annual report 2019 realizing true potential. contents randstad at a glance management report governance financial statements supplementary information contents. randstad at a glance financial statements 4 key figures 2019 135 contents financial statements 6 message from the CEO 136 consolidated financial statements 8 about randstad 140 main notes to the consolidated financial statements 14 our global presence 170 notes to the consolidated income statement 15 geographic spread 174 notes to the consolidated statement of financial 16 realizing true potential position 189 notes to the consolidated statement of management report cash flows 19 how we create value 193 other notes to the consolidated financial statements 24 integrated reporting framework 200 company financial statements 26 the world around us 202 notes to the company financial statements 31 our strategy and progress 206 other information 36 our value for clients and talent 41 our value for employees supplementary information 47 our value for investors 217 financial calendar 52 our value for society 218 ten years of randstad 58 sustainability basics 220 about this report 71 performance 222 sustainable development goals 88 risk & opportunity management 223 GRI content index 227 global compact index governance 228 sustainability and industry memberships and 102 executive board partnerships 104 supervisory board 229 certifications, rankings, and awards 106 report of the supervisory board 231 highest randstad positions in industry associations 115 remuneration report 232 glossary 128 corporate governance 238 history timeline annual report 2019 2 contents randstad at a glance management report governance financial statements supplementary information randstad at a glance. 4 key figures 2019 6 message from the CEO 8 about randstad 14 our global presence 15 geographic spread 16 realizing true potential annual report 2019 3 contents randstad at a glance management report governance financial statements supplementary information key figures 2019. revenue in millions € 23,676 › 73 underlying EBITA margin 4.6% › 73 adjusted net income in millions € 766 › 73 free cash flow in millions global HR services leader number of candidates working (on a daily basis) € 915 # 1 649,000 › 73 › 73 › 71 number of permanent proposed dividend employee engagement placements per ordinary share score 260,700 € 4.32 7.6 › 71 › 47 › 45 women in senior number of candidates number of employees leadership positions trained trained 47% 330,500 34,300 › 42 › 52 › 60 annual report 2019 4 contents randstad at a glance management report governance financial statements supplementary information key financials. in millions of €, unless otherwise indicated 2019 restated 2018 Δ Underlying1 Revenue 23,676 23,812 (1%) Gross profit 4,726 4,703 0% EBITA2 1,094 1,131 (3%) Actual Revenue 23,676 23,812 (1%) Gross profit 4,705 4,701 0% EBITA3 977 1,061 (8%) Net income 606 708 (14%) Free cash flow4 915 627 46% Net debt, excluding lease liabilities5 756 985 (23%) Net debt (including lease liabilities) 1,377 1,640 Leverage ratio (net debt/12-month EBITDA) 1.0 1.2 Total equity 4,473 4,447 1% Ratios (in % of revenue) Underlying1 Gross margin 20.0% 19.8% EBITA margin 4.6% 4.7% Actual Gross margin 19.9% 19.7% EBITA margin 4.1% 4.5% Net income margin 2.6% 3.0% Share data Basic earnings per ordinary share (in €) 3.24 3.80 (15%) Basic earnings per ordinary share, underlying (in €)6 4.18 4.55 (8%) Diluted earnings per ordinary share, underlying (in €)6 4.17 4.54 (8%) Dividend per ordinary share (in €) 4.32 3.38 28% Payout per ordinary share (in %)7 103 74 39% Closing price, year-end (in €) 54.44 40.09 36% Market capitalization, year-end 9,979 7,349 36% Enterprise value, year-end8 10,735 8,334 29% Employees/outlets Average number of candidates working 649,000 670,900 (3%) Average number of corporate employees 38,280 38,820 (1%) Number of branches, year-end 2,761 2,827 (2%) Number of Inhouse locations, year-end 2,100 1,999 5% 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 goodwill. 3 EBITA: operating profit before amortization and impairment of acquisition-related intangible assets and goodwilll. 4 Free cash flow: sum of net cash from operating and investing activities, excluding the acquisition and disposal of subsidiaries and associates and equity investments, and dividends from associates; including repayment of lease liabilities. 5 Net debt, excluding lease liabilities: cash and cash equivalents minus borrowings. 6 Before amortization and impairment of acquisition-related intangible assets and goodwill, integration costs, acquisition-related expenses, and one-offs. 7 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. 8 Enterprise value: the total of market capitalization and net debt (net debt excluding lease liabilities). annual report 2019 5 contents randstad at a glance management report governance financial statements supplementary information ‘We want to grow because we want to give more and more people the chance to grow with us ’ Dear Stakeholder, As data-driven global HR experts, we can help people and organizations overcome these mismatches and In 2019, we solidified our global No. 1 position as the help them navigate the increasingly complex labor largest HR services firm in the world. This further market to realize their true potential. And not just once, strengthens our commitment and responsibility to but throughout people’s careers and throughout support people and organizations in realizing their true business life cycles. potential. In fact, we see it as our core business. It has helped us achieve our leading position, and it will help For me and my colleagues, it has always been crucial to us in our journey towards our ultimate goal of touching perform today, but also to deliver a solid strategy for the work lives of 500 million people worldwide by 2030. tomorrow. I’m glad to say that we achieved both in 2019. We delivered a sound return for shareholders, and we So why is growth so important to us? Most importantly, made strong progress advancing our digital we want to grow because we want to give more and transformation and Tech & Touch strategy. In 2019, we more people the chance to grow with us, providing them launched our Human Forward promises: transparency, with ever better career opportunities. That has also been guidance and proactivity. Together with our core values, my personal experience over the past 32 years, as these promises will help us to perform to the best of our Randstad’s growth has helped me to realize my own full ability and drive future growth. potential. I believe that in today’s labor market, where mismatches between jobs and people are on the rise, I was pleased to see our efforts recognized by our our role is becoming increasingly significant. external stakeholders through several awards and listings in 2019. We were recognized by some of our largest clients with key partnership awards, our Annual annual report 2019 6 contents randstad at a glance management report governance financial statements supplementary information message from the CEO candidates placed in jobs revenue in millions of € 700,000 400,000 25,000 1,142 1,184 1,164 20,000 4,720 4,929 5,164 600,000 300,000 15,000 5,185 5,300 5,305 500,000 200,000 10,000 12,184 12,441 12,043 400,000 100,000 5,000 0 300,000 0 revenue 2017: revenue 2018: revenue 2019: 2017 2018 2019 € 23,273 € 23,812 € 23,676 temporary placements (average per day) permanent placements (annually) staffing inhouse professionals global businesses Report 2018 won the prestigious FD Henri Sijthoff Prize resulting in a strong balance sheet and additional cash in the Netherlands, and we were again listed as the only returns to shareholders. For 2019, we propose a record- HR services company in the Dow Jones Sustainability high cash dividend of € 4.32 per ordinary share, an Index. increase of 28%. This consists of a regular dividend of € 2.09, representing a payout of 50% and a special dividend of € 2.23. 2020 promises to be a special year, as Randstad will be celebrating its 60th anniversary. The theme of our anniversary program will be ‘above and beyond’, On behalf of the Executive Board, I would like to take this emphasizing our purpose and culture. With this opportunity to thank all our stakeholders for their engagement program, we’ll be reaching out to our more continued support and trust in our company. And, of than 38,000 employees across the globe. Again, this is course, I would like to thank all Randstad colleagues where technology helps us to create a global around the world for their enthusiasm, commitment, communication platform, where employees can share and dedication to this great company. stories about how they went above and beyond in helping people. That’s what Human Forward is all about. Best regards, Jacques van den Broek Financially, 2019 was a challenging year, particularly in Europe, but we have been able to show our resilience once again. Randstad’s increasingly diversified portfolio by region and activity paid off. Our Group revenue was slightly down organically year-on-year, reflecting ongoing macro and geopolitical uncertainties, primarily in Europe. At the same time, we continued our outperformance in several key geographies, such as France, Germany, and Italy. Importantly, we were able to further improve our pricing power and discipline, reflecting increasing scarcity in labor markets and the successful implementation of digital pricing tools globally.