*

Hitt og þetta 27. júlí 2007

Q2 2007 Results USG People N.V.

Gross margin rose from 24.0% to 25.0%; operating income rose by 28.0%; operating margin increased to 6.8% Almere, 27 July 2007, 07.00 hrs Highlights second quarter 2007 * Revenue rose by 11.2%; double-digit growth was realised for the seventh consecutive quarter. Corrected for working days revenue grew by 12.1% * The gross margin rose by 100 basis points to 25.0% (2nd quarter 2006 24.0%) * Operating income rose by 28.0% to ¤ 65.3 million (2nd quarter 2006: ¤ 51.0 million) * The recurring EBITA (not including ¤ 4 million rebranding expenses and ¤ 5.7 million French subsidies from preceding periods) amounted to ¤ 63.6 million * The operating margin came to 6.8% and rose by 90 basis points on the second quarter of 2006 * Net income totalled ¤ 39.2 million and rose 40.0% on last year (2nd quarter 2006: ¤ 28.0 million not including income from sale Luzac College). Earnings per share came to ¤ 0.62 compared with ¤ 0.44 (not including non-recurring income of ¤ 19.3 million from the sale of Luzac) in 2006 "Our focus on profitability brought our strategic objectives another step nearer in the second quarter", says Ron Icke, CEO of USG People. "The gross margin rose strongly to 25.0% and this improvement combined with revenue growth increased the operating margin to 6.8%.Operating profit from our activities outside the Benelux area more than doubled on last year. This substantially improved the geographic spread of our result. Meanwhile, our specialised labels also showed a clear revenue and profit growth in the second quarter." Consolidated Q2 Q2 growth HY1 HY1 growth results (¤ million) 2007 2006 2007 2006 Revenue 953.7 857.8 11.2% 1,859.9 1,649.2 12.8% Gross profit 238.9 206.2 15.9% 460.6 395.3 16.5% Operating 167.2 148.4 12.7% 332.9 294.0 13.2% expenses Income from sale of Luzac 19.3 19.3 College EBITDA 71.7 77.1 -7.0% 127.7 120.6 5.9% Depreciation 6.4 6.8 -5.9% 12.7 13.5 -5.9% Operating 65.3 51.0 28.0% 115.0 87.8 31.0% income EBITA 65.3 70.3 -7.1% 115.0 107.1 7.4% Amortisation 3.8 3.9 -2.6% 10.1 7.8 29.5% goodwill EBIT 61.5 66.4 -7.4% 104.9 99.4 5.5% Interest -5.2 -5.9 -11.9% -12.8 -12.3 4.1% Income tax -16.8 -13.0 29.2% -28.0 -21.5 30.2% Minority -0.2 -0.3 -0.3 -0.5 interest Net income 39.2 47.3 -17.1% 63.7 65.2 -2.3% Gross margin 25.0% 24.0% 100 bp 24.8% 24.0% 80 bp Cost ratio 18.2% 18.1% 10 bp 18.6% 18.6% EBITA margin 6.8% 8.2% -140bp 6.2% 6.5% - 30 bp Operating 6.8% 5.9% 90 bp 6.2% 5.3% 90 bp margin Earnings per 0.62 0.75 1.00 1.03 share Recurring earnings per 0.60 0.44 1.07 0.73 share * Operating income is EBITA excluding profit from sale of Luzac College ** Operating margin is operating income as a percentage of revenue Notes to the second quarter results 2007 Revenue In the second quarter the group realised 11.2% revenue growth compared with the same period in 2006. Based on the same number of working days the second quarter of 2007 had 0.5 less working days than in 2006, growth stood at 12.1%. At 10.1% organic growth was somewhat lower due to a net positive contribution to revenues from acquisitions and operating companies which had been sold. The strong growth trend of previous quarters declined somewhat during the second quarter. The Netherlands posted 9.3% growth which was slightly below the market level. This was partly due to USG People's large market share in the administrative market segment, which was less fast growing in the second quarter of 2007. In the Dutch market the industrial segment grew by 14.3% in the second quarter while the administrative segment reported 7.4% growth. Second quarter growth in Belgium stood at 7.6% which was more or less in line with first quarter growth. The General and Specialist segments performed somewhat better than in the previous quarter while the exuberant growth at Professionals flattened out slightly. In the Dutch and Belgian home markets the greater focus on profitability meant that revenue growth lagged somewhat on the market. Growth in France and Germany continued strong with revenue up 18.8% and 20.0% respectively compared with the second quarter of 2006. This meant that the group considerably outperformed the market in France. Spain and Italy posted around 9% growth and other countries posted joint growth of 32.7%. Gross margin The second quarter gross margin totalled 25.0% compared with 24.0% in the same period of 2006. Extraordinary income in France had a positive effect on the group's gross margin in the second quarter. In France a social security premiums grant arrangement was adjusted and was calculated in arrears as from 2006. Without this non-recurring income the margin stood at 24.5% and hence 0.5 percentage points higher than the second quarter of the previous year. For the third consecutive quarter the gross margin in the Benelux region showed a significant improvement hence reflecting our focus on profitability. Operating expenses In the second quarter operating expenses including depreciation increased by 11.9% on the same period of 2006 whereby expenses, including rebranding expenses, were ¤ 18.4 million higher than the previous year. As in the previous quarter, the second quarter brought incidental marketing and promotion expenses for the ongoing rebranding operations. These expenses amounted to ¤ 4 million in the second quarter. Not counting these expenses the increase in expenses totals 9.3% which is in line with the increase in the first quarter. Hence the adjusted cost ratio stands at 17.8% for the second quarter (2nd quarter 2006: 18.1%). Up to and including June rebranding expenses totalled ¤ 10 million. Alongside expense increases due to volume growth and additional rebranding expenses, in the first half of 2007 a reserve was also formed for a share based bonus plan. In 2006 the reserve was only formed in the fourth quarter. Expenses for this share plan totalled ¤ 1.5 million in the second quarter and ¤ 2.8 million for the first half year. Not including the expenses for rebranding and for the share plan the cost increase in the second quarter was 8.3% compared with the second quarter of 2006. EBITA Volume growth with higher gross margins resulted in an EBITA of ¤ 65.3 million for the second quarter (2nd quarter 2006 not including income from the sale of Luzac: ¤ 51.0 million). The recurring EBITA, adjusted for the effect of the French subsidies from preceding periods, and rebranding expenses in 2007, and not including income from the sale of Luzac in 2006, totalled ¤ 63.6 million compared to ¤ 51.0 million in 2006. Operating income rose by 28.0% compared with the same period of 2006. As a percentage of revenue the EBITA margin stood at 6.8%. Profitability rose in all regions and, not including the effect of the French subsidies in preceding periods; during the second quarter just over 14% of the EBITA was realised outside the Benelux area (2nd quarter 2006: 11.8%). In line with our objectives this significantly improved the geographic spread. Amortisation Second quarter amortisation amounted to ¤ 3.8 million. This amortisation relates to full regular amortisation of financial stated client relations and brand rights. Financial expenses Financial expenses totalled ¤ 5.2 million compared with ¤ 5.9 million in the second quarter of the previous year. Second quarter financial expenses in both 2007 and in 2006 include a fair value increase for interest derivatives. This value increase amounted to ¤ 3.3 million in 2007 and ¤ 3.0 million in 2006. The decline in financial expenses results from a lower debt position in 2007. Tax At 29.9% the tax rate was exactly at the average nominal rate. The structural tax-exempted income from the Belgian coordination centre compensated for the negative effect of the one-off decrease in German tax rate and non-deductible expenses, mainly in Belgium. Tax paid in the second quarter totalled ¤ 3.3 million whereby the cash out tax rate stood at 5.9%. The cash out tax rate for the first half year totalled 21.5%. Net income Net income in the second quarter stood at ¤ 39.2 million which is ¤ 11.2 million higher than profit not including the income from the sale of Luzac in the second quarter of 2006 (2006 net income 2nd quarter not including income from the sale of Luzac: ¤ 28.0 million). Earnings per share in the second quarter of 2007 based on the number of issued shares on 30 June came to ¤ 0.62. Working on the basis of a recurring net income, not including the net incidental subsidies and rebranding expenses (net effect ¤ 1 million) of ¤ 38.3 million, earnings per share amount to ¤ 0.60. In the second quarter the number of issued shares increased by 516,370 due to stock dividends payout and the exercise of rights on personnel options. Balance sheet and cash flow In the second quarter the balance total increased by ¤ 60 million due to factors including the seasonal increase of operating capital. There was also a net increase in equity due to the addition of the net result for the second quarter, contrasting with a cash dividend of ¤ 29 million. The increase in equity in the second quarter totalled a net ¤ 11 million whereby equity on 30 June stood at ¤ 612 million. On 30 June the net debt position stood at ¤ 663 million and increased during the second quarter due to factors including increased operating capital and the dividend, as well as the acquisition paid in cash. Capital adequacy on 30 June stood at 31.3%. During the first half of 2007 operating cash flow totalled just over ¤ 40 million and was hence double the level of the first half of 2006. Due to the cash dividend payout and an acquisition paid in cash in May, together with capital expenditure in software, net cash flow in the second quarter totalled - ¤ 3 million. Results by segment a. General Staffing Results Q2 Q2 Growth Inc. June Inc. June Growth ( in m euro) 2007 2006 2007 2006 Revenue 577.2 520.5 10.9% 1,112.9 983.2 13.2% EBITA 31.7 22.9 38.4% 49.5 33.1 49.5% General Staffing posted 10.9% higher revenue in the second quarter with income strongly improved by 38.4% compared with last year. The EBITA stood at ¤ 31.7 million compared with ¤ 22.9 million in the second quarter of 2006. Due to a sharper focus on performance profitability improved in all regions. The rebranding operations were continued apace and the second quarter saw completion of the first campaigns in Belgium for the name change from Creyf's to Start People. In the Netherlands revenue at Start People rose by 7.9% and a strong year-on-year improvement was realised in the EBITA, mainly due to a higher gross margin. A combination of factors meant that this was below the market level. USG People has a relatively large share of the administrative segment and of the central government sector - where growth in 2007 was below the industrial market. Furthermore, sharper pricing policy in the faster-growing industrial segment meant that a large number of volume contracts were discontinued. Growth in Belgium improved somewhat compared with the preceding first quarter. Revenue increased by 5.2% in the second quarter compared to the previous year. First quarter growth stood at 4.4%. As in the Netherlands growth was lower due to discontinuation of a number of low-profit volume contracts, due to a focus on better profitability. Growth in France remained strong with revenue up 17.0% on the second quarter of the previous year. Meanwhile, profitability rose strongly without the impact of higher subsidies on social security expenses. In Spain growth in the General segment was lower due to the transfers of a number of specialist-oriented branches from the old Creyf's label to Unique (Specialist Staffing). At 9.3% growth in Italy was slightly up on the 8.3% of the first quarter. A large-scale operation to integrate and renovate the office network is now in its final phase. During the first half year the restructuring programme meant a lower level of growth with improved profitability due to lower cost levels. Germany and the other countries posted 20.0% and 32.7% growth consecutively. Both regions posted a positive result. b. Specialist Staffing* Results Q2 Q2 Growth Inc. June Inc. June Growth ( in m euro) 2007 2006 2007 2006 Revenue 279.4 251.0 11.3% 549.9 491.7 11.8% EBITA 32.9 26.3 25.1% 63.7 49.7 28.2% The Specialist Staffing labels, including Content and Unique posted 11.3% higher revenue in the second quarter. Specialist staffing also realises most revenue in the administrative segment. At 10.9% growth in the Netherlands was higher than total market growth of 10.5%. In Belgium growth in Specialist Staffing stood at 6.3% which was higher than at general staffing. As with General Staffing the pricing policy at Specialists was also sharpened, with a focus on increasing profitability. c. Professionals* Results Q2 Q2 Growth Inc. June Inc. June Growth ( in m euro) 2007 2006 2007 2006 Revenue 92.5 80.4 15.0% 185.0 157.0 17.8% EBITA 8.3 8.1 2.5% 15.4 16.5 -6.7% The Professionals segment showed the strongest growth due to the addition of the Utrechtse Juristen Groep as from June 2006. Organic growth stood at 9.0%. The labels for highly trained technical personnel (ICT specialists and engineers) including the activities of Innotiv, Beaver, United Technical Solutions and United ICT Solutions were combined under the USG Innotiv label earlier in the year. The EBITA, which had declined year-on-year in the first quarter, rose again in the second quarter. Prospects 2007 The continuing growth confirms our previous expectations of increases in revenue in all regions where we provide our services. Looking to the rest of the year we also expect continuing revenue growth at around 10% for USG People. In this context the gross margin in the home markets may improve lightly apace with the further development of the economic cycle. In view of the positive revenue and result developments in the first half year, and expectations for the remainder of the year, we confirm our operating margin target for 2007, which we raised in the first quarter, at around 7%. * Compared with previous presentations the segments have been adjusted whereby 2006 figures have been made comparable. For more information please contact: Ron Icke CEO +31 (0)36 529 95 05 ricke@usgpeople.com Financial calendar 29 October 2007 Publication third quarter results 2007 (before start of trading) Analysts' meeting and press conference third quarter results 7 March 2008 Publication fourth quarter and annual results 2007 (before start of trading) Analysts' meeting and press conference fourth quarter and annual results 29 April 2008 Publication first quarter results 2008 (before start of trading) Conference call analysts first quarter results General Meeting of Shareholders The predictions and expectations given in this press release are provided without any form of guarantee as to their future realisation. This press release comprises or refers to statements related to the future as regards the intentions, opinions or current expectations of USG People and its board/management or other management in regard to USG People and its operations. In general such terms as "may", "shall", "expect", "intention", "estimate", "foresee", "believe", "intend to", "attempt", "continue" refer to statements regarding the future. Such future-related statements do not guarantee future performances. They are based on current views and assumptions and are subject to known and unknown risks, uncertainties and other factors which are largely outside the sphere of influence of USG People, whereby the actual results or developments may in fact diverge from future results or developments as set out implicitly or explicitly in the statements regarding the future. USG People does not accept any obligation whatsoever in regard to the updating or alteration of the statements regarding the future on the basis of new information, future events or for whatsoever reason, except where so required as per legislation and regulation or a duly authorised body. Profile USG People USG People provides all forms of flexible staffing/employment and a service offering covering human resources and customer care. The group, with headquarters in Almere in the Netherlands is active in a substantial number of European countries - the Netherlands, Belgium, Luxembourg, Germany, Austria, Switzerland, the Czech Republic, Slovakia, Poland, France, Italy, Spain and Portugal. The brand portfolio of USG People comprises Start People, Creyf's, Proflex (General Staffing), Unique, Content, Technicum, Secretary Plus, StarJob, Express Medical, Ad Rem Young Professionals, SYS, Financial Forces (Specialist Staffing), USG Innotiv, USG Energy, USG Capacity, HR Forces, Legal Forces, Utrechtse Juristen Groep, Accea, Carela, USG Restart and Multicompta (Professionals), and Call-IT (Customer Care Services). The shares of USG People are listed on the Euronext Amsterdam N.V. stock exchange (ticker: USG) and are included in the Midkap-index (AMX). For more information on USG People or one of its operating companies visit our website: www.usgpeople.com. Appendix 1: Information per segment Appendix 2: Segmentation by geography Appendix 3: Income statement Appendix 4: Consolidated balance sheet Appendix 5: Consolidated statement of changes in shareholders equity Appendix 6: Cash flow statement Appendix 7: Key figures THE PRESS RELEASE INCLUDING APPENDICES IS ENCLOSED AS A PDF FILE