Randstad N.V. (RAND) Earnings Call Transcript & Summary

[Interpreted] Ladies and gentlemen, good afternoon. I'm Wout Dekker, I chair the Supervisory Board. I am pleased to open this General Meeting of Shareholders. This meeting was initially scheduled to take place on March 24, but we had to cancel because of the measures applicable at that time introduced by the national government relating to the coronavirus. I'm pleased to welcome everybody attending this meeting online. This meeting is officially being conducted at the Randstad Diemen head office. And on behalf of the Executive Board, we have present, Jacques van den Broek, CEO; and Henry Schirmer, CFO. And on behalf of the Supervisory Board, in addition to myself, Frank Dorjee, Chair of the Audit Committee; and Antoinette Aris, Chair of the Remuneration Committee. We also have present here, Bas Savert from the Deloitte auditors firm at Agenda item 2D, adoption of the financial statements for 2019. He will reply to any questions about the statement, relating to the financial statements. Prior to that, he will provide a brief explanatory note concerning the annual audit and the unqualified opinion of the auditor. In connection with the coronavirus, we have encouraged shareholders to attend this website -- excuse me, to attend this meeting via the website, to submit questions in advance and to provide their voting instructions to an independent third party, IQ-EQ Financial Services. This participation method is also included in the convening notice for this meeting, which on May 7 of this year, was posted on the Randstad website together with the corresponding documents. We also have present here, the Corporate Secretary, Jelle Miedema. I hereby designate him as secretary to this meeting. We also have present here our civil loan notary, Joyce Leemrijse on behalf of Allen & Overy, relating to the execution of the amendment of articles of association proposed at agenda Item 2C. First, Jelle Miedema will briefly elaborate on some procedural matters. Jelle?

Good afternoon. You can attend this meeting in Dutch or in English, and we have interpretation into English by interpreted presentation that you see online on the website will be in English. This meeting was convened on May 7 this year. All documents for the meeting have also been posted on the Randstad website on that date. Shareholders may vote virtually via the Internet site, www.abnamro.com/evoting, and they may also submit questions. They've received log-in details immediately upon registering. Shareholders have also received the opportunity to provide voting instruction in advance, either via the stated ABN-AMRO internet website or via IQ-EQ. Prior to the meeting, shareholders have had the opportunity to ask questions. These questions and replies to these questions have been posted on our website this morning. In addition, a few brief questions will be elaborated on concisely by Jacques van der Broek and Henry Schirmer or by Supervisory Board members if applicable. Shareholders attending this meeting online may submit questions via this portal, which we will reply to at the relevant agenda item. Today, we will not be voting after each agenda item. The Chairman has decided that throughout the meeting, voting on the agenda items will remain open, and it will be closed after agenda item 9. Then shortly before ending the meeting, we will announce the voting results. This does not hold true for agenda items 2B and 2C. They will be voted on instantaneously. The number of parties entitled to vote at this meeting is as follows: all together, we have 966 registered shareholders, and they represent 225,574,649 shares with voting rights, possibly, with a proxy; 25.2 million are Preference Shares Bs and 35,332,552 Preference C shares. All together, they can cast 159,444,279 votes, which is 82.83% of the total outstanding shares. So there are 23.6 million on preference B shares and 5.6 million on preference C shares. Finally, I can tell you that the draft minutes to this meeting will be available within 3 months on our website. After that, you'll have 3 months to reply to the draft minutes, after which the chair and I, the secretary, will adopt those minutes. I am now pleased to hand you back to Wout.

Thank you, Jelle. That takes us to addressing agenda item 2, the report on 2019. This agenda item at 2A, we will discuss the report from the Executive Board and the report from the Supervisory Board regarding 2019. At 2B, we will discuss the remuneration report relating to 2019. At C, we will discuss the proposal to amend the articles of association. At 2D, we will discuss the proposal to adopt the financial statements 2019. And at 2E, we will discuss the explanation of the policy on reserves and dividends. First, I'm going to hand you over to Jacques van den Broek, who will deliver a presentation about the general course of events in 2019. And he will be followed by Henry Schirmer, who will deliver a presentation about the financial course of events and the other items stated. Of course, they will also cover the impact of the coronavirus on Randstad, and they will speak briefly about the initial annual figures published on 22 April. Jacques, you have the floor.

Okay. Well, this is not very congenial. There are very few of us here. Ordinarily, it's nice to see a crowd here, I mean, to see all of you, but we're not going to do that. I'm sure that all of you have become used to this method of work, which we've been doing for nearly 3 months now. I'll start at Slide 7. And that's this one. And that takes us straight to current events. Of course, and I believe this holds true for many of you as well. Employee health, both temporary employees and permanent employees, was our first priority. Within 3 days, we switched to working from home. Our 38,000 people in 39 countries were able to work from home very quickly with full access to client databases and the database of candidates rather than the 4,860 we have. All of a sudden, it seemed like we had 38,000 mini-branches. We started with regional online hangouts. Of course, this started in Asia, but it quickly carried over to Europe and then to the Americas, where we shared a lot of knowledge about how to address customers and how to manage our own people from home. Just imagine, in Asia, for example, people live in very tiny apartments often. They're young and they're very far away from their family. Of course, that in and of itself is a challenge. But we're very satisfied with the way our people rose to the challenge. One quote I truly appreciate was that in times of crisis, you really get to know what a company is like. And after 32 years, I saw the true nature of the Randstad's optimism, pragmatism. I'm truly proud of that. And with respect to our customers, about 4 weeks after this became clear, we opened up a special website, featuring all the options from our innovation fund, and we made them all available to our clients. All the HR processes that could happen online, for example, recruitment interviews, interviews, assessments, virtual recruiting events, because we did see that many clients needed this, so it feels really good when you can make that available to them. So briefly, we benefited fully from our vision of our trade in for the future. It's going to become increasingly digitized. We call it Tech and Touch. You try to strike the right balance because -- between contact and technology. We believe that, that will accelerate as a result of the COVID crisis. So we feel that we're well positioned, and we are finding our feet in this new method of work, as you see. About 7 weeks ago, I was approached by somebody from McKinsey, writing an article in which, for the first time, we were able to explain. This is the first time we're talking about health and health care systems, but we have to take a look at the economy as well. Then I contacted my Adecco Manpower counterparts, and we formed a safely back-to-work alliance. This means that as a total HR service industry, and we're the largest employer in the world, with 58 million jobs that we create and deploy year-after-year. But every day, we work with these well-known health and safety profiles. Well, what are they called, they're called protocols. We updated all of them, about 400 globally in many different sectors. And we approached governments and said, "Are you working on opening up the economy? We're happy to help you. We'll help you with the employers and the trade unions." We started in 10 countries, and we've expanded that to 26 countries. Our temporary staff as well as our permanent staff are all being brought safely back to work. And we're truly proud of how we've managed to deal with this because as a temporary staffing industry, we want to be part of this solution for after the crisis. Now about ourselves. Strong balance sheet. If I compare it with the 2009, which was one of the financial crises from the past, we're going into this entirely differently. Henry will tell you about that later on. Of course, we've always said we manage the company based on what we see, and we're able to shift gears very quickly because we have very little fixed overhead. And a huge difference with respect to 2009 is the support that we received from many governments this time, which has truly helped us to keep almost everybody on board. So we still have a lot of it [ on-set ] employees, some of them are working from home and some of them are being supported. And the challenge in the next few months is to see whether we can bring them back in, hopefully, when our revenues pick up again. But quite honestly, we're nearly -- we don't have a crystal ball about what course revenue will take. And although economies are opening up, and here and there, there is some activity, our customers are very uncertain about the future. And that makes us uncertain too. We're already in June, and I couldn't even begin to tell you what July or let alone September will be like. I have even less information about this than I ordinarily do. Okay. What about the start of the quarter? Already then, we had negative growth. It was not all loveliness last year either. And for example, the automotive industry in Germany, with all this value chain aspects, had been facing tough times for an entire year. We spoke with you about that last time, too. But all at once, we transitioned from a relatively stable development in 2 weeks to an industry that was simply being locked up in Europe and Asia. That was already the case in Q1. It was less so in America. But in Q2, of course, America was hit hard with over 20 million unemployed at this point in the United States. So you can tell that we still did fairly well even in that quarter. Now last year seems like a very long time, especially from our perspective, but it was actually a very stable year. We were able to protect our margins. We benefited, as we still do, from our global presence in regions such as Asia, which are still doing relatively well. So that helps. We're increasingly less dependent on individual markets. Now some key financials will be presented to you by Henry in more detail, but you see, they were fairly stable in 2019 with respect to 2018. Now and you see rest of world here, I told you that was up 9%, 9% growth, and that's become increasingly important in our portfolio. We certainly progressed well in digitization. What's interesting about this is that in 2019, our strategy assumed that unemployment would be low and that we would need to encourage people to switch jobs, to train for better jobs and that we would approach customers with our digital information to explain which people would still be available and how much they would have to pay for certain types of people, and whether they'd have to make certain compromises to achieve the ideal profile. And I think the biggest change we're experiencing now is that it's really a market for clients, and we're looking for jobs, for people who need work. And you can't -- you don't see that so much in Europe yet, because thanks to the government support in the Netherlands, 2.1 million people are receiving the transitional employment support from the government. And we see that there's going to be a considerable supply on the job market. And we use the same digital support, but we use it differently to approach clients to see when they'll need people and what type of people they'll need. We have installed a certain type of order module with some clients so that if they need people, we can deliver within an hour. It's interesting to see. The benefit is that we see a lot of experienced management too were almost all there in 2019. So we all saw that switch to a client-driven market. And as for leading enterprise strategy, there are 156 major customers worldwide who have -- are good for at least EUR 500 million in revenue each. So those are large companies, and we see that increasingly, those clients want to organize their work with fewer and fewer suppliers, especially now when they're trying to downsize, our digital outplacement service is doing well. Yes. Okay, you see this in a different way. The rest of the world has experienced very strong growth. Whereas other regions in the group were declining. But we benefited from our global presence. And now if I look at the underlying qualitative drivers over the past 10 years, you can see that we're blue based on our logo, even though they may be a different color. And you can see that in 2007, we were just a bit smaller than red and yellow. But now we've been larger than yellow for quite a while. And for an entire year, we've been larger than red. And we're quite proud of that, and we're never looking back. As for the quality of results, you can see that in 2010, we didn't have that many top 3 positions. And in our trade as well, if you're not in the top 3, you always have one strike against you. And you can see that 92% is from top 3 positions in regional markets. So globally as well as nationally, we've managed to improve our leverage, and that makes it easier for us. The better known you are in the market, the easier it is to get your foot in the door. As for in-house, that's our major growth driver and remains so. In-house, we were present for the client, and we -- sometimes, we were able to do the entire staff planning for those clients at over 2,000 sites, and we made that transition to digitizing it so that, with temporary staffing, we have a special app for human resources planning of customers. And at this head office, where we can have only 450 of our 1,200 people present because of COVID, we schedule ourselves with our own tools. It's always nice to take your own medicine. Okay, you see the breakdown by country here. I think I said Germany, automotive industry, 1 out of 8 jobs in Germany is related to the automotive industry. Basically, there are 2 industries that need to reinvent themselves in our view, and that's not really related to COVID. The first is the automotive industries, especially in Germany. And how does that work with the electric self-driving cars and car-sharing as well as airlines and travel? That's also an industry that will not start up right away after this crisis. So we're trying to talk with our clients about that. Now this pie chart shows the resistance of our format. We're not -- we don't depend on 1 market alone. And even within the market, we don't depend on a single service. So that makes us quite resistant to regular economic cycles, not necessarily COVID. Now what is our economic goal if you're to put our strategy on a single page? We have 3 promises to our stakeholders, that's our clients and our candidates. Transparency. You always know what we're doing for you. And as a customer, you know where you stand, as a candidate, you know where you stand. Guidance. We'll take you by the hand. And we have an impression of where the candidates are and what jobs are available to you. And we expect that a great many people will have to start doing different types of work. In the Netherlands, as you may have seen on television, we launched a new campaign. It's called Boost. And we're serving about 8,000 people who are sitting at home now because we know about them, thanks to the Dutch Transition Act. And we ask, "Are you going to get back to your current job? Or if not, perhaps we need to help you," and we offer them free training. This is called being proactive. We keep turning up with ideas for you, and we try to stay one step ahead of you, as we should. Now how do we expect to win this? The EB asked us a lot of questions about technology. We've invested heavily in technology. And we've invested in analyzing 3,000 startups in the past 6 years. And we've concluded that if you don't have people, then you're not scaling and you stagnate. 3 years ago, I had to explain, especially at B&R, whether I was afraid of Uber Works. Well, Uber Works went bankrupt. So it can be disappointing to get -- to grow too big in our trade. So it's about combining human operations and sales and customer contact in candidate contact supported by technology, as you see here. And increasingly, we offer a lot of consultancy and advice on behalf of our customers to keep their workforce fit for the future. And we'll discuss our priorities on the next slide. And we believe that as a team, our main priority is to make that company fit for the future. And we believe that by doing all of this, we can achieve this for you as shareholders, too. Our annual report won't win an award this year because we won an award last year, and then you're not allowed to enter the competition for 2 years. So in 3 years, we hope to win again. But we were very proud of what we conveyed. You see it captured on a single page here, the cooperation between operational excellence. We are an industry with low margins. We have to boost productivity, increasing digital support and of course, growth. It's tricky now. But now it's about relative growth. Are we performing better than our competition? We'll see that in the year ahead when we get new market figures at -- by 2030. We want to touch the work lives of 500 million people. Last year, we trained 300,000 people, and we expect this to keep increasing rapidly. I'm not going to address all the details, but embed the digital transformation, I've told you about that already, build a stronger one. Are you going to talk about it? It relates to the savings of EUR 120 million. Okay. It's not in the presentation, that's too bad. But if you have questions, feel free to ask them. Continuously upscale and rescale our talent, I told you about that. Where do we aim to grow career coaching? It used to be called outplacement. We purchased RiseSmart a few years ago in the U.S. Now it operates in Australia, Belgium, the Netherlands, France and Sweden, and we hope to expand it to Germany and England. As for statement of work, we don't supply people. We deliver a lot in IT. One of the companies that -- that's one of the industries that's fairly stable because all those IT people work on their clients' projects from home. As for the largest talent engine, we want to access the largest database of candidates. We believe that we have about 200 million. And through technology, we want to liaise with them throughout their lives and keep extending a hand and offering them solutions to advance in their careers. As for enterprise growth becoming important and growing with those huge clients, those are 2 markets that are very attractive, the largest in the world. One is in North America. The other is in Japan. We're successful but fairly modest in size on both markets. And we envision our growth out-performing the market in years ahead. But we might be making some acquisitions too. As per our innovation fund, we're going to reposition it and launch a new fund. We're not the only investor there. And those 3,000 HR start-ups are very closely aligned with our core process, matching candidates. And that new fund is about your active life, even though you're not necessarily working for somebody as an employee. There are a lot of people who will need training, will need to consider their financial needs and as well as their health needs and increasingly, our technologically driven solutions. And we think it's important to see where that's headed, and we want to figure prominently there. And then last but not least, in everything, we expect our brand to become increasingly prominent globally. Now what are we better in? And what are we different? How do we differentiate ourselves? We have some, in our view, fairly consistent strategic priorities, and we believe that the data that we have of both clients and candidates and job markets will increasingly be transitioned to paid services for our clients. We will remain providers of temporary staffing and permanent employees, but those data are invigorating us. And in the business, it makes us very low-threshold. It's easy -- we expect it to become increasingly difficult to start a staffing agency. We're fairly satisfied with our progress, but we can never rest on our laurels, quite honestly. This is a shareholders meeting. So I really need to tell you that I am -- I have to tell you I'm satisfied, but we're never entirely satisfied. We did make progress, and it may sound odd to say it now, but we're still a growth industry. So we believe that, hopefully, when the economy picks up again, we'll post absolute growth. But now we have to make it through this crisis. Not only us, you probably do as well. And we remain the company that Frits founded, as Frits said, in the early 1980s, we remain the company that does not have any raison d'etre if it doesn't add value to society. For example, safely back to work that I mentioned recently, that figures prominently in getting people safely back to work and our perspective matching that perfectly. So these values have been around for nearly 4 decades and continue to drive us every day. And it's nice to see that young employees, such as millennials, truly value this, and they want to work for a company that is socially meaningful. And fortunately, we are. Now how should we behave? We have a strong culture, but I shouldn't talk about culture. You have to act and do things, so that relates to what we do here on the Executive Board. We're very present in the company and with clients. What's nice about this day and age is that, more than ever, we're communicating directly with our headhunters. Sometimes we start a day in Japan, and we end up in Argentina without ever taking a plane, and we still have that tone at the top and those values that we highlight, that -- where we stand in society. Transparency, as I just mentioned, open and honest communication, both internally and externally. We aim to operate with integrity. That's our second nature. And finally, good governance. We want to be a responsible company. And that carries over to sustainability. I'm very proud that I believe this is the fifth year in a row, right Jelle, that we've appeared in the sustainability index. We're the only company in our industry that figures in that sustainability index. And yesterday, we heard that the Amsterdam Stock Exchange is also forming a new index of sustainable companies, and we're part of that one, too. We're happy about that. It's our own sustainability style. It's not about fuel use because for us, what truly matters is an inclusive job market, equal opportunities for people and job markets that treat their people right. Those are the main goals that interest us. And that is also reflected in our performance targets, as you see here for 2019 to 2021. And every year, we have another set of performance targets for sustainability. Now here are some specific questions relating to working conditions and the value chain. Quite honestly, in some countries, such as China and India, we are not involved in blue-collar work. So sometimes, we are selective from the get-go because we think it's a bit difficult to operate in those areas. Yes, there were some accidents, but many of those accidents as serious as they may have been -- -- and there were a lot of traffic accidents, especially in India. Of course, that's terrible. But given our size, I wouldn't say that it's an increasing trend. And increasingly, we quantify our impact, and we'll share that in an auditable way with you in the years ahead. As for diversity and inclusion, we feature over 100 programs globally that reflect our activity. We have a specialty fleet. If it interests you, please send us an e-mail, and we will share that with you so that you have a clear impression and we can convey to you what we do worldwide to make things better for people. If they have a disability or if they're young and are challenged on the job market, all kinds of reasons why people might need a little bit of support. And I am now going to hand you over to Henry. But first, I need to clean my click device. And I'll hand it over to Henry. Henry?

So. Thanks, Jacques. So we have a generally strong year for us and [Technical Difficulty] And we heard that before. So let me just repeat that. So that we -- when we think about 2019, we are thinking of the year with lots of pride. And indeed, it was a very strong year for us. So the company delivered definitely another solid operating performance, and we are pleased to show strong gross margins, controlled quality OpEx and excellent cash conversion. And despite somewhat lower revenues, we managed to keep our [ EBITDA ] margin very close to last year's level, and our healthy gross margin performance provided room for continued selective investments, securing competitive growth. It's important for us to balance short-term performance with positioning the company well for the long term. And as a result, we reported another year of outstanding free cash flow. So let me run you through the key items of the P&L in a bit more detail here. Revenue in 2019 was down 1.7%, with around half of the decline coming from automotive. And Europe remained challenging throughout the year, while the industrial and manufacturing side in the U.S. saw some slowdown. Globally, our professional businesses were performing well, and we enjoyed continued strong growth in our emerging markets. And we also managed to achieve market share gains in several of our key countries without losing focus to further drive pricing discipline. The wider use of the value-based pricing in the context of ongoing tight labor markets have delivered a year-over-year 20 basis points increase of gross margin, and operating expenses were stable year-over-year. Also, we continued to invest in our digital capabilities to further future-proof Randstad and kept on funding our most promising growth opportunities across the group. EBITA came in at a EUR 1.094 billion, with a 4.6% EBITA margin, which reflects the 10 basis points decrease year-on-year. And so overall, we have been able to report a good set of results, whilst ensuring significant investments in the future health of the company. So on the next page, Slide 24, I'm taking you through the gross margin. And as you can see on the left, the temp margin contributed positively in 2019, up 20 basis points year-on-year. We created an upside through a value-based pricing approach across our portfolio, also benefiting from tight labor markets. Regions like the U.S., Netherlands, France, Japan and Spain benefited in a significant way, and it confirms our ability to price for superior value delivered to our clients globally. The bar on the right represents HR solutions, which shows a negative 10 basis points effect on the gross margin, mainly reflecting it was mix effects of months. That brings me to the OpEx bridge on Page 25. And here also, as Jacques already mentioned, when it comes to OpEx steering, we always try to find a smart balance to swiftly adjust the cost base to the macro environment while securing enough funding to capture the many growth opportunities we continue to see in the marketplace. However dire it is, there's always growth to be found. Full year 2019 OpEx was organically stable year-over-year, which included significant investments in our digital strategy. Let me close that chart with a confirmation that our cost optimization plan of EUR 120 million is in progress and has my full attention. We're addressing our total cost base of EUR 3.6 billion and looking for ways for further unlocking the power of One Randstad. The Randstad team is fully prepared to challenge costs and performance paradigms in order to free up trapped resources and further flexibilize our cost structures. And we will see significant benefits of the program coming through this year, supporting our drive to protecting the health of our company in a very challenging market environment. Now to my favorite chart, the free cash flow and balance sheet on Page 26. Certainly, a highlight in 2019 was a very strong free cash flow of EUR 915 million, an improvement of 46% year-over-year, is a record in the history of the company. Key driver for the good free cash flow was undoubtedly strong working capital performance, reflecting our slowing top line but also hard-driven, tight DSO management. Let me also clearly point out that we benefited from the change in the French subsidy system and from a reversal in tax payments done in 2018. Please note that at the end of 2019, we also carried EUR 389 million of CCA receivables, which will help our free cash flow going forward. On the right hand of the chart, let's go straight into our strong balance sheet. Our net debt position improved by EUR 263 million versus 2018 to EUR 1.377 billion, which includes our lease liabilities of EUR 621 million. And to conclude that chart, pre-IFRS 16, our leverage ratio arrived at 0.7 versus 0.8 last year, [indiscernible] 2019. And that gets me to our capital allocation policy. We thought it's good to take us through our capital allocation strategy again, and it consists of 2 elements. The first one is our regular cash dividend based on 40% to 50% payout of adjusted earnings. And the second element on optional additional cash returns to shareholders, if our leverage ratio comes in below 1 at the end of the year. We reported a leverage ratio of 0.7 at December 31, 2019, but given unprecedented market conditions related to COVID-19 and consequent lack of visibility, capital preservation and the long-term health of the company took the highest priority. Hence, we have removed the proposal for ordinary and special dividends. That concludes my remarks. Back to Wout.

Thank you, Jacques and Henry. After this detailed presentation, I'd like to proceed to agenda Item 2a which is the report of the Executive Board and the Supervisory Board with respect to the financial year 2019. These are pages 18 through 133 of the annual report. And we see that now we have just received 2 questions, both questions are the association of stockholders, the VEB. I'll read out these questions. The first, question with -- for Item 2A is following the reply by Randstad to VEB question 14, as you'll find them posted on our website. Once again, how high was the net promoter score in 2019? On which page in the annual report can we find that? How high was the employee satisfaction rate? I know the answer. Jacques, do you know the answer?

Well, I don't know it on the top of my head, but we've got it here. It's on Page 11 of the annual report. And 62% of our countries, we had a rating of 8 or higher. But let me add to that. Actually, we are changing our customer -- our customer satisfaction review. We're calling it customer delight, and this includes our employees and our candidates and customers. We constantly ask them what is the most important thing to our customer groups. And now the dashboard will reflect all those aspects, and then we engage with the target groups in order to see what it is that we need to do more and less. And this is an initiative that we took in our Belgian operation, and we've rolled it out in more than 10 countries. Over the next few years, we expect to gather a much richer data set. Second question, Mr. Dekker.

Following up on the answer to question 4 of the VEB. Is the level of the Randstad employee high enough in order to make a human touch difference in 3 to 5 years' time. Jacques van den Broek.

Well, Frits didn't invent staffing, but he added a number of things to the profession when he started. One of those was that he really enhanced and increased the level of the temp workers. He started recruiting university graduates, and he had a 360-degree process. So he visited the intermediaries and the clients and the workers. And the difference between myself and the intermediaries in ECH, and we can communicate with each other. They're all involved and very much engaged. Everybody understands. So the level of the employees is really not a challenge. What is a challenge is to make sure that this touch moment really takes place appropriately, with a candidate that is really open to our services, open-minded to -- open to a different job. And obviously, we find it easier to check that digitally. In the past, people would just walk into a branch office. And now we have to do it digitally. So we also have to talk to our client at the appropriate time, and we have the supportive measures or technology. We call it data-driven sales. And the intermediary will visit the customer at the appropriate time so that the knowledge that the intermediary has will be offered at the appropriate time. So that is the challenge, not the level of our staff. It is important that we need to grow. We have 80% growth from within, and I started at one of the branch offices, and Chris Heutink as well. So we really want to make this growth possible for all our people, all the people working for Randstad. Mr. Dekker.

Thank you, Jacques. You've been able to hear that Jacques has been talking about Frits, and he mentioned it 3x. Isn't that unique? I mean, this company is 60 years old and our founding father Frits Goldschmeding, fortunately, is still around and very much involved and engaged. And you know that most of the AGMs up to 2 years ago, Frits always attended those AGMs. So that is really a unique dimension that we actually see here at Randstad. And I see, so far, that there's a third follow-on question. Oh, yes. Well, this is indeed a follow-on question because it ties back to the previous question, a question from the VEB. How high was customer satisfaction in 2019? So the weighted average, 62% -- the 62% was rated more than 8, says nothing about the average. Well, this is rocket science, Jacques. Jacques van den Broek

Well, someone once told me that you can drown in 50 -- in an average of 50 centimeters of water, so the VEB might be right. That means that 62% of our countries and particularly not only the small countries, I can reassure you, you can easily extrapolate that. So it's about 62% of our clients ranks us with more than an 8 out of 10. So well, at school, I was really pleased with 8 out of 10. But in customer satisfaction, this rating of 8 is a level at which you really can get market share. And in this customer-live program, we really tried to score more than an 8 in all respects. And we'll be telling you more about this next year, I believe.

I can confirm, says Mr. Dekker, that there are no further questions, and we can move on to agenda Item 2B, which is the remuneration report for 2019. You'll find the remuneration report in the annual report, pages 115 through 127. And at this point, I see that there are no additional questions, but perhaps might be a good idea because we did receive questions from a number of you. And those questions were particularly about the remuneration for our former CEO Robert Jan van de Kraats. We said, when we -- CFO, I beg your pardon. Robert Jan van de Kraats in 2019, did some consultancy work for the Executive Board. And this -- he was very, very valuable, given his enormous strong track record at Randstad and his involvement, engagement in strategy and acquisitions. So in 2017, in a press release, we announced the arrival of Henry Schirmer [ at ] the AGM. In March 2018, Henry took over the baton, and Jacques has already talked to us about, on the one hand, the strength of having Jacques and Chris and Rebecca, who've been working in this dynamic sector for all their lives. And on the other hand, we are really looking at the profile of competencies in last year. You saw Rebecca and Karen, you appointed them. And this year, we're going to appoint Rene. So it's very dynamic because the strategy constantly changes. So when Robert Jan van de Kraats left -- for 17 years, he was CFO of this company. So at that point when he left, we came up with a tailor-made solution. In 2018, the baton would be passed on to Henry. 2019, only M&A and strategy acquisitions. So I just thought it was important to specifically explain this. I see that there are no further questions -- so I can confirm that there are no further questions, and I propose that we have the remuneration report adopted with an advisory vote.And I'm going to give the floor to Jelle Miedema so he can take us through the voting process. Mr. Miedema?

Thank you, Wout. Before I open the vote, on behalf of the VEB, I'll be reading out a statement with regard to their vote. And they requested us to do as much. VEB feels that the arrangement that Randstad had agreed with Mr. van de Kraats when he left the company, as just detailed by the President of the Supervisory Board, is exorbitant. And the VEB finds it very difficult to accept this severance pay, and we'll be voting against. I'm opening the vote. We're going to leave the vote open for a bit longer than we usually do because there's a small delay for those who are following the meeting on the website. [Voting]

And so the vote is closed. And you see the results on the screen, and 98.3% of the votes have been cast in favor, so the agenda item has been adopted. I confirm that the remuneration report has been adopted. And with that, we can proceed to agenda Item 2C, which is a proposal to amend the articles of association. The proposal to amend the articles of association and explanatory note, the 2, have been published on the website and have been made available when you registered for the meeting. One of the most important reasons for this change is to include a transition provision with regards to preference shares for the period of 17 November, 2019 to 17 November, 2026. And to determine it at 2.0% for the financial year 2019, the holders of preference shares B and CE will be granted a dividend of EUR 12 million in total. The granting shall take place as a consequence of the adoption of the financial statements 2019. And that is then also the reason to put this change in the articles of association at the front of the agenda -- at the top of the agenda, to take this decision separately. At the same time, a number of other changes are proposed as explained in the explanatory note to the change in articles of association. The VEB asked a number of specific questions on the proposal. The holders of preference shares B will not be given a higher dividend. This is an adjustment of the [ statutories' ] increase with which the dividend is determined. 2012, 2019, the percentage was 2.7%. Now this is being reduced to 2.0%. And this concerns a fixed obligation to the long-term shareholders of preference shares. If the annual dividend payment is postponed, it shall take place as soon as possible. And this concerns, in total, a limited amount of money, EUR 12 million, on all preference shares. Are there any further questions? I see there are no further questions. So if there are no further questions, I can confirm and I can propose that we decide, with respect to the proposed amendment of the articles of association, I'd like to give the floor to Jelle Miedema to take us through the voting process. Mr. Miedema.

I'm opening the vote. [Voting]

And before I close the vote, I do have an answer with regards to a follow-on question of the VEB. Indeed it is true, and the Chairman has just explained this, Mr. van den Broek, that if the amendment of articles of association should not be adopted, we would revert to a higher dividend for the shares -- preference shares B. And because of the amendment, the dividend will be 2% for the preference share B. So this is a different to what the VEB assumed at first. We're hereby closing the vote. And you will see the results are 99.65% of the votes cast in favor, so the proposal to amend the articles of association has been adopted. Mr. Dekker?

And since the proposal has been adopted, I would request the civil law notary to now formally confirm that we have the mandate to amend the articles of association. So let us proceed to item 2D, the proposal to adopt the financial statements for financial year 2019. You'll find this on Pages 138 to 208 of the annual report, and it has been presented in detail. First of all, I'll give the floor the Chairman of the Audit Committee, Frank Dorjee, to say a few words about the work of the Audit Committee in 2019 and the way the Audit Committee has worked with the accountant. And then I shall give the floor to Bas Savert on behalf of Deloitte. Frank?

As the chair of Audit Committee, I'm looking back in the year in which we've addressed many, many topics. Most of the meetings of the Audit Committee took place prior to the publication of the quarterly figures. Prior to the Audit Committee, I personally held proprietary talks with the CFO, the Director of Global Control, Global Financial Reporting, and Global Risk and Audit. In the Audit Committee meetings, we not only had the CEO, but also the CFO and the external accountant, Mr. Bas Savert. And also, these directors attended the meetings. The focus of the Audit Committee meeting, therefore, was on financial reporting, through our press releases and reports of the external auditor and global business risk and audit. We also addressed a large number of other topics such as tax law issues, legal issues, funding, new guidelines with respect to IFRS, particularly IFRS 16 guideline concerning the lease liabilities -- lease obligations. And all this was implemented as per January 1, 2019. And we paid a lot of attention, and invested a lot of time, to data protection and information security -- cybersecurity and IT in general. And since Randstad works with personal details, data protection is extremely important. And since 2019, we've rolled out several programs to that effect. The Audit Committee is closely involved in this process and monitors the progression of these programs. And also in the Audit Committee, we talked about the audit plan of the auditor, the external auditor, and of Global Business Risk and Audit. And as usual, we also talked about the internal controls and the control environment. Every quarter, the Audit Committee discusses the findings of the external auditor, but also quarterly report of the Department of Global Risk -- Business Risk and Audit. In 2019, this department was further reinforced by means of training and recruiting IT audit specialists. The management letters of external auditors at Deloitte and BDO were discussed in the Audit Committee, and no material findings have been confirmed, the findings concerned, detailed recommendations and room for improvement, as reported by the local audit teams. We can highlight, however, that there's a clear focus on further improvement of the IT general controls, and this is in line with further improvement of data protection data security. As Jacques pointed out, the turn at the top in the organization is good. Core values, the code of conduct and also the whistleblower arrangement are very important elements in that respect. The strategic repositioning of the company makes sure that we are open, clear and -- that we have an open and clear and robust dialogue between all layers and nationals of the organization, and that goals and core values play an extremely important part. Randstad's target is to improve its internal control in different land -- country organizations every year and to be at a higher level. And every 6 months, management of the local companies will set up a risk register and carry out control self-assessment. Global Business Risk and Audit will look independently at the quality of control in the different operational companies and the outcomes there are discussed every 6 months in the Executive Board and also in the Audit Committee. And also risk appetite was discussed this year in the Executive Board and in the Audit Committee. And with that, we've been able to further materialize the annual improvement of internal control systems and measures. Further digitization of the business models and operational processes is further supported by a focus on IT control over the next few years. Over the past few months in terms of data protection, information security, cybersecurity, IT general controls, we had several programs that we've started, and a number of them will be implemented in 2020. And these programs with a high IT component will lead to a further update of the key control framework. The key control framework reflects the measures with respect to internal control concerning the main risk of operational financial business processes. Global Business Risk and Audit will monitor the effectiveness and quality of internal control progression. Now we have 3 specific aspects that we concentrated on as an Audit Committee in 2019. First of all, valuation of goodwill, also based on the annual goodwill impairment test -- or depreciation test, and that led to an impairment and also valuation of the position concerning postponed taxes and fraud risks, and fraud cases that fortunately are not material to Randstad, and were discovered, thanks to the company. As we pointed out earlier on, the CEO, CFO, both of them pointed this out. In fact, the Executive Board and the Supervisory Board frequently, on touch on the financial impact of the corona crisis. And several financial scenarios have been studied and elaborated. And given the very limited visibility, just to be cautious, we decided to withdraw ordinary and special dividend in 2019. And now, I'd like to give the floor to our auditor, Bas Savert of Deloitte.

Good afternoon. I'm Bas Savert. I'm an auditor. I'm working for Deloitte, and I'm responsible for the audit, and I'm going to elaborate on the operations performed. We issued our unqualified auditor's report on 10 February 2020, and it appears in the annual report from Page 209. In this report, you will read about our responsibilities regarding management and as auditing -- auditors, both for these financial statements and for other information, such as the annual report -- remuneration report and other data. And as in previous years, I'm responsible for ensuring that information required by law has been included and is consistent in the financial statements. During the year, as just explained by Mr. Dorjee, we were in touch with the Audit Committee and the Executive Board periodically, in any case, at least once a quarter. And throughout the year, we discussed the most important aspects, such as the audit plan, the management letter and, at the end of the year, the final report. The materiality for 2019 was unchanged with respect to 2018, as you saw on the slide and equal to EUR 50 million, which was a percentage of just over 6% of the profit before taxes. As per the consolidated segments, the materiality was lower and never exceeded EUR 21 million. Based on qualitative reasons, we reduced the materiality in certain segments. You might consider explanations concerning remuneration. As explained in the report, we conducted a full scope audit for 13 segments, which means the most in-depth audit possible, which achieved a cover of 86% in the audit examining consolidated revenue and assets. We conducted a group audit, which means that we partnered with teams from other countries. And during the course of the year, we were in touch with the teams at various points starting with a webcast at the beginning, explaining the plan of action. And throughout the year, we have various contact moments and take note of the findings, and we also assessed the records of those teams. And we have a rotation system where we also visit some of those countries. Our most important risks and areas of consideration for last year concerned revenue recognition. That's a standard risk by international standards and valuation of goodwill, as mentioned by Mr. Dorjee, and the leasing based on processing IFRS 16 standards. In addition, we addressed the risk of fraud and of noncompliance in determining our plan of action. In that respect, we used a forensic specialist as well. And the extended debt remuneration report, which was new for 2019, was also a point of consideration -- or rather the supplements to that. To comprehend the impact of COVID-19 on Randstad after issuing the auditor's opinion, and before the shareholders' meeting, we were in touch with the Executive Board to try to understand the main trends, as explained previously by Mr. Dorjee. And we determined that the most important developments and assumptions had already been explained by the Executive Board and have been reflected in press releases. Now as for the questions asked, I have certainly taken note of the questions submitted in writing, and I also have noted that they've been answered by the Executive Board. And that is the end of my brief explanatory note. Thank you for listening.

Thank you, Frank Dorjee and Bas Savert. Jacques?

Now that takes us to -- no, wait a minute. First, something about voting. I see that there are no additional questions about the financial statements or the auditor's report. And as mentioned at the start of this meeting, voting on -- this voting item and the subsequent voting items will remain open throughout the meeting through the conclusion of agenda Item 9. Then we will close the vote and disclose the results later on. And you have just noticed that a minute feels like a very long time or perhaps, it took us a few minutes to reach the results. So I think Jelle, that was a very pragmatic suggestion. Now on to agenda item 2E, the explanation of the policy on reserves and dividends. Henry Schirmer has already explained this topic. Are there any questions? I'm looking at the Secretary now. Are there any questions? No? Okay. The next item is 3A, which is granting a discharge from liability to the members of the Executive Board for their management. I am proposing the following discharge resolution. The general Meeting of Shareholders grants discharge to the members of the Executive Board for their management in the financial year 2019, to the extent reflected in the financial statements, the annual report and the other documents presented to the general meeting and the explanatory notes provided at this meeting. Are there any questions? I note that there are no additional questions pending. Now that takes us to agenda Item 3B, which entails granting discharge from liability to the members of the Supervisory Board for supervising the management. I propose the following discharge resolution. The General Meeting of Shareholders grants a discharge to the members of the Supervisory Board for the supervision of the management conducted in the 2019 financial year as reflected in the financial statements, the annual report, the other documents presented to the general meeting and the explanatory note provided at this meeting. Are there any questions? No additional questions. In this case, that takes us to agenda Item 4A, which is the proposal to adopt the remuneration policy of the Executive Board. The present remuneration policy was approved by you in 2017. Following careful consideration and the advice from the Remuneration Committee, we have decided not to change the substance of the present remuneration policy of the Executive Board, although the description of the policy has been aligned with legal requirements -- new legal requirements. Are there any additional questions? Apparently, there are no additional questions. That takes us to agenda Item 4B, the proposal to adopt the remuneration policy for the Supervisory Board. The current remuneration policy of the Supervisory Board was adopted by you in 2012. After careful consideration and following advice from the Remuneration Committee, we have decided not to change the substance of the present remuneration policy, although the description of the policy has been aligned to match the new legal requirements. Are there any questions? No. That takes us to agenda Item 5, which is the proposal to appoint Rene Steenvoorden as member of the Executive Board. Explanatory note about this and his curriculum vitae appear in the agenda. Rene Steenvoorden joined Randstad in 2016 as Chief Digital Officer. And he oversaw the development of digital strategy and its implementation within the group. He is also Chief Information Officer, and as such, is responsible for IT development, maintenance and operations. The highlights of his agreement match the remuneration policy and have been included in the agenda. We propose appointing him for a first term of 4 years. Rene Steenvoorden is present here in Diemen in this room.

Rene, please introduce yourself.

Thank you, Wout, and thank you for giving me this opportunity. Randstad is a magnificent company. For 60 years, it's been pursuing its mission of bringing organizations and talent together, and that mission is extremely relevant because it is such a large part of our joy in life. Enjoying your work is important for everybody, and it's also for organizations looking to recruit the best talent. We see major changes, especially driven by digitization. Employees are wondering which jobs will remain and which are no longer relevant. Organizations are considering how to recruit the best talent because they know that, that's key to their success. And our employees would like to be helpful in continuing to support all those. Digital technology gives us the keys because we can continue pursuing the mission we have in the past 60 years. But now, we can do it in an innovative way by providing personal data to each employee and each talent in helping develop careers, and we can focus our support to companies. We can examine where the demand is and where the supply is and where there's a scarcity, and we can help those employees manage those tools very flexibly. And security is also very important. Privacy was already mentioned. It's essential that we deal responsibly with those data. These are very personal data of all our employees and all our clients, and it needs to be safe, and it needs to be stable. We've invested heavily in all that, and we see the process accelerating. And we can keep up with that acceleration because we have experienced wonderful ideas and developments in all the countries, and we use those to scale everything up for the group. So we accelerate the process by using the best ideas from the different countries, and externally as well as those provided by our innovation fund. I'm deeply honored that since September 2016, I've been participating on this journey. And for a while, I have been allowed to participate in the Executive Board. I hope that you'll formally authorize me to continue doing this, and I'm greatly looking forward to accelerating that digital journey together with all our employees and clients and talents. Thank you very much for listening.

Thank you, Rene. Jelle, are there any additional questions? No. Okay. We'll wait and see what happens with the vote for Rene. Now on to agenda item 6A, which is the proposal to appoint Helene Auriol Potier as a member of the Supervisory Board. Please read the nomination in the agenda, where you'll also find her curriculum vitae. Helene Auriol Potier pursued a career in digital technology in telecommunications in various countries. Since 2018, she has been Executive Vice President, International, at Orange Business Services. The Supervisory Board, therefore, proposes appointing her for a first 4-year term. Helene is attending this meeting online. Please introduce yourself.

Thank you, Wout. Good afternoon. So I am Helene Auriol Potier. And as Wout mentioned, all my career has been around high tech, and in particular, in digital sector. I've been working for different companies like Microsoft, Orange, Dell, Nortel. And my career has been extensively international in the U.S., in Europe, in Asia, where I have been based. And for the last 15 years, I have been leading large business units in very fast-changing environments and highly competitive and with technology disruption. And my business has been mainly around for many years, around helping corporate customers, driving digital transformation. And I'm also a member of the Board of Directors of Safran and Oddo BHF. And I feel very privileged to be here, as Randstad is a global leader in HR industry, which is absolutely critical to the success of most companies. And the world of talent is more and more technology-driven, which is my expertise and my passion. And on top of that, there is a very important meaning in what Randstad is doing for the economy and for the society. So thank you. With that, back to you, Wout.

Thank you, Helene. Ladies and gentlemen, you see that these 3 proposals outlined with the structure and staffing for both the Supervisory Board and the Executive Board. We focus strongly on profiles of competencies that match our new challenges. I'm now pleased to give the floor to Frank Dorjee to elaborate on agenda Item 6B.

As for the proposal to reappoint Wout Dekker as member of the Supervisory Board, Wout Dekker has delivered a valuable contribution to our Board and the committees, especially as the Chair. And the Supervisory Board, therefore, proposes reappointing and to a third 2-year term. The curriculum vitae of Mr. Dekker and the justification for his reappointment appear in the agenda. Are there any questions? I'm looking to the company secretary. No additional questions. That takes us to agenda Item 7. This comprises [ 4 ] proposals at 7A. The proposal to extend the authorization of the Executive Board to issue shares and to restrict or exclude the preemptive right with issuing shares. At 7B, the proposal to authorize the Executive Board to repurchase shares. And at 7C, the proposal to cancel repurchased shares. Please read the explanatory note in the agenda to the meeting. This year, unlike previous years, we have opted for an issue authorization equaling 10% to safeguard financial flexibility. The 10% issue authorization is market practice. Are there any questions about 1 of these 3 proposals? No? Jelle? Okay. That takes us to agenda Item 8, which is the proposal to reappoint Sjoerd van Keulen as Board member of Stichting Administratiekantoor Preferente Aandelen Randstad. You'll find his curriculum vitae in the agenda to this meeting. Pursuant to the article of association of the Stichting, the Foundation, the Executive Board proposes appointing him as Board Member A to a third 2-year term.Are there any questions? And the first question, once again, from the VEB. What is the interest of Randstad shareholders in voting to reappoint Sjoerd van Keulen as Board Member A of STAK Randstad?

My answer is as follows: the appointment is a Board position at the Stichting Administratiekantoor Preferente Aandelen, preference shares of Randstad. According to the articles of association, this appointment requires the approval of the shareholders of Randstad, and the Board membership is mainly administrative and concerns the preference shares. These are financing shares, and that's why we have presented this proposal.I see there are no additional questions. That takes us to agenda Item 9. That's the proposal to reappoint Deloitte as external auditor for the 2021 financial year. In accordance with the law of the General Meeting of Shareholders, it's -- and an auditor to audit the financial statements. We propose instructing Deloitte to audit the financial statements for the upcoming 2021 financial year. Are there any additional questions about this? Jelle? No? Okay. Before we proceed to the next agenda item, I am closing the vote on agenda items 2D through 9. The Secretary will disclose the voting results after any other business. And any other business is Item 10. Are there any questions for any other business? There are none.

But I propose leaving that option open for a few more minutes so that shareholders have the opportunity to ask any questions, and in the meantime, we can gather the voting results. [Voting]

I will read out the voting results. First of all, agenda Item 2D, 99.96%. The financial statements for 2019 have been adopted. Agenda Item 3A, 99.76% voted in favor of granting discharge to the Executive Board members. Agenda Item 3B, 99.76% also voted in favor of granting the discharge to the Supervisory Board members for supervising the management. Agenda Item 4A, 99.34% reflects the remuneration policy for the Board, and it has been adopted. Agenda Item 4B, 99.91% reflects the adoption of the remuneration policy for the Supervisory Board. The previous one was for the Executive Board. Agenda Item 5, 99.98% has voted in favor of appointing Rene Steenvoorden as a member of the Executive Board. Agenda Item 6A, 99.12% has voted to appoint Helene Potier as member of the Supervisory Board. Agenda Item 6B, 99.73% has voted to reappoint Wout Dekker as member of the Supervisory Board. Agenda Item 7A, 99.85% has designated the Executive Board as the body authorized to issue shares and restrict or exclude preemptive rights with that issue. Agenda Item 7B, 98.09% has granted the Executive Board to repurchase shares. Agenda Item 7C, 98.41% has approved the proposal to cancel repurchase shares. Agenda Item 8, 100% has reappointed Sjoerd van Keulen as Board member of the Stichting Administratiekantoor Preferente Aandelen Randstad. And agenda Item 9, 99.96%, has reappointed Deloitte accountants as the external auditor for 2021. Over to you, Wout.

Thank you, Jelle. And so far, I see there are no additional questions. We have not received any additional questions. Just a second, the secretary is checking his e-mail.Well, in any case, I'll answer the question first and then talk about the vote. The VEB is asking, once again, as in Agenda Item 8, you did not answer what interest the shareholders have. May I see whether the company Secretary can express this any more clearly than I just did.

We apologize, it's not clear enough yet, but the interest concerns mainly a board position of the Stichting Administratiekantoor Preferente Aandelen Randstad. This is a foundation that administers depository proceeds issued on preference shares, and that is separate from the company. So according to the Articles of Association, shareholders of the NV have to approve that Board position. But the interest is mainly for the shareholders of preference shares, and once again, this is an administrative function.

Thank you very much. I'm pleased to congratulate Rene from here, and we have very high hopes of you. And thank you for your introductory words elaborating on the purpose of this company. Many congratulations. And Helene, congratulations, and welcome on board. And on behalf of myself and the shareholders, I'd like to thank the shareholders for the confidence and your trust in me. I hereby close this meeting, and thank you for contributing and for participating. And let's all hope that next year, we'll have an AGM at which you can be physically present in the lovely community of Diemen. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]