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Highlights for Q3 2006

 

Amounts in € million	Q3 2006	Q3 2005	Increase	Organic Growth
Sales	2,013.4	1,807.5	+11%	+7%
Gross Profit	365.9	315.1	+16%	+10%
Operating Income	82.3	65.6	+25%	+16%
Net Income	47.8	39.5	+21%	-
Net Income per share (€)	0.28	0.24	+17%	-

Excluding profit from the disposal of ISU, Germany in Q3 2006 of €4.7 million (€4.6 million net of tax)

Strong growth in operating income

• Growth in the UK including Education sector
• Netherlands up 43%
• Rest of Europe (excluding France and the UK) up 37%
• Rest of World (excluding US) up 20%
• France and US up 11%
• Operating margin up 46 basis points to 4.1%
• Acquisitions in the UK and Australia

CEO’s Statement

Zach Miles said, “I am pleased that we have achieved a strong increase in operating profit at the same time as we are investing in the business for long-term growth.

We continue to focus on improving profitability which has resulted in gross profit increasing faster than sales and an improved operating margin of 4.1%. In this respect, we have made particularly good progress in France, the Netherlands and Australia.

Our diverse business portfolio and strength in professional/executive recruitment continues to provide investors with consistent and stable growth.”

Q3 2006 Review

All growth percentages have been calculated on an organic basis which excludes the impact of currency effects, acquisitions and disposals. Currency effects decreased both sales and operating income by 1% this quarter.

Overall, sales increased by 7% this quarter and we achieved increases in all our major markets.

Demand for permanent placement provided a 25% organic increase in placement fees. Permanent placement now represents 3.1% (Q3 2005: 2.5%) of total Group sales and 17% of gross profit (Q3 2004: 14%).

Gross profit was €365.9 million compared to €315.1 million in Q3 2005. The development of permanent placement activities had a beneficial effect on the Group’s gross margin which increased from 17.4% in Q3 2005 to 18.2% this quarter. Temporary gross margin increased by 16 basis points.

Operating expenses increased by 9% including costs for ongoing business development initiatives.

In France, operating income improved by 11% with a 3% increase in sales. Gross profit increased by 7%. Allowing for one less business day compared to the same period in 2005, sales growth would have been 5%. We achieved consistent operating margin improvements across all business segments apart from large industrial sites. Accounting and finance was the best performing of our professional/executive staffing niches in France but we also saw growth in IT, engineering and healthcare. Growth in permanent placement services remains high with particular emphasis on the professional/executive sectors.

In the UK, both operating income and sales showed positive gains helped by better growth in the education sector. UK operating income was up by 5%, with sales 2% higher than the same quarter in 2005. Gross profit increased by 6%. Professional/executive recruitment achieved better growth in sales and profitability this quarter.

In the US, gross profit and operating income both increased by 11% and sales by 13%. Growth in our business continued broadly in line with previous quarters with skills shortages still prevalent. Despite positive sales increases, gross margin did not keep pace with sales growth due to changes in business mix and slower permanent placement growth in the accounting and finance sector. IT recruitment developed well in terms of sales and profitability.

In the Netherlands, we gained leverage with an operating income increase of 43% on an 8% increase in sales. Gross profit increased by 14%. Our two largest brands in the Dutch market, Vedior and Dactylo showed the biggest improvement in operating income. Strong demand for accounting and finance personnel has continued in this quarter alongside good performances from interim management and facilities management brands.

In the ‘Rest of Europe’ region, operating income increased by 37% while sales and gross profit were up by 11%. Many of our European businesses contributed to this result with the strongest growth in operating income experienced in Switzerland, Spain, Germany, Portugal and Belgium.

In our ‘Rest of World’ region, operating income was up by 20% while sales and gross profit increased by 21%. In Australia, operating income increased by 31% and sales were up by 15% with good increases in profitability achieved in both professional/executive and traditional sectors. In India, sales increased by 61% and operating income by 70%. In Latin America, sales increased by 36% but our gross profit grew at a lower rate because of wage inflation.

Cash flow from operating activities increased by €20 million to €70 million compared to the same quarter in 2005 mainly due to higher operating income.

Net debt increased by €44 million compared to September 2005 to €603 million primarily due to the cost of acquisitions.

Business Development

In the third quarter, new offices were opened in France, the UK and Australia. With a presence in 45 countries, Vedior’s global network has increased by 119 offices to 2,389 compared to 2,270 in Q3 2005 of which 21 were added by acquisition.

In July, we acquired Coopers Recruitment, based in Tasmania, Australia which specialises in permanent and temporary recruitment for professional, clerical and administrative positions. Established in 1964, Coopers Recruitment was the first recruitment service in Tasmania and has a very strong local brand reputation.

In October we acquired Armadillo UK Limited, a leading UK interim management company. With the addition of Armadillo to its portfolio, Vedior is now the largest provider of interim management services in the UK.

For the year to date, we have completed nine acquisitions with annualised sales of €300 million. Cumulative consideration paid for these acquisitions in the year to date is €130 million.

Management Outlook

We expect current trends including improving operating margins will continue in our major markets for the remainder of 2006.

For further information on these results, please join today’s conference call at 9.00am (CET). Details can be found on our website at www.vedior.com

Zach Miles, Chief Executive Tel: +31 (0)20 573 5609
Frits Vervoort, CFO
Jelle Miedema, Company Secretary


Investor Information at: www.vedior.com/investor-relations/investor-relations.asp

Company Profile

Vedior is one of the world’s largest recruitment companies and is a full-service recruitment provider with a diversified portfolio of brands targeting a broad range of industry sectors.

From its global network of offices spanning Europe, North America, Australasia, Asia, South America and Africa, Vedior offers temporary and permanent recruitment as well as a number of complementary employment-related services such as outplacement, HR outsourcing, payrolling and training.

Vedior has a leading market position in the provision of professional/executive recruitment in sectors such as information technology, healthcare, accounting, engineering and education. We also have a significant global network providing administrative/secretarial and light industrial recruitment.

Financial Agenda

8 February 2007	Publication Q4 and annual 2006 results
27 April 2007	Publication of first quarter results and AGM
26 July 2007	Publication of second quarter results
25 October 2007	Publication of third quarter results

Safe Harbour

This media release includes forward-looking statements that reflect our intentions, beliefs or current expectations and projections about our future results of operations, financial condition, liquidity, performance, prospects, growth, strategies, opportunities and the industry in which we operate. Forward-looking statements include all matters that are not historical fact. We have tried to identify these forward-looking statements by using words including "may", "will", "should", "expect", "intend", "estimate", "project", "believe", "plan", "seek", "continue", "appears" and similar expressions or their negative.

These forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by these forward-looking statements. Important factors that could cause those differences include, but are not limited to our financial position and our ability to implement our business strategy and plans and objectives of management for future operations, our ability to develop, balance and expand our business, our ability to implement our long- term growth strategy (including through organic growth and acquisitions), our ability to make improvements to our capital structure, industry and market trends and volumes, including the speed and strength at which the staffing services industry and the sectors in which we operate, rebound from economic slowdowns and recessions, the effects of regulation (including employment and tax regulations), our ability to improve the efficiency of our operations and to reduce expenses in our operating companies and their network of offices, litigation and our ability to take advantage of new technologies.

In light of these risks, uncertainties, assumptions and other factors, the forward-looking events described in this media release might not occur. Additional risks that we may deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this media release not to occur. Except as otherwise required by applicable law, we undertake no obligations to update publicly or revise publicly any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this media release.

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