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USG People report growth

• Underlying EBITA rose to &euro 27.2 million (Q4 2012: &euro 15.3 million) EBITA margin rose to 4.7% (Q4

2012: 2.6%)

• Underlying net income rose to &euro 13.2 million (Q4 2012: &euro 3.8 million)

2013 highlights

• Divestment effected of USG Energy and General Staffing activities in six countries

• Management structure and organisation simplified operating expenses reduced by a further

&euro 33.6 million

• Net debt lowered by &euro 66 million financing structure strengthened

• Proposed dividend of &euro 0.14, payable either in cash or in shares (2012: &euro 0.12)

“In the fourth quarter our revenue started growing again and our underlying profitability showed a strong improvement," said Rob Zandbergen, CEO of USG People. "In the Netherlands our growth was in line with the market. In France we comfortably outperformed the market and revenue also improved in Belgium and Germany. Now that the recovery in our markets appears to be persisting USG People, with its clear positioning of each brand and improved cost structure, is well placed to take good advantage of this. We are present in fundamentally sound markets and our staff are exceptionally motivated to create up-to-the-minute solutions for our clients and candidates. I offer warm thanks to our colleagues for their tireless efforts and their contribution to the results we achieved in the past year."

The notes to the pro forma results in this press release are based on the results of USG People’s continuing operations and exclude the results of the business units sold in the first half of the year – USG Energy and the General Staffing operations in Spain, Italy, Austria, Switzerland, Poland and Luxembourg. The comparative figures for 2012 have been adjusted accordingly. The results of USG Energy in accordance with IFRS have been included in the consolidated financial statements on pages 13-18.

Notes to the pro-forma fourth-quarter 2013 results

Revenue

USG People achieved revenue of &euro 580.4 million in the fourth quarter (Q4 2012: &euro 578.5 million). The turning point to growth was reached in the fourth quarter. Revenue per working day was up 1.2% on the fourth quarter of the previous year. Whilst there was a broad recovery, the improvement in demand was strongest at the large corporates, with demand for in-house solutions, outsourcing and payrolling showing further growth. Revenue from recruitment and selection (0.8% of group revenue) was 4.6% lower than last year, a considerable improvement compared to the decline in the previous quarter (Q3 2013: -19.0%). In January 2014 group revenue rose by 2% compared to last year while in the Netherlands revenue rose by 4% year-on-year.

Gross result

The underlying gross result totalled &euro 129.5 million in the fourth quarter (Q4 2012: &euro 124.6 million). As a percentage of revenue the gross margin was 22.3% against 21.5% in the fourth quarter of last year. There was a positive effect on the gross result from a refund of employer contributions in the Netherlands and in France (CICE), relating to the first nine months of the year. The total amount equalled &euro 4.2 million and this had a positive effect on the gross margin of 0.70 percentage point. Adjusted for this effect the gross margin rose to 21.6% from 21.5% in the fourth quarter of last year.

Compared to last year changes in the revenue mix had a negative impact on the gross margin. The growth at large clients, where large volumes are supplied at relatively low margins, resulted in a negative mix effect. There was also increased demand in this segment for efficient delivery models such as in-house concepts, payrolling and outsourcing. The lower organisational costs of these solutions mean that they are supplied at a lower gross margin. In addition compared to last year there was also a relatively sharp decline in revenue for which there is no immediate cost price recognition, such as recruitment and selection, re-integration

(USG Restart in France) and the revenue from the call centres.

The positive impact of the tax credit scheme (CICE) in France compensated for the pressure on prices, which continued in the fourth quarter. An ample supply of the profiles in demand and overcapacity at the organisations that provide them are creating stiff competition at this stage in the cycle.

In addition to the underlying gross margin the reported gross result includes a non-recurring charge of &euro 0.9 million in connection with the creation of a reserve relating to own-risk bearer status for payments under the Dutch sickness benefit act (Ziektewet). In the fourth quarter of 2012 a non-recurring charge of &euro 3.8 million was included in the reported gross result in connection with potential pension commitments for seconded flex workers.

Operating expenses excluding depreciation and amortisation of acquisition-related intangible assets. The underlying operating expenses fell by &euro 6.6 million compared to a year earlier to &euro 98.0 million (Q4 2012: &euro 104.6 million). Compared to the previous quarter underlying operating expenses were down by &euro 2.4 million (Q3 2013: &euro 100.4 million). 

In addition to the underlying expenses the reported expenses included a non-recurring charge of on balance &euro17.0 million for organisational changes under the ongoing optimisation and simplification plan. The reduction of the cost base as a result of combining the brands and simplifying the organisation already lowered the cost level by &euro 4.2 million on a quarterly basis in 2013 (&euro 16.8 million on an annual basis). The objective for total savings of &euro 38.0 million on an annual basis remains unchanged.

Unlike previous quarters, the underlying results include the fourth-quarter results of the Secretary Plus and USG Professionals activities that have been rolled out.

Underlying EBITA amounted to &euro 27.2 million (Q4 2012: &euro 15.3 million). The underlying EBITA margin came in at 4.7% compared to 2.6% in the fourth quarter of last year.

Amortisation of acquisition-related intangible assets

Amortisation of acquisition-related intangible assets amounted to &euro 2.1 million in the fourth quarter, down from &euro 4.6 million in the year-earlier quarter which included an accelerated amortisation of &euro 0.7 million on Professionals brands. The acquisition-related intangible assets concern brand rights, client portfolios and candidate databases valued at the time of acquisition.

Financing expenses

Underlying financing expenses improved to &euro 3.7 million compared to &euro 5.1 million in the fourth quarter of last year. Reported financing expenses amounted to &euro 3.2 million in the fourth quarter (Q4 2012: &euro 1.2 million). There was a positive effect of &euro 0.5 million deriving from an adjustment to the value of earn-out obligations (Q4 2012: &euro 1.4 million). In addition an unrealised value adjustment to interest-rate derivatives was recognised in the fourth quarter of 2012, equalling a positive &euro 2.5 million.

Income tax expense

Tax in the fourth quarter was a negative &euro 12.4 million compared to a negative &euro 2.7 million a year earlier. This figure includes a &euro 1.6 million charge related to business tax in France. There was a &euro 14.1 million write-down of deferred tax assets. Excluding the aforementioned deduction income tax was a positive &euro2.4 million. The tax figure was positive due to the reduction in employer contributions (CICE) in France which is not taxable under income tax.

Net result from discontinued activities

The net result from discontinued activities amounted to a negative &euro 4.0 million in the fourth quarter. The result concerns a provision taken in connection with a guarantee scheme arising from divestments.

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