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Vedior NV (0J9M)


Thursday 03 February, 2005

Vedior NV

Annual 2004 results

Vedior NV
03 February 2005

Amsterdam, The Netherlands

                        Vedior delivers strongest growth

                            in final quarter of 2004

                    For release at 7.00am on 3 February 2005

Zach Miles, Vedior's Chief Executive, said: '2004 has been a very successful
year for the Group and it is particularly satisfying to end it with the
strongest growth of the year.

A major strategic review has strengthened confidence in our direction, focusing
on Vedior's leading position in professional/executive recruitment and tailoring
brands to specific markets and specific business sectors. At the same time, we
continue to see our focus on cost control and improved efficiency bearing fruit
and directly benefiting Vedior's bottom line. Over the past 12 months we have
successfully strengthened the Group's finances.

We announce today our intention to redeem the preference class A and B shares to
simplify our capital structure and reduce financing costs.'


•         Sales up 8% at €1,640 million (organic growth of 11%)

•         Operating income up 24% at €59 million (organic growth of 26%)

•         Currency fluctuations decreased sales by 1% and operating income by 2%

•         Net income per share improved to €0.19 (2003: €0.14)

•         Professional/executive recruitment sales up 19% organically with rapid
          growth in IT, accounting and engineering

•         Strong growth in permanent placement fees; up 25% organically


•         Sales up 8% at €6,467 million (organic growth of 8%)

•         Operating income up 37% at €240 million. Excluding special items,
          operating income was €217 million (organic growth of 21%)

•         Net income per share €0.73 (2003: €0.47) or €0.66 excluding special

•         Net profit of €116 million and EPS of €0.68 or €0.63 excluding special
          items (restated for IFRS)

•         Net debt reduced by 16% to €491 million (Q4 2003: €587 million)

•         Improved operating efficiency lifts conversion ratio (operating income
          excluding special items divided by gross profit) from 16.2% to 19.0%.

•         Vedior is now established in 37 markets worldwide, compared with 33 in

•         Payment to ordinary shareholders of €0.20, a 25% increase from the
          prior year.

N.B. Organic growth is measured by excluding the impact of currency effects,
acquisitions and disposals. For the year ending 31 December 2004, organic growth
is adjusted for the number of business days in Q1. Operating income and net
income per share is before goodwill amortisation.

Special items include profit on the disposal of the Group's 51% interest in
Niscom in Japan and the disposal of Sapphire in France, both in the third
quarter. The 2003 annual sales of Niscom was €128 million and Sapphire France,
€7 million.

Q4 2004 Financial Performance

Sales increased 8% (organic increase: 11%) to €1,640 million from €1,516 million
in the same quarter in 2003. Currency fluctuations decreased sales by 1%.
Permanent placement increased 25% organically to 1.9% of sales compared to 1.7%
of sales in Q4 2003 led by a boost in demand in all geographic regions.

Professional/executive recruitment sales increased by 19% organically with
notable performances from the IT, accounting and engineering sectors. IT
recruitment sales once again accelerated and achieved 39% organic growth.
Traditional recruitment grew organically by 7%, the strongest performance of the

Gross Margin
Gross margin was 17.8% compared to 18.1% in Q4 2003. Slight pricing pressure is
still being experienced but this has moderated since the beginning of 2004.
Markets with increased gross margins were the US, Belgium and Germany while the
UK and the Netherlands experienced a decline.

Operating Costs
Operating costs were 5% higher on an organic basis at €233 million reflecting
increases in personnel costs mainly in the fast growing markets of the US, UK,
continental Europe and Australia. Once again, Vedior managed to control costs in
spite of the strong increase in sales. SG&A as a percentage of sales improved to
14.2% from 15.0% in Q4 2003.

Operating Income
Operating income (before interest, tax and goodwill amortisation) was €59
million, a 26% organic increase from €47 million in Q4 2003. Currency
fluctuations decreased operating income by 2%. Operating income as a percentage
of sales improved to 3.6% from 3.1% in Q4 2003.

The average number of shares outstanding in Q4 2004 was 166.1 million (2003:
164.6 million).

Net income and earnings per share
Net income (before goodwill amortisation) increased 30% to €32 million from €24
million in the fourth quarter of last year. Earnings per share (before goodwill)
were €0.19, a 36% increase from €0.14 in Q4 2003.

Interest costs for the quarter amounted to €9 million and, for the full year
amounted to €41million. The interest rate swaps entered into by the Company in
1999 expired on 3 November 2004.

Net Debt and Cash Flow
Net debt decreased by €103 million during the quarter to €491 million and by €96
million compared to the fourth quarter of 2003. Debtor days were 63, a reduction
of one day  compared to Q4 2003. Cash flow from operating activities was €64
million compared to €93 million in 2003. Higher operating income was offset by
additional working capital requirements to finance sales growth.

Annual Results and IFRS

For Vedior, the operating result before goodwill amortisation and net result
before goodwill amortisation are the most relevant internal and external
measures of operating performance. Vedior's goodwill mainly relates to the
acquisition of Select in 1999 which, in accordance with Dutch accounting
standards, is being amortised over a period of seven years.

In 2005, Vedior will adopt International Financial Reporting Standards (IFRS)
and report comparable figures for 2004 restated to IFRS. The main impact to the
Group's 2004 results restated to reflect IFRS relates to the requirement that
goodwill is no longer amortised on a systematic basis but is, instead, tested
for impairment annually.  As a consequence, Vedior's net result for 2004 under
IFRS will increase by €267 million to a profit of €116 million. The other main
differences between Dutch Accounting Standards and IFRS, impacting Vedior's net
result in 2004 are as follows:

•   Costs for stock option plans relating to stock option grants in 2003
    and 2004, are charged to the income statement, which results in an 
    additional charge of €3 million in 2004.

•   The book profit on the disposal of Niscom, in September 2004, is €5
    million lower.

•   There will be an additional charge of €1 million in 2004 relating to
    pension costs.

See Appendix for more detailed information.

Q4 2004 Operating Performance by Geography and Industry Sector


•   Organic sales increased by 5% compared to Q4 2003.

•   Operating income improved by 31% organically helped by a reduction in
    accruals no longer required of €2 million.

•   Professional/executive recruitment up 7% compared to Q4 2003

•   Strong growth in IT and engineering.

•   Healthcare recruitment market deteriorated in the last quarter of 2004
    due to budget cuts in clinics and hospitals.

•   Gross margins are relatively stable.

United Kingdom

•   Very strong sales improvement continues with 20% organic growth over
    Q4 2003.

•   Operating income increased by 8% organically

•   Professional/executive recruitment up 23% compared to Q4 2003 mainly
    driven by IT, engineering and teleservices sectors.

•   Education recruitment sales declined reflecting falling vacancy
    levels, however, we continue to perform well in a challenging market and 
    achieve high profitability.

•   Traditional staffing sales up organically by 12%.

United States

•   Organic growth remains high at 27%.

•   Operating income increased by 60% organically.

•   Professional/executive recruitment up 27% compared to Q4 2003.

•   IT and accounting staffing organic sales continue to recover at a high
    rate of growth.

•   Healthcare recruitment grew again and organically by 8%.

•   Traditional recruitment sales grew organically by 28%.


•   Organic sales growth of 8% compared to Q4 2003.

•   Operating income increased by 28% to €4 million, the first quarterly
    growth in 2004.

•   Professional/executive recruitment grew organically by 3% led by a
    notably strong performance in the IT and interim management sectors.
    Professional/executive recruitment in the Netherlands is now recovering
    following a protracted period of decline.

•   Traditional staffing continues to accelerate as the market recovers,
    growing by 10% this quarter. The Vedior brand does particularly well and, 
    again, outperforms the market.

Other Countries

•   Belgium grew sales by 8% organically while operating income doubled.

•   Southern Europe, particularly Spain and Portugal, was, once again, a
    strong performing region for the Group.

•   Australia increased sales by 9% organically with particular growth in
    IT, traditional and education sectors and continues to increase its 
    contribution to Group profits.

•   The Latin American region flourishes recording organic sales growth in
    excess of 40%.

Business Development

Vedior is now established in 37 markets compared to 33 at the end of 2003. We
continue to seek expansion into new markets in order to provide greater
geographical diversity to our earnings stream.

New initiatives launched in Q4 2004 include a new outsourcing business in
Malaysia and the merger of Ma Foi's human resources consulting and outsourcing
operations in India. These separate units have been combined to provide
high-value and fully integrated HR solutions. We continue to make progress in
India ahead of our expectations.

In Japan, our new healthcare recruitment business, Supernurse, has got off to a
good start in an emerging recruitment market. In 2004, we increased our
investment in this company to a majority position.

During the fourth quarter, we started to follow through on the refinements to
our business identified within our recent Strategic Review. Regional Plans are
being developed to reflect the outcome of the Review alongside a number of other
specific changes which have been identified in order to take advantage of
opportunities in specific local markets and to reflect differing market

In January 2005, Vedior disposed of its 100% interest in the Viawerk Group, a
provider of temporary light industrial personnel in the Netherlands. The Group
already operates two larger and well-established traditional recruitment brands
in the Dutch market, Vedior and Dactylo, and upon review of our portfolio
management concluded that having a third brand operating in this highly
competitive sector provided no strategic advantage.

At the end of 2004, Vedior operated through a worldwide network of 2,245 offices
which, on a net basis, is an increase of 20 compared to the prior year.

Payments on (certificates of) ordinary shares

It will be proposed to the Annual General Meeting of shareholders that a payment
of €0.20 is made out of distributable reserves on each (certificate of) an
ordinary share, representing 30% of profits per share for the year (before
goodwill amortization and special items). The total payments on the
(certificates of) ordinary shares will be €33 million. The payment on the
ordinary shares will be distributed optionally in cash (€) or in (certificates
of) ordinary shares, charged to reserves. The distribution will be made on 23
May 2005.The stock payment in (certificates of) ordinary shares will be
determined on 17 May 2005 after stock exchange closure on the basis of the
average price on this day. The value of the stock payment will be approximately
5% higher than the cash payment. The new (certificates of) ordinary shares to be
issued will qualify in full for dividends declared in respect of the financial
year ending December 2005.

Preference shares

It will also be proposed to the Annual General Meeting of shareholders that a
payment is made out of distributable reserves: on the (certificates of)
preference class A and B shares of €0.12 and €6.00 per share (including interim
payments) respectively. On the preference class A and B shares interim payments
have been distributed at a rate of €0.05 and €2.40 respectively. The total
payments on the preference class A and B shares will be €4 million. The
distribution will be made on 23 May 2005.

Vedior intends to seek shareholder approval at the annual general meeting to
redeem the preference class A shares in 2005 and the preference class B shares
within the next two years. The amount required to redeem the class A and class B
shares is €50.6 million and €2.7 million respectively. Consultations with the
holders of both these classes of preference shares will be held on 24 February

Management Outlook

We anticipate continued progress from our global operations during the course of
2005 although the economic outlook remains uncertain.

The improvement in the French recruitment market experienced in the final
quarter of 2004 is clearly encouraging after a period of stagnation. We estimate
that the French recruitment market grew in volume by 1% in January, however,
French employment indicators in 2005 are generally positive and pent up demand
should lead to an improved market in the IT and engineering sectors as well as
VediorBis' industrial professionals, tertiary and construction divisions.

Vedior is experiencing growth in both the professional/executive and traditional
parts of its business. We remain convinced of the merits of our strategy and are
confident in the strength of our market position.

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:

28 April 2005            Publication first quarter results

29 April 2005            Annual General Meeting of Shareholders

3 May 2005               Declared ex-payment from reserves

17 May 2005              Publication exchange ratio payment from reserves

23 May 2005              Distribution from reserves made payable

28 July 2005             Publication second quarter results

27 October 2005          Publication third quarter results

2 February 2006          Publication of annual results 2005

For further information, join today's live audio webcast at
webcast starting at 10.00am (CET) or contact the following after the event:


Zach Miles, Chief Executive                     +31 (0)20 573 5609
Frits Vervoort, CFO
Jelle Miedema, Company Secretary

Michael Berkeley, Citigate Dewe Rogerson        +44 (0)20 7282 2883
Freida Moore, Citigate Dewe Rogerson            +44 (0)20 7282 2997

                      This information is provided by RNS
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