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Vedior NV (0J9M)


Thursday 28 July, 2005

Vedior NV

Q2 2005 results

Vedior NV
28 July 2005

Amsterdam, The Netherlands

Q2 2005

                            Gross margin improvement
                   contributes to 38% increase in net income

                     For release at 7.00am on 28 July 2005

Zach Miles, Vedior's Chief Executive, said: 'We continued to see profitable
growth in all our major markets and sectors during the quarter led by strong
performances in the US and Australia.

For the first time in four years, gross margins have increased primarily due to
higher permanent placement revenues accompanied by an improvement in temporary
margins. Our operating efficiency also improved with particularly strong
increases in profitability in the US, Netherlands, and Rest of Europe region.

Our businesses in the UK and Netherlands exhibited a lower rate of sales growth
compared to the first quarter of 2005, in line with the slower economic
conditions in those countries.

During the quarter, we made good progress with Vedior's strategy to diversify by
geography and industry sector. Our global network has recently been extended
from 37 to 43 countries as a result of both acquisitive and organic growth with
continued emphasis on the development of professional/executive recruitment.'


•         Sales up organically by 7% to €1,718 million

•         Operating income up organically by 11% to €60 million

•         Professional/executive recruitment sales up 10% organically

•         Permanent placement fees up 21% organically

•         Efficiency improves with conversion ratio (operating income divided by
          gross profit) increasing to 19.6% from 18.6%

•         Net income increased by 38% to €36 million excluding profit from the
          sale of investment (Q2 2004: €27 million)

•         Net income per share was up strongly to €0.30, or €0.21 excluding
          profit from the sale of investment (Q2 2004: €0.16)

•         Combination of acquisitions and internal expansion extends global
          network to 43 countries


•         Sales up 9% organically to €3,249 million

•         Operating income up 15% organically to €98 million

•         Net debt reduced by €99 million compared to 30 June 2004

•         Net income per share was €0.42 or €0.33 excluding profit from the sale
          of investments (H1 2004: €0.26)

N.B. Organic growth is measured by excluding the impact of currency effects and
acquisitions/disposals, and adjusting for the number of business days. There
was, on average, one more business day in Q2 2005 compared to Q2 2004 due to the
earlier Easter holiday but the impact varies by market as detailed in the
individual country reviews below.

Q2 2005 Financial Performance


Sales increased organically by 7% to €1,718 million from €1,628 million in the
same quarter in 2004. Permanent placement has increased 21% organically and now
represents 2.4% of sales compared to 2.1% of sales in Q2 2004. Currency
fluctuations had no significant impact on sales.

Professional/executive recruitment sales increased by 10% organically with
notable performances from the IT, engineering and accounting recruitment
sectors. IT recruitment sales grew by 17% organically with the strongest growth
in the UK and US. Growth in engineering was driven mainly by the UK and France
and in the accounting segment by the US, France, Australia and the Netherlands.
Traditional recruitment grew organically by 5% with the strongest growth
achieved in the US, Netherlands and southern Europe.

Gross Margin

Gross margin improved to 17.8% compared to 17.5% in Q2 2004 primarily due to
increased permanent placement fees but also higher temporary margins.

Operating Costs

Operating costs were 8% higher on an organic basis at €246 million. This
reflected increases in personnel costs driven by sales growth including
permanent placement, higher marketing expenses and investment in new businesses
and offices.

Our conversion ratio (operating income divided by gross profit) increased from
18.6% in Q2 2004 to 19.6% demonstrating continued efficiency improvement.

Operating Income

Operating income (before interest and tax) was €60 million, an 11% organic
increase from Q2 2004. Currency fluctuations decreased operating income by 1%.

Net income and earnings per share

This quarter's results include the gain from the sale of our investment in
TriNet amounting to €15 million after tax.

Net income increased by 95% to €51 million from €27 million in the second
quarter of last year. Excluding the gain on the sale of TriNet, our net income
increased 38% to €36 million. Earnings per share (excluding the gain on TriNet)
were €0.21, a 31% increase from €0.16 in Q2 2004.

Net Debt and Cash Flow

Net debt decreased to €527 million, a €99 million reduction compared to the
second quarter of 2004. Cash flow used in operating activities was €25 million
compared to €48 million in 2004 mainly due to lower working capital
requirements. Debtor days improved by one day.

Q2 2005 Operating Performance by Geography and Industry Sector


•         Organic sales increased by 4% compared to Q2 2004.

•         Gross margins improved and operating income increased organically by
          6%. In Q2 2004, we benefited from a one-off gain of €2 million 
          relating to a reduction in accruals no longer required: like-for-like, 
          operating income improved by 17%.

•         All segments within VediorBis showed growth during the quarter with
          the strongest performance coming from the construction, tertiary and 
          industry professionals segments.

•         Permanent placement activity, which commenced in 2005 following
          changes to French legislation, has developed well during the course of 
          the quarter.

•         Owing to a weak healthcare market, professional/executive recruitment
          increased by 3% compared to Q2 2004. Engineering, accounting and IT 
          recruitment sectors all grew by more than 10%.

United Kingdom

•         Organic sales growth was 6% adjusted to take into account three extra
          business days.

-     Operating income increased organically by 6%. Gross margins were lower,
      mainly as a result of changes to business mix which were offset by 
      improved operating efficiency.

•         Professional/executive recruitment was up 7% compared to Q2 2004
          mainly driven by the IT and engineering sectors.

•         Our education recruitment sales increased during the quarter but,
          after adjusting for the timing of Easter, the trend continued to be 
          slightly negative.

•         Traditional recruitment sales were up 3% organically.

United States

•         Organic sales growth remains high at 19% adjusted to take into account
          one extra business day.

•         Very strong increase in organic operating income; up 66%. We continue
          to benefit from good operational leverage in the US with higher 
          placement fees and a higher temporary margin.

•         Professional/executive recruitment sales up 18% organically compared
          to Q2 2004 with IT and accounting recruitment continuing to recover at 
          a high rate of growth.

•         Our traditional recruitment business continued to grow well in advance
          of US market trends with an organic sales improvement of 22%.


•         The Dutch market continues to be positive despite weaker economic data
          and we achieved 5% organic sales growth compared to Q2 2004 adjusted 
          to take into account two extra business days,

•         Operating income increased organically by 21% due to good operational
          leverage and cost control.

•         IT, accounting and interim management recruitment grew well while
          other specialist sectors were weaker resulting in overall organic 
          sales growth of 1% for our professional/ executive sectors.

•         Traditional recruitment grew organically by 6% this quarter. The
          Vedior brand, our largest operating company in the Dutch market, once 
          again outperformed the market.

Other Countries

•         In the Rest of Europe, sales improved by 7% organically. Operating
          income improved by 22% with good performances from Belgium, 
          Switzerland, Spain and Portugal as well as emerging markets, 
          particularly Greece and Turkey.

•         Vedior's Australian operations increased sales, profitability and
          efficiency. Particular growth was achieved in the IT, executive and
          education sectors.

•         Our operations in Latin America and India continue to develop rapidly
          with all businesses performing well.

Business Development

Business development in this quarter has contributed to our strategic aim of
further diversifying Vedior's business mix.

We announced two acquisitions during the quarter and two more since the
conclusion of the quarter. In line with our strategy, we have acquired majority
stakes with management keeping a minority interest. In June, we announced the
acquisition of two specialist recruitment companies based in the US, Locum
Medical Group and Becker Executive Staffing/Becker Staffing Group, increasing
the Group's presence in both the healthcare and the finance and accounting

In July, 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. The
combined consideration for our majority interests in these four companies was
approximately €13 million.

Vedior aims to achieve a healthy balance of acquisitive and organic growth. In
addition to our recent acquisitions, we have initiated new organic start-ups in
Cyprus and Oman and we continue to invest in expansion of new businesses in the
UK, US, Australia and Japan.

Vedior now operates in 43 countries through a network of 2,259 offices.

Management Outlook

We are pleased with the progress made on gross margins and also in the
development of our global network.

The US market continues to grow strongly. The French recruitment market is
stable with growth maintained at a relatively modest pace. In the rest of
Europe, economic uncertainty is affecting the outlook for the remainder of the
year but we expect further positive growth in our business.

Vedior's strategy is to invest in markets and sectors promising above average
long-term growth, and to seek further operational efficiencies and improved
profitability in all its markets.

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:

27 October 2005         Publication third quarter results*

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
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