Randstad Nv · EURONEXT:RAND
Randstad Nv — Shareholder Meeting (March 2017)
64 slides from Randstad Nv's shareholder meeting presentation, Mar 30, 2017
Slide 1: Annual general meeting of shareholders
annual general meeting of shareholders supervisory board executive board Randstad Holding nv March 30, 2017 1
Slide 2: Disclaimer & definitions
disclaimer & definitions Certain statements in this document concern prognoses about the future financial condition, risks, investment plans and the results of operations of Randstad Holding and its operating companies, as well as certain plans and objectives. Obviously, such prognoses involve risks
Slide 3: Agenda
agenda 1. opening 2. review 2016 3. discharge of liability 4. shares 5. remuneration policy 6. external auditor 7. any other business 8. closing 3
Slide 4: Agenda
agenda 1. opening 2. review 2016 3. discharge of liability 4. shares 5. remuneration 6. external auditor 7. any other business 8. closing 4
Slide 5: Review 2016: operational performance & strategy
review 2016 operational performance & strategy 5
Slide 6: FY 2016: improving momentum in Europe
FY 2016: improving momentum in Europe Revenue of € 20,684 Gross profit up 4%; gross Perm fees up 7%, now million; organic growth margin up 30 bp to 19.0% 10.6% of gross profit (vs. + 4.7% (vs. 6.2% last (stable YoY excl. Monster) 10.6% last year) year) Underlying EBITA of € 947 FY 2016 EBITA margin
Slide 7: Strong finish to 2016
strong finish to 2016 YoY Randstad growth development 15% 5% -5% -15% Group Europe North America Rest of World improving growth in many European countries during 2H 2016; France, Germany, Italy & Iberia accelerating ahead of market in Q4 stable growth trends in North America throughout 2016; Canada
Slide 8: Organic growth in a historical context
topline organic growth in a historical context growth 30,0% 20,0% 13Q's of low-mid single digit growth 10,0% 0,0% Q1'02 Q2'03 Q3'04 Q4'05 Q1'07 Q2'08 Q3'09 Q4'10 Q1'12 Q2'13 Q3'14 Q4'15 -10,0% -20,0% -30,0% -40,0% consistent mid-single digit topline growth several European markets still 10-15% b
Slide 9: North America: stable growth trends
North America: stable growth trends North America – historical organic growth revenue +1% (2015: + 5%) 12% - perm up 1% (2015: + 10%) - GP up 2% (2015: + 9%) 8% US Staffing & Inhouse, revenue growth + 3% (2015: +7%) 4% US Professionals, revenue growth -/- 2 % -1% (2015: + 1%) Q1 2015 Q2 2015 Q3 2015
Slide 10: The Netherlands: solid EBITA margin performance
the Netherlands: solid EBITA margin performance performance Vs. market (ABU)- quarterly revenue at + 3% (2015: +11%) 15% - focus on profitability 10% - impact of lost payrolling contract 5% - perm growth at + 8% 0% -5% combined Staffing & Inhouse businesses ABU Market Randstad - up 3% YoY performanc
Slide 11: France: accelerating topline through 2016
France: accelerating topline through 2016 performance Vs. market (Prism)- quarterly 12% revenue up 7% YoY (2015: + 4%) 8% - combined Staffing & Inhouse at + 6% YoY 4% - Professionals at + 12% YoY 0% - perm grew 29% -4% -8% -12% EBITA margin at 5.5% vs. 5.2% last year Randstad Market (Prism) - improv
Slide 12: Germany: strong topline growth through 2016
Germany: strong topline growth through 2016 EBITA margin performance Germany - quarterly revenue growth + 6% YoY (2015: flat) 12% Organic Rev - perm growth of +8% 10% 8% 6% gross profit up 4% 4% 2% - SME outgrowing large clients 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2015 2015 2015 2016 2016 2016 2016 EBIT
Slide 13: Other countries: strong growth continues
other countries: strong growth continues revenue breakdown by geographical areas Belgium at + 2% - record profitability 9% North America NL 24% 11% Iberia + 7% France - market leader Germany 5% Belgium 6% - strong growth on higher margins Iberia 16% UK 7% UK + 1% YoY RoE 10% RoW 15% - improving prof
Slide 14: 2016 progress
2016 progress • Organic revenue growth: 4.7% • EBITA margin of 4.6% (+ 10bp YoY) M&A goals • Productivity (GP/FTE) remained stable Tech • About 2.2 million candidates placed • Proffice • > 180,000 • Obiettivo Lavoro permanent Talent • • Careo Twago positions filled • Monster • AUSY • Leverage ratio:
Slide 15: Current touch-focused models can be greatly improved
current touch-focused models can be greatly improved job scheduling search & match recurring request driven online job scheduling search & match online job scheduling search & match • planning and • planning and • having the right • having the right talent scheduling of gigs, scheduling of work, tal
Slide 16: How does Monster accelerate and improve Randstad
how does Monster accelerate and improve Randstad 16 16
Slide 17: Connecting initiatives and scaling up successful concepts
we are connecting the initiatives and scale up successful concepts fast around the world Search & Match (NL) Connected Professional (US) Job Scheduling (FR) RIF Portfolio Early stage MVP´s Companies Solutions Capabilities Sales Navigator (eg. SEO) Big Data France Ploy External Innovations SourceRigh
Slide 18: Digital change is much more than technology
Digital change is much more than technology W hen Digital becom es Hum an… 18
Slide 19: Tech & touch
role of Randstad in the future of work as the most agile integrator of tech supporting a core human touch we are the trusted human partner tech & touch in the technology driven world of talent 19
Slide 20: Review 2016: financial results
review 2016 financial results 20
Slide 21: Long term value creation
long term value creation return on invested capital 2016: 15.9% increasing our returns by optimizing ICR/RR, portfolio mix, DSO & cash, M&A & synergies and market outperformance flexibility & outsourcing, regulation, organic demographics, market share sales gains, innovation growth integration and M
Slide 22: Key criteria when considering an acquisition
key criteria when considering an aquisition randstad perspective 1 strengthens our strategic 2 provides significant value 3 manageability position creation ▪ create base for growth in existing markets (support global clients, high ▪ DCF valuation for entire business cycle ▪ management selected and a
Slide 23: Successful track record of bolt-on acquisitions
successful track record of bolt-on acquisitions Randstad’s M&A criteria • a number of successful acquisitions have been made on the basis of a disciplined M&A approach • Randstad focuses its M&A efforts on targets with a minimum size of EUR 100m in revenue, and consistently assesses opportunities on
Slide 24: Overview M&A activity
overview M&A activity Aim to be top 3 in local Strengthen professional Accelerate Progress towards EVA staffing market staffing business digital strategy after 3 years ✓ in line ✓ ahead ✓ ✓ ahead ✓ in line ✓ underway ✓ *underway ✓ *underway *Acquisition completed in early 2017 24
Slide 25: Income statement 2016
income statement 2016 € million FY ’16 FY ’15 % Org. revenue 20,684 19,219 +5% gross profit 3,934 3,595 +4% gross margin 19.0% 18.7% operating expenses* 2,987 2,733 +3% opex margin 14.4% 14.2% EBITA* 947 862 +7% EBITA margin* 4.6% 4.5% integration costs & one-offs 55 30 reported EBITA 892 832 amorti
Slide 26: Performance by revenue category
performance by revenue category Staffing FY FY *% in € M 2016 2015 organic revenue 12,065 11,186 3% EBITA 567 515 0% EBITA margin 4.7% 4.6% Inhouse FY FY *% Services 2016 2015 organic in € M revenue 4,641 4,216 10% EBITA 241 213 25% EBITA margin 5.2% 5.0% Professionals FY FY *% in € M 2016 2015 orga
Slide 27: Gross margin bridge
gross margin bridge YoY gross margin development • temp margin down 10bp as mix effects offset a • perm fees were 10.6% of GP (vs 10.6% LY) more competitive market - organic growth of 7% YoY • perm placements +10 bp and HRS + 30bp driven by the Monster acquisition 27
Slide 28: Operating expenses bridge
operating expenses bridge YoY OPEX development in € M • favourable FX impact • FTE growth in European growth markets • continued focus on cost control 28
Slide 29: Net debt at €793M
net debt at € 793M leverage ratio at 0.8 € million Q4, 2016 Q4, 2015 goodwill and acquisition-related intangible assets 3,286 2,603 operating working capital (OWC) 712 621 net tax assets 480 517 all other assets and liabilities* 456 293 invested capital 4,934 4,035 total equity 4,141 3,862 net debt
Slide 30: Q4'16 free cash flow
Q4’16 free cash flow € million FY ’16 FY ’15 EBITDA 966 897 change in OWC -/- 170 -/- 122 income taxes -/- 160 -/- 105 provisions & employee benefit obl. - -/- 32 net capital expenditures -/- 94 -/- 63 other items -/- 77 -/- 71 financial assets -/- 1 -/- 4 free cash flow 465 499 net acquisitions/dis
Slide 31: Solid free cash flow & conservative leverage ratio
solid free cash flow & conservative leverage ratio 800 3,0 700 2,5 600 2,0 500 400 1,5 strategic target 300 1,0 200 0,5 100 0 0,0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Free Cash Flow (€M) Leverage Ratio free cash flow adjusted for receipt and payment of a liability of € 131 million to the D
Slide 32: Conservative financial policy
conservative financial policy • target leverage ratio between 0 and 2, with max leverage ratio of 3.5x EBITDA • floating rate policy as a natural hedge against the development in operational results, and benefit from yield • financing in place for expected long-term needs • using our balance sheet t
Slide 33: Dividend proposal: a record high
dividend proposal: a record high proposed dividend payment over 2016 - payment of € 1.89 per ordinary share (+ 13% YoY) - payout of 50% of adjusted net profit, reflecting strong financial position - full cash dividend 2,00 1,80 Dividend (Cents per share) 1,60 1,40 1,20 1,00 0,80 0,60 0,40 0,20 0,00
Slide 34: Fine-tuned dividend policy
fine-tuned dividend policy • amended dividend policy 2017: payout of 40-50% of adjusted EPS ▪ leverage ratio < 1.0x: all-cash dividend ▪ leverage ratio between 1.0x – 2.0x: optional dividend ▪ leverage ratio between 2.0x – 2.5x: optional dividend with premium on stock dividend ▪ leverage ratio > 2.5
Slide 35: Dividend process and timeline in 2017
dividend process and timeline in 2017 • March 30, 2017: approval shareholders in AGM 2016 • April 3, 2017: ex-dividend date • April 4, 2017: record date • April 7, 2017: payment of cash dividend 35
Slide 36: Sustainability
sustainability 2 integral part of our strategy • progress 2016: • pre-assurance non-financial data • again included in the Dow Jones Sustainability Index • process started of updating ambition and strategy • Executive Board’s LTI 2016-2018 performance targets relating to sustainability: - Clients: N
Slide 37: Some specific questions
some specific questions • labor migration - published report ‘People to jobs, jobs to people’ on labor migration - local initiatives of helping refugees find a job in the Netherlands, Spain, Germany, Belgium and Sweden • living wage candidates - global HR services industry regulated by the Internati
Slide 38: KCF follows our business flow
KCF follows our business flow marketing & communication processes candidate client market negotiations & candidate market order intake recruitment treatment treatment contracting intake MATCH credit client order candidate / EW payroll billing procure & pay management management management processing
Slide 39: 2. Review 2016 Q&A
2. review 2016 Q&A -~c randstad
Slide 40: 2. Review 2016: application of remuneration policy
2. review 2016 2b. application of the remuneration policy in 2016: - last update remuneration policy approved by the AGM in 2013 - remuneration 2016 in line with approved policy - extensive remuneration report 2016 on corporate website 40
Slide 41: 2. Review 2016: adopt financial statements
2. review 2016 2c. proposal to adopt the financial statements 2016 41
Slide 42: 2. Review 2016: policy on reserves and dividends
2. review 2016 2d. explanation of the policy on reserves and dividends 42
Slide 43: Fine-tuned dividend policy
fine-tuned dividend policy • amended dividend policy 2017: payout of 40-50% of adjusted EPS ▪ leverage ratio < 1.0x: all-cash dividend ▪ leverage ratio between 1.0x – 2.0x: optional dividend ▪ leverage ratio between 2.0x – 2.5x: optional dividend with premium on stock dividend ▪ leverage ratio > 2.5
Slide 44: 2. Review 2016: proposal to determine the dividend
2. review 2016 2e. proposal to determine the dividend over the financial year 2016 • Dividend on ordinary shares: € 1.89 per share • full cash dividend • Dividend on preference shares B and C: € 12.6M 44
Slide 45: Dividend process and timeline in 2017
dividend process and timeline in 2017 • March 30, 2017: approval shareholders in AGM 2016 • April 3, 2017: ex-dividend date • April 4, 2017: record date • April 7, 2017: payment of cash dividend 45
Slide 46: Agenda
agenda 1. opening 2. review 2016 3. discharge of liability 4. shares 5. remuneration 6. external auditor 7. any other business 8. closing 46
Slide 47: 3. Discharge of liability: executive board
3. discharge of liability 3a. discharge of liability of the members of the executive board for the management 47
Slide 48: 3. Discharge of liability: supervisory board
3. discharge of liability 3b. discharge of liability of the members of the supervisory board for the supervision of the management 48
Slide 49: Agenda
agenda 1. opening 2. review 2016 3. discharge of liability 4. shares 5. remuneration 6. external auditor 7. any other business 8. closing 49
Slide 50: 4. Shares: authority to issue shares
4. shares 4a. proposal to extend the authority of the executive board to issue shares • valid for a period of 18 months (September 30, 2018) • approval by the supervisory board • yearly allocation of performance shares and options not more than 1% • yearly maximum authorization of 3% of the issued c
Slide 51: 4. Shares: restrict pre-emptive rights
4. shares 4b. proposal to extend the authority of the executive board to restrict or exclude the pre-emptive right to any issue of shares • valid for a period of 18 months (September 30, 2018) • approval by the supervisory board • yearly maximum authorization of 10% of the issued capital 51
Slide 52: 4. Shares: repurchase ordinary shares
4. shares 4c. proposal to authorize the executive board to repurchase ordinary shares • repurchase ordinary shares up to a maximum of 10% of the issued share capital of ordinary shares. • valid for a period of 18 months (September 30, 2018) • ordinary shares may be acquired for a price between the n
Slide 53: 4. Shares: cancel repurchased shares
4. shares 4d. proposal to cancel repurchased ordinary shares • cancel ordinary shares up to a maximum of 10% of the issued share capital of ordinary shares. • valid for a period of 18 months (September 30, 2018) • date(s) for cancellation to be determined by the executive board taking into account a
Slide 54: Agenda
agenda 1. opening 2. review 2016 3. discharge of liability 4. shares 5. remuneration 6. external auditor 7. any other business 8. closing 54
Slide 55: 5. Remuneration: key objectives
5. remuneration 5a. proposal to amend the remuneration policy of the Executive Board key objectives • align with the strategic direction for the transformation of Randstad • strengthen focus on long-term sustainable value-creation • stay focused on the values and societal aspirations of Randstad • r
Slide 56: 5. Remuneration: base salaries
5. remuneration 5a. proposal to amend the remuneration policy of the Executive Board base salaries • base salary levels and targets stay unchanged • labor market peer group expanded in line with good market practice • AEX sanity check maintained 56
Slide 57: 5. Remuneration: annual bonus
5. remuneration 5a. proposal to amend the remuneration policy of the Executive Board annual bonus • bonus opportunity kept at current levels • only joint targets • flexibility in target setting and target weighting • mandatory conversion of part of the earned bonus into shares • share matching to st
Slide 58: 5. Remuneration: long term incentive
5. remuneration 5a. proposal to amend the remuneration policy of the Executive Board long term incentive • targets rebalanced to 65% TSR (from 80%) and 35% non-financial targets (from 20%) • non-financial targets to include key strategic objectives in addition to sustainability measures • TSR perfor
Slide 59: 5. Remuneration: annual bonus targets 2017
5. remuneration 5a. proposal to amend the remuneration policy of the Executive Board annual bonus targets 2017 • revenue with market share validation (15% min, 25% on target, 35% max) • EBITA margin (10% min, 15% on target, 25% max) • DSO (5% min, 10% on target, 15% max) • strategic target not discl
Slide 60: 5. Remuneration: performance shares
5. remuneration 5b. proposal approve the performance related remuneration of the Executive Board in performance shares • valid for 5 years • in line with new remuneration policy 60
Slide 61: Agenda
agenda 1. opening 2. review 2016 3. discharge of liability 4. shares 5. remuneration 6. external auditor 7. any other business 8. closing 61
Slide 62: 6. External auditor
6. external auditor 6. Proposal to reappoint Deloitte Accountants BV as external auditor for the financial year 2018 • initial appointment at the AGM in 2014 for the 2015 financial year 62
Slide 63: Agenda
agenda 1. opening 2. review 2016 3. discharge of liability 4. shares 5. remuneration 6. external auditor 7. any other business 8. closing 63
Slide 64: Agenda
agenda 1. opening 2. review 2016 3. discharge of liability 4. shares 5. remuneration 6. external auditor 7. any other business 8. closing 64