investor relations & Randstad shares
Investor relations goals
Randstad’s investor relations main goal is to build our ‘financial brand’. Whereas clients and candidates recognize the Randstad brand for its reliability and service quality, investors and analysts should recognize our open and transparent communications style and our aim to be best in class in disclosure and in providing insight into the business. These efforts ensure accurate valuation for the shares over time. In addition we aim to be recognized as a worldwide labor market authority.
Communications policy
We communicate with the financial community through a broad range of dedicated activities. We undertake an active approach to maintain a dialogue with existing and potential shareholders. We take the lead in setting up roadshows and try to accommodate meeting requests where feasible. We adhere to the legal obligations relating to confidentiality. In that respect we oppose the trend among investors to adopt no-broker policies during road¬shows. Excluding brokers from investor conversations does not support our open and transparent communications style.
Communications activities
Each quarter Randstad organizes analyst meetings or conference calls to discuss results, supplemented by press conferences twice a year. Analyst meetings and conference calls are also webcasted. Furthermore, in November 2008, Randstad organized an analyst & investor conference at our headquarters in the Netherlands. Topics discussed included the strategy, managing through the cycle and the integration of Vedior and Tempo-Team in the Netherlands. The new board members, Greg Netland and Brian Wilkinson, who both have an extensive background at Vedior, shed light on their experience to date at Randstad. Conferences like this help investors and analysts to gain a better understanding of the way we work and are an opportunity to meet the executive board and other key managers. Roadshows for institutional investors were organized in the Netherlands, the US, the UK, France, Belgium, Germany, Switzerland, Scandinavia and Canada. A large number of one-on-one investor meetings were conducted at our head office in the Netherlands. In addition, Randstad presented at several investor conferences in the Netherlands, the UK, the US and France. In order to meet private investors we participated at the ‘Dag van de Belegger’ organized by the Dutch shareholder association VEB.
Randstad shares
Randstad Holding ordinary shares are listed on Euronext in Amsterdam (ticker symbol RAND). Options on Randstad shares are also traded on Euronext Amsterdam.
Share capital
The issued share capital changed during the year, primarily due to the issue of shares as part of the mixed offer for Vedior.
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| Ordinary shares |
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169.5 |
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116.6 |
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€0.10 |
| Type-B preferred financing shares |
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25.2 |
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25.2 |
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€0.10 |
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| Total number of shares |
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194.7 |
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141.8 |
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€0.10 |
Major shareholders
Under the Disclosure of Major Holdings in Listed Companies Act, shareholders are obliged to give notice of interests exceeding certain thresholds to the Netherlands Authority for the Financial Markets (AFM). Almost all the holdings listed below are a combination of (depositary receipts of) ordinary shares and (depositary receipts of) type-B preferred financing shares. The stakes of Frits Goldschmeding and Stichting Randstad Optiefonds changed due to the share issue.
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| F.J.D Goldschmeding |
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30-40% |
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40-50% |
| ING |
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10-15% |
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10-15% |
| Fortis |
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5-10% |
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5-10% |
| Stichting Randstad Optiefonds |
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0-5% |
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5-10% |
Indicative free float spread
Randstad’s free float has improved from about 40% to about 60% and the number of shares in free float has about doubled. The majority of the free float of ordinary shares is held outside the Netherlands. We actively pursue an international spread. We estimate that approximately 6% of our ordinary shares is held by private investors.
Liquidity
Liquidity has improved over the past few years. The number of shares traded has risen substantially, from about 32 million in 2003 to over 300 million in 2008. The increased free float enhances liquidity.
Indices
The Randstad Holding ordinary share is included in many indices, including the Euronext AEX index, Euronext 100, Dow Jones Stoxx TMI, MSCI Europe and the Dow Jones Stoxx Sustainability Index. Inclusion in large indices is important; in part because it improves visibility and liquidity.
Earnings per share reporting
Randstad reports earnings per share on a fully diluted basis. We focus on earnings per share before amortization and impairment of acquisition-related intangible assets and goodwill, integration costs and one-offs as, in our view, this gives the best reflection of underlying business performance.
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| 2008, excl. one-offs |
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€0.65 |
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€0.90 |
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€0.91 |
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€0.72 |
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€3.21 |
| 2007, excl. one-offs |
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€0.63 |
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€0.83 |
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€0.97 |
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€1.04 |
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€3.47 |
| 2006 |
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€0.43 |
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€0.64 |
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€0.92 |
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€1.18 (1) |
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€3.17 |
| 2005 |
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€0.24 |
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€0.47 |
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€0.65 |
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€0.79 (1) |
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€2.15 |
| 2004 |
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€0.12 |
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€0.31 |
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€0.44 |
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€0.82 (1) |
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€1.68 |
1 Including one-off tax gains of € 0.38 in 2004, € 0.09 in 2005 and € 0.19 in 2006. Dividend policy
In 2007 we updated our dividend policy. We aimed at a floor in the dividend of € 1.25 and consistent dividend growth through the cycle, based on a flexible payout ratio of 30% to 60% of net profit adjusted for amortization of acquisition-related other intangible assets. We stress tested the financing of the Vedior acquisition and based on a scenario of 5% revenue decline in H2 2008, 10% declines in both 2009 and 2010 and another 5% in 2011, we believed we would be able to pay this dividend. However, due to rapidly deteriorating markets, revenue declined at a pace far beyond this scenario in Q4 2008 and at the start of 2009, while visibility is low. In combination with the existing debt burden and the increased costs of capital, we believe it is prudent to propose to pass the dividend over 2008 in order to strengthen the balance sheet.
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| Dividend (€) |
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0.66 |
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0.84 |
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1.25 |
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1.25 |
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- |
| Payout(%) |
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39 |
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40 |
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40 |
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37 |
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- |
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| EPS |
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€1.68 |
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€2.15 |
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€3.17 |
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€3.47 (2) |
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€3.21 (2) |
| Free Cash flow |
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€2.00 |
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€1.56 |
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€3.02 |
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€2.82 |
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€4.64 |
| Equity |
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€4.40 |
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€4.65 |
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€6.82 |
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€8.78 |
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€16.23 |
| EBITA (pro forma) |
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€1.96 |
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€2.59 |
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€3.77 |
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€4.76 |
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€5.60 |
2 Before amortization, impairment, integration costs and one-offs. Share price development Randstad Holding ordinary shares
Our shareholders suffered. The share price ended the year at € 14.55, 46% below the 2007 closing price of € 27.02. Including the dividend of € 1.25 that was paid out in May, total shareholder return (TSR) was -42%. The share did relatively well in the first half of the year, based on solid Q4 2007 and Q1 2008 results and relief on good progression with the Vedior transaction.
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1 February 14th: Full year results 2007
2 April 17th: EU approval for Vedior merger
3 April 25th: Q1 results
4 June 26th: Vedior merger approved by share holders
5 August 27th: Q2 2008 results
6 November 6th: QW3 2008 results
7 Novermber 20th: Strategy update at analyst & investor day |
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Weak market data in July and the economic turmoil in the months thereafter drove the share price down. Market capitalization of ordinary Randstad shares amounted to € 2,466.9 million on December 31, 2008, compared to € 3,150.7 million on December 31, 2007.
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| Closing price (€) |
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28.95 |
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36.69 |
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52.40 |
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27.02 |
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14.55 |
| TSR (%) |
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52 |
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29 |
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45 |
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-46 |
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-42 |
| High (€) |
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29.90 |
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36.80 |
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57.55 |
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63.18 |
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30.00 |
| Low (€) |
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18.90 |
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26.73 |
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36.35 |
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24.72 |
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11.15 |