Vedior 2004 Annual Results

Vedior delivers strongest growth in final quarter of 2004

Zach Miles, Vedior's Chief Executive, said: "2004 has been a very successful year for the Group and it is particularly satisfying to end it with the strongest growth of the year.

A major strategic review has strengthened confidence in our direction, focusing on Vedior's leading position in professional/executive recruitment and tailoring brands to specific markets and specific business sectors. At the same time, we continue to see our focus on cost control and improved efficiency bearing fruit and directly benefiting Vedior's bottom line. Over the past 12 months we have successfully strengthened the Group's finances.

We announce today our intention to redeem the preference class A and B shares to simplify our capital structure and reduce financing costs."

HIGHLIGHTS FOR THE FOURTH QUARTER
Sales up 8% at 1,640 million (organic growth of 11%)
Operating income up 24% at 59 million (organic growth of 26%)
Currency fluctuations decreased sales by 1% and operating income by 2%
Net income per share improved to 0.19 (2003: 0.14)
Professional/executive recruitment sales up 19% organically with rapid growth in IT, accounting and engineering
Strong growth in permanent placement fees; up 25% organically

HIGHLIGHTS FOR THE YEAR
Sales up 8% at 6,467 million (organic growth of 8%)
Operating income up 37% at 240 million. Excluding special items, operating income was 217 million (organic growth of 21%)
Net income per share 0.73 (2003: e0.47) or 0.66 excluding special items Net profit of 116 million and EPS of 0.68 or 0.63 excluding special items (restated for IFRS)
Net debt reduced by 16% to 491 million (Q4 2003: 587 million)
Improved operating efficiency lifts conversion ratio (operating income excluding special items divided by gross profit) from 16.2% to 19.0%.
Vedior is now established in 37 markets worldwide, compared with 33 in 2003.
Payment to ordinary shareholders of 0.20, a 25% increase from the prior year.

N.B. Organic growth is measured by excluding the impact of currency effects, acquisitions and disposals. For the year ending 31 December 2004, organic growth is adjusted for the number of business days in Q1. Operating income and net income per share is before goodwill amortisation.
Special items include profit on the disposal of the Group's 51% interest in Niscom in Japan and the disposal of Sapphire in France, both in the third quarter. The 2003 annual sales of Niscom was 128 million and Sapphire France, 7 million.

Q4 2004 Financial Performance

Sales
Sales increased 8% (organic increase: 11%) to 1,640 million from 1,516 million in the same quarter in 2003. Currency fluctuations decreased sales by 1%. Permanent placement increased 25% organically to 1.9% of sales compared to 1.7% of sales in Q4 2003 led by a boost in demand in all geographic regions.

Professional/executive recruitment sales increased by 19% organically with notable performances from the IT, accounting and engineering sectors. IT recruitment sales once again accelerated and achieved 39% organic growth. Traditional recruitment grew organically by 7%, the strongest performance of the year.

Gross Margin
Gross margin was 17.8% compared to 18.1% in Q4 2003. Slight pricing pressure is still being experienced but this has moderated since the beginning of 2004. Markets with increased gross margins were the US, Belgium and Germany while the UK and the Netherlands experienced a decline.

Operating Costs
Operating costs were 5% higher on an organic basis at 233 million reflecting increases in personnel costs mainly in the fast growing markets of the US, UK, continental Europe and Australia. Once again, Vedior managed to control costs in spite of the strong increase in sales. SG&A as a percentage of sales improved to 14.2% from 15.0% in Q4 2003.

Operating Income
Operating income (before interest, tax and goodwill amortisation) was 59 million, a 26% organic increase from 47 million in Q4 2003. Currency fluctuations decreased operating income by 2%. Operating income as a percentage of sales improved to 3.6% from 3.1% in Q4 2003.

The average number of shares outstanding in Q4 2004 was 166.1 million (2003: 164.6 million).

Net income and earnings per share
Net income (before goodwill amortisation) increased 30% to 32 million from 24 million in the fourth quarter of last year. Earnings per share (before goodwill) were 0.19, a 36% increase from 0.14 in Q4 2003.

Interest costs for the quarter amounted to 9 million and, for the full year amounted to 41million. The interest rate swaps entered into by the Company in 1999 expired on 3 November 2004.

Net Debt and Cash Flow
Net debt decreased by 103 million during the quarter to 491 million and by 96 million compared to the fourth quarter of 2003. Debtor days were 63, a reduction of one day compared to Q4 2003. Cash flow from operating activities was 64 million compared to 93 million in 2003. Higher operating income was offset by additional working capital requirements to finance sales growth.

Annual Results and IFRS
For Vedior, the operating result before goodwill amortisation and net result before goodwill amortisation are the most relevant internal and external measures of operating performance. Vedior's goodwill mainly relates to the acquisition of Select in 1999 which, in accordance with Dutch accounting standards, is being amortised over a period of seven years.

In 2005, Vedior will adopt International Financial Reporting Standards (IFRS) and report comparable figures for 2004 restated to IFRS. The main impact to the Group's 2004 results restated to reflect IFRS relates to the requirement that goodwill is no longer amortised on a systematic basis but is, instead, tested for impairment annually. As a consequence, Vedior's net result for 2004 under IFRS will increase by 267 million to a profit of 116 million. The other main differences between Dutch Accounting Standards and IFRS, impacting Vedior's net result in 2004 are as follows:

Costs for stock option plans relating to stock option grants in 2003 and 2004, are charged to the income statement, which results in an additional charge of 3 million in 2004.
The book profit on the disposal of Niscom, in September 2004, is 5 million lower.
There will be an additional charge of 1 million in 2004 relating to pension costs.

Q4 2004 Operating Performance by Geography and Industry Sector

France
Organic sales increased by 5% compared to Q4 2003.
Operating income improved by 31% organically helped by a reduction in accruals no longer required of 2 million.
Professional/executive recruitment up 7% compared to Q4 2003
Strong growth in IT and engineering.
Healthcare recruitment market deteriorated in the last quarter of 2004 due to budget cuts in clinics and hospitals.
Gross margins are relatively stable.

United Kingdom
Very strong sales improvement continues with 20% organic growth over Q4 2003.
Operating income increased by 8% organically
Professional/executive recruitment up 23% compared to Q4 2003 mainly driven by IT, engineering and teleservices sectors.
Education recruitment sales declined reflecting falling vacancy levels, however, we continue to perform well in a challenging market and achieve high profitability.
Traditional staffing sales up organically by 12%.

United States
Organic growth remains high at 27%.
Operating income increased by 60% organically.
Professional/executive recruitment up 27% compared to Q4 2003.
IT and accounting staffing organic sales continue to recover at a high rate of growth.
Healthcare recruitment grew again and organically by 8%.
Traditional recruitment sales grew organically by 28%.

Netherlands
Organic sales growth of 8% compared to Q4 2003.
Operating income increased by 28% to 4 million, the first quarterly growth in 2004.
Professional/executive recruitment grew organically by 3% led by a notably strong performance in the IT and interim management sectors.
Professional/executive recruitment in the Netherlands is now recovering following a protracted period of decline.
Traditional staffing continues to accelerate as the market recovers, growing by 10% this quarter. The Vedior brand does particularly well and, again, outperforms the market.

Other Countries
Belgium grew sales by 8% organically while operating income doubled.
Southern Europe, particularly Spain and Portugal, was, once again, a strong performing region for the Group.
Australia increased sales by 9% organically with particular growth in IT, traditional and education sectors and continues to increase its contribution to Group profits.
The Latin American region flourishes recording organic sales growth in excess of 40%.

Business Development

Vedior is now established in 37 markets compared to 33 at the end of 2003. We continue to seek expansion into new markets in order to provide greater geographical diversity to our earnings stream.

New initiatives launched in Q4 2004 include a new outsourcing business in Malaysia and the merger of Ma Foi's human resources consulting and outsourcing operations in India. These separate units have been combined to provide high-value and fully integrated HR solutions. We continue to make progress in India ahead of our expectations.

In Japan, our new healthcare recruitment business, Supernurse, has got off to a good start in an emerging recruitment market. In 2004, we increased our investment in this company to a majority position.

During the fourth quarter, we started to follow through on the refinements to our business identified within our recent Strategic Review. Regional Plans are being developed to reflect the outcome of the Review alongside a number of other specific changes which have been identified in order to take advantage of opportunities in specific local markets and to reflect differing market profiles.

In January 2005, Vedior disposed of its 100% interest in the Viawerk Group, a provider of temporary light industrial personnel in the Netherlands. The Group already operates two larger and well-established traditional recruitment brands in the Dutch market, Vedior and Dactylo, and upon review of our portfolio management concluded that having a third brand operating in this highly competitive sector provided no strategic advantage.

At the end of 2004, Vedior operated through a worldwide network of 2,245 offices which, on a net basis, is an increase of 20 compared to the prior year.

Payments on (certificates of) ordinary shares

It will be proposed to the Annual General Meeting of shareholders that a payment of ?0.20 is made out of distributable reserves on each (certificate of) an ordinary share, representing 30% of profits per share for the year (before goodwill amortization and special items). The total payments on the (certificates of) ordinary shares will be ?33 million. The payment on the ordinary shares will be distributed optionally in cash (?) or in (certificates of) ordinary shares, charged to reserves. The distribution will be made on 23 May 2005.The stock payment in (certificates of) ordinary shares will be determined on 17 May 2005 after stock exchange closure on the basis of the average price on this day. The value of the stock payment will be approximately 5% higher than the cash payment. The new (certificates of) ordinary shares to be issued will qualify in full for dividends declared in respect of the financial year ending December 2005.

Preference shares

It will also be proposed to the Annual General Meeting of shareholders that a payment is made out of distributable reserves: on the (certificates of) preference class A and B shares of ?0.12 and ?6.00 per share (including interim payments) respectively. On the preference class A and B shares interim payments have been distributed at a rate of ?0.05 and ?2.40 respectively. The total payments on the preference class A and B shares will be ?4 million. The distribution will be made on 23 May 2005. Vedior intends to seek shareholder approval at the annual general meeting to redeem the preference class A shares in 2005 and the preference class B shares within the next two years. The amount required to redeem the class A and class B shares is ?50.6 million and ?2.7 million respectively. Consultations with the holders of both these classes of preference shares will be held on 24 February 2005.

Management Outlook

We anticipate continued progress from our global operations during the course of 2005 although the economic outlook remains uncertain.

The improvement in the French recruitment market experienced in the final quarter of 2004 is clearly encouraging after a period of stagnation. We estimate that the French recruitment market grew in volume by 1% in January, however, French employment indicators in 2005 are generally positive and pent up demand should lead to an improved market in the IT and engineering sectors as well as VediorBis' industrial professionals, tertiary and construction divisions.

Vedior is experiencing growth in both the professional/executive and traditional parts of its business. We remain convinced of the merits of our strategy and are confident in the strength of our market position.

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 longterm 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.

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. Annual sales for 2004 were ?6,467 million.

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. In order to meet client requirements for all categories of personnel, we also have a significant global network providing administrative/secretarial and light industrial recruitment.

Financial Agenda:

28 April 2005 Publication first quarter results
29 April 2005 Annual General Meeting of Shareholders
3 May 2005 Declared ex-payment from reserves
17 May 2005 Publication exchange ratio payment from reserves
23 May 2005 Distribution from reserves made payable
28 July 2005 Publication second quarter results
27 October 2005 Publication third quarter results
2 February 2006 Publication of annual results 2005

For further information, join today's live audio webcast at www.vedior.com/webcast starting at 10.00am (CET) or contact the following after the event:

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

London
Michael Berkeley, Citigate Dewe Rogerson +44 (0)20 7282 2883
Freida Moore, Citigate Dewe Rogerson +44 (0)20 7282 2997