjoying it, we got into another phase of stagnation effectively and some decline. After that, as you know, we've seen a few quarters now with a pickup. The question, of course, is where will we go? In order to analyze that, I've just sort of created a bucket here. This is a bucket on slide 37 with the various components in it. It's effectively a cocktail of activity-based field steering, organizing our work. Of cost management, which we'll talk about a little. Whatever assumption you have on top-line growth. All of this supported automatically with mix improvements. If we grow, you'll typically see blue-collar growth first. We see clerical business starting to pick up, then professionals. Typically at the end we see, let's say, the market as a whole improving in terms of permanent placement. Most of our growth today is in the blue-collar part. Clearly in the blue-collar segment, we see growth. That means that if this is a normal cycle, we're still at the very early stages of it. Even in the U.S., it's mainly blue-collar growth. I'm going to look at the various parts of this bucket, I'll look back at activity-based field steering quickly as well. If you look at our cost base on slide 38, at the left-hand side, you see the total amount, EUR 2.5 billion. The EUR 2.5 billion consists out of field cost, personal expenses, field cost. Which is the lower part, the dark blue part. That is what we manage through activity-based field steering. We have been doing that for quite some years, and I would say rather good as well. I'll talk about it a little further before getting back to the same slide again. Here you see the productivity improvements. This goes back to the first quarter of 2009. This is slide 39. In 2009, at the very beginning, the index is 100. This is GP earned by each and every FTE in the company. You can see a steep improvement. This is where we managed our cost quite well, and this is also where synergies of the Vedior Deal came in. We reached roughly north of 135%, and then it took a hit again with the market situation. You can see here is that it's easier to adjust to steep growth and steep decline than when things are hovering around a certain level. This is where we stand now at the very end of it. The question is: where will this go? It's clear also that we have some seasonal fluctuations throughout the year in our trading. If we then take another look, a bit more detailed on slide 40, we can see a successful adaptation of capacity. What you see here is 2007 at the very beginning up till today. If you look at the blue line, that's revenues. The blue line is revenues with a very severe hit in 2009. Outlets is the green line, the orange line is corporate employees. What you can see here is that in the downturn, the adjustments were rather smooth. It took us a lot of effort, but smooth in terms of alignment with revenue trends. Out of the crisis, we started to improve again. We see growth. You can see the blue line going up. Here steep, up here. As a result, we gained productivity because the increase in corporate employees was clearly slower, as was the outlets. Over here in 2011, we did get the inclusion of SFN. Over here we get the inclusion in branches of USG. What you can say that, first of all, it's easier to manage through a cycle, which is a bit more pronounced, as you can see here. We have made productivity gains here. It is clear that at the very end here, we still have overcapacity in our system. It is across the board, but not everywhere. We have locations where we're doing better than others, and it's very difficult to shift capacity across large geographic distances. Please note that part of the growth that we have in here in the outlets is the result of our in-house services continuing to grow. In-house has an on-site branch effectively for which we don't pay. We have great flexibility, no cost for the branch itself. We're very willing to adapt. I would say across the board, you can see that Randstad, on the back of its activity-based field steering, has been able to make good adjustments. If you look at where we are now, we're still looking at making adjustments to the branch network. The fact that we have a lot more communication with our flex workers through the internet takes away somewhat of the pressure to be located in A1 locations in shopping streets, we might well merge some smaller branches into bigger branches in larger cities. I would say that component, if we stay on track here, if we do what we have to do, we'll keep it under control. If you look, we're going back to the slide that I showed to you before, 41 now. Again, EUR 2.5 billion, nothing changed to the total cost number here. We look at the 40% over here. The red light is not that sharp, I think. 40% of our cost is outside the personal expenses for the field. You can see it is partly in personal expenses for head office and back-office staff, and part is in accommodation, IT, marketing, and general costs, roughly 60%-40%. 40% is people, and the remaining 60% is in those components, of which accommodation is the largest. We are also trying to steer that, and I'm going to elaborate on it. We have made an extensive benchmarking of personal expenses, head office staff, and I'll show you some more about that. This part, accommodation, IT, marketing, and general cost, is also getting attention because we see opportunities in terms of size and location of branches, which I already mentioned. The digitization, I thought it was digitalization, but it is digitization, which clearly creates an opportunity here. We have procurement opportunities. We believe those should contribute to further cost savings. We're going to address this both from a quantity point of view, which means cost down, but also from a qualitative point of view, because we want to make sure that the quality of these services do not deteriorate. By the way, the number stated here, EUR 60 million to EUR 70 million, will come in in two years, roughly half-half, and it includes the savings that we have already announced for the Dutch operations. Typically, making those adjustments in the front office doesn't carry a big cost. Typically. Sometimes it does, but mostly it doesn't. In the back office, it's different. Our staff turnover in the back office is low. Whether you're in an upturn or in a downturn, it's always lower. It's more expensive people with higher age, so a longer tenure. Typically, we need to spend some money on reorganizations here, as we have announced for the Dutch reorganization. Our aim is always, and we are rather relaxed about this, if we earn back the investment in the reorganization with one year, that's a no-brainer in our company. I think that most of it will require such provisions. If it requires such provisions, it will be a one-year payback. Whether it will require provisions, that is very depending on the situation, but frequently it will. If we then take the bucket back again, putting in things together. Continuing to see improved productivity from activity-based field steering, including the cost reductions that I just mentioned, there will be a EUR 30 million to EUR 35 million savings in 2015 and the same amount in 2016. If you include analyst estimates, which is just a data point. We don't know. Jacques mentioned it, I mentioned it. Our forward visibility is very limited. If you include the data point of the analysts, then I want to share the outcome with you, because if that happens, typically the business mix will also improve. If you apply a scenario to that, which is just a scenario, but it's by no means unlikely, then 2015, with this growth rate, 3.9%, which note is at or just below the growth rate that we are seeing at this point in time, we should arrive at between 4.4% or 4.6% EBITDA margin. In 2016, where the assumption in the consensus is 5.4, then we should arrive at the zone between 5% and 6%. If you look at the analyst consensus as it is right now, for 2015, it's 4.3, and for 2016, it stands at 4.6%. That is slightly off with the numbers here. Very much depending in the cocktail of where we're going to see growth and what speed it takes. The question, of course, is what will be the rate? We typically touch base with the founder of Randstad, Frits Goldschmeding, who just in August turned 81 years old. You could say that's old. You can also say that's a lot of wisdom. Frits is privately into macroeconomic research. It's got nothing to do with Randstad because we're very proud telling you that we don't plan. We just manage on the back of actuals every day. The founder of Randstad is into this macroeconomic research, and he has models. He's been right a few times, Jacques. Undeniable. I touched base with him again. I said, "Frits, listen, how is this working? Because your model tells you, and you told me that we'll see growth until 2018. We'll have a small dip, and then we'll be safe until 2024. How does this sound?" He said, "Nothing changed. Nothing changed. It will be a dip. I don't know how deep it will go, but it's not going to be too bad." He doesn't know the steepness of the curve, and it's all based on macroeconomic analysis of the short-term cycle and the long-term Kondratiev cycle. He's still very, very confident, and he also invests on the back of that. He's a billionaire, so he's got to do a few things right. Who knows? If we sort of assume in that context, a scenario where we would grow a little faster, for example, not around 4% in 2015, but a little more, for example, 5.5, and you apply the same sort of cocktail of elements, we would be north of the range that I just shared with you. It might be 4.7. It's just a model. If we would push growth to the very high end of the single range, so high single-digit growth, we're going to get very close to the strategic range of five to six. I think what we want to share here with you is that our conclusion is that the strategic range makes sense. It is clearly within reach. It is very dependent on what you believe will be the underlying economic scenario, because Randstad is a function of the market economy, but also of our internal micro-steering. You know our micro-steering. We've spoken about it a lot of time. We clearly measure ourselves against the market, but of course, the economic climate needs to support this. As a result of this, and this is just to go back to one of the previous slides, we believe that the strategic sort of zone between 5% and 6% continues to be highly applicable to what we are doing. I wanted to spend a few words with you on the cost savings that we believe we can achieve. The cost savings are based on a rather detailed benchmarking study throughout the group. We have a wonderful database by now where we have most of the large and mid-sized companies being included, and we're adding operating companies as we speak. In that analysis, we compare per function effectively. Within finance, you have general ledger, accounts receivable, accounts payable, and so forth. Within human resources, we have broken it down, IT, and so forth. We know the percentage of FTEs that is active in that company, in that function, relative to the total number of employees. That we compare across the world, and that we compare against a database of best practices, and you can imagine that you get good challenges out of that. That's a program we have been running. It has been translated by Chris and his team into the savings targets that we have just discussed. We're clearly on track there. There's no doubt we're going to get there. We blend it with a lean approach to ensure that we don't do stupid things, that we make sure that it is not the efficiency, but also the effectiveness that is being addressed. Well, we have that program globally, so our operating companies have all indicated what they believe they can do in that range. On top of that, they've looked at accommodation cost, IT, and so forth. The total of that, we have translated into our ambition, EUR 60 million-EUR 70 million within 2 years. I hope that clarifies. Question is, where are we in the cycle? Which is something we typically get as a question, and this slide helps to address it. It's slide 44. If we look at North America here, 2,700 index. To date, we're still not at the peak if one adjusts for acquisitions. Still below 2007. This tells you how big the hit has been. Clearly, 2009 is where it all went wrong. We have recovered, but we're not there yet. In North America, we've not been at market for all these years. We have clearly adjusted our client base to ensure that we get good profitability as well, which is clearly coming through now. If you look at the European markets, the gap is much bigger. We are still 21% behind the peak 2007. In the meantime, Germany has been adjusted to the previous level, even exceeding the previous level. You could also say, if you add it all up, we're EUR 3 billion short. We are again a EUR 17 billion company like we were in 2007 on a pro forma basis, adding up Vedior and Randstad. This is also achieved through the acquisition of SFN, Fujistaff, and USG. If you exclude that, it's now 2014, and we're not back to the level of 2007 yet. Where are we in the cycle? We don't know exactly, but I mentioned it before. We see a lot of growth in the blue-collar segment. Typically, this should come with more clerical and professionals growth going forward. If you combine it with the activity-based field steering, so capacity management, a lot of that we should be able to absorb in the existing organization. We've shared it with you in the past, and you've seen it also. We internally look at the incremental conversion ratio. How much of the new gross profit do we convert into EBITDA? In the very early stages of growth, it is around 80%. If you grow a little longer, it moves to 50%, and of course, over time, it will gradually get to the level of EBITDA that we typically have. We have a lot of opcos that are in the early stages of growth. If you look at our French organization, it has taken a lot of hits. We still have maintained our geographical network with the exception of some adjustments that we have announced last year. We still have quite some smaller branches that we keep occupied in order to be able to be there when market is improving again. I'm moving to a few remarks about the balance sheet, capital allocation, and cash flow. On slide 47, I think this is now Oh, no, 17. Sorry. Difficult to read the numbers. 17. We have a continued focus on working capital, as we have discussed in the past. You can see the percentage over revenues of working capital that we need. Working capital expressed in a percentage of revenues. It used to be 2005 here. It used to be 6%, and gradually we have reduced it down to 2.8%. It goes a little easier to reduce DSO in years where we have growth, because that's how the formula works typically. Whatever you say, you can see that it went up as a result of the acquisition of Vedior, and then because of discipline, we took it down. We have a low now of 2.8%, and if we are able to reduce DSO by one day, it's typically EUR 60 million. We're not dogmatic about this. We need to be able to sort of get the right clients in. There are quite a few clients that believe that if you need money, you go to Randstad or to one of our competitors. Well, they are wrong. You should go to bank. It's not easy to run a bank, as we all know, because there are very few people that run a bank successfully, and we don't want to run a bank because I'm sure we're not going to be the best in running a bank. One way or another, we need to be very cautious of this, and I think we're doing a good job. Our overdues, which is the amount that has surpassed the due date, used to be north of 30%, closer to 40%, and now it's at 20%, roughly. 20%. Part of that will never be resolved because it's typically related to the end-of-the-month situation. I think there's still some way to go to improve this further. We're very happy to grow because if you only invest 3% in working capital, there's hardly a limitation from this perspective to grow. As long as we keep it under control, and if you look at our bad debt losses, they have been around between EUR 10 million-EUR 50 million a year, even in the bad phase. I think we've got a tight credit management in place here, and growth can be easily supported by this. If I look at the balance sheet, strengthening the balance sheet on slide 18, the leverage ratio, 0.9 at the end of Q3, at a relatively low point as you can see here. The blue curve is the leverage ratio. It's always at any data point calculated over the previous four quarters. The red bars are the level of net debt. You can see here the Vedior acquisition resulting in a net debt level north of EUR 2 billion. Fujistaff, a smaller acquisition, I'll get back to that one. SFN in 2011, then a tiny acquisition in terms of the investment of USG in the second quarter of last year. I would say if you look at the balance sheet, it's doing quite well. If you look at how the balance sheet has been used to support the business, we've leveraged it on average 1.7 times EBITDA, which I would say is well within the range between zero and two. The banks allow us to go up to 3.5 and under certain circumstances up to 4.25 for a short period of time, which is like an insurance in difficult circumstances. Internally, our aim is to stick to two times EBITDA. I don't think there is a lot here to say other than that it's gone relatively well, and the balance sheet has been used to support the strategy of the company. If you look at financing, we always get questions, "Why don't you fix it? Why don't you fix the interest rates?" Our policy, our strategy is that we aim at hedging the cash out and the cash inflow. Typically, when the economic growth goes down, interest rates go down. We earn less, so we want to spend less. It's almost for free that we get a nice hedge with our cash flow. We're very, very happy with it. That is the focus of our strategy. On top of it, if we would have fixed the interest rates in the past and the brown or orange line, I don't know how you want to express it, but you can see compared to the floating interest, blue, that we shouldn't have fixed it over the last couple of years going back, and we don't intend to do so now. We don't intend to spend money today in order to have some upside over time. We believe that structurally, this is the best choice to make. We also are happy with bank financing. Some of our banks are in the room here, because if we would go to public markets, we would have fixed amounts, and our need for funding is floating. It's variable. If we continue like this and we don't meet any targets that we can successfully acquire, we might well get to zero, then we don't need money. If we do meet targets to acquire, then we might spend a little money, but I'll get back to that. We're still happy with our interest rate philosophy, which has contributed significantly in the past, and that translates here. This is an overview of free cash flow compared to EBITDA over the last three years, or over three years, 2010, 2013. The average free cash flow is 65% of EBITDA at Randstad, and we have made a benchmarking comparison to the competition. This is the result of the working capital analysis that I gave you. Of the cash tax rates that we are paying and also of the interest rates that we pay. Next to that, of course, CapEx. If you look at our CapEx and depreciation, it is just north of EUR 60 million roughly. As you might have seen on our press release for Q3, we might be a little conservative in sort of not being too aggressive on capitalizing, but absorbing, typically, it as costs if we can. As you can see, the result of that policy on taxes and on interest is clearly contributing to an excellent conversion here. We are happy to see that. If you look at capital allocation on slide 21, our first priority is investments in organic growth. We continue to invest. You might have seen the Q3 numbers. We have invested in Poland, in China, in some segments in various countries, and we will continue to do so. Next to that, we are also investing in some tech innovation, to which we will get back. Our second priority is M&A activity. You might have read something in the news about a Japanese opportunity. For sure, you should assume Randstad looks at it as well. We have an appetite here. We have a limited appetite because we are not going to leverage the balance sheet too much. You could easily get to half a billion EUR or so, maybe a little north of that. We look around at things that really fit our strategy, including the one in Japan. This was a company which is part of a larger conglomerate, and we looked at it. We set our mark, our data points, and so far the deal did not come through to our advantage because we think that the expectations are too high for our appetite. We will continue to have a look at it. It will typically be bolt-on. It will either supplement the geographical mix or it will strengthen a segment like professionals. The third focus is dividends. We know we had to pass dividend in 2009 and 2010. That is not of our liking. It is clear that we will continue to have a very strong focus on paying a dividend. I am sure David wants to know the precise percentage, but that is something we will address early next year, but it will be in the range 40%-50%. The strength of the balance sheet plays a role here, and last time we said it is 45% with an option to choose for shares, and 67%, I think, of the shareholders last time chose for shares. A few remarks about our track record of bolt-on acquisitions, but I would like to address the Vedior transaction first. It is a while ago, early December 2007, we announced it. It was after the stock price went from EUR 23, the stock price of Vedior, EUR 23 to EUR 12. That felt good, wasn't it, Chuck? It was much better than EUR 23. EUR 12. What should have been the right price? We did not know. We did not foresee 2009. I am sure some of you did not either. That is difficult. That is why in our modeling, we always try to include a scenario because we do not know what the world will bring us. We include a scenario which is relatively pessimistic. It includes all the synergies, though. All the synergies. Then we try to make sure that the price is below that. This is not the most realistic scenario. This is the most conservative, pessimistic scenario. That is how we try to get some discipline in pricing acquisitions. Our deal criteria remain as they are and as they have been. We're clearly, next to the balance sheet, we're looking at the fit, the strategic fit, and the manageability of such an acquisition. If we quickly look at the most recent acquisitions, Fujistaff, 2010. SFN, 2011. USG, 2013. They've all been EVA positive in two years. I think that clearly indicates that our rhythm, that our discipline does make quite some sense. I think Vedior. USG is already two months. It is already. Yeah. It was unavoidable almost. With USG, we spent the same amount as we paid on integration expenses, but still it wasn't too difficult. I think even the Vedior deal is getting closer. We have now integrated all the businesses for many years, so it's difficult to follow it. At least this is a successful track record, we would say. If we would be very good in making the right timing choices, I'm sure we should be on your side working because we would be highly successful. This is what we have done in the past. We believe this, from a capital standpoint, supports the focus on mid-size bolt-on acquisitions going forward. We're not going to surprise you tomorrow with an announcement. That's not the pipeline. That's not how the pipeline looks like. If we look at the key takeaways, we've made good progress in 2014 and we expect further improvements. The targets are within reach. Clearly, it depends on the scenarios that you believe in. It's a result of this bucket, of this cocktail of a lower cost base, improved business mix, and productivity going up or over capacity being utilized. The financing of the company is pretty stable. There is some capacity. We're not going to do crazy things. We don't see any sort of earth-moving deals like consolidation. The outlook for the remainder of the fourth quarter is just that the month of November continues to be in line in terms of volumes with what we have seen in the month of October. That completes my contribution. I think we are now heading either for Q&A or for the coffee break. Arun? First Q&A. The commander has instructed us. David. Jacques, shall we both? Go to the mic. Thanks, guys. David at Rabobank. First of all, on the cost savings, you take about two years. Do I understand correctly that means that, let's say, the vast majority or at least a major part of this is related to France? No, that's not a correct assumption. It's across the group. I just realized I should make clear that these are cost reductions. Next to it, on the 1st of January, salaries will go up. These are just the cost reductions, but it is across multiple countries. Why do you ask France, by the way? Sorry? Why do you ask on France? Well, I was just actually a bit curious what the breakdown would be, roughly, between countries. Oh, okay. That's indeed a follow-up question. Could you comment on that one? No, we're not going to do the breakdown. No. Can you at least mention the countries being involved? No, David, that would be too early. Okay. This is something where we share our vision with you. It has been thoroughly discussed in the board, and it is something that will be implemented very carefully and communicated carefully at country level. If I understand correctly, you're talking about 80% of the benchmarking process being completed. Is that correct? There's about 20% to go? Yeah, these are the smaller opcos. Yeah. That means the impact will most likely be smaller relatively than the bigger ones because of the scale of back offices and head offices in those countries. For sure, we have an ambition here. There should be a slight upside to your current target. Hopefully, in time. We have a dedicated lean team that we're going to use across the globe. In time, we'll set priorities for the large countries. Yeah. Then maybe the second one on slide 26, the activity matrix and the actions to be taken. Is that something you use already for all your countries? Yeah. What would be, let's say, your comment in terms of being successful countries? You mentioned U.S., for example, and the Netherlands maybe to some extent. Yeah. Can you also mention a couple of countries where you believe it's Hopefully, that's not the answer. Yeah. A couple of countries where you believe it's a little bit below par. Yeah. Sometimes it's also a cultural change almost, because Germany is an example of a country that went through massive growth with large clients. Yeah. They then need to go into SME sales. When you start doing that, you need to have sort of a conversion. Like, if I going to visit these 100 companies, what will come out? Well, they don't know. It just takes you at least six to nine months to get to a baseline. Also the role of management changes because they've been very good at servicing big clients, and now they need to drive a sales force, which is different. In some countries, it takes a lot of time. In France, when a market is down, your conversion is not great. You just need to touch a lot of clients to get a sale. It's not just about countries actually, David. It's really about teams and business lines in countries. Of course, we're never happy. We still think there's room for improvement there. The good news for us is we see companies that are doing this diligently for quite a while. They always improve performance, and it goes up, it goes above market. We're very happy about Italy, for example, where we have Marco Ceresa, who brought our business from scratch to EUR 600 million almost today. He has been an Italian leader, and an Italian leader manages on relationships, manage on knowing your people, and we had a great family. Now he's managing on a process. That has been a cultural change. We're very happy with the fact that he's reinvented himself. Now in Italy, we've done the acquisition of USG, and at the same time normalizing, we are above market. That's quite something. Okay, thanks a lot so far. Yeah. Few questions. First of all, on the restructuring, the provisions. How do you account for that? Basically what I'm asking is when is the cost out of your P&L and when is the cost actually out? Yeah, that's a good point. There's typically some time in between. In France, there's a lot of time in between, if you would have the situation as we had it at the end of last year. In other countries, it goes much faster. In the Netherlands, for example, we have processed a small part of it in Q3, and we expect to take most of the rest in Q4. It very much depends on It's the accounting rules that apply here. When we have identified the individuals, then typically it hits the P&L. Spending is as soon as possible afterwards that. I would say it's typically almost at the same point in time or one or two quarters later. Okay. Then on the capital allocation, you didn't really touch upon point four and five. I can imagine why. The special dividend and the share buyback, potentially when net cash is for a longer period. I recall, just before you did your largest acquisition ever, that was one year on your balance sheet. Yeah. Does that still stand? Yeah. Okay. It doesn't have to be the same situation in the future. It says here on the slide, not being considered currently. It's not on our plate. It's not a discussion we have entertained with the supervisory board. We have some context as it is worded here, which will trigger a discussion by then. It needs to be a position of net cash in the balance sheet. We've all learned at universities that repurchasing shares does not create economic value as long as you have substantial investment opportunities, and we believe in our business that is the case. Okay. A final question, more to Jacques. In your presentation, you mentioned the importance of being top three in the countries. Yeah. How much emphasis do you put on that now in the countries where you're not top three? Yeah. Depending on the individual country. Italy, we are the number 3. It's very tough to become the number 1 or 2, because the distance is big. We just concentrate on growing above market and having good returns. When we talked about Japan, we're the number, what is it, 6? Six. Six, 1% market share. Bolt-on acquisitions could happen. Sometimes, like in U.S., we're already number 2 or 3, but still with a limited market share in an enormous market. You might, over time, still see a bolt-on acquisition there. Not now, it's way too early. We would still stay the number 3 or the number 2, but with a bigger market share. We might even jump to the number 1. In U.K., Mark, we're the number 5, 6? Five. Yeah. With relatively small distances to the top 3, we think we can go there organically. At the same time, we're also looking at parts of our business that don't long-term give us the return we want. It's always this chicken and egg thing. Yeah, it is at the end of the day, we're happy if we are outperforming any market and we have the structurally winning position in a top 3. It's not even countries. Moreover, if you move to professionals, it's going to be more into segments also, like we see in the U.S. We might have to make some choices. Our firepower has a certain limitation. It will be atypical for the company to issue shares to support that. There is a certain amount available, we'll look at each and every market and then decide what is the best way to invest our money. It's not that easy yet to identify targets. It's not that easy. Yeah. Economically, the seller always thinks his company is worth much more than the buyer. I don't know why, but All right. Thanks. Sorry. Yeah. Behind you. Oh, you don't have a question. Yeah, Mark, here you go. Can I go? Thank you. Oh, you also have a mic. Leave him. No. Mark first, then. Okay. A question on the cost savings. How much of the cost savings really hanging around? Will it be invested part of that in growth or in marketing spend? Can you comment on that? No, it will be a big part in personal expenses. Furthermore, we are looking at improvements in the field of accommodation, mainly. Marketing is a pretty protected area in our company, I would say. Yeah, I think- How much of the cost savings will really remain there? Will part of it be used for investing? We take out back office costs, not really with the aim to immediately put it back in. If you look at our Dutch business, it is growing, but we don't need to invest massively in the Dutch business as we speak. The money we take out, we're not going to immediately invest in something else in the Dutch market as such. Even more precise, we're going to take the money out, and it will stay out of that specific department. Yeah. We'll tightly continue this benchmarking over time to make sure that we're not being surprised over time. We might use the funds to invest in further growth. It will be fueled by growth itself. Field steering again. Yeah. A question on acquisitions again. Bolt-on acquisitions focus on professionals. Can you maybe share a bit where the focus is, which segments, which areas? Can you give us a bit more color on that? We like Japan as a country. We were very happy with our acquisition. We have 1% market share. We like the engineering space. We also like IT. We're not going to buy perm companies, because what you see in perm companies is that, you don't buy a company, you buy performers. They tend to be not corporate in a way. The risk of losing many people is way too high. So, you know the companies in the sector, if it's like 80% perm, we're not going to buy them. We're not going to buy any emerging markets as such. Not much to buy there. It's organic. Still, USG was maybe, undermanaged is not the right word, but they had strategic issues in the markets they were in. The combination, it makes sense for us and makes sense for them to sell. You never know. It would be unlikely that you see an acquisition in the professional space in the U.S. right now because we are still going through the back office reworks. I would say it's Europe, it's Japan. It's clearly we're looking at the verticals, finance, IT, engineering. It depends on the country's specific situation. It depends on the targets. We'd love to see something. If it comes with some staffing business, we have great synergies right away that might pay for a little premium. This is sort of a bit of art. As you know, it needs to be friendly. We need to sit together, and we need to be able and like the vision of creating a new company. That's also crucial next to the whole financial benchmarking. Would you even consider buying staffing business if it would bring your 5%-6% margin in danger? If a USG deal would again occur, it would be stupid not to look at it, clearly. We are good in it. We understand the business. We have very attractive synergies. I don't think it's that likely that it will happen, but if it happens, we'll have a good look at it. Thank you very much. Laurent Brunet with BNP. Just one more for me. On your 2016 EBITDA margin target, 5%-6%. What will explain basically to be at the lower or the upper of the range? In 2016, I do understand the move in 2015, let's say 50 basis points improvement. On 4% sales growth. I struggle more to understand the, let's say, 100 basis points in 2016 based on just slightly more organic sales growth and similar cost savings. Let's be clear. That's why I use the scenarios. I'm rounding numbers, 4% growth in next year, 5% growth the year thereafter, including the business mix improvements and the cost, you'll get to the low end of the range. I think that is what is within reach. If we get to a higher, for example, high single-digit growth next year and the year thereafter, it is, in the model, unavoidable you're going to go much higher into the range. That is clearly acknowledged. If we continue this for a couple of years, actually, we had that discussion in 2007, it's unavoidable you're going to get out of the range to the north. We vaguely remember that discussion. For now, that is a dream. Cash positive. That's a dream. Yeah. The target does include some country and business mix improvements? Yeah. In our modeling, we clearly have included that, and we might well be disappointed because the mix is completely different. We need to see. You can imagine if we grow in France, we get growth with very high incremental conversion because we have the capacity. Whereas if we continue to grow in the U.S., it comes in with a lower, in staffing, with a lower incremental conversion ratio. We have made some assumptions which we think are not stupid, and that supports the calculations here. Hans. Yes. Thank you. You've made the calculation on the upside, have you made some scenarios on downside? For example, if you have zero revenue growth or maybe even -5%. Of course, key issue is how much can you still adapt your cost base. Can you give some feeling on that? Interesting question, actually. We discussed it together. I could just share with you on our budget next year, we're sort of a little higher than the consensus in terms of budgeting. We made a plan in the summer as well, which was again, higher. It very much depends on the flavor of the moment. To us, a budget is not a target because the circumstances can change dramatically. For us, it's much more organizing ambition, and we're now organizing ambition for growth somewhere sort of mid-range. That is the mindset now. You're right, it might be higher, but it might also be lower. We're looking at sort of preparing some lower scenarios. However, I can also answer your question more explicitly. We believe we can go through similar adjustments as we did in 2009, if necessary. It might even be easier. It's unpleasant to the people, but it might be easier because if you have it's hovering, and then it goes a little down. The urgency is different. If you have really a drop like in 2009, nobody discusses anymore. It is clear you need to do something. The possibility to make adjustments is of very significant size. The guiding practice is at cruising altitude, incremental conversion ratio is 50%. If you go down, recovery rate is 65%. Our people are used to that. That's the benefit of having experienced management. When they budget, they say, "This is what's going to happen, like growth, mid-range, downturn." Scenarios are in place. We can easily act and quickly act. Yeah. If you look at the data points in the past, you can see that the recovery ratio, so compensating a lost amount of gross profit through cost reductions, has been between 50% and 60%. Coming back on the cost savings. I believe the feeling they are, let's say, a little bit across the board, so in different countries, different operations. Yeah. Of course, over the last two years, you have adjusted a few country headquarters and structures, France, Belgium, and the Netherlands. Looking at Germany, how far away are you from there from a respect to maybe some more structural adjustments? Is that something we say let's go for- What do you call structural adjustments? Adjusting, for example, the head office or reducing the number of, a little bit comparable what you've done in Belgium. Yeah. Well, first of all, Germany is part of the benchmark. They're in this EUR 60 million to EUR 70 million bracket. What we did in Belgium is merging the back of two companies into one. What we did in Netherlands is even three companies. We don't really have that. We have smaller companies, but it's really one big company. It's a different ballgame. Again, they're part of it, but to a limited extent compared to the other two companies. That's the advantage of this benchmarking. It gives you very neutral data. You know where the differences are across the globe. Yves Franco, KBC Securities. When you're talking about the Anglo-Saxon professionals business, what went wrong in the past? Is it not enough focus on the vertical side, really vertical approach? Is it just also the integration of the many brands you took over from Vedior, Resumé, et cetera? Of course, it's not like we had an organic history in a way. We bought companies with a different mindset. We bought companies which in the U.K. were basically small. The mindset was on bottom line. The question we always ask our people is, how big is your market? How big are you? How much time do you need to become the number one? Those are questions that were never posed, and it's a cultural change, certainly in the U.K., and sometimes also changing management if people don't like those questions. Because if the answer is, "We've run a great company for the last 10 years. We've always made good money. What's the problem?" Then, yeah, we are on different planets. In the U.S., we've got a great company, Sapphire, that we acquired. Core IT staffers, huge experience, but also managed in a slightly different way. Listen to Tracy's story on the producer model. We had a great 2012 in IT staffing and in technologies, as we call it, in the U.S. We didn't invest in 2013 because we had people with high bonuses. Let's not frustrate the producers. In our model, it's like, "This is your growth, this many people are going to come in. What's the program?" Standardized induction, that sort of thing. It's not like what went wrong. It's really, what are we now doing with the base we have? Last question on your entry strategy in emerging markets. You're focusing on professionals business first. Is it because it's the easiest market to entry compared to general staffing, bigger- That's depending a bit on countries, but in Brazil, basic staffing is not an attractive place to be. It's very litigious. You get into legal conflicts very quickly. Margins are low, same as India, by the way, as we've learned in the last- Yeah years of operating. There's huge demand in professionals. These markets are big to begin with, you can easily focus. Yeah, it's about focus. We want to be leading in the segments we choose. Maybe supporting this with some data. If you look at the bill rate per hour that we invoice our clients, it's just like in the 24 range in Western Europe, the Netherlands, in Belgium, in France. It's a little lower in Germany. If you get to Poland, it's EUR 4.3 an hour, EUR 4.3. You can imagine the countries you just mentioned are even below that, and it becomes very difficult to make a good return there. That brings you back to the question, if you want to enter such a market, where is a segment that you can start and have a good return? In China, when we acquired the local company from the Chinese government of Shanghai, we bought a company with a widespread portfolio of services, we reduced it to effectively payrolling and a very big chunk of permanent placement, so search and selection in the professional field. In India, we had a company with a lot of payrolling, we are reducing that, focusing on higher-end payrolling and search and selection. By the way, understanding your history is understanding your future. In the Netherlands, we started in white collar. Over time, when the product became more accepted, we went to blue collar. Tom. Thanks very much. You alluded earlier to maybe some cost increases coming through from salary increases. Obviously you're not going to stand still on productivity, if you didn't do anything, what would actually be the impact of collective labor agreements and the increase to cost next year? How should we think about the net benefit of these costs coming through? Yeah. It very much depends on the countries, just to give you a ballpark, I guess it's sort of between 1.5%-2% wage inflation across the board. This is our own staff. What you should take into account is you get an increase at the beginning of the year. That's the system. It gets diluted throughout the year through the turnover of staff. Therefore, it's relatively limited. Okay. Thank you. Yeah, on top of that, we have a pricing strategy that's linked, of course, to this to ensure that we're charging our clients the increased costs. Yeah. Yeah. When you're looking at the business mix changes that could get you into the 5%-6%, or at least just to get to the 5%, what are you thinking about perm as a percentage? Maybe if you could just talk about the kind of business mix changes. Are you talking about getting back to the 12% gross profit? Yeah. That's not going to happen in next year. We were at 12%, north of 12% of gross profit in 2007, 2008. We've seen a decline to 8%. We're now close to 10. I think if we get it to 11 and just a little bit north of that in the next one or two years, 12% will take a little longer, I guess, because hopefully the rest of the company is also growing. This is not counting on, let's say, maximum performance. Okay. Thank you. Just a final question on Germany. Obviously, we've seen perhaps some of the structural changes. Are you saying you think some of that sort of fundamental rebalancing or rebasing has sort of happened, now you can grow from just due to macro changes now rather than structural changes? Do you think there's still a period of rebasing, maybe, from a structural point of view at all in Germany? There's 2 funny things in the current German legislation. One is it pays to be sick. This is very technical, but at least if you fall ill at like EUR 16 an hour at the mid-range of your last 13 weeks, and you were set up for a new job at 13, what happens, right? We now, and we've mentioned this, we've seen a little over 1% extra illness, which hits your P&L. That's a technical thing. We want to lobby against it. I don't know how long this will take. The other one is the 2-year hiring rule, which we also lobbied against because it's like a problem that doesn't exist, but you still want to fix it because these people are on our payroll. Nevertheless, it happens. That's something that also is going to sweat out over time. Apart from that, it's just demand, Tom. Currently, German economy is not in a great shape. It feels less structural than the French situation, to be honest. Okay. Thank you. Okay. Yes, come. Hi, it's Conrad from ABN AMRO. I have a question on slide 27, activity-based field steering. Okay. I can do without slides. Well, you showed us that the level of activities, calls, and visits has increased almost 30% since May, year-over-year. How long would it normally take to see that lead to higher revenues? I thought there was a more direct and quicker link between calls, visits, and sales. Yeah, that all depends on, of course, where you start. It all depends on the market situation. We've seen quite a quick pickup in the Netherlands because of a few things. We're very well known, it's easy to get access to clients. Your call-to-visit ratio is rather high. We see an economy which is slightly picking up. Your visit-to-order ratio is quite high. We see relatively high unemployment. Your candidate delivery to order is quite high, conversion. In Germany, this is different. We are market leader with 10% in Germany, if we're selling in SME and white collar, we drop to 5%, 6%. Visits Oh, sorry, Randstad. Come again. That doesn't help. Visit to order, we're in a recessional scenario. That all drops. That's your answer to how long it takes. The 30% is globally. Tracy has been running a tight shop already, so she doesn't need the increase as such. The increase is really in the Netherlands, in Germany, in Belgium, really making up for lost ground in a way. Yeah, it takes some time. That's very difficult to say. We're working hard on it. It has to do also with the marketing support, the right mix of the orders you get in. This is our job, Konrad. The only thing I can say is if we keep this up, something will happen. Something is happening spotily, not yet across the whole world. Thank you. A follow-up on that one. You said it is- The last question, sorry, because we have to break for coffee after this. Hans, last question. Yeah, you can do at the break. Yeah. More questions after. A follow-up on that one. You said the field steering and an increase in the activity levels across the board, is it also looking at your sales development, the perm is growing quite strongly? Yeah. Is that activity levels increasing much stronger at the perm side than at the No, what we definitely general staffing side? What we definitely see is that as a result of this, perm grows. Perm is like Robert-Jan said, it's a macro strategy. In staffing, we say, and Chris, again, will elaborate. In staffing, you just need to visit more. Your database is there, touch on these clients. This is your story. They know you're selling staffing. In perm, probably, you can also shed a bit of light on that. In perm, it's like, you know us. We also do perm. How does perm work? Perm is not with the HR person, perm is with the one hiring. You need to get around the person in the company. It's a different sell. You also need to get back to your manager, like, "I got a perm order." "Yeah, what kind of perm order? Are you the only one?" You need to validate it. It's a very high-maintenance sell in a way, but it's working. We're very happy, and it's definitely a result of improved field steering. Typically you sell to the candidate as well in the Yeah search and selection space. Absolutely. Yeah. Thank you

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