Almere, 7 March 2007, 07.00 hrs * ¤ 3.5 billion revenue due to continued strong revenue growth * Gross margin in the fourth quarter rose with 80 basis points to 24.7% * Operating margin rises to 5.8% due to synergy and cost controls * Recurring EBITA rises to ¤ 212.9 million * Earnings per share up by a factor five Highlights fourth quarter 2006 (comparative figures 2005 based on pro forma organic* figures) * Revenue rose by 16.5% to ¤ 957 million compared with the fourth quarter of 2005 (¤ 821 million). * All countries showed double digit revenue growth; in all growth regions revenue grew by more than 20 percent including strongly recovering growth in Germany during the fourth quarter * Cost ratio declined to 18.5% of revenue (2005: 21.3%) * EBITA rose to ¤ 58.8 million from ¤ 21.6 million in 2005. Adjusted for non-recurring expenses (settlement of WID [Identification Provision of Services Act] tax claim, re-labelling / restyling and restructuring) the EBITA totalled ¤ 65.4 million thus realising an operating margin of 6.8% compared with an adjusted EBITA of ¤ 43.1 million in the fourth quarter of 2005 (operating margin 5.3%) * Recurring**** net income totalled ¤ 35.1 million (2005: ¤ 12.2 million). Recurring net EPS*** in the fourth quarter totalled ¤ 0.56 (2005: ¤ 0.19) Highlights for the year 2006 (comparative figures 2005 based on pro forma organic* figures) * In 2006 revenue rose by 18.4% to ¤ 3.5 billion compared to ¤ 3.0 billion in 2005 * EBITA** totalled ¤ 225.5 million compared with ¤ 92.0 million in 2005. Adjusted for non-recurring income and expenses (settlement of WID tax claim, re-labelling / restyling, restructuring and the sale of training activities) the EBITA totalled ¤ 212.9 million which realised a recurring operating margin of 6.0% (operating margin 2005: 3.9%) * Net EPS *** totalled ¤ 1.76 (2005: ¤ 0.34) * Dividend payout ¤ 0.72 per share "Extremely good results in 2006 led to a group revenue in excess of ¤ 3.5 billion", said Ron Icke, CEO of USG People. "Supported by continuing economic growth compared with the previous year, growth more than doubled. In most regions this meant performance outstripping the market and securing greater shares of the market. Our profitability improved strongly thanks to strongly increased volume and the positive effects of integrations and synergetic effects. The increased operational leverage resulted in an improved operating margin. Another very positive aspect was the strong increase in the gross margin during the fourth quarter. The fact that all this was realised in the first year following the acquisition of Solvus, at a time when our attention was to a degree focused on integrations, says a lot about the commercial 'clout' and flexibility of our new organisation - and above all, our people. It gives me great pleasure to thank our people for their great performance, at the same time I take a very positive view on 2007." * For the comparative figures for 2005, the results of Solvus for the entire period are included in the pro forma organic classification and the figures for subsidiaries acquired and disposed of during a period have been incorporated or eliminated ** EBITA is the operating profit before amortisation of intangible assets and impairment of goodwill *** Net earnings per share based on numbers of shares at 31 December; the shares of USG People were split as per 13 October 2006 **** Recurring net income is net income adjusted for one-off profits and expenses The results can be summarised as follows: Organic results* Q4 Q4 Growth FY FY Growth ( x ¤ 1 million) 2006 2005 pro 2006 2005 pro forma forma Revenue 956.5 821.2 16.5% 3,536.8 2,987.6 18.4% Gross profit 235.9 196.7 19.9% 846.8 709.8 19.3% Operating expenses 164.8 145.7 13.1% 608.0 557.4 9.1% One-off profits and -6.6 -21.5 12.6 -25.5 expenses** EBITDA 64.5 29.5 251.4 126.8 Depreciation 5.7 7.9 26.0 34.8 EBITA 58.8 21.6 225.5 92.0 Amortization 19.5 5.2 31.3 5.2 EBIT 39.3 16.4 194.2 86.8 Interest expenses -7.2 -14.6 -32.0 -32.9 Income taxes -15.3 -4.6 -50.9 -23.5 Third parties -0.2 0.2 -0.4 -0.5 Net income 16.7 -2.6 110.9 29.9 Gross margin 24.7% 23.9% 23.9% 23.8% Cost ratio 18.5% 21.3% 17.6% 20.7% Operating margin*** 6.8% 5.3% 6.0% 3.9% Earnings per share**** 0.26 -0.05 1.76 0.34 Earnings per share not including proceeds from sale of training & education activities 1.45 * For the comparative figures for 2005, the results of Solvus for the entire period are included in the pro forma organic classification and the figures for subsidiaries acquired and disposed of during a period have been incorporated or eliminated. ** One-off profits and expenses include for 2006: ¤ 19.2 million profit from sale Training and education activities, ¤ 3.6 million tax claim and ¤ 3.0 million re-branding expenses. 2005 includes an amount of ¤ 25.5 million for restructuring expenses of which ¤ 21.5 in the fourth quarter. *** Operating margin is EBITA, before one-off profits and expenses, as percentage of revenue. **** Earnings per share 2005 not based on pro forma Notes to the fourth quarter and annual results for 2006 Revenue Due to the continuing strong revenue growth in the fourth quarter it was possible to close 2006 with a revenue volume in excess of ¤ 3.5 billion. If the comparison with 2005 were to include the former Solvus companies for the entire year this would be 18.4% or ¤ 500 million higher than last year. Revenue from acquisitions made in 2006 (Utrechtse Juristen Groep, Start Czech Republic and Start Slovakia) was approximately the same as the revenue loss due to divestments (Luzac College, Inter College, Abel Tasman College and Buro Transport Opleidingen). During the last quarter of the year growth was slightly lower than in the previous quarters largely due to public holidays in December which fell mid-week and were hence less-favourable than in the previous year. In 2006 we realised double-digit revenue growth in all countries. The Dutch domestic market grew by 20.2% while the pace of growth in Belgium and Luxemburg was 14.6% lower due to a successful focus on further improvement of profitability; in the Belgian market a number of contracts were not continued due to the focus on increasing the gross margin. Very good results were also posted outside the Benelux area, for instance in France and the growth regions, with Italy and Poland being particular contributors. We increased market share in most regions. Gross margin Over the entire year the gross margin showed an increase for the first time in years, and stood at 23.9% (2005: 23.8%). In view of the altered mix due to the substantial rise for in-house service and volumes in regions where lower gross margins are common, this evidences the underlying positive trend. In the first quarter the gross margin improved by 80 basis points compared to the same period in the previous year. Operating expenses 2006 saw a considerable improvement in operating leverage compared to 2005. Expenses including depreciation rose by just 3.7% while revenue volume increased by 18.4%. As percentage of revenue this meant a further decline of cost ratio from 20.7% in 2005 to 18.1% in 2006. The increase in expenses is the result of increased personnel expenses and selling expenses due to volume growth and re-labelling operations, as well as a decline in depreciation largely due to integration of back offices. The number of indirect FTEs increased by 5% in 2006 and the branch network was increased by 57, mainly in countries outside the Benelux region. Costs for the last quarter of 2006 included a total amount of ¤ 6.6 million for exceptional expenses which in no way related to regular operations in this period; of this ¤ 3 million were additional expenses for re-labelling operations and ¤ 3.6 million for the definite settlement of a (WID) tax claim over previous years. During the same quarter of 2005 costs amounting to ¤ 21.5 million were incurred for integration and restructuring. EBITA In 2006 we realised EBITA totalling ¤ 225.5 million compared with ¤ 92.0 million in 2005. The increase was mainly due to strong volume growth and synergetic effects due to integrations and benefits of scale. The year 2006 also brought a non-recurring positive net result of ¤ 12.6 million. On one hand there was a book profit of ¤ 19.2 million from the sale of the Training activities which were no longer counted as part of the group's core activities. On the other hand there were ¤ 6.6 million non-recurring expenses for re-labelling and settlement of the fiscal claim for previous years. This 'WID claim' was definitely settled with the tax authorities during the last quarter. With the EBITA result adjusted for these exceptional items the (recurring) operating result amounts to ¤ 212.9 million or 6% of revenue (operating margin 2005: 3.9%). Hence the 2007 strategic objective of an operating margin amounting to at least 6.5% was already exceeded, at 6.8%, in the fourth quarter. In the last quarter the countries outside the Benelux region an EBITA was realised totalling just over ¤ 6 million compared with a small loss in the same period of 2005. Over the entire year the contribution to the EBITA from non-Benelux increased five-fold from ¤ 5 million in 2005 to ¤ 25 million in 2006. Amortisation In 2006 amortisation of goodwill amounted to ¤ 31.3 million. Of this ¤ 15.9 million related to regular amortisation of stated brand rights and customers brought in as part of the Solvus acquisition. On top of this stated brand rights for ¤ 5.5 were subject to accelerated amortisation due to the combination of labels. Furthermore ¤ 9.9 million in goodwill was written down for the intended deconsolidation of Telecom Direct via a management buy out. The operating profit after amortisation totalled ¤ 194.2 million. Financial expenses Financial expenses totalled ¤ 32 million including a positive effect of ¤ 4 million for fluctuations in the market value of the interest rate derivative. Without this amount interest expenses totalled ¤ 36 million. On 31 December the market value of the interest rate derivative was virtually zero compared with a negative value of ¤ 4 million at the end of 2005. Tax At 31.4% the tax rate in 2006 was slightly lower than the average nominal rate of 32.0%. The tax rate was influenced by the tax-exempt income of the Belgian coordination centre and the income exempt from tax on the sale of the Training activities. There were also negative effects due to the non-deductible expenses and adjustments of the deferral mainly due to tariff changes and expected non-compensable losses. Net income The year 2006 closed with a net profit of ¤ 110.9 million (2005: ¤ 29.9 million). Profit per issued share came to ¤ 1.76 compared with ¤ 0.34 in 2005. In 2006 there was only a minimal increase in the number of shares exclusively due to exercise of personnel options. No further shares were issued and no bonds of the convertible bond loan were offered for conversion. As a consequence there was no dilution of earnings per share in 2006. Balance sheet and cash flow Total assets amounted to ¤ 1,900 million and were ¤ 165 million lower than on 31 December 2005. Capital adequacy improved to 30% due to an ¤ 102 million increase in equity and a ¤ 68 million decrease in the net debt position. With the exception of the exercise of a limited number of personnel options no shares were issued in 2006 and no new loans were contracted. At the end of 2006 equity totalled ¤ 574 million and the net interest bearing debt position amounted to ¤ 611 million. The cash flow from operations totalled ¤ 161 million and improved by ¤ 47 million on 2005. Influences on operating cash flow included low tax payments due to carry-over losses on tax deferral and negatively by application of the reorganisation provisions and the increase in working capital caused by continued revenue growth. Alongside the operating cash flow an amount of ¤ 30 million was invested and an additional net amount of ¤ 8 million was devoted to acquisitions and the sale of operating companies. Furthermore, interest expenses totalled ¤ 35 million and dividends paid totalled ¤ 13 million. The net debt position reduced thanks to positive cash flow. Results per segment a. General Staffing (2005 organic) +-------------------------------------------------------------------+ | Results | Q4 | Q4 | Growth | YTD | YTD | Growth | |-----------+-------+---------+--------+---------+---------+--------| | x ¤ | | 2005 | 06 / | | 2005 | 06 / | | milllion) | 2006 | pro | 05 | 2006 | pro | 05 | | | | forma | | | forma | | |-----------+-------+---------+--------+---------+---------+--------| | Revenue | 575.7 | 492.5 | 16.9% | 2,134.5 | 1.812.6 | 17.8% | |-----------+-------+---------+--------+---------+---------+--------| | EBITA | 19.6 | 15.6 | 25.6% | 78.9 | 44.4 | 77.7% | +-------------------------------------------------------------------+ During the past quarter countries involved with our general staffing activities were increased with the Czech Republic and Slovakia, bringing the total to 13. Fourth quarter organic growth in this segment stood at 16.9% which is slightly lower than the very strong growth of the preceding third quarter. This is mainly due to the large number of public holidays on weekdays during December, as well as lower revenue in Belgium due to the strong focus on profitability. In the Netherlands where some 30 percent of revenue is realised in the general segment, growth totalled 18.4% during the last quarter. On the basis of an equal number of weekdays worked this would have meant growth in excess of 20%. In 2006 revenue volume from in-house activities in the Netherlands grew 152% compared with 2005. In Belgium revenue growth declined due to the non-extension of a number of low-yielding volume contracts in the last half of 2006; hence, the second half of 2006 saw a greater focus on the further increase in profitability. Once again France realised strong last quarter growth with 14.9% higher revenue than in the same period of the previous year. Looking at the whole of 2006 France performed very well with 13.2% growth. In Spain and Italy during the fourth quarter the general staffing labels Start, Creyf's and People were re-labelled as Start People which is the new international label for all General Staffing activities. In Spain 17.9% growth was in line with previous quarters, and Italy posted 24.2% growth in the last quarter. Germany and the other countries posted last quarter growth of 28.1% and 32.9%, with growth acceleration in Germany, Switzerland and Austria. Increased growth in Germany evidences that the loss of revenue from a major client has been compensated. Looking at the year as a whole the General Staffing segment posted revenue growth of 17.8% while the EBITA rose by 77.7% to ¤ 78.9 million. b. Specialist Staffing (2005 organic) +-------------------------------------------------------------------+ | Results | Q4 | Q4 | Growth | YTD | YTD | Growth | |----------+-------+----------+---------+---------+-------+---------| | (x ¤ | | 2005 pro | | | 2005 | | | million) | 2006 | forma | 06 / 05 | 2006 | pro | 06 / 05 | | | | | | | forma | | |----------+-------+----------+---------+---------+-------+---------| | Revenue | 285.7 | 250.9 | 13.9% | 1,056.4 | 895.4 | 18.0% | |----------+-------+----------+---------+---------+-------+---------| | EBITA | 32.9 | 25.1 | 31.1% | 116.1 | 72.5 | 60.1% | +-------------------------------------------------------------------+ Specialist Staffing, which is strongly represented in the Small to Medium Enterprise sector (SME), posted 13.9% growth in the last quarter representing the close of a strong year with 18% growth. This growth confirmed that late-cyclical SME markets are well on track. The Specialist services offering covers the Netherlands, Belgium, France, Spain and Germany. The Netherlands makes up almost 70% of the Specialist Staffing segment with the local labels Content, Creyf's and Starjob showing strong growth in 2006. Of the international labels in the specialist segment Secretary Plus was a very good performer in all counties. Unique saw growth recover with excellent growth in excess of 40% in Spain. The Specialists contribution to the EBITA rose to ¤ 116 million for 2006. c. Professionals (2005 organic) +-------------------------------------------------------------------+ | Results | Q4 | Q4 | | Growth | YTD | YTD | Growth | |----------+------+----------+---+---------+-------+-------+--------| | (x ¤ | | 2005 pro | | | | 2005 | 06 / | | million) | 2006 | forma | | 06 / 05 | 2006 | pro | 05 | | | | | | | | forma | | |----------+------+----------+---+---------+-------+-------+--------| | Revenue | 80.6 | 64.0 | | 25.9% | 284.7 | 221.0 | 28.8% | |----------+------+----------+---+---------+-------+-------+--------| | EBITA | 12.8 | 9.3 | | 37,6% | 35.8 | 24.6 | 45.5% | +-------------------------------------------------------------------+ 2006 was an exceptionally good year for the Professionals segment with 32% organic growth in the Netherlands and just over 19% in Belgium, resulting in ¤ 285 million revenue. This growth is in line with previous quarters. The figures of the Utrechtse Juristen Groep (UJG) have been incorporated in the Professionals segment as from the start of the third quarter. UJG's results for the third and fourth quarters have been included in the overview above to provide comparative figures for 2005. For the year as a whole the Professionals contribution to the EBITA totalled ¤ 35.8 million. d. Special Services (2005 organic) +-------------------------------------------------------------------+ | Results | Q4 | Q4 | Growth | YTD | YTD | Growth | |----------+------+-------------+----------+------+-------+---------| | (x ¤ | | 2005 pro | | | 2005 | | | million) | 2006 | forma | 06 / 05 | 2006 | pro | 06 / 05 | | | | | | | forma | | |----------+------+-------------+----------+------+-------+---------| | Revenue | 14.5 | 14.0 | 3.6% | 61.2 | 58.6 | 4.4% | |----------+------+-------------+----------+------+-------+---------| | EBITA | 1.4 | 0.1 | 1,300.0% | 4.3 | 2.1 | 104.8% | +-------------------------------------------------------------------+ Following the sale of the Training & Education activities in the second quarter Special Services now comprise HR and Customer Care activities. Effective 1 April the results of training and education ceased to be included in the figures. Comparative figures for 2005 have been adjusted in the overview above and, similarly, these results are no longer included. During the fourth quarter revenue from these activities showed a slight increase with a strongly improved EBITA result of ¤ 1.4 million. The year as a whole also showed a slight revenue increase. Prospects 2007 In realising an operating margin of 5.8 percent USG People has made an important step towards its desired minimum operating margin of 6.5% for 2007. We expect to realise this objective in 2007. We see an ongoing strong growth in revenue in virtually all of the thirteen countries where USG People offers its services. There is strong growth in the national economies of most counties where we operate and from this angle expectations for 2007 are good. Given continuing economic growth combined with the fact that USG People has reinforced its position in most countries justifies expectations of revenue growth again in 2007. In this context the gross margin is expected to increase further while the synergetic benefits of the physical integrations in 2006 and 2007 will yield additional cost efficiency in 2007. Alongside the expected autonomous growth our cash flow and improved capital structure offer the scope to further expand our branch network in growth areas and to boost our market positions via acquisitions. For information contact Rob Zandbergen CFO +31 (0)36 529 95 07 [email protected] Financial calendar 26 April 2007 Publication first quarter results 2007 (before start of trading) Conference call analysts first quarter results General Meeting of Shareholders 30 April 2007 Listing ex dividend 7 May 2007 Dividend payable 27 July 2007 Publication second quarter results 2007 (before start of trading) Analysts' meeting and press conference second quarter results 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 Supplementary information The figures for the year 2006 (figures for the 12 month period ending on 31 December 2006) as incorporated in this press release are taken from - but only represent part of - the Annual Accounts for 2006. The Annual Accounts for USG People N.V. for 2006 have been given an unqualified report dated 6 March 2007. The Annual Accounts for 2006 have not yet been published and have yet to be approved by the General Meeting of Shareholders. The fourth quarter figures shown in this press release are unaudited. 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 wide service offering covering human resources and customer-care. The group, with headquarters in Almere in the Netherlands, is active in a large number of European countries including the Netherlands, Belgium, Luxemburg, Germany, Austria, Switzerland, Czech Republic, Slovakia, Poland, France, Italy, Spain and Portugal. The brand portfolio of USG People comprises the brands Start People, Creyf's (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, (Professionals), Call-IT and Telecom Direct (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. For more information about USG People of any of its subsidiaries please visit our website: www.usgpeople.com Appendix 1: Information per segment Appendix 2: Segmentation per country 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 FOR THE WHOLE PRESS RELEASE INCLUDING APPENDICES PLEASE CLICK ON THE LINK