Randstad Annual Report 2018
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annual report 2018 passion for people. contents randstad at a glance management report governance financial statements supplementary information contents. randstad at a glance financial statements 4 key figures 2018 128 contents financial statements 6 message from the CEO 129 consolidated financial statements 8 about us 133 main notes to the consolidated financial statements 11 value creation model 155 notes to the consolidated income statement 12 our global presence 159 notes to the consolidated statement of financial 13 geographic spread position 14 passion for people 168 notes to the consolidated statement of 16 our ultimate goal cash flows 171 other notes to the consolidated financial statements management report 184 company financial statements 20 the world around us 186 notes to the company financial statements 28 our strategy and progress 190 other information 32 our value for clients and candidates 41 our value for employees supplementary information 46 our value for investors 200 ten years of randstad 51 our value for society 202 about this report. 58 sustainability basics 204 GRI content index. 70 reporting framework 208 global compact index. 72 performance 209 sustainability and industry memberships and 89 risk & opportunity management partnerships 210 certifications, rankings, and awards governance 212 highest randstad positions in industry associations 102 executive board 213 glossary 104 supervisory board 219 financial calendar 106 report of the supervisory board 220 history timeline 115 remuneration report 121 corporate governance annual report 2018 2 contents randstad at a glance management report governance financial statements supplementary information randstad at a glance. 4 key figures 2018 6 message from the CEO 8 about us 11 value creation model 12 our global presence 13 geographic spread 14 passion for people 16 our ultimate goal annual report 2018 3 contents randstad at a glance management report governance financial statements supplementary information key figures 2018. revenue in millions € 23,812 › 74 underlying EBITA margin 4.7% › 74 adjusted net income in millions € 833 › 74 free cash flow in millions leverage ratio number of candidates working (on a daily basis) € 627 0.8 670,900 › 74 › 74 › 72 number of permanent proposed dividend employee engagement placements per ordinary share score 262,500 € 3.38 7.7 › 72 › 46 › 45 women in senior number of candidates number of employees leadership positions trained trained 48% 306,000 29,200 › 42 › 51 › 60 annual report 2018 4 contents randstad at a glance management report governance financial statements supplementary information key financials. in millions of €, unless otherwise indicated 2018 2017 Δ Underlying1 Revenue 23,812 23,273 2% Gross profit 4,703 4,708 0% EBITA2 1,108 1,065 4% Actual Revenue 23,812 23,273 2% Gross profit 4,701 4,706 0% EBITA2 1,032 994 4% Net income 704 631 12% Free cash flow3 627 586 7% Net debt4 985 1,026 (4%) Leverage ratio (net debt/12-month EBITDA) 0.8 0.9 Total equity 4,479 4,251 5% Ratios (in % of revenue) Underlying1 Gross margin 19.8% 20.2% EBITA margin 4.7% 4.6% Actual Gross margin 19.7% 20.2% EBITA margin 4.3% 4.3% Net income margin 3.0% 2.7% Share data Basic earnings per ordinary share (in €) 3.78 3.38 12% Basic earnings per ordinary share, underlying (in €)5 4.55 4.13 10% Diluted earnings per ordinary share, underlying (in €)5 4.54 4.11 10% Dividend per ordinary share (in €) 3.38 2.76 22% Payout per ordinary share (in %)6 74 67 11% Closing price, year-end (in €) 40.09 51.24 (22%) Market capitalization, year-end 7,349 9,390 (22%) Enterprise value, year-end7 8,334 10,416 (20%) Employees/outlets Average number of candidates working 670,900 668,800 0% Average number of corporate employees 38,820 37,930 2% Number of branches, year-end8 2,827 2,900 (3%) Number of Inhouse locations, year-end8 1,999 1,958 2% 1 Underlying: actual gross profit and EBITA adjusted for one-offs, such as restructuring costs, integration costs, and acquisition-related expenses. 2 EBITA: operating profit before amortization and impairment of acquisition-related intangible assets and goodwilll. 3 Free cash flow: sum of net cash from operating and investing activities, excluding the acquisition and disposal of subsidiaries and associates, and dividends from associates. 4 Net debt: cash and cash equivalents minus borrowings. 5 Before amortization and impairment of acquisition-related intangible assets and goodwill, integration costs, acquisition-related costs, and one-offs. 6 Payout per ordinary share in %: dividend per ordinary share on basic earnings per ordinary share adjusted for the net effect of amortization and impairment of acquisition- related intangible assets and goodwill, integration costs, acquisition-related costs, and one-offs. 7 Enterprise value: the total of market capitalization and net debt. 8 Branches are outlets from which various clients are served with various numbers of services and which are located in residential/commercial areas. Inhouse locations are outlets from which one client is served with a limited number of job profiles and which are located on the site of the client. annual report 2018 5 contents randstad at a glance management report governance financial statements supplementary information message from the CEO. ‘In the ideal future of work, everyone should be able to participate in the labor market, whatever their background or circumstances.’ Dear Stakeholder, stakeholders. We are excited about the fact that data is increasingly enabling us to add value for everyone, We live in exciting times. Technological, economic, and including society as a whole. In-depth and relevant data geopolitical changes are keeping us on our toes. The flip will help companies find the scarce talent they need and side of these developments is a sense of insecurity. I show candidates exciting new job opportunities. And would like to reassure people. In the ideal future of work, data-driven insights will make it a lot easier for our everyone should be able to participate in the labor consultants to spot emerging market trends, enabling market, whatever their background or circumstances. In them to have high-level interactions with candidates such a labor market, people will be valued for their and clients. talents and skills, and they will be empowered to take ownership of their careers. At the same time, there In 2018, I was in the fortunate position to be able to should be an adequate support and care safety net for coach seven Randstad employees in their volunteering those who need it. That is the future of work that we at work in India for Voluntary Service Overseas (VSO), Randstad believe in, and it is a future of work that I am helping people with disabilities. It was fantastic to see also personally committed to. what these enthusiastic colleagues managed to achieve with very limited means. We are celebrating the 15th In recent years, we have been transforming our business anniversary of our partnership with VSO in 2019, and I into a data-driven organization with a powerful human am looking forward to many more years of fruitful touch. We are doing this to make sure that we can collaboration. Volunteering is in fact highly valued at continue to improve the way we serve all our Randstad. In October 2018, we launched Randstad With annual report 2018 6 contents randstad at a glance management report governance financial statements supplementary information message from the CEO revenue in millions of € candidates placed in jobs 25,000 700,000 400,000 1,142 1,184 757 20,000 4,720 4,929 600,000 300,000 4,067 15,000 5,185 5,300 4,461 500,000 200,000 10,000 12,441 11,400 12,184 5,000 400,000 100,000 0 revenue 2016: revenue 2017: revenue 2018: 300,000 0 € 20,684 € 23,273 € 23,812 2016 2017 2018 staffing inhouse services professionals global businesses temporary placements (average per day) permanent placements (annually) Heart, a global program that enables our employees On behalf of the Executive Board, I would like to take this worldwide to do some voluntary activities during opportunity to thank all our stakeholders for their working hours. The Randstad With Heart platform also continued support and trust in our company. And, of connects colleagues around the world in their course, I would like to thank all Randstad colleagues volunteering activities. around the world for their enthusiasm, commitment, and dedication to this great company. Over the years, Randstad has increasingly become a truly global company, with countries and regions Best regards, throughout the world making significant contributions Jacques van den Broek to our growth and profitability. In 2018, for example, countries such as Japan, Australia, Singapore, and also the Latin America region, were particularly strong performers. At Group level, our revenue grew organically by 4% in 2018, despite increasing macro uncertainties in the second half of the year, primarily in Europe. We are pleased with our continued outperformance in several geographies, which are clearly benefiting from our highly diversified portfolio. Our EBITA margin further increased to 4.7%, driven by a strong incremental conversion ratio of 56%. Our free cash flow increased by 7% year-on-year to € 627 million, resulting in a sound leverage ratio of 0.8 at year-end 2018. For 2018, we propose a cash dividend of € 3.38 per ordinary share, consisting of a regular dividend of € 2.27 (2017: € 2.07), representing a payout of 50% and a special dividend of € 1.11 (2017: € 0.69). annual report 2018 7 contents randstad at a glance management report governance financial statements supplementary information about us. who randstad in numbers Randstad is a global leader in the HR services industry.