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Vedior NV (0J9M)


Thursday 27 October, 2005

Vedior NV

3rd Quarter Results

Vedior NV
27 October 2005

Amsterdam, The Netherlands


                Profitable growth driven by strong performances
                       in France, the US and Netherlands
                    For release at 7.00am on 27 October 2005

Zach Miles, Vedior's Chief Executive, said: 'We have had a busy quarter, both in
terms of acquisitions and organic developments. Vedior continued its organic
investment in new businesses in Japan, the UK and US, as well as completing four

Profits in three of our key markets, France, the US and the Netherlands all
showed a significant increase, driven by sales growth and improved operating
efficiency. In the rest of the world, particularly strong performances were
recorded in Latin America, Australasia and India. Profits in the UK were lower,
mainly as a result of a slowdown in the traditional sector.

The business outlook in the majority of our markets is encouraging.'


•         Sales up organically by 6% to €1,808 million
•         Operating income up organically by 7%* to €66 million
•         Professional/executive recruitment sales up 8% organically
•         Permanent placement fees up 18% organically
•         Net income increased by 25%* to €40 million
•         Net income per share up by 26% to €0.24 (Q3 2004: €0.19*)
•         New organic development initiatives in Japan
•         Strategic acquisitions in the US, UK and Eastern Europe

*Excluding special items. Special items in Q3 2004 included the disposal of the
Group's 51% interest in Niscom, Japan and the disposal of Sapphire, France.
There were no special items recorded in Q3 2005.

N.B. Organic growth is measured by excluding the impact of currency effects,
acquisitions/disposals and adjusting for the number of business days where
appropriate. There is no adjustment for business days in Q3 2005.

Q3 2005 Financial Performance

Sales increased organically by 6% to €1,808 million from €1,728 million in the
same quarter in 2004. Revenues from permanent placement increased by 18%
organically compared to Q3 2004.

Professional/executive recruitment sales increased by 8% organically with good
performances from the accounting and engineering recruitment sectors which grew
organically by 14% and 10% respectively. IT recruitment sales grew by 6%
organically. Traditional recruitment grew organically by 6% with the strongest
growth achieved in the US and Netherlands.

Gross Margin
Gross margin was 17.4%, the same as Q3 2004. We did experience some pricing
pressure however this was compensated by increased permanent placement fees.
Permanent placement fees represented 2.5% of sales this quarter compared to 2.1%
in Q3 2004.

Operating Costs
Operating costs were 6% higher on an organic basis at €249 million reflecting
increases in personnel costs driven by sales growth, higher marketing expenses,
investment in new business start-ups and some one-off reorganisation costs in
the UK.

Our conversion ratio (operating income before special items divided by gross
profit) increased from 20.5% in Q3 2004 to 20.8% demonstrating our continued
focus on efficiency improvement.

Operating Income
Operating income (before interest and tax) was €66 million, a 7% organic
increase from Q3 2004 excluding special items.

Net income and earnings per share
Net income increased by 25% to €40 million from €32 million in the third quarter
of last year. Interest costs were lower reflecting lower debt levels and the
expiry of interest rate swaps in November 2004. Earnings per share were €0.24, a
26% increase from €0.19 in Q3 2004 excluding special items.

Net Debt and Cash Flow
Net debt decreased to €559 million, a €33 million reduction compared to the same
period in the prior year. A payment of €51 million was made at the beginning of
July to redeem Vedior's Preference A Shares. Cash flow from operating activities
was €50 million compared to €37 million in Q3 2004 mainly due to lower working
capital requirements.

Q3 2005 Operating Performance by Geography and Industry Sector


•         Organic sales increased by 6% compared to Q3 2004 with growth
improving throughout the quarter.

•         Gross margins declined, mainly as a result of pricing pressure from
large accounts but operating income improved by 13% organically assisted by good
cost control.

•         All segments within VediorBis showed growth during the quarter with
the strongest performance coming from the construction and high skilled
blue-collar segments.

•         New permanent placement activity continues to develop encouragingly
and will be expanded in the months ahead.

•         Engineering and accounting recruitment sectors grew sales by more than
10% and the decline in healthcare staffing sales eased.

United Kingdom

•         Overall organic sales were flat with a good performance from the
engineering sector offset by a slowdown in the traditional and healthcare
sectors which both declined by 6% organically.

•         Gross margins increased reflecting higher permanent placement fees.

•         Operating income decreased organically by 18%. Profitability was
impacted by one-off reorganisation costs of €0.8 million arising from the
combination of back-offices within our UK traditional businesses which will
reduce future operating costs. Investment continues in new businesses in the
accounting/finance and education sectors.

United States

•         Organic sales growth remains high at 12%.

•         Continuing strong increase in organic operating income; up 36%
supported by higher placement fees and a higher gross margin on temporary

•         Professional/executive recruitment sales up 11% organically compared
to Q3 2004 led by accounting recruitment.

•         IT recruitment grew at a slower rate than prior quarters this year
with 5% organic growth.

•         Once again, our traditional recruitment business grew well in advance
of US market trends with an organic sales improvement of 20%.


•         Organic sales growth accelerated to 12%

•         Operating income increased organically by 62% due to continuing
operational leverage and cost control.

•         Professional/executive sectors showed a strong improvement in
performance with organic growth of 10%.

•         The Vedior brand, our largest operating company in the Dutch market,
grew organically by 17%.

Other Countries

•         In the Rest of Europe, sales improved by 4% organically. However,
despite good performances from Spain, Switzerland, Portugal and Luxembourg as
well as emerging markets in Eastern and Central Europe, operating income
declined due to lower profits in Belgium and Italy.

•         In the Rest of the World, sales improved by 20% organically with
operating income increasing by 26%.

-        Vedior's Australian operations continued to perform well with increased
sales, profitability and efficiency. Strong growth was achieved in the IT,
accounting, healthcare and traditional sectors and our education business is
developing particularly well.

-        All our operations in Latin America achieved excellent growth in sales
and profitability.

-        In India, where Vedior is market leader, sales have increased by 65%
organically and we continue to identify promising synergies and sales
opportunities with other parts of the Group.

Business Development

At the beginning of the quarter, we acquired the Mandeville Recruitment Group
Ltd, a UK-based provider of permanent recruitment primarily in the sales and
retail sectors, and the ConsulTeam Group of Companies, a market leader in the
provision of temporary recruitment services, permanent placement, training and
other HR related services from offices in Bulgaria, Romania, Croatia and Serbia
& Montenegro.

In August, we acquired UK aviation engineering specialist, Qualitair Aviation
Group Ltd with operations in the UK and The Netherlands and, in October, we
acquired a US legal staffing and outsourcing firm, Compliance Inc. In each case,
management have retained a minority equity position. These transactions bring
the total number of acquisitions this year to six and we anticipate that more
will be completed before the end of the year.

Two important organic initiatives have been launched this quarter in the
Japanese market in co-operation with local partners. Vedior Career provides
permanent recruitment services while Vedior Contec provides senior engineering
personnel on a contract basis for construction projects.

Vedior now operates in 43 countries through a network of 2,270 offices.

Management Outlook

Latest developments in the majority of our markets are encouraging and we look
forward to a continuation of positive trends in the final quarter of the year
and into 2006. At the same time, we clearly face a more difficult operating
environment in the UK. In this market, our costs are being reduced and other
measures taken in order to protect our profitability.

Despite downward revisions, consensus GDP forecasts for 2006 are still at a
higher level than for 2005 in most of Vedior's major markets or, as is the case
in the US, still at a relatively positive level. A healthier economic
environment combined with continuing structural growth driven by demographic
changes, deregulation and increasing skill shortages will enable Vedior to take
advantage of its leading market position in professional/ executive recruitment
and its diverse global network.

This media release includes forward-looking statements that reflect our
intentions, beliefs or current expectations and projections about our future
results of operations, financial condition, liquidity, performance, prospects,
growth, strategies, opportunities and the industry in which we operate.
Forward-looking statements include all matters that are not historical fact. We
have tried to identify these forward-looking statements by using words including
'may', 'will', 'should', 'expect', 'intend', 'estimate', 'project', 'believe',
'plan', 'seek', 'continue', 'appears' and similar expressions or their negative.

These forward-looking statements are subject to a number of risks,
uncertainties, assumptions and other factors that could cause our actual results
of operations, financial condition, liquidity, performance, prospects or
opportunities, as well as those of the markets we serve or intend to serve, to
differ materially from those expressed in, or suggested by these forward-looking
statements. Important factors that could cause those differences include, but
are not limited to our financial position and our ability to implement our
business strategy and plans and objectives of management for future operations,
our ability to develop, balance and expand our business, our ability to
implement our longterm growth strategy (including through organic growth and
acquisitions), our ability to make improvements to our capital structure,
industry and market trends and volumes, including the speed and strength at
which the staffing services industry and the sectors in which we operate,
rebound from economic slowdowns and recessions, the effects of regulation
(including employment and tax regulations), our ability to improve the
efficiency of our operations and to reduce expenses in our operating companies
and their network of offices, litigation and our ability to take advantage of
new technologies.

In light of these risks, uncertainties, assumptions and other factors, the
forward-looking events described in this media release might not occur.
Additional risks that we may deem immaterial or that are not presently known to
us could also cause the forward-looking events discussed in this media release
not to occur. Except as otherwise required by applicable law, we undertake no
obligations to update publicly or revise publicly any forward-looking
statements, whether as a result of new information, future events, changed
circumstances or any other reason after the date of this media release.

Company Profile:

Vedior is one of the world's largest recruitment companies and is a full-service
recruitment provider with a diversified portfolio of brands targeting a broad
range of industry sectors. Annual sales for 2004 were €6,467 million.

From its global network of offices spanning Europe, North America, Australasia,
Asia, South America and Africa, Vedior offers temporary and permanent
recruitment as well as a number of complementary employment-related services
such as outplacement, HR outsourcing, payrolling and training.

Vedior has a leading market position in the provision of professional/executive
recruitment in sectors such as information technology, healthcare, accounting,
engineering and education. In order to meet client requirements for all
categories of personnel, we also have a significant global network providing
administrative/secretarial and light industrial recruitment.

Financial Agenda:

2 February 2006          Publication of annual results 2005*
27 April 2006            Publication of first quarter results*
28 April 2006            Annual General Meeting
27 July 2006             Publication of second quarter results*
26 October 2006          Publication of third quarter results*

*Conference calls to discuss financial results are scheduled for 9am (CET) on
the day of publication.

For further information, please contact:

Zach Miles, Chief Executive                          +31 (0)20 573 5609
Frits Vervoort, CFO
Jelle Miedema, Company Secretary
Michael Berkeley, Citigate Dewe Rogerson             +44 (0)20 7638 9571
Patrick Toyne-Sewell, Citigate Dewe Rogerson         +44 (0)20 7638 9571

                      This information is provided by RNS
            The company news service from the London Stock Exchange                                         

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