USG PEOPLE Almere, 26 February 2016
FOURTH-QUARTER 2015 HIGHLIGHTS
Revenue rose 11.9% to € 677.3 million (Q4 2014: € 605.1 million); revenue per working day up 10.7%
Growth in revenue per working day in the Netherlands accelerated to 13.2% (Q3 2015: 12.1%)
Underlying expense ratio improved to 14.8% (Q4 2014: 16.0%)
Underlying EBITA increased 29.9% to € 36.1 million (Q4 2014: € 27.8 million); underlying EBITA margin rose to 5.3% (Q4 2014: 4.6%)
Underlying net income rose to € 23.8 million (Q4 2014: € 19.5 million)
FY 2015 HIGHLIGHTS
Revenue rose 8.3% to € 2,550.7 million (2014: € 2,355.0 million)
Underlying gross profit rose 5.8% to € 520.6 million (2014: € 492.1 million)
Underlying expense ratio improved by 100 basis points to 15.6% from 16.6% in 2014
Underlying EBITA increased by 26.2% to € 109.4 million (2014: € 86.7 million)
Underlying net income rose to € 65.3 million (2014: € 51.9 million)
Leverage ratio improved to 1.2 from 1.7 in 2014
KEY FIGURES
Underlying results 1) 3 months ended 31 December 12 months ended 31 Decemberin millions of euros | 2015 | 2014 | ∆ | 2015 | 2014 | ∆ |
Revenue | 677.3 | 605.1 | 11.9% | 2,550.7 | 2,355.0 | 8.3% |
Gross profit | 140.0 | 128.7 | 8.8% | 520.6 | 492.1 | 5.8% |
Operating expenses | 100.1 | 96.7 | 3.5% | 397.0 | 390.6 | 1.6% |
EBITDA | 39.9 | 32.0 | 24.7% | 123.6 | 101.5 | 21.8% |
EBITA | 36.1 | 27.8 | 29.9% | 109.4 | 86.7 | 26.2% |
Net income | 23.8 | 19.5 | 22.1% | 65.3 | 51.9 | 25.8% |
Gross margin | 20.7% | 21.3% | 20.4% | 20.9% | ||
Expense ratio | 14.8% | 16.0% | 15.6% | 16.6% | ||
EBITDA margin | 5.9% | 5.3% | 4.8% | 4.3% | ||
EBITA margin | 5.3% | 4.6% | 4.3% | 3.7% |
1) Underlying results have been adjusted for non-recurring costs.
NOTES TO THE FOURTH-QUARTER 2015 RESULTS
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"The positive trend in our results continued in the fourth quarter," said Rob Zandbergen, CEO of USG People. "Our revenue increased by 12% and there was a high rate of conversion to underlying EBITA, which improved by 30%. We achieved double-digit growth in the Netherlands and Belgium and outperformed the market in all four countries. Effective cost
management in combination with the revenue growth enabled us to comfortably achieve our stated target for improving our cost structure. Costs as a percentage of revenue fell by another full percentage point in 2015. Our staff achieved a good performance in several respects, both in the area of commercial and operational excellence and in realising our ambition to provide innovative solutions for our clients. The execution of our strategy led to highly satisfactory returns in 2015. If the proposed public offer by Recruit for our shares, announced on 22 December, is declared unconditional USG People will continue as a unit of a globally operating organisation. Linking up with Recruit will enable us to further accelerate our growth and develop our positioning on the continental European market more rapidly. I would like to thank all our employees for their commitment and the contribution they have made to the good results in the past year."
REVENUE
USG People saw revenue grow 11.9% in the fourth quarter to € 677.3 million (Q4 2014: € 605.1 million). The number of working days was on average 0.6 higher than in the fourth quarter of last year, which had a positive impact of 1.2% on revenue growth. Revenue per working day increased 10.7%. Growth was entirely organic. In all four core countries growth outpaced the market and USG People gained market share. The positive trend continued during the quarter with revenue per working day increasing by 10.1% in December.
GROSS PROFIT
The underlying gross profit rose € 11.3 million or 8.8% to € 140.0 million in the fourth quarter (Q4 2014: € 128.7 million). As a percentage of revenue the gross margin was 20.7% (Q4 2014: 21.3%).
The fall in the gross margin was mainly due to mix effects. During the year there was strong growth in the volume segment at Start People while conversely the latter half of the previous year saw several large volume contracts being phased out. Furthermore there was a negative impact from a drop in revenue at USG Restart, which has a gross margin of 96%, while recruitment and selection activities (100% gross margin) outside the core countries were terminated in the course of 2015.
Revenue from recruitment and selection equalled 0.7% of total group revenue in the fourth quarter of 2015 compared to 0.8% in the same quarter last year, with the decline attributable to the aforementioned termination of activities. In the core countries revenue from recruitment and selection rose 2.7% compared to the fourth quarter last year.
The reported gross profit included an additional charge of € 15.8 million mainly relating to an assessment from the French social security authority URSSAF concerning the years 2009 and 2010, which had been recognised as a contingent liability in the financial statements since 2011.
OPERATING EXPENSES EXCLUDING DEPRECIATION AND AMORTISATION OF INTANGIBLE ASSETS
In the fourth quarter underlying operating expenses rose by € 3.4 million compared to a year earlier to € 100.1 million (Q4 2014: € 96.7 million). The increase is mainly due to higher staffing costs connected with the continuing growth in Belgium and France. On balance expenses in the Netherlands and Germany were unchanged. In the Netherlands expenses for additional capacity, related to continuing growth, were offset by savings from Project Optima.
On balance the expense ratio, before depreciation, improved by 120 basis points to 14.8% from 16.0% in the fourth quarter of 2014. The improvement means that our target to lower the expense ratio by at least 60 basis points in 2015 was comfortably met. The underlying expense ratio for the 2015 full year was 15.6% compared to 16.6% in 2014 - an improvement of 100 basis points.
Reported expenses included both the underlying expenses and a non-recurring charge of € 7.5 million. This related mainly to costs connected with the proposed public offer by Recruit Holdings Co., Ltd. announced on 22 December 2015 as well as organisational changes in connection with the previously announced optimisation programme. The programme, which will be fully executed before the final quarter of 2016, will achieve annual cost savings of € 20 million in the Dutch organisation.
EBITA
in millions of euros | 2015 | 2014 |
Underlying EBITA | 36.1 | 27.8 |
Non-recurring gross profit | -15.8 | - |
Non-recurring operating expenses | -7.5 | -5.4 |
Non-recurring depreciation | -4.4 | -4.4 |
Reported EBITA | 8.4 | 18.0 |
Underlying EBITA rose 29.9% to € 36.1 million (Q4 2014: € 27.8 million). An € 11.3 million increase in the gross profit combined with a € 3.0 million rise in underlying expenses (including depreciation) resulted in an incremental conversion rate of 73% (a rise of € 8.3 million in EBITA). The underlying EBITA margin increased to 5.3% compared to 4.6% in the same quarter last year. Reported EBITA including non-recurring effects amounted to € 8.4 million (Q4 2014: € 18.0 million).
AMORTISATION OF ACQUISITION-RELATED INTANGIBLE ASSETS
Amortisation of acquisition-related intangible assets amounted to € 0.6 million in the fourth quarter (Q4 2014: € 1.6 million).
NET FINANCE COSTS
Finance costs amounted to € 7.3 million in the fourth quarter (Q4 2014: € 3.5 million). The increase in finance costs was due to costs related to the sale of CICE receivables issued to the French government. Furthermore there was a non-recurring charge of € 4.6 million in interest relating to a prior-year assessment for taxes and social security contributions from the French social security authority URSSAF.
INCOME TAX EXPENSE
Tax in the fourth quarter of 2015 was a negative € 8.4 million (Q4 2014: € -3.5 million). This figure includes a € 10.6 million charge related to unrecognised tax losses. There was a positive impact of € 1.8 million from prior-year corrections and offsetting of a tax loss at a subsidiary.
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
in millions of euros | 2015 | 2014 |
Underlying net income | 23.8 | 19.5 |
Non-recurring results | -27.7 | -9.8 |
Revaluation of earn-outs | -0.6 | -2.3 |
Revaluation of associate | -2.4 | - |
Non-recurring finance costs | -4.6 | - |
Net income of discontinued activities | 0.0 | -1.2 |
Non-recurring income tax | 1.0 | 1.7 |
Reported net income | -10.5 | 7.9 |
Net income per share (in euros) | € -0.13 | € 0.10 |
Underlying net income rose to € 23.8 million from € 19.5 million in the fourth quarter of last year. Reported net income was a negative € 10.5 million (Q4 2014: positive € 7.9 million).
BALANCE SHEET AND CASH FLOW
Working capital was € -119.5 million, € 11.0 million higher than in the fourth quarter of last year (Q4 2014: € -130.5 million). The increase in working capital was due to a reduction in factoring - in order to optimise the finance expenses the balance of trade receivables sold was reduced by € 32.1 million in 2015 to € 92.0 million (Q4 2014: € 124.1 million).
The operating cash flow in the fourth quarter was € 76.1 million (Q4 2014: € 57.3 million). Cash flow was higher due to the sale of € 18.0 million of CICE receivables issued to the French government. The net debt position fell to € 128.2 million (Q4 2014: € 149.7 million). The leverage ratio (net debt / 12-month underlying EBITDA) improved to 1.2 (Q4 2014: 1.7).
FOURTH-QUARTER 2015 RESULTS BY COUNTRY
The Netherlands
In the Netherlands revenue per working day rose 13.2% in the fourth quarter to € 303.7 million (Q4 2014: € 264.1 million). The fourth quarter saw a further acceleration of revenue growth compared to the 12.1% growth in the third quarter. This was above market growth, which according to figures published by sector association ABU equalled 9.2% in the fourth quarter.
Start People saw a further acceleration of revenue growth to 21.1% compared to the same quarter a year earlier (Q3 year- on-year growth: 15.5%). In the Specialist Staffing segment, which comprises Unique and Secretary Plus, revenue per working day rose 6.0%. Growth was lower at Unique due to a shift of capacity and commercial focus from volume clients to the small and medium-sized business segment, where Unique delivers higher added value. Secretary Plus continued its high rate of growth during the fourth quarter, with revenue rising 26.8% compared to a year earlier. USG Professionals was still registering a decline in revenue in the engineering segment (-12.1%); the other segments achieved growth of 13.9% on balance. Revenue at Online Business Solutions equalled € 2.1 million (Q4 2014: € 2.5 million).
The gross margin in the Netherlands was lower, mainly due to the strong growth at Start People, which saw a sharp increase in the volume segment while conversely the third and fourth quarters of the previous year saw a number of large volume contracts being phased out. This resulted in a change in the mix, with more revenue in the volume segment. In addition there was a negative effect from a decline in revenue at USG Restart (part of Start People). This has a relatively large impact on the gross margin given that USG Restart realises a gross margin of 96%. This relates mainly to outplacement where demand tends to decline at this stage of growth in the cycle.
USG People NV issued this content on 26 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 26 February 2016 06:21:13 UTC
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