Adecco Group Ag Unsp/Adr

Good day and welcome to the ADECO Group Q4 and Fall Year 2024 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. For operating assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Benita Barreto, ADECO Group AG, Head of Investor Relations, to begin the conference. Benita, over to you.

Good morning. Thank you for joining the ADECO Group's conference call today. I'm Benita Barreto, the Group's Head of Investor Relations, and with me are the ADECO Group's CEO, Denny Mashuel, and CFO, Coram Williams. Before we begin, We want to draw your attention to the disclaimer on slide two. Today's presentation will reference GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements. These statements are based on assumptions as of today and are therefore subject to risks and uncertainties. Let me now hand over to Denny for his opening remarks.

Thank you, Benita, and a warm welcome to all of you who have joined the call today. Before we begin the presentation, I'd like to refocus your attention on the brief video that we just shared. By leveraging Salesforce's technologies, including agent force and data cloud, we are enhancing our global talent supply chain, streamlining processes, improving fill rate and time to fill, and delivering superior experiences for our job seekers. We are building a group driven by innovation where technology is a key pillar. And I will share more on our digital and IT developments later in today's call. And let me open with a full year financial results on slide four. Revenues decreased by 3% year on year on an organic trading days adjusted basis to 23.1 billion euros. Gross profit of nearly 4.5 billion euros was 7% lower year on year. Gross margin contracted 80 basis points to 19.4%, a resilient result, reflecting firm pricing and volume and mix effects. EBITDA, excluding one-offs, was €709 million, 18% lower. The EBITDA margin at 3.1% and 50 basis points lower year-on-year was resilient. driven by substantial G&S savings and agile capacity management. Importantly, it is within the margin corridor, with the group delivering a recovery ratio of 44%. Moving now to the GBUs. In ADECO, revenues were 3% lower, a resilient performance given challenging markets. The EBITDA margin was solid at 3.4%. In ACODIS, revenues were 4% lower, The tech sector downturn continued to impact staffing, and the EBITDA margin of 5.5% mainly reflects this headwind. And in LHH, revenues were 6% lower, weighed by challenging markets and a high comparison in career transition. LHH's EBITDA margin was 6.3%, but within its margin corridor of 7% to 10% when excluding impacts from General Assembly that we will explain shortly. In sum, the group has delivered strong market share gains and resilient revenues and profitability in a challenging market environment. Let's now turn to slide five, which provides KPIs that evidence how the group has delivered on its simplified execute and grow plan set out in Q4 2022. Our market share growth is a testament to the success of the execution of our plan. Since its introduction, we've achieved a relative revenue growth of 980 basis points with 200 basis points share gain in 2024 versus our key competitors. We are focused on further increasing our market share in the coming quarters. We have continued to improve customer satisfaction. In the IDCO GBU, client NPS rose 2 points and candidate NPS rose also 2 points. cementing a multi-year improvement trajectory. This year's survey highlighted the speed of ADECO in selecting the right candidates' profiles, the quantity of the candidates, the ease of the procedures, and the friendliness of the people clients dealt with. And aligned with the simplification effort, the group's rigorous approach to overheads has now delivered 174 million euros in G&A savings, net of inflation, well ahead of of the original 150 million euros run rate target. Let's turn to slide six, which shows in more depth the consistency in which we have delivered our stated ambitions. And as you can see on the slide, our achievements have been multifold regarding key highlights, In 2023, the group adjusted incentive plans, finalized its new operating model, and established its partnership with Microsoft focused on developing the group's AI architecture. It began to deliver GNS savings and took 780 basis points of market share. In 2024, we made substantial progress. We accelerated the move to shared service centers for HR and finance and overachieved the GNS savings target. We outgrew competitors by a further 200 basis points. Moreover, we introduced a comprehensive tech roadmap covering the next couple of years. We have enhanced our IT tools and solutions swiftly, better positioning the group to improve both recruiter efficiency and the customer experience materially. Looking ahead, our operational focus areas include expanding MSP, advancing AI tools and solutions, and introducing authentic AI to the business. We are committed to managing capacity with agility and rigorously focused on GNS savings, deleveraging, and delivering market check-ins. On slide seven, we provide client wins from across our GBUs that encapsulate how the group is driving market share gains and growth. First, as part of a consortium, ADECO and ACODIS won a significant multi-year contract for the armed forces in the UK. The team will develop a digital-first and comprehensive recruitment solution. The client valued ADECO's unrivaled workforce management expertise and ACODIS' strength in systems integration and development. Second, Pontoon won a large MSP contract with a leading technology company to manage its IT workforce across the US, Canada, and India. The client required a reliable solution to address regulatory compliance, workforce visibility, and operational efficiency. The client particularly valued ACODIS' IT staffing expertise and ADECO staffing know-how at scale. Finally, in LHH, Ezra expanded its collaboration with Microsoft to develop a leadership training program for copilot adoption that supports organizational transformation. The client values Ezra's technologies, which provide real-time feedback and are proven to make a measurable impact at scale. Moving now to slide eight, as we've highlighted, the group is steadfastly executing its strategy and is firmly committed to delivering on its financial targets. The balance sheet and financial structure remain sound and leverage has not constrained the execution of the group strategy. Notwithstanding, the macroeconomic and the geopolitical environment has been unfavorable for longer than we had expected. which has prevented the group from deleveraging under the current dividend policy. The group's dividend policy was based on a 40% to 50% payout ratio on adjusted EPS with a commitment to hold the dividend per share at least in line with a prior year period. Moving forward, the group's updated dividend policy will be based on a 40% to 50% payout ratio on adjusted EPS with no floor. The group reiterates its commitment to distributing excess capital to shareholders when leverage is below one times. The updated dividend policy will accelerate deleveraging and increase financial flexibility. It is well suited to a strongly cash generative yet cyclical business. And it achieves a better balance between growth investment to support a group strategic shift towards higher growth and margin markets with direct distributions to shareholders. The immediate capital allocation priority is for the group to deliver. and we target a net debt to EBITDA ratio at or below 1.5 times by end 2027. Accordingly, the board proposes to distribute a dividend per share of one Swiss franc. This represents a payout of 42% within the group's 40 to 50% pay range. Let me now hand over to Korn, who will provide insights into this quarter's results.

Thank you, Denis, and a warm welcome to all of you who have joined the call today. Let's begin with slide 10 and the group's Q4 results. Like the full-year achievements, quarterly revenues and profit levels were resilient. The group delivered €5.9 billion in revenues, 4.6% lower year-on-year on an organic, trading days adjusted basis, and 3% lower on an organic basis. The gross margin at 19.2% was healthy, reflecting firm pricing, volume, and mix effect. Productivity improved 1% year-on-year. and G&A costs were reduced strongly by 14% year-on-year, supporting an EBITDA margin of 3.2%. Cash generation was notably strong. Cash flow from operating activities was €491 million, an increase of €174 million year-on-year, as the timing effects we noted in Q3 unwound and the last 12 months' cash conversion ratio was high at 109%. Turning now to the GBUs and slide 11. ADECO's performance was good in tough markets. Revenues were €4.6 billion, 5% lower year-on-year on an organic, trading days-adjusted basis, and 3% lower on an organic basis. By service line, flexible placement revenues were 3.5% lower. Permanent placement was 1% lower, and outsourcing activities were up 5%. Although enterprise demand remained soft, SMEs grew 2% year on year. In sector terms, autos and IT tech were subdued, while manufacturing and logistics were soft. In contrast, growth was solid in retail and strong in food and beverages. Gross profits were 3% lower, and the gross margin was stable, reflecting firm pricing. The EBITDA margin at 3.4% mainly reflects volumes and business mix, partly offset with good cost mitigation efforts and higher FESCO income. ADECO continues to manage its capacity with agility, reflecting market share opportunities and rebound potential. Slide 12 shows ADECO at the segment level. In France, revenues were 10% lower in a tough market and weighed by lower demand from a handful of key clients. In sector terms, logistics and healthcare were notably pressured. France's EBITDA margin of 4.2% mainly reflects unfavorable operating leverage. Given the market backdrop, management has taken right-sizing action with headcount reduced by a high single-digit amount. Revenues were 11% lower in Northern Europe, performing better than the market. Within the region, revenues were 19% lower in the UK and Ireland, 10% lower in the Nordics, and 4% higher in Belux. One-time items weighed the segment's margin. Excluding these, the underlying EBITDA margin was 0.6%. Revenues in DACHE were 11% lower and ahead of competitors. Germany was 14% lower and Switzerland 6% lower. Manufacturing, logistics, and IT tech were challenged, and autos remained weak. Southern Europe and Iemina revenues were 3% higher. Iberia was up 10%, and Iemina up 13%, outpacing the market, while Italy was 3% lower. Logistics, food and beverages, and retail were strong. the America's revenues were 5% lower. LATAM was up 8%, with most countries growing in double-digit terms. In North America, although SMEs grew moderately, revenues were 12% lower, reflecting the continued downturn in flexible placement demand and specific client headwinds. In APAC, revenue growth was solid, up 5%. Japan was up 7%. India up 24% and Asia up 8%. In Australia and New Zealand, revenues were 10% lower on a high comparison base. Let's move to slide 13 under CODIS. This was a quarter of solid execution given market headwinds. Revenues were 6% lower year on year on an organic trading days adjusted basis. Consulting and solutions revenues were 3% lower, while tech staffing revenues were 11% lower. Revenues in EMEA were weak. France was 6% lower, reflecting subdued demand from autos and aerospace clients. Germany was 15% lower, with the business facing strong headwinds from autos, with many projects postponed or canceled due to budget freezes and pressure on utilization rates. Revenues in North America were 9% lower, weighed by the ongoing downturn in tech staffing, albeit sequentially improved. Consulting and solutions rose 31%. In APAC, revenues were solid, up 4%, with Japan and China up 9%, reflecting strength in consulting, while Australia was 8% lower due to continued headwinds in tech staffing. The 6.1% EBIT A margin mainly reflects lower volumes in utilization, partly offset by G&A cost savings. Last year's Q4 EBIT A margin was flattered by one-time items, which we highlighted at the time. The underlying margin development was 100 basis points lower. The consulting and solutions margin was strong at 7.6%. rising to over 10% when excluding the German operations which are currently in turnaround. Now to slide 14, an LHH. Revenues in LHH were 3% lower year on year on an organic trading days adjusted basis. Recruitment solutions revenues were 8% lower ahead of the market if reflecting continued headwinds in professional talent markets. Gross profits were 8% lower, improved from H1's minus 15% and Q3's minus 9%. Career transition was strong in the context of a high comparison, with revenues 1% lower. Sequentially, revenues improved and the pipeline remains solid. Learning and development revenues were 5% lower, Ezra performed well, with revenues up 15% on a high comparison and a healthy order book. GA made good progress against its strategy. It is progressively exiting B2C while growing its B2B business, where revenues were up 48%. Revenues in Pontoon were up 6%, led by 17% growth in direct sourcing. While MSP and RPO revenues remain soft, they have improved quarter on quarter throughout 2024 and the pipeline is healthy. The EBIT A margin of 4.4% was impacted by charges for student loans in GA as we wind down the B2C activities. Excluding this, the underlying EBITDA margin was 7.4%, reflecting lower volumes, strong G&A savings, and moderated investment in ventures. Let's return now to the group results on slide 15. On the left, we review the quarter's gross margin drivers. On a year-on-year basis and under the group's accounting policies effective January the 1st, 2024, currency translation and portfolio scope had a neutral impact. Flexible placement had a negative impact of 30 basis points, mainly due to current geographic mix. Permanent placement had a 10 basis point negative impact, reflecting lower volumes, while outsourcing, consulting, and other had a 10 basis point negative impact, mainly reflecting lower utilization in a CODIS. Training, upskilling, and reskilling had a 10 basis point positive impact, while the career transition impact was neutral. In total, the gross margin was 40 basis points lower on an organic and reported basis. At 19.2%, it is a healthy result, reflecting firm pricing, volumes, and mix effects. On the right, we review this quarter's year-on-year drivers of the group's EBIT-A margin. Q423's margin of 4.3% was flattered by one-time items that we highlighted at the time, totaling around 30 basis points, giving us an underlying development of minus 80 basis points year on year. Gross margin developments were accompanied by a 90 basis point negative impact from operating leverage as we selectively protect capacity, partly mitigated by a strong 50 basis point positive impact from G&A savings. Moving now to slide 16, which shows the group's strong cash generation and solid financing structure. On a full year basis, cash flow from operating activities of €707 million and free cash flow of €563 million were both very strong. Networking capital developments reflect favourable customer collections, with DSO at 52.8 days, improving 0.1 days year-on-year, and favourable payables balances. Q4's operating cash flow was €491 million, while free cash flow was €446 million. Network and capital development was supported by an approximately €100 million reversal of Q3's negative timing impacts and favourable payables balances. DSO was best in class at 52.2 days, improving 0.4 days year on year. Finally, the full year cash conversion ratio was 109%, a significant improvement from 63% in the prior year. Management has rigorously focused on improving cash generation through disciplined network and capital management and by lowering capex and one-off costs. The chart evidences the delivery of these efforts. For example, capex in 2024 was 144 million euros, down from over 210 million euros. One-off charges in 2024 were €87 million, meaningfully below 2022 and 2023 levels, and we expect a further significant reduction in 2025. Turning to the balance sheet. In net debt to EBITDA terms, excluding one-offs, the group's leverage was 2.8 times at year-end. End Q4 net debt was €2476 million, €114 million lower year-on-year and ahead of management expectations. Gross debts reduced by €188 million in 2024, supported by the repayment of a €430 million bond procured in Q4. The Group has a solid financial structure, with fixed interest rates on 79% of its outstanding debts, no financial covenants on any of its outstanding debts, and strong liquidity, including access to an undrawn €750 million revolving credit facility. The updated dividend policy will help accelerate deleveraging and increase financial flexibility. We remain firmly committed to deleveraging and now target bringing the net debt to EBITDA ratio to 1.5 times below by the end of 2027 absent any major macroeconomic or geopolitical disruption. Let's turn to slide 17. Strong progress de-layering and simplifying the group structure and our relentless focus growth and market share are driving changes in how the company manages and allocates its resources. Consequently, effective January 1, 2025, a new reporting structure has been implemented. Given the close alignment of services and the group's strategic focus on MSP expansion, Pontoon's MSP and direct sourcing activities have been rehomed under the ADECO GBU president. Pontoon's RPO activities have been combined with LHH recruitment solutions to realise synergies and scale the RPO business. The move in Pontoon's reporting structures will increase ADECO's revenues by approximately €390 million and lower LHH's revenues by the equivalent amount. the EBA margin impact is not material for ADECO, but LHH's margin will rise by around 100 basis points. Finally, ADECO's segments have been streamlined into four regions, France, EMEA, Americas, and APAC. Before the Q1 results, the group will provide re-reported GBU and segment disclosure that reflects these changes. Let's turn now to slide 18 and the group's outlook. Volumes were stabilizing throughout Q4 and have shown improving momentum in early 2025. For Q1, the group expects gross margin to be higher sequentially in line with normal seasonality and SG&A expenses, excluding one ought to be broadly flat sequentially. We are continuing to focus on G&A savings whilst positioning sales and delivery capacity to capture market share and accelerate into recovery. And with that, I'll hand back to Denis.

Thank you, Coram. And on our next few slides, we'll focus on some of the key priorities that are driving improved financial performance. We first focus on how we drive performance across our GBUs, starting with slide 20 and a deep dive on ADECO-US. Management has stayed the course with its turnaround strategy despite challenging markets. This slide sets out some of the many achievements made in 2024 across three key focus areas, branch revitalization, customer expansion, and cost optimization. The team have improved the profitability of 96 branches, and the branch network delivered a strengthened average fill rate of 80%. As proof of progress, in a down market, our SME revenues were up through the H2 period. Overall, 2024 revenues grew 390 basis points ahead of the American Staffing Association Market Index. And the sales pipeline now stands at very high levels. Moreover, Atico US made over 1,400 client wins on a net basis in 2024, including substantial wins, particularly in the food and beverages sector. There's still much work to be done, but the turnaround has good traction. And looking forward, we anticipate that ADECO US will return to year-on-year revenue growth in the first half of 2025. Going to slide 21, where we take a closer look at ACODES. We have selected a new leader for the GBU and Jan Gupta will step down from his role and the group's executive committee. We want to acknowledge the key role that Jan played in shaping MODIS and in the successful integration of ACA and MODIS, creating a world leader in ER&D technology consulting. In 2024, consulting and solutions revenues were 2.6 billion euros, showing growth a growing 1% year-on-year in line with competitors. And the consulting and solutions EBITDA margin was 6.1% weighed by Germany, which is currently in turnaround. But excluding Germany, the segment delivered a healthy margin of around 8%. ACODES has very strong foundations. And under new leadership, we'll accelerate the implementation of ACODES' consulting and solutions strategy with a focus on key levers. Operational excellence, strengthening the business technology practices, significantly expanding offshore capabilities, delivering the German turnaround, and increasing our consulting footprint in key geographies, such as the U.S. and China. Small, bolt-on acquisitions will support this strategy. Accodis recently acquired Radon Compliance Partners in the U.S. to bolster its life sciences and healthcare capabilities. It also acquired Barhead Solutions in Australia to enhance its Microsoft technology solutions expertise. In accelerating performance, we expect ACODES to deliver higher growth and bring EBITDA margins into the 7% to 10% GBU corridor. Let's turn to slide 22 and an update on how the group is building a GenAI-powered business. The group is upgrading its IT foundation by consolidating and simplifying its technology landscape. We will leverage this foundation to accelerate investment in innovation to support the profitable growth of the ADECO group. In particular, the group is building an ultra-efficient talent supply chain. Processes are being automated end-to-end, with GNI technologies and a genetic AI to improve efficiency further. The group plans to fully leverage local and global delivery assets, such as existing branches and career centers and many fully expand its own and offshore recruiting and delivery hubs. Progress has been substantial during 2024. We have equipped 25,000 recruiters with our recruiter GNI suite. 136,000 candidates were placed through the ADECO's digital platform globally. Supported by higher field rates, revenues from clients serviced by our digital platform were 9% higher than revenues from our global accounts. And 19,000 candidates have benefited from Eletech's AI-powered career canvas. Our swift progress is supported by key strategic partnership with Salesforce, Bullhorn, and Microsoft, as the video played earlier today shows. In summary, the group's AI strategy will drive efficiencies, productivity, and competitive edge. It will create a differentiated experience for customers with enhanced human centricity. And let me now wrap up today's presentation with slide 23 and our key takeaways. The group achieved relative revenue growth of plus 200 basis points in 2024, demonstrating its ability to gain market share despite challenging market conditions. We exceeded our GNS savings target, delivering 174 million euros net of inflation by year end, while selectively protecting sales and dairy capacity to capture market share and accelerate into recovery. We delivered very strong cash generation, reflected in the 109% cash conversion ratio. And we are accelerating the adoption of AI technologies to revolutionize the recruitment process and build a competitive edge. The group has updated its dividend policy to accelerate deleveraging and increase financial flexibility. And management remains focused on delivering our strategic priorities with rigorous execution and a commitment to achieving our financial targets. Thank you for your attention and look forward to answering your questions. Operator, we can have the first questions.

If you wish to ask a question, Please press star followed by one on your telephone and wait for your name to be announced. That's star one if you wish to ask a question. And your first question comes from the line of Alfonso Asario from Barclays. Your line is open.

Oh, yes. Thank you for taking my questions. Good morning. A few from me, please. The first one, obviously, on this dividend decision, can you explain a little bit on that and what made you conclude that this was the right level for the dividend this year? And how should we think about next year and the year after in terms of progression for the dividend? And then secondly, in the U.S., can you also explain a little bit on your assumptions for growth in the country in the first half? First of all, I see you're planning to grow positively in the first half. So your assumptions there are quite helpful. Is that broadly market share gains or is it a function of the broader market to recover in the first half? And then just lastly on France, I mean, I believe you reported loss of market share in the country for a few quarters now. So just wondering what are the drivers of that and how are you thinking about growth in France going forward? Thank you.

Thank you, Alfonso. And I'll start with the dividend. So in a nutshell, we have a solid strategy. We are rigorously executing on it. We're focused on profitable growth. we have a solid financial structure. However, clearly the macroeconomic environment, the geopolitical environment haven't helped and haven't have prevented us to deliver at the speed at which we wanted under the current dividend policy. So this was the right time to adjust the policy, to help us accelerate deleveraging, to bring you know, additional financial flexibility and to have a better balance between profitable growth investments into higher growth markets, into higher margin markets, and of course, the distribution to our shareholders. We are a strong cash generative business and also a cyclical business. So the adjustment of this policy comes at the right moment.

And let me just pick up, this is Coram. Good morning, Alfonso. Let me just pick up on the point about how we landed on the amount. I mean, as Denise said earlier, This updated dividend policy strikes a good balance between shareholder returns, deleveraging, and growth investment. And obviously, our short-term priority is deleveraging. This frees up $250 million of cash to help us delever. The policy itself is based on 40% to 50% of adjusted EPS. That means it moves in line with earnings. and clearly we are at the lower end of our margin corridor right now and on and we are absolutely confident that we can drive margins profitability and earnings up over time and obviously the dividend will move up in line with that now turning to you to the us we are pleased with what we see from our turnaround plan uh

you know, there has been sequential improvement, particularly in ADECO US. I mean, the big ticket item there is ADECO US. The rest of the business, you know, career transition is solid, and it's second, you know, highest revenue, you know, in its history. Recruitment solutions in the NHH is still, like, performing ahead of the market, but still down. And I call this staffing is still in line with the market, which is down, consulting is growing 30%, which is very encouraging. It has good traction. Now, at DecoUS, which was the problem child, if I may say so, we see an improvement quarter on quarter on our performance. We still had some large client impact in the quarter that have weighed on our performance. However, We are very positive about the impact of our turnaround plan on our results. You know, we've seen an improvement in our branch profitability. And, you know, we have now almost 100 branches that have improved their profitability. At the end of 2025, we will have nearly, you know, more than plus 40% in number of branches versus two years ago. So we are you know, investing there. And it shows because the small and medium markets has grown 1% this quarter. It's the second quarter in a row where we grow versus, you know, starting the year at minus 7%. So we see traction there. And this will continue. The large clients' losses are behind us. And we have some large wins through MSPs or directly with ADECO that will support growth moving forward. On top of that, the pontoon spent with ADECO has increased 13%. So, pontoon is driving more volumes to ADECO. We've also, you know, built a strong near-shore delivery engine. We've seen productivity, GP per selling FT improving 3%. A good sign of how our clients appreciate what we do, we have an NPS strongly improving. At the end of the day, when you look at the performance versus the American Staffing Association market index, we are in Q4, 400 basis points ahead of that index. So that shows positive traction. On the market side now, We have seen in the U.S. temp volumes since the beginning of the year improving, slightly improving week after week. We are much more cautious about perm, permanent recruitment, which is still very soft. So we see better traction in temp, soft in perm, which gives some, let's say, some ideas of a possible positive momentum moving forward. However, as I said, given what, you know, our traction in SMEs, what we do in large clients, we are positive that over the H1, we will achieve growth in revenue year on year. Now, France, France is, let's be clear, France is still a tough market. And of course, there are, you know, difficult economic and political, you know, situations. There's still uncertainty there. And we've been facing headwinds, particularly with our top three clients that are still in negative territories. However, and we also had a change in the legislative environment on healthcare that have impacted our Q4. However, we've seen a good traction in the next 20 clients, not the top three, but the next 20, where we are positive year on year. So we are closing the gap with the market. We're getting market share in construction. Our perm business is up 5%, which is positively surprising, I would say. And we had some large wins in Q4. So France will remain a market, a difficult market, let's be clear. We are protecting margins. We're protecting bottom line. We are executing a restructuring plan as we speak with a high single-digit percentage of people reduction. We are adjusting selling FTEs, and we have also put a new leader in place to improve performance. He will focus on branch productivity, execution of our time supply chain, speed of delivery, and the MSP development. So, France will remain a somehow difficult market, but I'm positive in the footprint that we're going to have in this country.

That's very clear. Thank you very much.

Your next question comes from the line of Remy Grenouille from Morgan Stanley. Your line is open.

Yes, morning, and thanks for taking my question. So the first one is to come back on the comments you're making on the outlook. Can you help us reconcile a little bit that comment on improving momentum and the weak data we have seen so far for staffing markets like France, Germany and the UK? Is that improvement you're referring to driven by any specific regions and should we assume that the divergence between Northern and Southern Europe continues from here? So that would be the first question. The second one is on working capital. So clearly better DSO, but also significant inflow on payables. So I know you flagged that you had 60 million of positive timing effect on payable, but can you help us understand what are the drivers for the remaining payable inflow? And if it means that we could see any offsetting impact in Q1, any payments falling into Q1 rather than Q4? And then the third one is on the leveraging, helpful to get just a little bit more visibility. Can you elaborate a little bit on the assumptions you've made regarding the timing for the infection and the pace at which the volume are going to improve from here? Not really as a guidance, but much more as a way for us to assess going forward whether you are ahead or slightly below on that pace for the leveraging the balance sheet.

Thank you, Remy. I will take all three of those. So on your question to begin with about the outlook, I absolutely understand the point you're making. To be clear, the shape of the business that we've seen in Q1 is similar to what we saw in 2024. In other words, We are seeing markets in LATAM, APAC, Southern Europe continue to grow, whereas, for example, in Northern Europe, in France, in the UK, in Germany, they continue to be down and they continue to be challenging markets overall. The point that we're making about momentum is around the weekly volumes. And what we have seen from the beginning of the year is a very modest improvement every week on volumes across a broad number of countries. It's not changing the overall shape of where the pressure is and where the growth is, but it is interesting to see that every week we see a modest improvement in volumes across a significant number of countries. And that's the point that I think we're trying to make about momentum. It is relatively broad-based. On working capital and cash, obviously, we were very pleased with the Q4 performance, which is $170 million up. on Q3. And we're obviously also very pleased about the 109% cash conversion ratio that we delivered for the full year. There's really three drivers of the cash performance. So in Q4, the positive reversal of the 100 million of timing effects that we flagged in Q3, part of that was AR. A bigger chunk of it was accounts payable. And just to be clear on this accounts payable, in 2023, the timing of that AP was very heavily weighted towards Q4. We had something of a backlog that had built up on payables. And that means that in comp terms, it hurt us in Q3 24, but it benefited us in Q4 24. I think there are two other things that are driving the cash performance for the full year. The first is really, really strong management of DSO. We are 0.4 days improved in Q4 at 52.2 days. And that is despite pressure in the market on terms. I think we're all seeing that. But we've done a really good job of managing this. And we are now clearly best in class in terms of DSO. And I think the third thing you should factor in on the full year cash is that obviously with a top line that has declined, you know the working capital profile of this business, we tend to see a working capital release. So I think when you put all three of those together, that explains both the Q4 and the full year cash performance. What's it going to look like in 2025? Well, we will continue to focus on networking capital, particularly around DSO and payables. Obviously, it depends on the shape of the year and in particular on growth, because if we see a little bit of growth. then that will absorb working capital. But the other thing I'd remind you is that on free cash flow, we've done a good job of managing CapEx. We'd expect it to be about 160 million in 2025. And our one-offs drop significantly. considerably from 87 million in 24 to around 30 million is what we're forecasting in 25. So I would expect solid cash generation in the year. Obviously, the conversion will depend on growth, and we will deleverage year on year in 25 as a result of the pieces that I've just described, plus the 250 million benefit from the updated dividend policy. I'm not going to make a prediction on Q1. It is typically a seasonal outflow. It's one of our least cash generative quarters. And there's always timing effects on some quite big balances on both receivables and payables. But we are expecting solid cash generation in 2025 and clearly deleveraging. On the question around how to get to at or below 1.5 times net debt to EBITDA, obviously there's a variety of factors that affect this. So what happens to the top line, what we do on costs, and therefore margin, and also cash conversion. If I were to boil it down, then I think you should think of this in one of two ways. Either modest top-line recovery, and I'm talking low single digits here, which drive operating leverage and productivity and therefore margin, or margin expansion into the middle of the 3% to 6% margin corridor. And if we did not see top-line growth, then you'd expect us to adjust capacity and take cost out and drive margins. either of those will get us to the 1.5 times net debt to EBITDA target. Both of them would get us there faster. So I hope that gives you a sense on how to think about this, given that there are a variety of different drivers.

Yes, thanks very much. And just one housekeeping question on what's the level of leverage at which you would consider returning excess cash? Is it still 1.5 or maybe I think I heard Danny mentioning one time.

It's actually always been one. So we've not changed that aspect of the capital allocation policy. Our target for leverage is to be at or below 1.5 times. And we have a clear commitment that if we're below one times, that we will distribute excess capital. And we normally do that via buybacks.

Okay. Thanks for the clarification.

Thanks. Your next question comes from Simone Asali from Bank of America. Your line is open.

Yes, good morning, and thanks for taking my question. I have just one left. If you could please elaborate a little bit more on your guidance of SG&A sequentially flattening Q1. So if I consider seasonality, it should actually be down sequentially. So is that an element of being conservative here, or what are the moving parts? Thank you.

I think Coran would be very happy to answer this one.

I'll take that one. Actually, Simone, if you look at what's happened to SG&A typically from Q4 to Q1, there's usually a seasonal uplift in absolute terms. It's usually 10 to 15 million. Now, we do have, as we flagged, some charges in GA in Q4, which went through SG&A. And that's why we're guiding to broadly flat sequentially. Longer term, obviously, we adjust capacity on an agile basis around selling, depending on what we see in the markets. And we continue to focus on making sure that we are keeping our G&A savings firmly under control, below 3.5%. of revenues and there are still some pockets that we can go after. I'm not flagging another program along the same lines that, you know, you saw us deliver the 174 million, but there are a couple of pockets that we can go after in certain territories and we will continue to do that. Obviously, that will come later in the year. That doesn't affect our Q1 guidance.

Thank you.

Your next question comes from the line of Andy Grobler from BNP Paribas. Axan, your line is open.

Hi, good morning. Just a couple from me, if I may. Firstly, just on Germany, you talked about the turnaround within the Ecodis business. What assumptions are you making about the automotive industry as you plan that turnaround in terms of how bad that could be over the next one, two, or three years. And then secondly, just on AI, sorry to bring that one up again, you talked about the opportunities. It was interesting to see that one of your peers put AI as a material risk. What are your thoughts about some of the headwinds that may come from AI as well as some of the opportunities?

Thank you. Thank you very much, Andy. Nice to talk to you. So on Germany specifically, Definitely, overall, the credit business is solid. The pain point at the moment is Germany, mainly due to two things. One, the auto business, as you rightly mentioned. We had projects that got stalled. Some were stopped. Some were delayed. This has created a lower utilization rate, bench management, et cetera. That's one thing. There was also, to just further clarify, we were in Germany too much exposed to legacy technologies. And, you know, we talked in the past about this move from legacy technology into smart industry. And this is what we were executing, moving into digital engineering and AI. But that piece is still a bit too small. And as we were shifting, the auto crisis hit us. So... We have a turnaround action plan. It's in progress. We've brought an additional new leader to help us accelerate. We are optimizing a center of excellence. We have a new organization being put in place, which is going to be more client-centric. So all these things are good. However, we will need, given the exposure that we have to OTOs, a bit of a more supportive environment. So it's difficult to say exactly at which moment things are going to pick up. What we know, what we hear from our clients, and let me be clear, we still have an excellent relationship with our clients. I mean, the likes of the BMW and Mercedes and VW are key clients. They really appreciate what we do. Just as you know, they are in a difficult situation. What they're moving forward, what we see, it's probably more into 2026 onwards, is they will do more outsourcing. They need to reduce their workforce, and they're doing it, as you know, and they've been very clear that it would expect partners like us to really accompany them with efficiency and outsourcing of larger projects. I don't expect any positive move in 2025, but moving forward, I am really strongly positive in how we can develop further partnerships. At the same time, we are also diversifying. We see good traction on the defense sector. The aerospace also is promising. Life science is also getting some traction. So we are all hands on deck, adjusting the bench, diversifying, and staying very, very close to the auto sector to be seen as the partner that will help them on their efficiency program. And that's what they're asking us. And it's an opportunity for us. Now on AI, we started all our Gen AI initiatives very early on. We learned a lot. We streamlined a lot of things thanks to Gen AI. Internally, we have four pillars to our Gen AI action plan. We've, you know, from this initial, you know, discovery two years ago, we've now much more focused. We go deep and we scale, which means that helps us streamline our processes and automate. And we've chosen a few battles, recruiter efficiencies and candidate experience, LHH, Curry Canvas, as we mentioned, Ezra coaching and a few others. But we go really, we don't spread our effort. We focus it and we scale. We have great strategic partnerships. with Salesforce on the Gen-TK AI in Data Cloud, with Bullhorn on the Search and Match, with Microsoft on the infrastructure and on Copilot. We train our people and we also have a jewel, which is ICODIS research, which is really very advanced in how they help us progress on Gen AI. We've been working with AI agents in ICODIS since spring 2023. So this is very solid. Now on the market, you know, very, very hard to know which direction it's going to take. Of course, there's going to be disruption, as we had when digital came in. What I must say is because of the effort and the focus that we have, I think we are very well placed to capture every single opportunity. I'm very confident in our general strategy. It would also be disrupting you know, the job organization in our clients, that's an opportunity for us because they will need to train, they will need to upskill, they will need to, you know, do internal moves, et cetera, and we are here to help. We see great traction in how we train, you know, thanks to our Aquadis Academy into GA. Aquadis Academy focuses on training engineers. General Assembly focuses in the B2B side on non-engineers. So we have very focused offering to train lawyers, for example, to train accountants on how they have to embark into Gen AI. So I see Gen AI much more as an opportunity than a risk. The risk exists, of course, but we are embarking boldly on that revolution, as we call it. Great.

Thank you very much. Your next question comes from the line of Shashani Fararathani from Goldman Sachs. Your line is open.

One left for me, please. You've discussed gross margins which can be sequentially higher in 1Q versus 4Q. I think it was a bit of a disappointment in Q4 versus your initial guidance which you had given at the time of Q3 results. Can you maybe help us understand what's going to drive this improvement sequentially, especially given PERM is still a little bit weak? Thank you.

Thank you. So just to be clear, the gross margin of right now, we think is healthy, given the environment in which we're operating. Pricing has remained firm. Our spread between bill rate and pay rate is up in the G12. The multiplier is positive. And so we are protecting pricing whilst still, as you've seen, gaining share pretty consistently. The impact on gross margin is really twofold. It's the ongoing pressure in PERM and it's the particular mix of where the growth is coming from in the ADECO business. Neither of those is structural. Both of those are really driven by the market conditions that we see. In terms of what drives the sequential improvement, there is always a small sequential improvement between Q4 and Q1 gross margin. It's usually around 10 basis points. And it's simply about the weight of the business. It's the seasonality, particularly in the deco business, means it's the softest quarter. So it has an impact on the group gross margin. In terms of the trends that we would expect to see, Very similar to Q4. So in Q1, no real impact from FX or M&A. We'd expect to see PERM broadly flat because that has been going for a number of quarters. And so the comp effect is unwinding. We'd expect to see maybe 10 basis points of year-on-year pressure from career transition, just because it's coming off a record year. It's still strong. OCS, about another 10 basis points year-on-year, simply because of the pressures on utilization rates. Will they Let's also flag that our utilization rates in the consulting and solutions business are good still. They're at 91%. So we're protecting those. And then flex, I think, will be about minus 30 to minus 40 year on year. And however you triangulate it, whether you look at the plus 10 bit seasonal effect or you take those trends and apply them Q1 24 to Q1 25, you'll get to around 19.3, 19.4%. And that's where we're guiding to.

Thank you.

Your next question comes from the line of Rory McKenzie from UBS. Your line is open.

Good morning. It's Rory here. First question on the cost base. Can you give more detail on the savings actions in Q4 and where you've landed ahead of plan on the G&A savings? And also, are there any other Q4 cost movements that we should be aware of, like lower bonus accruals or T&E restrictions perhaps? And then related to that, do you think you can stay within your target 3% to 6% margin corridor for FY25, just this year land at 3.1%? And given the profit growth rate, I guess, deteriorated over the year, you kind of face a weak exit rate. So it's interesting to hear you don't think there are many more large programs to come. Thank you.

Let me take those, Rory. I mean, on G&A, as I think we've talked about previously, you know, we've been very effective in driving that G&A savings program, 174 million of savings versus a target of 150. It's very broad-based. All of the GBUs contributed significantly. There were significant savings at corporate. And it's really about making sure that we're de-layering and streamlining the organization. So all parts of the business contributed to that. And our G&A expenses at the end of the year were at 3.4% of revenues, which is very lean. G&A FTE is down 8% in Q4. In terms of notable cost movements in Q4, we have flagged the one item which is unusual, which is the costs of the wind down of the B2C business in General Assembly. We took that above the line. And just to spend a moment on that, we are exiting the B2C business. It's part of our strategic focus on B2B, which is growing very nicely. As we've seen across the industry in B2C education, there have been challenges in collecting some of the loans that were made to students in previous models to pay for the education. And we've taken a very thorough look at that loan book. We've cleaned it up. And that is a cost that was in Q4 that won't repeat in Q1. And that really brings me back to the answer I gave earlier about the sequential movement on SG&A, because normally you see SG&A rise by 10 to 15 million between Q4 and Q1. The reason we're broadly flat is obviously ongoing discipline around G&A, capacity management, and then the absence of those GA costs. On the 3% to 6%, I mean, I think it's important. The exit rate is not weak. It is stabilizing in Q4. And as we flagged, we are seeing improving momentum in our weekly volumes in the first two months of 2025. Overall shape hasn't changed, but every week there's a modest improvement in demand. volumes across a number of different countries. We are very focused on making sure that our G&A savings stick. And as I said earlier, there are a couple of pockets where we can go for further G&A. Denis has mentioned some of the turnarounds, for example, in France and the U.S., There are opportunities in both of those territories for further G&A reductions, and they will come later in the year. We're very focused on delivering that. So we are very confident that we will stay within our 3% to 6% margin corridor. And one final point that I will make, our recovery ratio in 2024 was 44%. Now, that's a good recovery, but it's not quite at the 50% that we've targeted previously. And that's because we have protected capacity in our sales organization so that we can make the most of a recovery when it comes. And I think that's important because that means you'll get good operating leverage on the way up.

Yep, thanks. I was definitely getting about a drop-through ratio question, so thanks for anticipating that. Thank you.

No problem. I figured that's where you were going.

Your next question comes from the line of Conrad Zomer from ABN Omara at Odo. Your line is open.

Hi, good morning. Thanks for taking my questions. The first one is on your new organisational structure. Can you give us a few specific advantages or synergies that you'd likely achieve from moving Pontoon RPO into LHH, please? And my second question, you sound quite a bit more optimistic in today's call and in today's press release than in the previous few quarters. So having said that, Can you tell us what you think will happen to your headcount into 2025? Because I think you did an excellent job in 2024 by reducing costs, partly by reducing headcount. Is this the time to protect headcount? Is this the time to further shed people, given that you expect markets seem to have stabilized quite a few different regions? Thank you.

I think the first one, Conrad, and thanks for your questions, and Coram, we'll take the second one. On Pontoon, Pontoon had really two components, a recruitment component and a MSP component, managed service provider. And if you look at that, there was not so much synergies between the two. And we believe that hosting the recruitment business, the RPO business in LHH makes more sense because LHH has this sort of advisory positioning on workforce management, particularly for white collar and managers, et cetera. So deals directly with CHROs on topics like you know, your strategy, how you can accelerate. So putting the recruitment process outsourcing is much more strategic decisions that CHRO will make or talent acquisition people. So that really creates a better home for that business. On the other side, on the MSP side, there was too much, I would say, of a disconnect between what we do with MSP and the way MSP can feed the ADECO business. So They're still run as separate because some of the MSP business is run as vendor neutral. So we have to keep it separate. But there's one leader. And that one leader, Christophe, who runs the overall ADECO and pontoon business, is there to make sure that wherever we can, we know the MSP piece really brings All these these the best of a deco and so those those synergies this collaboration between the two is Is very efficient so and we've already seen traction. We've won some very large contracts Thanks to a perfect alignment and collaboration between the two so rather than having two separate entities one one leadership one direction great synergies great collaboration and and this is already getting traction. As I was mentioning, I think in the U.S., we've already seen the MSP, the pontoon business, driving 13% more business into ADECO in its spend. So more to come on this, but that was a logical thing to do.

And Conrad, let me pick up on your point about headcount. I mean, if I look at Q4, then year on year, our headcount was down 6%. And 2% sequentially. You know, within that, as you rightly identified, there has been more headcount reduction in G&A. So that was down 8% year on year. while our selling headcount was down 5%. So to deliver those savings, we have very deliberately targeted headcount reductions in G&A. And I think, as you say, we've been very effective at over-delivering versus our target. In terms of what I'd expect going forwards, Obviously, there continues to be a focus on relentlessly managing our G&A costs. Again, I'm not flagging another big program, but as I've mentioned, we do think there are further pockets that we can go after. So I would expect later in the year for there to be modest reductions in G&A headcounts. And then on the selling side, we're really managing this on a country-by-country basis. We have taken headcount out in some of the more difficult markets. We've protected headcount where we can see signs of a recovery, and we've added headcount where we can see signs of growth that we can go after, and we will continue to do that. It's the reason why, as I mentioned to Rory, the... The recovery ratio is at 44%. It's a little bit lower than the 50 we normally guide to because we're very deliberately protecting capacity, and it means we will get good operating leverage in a recovery. So I think you should expect us to continue to manage selling headcount on a very dynamic basis.

Okay. Thank you both. Your next question, Consul General Simon Le Chaperie from Jefferies. Your line is open.

Yes, good morning. Three questions, please. First of all, just on your Q1 outlook, I mean, in which extent this is conservative enough in case trends turn softer again in the coming weeks? Secondly, just a follow-up on your comment around further adjustment of FT. I mean, how can we reconcile this with your comment around like consistent volume improvements across the board. I mean, yes, some color would be helpful. And lastly, just on France and what kind of impact can we expect from the exceptional tax contribution in 2025 and any color on the cash impact? Thank you.

Thank you, Simon. And I'll take the first one and Coram take the next two. Let's be clear. We have seen volume stabilizing in Q4. We still have a growing and we will continue to see a growth momentum in APAC and LATAM and probably Southern Europe. But Europe will remain a difficult piece. We have some large businesses like France, like Germany, UK, Nordics that are in a difficult position from a macroeconomic perspective. So, you know, we have, as we said, and we've been, you know, we just tell you what we see. And we see that, you know, the temp volumes have been trending positively in a variety of countries, including the U.S. What's interesting, while the temp business is softly growing, the perm business is very soft. In the US, the perm business is minus 8%. We are still ahead of competitors, but it's very soft. So that says something probably around companies Being a bit more positive, you know, when you see a little bit of improvement and you bring in 10 people, you don't dare yet to recruit permanently. So that's where we've got to be cautious about what we say. We believe that there is a bit of momentum. We remain cautious. But this momentum is encouraging. Back to the U.S., we've seen job order volumes increasing in ACODES U.S., In ADECO also we've seen some temp improvement and across several others. So we're not done, we're not calling it a recovery, but we see a little bit of a positive trend.

And picking up on your other two questions, I don't see an inconsistency between modest volume improvement and the dynamic approach that we take to managing our sales capacity. So we manage sales headcount according to what we see in the markets. momentum continues then as we've said we've protected a degree of capacity to help us capture it and if it becomes a strong recovery then obviously we would invest where we see opportunities to capture growth so I don't think there's an inconsistency in any of that. On France So there are two components to the French tax changes. There is a corporate tax surcharge and there is effectively the reversal of the planned reduction in business tax. We have built that into our tax guidance. So it's about 150 basis points on the group ETR, and it is incorporated within the 34% guidance range. It is not a big driver of cash. I mean, in absolute terms, this is less than $10 million. So I don't think it has a big impact on cash.

Okay, thank you. Just a quick follow-up on the U.S. exposure issue. In terms of group revenue, it's like a bit less than 15%. Is it a fair assumption?

In terms of revenue percentage for the U.S.?

Yeah.

Yeah, that's about right. It's about that. It's about right.

A bit less. Okay. Thank you.

Your next question comes from Gianmarco from ZK Bank. Your line is open.

The leave of Jan Gupta, despite the probably weak top line that we saw for our codies over the last two years, what are some of the key reasons for him leaving and why did you not mention a replacement of him already today? And second question is, you mentioned also with your dividend cut now that you want to keep financial flexibility. Of course, I see the key reason is to deleverage, but is it also possible that you are keeping some dry power for some near-term M&A?

So, regarding Akodis and Jan Gupta, first of all, we love that business. It has an immense potential. We have great assets. And as you heard in the call, we are extremely positive in the way consulting and solutions is developing. We've been growing 1% this year. We have healthy margins. And the tech staffing is ready for a rebound. So we love that business. And as far as Jan's departure, I think it was a very logical moment. Jan has been, you know, absolutely instrumental into sort of creating MODIS out of a variety of businesses in the group. putting it together, then strategically moving ahead and accelerating the ER&D positioning thanks to the acquisition of ACA and then integrating ACA successfully. So we're very grateful for what Yann has done. It was time for the both of us to move to the next phase. And we have recruited a great leader who has an extensive experience in running large businesses in the IT sector, in the digital engineering sector, and with a large also experience in running offshore operations. So he's a great guy, highly energetic, great background, We cannot announce his name because of constraints on where he is at the moment. We will announce very shortly, but we respect, of course, his current environment. So we will announce his name very shortly.

And then on the second question, obviously, you know, moving forward. to the updated policy of a payout ratio of 40% to 50% of adjusted EPS with no floor does give a better balance between growth investment and shareholder returns. It does give greater financial flexibility, but the immediate priority is deleveraging. And that's why we have confidently put the target of at or below 1.5 times net debt to EBITDA by the end of 2027, you would expect us to continue to do small bolt-on deals. You saw two of them announced in Q4. These do not fundamentally change the balance sheet, but they're good deals where we get swift returns and we will continue to do those. But the immediate priority is delevering the balance sheet and achieving our targets.

Thank you.

Your next question comes from Simon van Open from Kepler Schiffer. Your line is open.

Thank you and good morning. Thanks for taking my questions. First of all, congratulations on the strong cash flow performance in Q4. First of all, thank you for the additional disclosure on the ACOTUS consulting and solutions business. Will this also be reported on a quarterly basis going forward? We would highly encourage this. Secondly, could you provide some long-term insights in what you expect in terms of net improvement in your EBITDA margins coming from AI? And lastly, what are your expectations for the outplacement business going forward?

So I think on the disclosure, when I go to this column, and then I take the...

So, I mean, obviously, the segment that we report on is a CODIS. And, you know, that's the way that it's set up because of the way that we manage the business. We have, as you know, Simon, typically given... good color into what's happening on the tech staffing business, what's happening on the consulting and solutions business, how that varies by country, and also the sort of profitability characteristics. So, you know, I'm glad that you appreciate it. It's building on what we've already been doing, and we will continue to do so. And just one other point from me, thank you for your comments about the cash flow, because that's appreciated.

And that's cool. I mean, we really love that ACODA's business. Great asset, great perspective, very strong client portfolio. So this is very, very promising. So as far as AI is concerned, definitely we believe that this will help us grow. accelerate our trajectory and contribute to getting to the top of our margin corridor. Definitely, we see two things. There's the way it's going to bring efficiency into our operations. We've already brought Jenea, as I said, in several things with our recruiters, but also with our lawyers. We use a tool to really help our lawyers be more efficient. So There's much more things to come there. And we also believe that this will help us take a different angle with our clients. The strategic workforce management question is going to be more and more live into our clients' organization. And because of the power that we have with the massive data that we have, we capture data at scale every day. We interview an immense number of candidates every day. We connect with our clients constantly. So that massive amount of data will help us create opportunities progressively additional business model or different angles in terms of how we create value for our clients. So I am very positive that this will contribute to a margin improvement. On the CT business, let's be clear, we're very pleased with the performance. It's a very strong team. They have incredible momentum. And despite the little decrease in revenue, as I said earlier, it's the second highest revenue in history, coming from a very, very high top line last year, in 2023. So we have a very solid pipeline. We see some layoffs still coming in in Europe, still in the U.S., And we are also expanding, particularly in the U.S., on the small and medium enterprise segment, which was not really explored. And we have, for the moment, a great traction. So we are positive on the way that things are going in CT. We still believe we have reasonable levels of revenue. We also are improving revenue. the customer experience, both on the client side and also on the people that benefit from the outplacement experience. We've digitalized, we've put generative AI, career canvas is core to our offer now. It helps really scale the offer, but also provide the people with a different experience, broader understanding of the opportunities that they have ahead of us, career guidance, at scale. So that's a promising business moving forward.

Thank you. So just coming back on the EBITDA margins, you are targeting a long-term EBITDA margin of 5% to 6%. Am I correct?

So we have been very clear that we operate in a corridor of 3% to 6%. And we would expect to be in the upper half of that range in a supportive economic environment. And to be clear, it's EBITDA margin, not EBITDA. Obviously, EBITDA is higher than that. And I think to emphasize Denise's point, longer term, these tools will drive productivity, both in the back office and the front office. So it is one of the tools in the toolkit for driving the margin up.

Thank you. Your next question comes from the line of Karen So from JP Morgan. Your line is open.

Good morning. Thank you for taking my questions. Just two left on my side. The first one is on your new reporting structure. Could you maybe talk a little bit about the rationale behind the change, especially around the formation of EMEA, so combining North and Southern Europe and DOC? into the segment and your thoughts around providing details around kind of the key markets going forward. And then the second question is on slide five, where you highlighted that you are 200 basis points ahead of competitors around the market share gains. I think this was 290 basis points in the first nine months for 2024 at your Q3 results, if I understood it correctly. So I was wondering if you could clarify what the driver of the change here is for Q4. Thank you.

Let me take the reporting structure question, Karen. I mean, ultimately, our segmental reporting is driven by the way that we manage the business. So we have to mirror the segments for the management structure. And as you know, we have been streamlining GBU structures We've been making sure that we are as lean as we can be in terms of the managerial structure. So ADECO has now moved to effectively four key leadership segments that sit underneath the main GBU. And therefore, we have to report in this way. In terms of color and disclosure going forwards, And I think you can see from the way that we present existing segments like Northern Europe, for example, we always do try to unpack what's happening within those broader segments. We try to give you the color by country in terms of growth and margins, and we'll continue to do that. So the structure is driven by the way that we manage the business, but we will continue to give you the color that you need to understand what's happening within those groups. In terms of the calculation of the market share, and then I think Denis will pick up.

Yeah. First of all, we are pleased on the market share gains that we've done over the years. 200 basis points, which was on top of 790 in last year. So, of course, the bar was higher this year and particularly towards the end of the year where we had a very high comp base. The way we calculated is we do a simple average with the two main competitors. So it is the 200 basis is a full year calculation. In Q4, we were ahead of one competitor behind another, and it's better than Q3 where we're behind both. So that's where we are.

Okay, that's very helpful. Thank you.

Your next question comes from . Your line is open.

All my questions have been asked, so there's no need to. I just want to highlight that we really welcome the delivering efforts

and as simon said the good cash flow so give you all the good work thank you very much thank you we really appreciate that thank you we are very focused on this absolutely so i understand there are no more questions so it's time to wrap up this call i would i'd like to thank you again for attending um in a nutshell we are rigorously executing on our strategy. We believe the strategy is the right one and we are rigorously executing on it. We are committed to deleveraging and this will be supported by our new adjusted dividend policy. I am very confident in our future perspectives given the proven capacity to execute, given our unique positioning, with this great portfolio of GBUs, ADECO, ACODES, with a new leader, LHH, great portfolio of services, really resonating well with our clients, and the portfolio of countries. We are on a path of growth. We believe in profitable growth, of course. A supportive economic environment will help. but we are building a great future for our group. Thank you again for attending this call and looking forward to our interactions to come and, of course, to our next results call. Thank you very much. Have a great day.

That does conclude our conference for today. Thank you for participating in Man Out or Disconnect.