message from the ceo
|
| Dear shareholder,
Joining forces with Vedior to become the second-largest player in the global HR services industry made 2008 a landmark year for Randstad. The strategic fit between the companies was always clear, and we are pleased that the combination works well in practice. As it was a friendly deal, we were able to begin preparations for the integration on the day after announcing the merger plan in December 2007. This gave us a head start when we were able to start the integration after the completion of the deal. The integration is well on track. The Group head offices were combined in July and the integration in staffing has virtually been completed in the Netherlands, Belgium, the UK and Switzerland. In Southern Europe this will happen, as planned, in 2009 and we are also well underway in determining the combined strategy in professionals. The synergies will be greater than expected at the time of the merger. Cost synergies will come out at about € 90 million instead of € 80 million, while the tax synergies will be around € 40 million instead of the € 20 million expected initially. Moreover, we had a substantial one-off tax release related to the merger.
Amidst the preparation for the integration, our people continued to focus on providing an unequalled quality of service to our clients and candidates. Their efforts and commitment enabled us to report a record first quarter. In an increasingly
challenging economic environment, and with all the internal and external change going on around them, they continued to seize opportunities to deliver strong growth and gain market share in many markets during the second quarter. By the end of the year however, the market was declining sharply, and none of us are immune to the impact of this.
Nevertheless, the much greater share of the market we now have is not only generating more revenue and profit in good times. It has also given our business a density that is helping us in managing our cost base more effectively to minimize the impact of the market decline. We have a much greater share of the professionals segment, which in the future will continue to grow fastest and produce the best returns. Clients are looking for fewer HR service providers, able to address more segments in more countries. We are now in a much better position to meet this increasing demand and gain market share. As the cycles of our market follow different patterns in different countries and in specific segments, our enlarged global presence and more diverse business mix helps us to continue generating solid cash flow and results.
However, the volatility in our markets reached unprecedented levels during Q4 2008 and early 2009. The magnitude of the revenue decline has been greater than in the already very cautious stress case scenario we used to determine the funding for the Vedior acquisition. Given the recent sharp drop in demand and the very low visibility, we will now, as a precautionary measure to further strengthen the balance sheet, propose that no ordinary dividend is paid for 2008. This is a decision that has not been taken lightly, as we have never skipped the dividend before. Despite the success of the integration, but because of the sudden market decline, we impaired € 500 million of the Vedior-related goodwill.
The true value of any business is in its people and, on behalf of the executive board, I would like to express our appreciation for all the hard work being done by all our people to ensure the success of the integration in difficult market circumstances. I hope this annual report will help to demonstrate how we are leveraging the opportunities created by the ‘new’ Randstad. We recognize that the Randstad share price did not do well this year. However, with the best people and broadest service portfolio in our young industry, we are strongly positioned to manage through these turbulent times and to emerge from them as a leader in shaping the world of work, to the benefit of all our stakeholders.
Ben Noteboom